Gyle Shopping Centre General Partners Limited Against Marks And Spencer Plc
| Jurisdiction | Scotland |
| Judge | Lady Paton,Lady Smith,Lord McGhie |
| Neutral Citation | [2016] CSIH 19 |
| Date | 16 March 2016 |
| Docket Number | CA190/13 |
| Court | Court of Session |
| Published date | 16 March 2016 |
SECOND DIVISION, INNER HOUSE, COURT OF SESSION
[2016] CSIH 19
CA190/13
Lady Paton
Lady Smith
Lord McGhie
OPINION OF THE COURT
delivered by LADY PATON
in the cause
GYLE SHOPPING CENTRE GENERAL PARTNERS LIMITED
Pursuers and Respondents;
against
MARKS AND SPENCER PLC
Defenders and Reclaimers:
Pursuers and Respondents: Lindsay QC; HBJ Gateley
Defenders and Reclaimers: Murphy QC, E Robertson; DWF LLP
16 March 2016
Shopping centre: dispute over the proper construction of a commercial lease
[1] The owners of the Gyle Shopping Centre (the pursuers) wished to lease premises to a new retail tenant, namely Primark Stores Ltd (“Primark”). It was proposed that Primark should occupy not only several retail units in the central building, but also a new extension which would be built projecting beyond the straight-line frontage of the shopping centre such that part of it would be built on car-parking and pedestrianised areas. The shopping centre management committee, including one representative from the defenders (“M&S”) approved the proposal. The committee considered that Primark would bring more custom to the area, and would be beneficial to the centre.
[2] The pursuers sought the consent of the two anchor tenants, namely M&S and Morrisons plc, formerly ASDA (“Morrisons”). Each refused their consent. The pursuers raised the current action in the Court of Session.
Debate and opinion dated 25 March 2014
[3] A debate took place concerning inter alia the status and powers of the management committee. The pursuers were unsuccessful in arguing that M&S had already, via the management committee, given unqualified written consent to the project (Lord Tyre’s opinion dated 25 March 2014, [2014] CSOH 59). However in that opinion, the Lord Ordinary made the following obiter observation:
“[37] Although I was not specifically addressed on it, it seems to me that an appropriate procedure may be found in Clause 24, which applies to ‘works within the Mall or Shared Parts’ that are not carried out by the Management Committee under Clause 77. Provision is made by Clause 24.2 for the giving of consent – or of written confirmation that they do not object – by the Represented Parties [M&S, Morrisons, and the pursuers]. At paragraph 13 above, I set out the terms of Clause 24.10. I mention this sub-clause in particular because it appears to me to make clear that the parties intend Clause 24 to be capable of applying inter alia to works which effect a permanent alteration to the layout of the shopping centre.”
While disagreeing with that approach, M&S did not appeal the decision, as they had been successful. The obiter remark accordingly stood unchallenged.
Pursuers’ use of Clause 24.2 by letter dated 5 June 2014
[4] Clause 24.2, referred to by the Lord Ordinary, provides:
“24.2 Except in case of emergency or where such works are carried out by the Management Committee pursuant to the duties of the Management Committee under Clause 77 hereof, such works shall not be carried out unless all of the Represented Parties [including inter alios M&S] either previously consent that they respectively accept that such works will not render the Mall or the Shared Parts materially less adequate, materially less commodious or materially less convenient to them respectively than the Mall and the Shared Parts as existing immediately prior to the commencement of such works (which consents shall not be unreasonably withheld) or previously confirm in writing that they do not object to such works.”
[5] The pursuers decided to adopt a Clause 24.2 approach. They sent M&S a letter dated 5 June 2014 in inter alia the following terms:
“ … Clause 24 of the Lease applies in respect of any works within the Mall or the Shared Parts all as defined within the Lease. As has previously been outlined in correspondence with your solicitors, it is our clients’ primary position that you have already provided their unqualified written consent to the construction of a new building to be leased to Primark Stores Limited, and to the works associated with this development.
In the event that you have not already confirmed that you do not object to this proposed development, we now, on behalf of and as instructed by the Gyle, seek your consent in accordance with Clause 24.2 of the Lease …
As you will be aware, Clause 24.2 provides as follows:-
[The Clause is then quoted.]
In relation to the proposed works, please find enclosed the Planning Decision Notice … together with the accompanying drawings … The scope of the proposed works has not altered.
Without prejudice to any consent which may be found to have already been provided, please now advise by return whether you accept that the proposed works will not render either the Mall or the Shared Parts materially less adequate, materially less commodious, or materially less convenient to them than they are prior to said works taking place …
In order to allow you to consider this request, it may also be of assistance to have regard to the Witness Statement by Kenneth Williamson lodged by the Gyle as part of the ongoing court action. This provides an independent analysis by a qualified architect on the impact of the proposed works …
You will of course be aware that the consent being sought in terms of Clause 24.2 shall not be unreasonably withheld, all in accordance with the Lease. As such, in the absence of a substantive response now being received without delay, the Gyle will have no option but to conclude that said consent is being refused, which refusal shall be unreasonable and therefore in breach of the Lease …”
[6] M&S did not consent.
Proof before answer in December 2014 and opinion dated 12 February 2015
[7] The pursuers then adjusted and amended their pleadings to include the following declarator:
“1.4 Esto the defender has not already confirmed that it does not object to the Primark Development (which is denied), any refusal by it to consent to that development, all as shown on the plans produced as production 6.19 of Process, for the purposes of clause 24.2 would amount to an unreasonable withholding of consent.”
[8] A proof before answer took place in December 2014. Witnesses for the pursuers were their Gyle manager (Andrew Cronie), and an architect (Kenneth Williamson). Each gave evidence about the effect which the Primark project would have on the centre.
[9] The Lord Ordinary issued his judgment on 12 February 2015. In paragraph [2], he noted that in his earlier judgment dated 25 March 2014 he had decided inter alia that probative writing was required for any agreement that had the effect of altering the area allocated to car parking, roads, and/or pedestrian routes. In paragraph [4] he stated that:
“ … [the evidence of Mr Cronie and Mr Williamson] was to the effect that the Primark development would be beneficial to the Gyle Shopping Centre as a whole, and that the loss of car parking spaces which the development would entail would not render the shopping mall or the shared areas materially less adequate, commodious or convenient to the defender than they are at present. This evidence was largely unchallenged; the defender’s position, at the close of the proof, was that it was irrelevant because the provision of the lease concerning unreasonable withholding of consent (clause 24) did not apply to works which would effect a permanent alteration of the real rights granted to the respective parties in terms of the lease.”
[10] In paragraph [5], the Lord Ordinary focused the issues for determination as follows:
“ … (i) Does clause 24 apply to works which would have the effect of permanently removing an area of land from the Shared Areas in which the defender’s real right subsists?
(ii) If so, is the defender unreasonably withholding consent to works consisting of the proposed Primark development?”
[11] Thereafter reference was made to other clauses in the lease. It was noted inter alia that:
“the Shared Parts” meant “the Shared Services, the Shared Areas and the Common Internal Parts” (Clause 1.53);
“the Shared Areas” consisted of “the Car Parking Areas, the Roads, and the Pedestrian Routes, together with the landscaped ground within the Site” (Clause 1.52 and paragraph [8] of the opinion).
[12] In paragraph [9], the Lord Ordinary held that:
“ … the defender’s interest in the Shared Areas was properly characterised as a pertinent of the lease, conferring a real right which was enforceable against the pursuer as successor in title to EDC as owners of the subjects”.
[13] In paragraph [10] he noted that the Primark extension constructed on car parking areas and pedestrian routes would:
“effect the permanent removal from the Shared Areas of an area of land in which the defender, along with the pursuers and Morrisons, has a real right under the lease”.
[14] Paragraph [11] of the opinion summarised the pursuers’ submissions. It was contended that it was in accordance with business common sense to construe Clause 24 as being sufficiently wide as to apply to works which effected a permanent alteration to the extent of the Shared Areas. The lease was long (127 years) and parties must have contemplated some redevelopment and expansion, with an appropriate mechanism in the lease, to avoid any one party exercising a veto. Protection was given by the caveat of “not … materially less adequate, commodious or convenient”. “Any works” in Clause 24 should be interpreted broadly. Clause 24.10 made it clear that the clause extended to permanent change. The definitions in the lease of the car parking areas, the roads, and the pedestrian routes also demonstrated that changes were envisaged. Probative writing was simply the way in which consent under Clause 24.2 was to be recorded.
[15] Paragraph [12] of the opinion summarised M&S’s contentions. It was submitted that Clause 24 did not apply to works which would interfere with M&S’s heritable rights in the shared areas. For such interference...
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