Martineau Galleries No1 Ltd & Anor v Birmingham City Council [2013] EWHC 3018 (Ch) (20 August 2013)

Martineau Galleries No1 Ltd & Anor v Birmingham City Council [2013] EWHC 3018 (Ch) (20 August 2013)

The lease requires the valuer, when assessing rental value for rent review under clause 7(h), to have regard to the actual rents receivable for sublet parts and not to assume vacant possession; the valuer may consider the terms of subleases and is not precluded from considering management costs and voids. For vacant parts under clause 7(j), the valuer may determine whether to value the premises as a whole or in parts, as would secure the highest open market rent, and may have regard to management costs and voids.

Citation
[2013] EWHC 3018 (Ch)
Parties
Claimant: Martineau Galleries No.1 Limited; Claimant: Martineau Galleries No.2 Limited; Defendant: Birmingham City Council
Jurisdiction
England and Wales
Judgment Date
20 August 2013
Procedural Posture
Chancery Division Lease Construction Dispute / Judgment on Construction of Rent Review Provisions
Outcome
Declarations to be formulated in accordance with the court's rulings; MG's construction of clause 7(h) accepted; BCC's restrictive construction rejected.
Legal Topics
Rent Review, Lease Construction, Valuation of Sublet Premises, Vacant Possession, Developer's Lease
Property Law Landlord and Tenant Rent Review Lease Construction Valuation of Sublet Premises Vacant Possession Developer's Lease

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Parties

Martineau Galleries No.1 Limited

Claimant

Martineau Galleries No.2 Limited

Claimant

Birmingham City Council

Defendant

Procedural Posture

Chancery Division Lease Construction Dispute / Judgment on Construction of Rent Review Provisions

Legal Issues

  1. 1 Whether clause 7(h) of the lease requires valuation of sublet parts on the basis of vacant possession or subject to existing subtenancies
  2. 2 Whether the valuer must assume vacant possession for vacant parts under clause 7(j)
  3. 3 Whether the valuer can consider management costs and voids in valuation

Ratio Decidendi

The lease requires the valuer, when assessing rental value for rent review under clause 7(h), to have regard to the actual rents receivable for sublet parts and not to assume vacant possession; the valuer may consider the terms of subleases and is not precluded from considering management costs and voids. For vacant parts under clause 7(j), the valuer may determine whether to value the premises as a whole or in parts, as would secure the highest open market rent, and may have regard to management costs and voids.

Court Disposition

Declarations to be formulated in accordance with the court's rulings; MG's construction of clause 7(h) accepted; BCC's restrictive construction rejected.

Orders

  • Parties to formulate appropriate declarations reflecting the court's rulings on the construction of clauses 7(h) and 7(j).
  • Valuer is not required to assume vacant possession for sublet parts under clause 7(h).