Salaried Staff London Loan Company Ltd v Swears and Wells Ltd
| Jurisdiction | Scotland |
| Judgment Date | 15 February 1985 |
| Date | 15 February 1985 |
| Docket Number | No. 21. |
| Court | Court of Session (Inner House - First Division) |
FIRST DIVISION.
Lord McDonald.
ContractBreach of contractRepudiation of leaseRemediesAction for payment of rent since lease repudiatedNo averments by pursuers that it was just and reasonable to enforce contractAverments by defenders that pursuer no interest to enforce contractRelevancyCompetency.
LeaseRepudiation of leaseAction of paymentWhether appropriate or competent remedy.
The landlords under a commercial lease for 35 years raised an action against the tenants in which they concluded for payment of rent from a certain date. They averred that the tenants had on that date purported to "renounce" the lease and vacated the premises and the pursuers' claim included additional rent due under a "rent review" clause. The defenders admitted their breach of contract but contended that the action was irrelevant in the absence of averments that it was just and reasonable for the pursuers to enforce the contract. The pursuers pleaded that the defences were irrelevant without averments of exceptional circumstances, in which the pursuers should be deprived of their legal remedy. The Lord Ordinary dismissed the action as irrelevant on the ground that the pursuers could not sue for implement of only one obligation under a contract. At the hearing of the reclaiming motion the defenders did not support the reasoning of the Lord Ordinary.
Held (1) that, as the pursuers sought payment of a debt admittedly due and not an equitable remedy, it was for the defenders to aver exceptional circumstances why the court should on equitable grounds refuse the pursuers their remedy.
(2) That the pursuers had a legitimate financial interest in the lease and, in any event, the lease allowed the defenders to assign their interest with the consent of the pursuers, which would not be unreasonably withheld; reclaiming motion allowed and decree de plano granted
Rankine on Leases, 3rd ed., at p. 357, approved.
Dicta of Lord Watson in Grahame v. Magistrates of Kirkcaldy (1882) 9 R. (H.L.) 91 and in Stewart v. Kennedy (1890) 17 R. (H.L.) 1, at p. 10, and of Lord Reid inWhite and Carter (Councils) Ltd. v. McGregorSC1962 S.C. (H.L.) 1, at p. 11, applied; Attica Sea Carriers v. FerrostaalUNK [1976] 1 Lloyd's Rep. 250, distinguished
Observed that different considerations might arise if the pursuers continued to raise actions for payment of rent.
Salaried Staff London Loan Company Limited raised an action against Swears and Wells Limited concluding for payment of 24,280.76 with interest on various parts of that sum from various dates. This sum represented rent and a proportion of service charges unpaid by the defenders between 15th May 1982 and 2nd February 1983, together with interest, in terms of a lease for 35 years between the precedessors in title of the pursuers, as landlords, and the defenders as tenants of subjects known as Unit E, 13c Anniesland Industrial Estate, Glasgow.
The facts appear fully in the opinion of the Lord President.
The pursuers pleaded:"1. The rent and other prestations under the said lease falling due by the defenders to the pursuers and remaining unpaid by them as condescended upon, decree therefor should be pronounced as concluded for. 2. The defenders' averments in answer being irrelevant et separatim lacking in specification, decree should be granted de plano."
The defenders pleaded inter alia:"1. The pursuers' averments being irrelevant et separatim lacking in specification, the action should be dismissed. 3. The defenders having renounced said lease and yielded up possession of the subjects they are not liable to pay rent thereafter and should be assoilzied."
On 23rd March 1984 after a procedure roll hearing, the Lord Ordinary (McDonald) sustained the first plea-in-law for the defenders and dismissed the action.
The pursuers reclaimed and the reclaiming motion was heard before the First Division on 29th January 1985.
The arguments of the parties appear fully in the opinion of the Lord President.
At advising on 15th February 1985,
LORD PRESIDENT (Emslie).In 1977 the defenders became tenants of premises on the Anniesland Industrial Estate under a commercial lease, which is reproduced in the appendix to this reclaiming motion. The ish prescribed by the lease is 1st August 2011. In 1981 the pursuers succeeded the granters of the lease and are the landlords of the premises. It is unnecessary to rehearse the whole obligations imposed upon the tenants under the lease. All that needs to be said is that inter alia they bound themselves to pay an annual rent which was subject to review at five-yearly intervals, to pay additional rent in terms of clause 2, to make certain payments all as prescribed in clause 3, and to maintain the premises, replace them if damaged, and keep them regularly painted, and insured in the joint names of the landlords and the tenants.
By letter dated 25th March 1982 the defenders purported to "renounce" the lease with effect from 31st March 1982. They vacated the premises and on 26th March 1982 handed the keys to the pursuers' factor. It is accepted that they had no conventional right to do any of these things and that by their actions they are comprehensively in breach of contract. No explanation is offered by the defenders in their pleadings for their repudiation of the lease which the pursuers have refused to accept.
In this action the pursuers seek to enforce the defenders' obligation under the lease to pay the rent and the additional rent, by concluding for payment of the rent and the additional rent which became due and payable by the defenders on various dates subsequent to their repudation of the lease and which remain unpaid as at the date when this action began. We are informed that two further actions for payment of rent for periods of time subsequent to the bringing of this action have been brought by the pursuers, and have been sisted to await the disposal of this action.
In the procedure roll to which the action was sent on the defenders' motion the Lord Ordinary sustained the defenders' first plea-in-lawa plea to the relevancyand dismissed the action. As his opinion shows he accepted that in the law of Scotland the general rule in cases of breach of contract is that the innocent party has a choice of remedy and in that connection said this: "He may sue for implement of the contract. Alternatively, he may accept the repudiation of the contract and claim damages for the breach. He cannot in the normal case be compelled to seek the alternative remedy if he does not wish to do so. This was authoritatively stated by Lord Watson in Stewart v. Kennedy (1890) 17 R. (H.L.) 1, at p. 10, in the context of a contract for the sale of a specific subject". He then went on to hold, as I understand his opinion, that the general rule does not permit innocent parties in the position of the pursuers, faced by repudiation of an entire contract, to enforce only a particular term of the contract. They must either seek specific implement of the whole contract, or accept the repudiation and claim damages. In effect, accordingly, the Lord Ordinary's decision to sustain the plea to the relevancy appears to have rested upon the view that it is not competent for the pursuers in this action merely to seek payment of unpaid rent.
In this reclaiming motion the defenders did not seek to support the Lord Ordinary's reasons for dismissing the action. They recognised, quite correctly in my opinion, that if an innocent party is entitled to refuse to recognise and accept a repudiation of a contract he is entitled to hold the party in breach of contract in this way to each and every obligation, but is not bound to sue for performance of all the obligations in one action. The hearing before us, accordingly, came to be conducted as a debate about the correctness of the result which the defenders maintained was a perfectly sound one although it was arrived at for the wrong reasons. In these circumstances, although this is a reclaiming motion for the pursuers, it will be both convenient and appropriate to begin by summarising, first of all, the submissions for the defenders.
For the defenders it was accepted that when one party to a contract repudiates it as the defenders have done in this case, making it clear that he refuses for the future to carry out his part of the contract, the general rule in the law of Scotland is that the innocent party has an option. He may accept that repudiation and sue for damages for breach of contract or, if he chooses, may disregard or refuse to accept it and then the contract remains in full effect. There is, accordingly, under the general rule a legal right in the aggrieved party to sue for implement, where implement is possible, but, said counsel for the defenders, the court has inherent power to refused on equitable grounds, to allow the aggrieved party to exercise that legal right if it would be inconvenient...
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