Sheriff court case considering the repairing obligations contained in a lease of commercial premises between (the partners and trustees of) the Bridge Street Partnership (the landlord) and William Hill (the tenant).

In terms of the lease the tenant was obliged to “render the Premises into a satisfactory tenantable state and adequate for the Tenant’s purposes” and to maintain the premises to “at least such satisfactory tenantable state”. In a subsequent clause the tenant was also required to return the premises (at the expiry of the lease) to the landlord “in such good and substantial repair and condition as shall be in accordance with the obligations undertaken by the Tenant under the Lease”. The sheriff found that this meant that William Hill was obliged to leave the premises in a satisfactory tenantable state and adequate for William Hill’s purposes as tenant. The sheriff principal allowed an appeal by the Partnership which argued that the phrase “adequate for the tenant’s purposes” referred to an obligation on the tenant to fit out the premises for its purposes rather that an obligation to leave the premises in that state.

Business common sense
The sheriff principal noted that the lease was a full repairing and insuring lease, the overall commercial purpose of which is that the landlord lets the premises in return for rent, and passes on to the tenant the whole responsibility for its upkeep and maintenance. This generally means that the landlord has little or no interest in the works which the tenant might carry out to suit its particular purposes, provided that the property is returned to the landlord at the end of the lease in its original condition. Here, there was nothing in the lease to suggest that the landlord wanted the lease returned as a licenced betting shop.

A construction of the lease as a whole
In agreeing with the Partnership’s interpretation of the lease, the sheriff principal took account of the following:

1. the lease provided that the tenant accepted the premises “in their present condition”;
2. the term “satisfactory tenantable state” had been repeated in the context of the continuing nature of the repairing obligation during the currency of the lease (rather than just at its commencement) but the reference to the tenant’s purposes had not;
3. the tenant was required to remove its fixtures and fittings on termination and, if  adequacy for the tenant’s purposes was the standard by which the repairing obligation was to be tested, it made little sense that all such fixtures and fittings required to be removed; and
4. it was impossible to see how a chartered surveyor (or, indeed, the court) could apply what were ultimately two different tests to the same premises. Part of the premises might be in a satisfactory tenantable state but not be adequate for a licensed betting shop, or vice versa.

 The full judgment is available from Scottish Courts here.

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