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Airways Aero Associations Ltd v Wycombe DC

Chancery Division 09 July 2010

Case Analysis
Where Reported Case Digest
[2010] EWHC 1654 (Ch); Official Transcript Subject: Landlord and tenant Keywords: Business tenancies; Estoppel; Local authorities; Rent reviews; Valuation Summary: The starting point in considering a rent review clause in a commercial lease was an assumption that the rental value was to be that of the whole of the demised premises as they existed at the review date. On its proper construction, a lease for a civil airport did not show with sufficient clarity any intention to depart from that position, and its use of the terms "airfield" and "aerodrome" was largely indiscriminate and did not refer to different parts of the site for the purpose of rent review. Abstract: The court was required to determine, as preliminary issues, matters arising from the operation of a rent review clause in a commercial lease. The claimant company (X) had leased a small civil airport from the defendant local authority. The lease ran for 42 years and the annual rent payable by X was reviewable every seven years. At the final review, the parties were unable to agree a rent and activated the procedure in the lease for reference to an expert valuer. X asserted that that local authority's rent proposal was based on an incorrect interpretation of the review provision and that the authority was, in any event, estopped from seeking any increase in rent attributable to the rebuilding of hangars by X at its own expense, having expressly agreed in writing not to do so before the rebuilding took place. The court held that the question of construction of the lease was a matter for the court and not the valuer. The issues for determination concerned (i) whether X was entitled to a declaration that the valuer was required to determine a rent for an area less than the whole site, excluding the hangars and other buildings; (ii) the extent of the estoppel conceded by the local authority. X contended that as the rent review clause referred to "The Airfield", it was to be construed as referring not to the whole of the demised premises, but to an area excluding the "stores, offices, hangars and other aerodrome buildings" and a bungalow. It submitted that the excluded areas, other than the bungalow, were referred to in the lease as "the aerodrome" in distinction from the "airfield". The local authority's position was that the various terms used in the lease were merely poor drafting and did not indicate any intention to refer to separate areas, so that the rent should be fixed by reference to the rental value of the whole of the premises actually demised. In relation to the estoppel, X contended that the rent at review should be assessed on the footing that the old hangars had been removed and not replaced. The local authority argued that the assumption should be that the former buildings remained in the condition they were prior to demolition, subject to a further assumption that up to that date the tenant had complied with its repairing covenant. Preliminary issues determined. (1) The starting point in considering

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a rent review clause in a commercial lease was an assumption that the rental value was to be that of the whole of the demised premises as they existed at the review date, Ponsford v HMS Aerosols Ltd [1979] A.C. 63 followed. That assumption could, however, be displaced by wording in the lease itself if the factual context gave a sufficiently clear indication of a contrary intention. In the instant case, the review clause did not show with sufficient clarity any intention that the rent on review should be fixed on an artificial basis of assessing only part of the demised area described as the "airfield". The terminology of "airfield" and "aerodrome" used in the lease did not denote an intention to refer to different parts of the site, but was to be regarded as largely indiscriminate. The court, accordingly, declined to make the declaration as to construction sought by X. (2) The estoppel alleged, and conceded, was one which prevented the local authority from going back on its earlier assurance. The court had no power to impose terms on the parties which it considered fair or reasonable by reference to circumstances which might have, but did not, occur, but only to determine whether an assurance had been given which it would be inequitable for the local authority to renege on once X had relied on it to its detriment, and if so, what its terms were. Reliance and detriment had been conceded, and the assurance sought and given related to the value of improvements. The value of the old buildings was to be assessed on the footing that the tenant had complied, and continued to comply, with its repairing covenants under the lease in relation to them, but no more. Judge: David Cooke, HHJ Counsel: For the claimant: Jeffrey Terry. For the defendant: John Male QC. Solicitor: For the claimant: Allan Janes. For the defendant: Veale Wasbrough Vizards.

Significant Cases Cited

Ponsford v HMS Aerosols Ltd [1979] A.C. 63; [1978] 3 W.L.R. 241; [1978] 2 All E.R. 837; (1979) 38 P. & C.R. 270; (1978) 247 E.G. 1171; HL; 1978-06-29

All Cases Cited

AJ (A Child) (Adoption Order or Special Guardianship Order), Re [2007] EWCA Civ 55; [2007] 1 F.L.R. 507; [2007] 1 F.C.R. 308; [2007] Fam. Law 387; (2007) 104(8) L.S.G. 38; Official Transcript; CA (Civ Div); 2007-02-06 Ponsford v HMS Aerosols Ltd [1979] A.C. 63; [1978] 3 W.L.R. 241; [1978] 2 All E.R. 837; (1979) 38 P. & C.R. 270; (1978) 247 E.G. 1171; HL; 1978-06-29

Legislation Cited

Civil Aviation Act 1971 (c.75) Landlord and Tenant Act 1954 (c.56)

Journal Articles

Commercial lease - rent review - construction and assumptions - estoppel Business tenancies; Estoppel; Rent reviews; Rental value; Valuers.

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Comm. Leases 2010, Aug, 1602-1604

Books

Handbook of Rent Review Chapter: Chapter 4 - The Basis of Valuation Documents: 4.4.1 Handbook of Rent Review Chapter: Chapter 4 - The Basis of Valuation Documents: 4.5.1 What is meant by the premises? Handbook of Rent Review Chapter: Chapter 4 - The Basis of Valuation Documents: 4.5.5 Where the premises have been added to by the tenant at its own expense

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