Mapeley Acquisition Co (3) Limited (in Receivership) Against City Of Edinburgh Council
| Jurisdiction | Scotland |
| Judge | Lord Doherty |
| Neutral Citation | [2015] CSOH 29 |
| Court | Court of Session |
| Docket Number | CA195/14 |
| Published date | 24 March 2015 |
| Date | 24 March 2015 |
OUTER HOUSE, COURT OF SESSION
[2015] CSOH 29
CA195/14
OPINION OF LORD DOHERTY
In the cause
MAPELEY ACQUISITION CO (3) LIMITED (In Receivership)
Pursuer;
against
CITY OF EDINBURGH COUNCIL
Defender:
Pursuer: Sandison QC; Brodies LLP
Defender: Dean of Faculty, D Thomson; Burness Paull LLP
24 March 2015
Introduction
[1] The pursuer is the proprietor of the office premises known as and forming Chesser House, 500 Gorgie Road, Edinburgh. It is the successor to the landlord’s interest in a lease of the premises between Boland Chesser Properties Limited and Lothian Regional Council for the period 1 July 1994 to 29 June 2014. The defender, as the statutory successor to Lothian Regional Council, is the successor to the tenant’s interest in the lease. The defender gave up possession on the expiry of the lease.
[2] In this commercial action the pursuer seeks payment from the defender of the sum of £8,062,006.91 with interest from 15 July 2014 until payment. Of that sum approximately £3 million relates to a claim for the replacement of items of plant and equipment. The pursuer avers that during the currency of the lease the defender did not discharge the repairing obligations which were incumbent upon it; and that on the expiry of the lease the premises were not in the state and condition they ought to have been had the defender performed its obligations under the lease. The parties are in dispute as to the nature and extent of the tenant’s obligations under the lease. The matter came before me for debate on two issues of interpretation.
[3] The first issue is whether, on a proper construction of the lease, clause 3.37.2 entitles the landlord to payment of a sum equal to the cost of putting the premises into the relevant state of repair, regardless of whether it actually intends to carry out any such work.
[4] The second issue is whether clause 3.37.1.1 obliges the tenant to replace at expiry or termination of the lease all items of plant and equipment which were on the premises at the date of entry, whatever the condition of those items at expiry or termination; or whether the tenant’s obligation is restricted to replacing, at expiry or termination, such items as are missing, broken, worn, damaged or destroyed.
[5] A third issue in relation to VAT was raised in the pleadings and in the notes of argument. Both parties indicated a preference for the court to issue an Opinion dealing with the first two issues with the third issue being left over for argument at a later stage should it prove necessary.
The lease
[6] Clause 1.2.5 defined “the Premises” under reference to Part I of the Schedule to the lease “together with” certain other matters including “all plant and equipment … from time to time in and about the same”. The tenant’s obligations were set out in clause 3. Those parts thereof relevant to the discussion before me were:
“3. TENANT’S OBLIGATIONS
The Tenant HEREBY UNDERTAKES with the Landlord and binds and obliges itself and its successors and assignees whomsoever all jointly and severally without discussing them in their order throughout the period of this Lease as follows:-
…
Re plant and equipment and service systems
3.5.1 To keep in good and substantial repair and condition and where necessary to renew and replace the plant and machinery which is within the Premises from time to time…
3.5.2 Without prejudice to Clause 3.6.1 at the cost of the Tenant to enter into such contracts as the Landlord may consider advisable with persons of repute previously approved in writing by the Landlord … for the regular maintenance, inspection, care and servicing of all such plant and machinery …
…
To repair, maintain and renew:
3.7 At all times throughout the Period of this Lease at the Tenant’s expense well and substantially to repair, maintain, renew, rebuild, and reinstate and generally in all respects keep in good and substantial condition the Premises and every part thereof with all necessary maintenance and cleansing and rebuilding and renewal works and amendments whatsoever (regardless of the age or state of dilapidation of the buildings for the time being comprised in the Premises) …
To decorate exterior
3.8 Regularly (but no more frequently than once in every five years unless the Tenant so requires) and also during the last year thereof (howsoever the same shall be determined) to paint in a proper and workmanlike manner…all outside parts of the Premises which are painted … and …to polish all outside parts of the woodwork usually polished and to restore, point and make good the brickwork, stucco and stonework where necessary…PROVIDED that the landlord shall have the option (in lieu of requiring the Tenant to carry out the work in this sub-clause provided to be done in the last year of the Lease) of requiring the Tenant to pay to the Landlord such reasonable sum as shall be certified by the Landlord’s Surveyors as being equal to the cost of carrying out such work and if the Tenant shall pay to the Landlord the sum as certified together with the Surveyors’ fees of and in connection with such Certificate within twenty eight days of demand the Landlord shall accept the same in full satisfaction of the Tenant’s liability under this sub-clause quoad the work referred to in this proviso.
To decorate interior
3.9 Regularly (but no more frequently than once in every seven years (but every three years in the case of kitchens, toilets and public areas …) unless the Tenant so requires) and also during the last year thereof (howsoever the same shall be determined) to paint … and well and sufficiently to grain, varnish, paper, plaster, whiten and distemper all the interior parts of the premises as are usually or ought to be grained, varnished, papered, plastered, whitened and distempered and generally to redecorate throughout, restoring and making good the Premises … PROVIDED that the landlord shall have the option (in lieu of requiring the Tenant to carry out the work in this sub-clause provided to be done in the last year of the Lease) of requiring the Tenant to pay to the Landlord such reasonable sum as shall be certified by the Landlord’s Surveyors as being equal to the cost of carrying out such work and if the Tenant shall pay to the Landlord the sum as certified together with the Surveyors’ fees of and in connection with such Certificate within twenty eight days of demand the Landlord shall accept the same in full satisfaction of the Tenant’s liability under this sub-clause quoad the work referred to in this proviso.
…
To remove:
3.37.1 Immediately prior to the expiration or sooner determination of the Period of
this Lease at the cost of the Tenant:-
3.37.1.1 to renew and replace any of the Landlord’s fixtures and fittings, and the forementioned items of plant and equipment which shall be missing broken , worn, damaged or destroyed with others of a similar character, condition, and quality and, without prejudice to the foregoing generality, to renew and replace the items which were present in the Premises at the Date of Entry with others of a character, condition, and quality which at the determination hereof are the modern equivalents of those provided at the Date of Entry by the Landlord.
…
3.37.2 At the expiration or sooner determination of the Period of this Lease … to remove from and leave void and redd the premises in such good and substantial condition as shall be in accordance with the obligations on the part of the Tenant contained in These Presents together with all fixtures and fittings, (excepting Tenant’s fixtures and fittings) and improvements and additions which now are or may at any time hereafter be in or about the Premises save such as the Tenant has been required to remove pursuant to Clause 3.38.1.3; Provided that if at such expiration or sooner determination the Premises shall not be in such good and substantial repair and condition then at the option of the Landlord either (i) the tenant shall carry out at its entire cost the works necessary to put the Premises into such repair and condition or (ii) the Tenant shall pay to the Landlord such reasonable sum as shall be certified by the Landlord’s Surveyors as being equal to the cost of carrying out such work and if the Tenant shall pay to the Landlord the sum a certified together with the Surveyors’ fees of and in connection with such Certificate within twenty eight days of demand the Landlord shall accept the same in full satisfaction of the Tenant’s liability under this sub-clause quoad the work referred to in this proviso. If the Landlord elects to require the Tenant to carry out the works foresaid and the Tenant defaults in so doing the Landlord shall be entitled to carry out such works at the entire cost of the Tenant and whether such works are carried out by the Tenant or in default by the Tenant as aforesaid, by the Landlord there shall in addition be paid to Landlord by the Tenant a sum equivalent to the rent which the Tenant would have received had the These Presents subsisted until the date that all such necessary works had been completed to the satisfaction of the Landlord such sum to be paid on a date being seven days from the date of the Landlord informing the Tenant that all such works have been so completed. “
The pleadings
[8] The pursuer avers that upon the expiry of the lease the premises were not in such a state of repair and condition as was in accordance with the performance of the tenant’s obligations under the lease. By letter dated 15 July 2014 the landlord exercised option (ii) of the proviso to clause 3.37.2 to seek payment from the tenant in respect of what it avers to be a sum equal to the cost of rectifying wants of repair and failure of the tenant to remove alterations and additions which it had been called upon to remove by the end of the lease. The letter enclosed a certificate by the landlord’s surveyor and a Schedule of Dilapidations. The sum certified was...
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