Aberdeen City Council V. Stewart Milne Group Limited
| Jurisdiction | Scotland |
| Judge | Lord Clarke,Lord Hardie,Lord Drummond Young |
| Neutral Citation | [2010] CSIH 81 |
| Docket Number | CA41/09 |
| Date | 14 October 2010 |
| Published date | 14 October 2010 |
| Court | Court of Session |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Clarke Lord Hardie Lord Drummond Young | [2010] CSIH 81 CA41/09 OPINION OF THE COURT delivered by LORD DRUMMOND YOUNG in the cause by ABERDEEN CITY COUNCIL Pursuers and Respondents; against STEWART MILNE GROUP LIMITED Defenders and Reclaimers: _______ |
Pursuers and respondents: Sandison, QC; Brodies
Defenders and reclaimers: Connall, QC, Solicitor; McGrigors LLP
14 October 2010[1] By missives concluded ultimately in August 2004 the pursuers agreed to sell to the defenders an area of land amounting to 11 acres at Cairnie, Westhill, Aberdeen. A price of £365,000 was stipulated in the missives, but this was subject to an uplift in the circumstances specified in clause 9 of the first of the missive letters, dated 6 November 2001. The circumstances in which an uplift was payable included a sale of the property by the defenders. By letter dated 30 December 2006 the defenders' agents wrote to the pursuers to intimate that the defenders had disposed of the subjects by way of sale. That sale was to another company in the defenders' group of companies, Stewart Milne Westhill Limited ("Westhill"). Other land was included in the transaction, but the consideration attributed to the subjects that originated with the pursuers was £483,020. Under the provisions of the parties' contract, certain costs (the "Allowable Costs") required to be calculated in order to calculate the uplift. The Allowable Costs were said in the defenders 'agents' letter to amount to £559,696. Because the Allowable Costs were greater than the sale proceeds, the defenders claimed that no uplift was payable in terms of clause 9. The pursuers aver in the present action that at the time of the sale the subjects were properly valued at a sum in the region of £5,670,000. If that value were used in the calculation of the uplift, the sum due to the pursuers would, it is averred, be in the region of £1.7 million.
[2] In the foregoing circumstances, the pursuers have raised an action against the defenders for declarator that, under the parties' contract, any further sum due to the pursuers in terms of clause 9 falls to be calculated by reference to the open market value of the subjects at the date of their sale by the defenders to Westhill, deducting the Allowable Costs in accordance with the parties' contract. The defenders dispute that that is the correct way to carry out the calculation; instead, they maintain that the calculation should be based on the sum actually paid by Westhill, with the result that no uplift is due. Parties were agreed that this question was capable of being resolved at debate, and the action proceeded to debate before Lord Glennie in May 2009. Lord Glennie found in favour of the pursuers and granted the declarator sought by them. The defenders have reclaimed against his interlocutor.
[3] The outcome of the parties' dispute turns upon the wording of the missives, and of clause 9 in particular. Clause 9, which is headed "Uplift", provides as follows:
"In addition to the purchase price detailed in Clause 2 hereof, the Purchasers and the Sellers have agreed that the Sellers shall be entitled to a further payment ('the Profit Share') upon the Purchasers purifying the suspensive conditions contained in Clause 4 hereof and issuing a notice to the Sellers indicating to the Sellers that the Purchasers wish to purchase the relevant part of the profit-share as defined in the Schedule to which the Sellers are entitled. The Sellers' entitlement to the relevant part of the profit-share will also be triggered by the Purchasers disposing either by selling or by granting a lease of the whole or any part of the Subjects".
The suspensive conditions contained in clause 4 include obtaining a satisfactory site survey, agreeing a detailed plan showing the precise boundaries of the subjects, obtaining outline planning permission and other standard consents, and the defenders satisfying themselves that services required for the development of the subjects were available at reasonable cost.
[4] After the initial paragraph of clause 9, the precise manner in which the Profit Share was to be calculated is set out in a number of detailed subparagraphs. These are as follows:
"9.1 To enable the profit share to be calculated, the Purchasers shall be obliged to keep separate accounts in respect of the Allowable Costs as after defined...
9.2 The profit share shall be calculated in the first instance by the Purchasers, and in the event of the Sellers disputing the Purchasers' calculations, the matter shall be referred to an independent Chartered Surveyor experienced in valuing business parks and industrial land in the Aberdeen City and Aberdeenshire areas....
9.3 In the event of the Purchasers serving a notice in respect of part only of the Subjects or in the event of the Purchasers selling or leasing part only of the Subjects after servicing, this Clause 9 shall apply to each and every such notice sale or lease under declaration that any of the Allowable Costs which relate to more than the part then being sold or leased and which cannot otherwise be equitably apportioned will be apportioned in the percentage which the area of the Subjects described in the notice, sold or leased bears to the Developable Area. If any such calculation following a notice, sale or lease produces a loss in accordance with the provisions of this Clause 9, then the Purchasers shall be entitled to deduct that loss from the Profit in respect of any other part of the Subjects which is the subject of any future notice, sale or lease.
9.4 The relevant part of the profit share due to the Sellers shall be paid by the Purchasers to the Sellers within 14 days of it being calculated in accordance with Clause 9.2 hereof or in the event of a sale 14 days after receipt of the gross sale proceeds by the Purchasers.
9.5 The purchasers shall be entitled to serve a notice to the Sellers any time after purification of the suspensive conditions in clause 4 hereof intimating that the Purchasers wish to purchase the profit share as aforesaid. Any notice served in accordance with this Clause shall specify the part of the Subjects to which it relates, the estimated profit, the Purchasers' estimate of the Open Market Valuation and the Allowable Costs.
9.6 In the event of the Sellers disputing the...
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