Ashtead Plant Hire Company Ltd v Granton Central Developments Ltd
| Jurisdiction | Scotland |
| Judge | Lady Wolffe |
| Judgment Date | 21 January 2020 |
| Neutral Citation | [2020] CSIH 2 |
| Court | Court of Session (Inner House) |
| Date | 21 January 2020 |
| Docket Number | No 14 |
[2020] CSIH 2
Extra Division
Lady Wolffe
Arnold v Britton [2015] UKSC 36; [2015] AC 1619; [2015] 2 WLR 1593; [2016] 1 All ER 1; [2015] HLR 31; [2015] 2 P & CR 14; [2015] L & TR 25; [2015] CILL 3689
Barclays Bank plc v HHY Luxembourg SARL [2010] EWCA Civ 1248; [2011] 1 BCLC 336
Charrington & Co Ltd v Wooder [1914] AC 71
Co-operative Wholesale Society Ltd v National Westminster Bank plc [1995] 1 EGLR 97; [1995] 1 EG 111; [1994] EG 184 (CS); [1994] NPC 147
Goh Eng Wah v Yap Phooi Yin [1988] 2 EGLR 148; [1988] 32 EG 55
Grove Investments Ltd v Cape Building Products Ltd [2014] CSIH 43; 2014 Hous LR 35; 2014 GWD 17–327
HOE International Ltd v Andersen [2017] CSIH 9; 2017 SC 313; 2017 GWD 6–83
Jacobs v Scott & Co (1900) 2 F (HL) 70; (1899) 7 SLT 5
Ponsford v HMS Aerosols Ltd [1979] AC 63; [1978] 3 WLR 241; [1978] 2 All ER 837; (1979) 38 P & CR 270; (1978) 247 EG 1171
Rainy Sky SA v Kookmin Bank Co Ltd [2011] UKSC 50; [2011] 1 WLR 2900; [2012] 1 All ER 1137; [2012] 1 All ER (Comm) 1; [2012] Bus LR 313; [2012] 1 Lloyd's Rep 34; [2011] 2 CLC 923; [2012] BLR 132; 138 Con LR 1; [2011] CILL 3105; The Times, 18 November 2011
Ravenseft Properties Ltd v Park [1988] 2 EGLR 164; [1988] 50 EG 52; [1988] EG 120 (CS)
Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173; [2017] 2 WLR 1095; [2017] 4 All ER 615; [2018] 1 All ER (Comm) 51; 171 Con LR 1; [2017] CILL 3971; The Times, 7 April 2017
McAllister, A, Scottish Law of Leases (4th ed, Bloomsbury Professional, Haywards Heath, 2013), Ch 12
Reid, T, Essays on the Intellectual Powers of Man (J Bell, Edinburgh, 1785), Essay 1, Chs 2, 7, 8
Rennie, R, et al, Leases (W Green/Scottish Universities Law Institute, Edinburgh, 2015), paras 9.13, 27.02, 27.08
Reynolds, K, and Fetherstonhaugh, G, Handbook of Rent Review (Sweet and Maxwell, London, 1989), paras 2.4.2, 2.4.3, 4.4
Landlord and tenant — Commercial lease — Rent review — Lease providing that value of buildings or other constructions to be disregarded in calculating open market rent — Whether all buildings or constructions to be disregarded — Whether only buildings or constructions carried out at expense of tenant to be disregarded
Contract — Construction — Express term — Lease providing that value of buildings or other constructions to be disregarded in calculating open market rent — Whether all buildings and constructions to be disregarded — Whether only buildings and constructions carried out at expense of tenant to be disregarded
Ashtead Plant Hire co ltd brought an action under the commercial cause rules (Act of Sederunt (Rules of the Court of Session 1994) 1994 (SI 1994/1443 (S 69)), Ch 47) in the Court of Session seeking declarator against Granton Central Developments Ltd as to the correct interpretation of the term ‘open market rent’ in the parties' lease.
Following sundry procedure, the cause called before the commercial judge (Lord Doherty) for a debate on the defender's preliminary plea that the court had no jurisdiction to determine the dispute. At advising, on 21 November 2018, the commercial judge repelled the defender's plea of no jurisdiction and put the case out by order to discuss further procedure ([2018] CSOH 107).
Following sundry further procedure, the cause called before the commercial judge (Lady Wolffe) for a debate. At advising on 25 January 2019, the commercial judge put the case out by order for a discussion of the precise terms of the declarator to be granted. The case called by order, on 5 February 2019, and eo die the commercial judge granted declarator ([2019] CSOH 7). The defender reclaimed.
A landlord of commercial property in Granton Harbour, Edinburgh initiated a rent review. The subjects consisted of 1.34 acres of land. Although largely unbuilt on, there were certain buildings on the subjects that had been in place at the time of the lease in 1988. The term ‘open market rent’ was fundamental to review of the rent under the lease. The rent review clause of the lease provided that, in calculating the open market rent, ‘the effect on any rent of the value of any buildings or other constructions erected on or other constructions erected on and any improvements carried out to the subjects of lease’ was to be disregarded. The disregard had been inserted by way of amendment to the lease in a minute of agreement in 1990. The landlord and tenant fell into dispute as to the meaning of the disregard, and the tenant raised proceedings seeking declarator.
The tenant argued that calculation of open market rent should disregard all buildings and other constructions erected on, and improvements carried out to, the leased subjects.
The landlord argued that only those buildings, and other constructions and improvements, that had been carried out at the expense of the tenant (or his predecessors as tenant) should be disregarded. Any buildings, constructions and improvements carried out at the expense of the landlord should be taken into account.
At first instance, the commercial judge agreed with the tenant and granted declarator. The landlord reclaimed.
Held that: (1) the fundamental objective of a rent review clause was to secure that the rent remained in line with market conditions and a rent review provision would normally take into account the actual premises let, including buildings, and any departure from that required express provision (paras 23, 24, 26); (2) if the disregard was intended to exclude all buildings and other constructions, it would contradict both the basic definition of the leased subjects, which included the buildings, and also the other provisions of the rent review clause which assumed they were to be taken into account (para 33); (3) the disregard had to be construed in accordance with the fundamental purpose of the rent review clause and with commercial common sense and, when that was done, the only sensible construction was that it related to improvements undertaken, or buildings constructed by, the tenant at its cost, or by the landlord after the date of entry under the lease; unless construed in that manner, the disregard would contravene the fundamental commercial principle that obligations should normally be broadly equivalent, and would be a disproportionate burden on the landlord and would remain in existence until the end of the lease in 2096 (para 34); (4) if buildings on land were to be disregarded, an express provision was normally required; the disregard in the rent review clause had been anything but clear and its wording could be interpreted as referring only to the future and not to the past and, in those circumstances, required to be restricted in the manner suggested (paras 35, 36); (5) the disregard could not be construed as a result of striking a bad bargain, having been introduced by minute of agreement in 1990 and nothing in that agreement suggested that anything could have been given in exchange for the exclusion of buildings, and equally could not be characterised as the outcome of negotiations involving give-and-take by the parties (para 37); and reclaiming motion allowed.
Observed that: (1) commercial common sense was an important aid to the construction of contracts and commercial dealings of every sort and, in any case where a contractual provision was capable of bearing more than one meaning, the court should adopt the construction that best accorded with commercial common sense and the question for the court would be how a reasonable person in business would be likely to conduct their affairs in a particular situation (paras 12–14); and (2) there were three features of general business conduct that were frequently relevant: (i) contracts were based on the principle of consideration or exchange and it was normal to find that the obligations of one party were broadly equivalent to the obligations of the other party; (ii) parties expected to perform their obligations and for that reason would normally avoid the risk of disproportionate burdens; and (iii) predictability was generally important and for that reason parties would normally try to avoid obligations or burdens that operated in an arbitrary manner (para 16).
HOE International Ltd v Andersen 2017 SC 313, Rainy Sky SA v Kookmin Bank Co Ltd[2011] 1 WLR 2900, Grove Investments Ltd v Cape Building Products Ltd2014 Hous LR 35, Arnold v Britton[2015] AC 1619 and Wood v Capita Insurance Services Ltd[2017] AC 1173applied.
The cause called before an Extra Division, comprising Lord Menzies, Lord Drummond Young and Lord Glennie, for a hearing on the summar roll, on 8 August 2019.
At advising, on 21 January 2020, the opinion of the Court was delivered by Lord Drummond Young—
Opinion of the Court— [1] The defender is the proprietor of a commercial property at 50 West Harbour Road, Granton. The subjects are let to the pursuer, the defender being the landlord under the lease. A rent review is currently under negotiation between the parties' agents. The review is based on the open market rent of the subjects as at 28 May 2017, but the parties are unable to agree on the manner in which rent is to be calculated, having regard to specific provisions in the parties' lease agreement. In short, the pursuer claims that the calculation of open market rent should disregard all of the buildings and other constructions erected on and improvements carried out to the leased subjects. The defender, by contrast, contends that buildings and other constructions and improvements should only be disregarded to the extent that the relevant works have been carried out at the expense of the pursuer or its predecessors as tenant. To the extent that such buildings, constructions and improvements have been carried out at the expense of the defender or its predecessors as landlord, the defender contends that they should be taken into account in calculating the open market rent.
[2]...
To continue reading
Request your trial
-
Paterson v Angelline (Scotland) Ltd
...rectification was unavailable (paras 36, 37); and reclaiming motion allowed. Ashtead Plant Hire Co Ltd v Granton Central Developments Ltd 2020 SC 244, Network Rail Infrastructure Ltd v Fern Trustee 1 Ltd2022 SLT 997, Rainy Sky SA v Kookmin Bank[2011] 1 WLR 2900, Arnold v Britton[2015] AC 16......
-
Keiron David Paterson Against Angelline (scotland) Limited
...in isolation . [26] A commercially sensible constru ction should be applied (Ashs tead Plant Hire v Granton Central Developments 2020 SC 244 at paras [9]-[20]). The context may suggest an alternative to the literal or ordinary meaning of the words (Aberdeen City Council v Stewart Milne Grou......
-
The Scottish Ministers Against Scot Roads Partnership Project Ltd And Others
...where one party is in a position to break its contr act with impunity: cf Ashtead Plant Hire Co Ltd v Granton Central Developments Ltd 2020 SC 244, paras [10] to [17]; Van Oord UK Ltd v Dragados UK Ltd 2021 SLT 1317, para [20]). To that end, the court is entitled to consider the likely comm......
-
Gwr Property Co Limited Against Forrest Outdoor Media Limited
...[ 2017] AC 1173 and also to recent decisions of the Inn er House, including Ashtead Plant Hire Co Ltd v Granton Central Developments Ltd 2020 SC 244 and Van Oord UK Ltd v Draga dos UK Ltd. The relevant principles have been neatly summarised as follows: a contract must be construed objective......
-
Interpreting A Contract
...ultimately depend on the facts and circumstances of each individual case. In Ashtead Plant Hire Co Ltd v Granton Central Developments Ltd 2020 S.C. 244, the Inner House of the Court of Session observed that 'commercial common sense was an important aid to the construction of contracts and c......