White & Anor v Riverside Housing Association Ltd

A contractual rent variation date identifies when an increase may take effect. The presumption that time is not of the essence in rent-review machinery does not permit a landlord to move that date. An exclusive contractual procedure for varying a tenancy agreement must be followed; informal consultation and unilateral notices are insufficient. A rent-increase notice stating what the tenant must pay is not an offer to vary the agreement, and continued occupation or payment cannot accept an offer that was never made. Estoppel by convention or acquiescence cannot ordinarily be used as a sword to create a cause of action for disputed rent arrears. Waiver requires a clear and unequivocal representation, particularly where tenants were unaware of the defect.

Riverside sought possession of the Whites’ residential property and payment of rent arrears. The Whites challenged rent increases imposed from 2001 onwards, contending that their assured tenancy agreement fixed the rent variation date as the first Monday in June.

The Liverpool County Court held that time was not of the essence of the relevant clause and upheld the increases on that basis. It rejected Riverside’s alternative arguments based on contractual variation, consultation, waiver and estoppel. The Whites appealed. Riverside sought to uphold the result on the rejected grounds and sought permission to cross-appeal the costs order. The central issue was whether the rent variation date could validly be changed from June to April.

The substantive appeal was allowed. Sir Peter Gibson gave the leading judgment. Lady Justice Hallett and Lord Justice Auld agreed, with Lord Justice Auld expressing reluctance to accept the result and preferring, if possible, the route of estoppel by convention.

1. Clauses 2(6), 2(7), 2(8) and 6(2) of the tenancy agreement showed that Riverside had a power, but not a duty, to increase rent. The first Monday in June was the contractual date from which an increase could take effect. The wording did not permit Riverside to substitute April or any other date.
2. The equitable presumption that time is not of the essence had no application to clause 2(7). That clause identified the rent variation date and imposed no obligation to do something by a particular time from which equity could relieve. United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 concerned the timing of rent-review machinery and did not govern the movement of the date from which reviewed rent became payable. The date of 31 December used in the rent formula was likewise not alterable.
3. Clause 2(12) provided a specified method for altering the tenancy agreement. Riverside had not proposed a permanent contractual variation, given the required notice and explanation, or allowed a reasonable period for comments. The non-compliance was more than trivial.
4. An oral variation was theoretically possible despite clause 2(12), but the rent notices were not offers capable of acceptance. The Whites’ continued tenancy and failure to object did not amount to acceptance of an offer that had not been made.
5. Estoppel by convention could not be used as a sword to create the part of Riverside’s cause of action dependent on the disputed rent. Aristocrat Property Investments v Harounoff (1982) 2 HLR 102 and Baird Textiles v Marks & Spencer [2002] 1 All ER (Comm) 737 supported that conclusion. The special circumstances discussed in Amalgamated Investment and Property Co. Ltd. v Texas Commerce International Bank Ltd [1982] QB 84 did not apply. Estoppel by acquiescence failed for the same reason. The court also treated the equitable distinction between essential and non-essential time provisions as having become a rule of law under section 41 of the Law of Property Act 1925.
6. There was no waiver. The Whites did not know that the notices were defective, and their failure to challenge the arrears was not a clear and unequivocal representation that they would abandon their contractual rights. The court noted, obiter, that estoppel might assist defensively in a future claim by tenants seeking repayment, but the costs issues had not yet been argued or determined in this judgment.

• Court of Appeal (Civil Division): Allowed the Whites’ substantive appeal and rejected Riverside’s alternative grounds for upholding the rent increases. The costs appeal and application for permission to cross-appeal remained to be argued.
• Liverpool County Court: On 9 July 2004, His Honour Judge Stewart QC held that time was not of the essence of the rent variation clause and upheld Riverside’s case on that ground. He rejected the other grounds relied on by Riverside and made a costs order limiting the Whites’ liability to an amount not exceeding two-thirds of Riverside’s costs.