Outer House case concerning a rent review under a lease of premises in Helensburgh.  The landlords were the trustees of a pension fund. The tenants were Argyll and Bute Council.

On 19 July 2010 a surveyor wrote to the Council purporting to act for the landlord in relation to a rent review of the property and specifying the revised fair market rent for the property was £58k. The letter contained several errors (including naming an entirely different company as landlord and stating an incorrect review date).  On 24 August 2010 the surveyor again wrote to the Council in relation to the rent review of the property and specifying the rent but this time correcting the errors in the previous letter.

The Council did not serve a counter notice but continued to pay the rent payable prior to the review and the trustees sought declarator that the rent had been effectively reviewed.

Lord Menzies held that the errors contained in the letter dated 19 July were failures to comply with the fundamental requirements of the lease and the letter did not operate as an effective rent review notice.  However, the second letter did satisfy those requirements. The Council‘s argument that it was also invalid as it had not been signed by an officer of the landlord (as specified in the notice clause of the lease) was rejected by Lord Menzies as this was not a mandatory requirement; the provisions of the notice clause not suggesting that different methods of service would result in invalidity.

After considering the rent review clause as a whole, Lord Menzies also found that time was of the essence in relation to the 3 month period by which any counter notice (requiring determination of the rent by an independent surveyor) had to be served by the Council in terms of that clause. The failure of the Council to serve a counter notice within that period meant that the rent had been effectively reviewed at the review date.

The full report is available from Scottish Courts here.

(See also appeal in the Inner House here.)

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