Case: United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904
Outcome: discussed
In determining what orders may be appropriate, the parties may wish to consider the applicability of the principles laid down in United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 (" United Scientific Holdings ") in relation to the retrospective application of rent reviews completed outside the period provided for under the lease. 180 In United Scientific Holdings , the House of Lords held that there was nothing in that case that displaced the presumption that strict adherence to the timetables specified in the relevant rent review clauses was not of the essence of the contract. 181 There were in fact two separate cases decided in United Scientific Holdings . The first involved a rent review on a 99 year lease. The review was to occur each ten years after the commencement of the lease, with the new rent to commence on 31 August of that year. The rent review mechanisms provided that the revised rent was to be determined by agreement, or failing agreement, by arbitration "during the year immediately preceding" the 10 year period to which that rent would relate. By the end of the first 10 year period, such agreement had not been reached, and nor had the matter been referred to arbitration. 182 The second case involved a 21 year lease, commencing upon 8 April 1968. The rent was to be reviewed every seven years. The relevant machinery provided for the lessor to serve a notice on the lessee, and the lessee to serve a counter-notice accepting the proposal or making a counter-offer. The parties were then to negotiate. If agreement had not been reached after a certain time, the lessor was required to appoint an independent valuer. In this case, the lessor's notice was served within time. However, no agreement had been reached by the parties, and the lessor failed to appoint an independent valuer within the time provided for under the lease. 183 In both cases the House of Lords held that time was not of the essence in relation to the clauses in the leases which the lessors had not complied with. The lessors had not lost the opportunity to have the rent for the next rental period reviewed by virtue of not complying with the time periods set down in the rent review machinery clauses. 184 The potential significance of the case for this proceeding in terms of any final orders that may be made is as follows. The House of Lords held that once the relevant terms were complied with (namely an arbitration concluded in the first case and independent valuation conducted in the second case), the new rent would be payable from the date that the lease provided that the new rental period was to commence. That is, despite the lessors' tardiness, not only did they maintain their rights to rent reviews, but once the rent reviews were completed, the revised rent applied retrospectively as if those reviews had been completed on time. 185 Whether the parties wish to consider or rely upon United Scientific Holdings in putting forward orders to reflect my reasons for judgement is, however, a matter for them. 186 There is also potentially a difficult question to be resolved regarding costs. The applicant has succeeded against the first respondent in relation to its claim that the notice was invalid. However, there were a number of other issues raised in relation to which it either did not succeed, or would not have succeeded. That is a matter that may have to be taken into account. 187 With regard to the second respondent, it is sufficient to note, for present purposes, that the applicant's claim against it must be dismissed. It is clear that the second respondent will be entitled to its costs. Beyond these findings, it may be necessary to hear the parties further.