Bello v Ideal View

In a rent-review clause where time is not expressly or impliedly of the essence, the landlord’s delay does not by itself bar a later review or create a defence to the resulting rent claim. The tenant must establish a separate legal basis, such as an estoppel founded on a representation, reliance and prejudice. A tenant who was notified of an arbitration and failed to participate cannot ordinarily raise in court, by collateral attack, objections which should have been made to the arbitrator. For limitation purposes, the reviewed increase became due only when the rent was ascertained and payable under the lease; the increase was therefore not arrears due from the earlier review date.

The defendant appealed against a possession order made by His Honour Judge Behar at Wandsworth County Court on 23 October 2008. The order followed forfeiture of a long lease for rent arrears. The lease provided for a rent review after the first 25 years, with referral to arbitration if the parties did not agree.

The review was not initiated until 2007. The arbitrator assessed rent retrospectively from 25 March 1994, and the claimant then sought arrears from the defendant. The defendant relied on limitation, delay, abandonment, estoppel, acquiescence and laches. Permission to appeal was granted on the limitation ground, understood by the High Court to include the wider effect of delay.

1. Appeal dismissed. The defendant was bound by the arbitrator’s determination. The objections based on the 13-year delay could and should have been advanced in the arbitration. Raising them in the possession proceedings would amount to an impermissible collateral attack on the award.
2. The lease did not make time of the essence for the rent review. The date specified in the clause was the earliest point at which the landlord could trigger the review; it did not require the review to occur within a defined period. No term making time of the essence arose expressly or by implication.
3. Following Amherst v James Walker Limited [1983] 1 Ch 305, mere delay, even if unreasonable, did not in itself prevent exercise of the contractual review right. The court adopted the qualification drawn from London & Manchester Assurance Co. Ltd. v. G. A. Dunn & Co.: delay may support an estoppel where the landlord’s words or conduct represented that no review would be pursued and the tenant relied on that representation to his prejudice. The trial judge had found no evidence of such a representation or equivalent defence.
4. Section 19 of the Limitation Act 1980 applied only when rent arrears became due. The original rent was due periodically, but the claimant did not seek the pre-2006 element. The reviewed balance did not become due until the arbitrator had assessed it and the next quarter date arrived, on 29 September 2007. The claim for that balance was therefore not time-barred.
5. The asserted prejudice did not alter the result. The defendant could have taken advice before purchase, negotiated with the landlord or sought an indemnity, and could have raised the relevant arguments in the arbitration.

• Wandsworth County Court: His Honour Judge Behar made an order for possession on forfeiture for rent arrears on 23 October 2008.
• High Court (Queen’s Bench Division): Permission to appeal was granted on limitation, understood to include the wider issue of delay. Mr Justice Flaux dismissed the appeal.