Airways Aero Associations Ltd v Wycombe District Council

A rent review clause is construed objectively by reference to the lease as a whole and its relevant factual and business context. The usual assumption is that rent is assessed by reference to the premises as they exist at the review date, including buildings and improvements. That assumption may be displaced without express words if the lease gives a sufficiently clear indication of a different intention. The court should not impose an inflexible or artificially high threshold.

An estoppel arising from an assurance concerning tenant’s improvements extends according to the assurance actually given. It ordinarily excludes only the enhanced value attributable to the improvements, while retaining the value of the pre-existing buildings assessed on the appropriate repairing assumptions.

The claimant held a long lease of an airfield from the defendant. At the final rent review, the parties disagreed about whether the rent should reflect the whole demised premises or only an area described as the Airfield, excluding buildings and other developed areas. The claimant also relied on an assurance that improvements to hangars would not be taken into account.

The construction issue had previously been identified by Lewison J as a question for the court. At trial, the defendant conceded an estoppel in principle, but the parties disputed its extent. The court determined the construction issue and the scope of the conceded estoppel as preliminary matters.

1. Construction of the rent review clause. The parties may agree any method of rent determination. The court must identify the objective meaning of the lease, considering the lease as a whole and the relevant factual and business context, but excluding subjective intention and negotiations.
2. The normal starting point is the rental value of the whole demised premises as they exist at the review date. This is the approach described in Ponsford v HMS Aerosols Ltd [1979] AC 63 and subsequently applied in rent review cases. It is a prima facie assumption, not an inflexible rule. The lease may displace it where its wording and context sufficiently indicate a contrary intention.
3. The references to “Airfield” and “aerodrome” in the lease did not clearly distinguish open land from buildings or other facilities. The lease was confused and inconsistently drafted. Its language, context and commercial purpose indicated that “Airfield” in the rent review clause referred to the whole demised premises, apart from the bungalow. The claimant’s requested declaration on construction was therefore refused.
4. Estoppel. The relevant question was the assurance actually given, not what arrangement might have been fair or reasonable. The correspondence concerned the value of improvements and the enhanced value attributable to the rebuilt hangars. It did not require the whole value of the new buildings to be disregarded. The rent was to reflect the value of the old buildings, assessed on the footing that the tenant had complied with its repairing covenants, while excluding the additional value created by the improvements.
5. The court left open whether the old buildings’ value was limited by their condition or by the tenant’s repairing obligations. Planning consent to demolition did not necessarily establish consent to demolition on the ground that the buildings were beyond economic repair.