Co-operative Wholesale Society Limited V. (first) Ravenseft Properties Ltd And (second) Douglas Shelf Seven Ltd
| Jurisdiction | Scotland |
| Judge | Lord Macfadyen |
| Docket Number | CA41/00 |
| Date | 08 April 2002 |
| Court | Court of Session |
| Published date | 08 April 2002 |
| OUTER HOUSE, COURT OF SESSION | |
| CA41/00 | OPINION OF LORD MACFADYEN in the cause CO-OPERATIVE WHOLESALE SOCIETY LIMITED Pursuers; against (FIRST) RAVENSEFT PROPERTIES LIMITED and (SECOND) DOUGLAS SHELF SEVEN LIMITED Defenders: ________________ |
Pursuers: Ferguson, Q.C., MacColl; Dundas & Wilson
Second Defenders: Abercrombie, Q.C., Di Emidio; McClure Naismith
8 April 2002
Introduction
[1]In this action the pursuers seek rectification of a Minute of Variation which varied a Sub-Lease of a supermarket in Whitfield, Dundee. The Sub-Lease was dated 1 and 11 December 1972 (No. 6/8 of process). The Minute of Variation was dated 14 July and 19 August 1993 (No. 6/11 of process). At the date of the Minute of Variation the first defenders were the landlords and the pursuers were the tenants in the Sub-Lease. At present the second defenders are the landlords and the pursuers remain the tenants in the Sub-Lease. The action is defended only by the second defenders.
[2]For present purposes, three provisions of the Sub-Lease are relevant. Clause (FIFTH) provided that the premises were let "for use only for the retail trade or business of a supermarket primarily for the sale of food." Clause (SIXTH) was in inter alia the following terms:
"The Tenants shall take possession of and use and occupy the premises for the foregoing purpose from [29 June 1970] and shall within three months thereafter commence trade therefrom and shall continue to so use and occupy the premises and trade therefrom throughout the whole period of this Sub-Lease."
In Clause (TENTH) (Sixteen) the tenants bound and obliged themselves:
"To keep the premises open for retail trade during the usual hours of business in the locality ... the shop display windows being kept dressed in a suitable manner and in keeping with a good class shopping centre".
[3]The Minute of Variation contained a number of separate alterations to the terms of the Sub-Lease (therein referred to as "the Lease"). One of these was in the following terms:
"AND WHEREAS it has been further agreed between the Landlords and the Tenants that the provision of Clause (SIXTH) shall no longer apply Therefore the Landlords and Tenants DO HEREBY DECLARE that Clause (Sixth) of the said Lease shall be deleted and shall cease to have any force and effect".
The Minute of Variation made no provision for the deletion of Clause (TENTH) (Sixteen) of the Sub-Lease. After the last substantive variation provision, it contained the following passage:
"And save as hereby varied the whole provisions of the said Lease as varied by [certain earlier deeds] will continue in full force and effect".
[4]The rectification which the pursuers seek is the insertion into the first of the two passages quoted in paragraph [3] above of reference to Clause (TENTH) (Sixteen). The effect of that rectification, if granted, would be that the Minute of Variation deleted from the Sub-Lease not only Clause (SIXTH) but also Clause (TENTH) (Sixteen).
[5]The pursuers seek to support their conclusion for rectification with averments to the effect that in 1993 they and the first defenders were in negotiation with Shoprite Ltd ("Shoprite") with a view to the pursuers further sub-letting the supermarket to Shoprite; that Shoprite were not prepared to undertake the "keep open" obligations in the Sub-Lease; that it was therefore agreed between the pursuers and the first defenders that the entire keep open obligations would be deleted from the Sub-Lease; and that it was by oversight that the Minute of Variation failed to give effect to that common intention by referring only to Clause (SIXTH) instead of to both that clause and Clause (TENTH) (Sixteen).
[6]The second defenders dispute that it was the common intention of the pursuers and the first defenders that Clause (TENTH) (Sixteen) as well as Clause (SIXTH) should be deleted. In addition, they invoke section 9 of the Law Reform (Miscellaneous Provisions) Act 1985 ("the Act") as a defence to the pursuers' claim for rectification. Following an earlier debate, in which the matters discussed related to the relevancy of the second defenders' averments invoking section 9, a proof before answer was allowed. Thereafter the pursuers were granted leave to amend their pleadings. As a result of that amendment further issues for debate were identified. The diet of proof before answer was discharged, a fresh diet of debate was fixed, and the parties were ordered to lodge Notes of Argument.
[7]Two separate issues were identified in the Notes of Argument and were debated. One related to the relevancy of averments introduced by the pursuers invoking section 9(3) of the Act. The other related to the connected questions of (i) the relevancy of an averment that if Clause (TENTH) (Sixteen) had not formed part of the Sub-Lease at the date of a rent review arbitration in 1998 the passing rent would nevertheless have remained £20,000, and (ii) the competency of calling the rent review arbiter to give evidence on that point.
The Section 9(3) Issue
(a) The Legislation
[8]It is convenient to begin consideration of this issue by noting the relevant provisions of the Act. Section 8(1)(a) empowers the court to order rectification of a document where it is satisfied that the document, intended to express or give effect to an agreement, fails to express accurately the common intention of the parties to the agreement at the date when it was made. The power conferred by section 8(1)(a) is made subject to section 9. Section 9 applies (by virtue of subsection (2)) to a person (other than a party to the agreement) who has acted or refrained from acting in reliance on the terms of the document, with the result that his position has been affected to a material extent. Section 9(1) provides that the court shall only order rectification under section 8 where it is satisfied (a) that the interests of the person to whom section 9 applies would not be adversely affected to a material extent by the rectification, or (b) that that person has consented to the proposed rectification. No question of consent under section 9(1)(b) arises in the present case. The second defenders, however, seek to rely on section 9(1)(a) as ground for resisting the rectification sought.
[9]Following the previous debate, I held that the second defenders' averments invoking section 9(1)(a) were relevant to be admitted to inquiry before answer (see my Opinion dated 4 July 2001). At that stage, no issue under section 9(3) was raised in the pursuers' pleadings.
[10]Section 9(3) provides:
| "This section does not apply to a person - | |||
| (a) | who, at the time when he acted or refrained from acting as mentioned in subsection (2) above, knew, or ought in the circumstances known to him at that time to have been aware, that the document ... failed accurately to express the common intention of the parties to the agreement ...; or | ||
| (b) | whose reliance on the terms of the document ... was otherwise unreasonable." |
(b) The Pleadings
[11]In the amendment to their pleadings carried out after the previous debate the pursuers introduced averments invoking section 9(3). Those averments fall into two parts. The first part, which is founded on section 9(3)(a), is in the following terms:
"Separatim, the said oversight [i.e. the failure to give effect to the alleged common intention of the pursuers and the first defenders by including in the Minute of Variation a provision deleting Clause (TENTH) (Sixteen) as well as the provision deleting Clause (SIXTH)] was patent on the face of the Sub Lease and Minute of Variation and Agreement. In particular, the deletion of Clause (SIXTH) without reference to Clause (TENTH) (Sixteen) was plainly anomalous. Any experienced landlord such as the Second Defenders or their legal advisers would have recognised this anomaly. In these circumstances, the Second Defenders ought to have known (as was obvious) that the Minute of Variation and Agreement failed accurately to express the common intention of the parties to the antecedent agreement to which it purported to give effect."
The second part of the averments, which sets out the basis for invocation of section 9(3)(b), is in the following terms:
"Further and in any event, esto the Second Defenders relied on the terms of the Sub Lease as varied by the Minute of Variation and Agreement (which is not known and not admitted), such reliance was not, in the whole circumstances, reasonable. The Second Defenders made no inquiry as to the reason(s) why the Minute of Variation and Amendment deleted Clause (SIXTH) and not both Clause (SIXTH) and (TENTH) (Sixteen) of the Sub Lease. In the circumstances it would have been reasonable for the Second Defenders to make such inquiry. Had they done so the oversight in the Minute of Variation and Agreement would have been identified to them."
[12]The second defenders, in their third plea-in-law, maintain that the pursuers' averments invoking section 9(3) are irrelevant, and should not be admitted to probation. In the course of the debate, counsel for the second defenders submitted that that plea should be sustained. Counsel for the pursuers, on the other hand, argued that the plea should be repelled, and the averments remitted to proof before answer. If the relevancy of the averments remained in dispute after proof, that issue could be argued under the second defenders first plea-in-law, which is a general plea to the relevancy of the pursuers' pleadings.
(c) The Parties' Submissions
[13]Mr Di Emidio, for the second defenders, noted what he described as the pursuers' very bold averments (a) that the "oversight" was patent on the face of the Minute of Variation, and (b) that the deletion of Clause (SIXTH) without the deletion of Clause (TENTH) (Sixteen) constituted a plain anomaly which would have been recognised as such by any experienced landlord. He pointed out that the pursuers relied on no extrinsic circumstances for the...
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