Outer House case considering the interpretation of a break clause in a lease of premises at Almondvale Office Park in Livingston.

The clause was clear in that CBS (the tenant) was required to serve notice exercising the break and pay a lump sum before terminating the lease. However words had been omitted from a third part of the clause and, although a third and additional requirement appeared to be intended, it was unclear what it was.

CBS sought to exercise the break, served the notice and paid the lump sum. However, RPS (the landlord) argued that CBS had not validly terminated the lease contending that payment in respect of repairs required to be made in terms of the clause before CBS could terminate. (A schedule of dilapidations had been served on CBS by RPS prior to the termination but the parties had been unable to agree the sum due.) In RPS’s view the third part of the clause had three possible meanings. These were that: prior to the termination date, the tenant had to either (a) pay and perform all its obligations in full; or (b) pay all its monetary obligations; or (c) pay all sums over and above the lump sum.

In the first place Lord Woolman found that omission of words left the third part of clause with no natural meaning. In the second place, when considering what a reasonable person would have understood the clause to mean, although use of the words “in addition” did indicate that a third requirement was intended, omission of the words meant that it was not clear what the requirement was (the fact that RPS had offered three possible meanings in itself suggested this).  As such, it was not possible to interpret the clause as imposing a third obligation on CBS prior to termination of the lease.

The full judgement is available from Scottish Courts here.

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