Stv Central Ltd V. Cbre Limited
| Jurisdiction | Scotland |
| Judge | Lord Woolman |
| Neutral Citation | [2014] CSOH 82 |
| Court | Court of Session |
| Docket Number | CA151/12 |
| Published date | 09 May 2014 |
| Date | 09 May 2014 |
| Year | 2014 |
| OUTER HOUSE, COURT OF SESSION | |
| [2014] CSOH 82 | |
| CA151/12 | OPINION OF LORD WOOLMAN in the cause STV CENTRAL LTD Pursuer; against SEMPLE FRASER LLP Defender; and CBRE LIMITED Third Party: ________________ |
Defender: Young QC, Gardiner; DWF LLP
Third Party: Connal QC (sol adv); Pinsent Masons LLP
9 May 2014
Introduction
[1] This case arises out of an error in a rent review clause in a lease. The defender has admitted liability for the error and paid a substantial sum to settle the pursuer's claim. It now seeks a contribution from the third party. The issue came before me for discussion on the Procedure Roll. In seeking dismissal of the claim, the third party submitted that the defender had not made out a relevant claim under section 3(2) of the Law Reform (Contributory Negligence) (Scotland) Act 1940. The defender maintained the contrary position. It invited me to allow a proof before answer.
[2] Between about 2003 and 2006 a consortium of companies carried out a commercial development at Pacific Quay, Glasgow. STV Central Ltd ('STV') decided to relocate there from its former premises at Cowcaddens. It instructed Semple Fraser, solicitors, and CBRE Ltd (formerly CB Richard Ellis Ltd), surveyors, to act on its behalf in securing a lease of new premises at Pacific Quay. Negotiations about the heads of terms commenced in 2003. The lease for the new premises was executed in May 2006.
[3] The landlord agreed to STV's request to fit out the new premises to a higher specification than was normal for that type of building. The extra cost was reflected in the rent, which was split into two elements: (a) the initial rent, and (b) the enhanced rent. Clause 1.1.13 set out a formula to calculate the enhanced rent over the 20 year period of the lease:
"subject to review and compounded (upwards only) at each successive anniversary ("the Relevant Date") of the Date of Entry, according to the formula R = 1 x A/B where R is the Enhanced Rent payable from and after the Relevant Date, 1 is the Enhanced Rent payable prior to the Relevant Date, A is the RPI for the date two months before the Relevant Date ... and B is the RPI for the date two months before the Date of Entry."
[4] The effect of the RPI formula was to increase the sum payable in an exponential manner. If, for example, the retail prices index increased at the rate of 3 per cent each year, STV would have been liable to pay an annual rent of £100 million in 2025. It only became aware of the true effect of the RPI formula in November 2009. On the advice of senior counsel, it decided against raising an action for rectification. Instead it entered into negotiations with the landlord to attempt to resolve matters. Following mediation in March 2012, the landlord agreed to insert a new rent formula into the lease. In return, STV became liable to pay various sums to the landlord.
[5] STV raised the present action for professional negligence against the defender shortly before Christmas 2012. It sought compensation for the losses it had incurred on the basis of breach of contract and delict. In February 2013, the defender admitted liability. Subsequently it lodged a substantial tender, which STV accepted in July 2013. Accordingly the litigation is now between the defender and CBRE.
[6] The defender traces the negotiations regarding the proposed lease at Pacific Quay back to 2003. On 9 May Sarah Clarke (STV), Simon Etchells (a partner in the defender) and Philip Reid (the managing director of CBRE) met to discuss matters. On 19 June Mr Etchells and Mr Reid, together with Joanna Campbell-Smith (also of the defender), attended a meeting with representatives of the consortium, including Jones Lang Wootton. Later the same day, Jones Lang Wootton sent Heads of Terms to Mr Reid, which he summarised in an email to STV. He copied the email to the defender.
[7] The key emails upon which the defender relies were sent in March and April of the following year. On 9 March 2004, Mr Etchells sent three emails:
09.51 He informed the Consortium's solicitors that he was asking CBRE to look at the RPI wording and Enhanced Rent provisions. Later that day he copied the email to Mr Reid.
10.03 He sent an email to Mr Reid asking "Can you comment on the RPI wording and the Cat A enhanced rent review point I make?"
11.38 He sent an email to STV and Mr Reid stating "Enhanced Rent - I think that the RPI provisions work, but I ask that CBRE look at them."
[8] CBRE employed Keith Hutchison as one of its rent review specialists. On 25 March 2004 he wrote an email commenting on one aspect of the rent review provisions in the proposed lease. He did not, however, address...
To continue reading
Request your trial
-
John Mackay Against Scottish Fire And Rescue Service And Another
...v Highland Council 2013 SLT 847 OH A J Allan (Blairnyle) Ltd v Strathclyde Fire Board [2014] CSOH 135 STV Central Ltd v Semple Fraser LLP [2014] CSOH 82 Michael &c v Chief Constable of South Wales Police [2015] 2 WLR 343 [4] Mr Dunlop opened by reminding the court that the whole circumstanc......
-
Professional Negligence: (Former) Law Firm Fails In Claim Against Surveyors
...Introduction STV Central Ltd v Semple Fraser LLP and CBRE Limited [2014] CSOH 82, Semple Fraser ('SF') failed to claim a contribution from CBRE after settling a professional negligence claim by STV relating to an erroneous rent review The Facts In 2003, STV decided to relocate to new office......