Douglas Shelf Seven Limited V. Co-operative Wholesale Society Limited+kwik Save Group Plc
| Jurisdiction | Scotland |
| Judge | Lord Reed |
| Neutral Citation | [2007] CSOH 53 |
| Published date | 09 March 2007 |
| Docket Number | CA174/03 |
| Court | Court of Session |
| Date | 09 March 2007 |
| OUTER HOUSE, COURT OF SESSION [2007] CSOH 53 | |
| CA174/03 | OPINION OF LORD REED in the cause DOUGLAS SHELF SEVEN LTD Pursuers; against CO-OPERATIVE WHOLESALE SOCIETY LTD Defenders; And KWIK SAVE GROUP PLC Third Party: ________________ |
Pursuers: Abercrombie, Q.C., Di Emidio; McClure Naismith
Defenders and Third Party: Renton, Solicitor Advocate; Dundas & Wilson, C.S.
9 March 2007
Introduction
[1] In this action the pursuers seek damages from the defenders for the breach of a keep-open clause in a lease of supermarket premises located in the Whitfield area of Dundee ("the Premises"). The Premises form the largest unit in a shopping centre ("the Centre"). The pursuers maintain that the closure of the Premises since 1995 has reduced the present capital value of the Centre, and has also resulted in a loss of income (in the form of rent and service charges) from the other units there. They seek separate awards of damages under each of those two heads of loss. The defenders accept that their lease contains a valid and enforceable keep-open clause and that the Premises have been vacant since January 1995. It emerged during the proof, however, that they nevertheless wished to argue that the clause did not impose on them an obligation to keep the Premises open, since the then landlord had consented to their granting a sub-lease. The defenders further maintain that the pursuers have not suffered any loss in consequence of any breach of the keep-open clause, and that the pursuers' losses are in any event less than the amounts claimed. They further seek to be indemnified by the third party, to whose subsidiary Kwik Save Stores Ltd ("Kwik Save") the Premises had been sub-let on terms which included a keep-open obligation and a guarantee by the third party. The third party similarly accepts that the lease contains a valid and enforceable keep-open clause, but maintains that the pursuers have not suffered any loss, or in any event that their losses are less than the amounts claimed. In its pleadings, the third party denies any obligation to indemnify the defenders. At the commencement of the proof, however, the court was informed that the defenders and the third party had resolved their differences extra-judicially, and that they would be jointly represented by the solicitor-advocate previously acting for the third party. At a later stage during the proof, it was explained that the defenders and the third party had entered into an extra-judicial agreement resolving the issues between them (in particular, as to the extent of the obligation to indemnify, given that the duration of Kwik Save's sub-lease was shorter than that of the defenders' lease), and that the solicitor advocate was instructed on behalf of both the defenders and the third party, by solicitors acting as agents for both parties [Mr Poulton, pp.159-163, 176].
[2] This litigation has a protracted history, which it may be helpful to explain at the outset. The present action was raised in the Sheriff Court in January 1999, and was remitted to this court in March of that year. In January 2000 it was sisted, pending proceedings at the instance of the present defenders (but in reality, I was informed, conducted by the present third party) for the rectification of a minute of variation of their lease. The objective of those proceedings was to have the keep-open clause removed from the lease. The present defenders were unsuccessful in those proceedings. The present litigation was then resumed in January 2004. In July 2004 the defenders and the third party each lodged a note accepting "that clause (Tenth) (Sixteen) (the keep-open clause) is a valid and enforceable Keep Open Clause". In August 2004 a proof before answer was allowed. A diet of 12 days duration was allowed, in accordance with parties' estimates. In the event, the proof occupied 63 days, and required to be heard over a number of diets during March, April, May, June, November and December 2005, and February and March 2006.
[3] At the proof, the following witnesses were led on behalf of the pursuers:
1. Mr Barrie Clapham, managing director of the pursuers, and of their parent company, Credential Holdings Ltd ("Credential Holdings").
2. Mr Robert Wallace, a resident of Whitfield since 1970, and chairman of the Whitfield Area Forum for Tenants and of the Murrayfield Area Residents' Association.
3. Mr Iain Luke MP, the Member of Parliament for Dundee East between 2001 and 2005. Mr Luke was a member of Dundee District Council and of its successor, Dundee City Council, between 1984 and 2001, Convenor of the Economic Development Committee between 1990 and 1996, Convenor of the Housing Committee between 1996 and 2001, leader of the administration between 1989 and 1992, and latterly a member of the Planning Committee.
4. Mr James Dallas, the community development worker employed by the Whitfield Inclusion Network Group since 2002.
5. Mrs Caroline Canter, a local resident since 1983, and a voluntary worker for the Whitfield Inclusion Network Group.
6. Mrs Margaret Neil, the manageress of Ladbrokes, 115 Whitfield Drive (one of the units in the Centre), since 2002.
7. Mrs Bonjekiola Majola, a local resident, a pharmacist, and the manageress of Moss Chemists (one of the units in the Centre) since 2003.
8. Mr Jonathan Reid, a chartered surveyor employed by the firm of J & E Shepherd, Chartered Surveyors, in Dundee.
9. Mr Craig Watt, a chartered surveyor employed by Edinburgh City Council, and formerly employed by J & E Shepherd in Dundee.
10. Mr John Thomson, a senior management surveyor employed by Land Securities plc, the parent company of Ravenseft Properties Ltd ("Ravenseft"), since about 1977.
11. Mr Gerard McCluskey, a chartered surveyor, and a partner in J & E Shepherd, Dundee.
12. Mr Paul Letley, a chartered surveyor, and a partner in J & E Shepherd, Dundee.
13. Mr Michael De Vos, a commercial property manager employed by J & E Shepherd, Dundee.
14. Ms Joanna Fawcett, managing director of George Street Research Ltd, Edinburgh.
15. Mr Roderick MacLean, a chartered town planner, and an associate director of DTZ Pieda Consulting, Edinburgh.
16. Mr Rushid Hussein, the postmaster at Whitfield Drive Post Office, 120 Whitfield Drive (one of the units in the Centre) since 1989, and formerly also the occupier of the newsagents at 121 Whitfield Drive (another of the units) between about 1989 and 1992.
17. Mr Andrew Oswald, a chartered surveyor, and a partner in Knight Frank, Glasgow.
18. Mr Andrew Lythgoe, a chartered surveyor, and an associate director of D B Richard Ellis Ltd, Glasgow.
19. Ms Jill Brash, a senior planning officer with Dundee City Council.
[4] The following witnesses were led on behalf of the defenders and third party:
1. Mr Mark Poulton, business director of property of Somerfield plc since 1998 (when it merged with the third party), and previously in a similar position with the third party since 1987.
2. Mr Eric Young, a chartered surveyor, and a director of Eric Young & Co, Chartered Surveyors.
3. Mr James Merry, a retired chartered surveyor, formerly the senior partner in Graham & Sibbald, Chartered Surveyors, Dundee.
4. Mrs Morag Meneer, a chartered surveyor employed by Colliers CRE, Glasgow.
5. Mr David Allison, a chartered surveyor, and the senior partner in Allison & Lightbody, Glasgow.
6. Mr Alexander Brown, a senior town planner employed by Dundee City Council.
7. Mr Alistair Todd, a chartered surveyor, and a partner in Graham & Sibbald, Dundee.
8. Mr George Nisbet, a chartered surveyor, and a partner in D M Hall, Edinburgh.
9. Mr Brian Hermiston, a chartered surveyor and chartered town planner, and a consultant with Montagu Evans, Edinburgh.
10. Mr Martin Robeson, a chartered surveyor and Fellow of the Royal Town Planning Institute, and a partner in Littman & Robeson, London.
[5] It may be helpful to say something at the outset about my assessment of the witnesses' evidence, although this is something which I shall discuss later in greater detail in relation to particular issues. In general terms, almost all the witnesses appeared to me to give their evidence honestly and to the best of their ability. One exception (so far as the latter aspect is concerned) was Mr Todd, who initially failed to attend court (despite receiving a citation), as he wished to attend a meeting with his partners instead. In consequence, the court was unable to sit. He failed to refresh his memory prior to giving evidence, and had a poor recollection of events. He also appeared to me to lack objectivity: he appeared to be endeavouring to undermine the position of the pursuers at every opportunity. It only emerged as a result of questioning during cross-examination that his firm was at the time he gave evidence acting as the defenders' managing agent in relation to the Premises. I did not consider his evidence to be reliable. Some of the other witnesses appeared to me to be more reliable than others. Mr Clapham appeared to me to give his evidence with sincerity, but did not have an entirely accurate recollection of events, and at times appeared to me to put a somewhat optimistic gloss on matters. I also have reservations about the reliability of some of the evidence given by Mr Poulton, for reasons which are explained below. Of the other lay witnesses, I found the evidence of Mrs Neil, Mrs Majola and Mr Hussein to be particularly careful, objective and well-informed. Of the chartered surveyors who were led as witnesses to fact, I found the evidence of Mr Reid, Mr Watt, Mr McCluskey, Mr Thomson, Mr Letley, Mr De Vos (who, although not qualified as a chartered surveyor, nevertheless belongs in this group) and Mrs Meneer to be straightforward and generally objective. I found the evidence of Mr Young and Mr Merry to be less persuasive, for reasons which are explained below. Of the other professional witnesses who were led as witnesses to fact, Ms Brash and Mr Brown appeared to me to be reliable....
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Douglas Shelf Seven Limited V. Co-operative Wholesale Society Limited
...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 o......