BRADOR PROPERTIES Ltd v BRITISH TELECOMMUNICATIONS Plc
| Jurisdiction | Scotland |
| Judgment Date | 05 September 1991 |
| Docket Number | No. 2. |
| Date | 05 September 1991 |
| Court | Court of Session (Inner House - Second Division) |
SECOND DIVISION.
Landlord and tenant—Lease—Constitution of lease—Lease prohibiting sub-let without consent of landlords which consent would not be unreasonably withheld—Whether agreement by tenants to provide third parties with "services and facilities" which included use of office constituted sub-lease—Tenants reserving right to change allocated office on 14 days' notice—Agreement providing that tenants retained possession of subjects and that agreement did not constitute lease—Whether landlords entitled to irritate lease.
In 1959 the predecessors in title of the parties entered into a lease, cl. 8 of which entitled the tenants to sub-let or assign any part of the subjects let with the consent of the landlords, which consent would not be unreasonably withheld. The claimants ("the landlords") refused consent to the respondents ("the tenants") which resulted in the tenants entering into agreements with various third parties in relation to parts of the subjects let. Under one such agreement the tenants agreed inter alia to provide a third party with the use of an office and various other facilities in the subjects in return for a fee. The tenants reserved the right to change the allocated office on 14 days' notice, to enter it at any time and for any reason. The agreement also provided that the tenants retained possession of the subjects and that the agreement did not constitute a sub-lease. Clause 14 of the lease entitled the landlords to irritate it if the tenants broke the conditions of let. The landlords purported to invoke cl. 14 on the basis that by entering into the agreements the tenants had contravened cl. 8 of the lease. The matter was referred to an arbiter. In his draft interlocutor, the arbiter intimated that he proposed to find that the tenants had entered into agreements which were sub-leases and had therefore contravened the lease. The tenants appealed to the Court of Session, arguing inter alia that the third parties were not tenants of theirs but merely business lodgers sharing accommodation with them; the third parties did not have exclusive possession of any part of the subjects; and the payment which they made by way of fee was not merely for use of property but was for services, and citing in support the English authority of Street v. MountfordELR [1985] A.C. 809.
Held (1) that the English authority was of no assistance for the purposes of the instant case since the Scottish definition of a lease was different to the definition which appeared to prevail in England; (2) that insofar as the agreement conferred upon the customer the use of part of the premises, it was clearly capable of amounting to a lease; the question of whether it did amount to one was able to be determined only when the whole provisions of the agreement were considered; (3) that it was necessary to have regard to the prohibition on alienation contained in cl. 8 which was clearly intended to restrict the power of the tenants to sub-let or assign so that it was plain that the landlords were intending to preserve the rule of delectus personae; (4) that an arrangement under which substantial possession was ceded to one or more third parties by the tenants was prima facie the sort of arrangement which the tenants were entitled to carry through only with the consent of the landlords; (5) that given that the tenants had been refused consent to sub-let, the subsequent agreements had to be examined with care to ascertain whether they had been deliberately framed as delusive devices to defeat the prohibition on sub-letting; (6) that the arbiter had been entitled to conclude that the subjects had been sufficiently identified to allow the agreement to be categorised as a sub-let, there being no reason why the subjects of let must remain the same throughout the duration of the agreement and no reason in principle why a cardinal element of a lease, the subjects, could not be determined by some agreed mechanism; and (7) that he had also been entitled to conclude that the respondents had granted sufficient possession to the third parties for the agreement to amount to a sub-let; and questionsanswered appropriately.
Brador Properties Limited ("the landlords and claimants") sought to irritate a lease of certain subjects tenanted by British Telecommunications plc ("the tenants and respondents") on the basis that the tenants had contravened the terms of the lease by sub-letting parts of the subjects without the landlords' consent. The tenants disputed the landlords' claim and the parties jointly submitted the dispute to arbitration.
The questions submitted to the arbiter were in the following terms:—"(1) Whether the respondents had contravened or failed to implement any of the conditions, provisions and restrictions contained in the lease. (2) Whether, if the respondents were in material breach of the terms of the said lease, the claimants were entitled to seek to terminate said lease as they did by the notice of termination by irritancy dated 10th February 1988. (3) Whether the claimants, in the event that the respondents were in material breach of the said lease, afforded to the tenants a reasonable opportunity of remedying said breach prior to seeking to terminate the tenancy. (4) Whether in all the circumstances a fair and reasonable landlord would seek to rely on such breach for the purpose of terminating the lease."
After hearing debate on the claimants' pleadings and after amendment thereof, the arbiter intimated a draft interlocutor in which he proposed to answer question (1) by finding that the tenants had contravened the lease and quoad ultra allowing a proof before answer.
The tenants requested the arbiter to state a case for the opinion of the Inner House of the Court of Session on whether he was entitled to find:—"(a) that the agreements entered into by the respondents and third parties and referred to on record constituted sub-leases by the respondents, (b) that the respondents have contravened or failed to implement conditions, provisions and restrictions in the lease between the parties and in particular cl. 8 thereof."
The cause came before the Second Division, comprising the Lord Justice-Clerk (Ross), Lord Murray and Lord Wylie, for a hearing thereon. The arguments of parties appear sufficiently from the opinion of the Lord Justice-Clerk (Ross).
At advising, on 5th September 1991;—
LORD JUSTICE-CLERK (Ross).—This is an appeal by stated case under sec. 3 of the Administration of Justice (Scotland) Act 1972 in an arbitration between the claimants and the respondents. In terms of a joint contract of submission the claimants and the respondents submitted to an arbiter the whole question, disputes and differences between them in respect of the meaning and construction of a lease between the parties' respective predecessors dated 30th January and 17th February 1959. In particular but without prejudice to the generality, they submitted to the arbiter the following questions: [His Lordship narrated the terms thereof as set out supra and continued thereafter.]
A statement of claim and answers for the respondents were duly lodged and after a period of adjustment the record was closed. Thereafter the arbiter heard parties in debate on their preliminary pleas. The arbiter held the claimants' pleadings to be irrelevant and lacking in specification and allowed them to lodge a motion seeking leave to amend. The claimants duly did so and after sundry procedure, in the course of which the record was amended, the arbiter again heard parties in debate on their preliminary pleas. On 3rd April 1990 the arbiter intimated to parties a draft interlocutor in which he proposed to answer question (1) put to him in para. 2 of the crave of the record by finding that the respondents had contravened or failed to implement conditions, provisions, and restrictions contained in the lease, and quoad ultra allowing parties a proof before answer of their respective averments. The draft interlocutor was accompanied by a proposed note of the arbiter's reasons. Subsequently the respondents requested the arbiter to state a case for the opinion of the Court of Session on the question of whether the arbiter would be entitled to find, as proposed by him, (a) that the agreements entered into by the respondents and third parties and referred to on record constituted sub-leases by the respondents, (b) that the respondents have contravened or failed to implement conditions, provisions and restrictions in the lease between the parties and in particular cl. 8 thereof.
The arbiter has duly stated such a case for the opinion of this court.
The lease between the parties' respective predecessors is a lease dated in 1959. In terms of cl. 3 the lease is to endure for a period of 49 years from the term of Whitsunday 1958. Clause 7 provides that the Postmaster-General shall use and occupy the subjects let and the buildings thereon solely as office premises and for ancillary purposes, or, with the prior consent of the landlord, which shall not be unreasonably withheld, for other...
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