Background
Outer House case concerning a lease of premises at Corstorphine Road Retail Park in Edinburgh. Aviva were the Landlords and McDonald’s, the tenant. McDonald’s operated a restaurant with a drive through from the premises. Aviva entered an agreement with Costa for the construction of a coffee shop with a drive through to be situated on the car park. In terms of the lease with McDonald’s, McDonald’s consent was required for such an arrangement. McDonald’s refused consent and the question for the court was whether McDonald’s refusal of consent was unreasonable.

Arguments
Before coming to a decision, McDonald’s sought information from Aviva on the impact of the proposals on traffic and parking and instructed expert advice from ADL Traffic Engineering Limited. ADL advised that, following construction of the coffee shop, the car park would not be fit for purpose at peak times and the development would impact negatively on McDonald’s. Following that advice, McDonald’s concluded that the proposals would materially adversely affect its trade and refused consent.

Aviva obtained a report from its own engineer Dougall Baillie Associates (DBA) which indicated that sufficient parking would remain after construction of the Costa store. They argued that McDonald’s should have been aware of the DBL report and it was not reasonable for them to rely solely on the ADL report.

Decision
After noting that the onus was on Aviva to demonstrate that the refusal was unreasonable, not on McDonald’s to prove the opposite, Lord Malcolm found that Aviva had failed to show that any reasonable tenant would have granted consent. In all the circumstances there was nothing unreasonable in McDonald’s choosing to follow ADL’s views. The court did not require to decide whether it agreed with the refusal of consent or the reasons for it. McDonald’s did not need to demonstrate that the expert advice was correct, nor justify the conclusions upon which the decision to refuse consent was based. The only question was whether McDonald’s had acted in a reasonable manner. In that regard, Lord Malcolm said the following:

“[McDonald’s] did not “expert shop”, nor tailor matters to obtain the advice it wanted. There was no need for [McDonald’s] to seek another view, nor to place the ADL report before DBA before reaching a decision on what to do. There was no obligation upon [McDonald’s] to come to its own independent view on the traffic impact of the DBA proposals. It was entitled to rely on the advice received from ADL. There was nothing unreasonable about the conclusions on which the refusal of consent was based.”

The full judgement is available from Scottish Courts here.

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