Scottish Court of Session Decisions

[1] This action has been brought and a counterclaim tabled in order to determine which of the parties is liable in damages for breach of contract as undernoted. The Note of Argument for the defender principally sought dismissal, but since that contention proceeded upon a misapprehension of the missives hereafter mentioned, senior counsel restricted his argument to contending that certain averments should not be remitted to probation. Senior counsel for the pursuer sought dismissal of the counterclaim.

[2] By offer and acceptance, both dated 26 August 1999, the parties entered into missives whereby the defender agreed to lease to the pursuer the subjects 29-35 Constitution Street, Leith. The offer incorporated a draft lease which was annexed and signed as relative thereto. So far the matters are clear. Thereafter confusion extends to both the pleadings and the Note of Argument presented. In terms of the missives (7/1 of process) the date of entry was defined as being either "31 January 2000 or the date following three working days after the purification of the conditions" (in Condition 2 of the document) "whichever is the earlier date or such other date as may be agreed between the parties in writing". The completion date was defined as, "the date of entry". The provision of a later completion date being one on which the tenants took entry to the subjects under the lease in terms of Condition 6, does not apply to the present circumstances. The rent was stipulated as £45,000 per annum and in terms of the draft lease (which was to bind the parties), was payable by equal quarterly payment in advance on the quarter days of 28 February, 28 May, 28 August and 28 November. There was provision for a proportionate amount of rent due payable from the date of entry until the day preceding the quarter day next following. In this case, because of the terms of the draft lease, it was only the sum from the date of entry to 27 February which was due on actual entry.

[3] Reading the averments, what appears to have happened is that the pursuer thought he required to purify or waive conditions as mentioned in the date of entry definition which he purported to do on 31 January. Both parties appear to have been under the misapprehension that this purification was a necessary event omitting altogether to notice that 31 January was the date of entry unless it was either earlier upon purification or later if agreed by the parties in writing. This would seem to be why the pursuer avers this purification and the tendering of payment and why the defender, in his Note of Argument, sought to contend that upon a proper construction of the missives the pursuer required to waive any suspensive condition before 31 January 2000 in order to treat that date as the date of entry. It requires to be said that senior counsel for the defender did not attempt to argue that matter. This serves to illustrate one aspect of the confusion into which the parties have fallen in relation to the entire transaction.

[4] The pursuer avers that keys to the property had been made available to him by the defender's agents in about the end of August 1999. He continues:

Those were the principal averments that the defender sought to have deleted along with certain consequential averments following therefrom.

[5] The pursuer avers that on 3 February 2000 his agent discussed settlement arrangements with the defender indicating that a quarters rent would be paid immediately and the balance of the sums due would be paid within three weeks. He avers that the defender agreed to this. The defender is averred to have claimed payment of the sum of £21,424.65 on 4 February 2000. That total erroneously included a sum of £13,218.75, which was the initial rent due. The pursuer on 4 February tendered £13,218.75 which exceeded the sum of £11,657.95 which was actually due at that time. By letter dated 10 February 2000 the defender, it is averred, required payment in full by 16 February of £21,424.65 under threat of termination of the contract. He purported to rescind the contract on 18 February, entered the subjects and changed the locks. "He has thus denied, and continued until the raising of the action to deny, the pursuer possession." The defender sought deletion of that last sentence from the pleadings.

[6] It had been agreed that certain sums should be paid to the defender by way of monthly payments and that legal expenses up to a limit of £5,000 plus VAT would also be paid. The pursuer accepts that under these missives £8,205.90 fell due to be paid by the pursuer at or prior to the date of entry and remained unpaid at the date of entry. In terms of the missives the pursuer required to pay at 31 January 2000 the sum of £8,205.90 plus the rent to 27 February 2000, i.e. a total of £11,657.95.

[7] The pursuer's agent, also suffering from confusion, tendered payment of the sum above noted of £13,218.75 as rent. This of course was not rent due but could have been treated as payment in advance. What is however clear on the pursuer's averments is that he contends that as at 18 February 2000 the defender was not entitled to demand payment of £21,424.65 and purport to rescind the contract when such sum was not paid.

[8] The pursuer's averments about an agreement for payment of the balance of any sums due on 3 February 2000 are accepted as requiring to go to probation. In these circumstances no question would arise of mutual obligations not being fulfilled entitling the defender either to rescind the contract or, as the pursuer would have it, evict him from the premises.

[9] There is no provision in the missives for other than payments falling due. There is no provision that failure to make payment on any particular date would entitle the defender to rescind the contract but, in any event, it was averred that there was discussion and agreement thereafter between the parties about payment of sums due prior to the pursuer changing the locks.

[10] The argument presented for the defender in relation to the matter of whether the pursuer had taken possession of the property in terms of the contract centred round the question of the keys and the changing of the locks. It was argued that these averments were insufficient to constitute the degree of possession required to constitute a lease and therefore to entitle the pursuer to invoke the defender's failure to give him either the requisite notice in terms of the draft lease or in terms of section 4 of the Law Reform (Miscellaneous Provisions)(Scotland) Act 1985.

[11] I was favoured with a citation of authority on the matter of possession, beginning with Bell's Principles 10^th Ed. para.1209, Rankine on Leases 4^th Ed. 132 and 136 and Hunter, Landlord and Tenant Vol.1 4^th Ed. pps.457-8. I pause only to observe that citation of that last authority would appear to occur but rarely in the courts, since the judicial library edition with which I was provided still had its pages uncut. These authorities merely serve to state the importance of possession, a theme taken up again in Miller v McRobbie 1949 S.C. at pps.6 and 7 where it was stressed that there required to be possession in a real sense of the whole subjects of the tenant's occupation. That case however was concerned with the rights of incoming and outgoing tenants to work the land simultaneously for their various farming purposes.

[12] In my opinion there is nothing in the authorities which demands that the averments tabled by the pursuer about the keys and the locks be categorised as insufficient as a matter of law to establish sufficient possession for the purposes of this lease. The pursuer's date of entry had arrived. He had the keys. He took actual entry and he asserted that entry against the world by changing the locks. He is entitled to prove those averments. The quality or extent of that possession might after proof be held to be insufficient but cannot, in my opinion, be so held at this stage.

[13] It follows that the averments relating to proper notice might also be apposite and I hold that they should not be dismissed at this stage. The averments about a tender of payment and the agreement are also sufficient to entitle the pursuer to claim that he was legitimately in possession whether or not the defender accepted his tender of the sums due.

[14] The defender counterclaims on the basis that the pursuer had caused him loss by his failure to complete the bargain constituted by the missives. No general point was taken as to the relevance of that particular position, but senior counsel for the pursuer argued that the counterclaim should be dismissed for lack of specification of the sums claimed. These are two. The first, £6,913.40, is averred to be an outstanding balance of legal fees and the sums due on a monthly basis in terms of the missives prior to entry. The point was made that there was no specification of what the legal fees actually were as opposed to the maximum entitlement. While that is indeed correct, the fees in respect of preparing missives for a 25 year lease at an annual rent of £45,000, together with the other expenses attached thereto would, in the view of the court, be likely to amount to a sum approximately very closely to it. Whether or not these fees were paid, they would certainly be due. Accordingly there is no reason why the defender should not be entitled to prove that aspect of his counterclaim.

[15] The second sum sued for is £234,000. That is asserted to be surveyors' fees of "about £5,000", legal expenses of "about £4,000", and rent in the future which is, by arithmetic, limited to five years payment of the agreed rental. While these averments are exiguous, and do lack detail particularly in respect of the future loss and mitigation, I do not think that they are so deficient as to lead to dismissal of that head of the counterclaim. A sum of rent would be due if it is the case that the pursuer has failed to complete his bargain. That sum would not require speculation as to the multiplicand. I do not think that matters are so unclear as to entitle the pursuer to a dismissal of the counterclaim. More clarity might have been required to sustain any arrestments, but the defender is entitled to prove his losses and, for the purposes of this case, in the very limited ambit of the claim does give sufficient warning of the extent of his demand.

[16] On the whole matter therefore, I shall allow a proof before answer upon the parties' entire averments in the principal action and the counterclaim.