Calderbank offers in the context of rent only 1954 Act disputes.
A recent case raised the very practical issue of Calderbank offers in the context of rent only 1954 Act disputes. Mr Justice Vos has provided some useful guidance in Centreland Management LLP v HSBC Bank Pension Trust (UK) Ltd 2013, 4th July as to what an arbitrator should take into account in determining whether a Calderbank offer made 9 months before his determination of rent under s.34 of the 1954 Act should be viewed as a winning or losing offer. The parties having agreed all the terms other than rent, including a backdated contractual term and rent commencement date, hived off the issue of rent to PACT. The rent awarded by the arbitrator was £69,000 per annum. The Calderbank offer was £68,000 per annum. The arbitrator ordered that each party pay its own costs. The tenant appealed the order for costs on the basis that the arbitrator should have found that the tenant had made a winning offer, as the offer should have been contrasted not with the rent as awarded, but with the market rent at the date of the offer. On the material before the arbitrator the market rent at the date of the offer would have produced a s.34 rent of just under £68,000 per annum. Vos J held that there was no requirement at law to make such an assessment as contended for by the tenant and in fact the arbitrator would have been asking himself the wrong question in considering the issue of costs if he had made such an assessment. The tenant’s offer was to be viewed as an offer for a rent as at the valuation date i.e. at the date of the arbitrator’s award and not some earlier date. The tenant could always seek to protect himself in making the offer against subsequent changes in the market e.g. by providing that the rent offered be tracked to some market indices. The landlord had done better financially overall, having regard to the retrospective rent commencement date as agreed by the parties, in rejecting the offer and proceeding with the arbitration and the arbitrator could not be criticised for rejecting the tenant’s contention.
Wayne Clark acted for the successful landlord.
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