The Gazette 1984

GAZETTE

SEPTEMBER1984

Practice Notes

under rack rent leases to be on guard against the existence of such a provision. Solicitors should ma ke absolutely sure that any client who elects to proceed despite the existence of such a provision in the rent review clause has been made aware of the full implications of their position. Such advice should be either given or recorded in writing. The question of how the Cou r ts would interpret such a clause has not arisen in Ireland yet as far as the Commi t t ee can ascertain. It has arisen in the U.K., in a case of Pugh & Ors. -v- Smiths Industries Ltd., & Ors. 264 E.G. 823 where Mr. Justice Gou l d i ng interpreted the provisions literally. The case was fully fought and argued and in a full and reasoned j udgme nt he considered the a r gume n ts that the Court should not take into account the provision requiring the existence of a rent review provision to be ignored, very carefully before ma k i ng his decision. The decision is, of course, quite logical and it seems likely that it would be followed in our Courts. • Comb i n ed Drainage Agreements occasionally turn up on titles or as acts on Searches affecting properties in the Dublin area. Such Agreements arose in order to avoid expense of connecting each house on the Estate directly to the main drain or sewer, by the Co r p o r a t i on allowing the Builder or Co n t r a c t or to ma ke an agreed connection, but indemnifying the Co r p o r a t i on against any cost or expense arising out of such Consent, because of the liability of the Co r p o r a t i on to maintain such drains or sewers, and further, the Co n t r a c t or or Builder agreed to charge the houses on the Estate with such cost and expenses. However, since Section 11 of the Local Go v e r nme nt (Sanitary Services) Act, 1948, all combined drains were deemed to be drains not sewers, for the purpose of The Sanitary Services Acts, and since that enactment, these agreements have become obsolete, as the liability for the maintenance of all householders' drains, whether combined or single private drains, devolves on the owners. There is, therefore, no further liability on the Co r p o r a t i on to maintain householders' drains which connect into the main drain or sewer. Notwithstanding that such agreements have now become obsolete, they still a pp e ar on the Title, and will remain on the Title until such time as a formal Deed of Release is executed by the Co r p o r a t i o n. Such Deeds of Charge could be deemed prior Charges and so this creates a dilemma in so far as the Building Society is concerned, by reason of Section 80 of The Building Societies Act, 1976, which prohibits the Society making an Advance where there is a prior Charge, unless such prior Charge is in favour of the Society. The Conveyancing Commi t t ee has looked at the position, as has the Joint Commi t t ee and, while it is felt, there should be a formal Release, the procedure should be a dop t ed that such Deeds be ignored, because they are of no further relevance, and are now un-enforceable. Ac c o r d i n g l y, solicitors a c t i ng for Builders or Developers should, in the case of Unregistered Title, have the Title registered in the Land Registry, and there is no Combined Drainage Agreements A Charge on Property

Trap for Solicitors in Rent Review Clauses

Every Rent Review Clause must include some formula on which the parties or an arbitrator may base their calculations as to what is the market rent of a hypothetical letting of the property leased. Most rent review clauses attempt to define in great detail the exact basis of the hypothetical letting. It is normal to provide that certain matters are to be disregarded such as the goodwill of the lessee's business or genuine improvements made by the lessee. Some rent review clauses however include a provision that in assessing the market rent upon a review the existence of the provision for the review of the rent at intervals shall be disregarded. The letting value of property to be leased lor a term of 20 years or upwards would almost certainly be substantially greater if in assessing that rent the provisions tor a review of rent were to be ignored. It is generally agreed by valuers and lawyers practising in this area that such provisions are not appropriate. The hypothetical lease for which the letting value is to be calculated should be identical in terms to the existing lease so that the rent will be calculated on the same basis as that of the existing lease. The Commi t t ee advises solicitors acting for clients taking lettings of property or purchasing property held Walter Conan Ltd., Academic-Legal-Civil-Clerical Robemakers. Telephone - 971730 - 971887

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