The Upper Tribunal has confirmed that time cannot be made of the essence if a time has been stipulated in a lease, even if an exact time frame was unspecified. This contrasts with a case in which no time frame was stipulated and the Court was happy to imply a reasonable time frame into the lease.

A recent case before the Upper Tribunal concerned a rent review, due at the end of 2005, on a lease of residential premises. In Proxima GR Properties v Spencer [2017] UKUT 450 the landlord had not actioned the rent review and at the beginning of 2010 the tenant wrote to the landlord and stated that time was now of the essence in respect of the rent review and that the outcome of the rent review should be reported to the tenant by no later than 1 March 2010. The landlord did not respond to this letter.

Six years later the landlord appointed a surveyor and the new rent was determined at the end of September 2016. The ground rent was tripled from £50 per annum to just over £192 per annum. The tenant argued that the landlord had lost its right to increase the ground rent as it had failed to respond to its letter which had made time of the essence. In making this assertion the tenant relied upon the case of Barclays Bank Plc v Savile Estates Limited [2002] EWCA Civ 589.  In this case the lease provided that the rent was to be assessed by a surveyor appointed by the president of the RICS (on application by the landlord) if the rent had not been agreed before the quarter date. This date passed, and the tenant served notice on the landlord requiring it to make an application to RICS or otherwise lose the right to review the rent. In Barclays, the landlord failed to make an application to RICS and the Court of Appeal was happy to imply that the application had to be made within a reasonable time and, therefore, the landlord had lost its right to review.

In this current case, the First Tier Property Chamber (Residential Property) decided in the tenant’s favour and held that the tenant’s letter made time of the essence. Therefore, the landlord was debarred from commencing the rent review in 2016 and the ground rent remained at £50 per annum.

The landlord appealed to the Upper Tribunal (UT) which upheld the appeal. Of importance to the UT was that the lease stated that a surveyor could be appointed by the landlord ‘at any time after the expiration of the 20th… year of the said term.’. The key words ‘at any time’ meant that the landlord was free to appoint the surveyor at a time it chose, and it could not be forced to speed up the process by the tenant serving a notice, or by any other means.

The distinction between this and the Barclays case is that there was no time frame stipulated at all in the Barclays case, so the Court were happy to imply a reasonable time frame. In this case, a time frame was stipulated in the lease; the landlord could appoint a surveyor ‘at any time’.

Practical points

• Time is not of the essence at any step in a rent review process unless the lease expressly makes time of the essence;

• A notice can be served upon the landlord in an attempt to speed up the process (where there is delay) but this may not have any legal effect depending on the drafting of the relevant clause in the lease.

If you are a landlord and receive a notice from a tenant seeking to make time of the essence, consider the wording of the relevant clauses carefully in determining whether you need to take action.

by Siân Westby
Solicitor (Litigation)