Commercial Common Sense Revisited: Further Developments in Contract Interpretation and Commercial Leasing
| Pages | 342-348 |
| Published date | 01 September 2016 |
| Author | |
| Date | 01 September 2016 |
| DOI | 10.3366/elr.2016.0364 |
The reclaimers were landlords of commercial property which had been let to the respondent tenants. The lease had ended. The landlords claimed that at lease termination the subjects were not in good and substantial repair, as required by the lease. According to the landlords the total estimated cost of works to put the premises into the required condition was £1,051,086.25. The tenants averred that if they had carried out the works they accepted should have been carried out before lease end the capital value of the subjects would have been increased by £75,000. Even if they carried out all of the works the landlords claimed should be carried out the capital value would be increased by £175,000. The tenants claimed that no reasonable landlord would carry out the works and, in fact, believed that the landlords did not intend to do the works. As such, argued the tenants, the landlords' claim should be quantified by reference to diminution in capital value of the subjects rather than the cost of the works.
The Inner House had to consider two issues: firstly, whether the tenants' obligation at termination was limited to putting the premises into the condition in which they were accepted by the tenants at lease commencement; secondly, whether the landlords were entitled to payment of a sum equal to the cost of putting the premises into the required state of repair, regardless of whether the landlords actually intended to carry out the works.
In terms of the lease the tenants were obliged:
(Three) To accept the lease subjects in their present condition and at their own cost and expense to repair and keep in good and substantial repair and maintained, paved … in every respect all to the satisfaction of the Landlord and to replace or renew or rebuild whenever necessary the leased subjects and all additions thereto and all drains, soil and other pipes, … and parts, pertinents and others therein and thereon in at least as good condition as they are accepted by the Tenant all to the satisfaction of the Landlord and that regardless of the age or state of dilapidation of the buildings or others for the time being comprised in the leased subjects. …
(Seven) At the expiry or sooner termination of the … Lease to surrender to the Landlord the leased subjects … in...
To continue reading
Request your trial