Kodak Processing Companies Limited V. Shoredale Limited
| Jurisdiction | Scotland |
| Judge | Lord Osborne,Lord Emslie,Lord Carloway |
| Judgment Date | 27 August 2009 |
| Neutral Citation | [2009] CSIH 71 |
| Docket Number | XA41/08 |
| Court | Court of Session |
| Published date | 28 September 2009 |
| Date | 27 August 2009 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Osborne Lord Carloway Lord Emslie | [2009] CSIH 71 XA41/08 OPINION OF THE COURT delivered by LORD OSBORNE in an Appeal from the Sheriffdom of Glasgow and Strathkelvin at Glasgow by KODAK PROCESSING COMPANIES LIMITED Pursuers and Respondents; against SHOREDALE LIMITED Defenders and Appellants: _______ |
For Defenders and Appellants: Sanders; Fyfe Ireland LLP
27 August 2009
The background circumstances
[1] Shirlett and Tudor Estates Limited are the heritable proprietors of subjects at 719 South Street/10 to 18 Clydeholm Road, Glasgow. The pursuers and respondents are tenants under a lease, dated 23 October 1970 and 4 August 1971. By missives of let between the respondents and the appellants, the respondents sub-let the subjects to the appellants. The annual rent was £60,000, exclusive of value added tax, if any, properly chargeable thereon, payable quarterly in advance on the rent payment dates specified in the lease. Those dates were 25 March, 24 June, 29 September and 25 December. The lease provided for a rent-free period, which came to an end on 1 August 2007.
[2] Clause 7.1 of the lease between the respondents and appellants is in, inter alia, the following terms:
"7.1 Irritancy
Subject to the provisions of sections 4, 5 and 6 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 that if the rent herein provided for or any part thereof shall at any time be in arrear (whether demanded or not)...then and in any such case it shall be lawful for the Landlord at any time thereafter by notice in writing to bring this Lease to an end forthwith and to enter the Property and repossess and enjoy the same as if this Lease had not been granted but...the Landlord shall not exercise such option of forfeiture or irritancy unless and until it shall first have given, under express threat of irritancy, written notice to the Tenant and any heritable creditor (approved by the Landlord in terms of this Lease) requiring the same to remedied and the Tenant and any such permitted heritable creditor shall have failed to remedy the same within such reasonable period as shall be provided in the notice, which in the case of non-payment of rent or other sum of money shall be 14 days only...".
[3] It is a matter of agreement that the appellants failed to pay to the respondents rent which fell due to be paid on 29 September 2007, pursuant to the lease. By a notice dated 9 October 2007, the respondents required the appellants to make payment of the sum in question within fourteen days of the effective date of service upon them of the notice. The appellants did not make payment of the total sum said to be due to the respondents, as required by that notice, although they did make payment of a lesser sum. Accordingly, a further notice, dated 24 October 2007, was served upon the appellants, stating that the lease was now irritated. The respondents therefore required the appellants to remove from the subjects immediately. The appellants did not follow that course, in consequence of which the respondents raised the present action against them in Glasgow Sheriff Court. In the action, the respondents craved the court, first, to find and declare that the appellants, having allowed rent to remain unpaid had thereby incurred an irritancy of the lease; that the lease was at an end; and that the respondents were entitled to enter upon possession of the subjects. Second, they craved the court to ordain the appellants summarily to flit and remove themselves from the subjects. Third, they craved summary ejection in the event of the appellants failing to remove themselves therefrom. Fourth, they craved decree for the sum of rent said to remain unpaid. The action was defended.
[4] On 8 February 2008, the sheriff found that the defenders' and appellants' averments were irrelevant and lacking in specification; therefore in part he sustained the pursuers' and respondents' first plea-in-law, repelled the first to third pleas-in-law for the defenders and appellants and granted decree in terms of the pursuers' and respondents' craves one to four inclusive. On 22 February 2008, the sheriff sustained the pursuers' and respondents' sixth plea in law, repelled the defenders' and appellants' fourth plea-in-law and granted decree against the defenders and appellants for payment of the sum of money with interest specified in the interlocutor of that date. Against these interlocutors the appellants have appealed to this court.
[5] Among the several issues ventilated before the sheriff was the issue of the manner of service of the notice of 9 October 2007. The terms of that notice are to be seen at page 8.1 of the appendix in the appeal. In it, the respondents gave notice in terms of the lease and section 4 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985, "the 1985 Act", that the appellants were required to pay the sum of money specified to the respondents within fourteen days of the effective date of service on them of the notice. It contained a warning that, if payment was not made as required, the lease might be terminated at the instance of the respondents. That notice was served by a sheriff officer upon the appellants on 9 October 2007 in the presence of a witness, all as narrated in the execution of service reproduced at page 8.2 of the appendix.
[6] At this point it is convenient to notice the terms of section 4 of the 1985 Act, which provides:
"4(1) A landlord shall not, for the purpose of treating a lease as terminated or terminating it, be entitled to rely -
(a) on a provision in the lease which purports to terminate it, or to enable him to terminate it, in the event of a failure of the tenant to pay rent, or to make any other payment, on or before the due date therefor or such later date or within such period as may be provided for in the lease; or
(b) on the fact that such a failure is, or is deemed by a provision of the lease to be, a material breach of contract,
unless subsection (2) or (5) below applies.
(2) This subsection applies if -
(a) The landlord has, at any time after the payment of rent or other payment mentioned in subsection (1) above has become due, served a notice on the tenant -
(i) requiring the tenant to make payment of the sum which he has failed to pay together with any interest thereon in terms of the lease within the period specified in the notice; and
(ii) stating that, if the tenant does not comply with the requirement mentioned in sub-paragraph (i) above, the lease may be terminated; and
(b) the tenant has not complied with that requirement.
(3) The period to be specified in any such notice shall be not less than -
(a) a period of 14 days immediately following the service of the notice; or
(b) if any period remaining between the service of the notice and the expiry of any time provided for in the lease or otherwise for the late payment of the sum which the tenant has failed to pay is greater than 14 days, that greater period.
(4) Any notice serviced under subsection (2) above shall be sent by recorded delivery and shall be sufficiently served if it is sent to the tenant's last business or residential address in the United Kingdom known to the landlord or to the last address in the United Kingdom provided to the landlord by the tenant for the purpose of such service. ...".
[7] Before the sheriff, among the points taken on behalf of the appellants was the contention that, since section 4(4) of the 1985 Act required that any notice served under subsection (2) had to be sent by "recorded delivery" and because the notice of 9 October 2007 had not been so sent, the procedure required by section 4(2) had not been carried through. It followed that the respondents had not been entitled to irritate the lease on account of failure to pay rent by means of the irritancy notice, dated 24 October 2007. On that basis, the respondents were not entitled to a decree in terms of craves one to three of the initial writ. The sheriff, for the reasons which he gives in paragraphs [1] to [20] of his judgment, rejected that contention. In paragraph [8], the sheriff concluded that the natural and ordinary meaning of "recorded delivery" would be a reference to the Post Office recorded delivery service; however, he considered that the absence of any express mention of the Post Office in section 4(4) of the 1985 Act admitted of the possibility of other varieties of delivery which involved formal recording, such as where service was executed by a sheriff officer, who issued a certificate of execution of service. In paragraph [20] of his judgment the sheriff stated that:
"Having formed the view that the primary natural or ordinary meaning of the expression 'recorded delivery' produces absurdity I consider that the purpose of the provision shows that the secondary sense should be given to the words; a delivery by any established method which involves the making of a formal record of that delivery".
He thus rejected this particular contention of the appellants. It should be explained that he also rejected certain other contentions advanced on their behalf.
[8] In the grounds of appeal to this court, the appellants set forth a range of criticisms of the sheriff's decision. However, when the case came before us, counsel for the appellants indicated that he intended to support only that part of the grounds of appeal that related to the argument focused upon the words "recorded delivery" in section 4(4) of the 1985 Act. Accordingly it is unnecessary to be further concerned with those other parts of the grounds of appeal, which were abandoned.
[9] The ground of appeal which was supported before us was in the following terms:
"More specifically, the learned sheriff erred in the following respects:
(a) So far as material to this action, section 4 of the Law Reform (Miscellaneous Provisions)...
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