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.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

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.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case concerning arbitration proceedings in respect of a lease over Pentlandfield business park at Roslin in Midlothian. Midlothian Innovation let the premises from Robert W Ferguson & Co.

The lease was for 5 years and included an option to purchase as at 1 July 2007. The parties had also signed a minute of agreement. Both of the documents stipulated that, if the option were exercised, Robert W Ferguson would grant a renunciation of the lease.  Midlothian exercised the option on 1 December 2006 and a renunciation was signed on 2 July 2007. However, on 16 August 2007 both parties signed a joint application form seeking the appointment of an arbitrator in respect of a dispute over compliance with the repairing obligations in the lease. The arbitration proceeded slowly but in 2011 Robert Ferguson (the surviving partner of the firm of Robert W Ferguson & Co) changed his position and argued that, given the granting of the renunciation, the arbitrator had no power to make an award.

Lord Woolman rejected that argument. Although the acceptance of a renunciation by a landlord implies a discharge of all claims against the tenant, the renunciation is potentially subject to any further agreement made by the parties. The parties had freedom of contract and were entitled to agree not only that they had a dispute arising out of the lease, but also that they wished to resolve it by arbitration. The signing of the joint application form demonstrated the parties’ intention to have the dispute referred to arbitration and Mr Ferguson’s participation in the proceedings until 2011 implied that he consented to the arbitration. Lord Woolman found that the arbitrator had jurisdiction and the proceedings should proceed to a conclusion.

The full judgement is available from Scottish Courts here.

(See also related decision here).

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Inner House case considering a lease of premises at Wardpark South Industrial Estate in Cumbernauld.  Batley were tenants and North Lanarkshire Council were sub-tenants.

At the centre of the dispute were works which the Council carried out to the property under a minute of agreement. In terms of the minute, the Council had to remove the works and re-instate the premises at the end of the agreement if they were required to do so by Batley.  Batley served a schedule of dilapidations after the end of the sublease.  However, the Council argued that the obligation to reinstate the premises died on the expiry of the sublease and therefore it did not require to comply.

In the Outer House, the temporary judge (Morag Wise QC) found that, in terms of the minute, there was no need for Batley to give written notice requiring removal of the works and allowed a proof to consider whether Batley had adequately conveyed its requirement for re-instatement when a surveyor acting on its behalf had telephoned the Council before the end of the sublease and indicated re-instatement would be required.

The Inner House allowed a reclaiming motion finding that the minute not only amended the sublease but also ratified provisions in the sublease. These included a provision incorporating a requirement for written notice which was contained in the lease. In the absence of such written notice there was no requirement on the Council to re-instate the premises. An attempt by Batley to claim the cost of re-instating the premises under the general repairing clause in the sublease also failed.

The full judgement is available from Scottish Courts here.

(NB: See appeal to Supreme Court)

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Sheriff Court case considering a lease of residential property at 39 Calside Road in Dumfries.  The landlords (Calmac) were seeking to recover possession of the property from the tenant at the end of the term. The issue for the court was whether the lease was a short assured tenancy (in terms of the Housing (Scotland) Act 1988).

For a tenancy to qualify as a short assured tenancy, it must be “for a term of not less than 6 months” (s 32(1) of the 1988 Act).

The lease stated:

 “The Date of Entry will be 29th April 2011. The Let will run from that date until 28th October 2011…”

The general rule for calculating time periods, known as the civilis computatio, is that the whole of the day on which a period commences is excluded and the whole of the day on which it ends is included (days being indivisible for the purposes of the rule).

Following that rule, the period of the lease in question would be one day short of 6 months. The sheriff rejected Calmac’s argument that there is a general exception to the rule for leases (on the basis that the date of entry should always be counted when computing the term of a lease).  However, after considering the authorities, he found that use of the words ‘date of entry’ in the lease meant that it had been contemplated that the tenant would take entry on that date thus creating an exception to the general rule[1].

Consequently, the lease ran from midnight on the 28^th April meaning that its term was exactly 6 months and the lease was correctly constituted as a short assured tenancy.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case concerning a GP practice operating at the Terra Nova Medical Centre on Dura Street, Dundee.  Michael John Morris and others (the pursuers) were doctors who had retired from the practice. They argued that they were the current tenants of the centre and that (following a number of changes in the composition of the practice) all bar one of the current partners and the partnership practising at the centre had no right or title to occupy the premises.  One of the original partners (and tenant under the lease), Dr Ritchie remained in the practice but chose neither to pursue the action nor raise defences to it.

The pursuers had bought the centre from the Dundee City Council in 1993 then entered a sale and leaseback transaction with MPIF Holdings Ltd in 2006. The lease contained a general prohibition on assignation and subletting but allowed assignations between partners in the practice without the landlord’s consent whilst requiring notification of assignations to the landlord. Despite the pursuers’ retirement from the practice, there had been no assignation of the lease to the new partners. Indeed the new partners had refused to accept an assignation of the lease from the pursuers. As a consequence, the pursuers and Dr Ritchie retained the tenancy obligations meaning that if the partnership failed to pay the rent, MPIF’s claim would be against the pursuers and Dr Ritchie rather than the partnership.

The new partners and partnership contended that none of the pursuers had occupied the premises as individuals and argued that the partnership paid the rent and occupied the centre with knowledge of the landlord and the agreement of the tenants (i.e. the pursuers and Dr Ritchie).  As such, a right of occupancy subsidiary to the lease (possibly similar to a licence) had been created.

Lord Woolman rejected these arguments:

“The transfer of a real right, which includes “a right to occupy or use land”, requires to be in writing: Requirements of Writing (Scotland) Act 1995 s. 1(2) and 1(7). The defenders do not point to any document in support of their claim. Even if such an agreement could be established by actings, many questions would arise about the contours of the agreement. Who are the parties? When was it made? What is its duration? Was a new agreement made each time a new partner was assumed? Can the permission be withdrawn and if so by whom – the landlord or the pursuers or both? The complete absence of specification on these points is in my view unsurprising. It demonstrates that there was no such agreement. It is also unclear how this private arrangement would fit with the Lease. I cannot see how an agreement arose which is in some way derivative of the lease, yet contradicts its terms.”

Consequently, it was held that the new partners and partnership had no right or title to occupy the centre.

Lord Woolman also rejected an argument by the new partners that the pursuers had no title to sue due to the absence of Dr Ritchie from the action. This argument was based on the rule of common property that the consent of all common owners must be obtained in decisions relating to the management of the property (including in the granting of a lease and in a removing). However, after reviewing the authorities, Lord Woolman noted a modification of the rule to the effect that a mere squatter would not be entitled to a defence based on the rule. As it had been held that the new partners and partnership were in occupation without a right, they were therefore not entitled to query the pursuers’ title to sue.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Inner House case in which Ms Kirkham sought damages from her Landlords after she tripped and fell over uneven paving slabs on her garden path. She relied both on the terms of her lease and the Occupiers Liability (Scotland) Act 1960. The claim had been rejected in the Outer House and was appealed to the Inner House.

Lease
In terms of the lease, Link undertook to:

1. Clause 5.3
   “carry out all repairs within a reasonable period of becoming aware that repairs need to be done”
2. Clause 5.4
   “carry out inspections, at reasonable intervals, of the common parts”.
3. Clause 5.8
   “keep in repair the structure and exterior of the house, including … pathways, steps or other means of access …”

 Taking each of the clauses in turn the Inner house agreed with the findings of the Outer House:

1. Clause 5.3 did not come into play unless Link was made aware of a repair requiring to be done (which had not been done). Also, on a proper construction of the clause, Ms Kirkham could not rely upon deemed knowledge.
2. Ms Kirkham’s garden path was not a common part. It was not a “common facility” shared by other tenants or residents, but rather was a dedicated access to Ms Kirkham’s property.
3. Clause 5.8 did not impose any repair obligation over and above what was to be found elsewhere in the tenancy agreement or in statute. The words “take reasonable care” did not require to be read into the clause so that there could be argued to be a breach of a duty to take reasonable care by failing to inspect the pathway regularly.

Occupiers Liability
In terms of sections 2 and 3 of the 1960 Act, Ms Kirkham was entitled to such care as, in all the circumstances of the case, was reasonable to ensure that she would not suffer injury or damage by reason of danger arising from the state of the premises. In order to succeed, Ms Kirkham would have had to establish Link’s failure to take reasonable care for her safety.  For example, she would require to show a failure to set up an adequate system of inspection, or failure to properly implement a system of inspection which was already in place.

However, in this case Mrs Kirkham failed to provide evidence as to what other landlords in the same situation as Link did by way of periodic inspection. Therefore it was not apparent what Link required to do in relation to the footpath. On the evidence available, it had not been established that the system undertaken was inadequate.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case concerning a rent review under a lease of premises in Helensburgh.  The landlords were the trustees of a pension fund. The tenants were Argyll and Bute Council.

On 19 July 2010 a surveyor wrote to the Council purporting to act for the landlord in relation to a rent review of the property and specifying the revised fair market rent for the property was £58k. The letter contained several errors (including naming an entirely different company as landlord and stating an incorrect review date).  On 24 August 2010 the surveyor again wrote to the Council in relation to the rent review of the property and specifying the rent but this time correcting the errors in the previous letter.

The Council did not serve a counter notice but continued to pay the rent payable prior to the review and the trustees sought declarator that the rent had been effectively reviewed.

Lord Menzies held that the errors contained in the letter dated 19 July were failures to comply with the fundamental requirements of the lease and the letter did not operate as an effective rent review notice.  However, the second letter did satisfy those requirements. The Council‘s argument that it was also invalid as it had not been signed by an officer of the landlord (as specified in the notice clause of the lease) was rejected by Lord Menzies as this was not a mandatory requirement; the provisions of the notice clause not suggesting that different methods of service would result in invalidity.

After considering the rent review clause as a whole, Lord Menzies also found that time was of the essence in relation to the 3 month period by which any counter notice (requiring determination of the rent by an independent surveyor) had to be served by the Council in terms of that clause. The failure of the Council to serve a counter notice within that period meant that the rent had been effectively reviewed at the review date.

The full report is available from Scottish Courts here.

(See also appeal in the Inner House here.)

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

English High Court case concerning a break option contained in a sublease between Cancer Research (the landlord) and PCE (the tenant).  PCE sought to exercise the break option which was conditional on payment of the rent up to the break date.  The break date occurred shortly after a quarter day and, after receiving an invoice for a full quarter’s rent (payable quarterly in advance) from Cancer Research, PCE sent an email to Cancer Research’s managing agents advising them that a payment had been made for the rent for the period between the quarter day to the break date and asking whether that was the correct basis for calculating the rent for that period. The managing agents did not respond.

Cancer Research then argued that the PCE had failed to terminate the lease properly contending that, to do so, PCE would have to (amongst other things) pay the full rent for the quarter in advance. The court agreed with Cancer Research.  On the September quarter day it could not be said with certainty that the sublease would terminate on the break date as the tenant may have been in breach of another condition of the break option. The clear obligation on the quarter day to pay a full quarter’s rent could not be retrospectively reduced merely because an event which occurred after that date operated to terminate the sublease from the future date.

PCE’s alternative argument based on estoppel also failed. On the facts before the court, there was no basis for finding that there was a duty on the part of the Landlord to tell the Tenant that the Landlord believed the full rent was due.

The full judgement is available from Bailii here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.