Douglas Shelf Seven Limited V. Co-operative Wholesale Society Limited
| Jurisdiction | Scotland |
| Judge | Lord Menzies |
| Neutral Citation | [2009] CSOH 3 |
| Date | 08 January 2009 |
| Docket Number | CA32/2008 |
| Court | Court of Session |
| Published date | 14 January 2009 |
| OUTER HOUSE, COURT OF SESSION [2009] CSOH 3 | |
| CA32/2008 | OPINION OF LORD MENZIES in the cause DOUGLAS SHELF SEVEN LIMITED Pursuers; against CO-OPERATIVE WHOLESALE SOCIETY LIMITED Defenders: ________________ |
Pursuers: Abercrombie QC et J Brown; McClure Naismith
Defenders: Connal QC, solicitor-advocate; McGrigors LLP
8 January 2009
Introduction
[1] The pursuers are tenants of a shopping centre at Whitfield in Dundee. The defenders are the sub-tenants of part of that shopping centre, known as Supermarket Unit Number 1 of the shopping centre (hereafter referred to as "the premises"). The contractual relationship between the parties is governed by a sub-lease between Ravenseft Properties Limited and Johnston's Stores Limited dated 1 and 11 December 1972. In that sub-lease the expression "Landlords" currently refers to the pursuers and the expression "Tenants" currently refers to the defenders. It is not necessary for present purposes to narrate the history of how the parties came to acquire their respective interests in the premises.
[2] The premises closed in about January 1995 and have remained vacant since then. The sub-lease contained a valid and enforceable keep-open clause. The term of the sub-lease was from 15 May 1970 until 15 May 2033. In January 1999 the pursuers raised an action seeking damages from the defenders for breach of the keep-open clause. In that action the pursuers maintained that the closure of the premises since 1995 had reduced the present capital value of the centre, and had also resulted in a loss of income (in the form of rent and service charges) from the other units there. The action was raised in the Sheriff Court but subsequently transferred to the commercial roll of the Court of Session. The defenders introduced their sub-tenants Kwik Save Stores Limited as third parties to the action. After a proof lasting some 63 days, Lord Reed found in favour of the pursuers and awarded them damages for loss of capital value and also for accrued revenue losses. (The opinion of Lord Reed dated 9 March 2007 may be found at [2007] CSOH 53.)
[3] In the present action the pursuers seek (1) decree ordaining the defenders to carry out works to the premises as specified in terms of an interim schedule of dilapidations prepared by the pursuers' factors, (2) declarator that the defenders are obliged by clause (EIGHTH) (Three) (d) of the sub-lease to make payment to the pursuers' factors of sums invoiced to them in respect of the provision of security services at the premises, and (3) payment of the sums brought out in these invoices. The defenders deny that they are obliged by clause (EIGHTH) (Three) (d) of the sub-lease to pay a share of costs of security services, and they also dispute their liability at present to carry out the works specified in the interim schedule of dilapidations. The parties were allowed a debate on a variety of issues raised in the pleadings, but when the matter came before me for debate the arguments focused on these two issues.
The terms of the sub-lease
[4] The terms of the sub-lease, so far as relevant to the arguments advanced at debate, are as follows:-
"(FIFTH) The premises are let for use only as and for the retail trade or business of a supermarket primarily for the sale of food and as ancillary thereto an off-licence and for no other purpose whatever except with the prior written consent of the Landlords.......
(SIXTH) The Tenants shall take possession of and use and occupy the premises for the foregoing purpose from the said Twenty ninth day of June Nineteen hundred and seventy and shall within three months thereafter commence trading therefrom and shall continue to so use and occupy the premises and trade therefrom throughout the whole period of this Sub-Lease....
(SEVENTH) The tenants hereby accept the premises as in good and substantial order and repair as at the date of entry hereunder and in all respects as suitable and fit for the purposes for which they are let and
(One) The Tenants bind and oblige themselves to uphold, repair, maintain, renew and keep and in the event of destruction or damage, to rebuild re-instate and replace the premises and the common parts thereof and all additions thereto so that the same shall be in good and substantial repair and condition during the whole currency of this Sub-Lease all to the satisfaction of the Landlords and/or the Over-Landlords which obligations shall include the maintenance of the premises, wind and water tight;
(Two) The Tenants bind and oblige themselves at all time to keep the premises clean and to clean the widows as often as occasion shall require,
(Three) The Tenants bind and oblige themselves to keep the drainage channels appertaining to the premises free of all obstructions and
(Four) The Tenants bind and oblige themselves once in every three years during the period of this Sub-Lease and in the last year of this Sub-Lease (howsoever determined) to paint, grain, varnish and colour in a proper and workmanlike manner all the external parts of the premises.....
(EIGHTH) In addition to the said rent, the Tenants shall pay punctually during the whole period of this Sub-Lease the whole charges and others hereinafter specified and if required shall exhibit the receipts in respect thereof to the Landlords or their Agents or Factors, videlicet:-....
(Three) A share proportionate to the ratio which the floor area of the premises (calculated as aforesaid), as certified by the Landlords' Surveyors (whose decision shall be final) bears to the total floor area (calculated as aforesaid), as certified by the Landlords' Surveyors (whose decision shall be final) of the tenanted shop and supermarket units and other tenanted subjects erected or to be erected on the whole subjects (under exception of the electricity sub-station erected or to be erected thereon) or on some other equitable basis at the discretion of the landlords in each and every case, of (a) the cost, as certified by the Landlords' Surveyors (whose decision shall be final) of repairs to and renewals of the common parts of the whole subjects including (without prejudice to the foregoing generality) the cost of repairing, maintaining, cleansing and lighting of all service roads, areas, ramps and open spaces, all sewers, drains, pipes and cables, all boundary walls and/or fences and all others common to the whole subjects or any common part or parts thereof (b) the cost as certified by the Landlords' Surveyors (whose decision shall be final) of effecting and maintaining an insurance of the said common parts of the whole subjects against loss or damage by fire and the other risks specified in Clause Twelfth hereof for such sum as shall represent the full reinstatement value thereof, together with fifteen per cent of the said value for architects' surveyors', clerk of works' and other fees in relation to the reinstatement thereof, (c) the cost, as certified by the Landlord's Surveyors, (whose decision shall be final) of effecting and maintaining an insurance in respect of the said common parts of the whole subjects against general third party liability and (d) the professional charges of the Landlords' surveyors, as common factors of the whole subjects and the shopping development contained therein and thereon, in connection with the repairs, insurance and others abovementioned and in general in connection with the management and administration of the whole subjects and the said shopping development subject to the proviso that the amount payable by the Tenants hereunder in respect of their portion of the said professional charges (calculated as aforesaid) shall not, at any time, be less than such amount as shall be equivalent to Two and a half per cent of the rent payable from time to time in terms of this Sub-Lease;..."
Submissions for the defenders
[5] Mr Connal for the defenders submitted that on a proper construction of Clause (EIGHTH) (Three) (d), when read together with the whole provisions of the sub-lease, the defenders were not obliged to make any payments towards the costs of security cover for the premises. Sub-paragraphs (a), (b) and (c) of Clause (EIGHTH) (Three) obliged the defenders to pay certain costs. These included a share of the costs of repairs and renewals, maintenance, cleansing and lighting etc, and the costs of insurance cover of the common parts. Sub-paragraph (d) was in a different category and merely obliged the defenders to pay the professional charges of the Landlords' surveyors, as common factors of the whole subjects. This provision related to the surveyors' fees properly connected with the repairs and insurance referred to elsewhere in the clause, and in general in connection with the management and administration of the whole subjects. The sub-paragraph had nothing to do with the instruction of services such as the provision of security guards. Support for this view was to be found in the provision that the defenders' proportion of the surveyors' professional charges should be linked to the rent and should be a minimum of 2.5% of the rent payable under the sub-lease.
[6] As to the rules developed for the construction of documents such as this sub-lease, I was referred to Lord Reed's reviews of the authorities in Macdonald Estates Plc v Regenesis (2005) Dunfermline Limited [2007] CSOH 123, 2007 SLT 791 and Credential Bath Street Limited v Venture Investment Placement Limited [2007] CSOH 208. Applying these rules, the sub-lease was clearly a detailed document drawn up by professionals; the parties had an opportunity to spell out what was to be paid for, and had availed themselves of that opportunity. If a significant area of charge was not anticipated at the time the contract was entered into, it was not appropriate to add this in to the contract now. The contract made detailed provisions for the costs of repairs and insurances, but made no provision for the costs of security guards. Properly...
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