Monsolar IQ v Ltd Woden Park Ltd [2021] EWCA Civ 961 (29 June 2021)

Monsolar IQ v Ltd Woden Park Ltd [2021] EWCA Civ 961 (29 June 2021)

The rent review formula in the lease, if applied literally, produced arbitrary and irrational results inconsistent with the parties' intentions and the purpose of an RPI-linked rent review. It was clear that a drafting mistake had occurred, and it was equally clear how to correct it: the formula should increase or decrease the rent in line with the proportionate change in RPI over each year, not cumulatively since the lease's commencement. The Chartbrook principle applied, justifying correction by construction.

Citation
[2021] EWCA Civ 961
Parties
Claimant and Respondent: MonSolar IQ Ltd; Defendant and Appellant: Woden Park Ltd
Jurisdiction
England and Wales
Judgment Date
29 June 2021
Procedural Posture
Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal dismissed
Legal Topics
Lease Construction, Rent Review Clauses, Rectification of Contracts, Interpretation of Contracts
Contract Law Property Law Lease Construction Rent Review Clauses Rectification of Contracts Interpretation of Contracts

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Parties

MonSolar IQ Ltd

Claimant and Respondent

Woden Park Ltd

Defendant and Appellant

Procedural Posture

Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether the rent review formula in the lease contained a clear drafting error
  2. 2 Whether it is clear how the drafting error should be corrected under the Chartbrook principle

Ratio Decidendi

The rent review formula in the lease, if applied literally, produced arbitrary and irrational results inconsistent with the parties' intentions and the purpose of an RPI-linked rent review. It was clear that a drafting mistake had occurred, and it was equally clear how to correct it: the formula should increase or decrease the rent in line with the proportionate change in RPI over each year, not cumulatively since the lease's commencement. The Chartbrook principle applied, justifying correction by construction.

Court Disposition

Appeal dismissed

Orders

  • Declaration that paragraph 3 of Schedule 6 to the Lease means the rent is to be increased or decreased on each Review Date in accordance with the proportionate change in RPI during the preceding year, as measured by the values two months before the relevant dates.