Scottish Court of Session Decisions

H. E. Randall, Limited, carrying on business as boot and shoe sellers at 118b Princes Street, Edinburgh, pursuers, brought an action against Miss Margaret Sibbald Summers, the owner of the shop held on lease by the pursuers, defender, concluding for declarator that during the continuance of their lease the defender was bound not to lease any other shop in the property in Princes Street belonging to her for the purpose of being occupied for a business of a similar nature to that carried on by the pursuers; for interdict against the defender permitting anyone to occupy any part of her property for the sale of boots and shoes or from leasing or continuing to lease the premises or any part of them belonging to her at the corner of Princes Street and Castle Street to Messrs Gieve, Matthews, & Seagrove, Limited, during the currency of the lease to the pursuers, for the purpose of being occupied by them for a boot and shoe selling business, or under any terms or conditions which permitted them to carry on a boot and shoe business, and for £1000 damages.

The lease between the pursuers and defenders, after leasing to the pursuers the shop at 118b Princes Street for ten years after Whitsunday 1911, the date of entry, at a rent of £500, provided as follows:—“ Sixth. The premises hereby let are to be used by the tenants exclusively for the purposes of their business as boot and shoe sellers, including the usual accessories. During the continuance of this lease the proprietrix shall not lease any other shop in the property in Princes Street, Edinburgh, belonging to her for the purpose of being occupied for a business of similar nature.”

On 29th May and 23rd June 1916 the defender executed a lease of the shop No. 118 Princes Street, another part of her property there, to Messrs Gieve, Matthews, & Seagrove, Limited, for five years from Whitsunday 1916 at a rent of £1250, which provided:—“ Sixth. The premises hereby let shall be used by the tenants exclusively for the purposes of their business.” The lease contained no restriction as to the selling of boots and shoes.

The pursuers pleaded, inter alia—“1. The defender being bound in terms of the lease condescended on not to lease any other shop in her property in Princes Street for the purpose of being occupied for a business of a similar nature to that carried on by the pursuers, the pursuers are entitled to decree in terms of the declaratory conclusion of the summons. 2. The defender being in breach of the obligation condescended on undertaken by her in the said lease between her and the pursuers, and persisting in said breach, the pursuers are entitled to interdict as concluded for. 3. The defender being in breach of her contract with the pursuers as condescended on is liable to them in damages therefor.”

The defenders pleaded, inter alia—“4. The pursuers' averments, in so far as material, being unfounded in fact, the defender should be assoilzied from the conclusions of the summons. 5. The defender not being in breach of the provision in the lease to the pursuers founded on, decree of absolvitor should be pronounced.

On 12th July 1918 the Lord Ordinary ( Cullen), after a proof, pronounced the following interlocutor—“Finds and declares in terms of the declaratory conclusion of the summons: In respect the conclusion for

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interdict is not insisted in, dismisses said conclusion; and assoilzies the defender from the petitory conclusion of the summons: and decerns: Finds no expenses due to or by either party.”

Opinion—from which the facts of the case appear—“By a lease dated in April 1911 the defender let to the pursuers, for ten years from Whitsunday 1911, the shop 118B Princes Street, to be used by them exclusively for the purposes of their business as boot and shoe sellers, and it was thereby stipulated that during said period the defender should not lease any other shop in the property in Princes Street belonging to her ‘for the purpose of being occupied for business of a similar nature.’ The defender's said property in Princes Street includes the shop at the south-west corner of Castle Street and Princes Street, two doors further east from No. 118B. The pursuers under said lease are occupying No. 118B as a boot and shoe shop.

In 1917 the defender granted to Gieves, Limited, a lease of the corner shop until Whitsunday 1921. The pursuers complain that in doing so she committed a breach of the foresaid stipulation in their lease, and they claim damages. They say that Gieves, Limited, are permitted by their lease to carry on, and do carry on, a business of a similar nature to that of the pursuers.

Gieves, Limited, describe their business as that of ‘naval outfitters.’ Their customers are mainly persons serving in or connected with the Navy. They provide all articles of men's clothing, giving special attention to the provision of uniforms, kits, and equipments. Inter alia they sell men's boots and shoes. They do not sell ladies' or children's boots or shoes. Their boot and shoe department is an essential part of their business. While the bulk of their customers are naval, they offer to sell, and do to some extent sell, their goods, including boots and shoes, to the general public.

The first question in this case is whether the lease to Messrs Gieves entitles them to carry on a business of a similar nature to that of the pursuers' within the meaning of the stipulation in the pursuers' lease. In both businesses boots and shoes are sold. In one boots and shoes only are sold, while in the other a variety of other goods are de facto also sold.

In support of his contention that the two businesses do not fall to be regarded as similar within the meaning of the said stipulation, the defender's counsel cited the cases of Stuart v. Diplock, 43 Chan. Div. 343; Baillie v. Skinner, 105 L.T. (O.S.) 473; and Lumley, 34 L.T. (N.S.) 774. In Stuart v. Diplock, the plaintiff's business was that of a ladies' outfitter, while the other business included the selling of one or two kinds of goods which a ladies' outfitter commonly sells inter alia. In Baillie v. Skinner, the plaintiff's business was that of a general draper, while the licence given by lease to the other tenant was to sell knitting wools and worsted and woollen goods. In Lumley the plaintiff's business was that of a pastrycook and retail confectioner, while the business complained of was that of a grocer and tea-dealer, who sold a particular kind of sweetmeat to the amount of 281bs. per week. In none of these three cases did the plaintiffs succeed. The decisions went on the ratio that businesses of one kind and another do not occupy watertight compartments, so to speak, but overlap, and that the mere fact of two tradesman selling the same article does not necessarily make a substantial identity between their respective businesses viewed in their entirety.

If in the present case Gieves, Limited, had been bound by their lease to carry on in the premises let to them their business of outfitters in all its departments, I should have doubted whether the ratio of the three English cases above referred to would have applied, inasmuch as the concern of Gieves, Limited, appears to me to consist of a congeries of different businesses, each being such as is commonly carried on separately. They are tailors and clothiers, they are hosiers, they are hatters, they are boot and shoe sellers, &c. But the lease granted to them by the defender only stipulates that they shall use the shop for the purposes of their outfitting business, and under this licence I do not see any sufficient reason why they might not devote the shop exclusively to the purposes of their boot and shoe department while their other departments were carried on in neighbouring premises. The question in the case at this stage is not as to the mode in which Gieves, Limited, are de facto using their shop, but as to the licence to use it which the defender has given them under the lease which she has granted. I think that the defender has failed so to restrict Gieves, Limited, as to bind them not to carry on in their said shop a business of a similar nature to that of the pursuers, and that she has therefore contravened the stipulation before mentioned contained in the pursuers' lease.

It is right, however, that I should say that I think the defender is not reproachable with any intention to breach said stipulation. Mr Bennet Clark, who acted for her in the matter, was not aware that Gieves, Limited, sold boots and shoes when he arranged the lease in their favour, and he had no idea that their business might be said to conflict with that of pursuers.

If the defender has contravened the stipulation in the pursuers' lease, the next question is whether the pursuers have proved any damage accruing to them thereby, and, if so, how much.

The pursuers have presented their claim of damages in a peculiar way, and that as follows They approach the matter from the point of view of a person desiring a lease of the shop No. 118B, as the pursuers did in 1911. Such a desired lease might either contain a stipulation of the kind the pursuers asked for and got, or it might not. The presence or absence of the stipulation would, presumably, affect the amount of the rent. The offering tenant would not, presumably, be willing to pay so large a rent without the stipulation as he would be if he got it. Following this line the pursuers adduce three witnesses—two of them house agents in Edinburgh, and the third a

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boot and shoe merchant in Princes Street—to offer somewhat random opinions as to the difference which the presence or absence of the stipulation in the lease might be presumed to make on the amount of the rent to be expected. This, however, is all an a priori way of treating the matter. If the pursuers had been content with a lease making no stipulation, it does not in the least follow that de facto they would have found themselves worse off as regards the volume of business done by them than with a stipulation duly observed. During the whole of their lease the adjoining premises belonging to the defender might, notwithstanding the absence of any stipulation, have been occupied for businesses of a kind wholly alien to that of theirs. It may or may not be that if the defender has contravened the stipulation which the pursuers got, the pursuers have a right to throw up their lease on the ground that their shop has, by the defender's actings, come to be a shop differently conditioned in a material respect from what the contract contemplated. But that is not the question at issue. The question at issue is whether the pursuers have de facto sustained pecuniary damage through the carrying on of the business of Gieves, Limited, in the corner shop. On this question I was not favoured with any reasoned statement of claim by the pursuers' counsel, who appeared to place exclusive reliance on the a priori rent theory of damage which I have explained. And if that theory be discarded, I confess that I am unable on the evidence to find any solid ground for holding that the pursuers have de facto sustained any definable amount of pecuniary damage or that their business has been damaged at all. There is no evidence that the advent of Messrs Gieves was followed by a shrinkage in the volume of business done by the pursuers. No customer of the pursuers is said to have left them in order to resort to Messrs Gieves. It is, of course, possible that some persons may have bought boots or shoes from Messrs Gieves who if Messrs Gieves had not been there might have made their purchases at the pursuers' shop. They might equally, however, have made their purchases at the next door shop to the pursuers on the west, which is, like theirs, a general boot and shoe shop, or at some of the other boot and shoe shops in the street. It so happens that the war conditions have brought to the pursuers' shop a good deal of trade in a class of boots which Messrs Gieves as outfitters have to provide, viz., military and naval service boots. And this may make it all the more difficult for the pursuers to prove a falling off in their business or a disappointment in their expectations of business due to the advent of Messrs Gieves. But it is consistent with the evidence as it stands that de facto Messrs Gieves' business has not resulted in any injurious affection of the business of the pursuers; and I do not see how presumptions of possible injurious affection of the pursuers' business can be admitted so as to be susceptible of pecuniary valuation.

It may be, as I have said, that the pursuers have a remedy in the form of a rejection of their lease owing to their shop having become, by the defender's actings, differently conditioned from what the contract contemplated. But on the actual question raised I am unable to hold that the pursuers have proved any actual damage to their business.

The summons contains a conclusion for interdict, but this was not insisted in, the pursuers' counsel accepting an undertaking given by the defender's counsel at the Bar.

On the matter of expenses I think the fair course is to find neither party entitled to expenses.”

The pursuers reclaimed, and argued—The defender was in breach of her obligation to the pursuers. The question of the similarity of two businesses must be decided upon broad principles of common sense, and if the two businesses were so like each other as to lead to real competition, then they must be regarded as similar businesses in the sense of such a contract as the present Buckle v. Fredericks, 1890, 44 Ch D 244; Fitz v. lies, [1893] 1 Ch 77, per Lindley, L.J., and Sir A. L. Smith, L. J.; Drew v. Guy, [1894] 3 Ch 25. Patrick Thomson Limited, v. Somerville, 1917 S.C. (J.) 3, 54 S.L.R. 25, was not in point. Stuart v. Diplock, 1889, 43 Ch. D. 343, was distinguishable. It merely decided that because two businesses sold the same goods they were not necessarily similar businesses. In the present case there was substantial competition. Gieves advertised and sold all sorts of ready-made boots and shoes; they also competed with the pursuers in the naval and military trade which had sprung up. Gieves really did carry on business as bootsellers. Their outfitting business was not a unum quid but a congeries of separable businesses. Further, the pursuers were entitled to substantial damages. The protective stipulation in their lease was of a monetary value; it rendered the premises more desirable and was a reason for exacting a higher rent. The evidence on that point was uncontradicted. Further, that was the only method of ascertaining the damage open to the pursuers for the Lord Ordinary had refused them access to Gieves' books

Argued for the defender—The Lord Ordinary was wrong in holding that the defender was in breach of her obligation. To entitle the pursuers to succeed it was necessary for them to prove (1) that Gieves were boot and shoe sellers; (2) that within the boot and shoe trade they did a business similar to the pursuers; and (3) that the defender gave them a lease to enable them to carry on such a business. The pursuers' lease protected them against a similar business being carried on near them. “Similar” was to be contrasted with “same,” and meant that though the same goods were sold there might be distinctions in the class or quality of the trade done, and two businesses were only similar when the same commodities were sold and the same class of trade done. Further, the date when similarity was to be tested was the date of the contract— Dowden & Pook, Limited v. Pook, [1904] 1 K B 45, per Cozens-Hardy, L.J.

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at p. 55. Further, the pursuers' lease did not stipulate that the defender should not allow anyone to sell boots and shoes, but simply that she should not allow a similar business to be set up. In her lease to Gieves they were described as outfitters, and for the purposes of that business the premises were let to them. In both leases the respective businesses were regarded as a whole. The evidence showed that Gieves carried on a business as outfitters, and as an essential and not separable part of that business they sold boots and shoes. Theirs was not a congeries of separable businesses. Further, their business did not extend to the supply of boots or shoes for women and children; the pursuers' business did. Further, they did not sell accessories; the pursuer did. Further, their business was of a higher class than the pursuers'. Further, Gieves' business was with a particular class of customer. Further, when the pursuers' lease was entered into there was no business in military and naval boots. Gieves' civilian sales were negligible. Such clauses as the present must be strictly construed, and the mere occasional sale of such articles as the pursuers sold was not sufficient to make Gieves a business similar to theirs— Stuart v. Diplock ( cit.), per Kekewich, J., 345, and Bowen, L.J., 349, following in Baillie v. Skinner, and Fleming, Reid & Company, 1898, 105 L.T., O.S. 473, per Channell, J.; Lumley v. Metropolitan Railway Company, 1876, 34 L.T., N.S. 774; Dowden & Pook, Limited v. Pook ( cit.), Patrick Thomson, Limited v. Somerville ( cit.) and Caledonian Railway Company v. Paterson, 1898, 1 F. (J.) 24, 36 S.L.R. 60, were referred to. Buckle v. Fredericks ( cit.) and Fitz v. lies ( cit.) were distinguishable because the business in question was separable. In Drew v. Guy ( cit.) similarity was admitted. Kerr on Injunctions (5th ed.), p. 446 et seq., was referred to. If, however, the defender was in breach of her obligation the pursuers were not entitled to damages. They had chosen the wrong remedy and ought to have sued for abatement of rent. But any claim of the pursuers to damage could only be brought on the expiry of their lease, because then only could it be proved that they had suffered loss. On the facts the claim for damage had not been made out. Further, it did not follow that the defender would have been willing to take a less rent if the restrictive clause had been omitted, and that the pursuers would not have taken the shop without that clause. On the question of damages, the following were referred to— Fleming v. District Committee of the Middle Ward of Lanarkshire, 1895, 23 R. 98, 33 S.L.R. 83; Waugh v. More Nisbett, 1882, 19 S.L.R. 427; Webster & Company v. Cramond Iron Company, 1875, 2 R. 752, 12 S.L.R. 496.

At advising—