Museprime Properties Ltd v Adhill Properties Ltd (1991) 61 P & CR 111

Landlord and tenant – Contract for the sale of land – Commercial property

Facts

Three properties (940, 942, 944) contained commercial premises and residential accommodation. The rent review on each property was scheduled after five years which would be triggered by a notice. The terms in this notice would be agreed, for property 942 and 944 if the tenant did not respond within a month. The landlord requested double the amount of rent at the next review, in each of the three properties. The tenant complained in writing regarding 940 and made comments on the telephone regarding 942 and 944. Later, all three properties were sold at auction to the plaintiff. During the sale, the defendant stated that in each case, the tenant had made an offer for rent which had been rejected. This implied the rent could still be negotiated. The plaintiff later discovered that the rent on 942 and 944 was likely already agreed by way of the notices and did not complete the purchase on the basis of misrepresentation.

Issue

The court was required to consider whether the plaintiff was bound by the notice and counter-notice communication between the landlord and tenant with regards to negotiating a new price for the rent of the property by the tenant.

Held

The court found in favour of the plaintiff. It was held that with regards to each property, the trigger notices had been valid and that the oral comments made over the telephone in relation to property 942 and 944 could not be considered as effective counter-notices. On this basis, the plaintiff could rely upon the misrepresentation of the defendant with regards to the negotiation of the rent for the properties.