Homebase Limited V. Scottish Provident Institution
| Jurisdiction | Scotland |
| Judge | Lord Macfadyen,Lord Marnoch,Lord Abernethy |
| Date | 13 June 2003 |
| Docket Number | XA115/02 |
| Court | Court of Session |
| Published date | 13 June 2003 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Marnoch Lord Macfadyen Lord Abernethy
| XA115/02 OPINION OF THE COURT delivered by LORD MACFADYEN in the CASE FOR THE OPINION OF THE COURT OF SESSION under the Administration of Justice (Scotland) Act 1972, section 3 between HOMEBASE LIMITED First Party; against SCOTTISH PROVIDENT INSTITUTION Second Party: _______ |
Act: Martin, Q.C.; Biggart Baillie (First Party)
Alt: Cullen, Q.C.; Shepherd & Wedderburn (Second Party)
13 June 2003
Introduction
[1]The Scottish Provident Institution and Homebase Limited are respectively the landlord and the tenant of warehouse premises situated at Discovery Quay, Riverside Drive, Dundee. The lease (Part 1 of the Appendix to the Stated Case) was entered into in 1990. It contains provision for quinquennial rent review, and the parties are agreed that 8 October 2000 was a date of review within the meaning of that provision. The parties were, however, unable to agree upon the revised rent to be paid after that date, and the matter was therefore submitted to arbitration.
[2]The parties invited the arbiter to determine a preliminary question of law. They formulated that question in the following terms:
"Whether the valuation of the market rent of the Premises in accordance with Schedule Part V of the Lease ... should be based upon unrestricted non-food retail use in terms of Class 1 of the Schedule to the Town and Country Planning (Use Classes) (Scotland) Order 1997 (SI 1997 3061) being permitted within the Premises or upon the non-food retail use permitted being restricted to the sale of a range of goods normally retailed in DIY outlets, including garden centre with sales related thereto".
[3]The parties each made written submissions on that question (Parts 2 and 3 of the Appendix), and thereafter oral submissions were made at a hearing (the arbiter's minute of which is Part 4 of the Appendix). The arbiter issued a draft award (Part 5 of the Appendix) in which he proposed to answer the question in the landlord's favour, that is, to hold that the valuation should be carried out on the first of the two bases formulated in the agreed question. The tenant requested that the arbiter state a case for the opinion of this court under section 3 of the Administration of Justice (Scotland) Act 1972. The arbiter duly did so. It is convenient to defer setting out the terms of the questions which the arbiter stated for the opinion of the court until later in this Opinion.
The relevant provisions of the lease
[4]In terms of clause 2 of the lease the tenant bound itself to pay the stated yearly rent "or such higher yearly rent as may be substituted therefor in terms of the Schedule Part V".
[5]In paragraph (1) of the Schedule Part V it is provided that at the dates of review therein identified the yearly rent should be reviewed "and thereafter shall be an amount (... 'the revised rent') which shall, subject to paragraph (4) of this Part of the Schedule [which provides for 'upwards only' review], represent the market rent of the Premises at each date of review".
[6]Paragraph (2) of the Schedule Part V sets out the approach to valuation which is to be adopted in determining the revised rent at each date of review. It provides inter alia as follows:
| "Valuation The market rent of the Premises at each date of review shall be such amount as may be agreed between the Landlord and the Tenant or determined in accordance with paragraph (3) of this Part of the Schedule [which sets out the arbitration procedure] as representing the rent at which the premises might reasonably be expected to be let at the date of review as a whole for a period of years equal to whichever is the longer at the relevant date of review of the unexpired Period of this Lease or ten years on the open market as between a willing landlord and a willing tenant without payment of grassum or premium with vacant possession and upon the supposition (if not a fact) | ||
| (a) | that all parts of the Premises are then available for use for the purposes herein permitted; | |
| (b) | that the Landlord and the Tenant have complied with all the obligations imposed on them respectively under These Presents (but without prejudice to any rights of either party in regard thereto); | |
| and taking no account of:- | ||
| [five numbered considerations which need not, for present purposes, be quoted in full]; | ||
| but in all other respects on the terms and conditions of These Presents (other than as to the amount of rent but including the provisions for five yearly rent reviews herein contained)." |
[7]Clause 3 of the lease sets out the obligations undertaken by the tenant. Clause 3.2 is in the following terms:
"As to user
Not to use or permit the Premises to be used except as a non-food retail warehouse for any use falling within Class 1 of the Schedule to the Town and Country Planning (Use Classes) (Scotland) Order 1989 (with ancillary stores and offices) together with car parking, servicing and landscaping or for such other purpose or purposes as shall have been approved in writing by the Landlord which approval shall not be unreasonably withheld or delayed in the case of a use within section 74 of the Finance Act 1980 and subject always to the provisions of paragraph (15) of the Schedule Part III."
Class 1 of the Schedule to the Use Classes Order 1989, referred to in paragraph 3.2, has been superseded by Class 1 of the Schedule to the Town and Country Planning (Use Classes) (Scotland) Order 1997, which is referred to in the preliminary question put to the arbiter. Section 74 of the Finance Act 1980 relates to the construction of buildings in an Enterprise Zone, and is not relevant for present purposes. Paragraph (15) of the Schedule Part III obliges the tenant not to make use of the premises in a variety of undesirable ways, and likewise is irrelevant for present purposes.
[8]Clause 3.1 incorporates the range of tenant's obligations set out in the Schedule Part III. Of these, one is of particular significance for the purposes of the submissions made by the parties before the arbiter and before us. Paragraph (30) sets out an obligation of the tenant in inter alia the following terms:
| "Planning In relation to the Planning Acts:- | ||
| (a) | at all times during the Period of this Lease to comply in all respects with the Planning Acts ...; | |
| (b) | ...; | |
| (c) | not to do or omit or permit to be done or omitted anything relating to or affecting the Premises the doing or omission of which shall be a contravention of the Planning Acts or of any notices, orders, licences, consents, permissions and conditions (if any) granted or imposed thereunder ..." |
The Planning Acts are defined in Clause 1.2.8 as meaning the Town and Country Planning (Scotland) Acts 1972 to 1977 and the Local Government and Planning (Scotland) Act 1982, but by virtue of section 2(4) of the Planning (Consequential Provisions) (Scotland) Act 1997 the expression now falls to be construed as a reference to the current legislation, including in particular the Town and Country Planning (Scotland) Act 1997.
The relevant planning history
[9]Outline planning permission (No. D/11578) for the development which resulted in the building of the premises was granted in May 1987 by Tayside Regional Council.
[10]Detailed planning permission (No. D/12550) was issued by the City of Dundee District Council on 22 July 1987. The detailed planning permissions was for:
"Erection of superstore, retail warehouse, speciality shopping, food court, office building, heritage centre and associated car parking".
The detailed planning permission was subject to inter alia the following conditions:
| "01 | that this development shall not commence until such time as an agreement between this Authority and the owner of the land and or the applicant in accordance with the Schedule annexed hereto, in terms of Section 50 of the Town and Country Planning (Scotland) Act, 1972 has been registered. | |
| 03 | that the Shopping Mall shall be used only for purposes included within Class 1 Retail of the Town and Country Planning Use Classes (Scotland) Order 1973 unless express written permission is granted by this Authority for an alternative use." |
[11]The premises with which this case is concerned comprise the "retail warehouse" mentioned in the detailed planning permission. It is not clear what was meant in condition 03 by the "Shopping Mall". It is supposed that it was identified in plans forming part of the application for planning permission which were approved in the detailed planning permission, but these cannot be traced. The parties were agreed in proceeding on the basis that condition 03 cannot be taken to have defined the range of goods that might be sold in the retail warehouse.
[12]A section 50 agreement was entered into, although not precisely as contemplated in condition 01 of the detailed planning permission. The planning authority which was party to the section 50 agreement was not the City of Dundee District Council, but Tayside Regional Council. Although executed in February 1989, some time after both the outline planning permission and the detailed planning permission had been granted, the section 50 agreement proceeds on the narrative that the Scottish Development Agency, the owners of the site, proposed to develop it in accordance with "proposals contained in an application for planning permission being application number D/11578", i.e. the application for outline planning permission. It is to be inferred, however, that that section 50 agreement was treated by the planning authorities as satisfying condition 01 of the detailed planning permission, since the development in due course proceeded. Both parties accepted that that was so.
[13]For present purposes the relevant provision of the section 50 agreement is Clause (THIRD) which provides inter alia as follows:
| "The Agency undertakes that the undernoted restrictions shall... |
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