Riverside Housing Association Ltd v White & Anor

The appeal concerned the proper construction of rent review provisions in an assured weekly tenancy and whether notices served by the landlord were valid. The court considered clauses in the tenancy agreement, in particular clauses 2(6)–(9) and 6(1)–(3), and addressed whether the first Monday in June was the only date on which reviewed rent could become payable and whether time was of the essence for the service of notice.

The House of Lords held that the presumption that time is not of the essence for serving notices was not a substitute for construing the contract and was not determinative here. On a fair construction of the operative clauses, the landlord was entitled to increase the rent once a year on at least 28 days' notice and the reviewed rent could take effect on or at any time after the first Monday in June in that year. Accordingly the notices served by Riverside were valid.

The landlord, Riverside Housing Association, is a charitable registered social landlord. The tenancy agreement with the respondents was titled "Assured Tenancy Agreement" and contained rent review provisions stating a weekly "net rent", a service charge, a "rent variation date" described as the first Monday in June each year and a requirement that Riverside give the tenant four weeks' notice in writing.

The landlord did not increase rent in June 2000 for certain tenants because of policy, but later chose to implement increases and served notices in February 2001, February 2002, January 2003 and February 2004 giving effect to increases from dates in April. The tenants initially paid but then fell into arrears; the landlord sought possession for arrears. The tenants contended that the notices were ineffective because the tenancy permitted an increase only if notice took effect on the first Monday in June and thus the notices taking effect in April were invalid.

Procedural history: the parties agreed preliminary issues. At first instance His Honour Judge Stewart QC held the notices valid. The Court of Appeal ([2005] EWCA Civ 1385) allowed the tenants' appeal, holding that the rent review could only take effect on the first Monday in June and that the landlord could not rely on the non-essentiality of time to validate late notices. The landlord appealed to the House of Lords.

The issues for the House of Lords were (i) whether time was of the essence for the rent variation date and (ii) the proper construction of the rent review provisions. The Law Lords held that the question whether time was of the essence was subordinate to the primary question of construction: the presumption that time is not of the essence could not rewrite a clause that, if properly construed, required a particular date. The court identified three possible constructions and, after considering the context (a partially publicly funded social landlord, the drafting and the effects on tenants), concluded that the most sensible construction was that Riverside could increase rent once a year provided it gave 28 days' notice and the increase could take effect on or after the first Monday in June. This construction avoided retrospective increases, preserved an annual review right for the landlord and accorded with the contract as a whole.

The House of Lords therefore allowed the appeal, held the four notices valid and ordered that the tenants pay Riverside's costs. The court noted ancillary points including that clause 2(9) (independent expert) and the drafting of clause 6 supported a moveable effective date and that other arguments (agreement to change date; estoppel; acceptance by payment) were not reached as academic.

Appeal allowed. The House of Lords held that on a true construction of the tenancy agreement Riverside was entitled to increase the rent once each year on at least 28 days' notice and that the reviewed rent could take effect on or at any time after the first Monday in June; the notices served by Riverside were therefore valid. The presumption that time is not of the essence did not resolve the matter without first construing the agreement. Costs were awarded to Riverside.

First instance: Liverpool County Court, preliminary issues tried by His Honour Judge Stewart QC (judgment for landlord on validity of notices). Appeal: Court of Appeal allowed the tenants' appeal ([2005] EWCA Civ 1385). Final appeal: House of Lords allowed landlord's appeal ([2007] UKHL 20).