Bywater Properties Investments LLP & Ors v Oswestry Town Council

Rent review clauses are construed using ordinary contractual principles, giving primary weight to their language read in the context of the lease and its commercial purpose. Where a clause refers to the rent for the time being payable, that ordinarily includes rent previously fixed on review. If the landlord alone may initiate a later review and does not do so, the existing reviewed rent continues unless the lease provides otherwise. Silence does not ordinarily justify implying a term where the express provisions supply the default position.

The claimants were tenants under two 99-year commercial leases granted in the 1960s. Each lease provided for 25-year rent reviews which the landlord alone could initiate, subject to a threshold preventing the reviewed rent falling below the initial reserved rent.

The landlord initiated the first review in 1988, increasing the rent, but did not initiate the second review in 2013. The claimants argued that the rent reverted to the initial reserved rent. The defendant argued that the increased rent continued. The issue was the proper construction of the rent review clauses.

1. Construction. Judgment was given for the defendant. The phrase “the rent for the time being payable hereunder” referred to the rent actually payable at the relevant time, including rent previously increased on review. If the landlord did not initiate a further review, that rent continued: paras [23]–[25].
2. The phrase “from and after each such date of review” applied only where the landlord invoked the review procedure. It did not create a lacuna requiring implication of a term. Alternatively, the wording strongly supported the conclusion that a reviewed rent continued until a further review or termination of the lease: paras [25]–[28].
3. The threshold proviso gave modest additional support to the defendant’s construction. The remaining lease provisions and the competing commercial-purpose arguments did not displace the natural reading of the operative clause: paras [27]–[33].
4. The court applied the principle that, where an instrument does not expressly provide for the consequence of an event, the usual inference is that nothing happens and the express provisions continue. The commercial purpose was to be discerned principally from the leases themselves. The tenant had accepted the risk inherent in a landlord-only review clause that the landlord might decline a review when market rents had fallen: paras [30]–[33].
5. Declarations were proposed in the terms of paragraphs 1(ii) and 2(ii) of the Claim Form, subject to argument on the form of order and costs: para [34].