Wilderbrook Ltd v Oluwu

In a rent review clause, the established presumption is that contractual time limits are not of the essence unless clear and explicit wording rebuts it. A deeming provision stating that the tenant is taken to accept the proposed rent is ordinarily a powerful contra-indication. However, where the lease also contains an obscure proviso allowing either party to seek a surveyor’s determination at any time notwithstanding anything in the schedule, the court cannot selectively preserve the deeming provision while disregarding the proviso. The proviso deprives the apparent contra-indications of the clarity needed to displace the presumption. A rent review notice sent by recorded delivery is received, for the purpose of a contractual period running from receipt, when received at the demised premises, unless clearer wording requires personal receipt.

Wilderbrook Ltd, the landlords, appealed against His Honour Judge Cotran’s decision in the Lambeth County Court, which refused a declaration that a rent of £40,000 per year had been agreed on review of the commercial lease. The lease required a counter-notice within one month after receipt of the rent notice and provided that failure to serve one would deem the proposed rent agreed. It also stated that time was of the essence, but contained a proviso allowing the appointment of a surveyor to determine the new rent at any time after the relevant review period began.

The tenant’s counter-notice was sent more than one month after delivery to the demised premises but before the tenant or his agent had seen the notice. The appeal concerned whether the proviso preserved the rent-review machinery despite the late counter-notice, and when the notice had been received.

1. Appeal dismissed. The Court of Appeal upheld the refusal to declare that the proposed rent had been agreed.
2. The starting point in construing a rent review clause is the presumption that its timetable is not of the essence. That presumption may be rebutted by clear and explicit contra-indications in the lease, its interrelation with other provisions, or the surrounding circumstances. A contractual deeming provision is ordinarily a decisive, or virtually decisive, contra-indication, subject to any sufficiently clear provision showing that the deemed state of affairs is not to survive.
3. Paragraph 13 of the Third Schedule was obscure. Its opening words made time of the essence for all periods in the schedule, while its proviso stated that either party could require a surveyor’s determination at any time notwithstanding anything in the schedule. The court could not rewrite the proviso so that it relaxed the timetable for the surveyor but left paragraph 2’s deeming provision unaffected. Properly construed, it applied to the whole stipulated rent-review process, including the counter-notice. Its presence deprived the other provisions of the clarity required to rebut the presumption.
4. The rent notice was received on 16 April 2003, when it was delivered to and signed for at the demised premises. The use of “receipt”, rather than “service”, did not require receipt by the tenant or an authorised agent. Greater specificity would have been necessary to create the moveable date contended for by the tenant. The conclusion was supported by Sun Alliance & London Assurance Co Ltd v Hayman.
5. Lord Justice Carnwath agreed with Pill LJ. He emphasised the direct conflict between the deeming provision and the proviso, and stated that there was no principled basis for rewriting the proviso in the landlords’ proposed way. He also considered the second issue effectively settled by Sun Alliance.

• Court of Appeal (Civil Division) — [2005] EWCA Civ 1361: appeal from the Lambeth County Court dismissed.
• Lambeth County Court — His Honour Judge Cotran dismissed the landlords’ claim for a declaration on 20 January 2005.