Construction of a rent review clause- literal interpretation – commercial common sense

The appellant tenant sought to argue that a rent review clause was ambiguous and should not be given its literal meaning as such interpretation would result in an “uncommercial” outcome. The Court of Appeal dismissed the appeal. It held that there was no ambiguity in the language of the rent review clause. The Court noted that where parties had gone to the trouble to define terms in a lease, it was all the more difficult to avoid giving effect to their chosen definition. The Court further ejected the argument that the commercial consequences of the literal interpretation showed that something had gone wrong with the language of the clause; if anything had gone wrong it was because of a failure to think through the consequences of what the parties agreed, rather than any deficiency in drafting. A failure of that kind could not be solved by the process of interpretation. The fact that a contract term was an imprudent one for a party to have agreed, or that it had worked out badly, was no reason to depart from the clear language of the contract.