Decision Of The Master Of The High Court (29/01/09)
A recent decision of the Master of the High Court in which he commented upon the enforceability of rent upwards review clauses has caused some controversy. The decision related to the appointment of an arbitrator to carry out a rent review in respect of premises in Dawson Street, Dublin, held under a 35-year lease granted in 1986, with 5-yearly upwards-only rent reviews. The tenants were opposing appointment of an arbitrator on the ground that it was premature, because they wanted rulings on various interpretation issues and the legality of an upwards-only provision. The "decision" by the Master is not the same as a formal ruling by the High Court itself – only such a ruling by the court states the law and has the effect of a precedent binding other cases. Four propositions or suggestions were set out in his decision. They were as follows:
- A court could strike out (or sever from the rest of the review provisions) the upwards-only provision on the ground of public policy;
- The Oireachtas could introduce legislation similar to what the American Congress did during the 1930s to invalidate "gold" clauses in contracts. The suggestion is that similar retrospective legislation here would be upheld by the courts;
- Where there is an ambiguity in the wording of the rent review clause, the court has to chose between the alternative interpretations and this could lead to the striking down of an upwards provision;
- Arbitrators in the current climate should question the validity of upwards-only clauses and even ignore them.
A summary of Professor Wylie's views is set out here.