Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION
CA142/02	OPINION OF LORD DRUMMOND YOUNG in the cause OAK MALL GREENOCK LIMITED Pursuers; against McDONALD'S RESTAURANTS LTD Defenders:   ________________

 

 

 

Act: Lake; Maclay Murray & Spens

Alt: Connall, QC, Solicitor; McGrigor Donald

 

9 May 2003

1. The pursuers are landlords and the defenders are tenants of retail units known as 16-18 Hamilton Gate, which form part of The Oak Mall Shopping Centre in Greenock. The parties' relationship is governed by a Lease granted by the Prudential Assurance Company Limited in favour of the defenders dated 26 January and 5 February 1998 and registered in the Books of Council and Session on 19 February 1998, as supplemented by a back letter from the trustees of the Rachel Charitable Trust to the defenders dated 24 May 2001. Clause 4.12 of the Lease is in the following terms:

"To use only for permitted purposes

4.12.1 Not to use or authorise or suffer or permit to be used the Leased Premises or any part thereof for any noisy, noxious or offensive trade, for general industrial purposes, for any illegal or immoral purposes or for amusement arcades, betting shops, gambling clubs or casinos or any similar purposes and otherwise only as a quick service restaurant for consumption of food and non-alcoholic drink both on and off the Leased Premises and for the sale of any related items with ancillary storage, staff and office accommodation or for such purpose within Class 1 of the Schedule to the Town & Country Planning (Use Classes) (Scotland) Order 1989 as may first be approved in writing by the Landlord, such approval not to be unreasonably withheld or delayed but declaring that the Landlord shall be deemed to be reasonable in withholding approval if it does so because it is constrained by a contractual provision to which it is a party or because the proposed use would conflict with the Landlord's interpretation of good estate management and/or the Landlord's view of a good tenant mix for the Centre

4.12.2 To carry on such business as is permitted by Clause 4.12.1 or procure the same to be carried on in a proper and normal manner and to keep the Leased Premises open for trade for not less than the normal shopping hours of the Centre. Declaring however that (One) this Clause 4.12.2 shall not require the Tenant to occupy or trade from the Leased Premises if (a) the Tenant is prevented from so doing by reason of destruction or damage to the Leased Premises and/or the Centre, (b) to do so would be contrary to any regulation or requirement of any competent statutory or local authority, (c) the Tenant is carrying out repairs to the Leased Premises or alterations or additions permitted in terms of this Lease or (d) effecting a disposal by the Tenant of its interest in the Leased Premises whether by way of assignation or sub-letting (provided that the party in whom the Tenant's interest is vested from time to time shall not be entitled to vacate the Leased Premises while effecting a disposal as aforesaid for longer than three months during the period when the Tenant's interest is vested in such party) and (2) this Clause 4.12.2 shall not apply for such period of time following the expiry of ten years from the date of entry under this Lease during which the Tenant is the said McDonalds Restaurants Limited or a subsidiary or holding company or a subsidiary of such holding company of the said McDonalds Restaurants Limited...".

Both parties accept that the date of entry under the Lease is 10 November 1997, and that the Lease expires on 9 November 2022.

2. In the summons the pursuers make the following averments, all of which are admitted by the defenders. On or about 9 September 2001 the defenders ceased carrying on their business from the units that form the subjects of let. No prior warning was given to the pursuers of their intention to cease trading. Property agents acting for the pursuers wrote to the defenders on 12 September 2001 demanding to know why the defenders were refusing to comply with their obligations in terms of the Lease. The defenders intimated that they were exercising their option in terms of clause 4.12.2 of the Lease not to open for business while effecting a disposal of their interest in the units. By letter dated 3 December 2001, property agents for the pursuers notified the defenders that in terms of the Lease they were bound to re-open by 9 December 2001. The pursuers' solicitors wrote to the defenders on 7 December 2001 seeking confirmation that they would resume occupation of the units. By letter dated 12 December 2001, solicitors for the defenders intimated that it was not the defenders' intention to re-occupy the premises. The defenders have not conducted business from the units and have not opened them for business since that date.
3. Against the foregoing background, the pursuers have raised the present action in which they seek declarator in the following terms:

"For declarator that, in terms of the lease between The Prudential Assurance Company Limited and the defenders dated 26 January and 5 February 1998 and registered in the Books of Council and Session on 19 February 1998 ('the Lease'), the defenders are bound (1) to carry on the business specified by clause 4.12.1 of the Lease from the retail units known as 16 to 18 Hamilton Gate, The Oak Mall Shopping Centre, Greenock, and (2) to keep the said units open for said business during the normal shopping hours of the Oak Mall Shopping Centre, Greenock until 9 November 2007 or until the Lease is irritated or otherwise lawfully terminated, or the Lease is lawfully assigned to a third party (whichever is the earliest), provided that the said unit has not been rendered unfit for use by reason of damage or destruction".

The pursuers also claim to be entitled to specific implement. Their conclusion for implement has been amended from its original version, and now reads as follows:

"For decree ordaining the defenders (1) to carry on the business specified by clause 4.12.1 of the lease between The Prudential Assurance Company Limited and the defenders dated 26 January and 5 February 1998 and registered in the Books of Council and Session on 19 February 1998 ('the Lease') from the retail units known as 16 to 18 Hamilton Gate, The Oak Mall Shopping Centre, Greenock or to procure that the said business is carried on there, and (2) to keep the said units open for said business during the normal shopping hours of the Oak Mall Shopping Centre, Greenock, all until 9 November 2007 or until the Lease is irritated or otherwise lawfully terminated or the Lease is lawfully assigned to a third party (whichever is the earliest), provided that the said unit has not been rendered unfit for use by reason of damage or destruction".

The pursuers have tabled pleas to the relevancy of the defences, and when the case called before me for a debate they sought decree de plano in terms of their conclusions for declarator and interdict. The defenders submitted that a proof before answer should be allowed on the parties' whole averments.

4. Counsel for the pursuers submitted that the admitted facts disclosed a clear breach of the provisions of clause 4.12.1 and .2 of the Lease. In these circumstances the pursuers were entitled to specific implement of the obligations contained in those clauses; reference was made to Highland and Universal Properties Ltd v Safeway Properties Ltd, 2000 SC 297, in support of that proposition. The defenders argued that the pursuers were not entitled to specific implement, for four reasons. First, they argued that the provisions of clause 4.12.1 and .2 were not such as to be appropriate for specific implement. Secondly, they argued that the court should refuse to grant specific implement in the terms sought, because that would involve innovating upon the parties' contract. Thirdly, they argued that the court has an underlying discretion to refuse specific implement in the particular circumstances of the case, and that that discretion should be exercised in the defenders' favour in the present case. Fourthly, they argued that the pursuers, through their actings, had waived their right to insist on the three months' time limit that applied to the provisions in clause 4.12.2 authorising the disposal of the tenant's interest in the lease; consequently the defenders were still entitled to seek to dispose of their interest, and were entitled not to occupy while they were doing so. I deal with each of these arguments in turn.

1. Whether specific implement an appropriate remedy

5. The proposition that specific implement is the normal remedy available to enforce a clause in a lease requiring the tenant to keep premises open for business and carry on business was established in Highland and Universal Properties Ltd v Safeway Properties Ltd, supra; the rule and the authorities supporting it are discussed by Lord President Rodger at 299D-H and Lord Kingarth at 309D-311B. That much was accepted by the defenders. It was submitted, however, that the terms of clause 4.12.1 and .2 were such that specific implement was not appropriate. For this purpose, it was not necessary that the provisions of the clause should be void for uncertainty. It was sufficient if the terms of the clause were so complex that it was difficult to formulate an order that covered them adequately. The solicitor for the defenders drew attention to the quasi-penal consequences that attend an order for specific implement, and submitted that the terms of any order required careful consideration, especially if the order was to take effect over a period of years. He referred in particular to certain passages in Retail Parks Investments Ltd v The Royal Bank of Scotland PLC (No 2), 1996 SC 227 in which the need for precision in framing decree is of specific implement was discussed in the context of a keep open clause. In relation to the present clause, he submitted that the expression "quick service restaurant" and the reference to premises within Class 1 of the Town and Country Planning (Use Classes) (Scotland) Order 1989 were not clear, as neither was defined in the Lease. Clause 4.12.2, when dealing with carrying on business, permitted the tenant to "procure" the business to be carried on by another person; that gave rise to uncertainty because the tenant did not require to be in physical possession. Furthermore, the reference to procuring was not carried through to the later parts of clause 4.12.2. Clause 4.12.2 required the tenant to carry on business in a "normal" manner during "normal" shopping hours; these expressions were not defined, and gave rise to further uncertainty. Finally, clause 4.12.2 set out a number of circumstances in which the tenant was not required to occupy or trade from the leased premises, and these required to be taken into account. Having regard to all of these difficulties, it was impossible in practice to frame an order for specific implement with sufficient precision, and an order for specific implement should be refused.

[6} In my opinion it is quite possible in the present case to frame an order for specific implement with sufficient precision. The framing of orders for specific implement in the present context was discussed in some detail in Retail Parks Investments Ltd v The Royal Bank of Scotland PLC (No 2), supra. In that case, Lord McCluskey stated (at 1996 SC 241):

"It is not fatal to the obtaining of [an order for specific implement] that a number of distinct acts may have to be performed in order to secure compliance; nor is it fatal that the order is likely to remain effective against the defenders over a period of years. However, the more numerous the acts desiderated or likely to be required to secure compliance and the longer the period of time during which it is envisaged that the order will remain effective, the more necessary will it be to find terms for the order that will satisfy the need for adequate precision....

"In considering the precision that is necessary in a court order, breach of which could have serious, including penal, consequences, the court should consider the commercial realities which form the background to the undertaking of the parties' mutual obligations....

"The possible difficulties for the debtor in the obligation in knowing what is required of him should be considered against the background of the enforcement procedures available if a breach of the order is alleged. Thus, if the pursuers were to allege a breach they would require to proceed by petition and complaint and, unless a breach were to be admitted, the court would then have to determine whether or not any breach of the order had occurred and, before imposing a penalty, would have to be satisfied that the defenders had acted or were acting in wilful disobedience of the court's order: these procedures would diminish the risk of a person's being punished for, or even found in breach of, a court order which turned out to be lacking in precision. Furthermore, if the court, after the matter has been brought to its attention in a petition and complaint, were to hold that the defenders had not complied with the order but that the non-compliance was not a wilful defying of the court's order, the court could, without proceeding to punishment, give the defenders a further opportunity to comply in the light of the court's pronouncement that the order has been breached by the defenders' previous acts or omissions. Accordingly there should be no insuperable difficulty in policing compliance with an order of the court pronounced in suitable terms".

In the same case, Lord Cullen stated (at 248):

"I accept that there may be cases in which the meaning of a provision is so obscure that any attempt to enforce its terms would founder. In such a case the court might well refuse to make an order even if the clause was not void from uncertainty. However, in the present case the most that can be said against the order is that future changes within what is left of the currency of the lease might give rise to difficulty in determining whether the clause was complied with or not. It was not suggested, nor could it be suggested, by the defenders that there were not cases in which there would be clear non-compliance with the order. I do not accept that the correct way to judge the case for making an order is by reference to borderline cases. I do not agree with the view... that where an order is based directly on the terms of a contractual obligation the defenders must always know with certainty what they are required to do".

A number of important points emerge from these passages. First, in framing an order for specific implement of a lease or other contract, commercial realities must be taken into account. In particular, it must be presumed that, when they agreed on the terms of their contract, the parties considered the expressions used by them to be sufficiently precise to let them know what had to be done. Consequently, if the order for implement essentially repeats the provisions of the contract, it is inherently likely that the parties will know what the interdict means and what must be done to comply with its terms. Secondly, it is not appropriate to determine whether an order is sufficiently precise by reference to borderline cases. Consequently it does not matter if hypothetical cases can be put forward where the result is not clear, provided that the general import of the interdict in a more typical case is clear. Thirdly, an important reason that absolute precision is not required is that it is only wilful breaches of the order that will have penal consequences. Fourthly, the enforcement procedures following breach of an order for specific implement provide a substantial degree of protection for the person bound by the order; in particular, if it is found that the breach was not wilful an opportunity will normally be given to comply with the order.

6. Against that legal background, I am of opinion that there is no real substance in any of the specific points made by the solicitor for the defenders. The first such point related to the reference in clause 4.12.1 to a "quick service restaurant". That expression appears to me to be perfectly clear. It is a provision used in the Lease itself, where it is clearly intended to describe the type of business carried on by the defenders. In these circumstances, the defenders must have been well aware of what the expression meant. No doubt it is possible to imagine marginal cases, but the general import of the expression is very obvious. Likewise, the reference to purposes falling within Class 1 of the Schedule to the Town and Country Planning (Use Classes) (Scotland) Order 1989 appears quite clear. The Order in question is part of the general planning legislation, which of course can in certain circumstances have penal consequences. The fact that the reference to one of the Classes in the Order is incorporated into a lease cannot make the provisions of the Order any less clear. Moreover, before the tenant can change the use of the premises from a quick service restaurant to another purposes falling within Class 1 the approval in writing of the landlord must first be obtained. That requirement will protect the tenant from any penal consequences of an order for specific implement. The defenders' second specific point was that clause 4.12.2 stated that the tenant might "procure" the business to be carried on by another person, a reference which was not carried through to the remainder of that clause. The fact that the tenant may procure business to be carried on upon the premises rather than carry on the business itself does not in my opinion make it significantly more difficult to frame an order for specific implement. The notion of "procuring" clearly requires active involvement on the tenant's part. The order for implement sought by the pursuers requires the defenders to carry on the business specified by clause 4.12.1 of the lease or to procure that such business is carried on. It is clear in my view that the defenders can do that either by themselves or through another person; indeed, as a corporation they must in one sense carry on business through persons other than themselves. Consequently there is no need to be any more specific than the existing second conclusion. In this connection, it is significant that the defenders will be protected against any inadvertent breach of the court's order by the procedures that are necessary if the order is to be enforced. The fact that the reference to procuring is not carried through to the latter part of clause 4.12.2 is in my opinion wholly irrelevant. It arises out of the point that I have already made, that the defenders can carry on the business of a quick service restaurant either themselves or through another person, and indeed in a sense must do so. Specification of that point appears wholly unnecessary. The defenders' third point related to the reference in clause 4.12.2 to carrying on the business of a quick service restaurant "in a proper and normal manner" and "for not less than the normal shopping hours of the Centre". Both of these expressions are in my view perfectly clear. Both are contained in the Lease. Both were accordingly accepted by the defenders when they took the Lease. In these circumstances the inevitable inference is that the defenders must have known with quite sufficient precision what both expressions meant. The reference to normal shopping hours is further particularised by the reference to the Centre, and the normal hours followed in the Centre must be obvious to the defenders. In these respects, it can be said that clause 4.12.2 is considerably more precise than the clause considered by the court in Highland and Universal Properties Limited v Safeway Properties Limited, supra. That clause, and the court's order in that case, made reference to "retail trade in any such goods as are from time to time sold in a high class retail store", and to keeping the premises open "throughout the normal hours of business", without any reference to the shopping centre in which the premises were situated. The present case is clearly a fortiori.
7. The defenders' final point was that clause 4.12.2 specified various circumstances in which the defenders were not obliged to occupy or trade from the premises. The first two of these were that the tenant was prevented from occupying or trading from the premises because of destruction or damage to those premises or to the Centre or because to do so would be contrary to a regulation or requirement of a competent statutory or local authority. These are both cases where occupation or trading is impossible, either physically or legally. In such cases, if nothing had been said in the lease, it would in my opinion have been implied that the obligation to occupy and trade should be inoperative during the period of such impossibility. If such a term were implied in the lease, it would have to be implied in any order for specific implement as well. Physical or legal impossibility would in my view be a very obvious case for such implication; no one can be compelled by a court order to do anything that is physically or legally impossible. The third case where the tenant was not obliged to occupy or trade occurred if it were carrying out repairs or permitted alterations or additions to the premises. In such a case the tenant would be exercising a power in the lease, and it is clear that the exercise of that power must make occupation and trading impossible or impracticable. In these circumstances, it must in my opinion be implied in any court order that the order will not apply for as long as occupation and trading is rendered impossible or impracticable through the exercise of the tenant's power. The fourth case where the tenant was not obliged to occupy or trade was when it was attempting to dispose of its interest in the Leased Premises, by assignation or sub-letting. In such a case, the words in parentheses in clause 4.12.2 make it clear that the tenant is not entitled to exercise this right for longer than three months during the period when that tenant has an interest in the Leased Premises. In the present case, the defenders claim to have exercised this right already. Consequently it could no longer apply to them, and it is unnecessary to make any provision for such right in the court's order.

2. Whether proposed order innovates upon parties' contract

8. The defenders' second submission was that the form of specific implement proposed by the pursuers would innovate on the parties' contract. Four points were made. First, the proposed order of specific implement made no provision for occupation by a person associated with the defenders. Secondly, the various circumstances in which the defenders were not obliged to occupy or trade from the premises, discussed in paragraph [8] above, were not referred to in the proposed order. Thirdly, the proposed order referred to the premises being "unfit for use" by reason of damage or destruction, but that did not reflect accurately the terms of the Lease. Fourthly, nothing was said in the order regarding the provisions of a back letter concluded between the defenders and the then the proprietors of the Centre on 24 May 2001; this permitted the defenders, without the landlords' consent, to grant sub-leases or licences to franchisees or to certain companies associated with the defenders. Reference was made to Britel Fund Trustees Ltd v Scottish and Southern Energy PLC, 25 October 2001.
9. The first of these points arises out of the provisions of clause 4.8.3 of the Lease. Clause 4.8 contains a general prohibition on assignation and sub-letting. The last part of clause 4.8.3 provides that, if the tenant is McDonalds Restaurants Limited, it may part with or share possession or occupation of the Leased Premises with its subsidiary or holding company or a subsidiary of such holding company. In my opinion it is unnecessary to make specific provision for occupation by companies associated with the defenders in the manner described in this clause. The relevant part of clause 4.8.3 only applies if the defenders are the tenant of the Leased Premises. Consequently they must be primarily responsible for all the duties incumbent upon the tenant under the Lease. The provision in question merely permits parting with or sharing possession or occupation of the Leased Premises. That clearly has no bearing on the defenders' position as tenant. The companies that may benefit from this provision are all closely associated with the defenders, and indeed all such companies and the defenders must share common control. In these circumstances it seems clearly to have been intended that the defenders would remain fully responsible for implement of the whole of the tenant's obligations under the Lease, despite such sharing or parting with possession or occupation. In that event, I am of opinion that the terms of the proposed order for specific implement do not involve any innovation on the terms of the lease, since they place responsibility for compliance with clause 4.12 upon the defenders. The second and third of the points mentioned in the last paragraph are essentially variations on the defenders' arguments, described in paragraph [5] above, in support of the proposition that specific implement was not an appropriate remedy. In my opinion both of these points must fail, for the reasons discussed in paragraph [8] above. The various circumstances in which the defenders are not obliged to occupy or trade from the premises are in my view sufficiently covered by the pursuers' proposed order. The expression "unfit for use", used in the proposed order, does not occur in clause 4.12.2; nevertheless, it is clearly intended to deal with cases where the tenant is prevented from carrying on business in the Leased Premises or keeping them open by reason of destruction of or damage to the Leased Premises or the Centre. As stated above, I am of opinion that performance of the tenant's obligations would be impossible in such cases, and that accordingly the tenant's failure to keep the premises open, or to trade from those premises, would not constitute a breach of any order for specific implement.
10. The defenders' fourth point relates to the back letter concluded on 24 May 2001. In that document, the then landlords granted the following authority to the defenders:

"Notwithstanding the provisions of Clause 4.8 of the Lease, you may, without having to obtain our consent, grant a Sub-Lease or Sub-Leases or a Licence or Licences to (i) franchisee(s) and/or to a subsidiary company, a holding company or a subsidiary company of such holding company of you, the said McDonalds Restaurants Limited...".

In Britel Fund Trustees Limited v Scottish and Southern Energy PLC, supra, the lease contained a keep open clause, and it was not disputed that an order for specific implement should be pronounced against the tenants. Lord Macfadyen held that such an order required to take account of the possibility that the tenants would sub-let the premises, because during the subsistence of a lawful sub-lease the tenants were not obliged themselves to keep the shop open. He referred (at paragraph [19]) to the principle that the granting of a sub-lease does not bring the contract of lease to an end, and continued:

"But [that principle] does not seem to me to exclude the possibility that, on a sound construction of an obligation imposed on the tenant by the Lease, the content of the obligation varies according to whether, on one hand, the tenant is in actual occupation or, on the other hand, there is a sub-tenancy in subsistence".

Lord Macfadyen's approach is thus based on the specific terms of the lease under consideration. He accordingly went on to examine the detailed terms of that lease. So far as the keep open clause was concerned, he held that only the party in actual occupation could keep the premises open for trade, and during the subsistence of a sub-lease that must be the sub-tenant, not the tenant. That was recognised in the wording of the keep open clause, which was not expressed as something that the tenant must do, but rather in the abstract as something that must be done; the actual wording was that "The Leased Premises shall be kept open for normal trading purposes during Trading Hours". Moreover, obligatory force was given to that clause by a provision that obliged the tenant "To observe, perform and abide by and procure observance by the Tenant's employees, agents and any sub-tenants and assignees" of inter alia the keep open clause. Thus the principal tenant was specifically obliged to ensure that any sub-tenants complied with the keep open clause. Furthermore, in the event that a sub-lease was granted, the tenant was obliged to include a corresponding keep open clause in the sub-lease and to enforce the terms of the sub-lease. It was accordingly clear that the lease under consideration assumed that, in the event of a sub-lease, the obligation to keep the premises open would devolve on the sub-tenant.

11. The present lease, by contrast, makes no such assumption in respect of the keep open clause. That clause forms part of the tenant's obligations, and these are introduced, in clause 4.0, as follows:

"The Tenant hereby binds and obliges itself to observe and perform throughout the Term the following conditions, obligations and others".

Thus the obligations are specifically imposed on the tenant, and are not expressed in an abstract manner. This is carried into the relevant part of Clause 4.12.2, which provides that the tenant is obliged to keep the Leased Premises open for trade. That is in my opinion a clear point of distinction from Britel; in the present case, the obligation to keep the premises open is that of the tenant, without qualification. In those circumstances, in my opinion, the grant of a sub-lease does not affect the obligation. No doubt in such a case it will be the sub-tenant who actually secures that the premises are kept open, but the scheme of the Lease is that the tenant will enforce that obligation, and the tenant in turn is answerable to the landlord. If a licence rather than a sub-lease is granted, the position is clearly a fortiori. If a sub-tenant or licensee failed to keep the premises open, the defenders would be obliged to take steps to enforce the obligation through their sub-lease or licence. Provided that they did so, however, there would be no wilful breach of the decree of specific implement, and no contempt of court. There is accordingly no need for any order for specific implement of the keep open clause to take account of the possibility that the defenders may make use of the power conferred by the back letter of 24 May 2001. The obligation to carry on business is somewhat different. In clause 4.12.2 it is provided that the tenant is obliged to carry on the business permitted in clause 4.12.1 "or procure the same to be carried on". In this case, therefore, it is expressly contemplated that the tenant may carry on business at the Leased Premises through another person. That would apply directly to cases where the defenders granted a sub-lease or a licence in terms of the back letter of 24 May 2001. The order for specific implement sought by the pursuers, however, makes express reference to this possibility. In respect of the obligation to carry on business, it requires that the defenders carry on business themselves or procure that the business specified in clause 4.12.1 of the Lease is carried on at the Leased Premises. That is in my opinion sufficient to deal with the possibility of a sub-lease or licence. Consequently I consider that the approach taken in Britel does not prevent the grant of an order for specific implement in the terms sought by the pursuers.

3. Discretion to refuse specific implement on equitable grounds

12. The defenders argued that, on the pleadings, there was material from which the court could after proof conclude that specific implement should be refused on equitable grounds. The whole circumstances of the case might be relevant for that purpose, including the nature and role of the unit in the Centre, the losses sustained by the defenders through trading at the unit, the absence of any attempt by the pursuers to obtain an interim order, provisions within the Lease that allowed for periods of non-occupation, and the pursuers' approach to time limits in respect of such periods. Reference was made to Highland and Universal Properties Limited v Safeway Properties Limited, supra, per Lord President Rodger at 299-300 and Lord Kingarth at 306-307, Retail Parks Investments Limited v The Royal Bank of Scotland PLC (No 2), supra, per Lord Kirkwood at 250 and 253, Salaried Staff London Loan Company Limited v Swears and Wells Limited, 1985 SC 189, at 200 per Lord Ross, and William Grant and Company Limited v Glen Catrine Bonded Warehouse Limited, 2001 SC 901, per Lord President Rodger at 929-930.
13. I do not doubt that the court has an underlying equitable discretion to refuse specific implement. It is nevertheless quite clear that the discretionary power is exceptional in nature, and can only be granted in the presence of special circumstances which would render it unjust to grant decree of implement. The law is summarised by Lord Prseident Rodger in Highland and Universal Properties Limited v Safeway Properties Limited, supra, at 300C-E, where, after referring to the prior authorities, he stated:

"These passages affirm the existence of a discretion in the court, in exceptional cases, to deny to a party the remedy to which the party would otherwise be entitled. It is important to note, however, that the power is plainly regarded as being wholly exceptional and is to be invoked only where there is some 'very cogent reason' for doing so. Secondly, the very cogent reason must be one which would make it 'inconvenient and unjust' to grant specific implement".

In the same case Lord Kingarth stated at 311F that the discretion can be exercised only "in exceptional circumstances, where, although the order would otherwise be competent, there exist very cogent reasons to refuse it and, in particular, where to grant it would be inconvenient and unjust, or cause exceptional hardship". Lord Kingarth went on to point out that the power has rarely been used, and then only in cases where enforcing the obligation involved a burden on the defender grossly disproportionate to any advantage to the pursuer. Similar comments are found in the opinion of Lord Kirkwood in Retail Parks Investments Limited v The Royal Bank of Scotland PLC (No 2), supra, at 250. The expression "inconvenient and unjust" is derived from the speech of Lord Watson in Stewart v Kennedy, 1890, 17 R. (HL) 1. The word "inconvenient", used in this context, must in my opinion mean something that has undesirable practical consequences. It is joined with the word "unjust", which indicates that those practical consequences must be seriously unfair to the defender. In view of the stringent nature of the test, it seems clear that it is only in cases where there is severe detriment to the defender, seriously disproportionate to any corresponding benefit to the pursuer, that the test is likely to be satisfied.

14. In the present case I am of opinion that the facts averred could not justify the exercise of the court's discretion to refuse specific implement. In the defences, the factors principally relied on are the losses sustained by the defenders in trading from the premises and the expense that would be incurred in re-opening the premises for trade. Specifically, the defenders aver that during 46 months of trading they made a profit in only two months, and would expect such losses to continue. They further aver that they would incur costs in excess of £75,000 in re-equipping the premises, and further costs and effort in recruiting staff. The mere fact that the defenders are trading at a loss, even if it appears that that loss is likely to continue for the remainder of the Lease, is in my opinion quite insufficient to satisfy the test. In many commercial contracts, perhaps even the majority of them, one or both parties run the risk of making a loss; that is of the very nature of commercial activity. If a loss results, that cannot be an excuse for non-performance. It is immaterial that the loss is severe. In the present case, the defenders are a large organisation, and it has not been suggested that they are incapable of surviving losses on the scale that they have suffered in the Leased Premises. The same is true of the cost of re-equipping and staffing the premises; the sums involved should not place an intolerable burden on the defenders, and the need to re-equip and re-staff has in any event been brought about by the defenders' own breach of contract. The defenders do not suggest in their averments that there is a lack of any significant benefit to the pursuers in having the Leased Premises kept open for trade, beyond a statement that other units within the Centre have been closed at all material times. Even if that is correct, it does not follow that keeping the premises open for business is of no benefit to the pursuers. I would certainly be quite unable to conclude that there was any serious disproportion between the benefit to the pursuers in enforcing the defenders' obligations and the detriment to the defenders in doing so. What is averred cannot be considered in any way exceptional.
15. In their arguments during the present hearing the defenders also made reference to a number of other factors. The first was the pursuers' failure to seek an interim order. That would clearly be relevant if the present application were for an interim order for specific implement, but that is because delay is an important factor in considering the balance of convenience. The pursuers now seek a final order, and the balance of convenience is irrelevant. The defenders also referred to the provisions in the Lease that allowed for periods of non-occupation and to the defenders' approach to time limits in respect of such periods. These might be relevant if the balance of convenience were in issue, but in my view that they are not material to the court's discretion to grant a permanent order for specific implement. Even if the whole of the factors relied on by the solicitor for the defenders are taken together, my conclusion remains the same: the circumstances of the present case are not exceptional, and come nowhere near justifying the exercise of the court's discretion to refuse specific implement.

4. Waiver

16. The defenders' fourth argument was that a proof before answer should be allowed on averments that the pursuers had waived their right to rely on the period of three months referred to in the proviso to paragraph (d) of clause 4.12.2. Paragraph (d) of that clause provides that the tenant need not occupy or trade from the Leased Premises if it is effecting a disposal of its interest in the Leased Premises, whether by way of assignation or sub-letting. That paragraph is followed by the proviso:

"provided that the party in whom the Tenant's interest is vested from time to time shall not be entitled to vacate the Leased Premises while effecting a disposal as aforesaid for longer than three months during the period when the Tenant's interest is vested in such party".

The defenders aver that they had been actively seeking an assignee for the property and had started marketing the unit in September 2001. Thus the three-month period expired in December 2001. Agents had been employed to market the premises, and they had taken various steps to that end. Such steps had continued until at least January 2002, after the end of the three-month period. The defenders had kept the pursuers regularly advised of the efforts that they were making to dispose of the premises. The defenders further aver that on 3 October 2002 they advised that they had secured an acceptable assignee and sought the pursuers' formal consent. They aver that disputes as to delay or refusal to grant consent fall to be dealt with by arbitration under the lease. Until 30 April 2002, it is averred, the pursuers had corresponded from time to time, but had not threatened proceedings in respect of the lease, and had merely requested information on and scrutinised the defenders' efforts towards disposal. In particular, the pursuers did not insist on the time period specified in clause 4.12.2(d). The defenders aver that they relied on that non-insistence, and did so to their prejudice. In these circumstances, the defenders submitted, the pursuers had waived reliance on the three-month time limit. In support of his argument, the solicitor for the defenders cited Waydale Limited v MRM Engineering, 1996 SLT (Sh Ct) 6, and Banks v Mecca Bookmakers (Scotland) Limited, 1982 SC 7. Waiver involves giving up a right for all time; consequently the pursuers would be unable to enforce the defenders' obligations under clause 4.12.2 for the whole of the remaining term of the Lease, provided that the defenders kept trying to dispose of their interest in the premises.

17. In my opinion the defenders' argument based on waiver is not well founded. Waiver involves the abandonment of a right: Armia Limited v Daejan Developments Limited, 1979 SC (HL) 56, per Lord Fraser of Tullybelton at 69 and Lord Keith at 72. Its effects are permanent; the right is abandoned for all time: ibid. It is not necessary that the party advancing the plea of waiver should have suffered prejudice by reliance on the waiver, but it is essential that he should have conducted his affairs in reliance on the waiver: ibid. Similar statements of the law are found in Presslie v Cochrane McGregor Group Limited, 1996 SC 289, at 291-292, and James Howden & Co Ltd v Taylor Woodrow Property Co Ltd, 1998 SC 853, at 865-868 and 872-873. The latter case establishes that waiver cannot be constituted by an undertaking to postpone the exercise of a right; that is because waiver involves abandonment for all time, and therefore the extinction of the right: see Lord Kirkwood at 1998 SC 866-867.
18. In the first place it is necessary to define the right that is said to have been waived. At times the defenders' submissions appeared to be based on the view that the right being waived was a right to insist on the three-month time limit found in paragraph (d) of clause 4.12.2. That cannot be correct, however. The three-month time limit does not give rise to any independent right that is capable of being waived; it is rather a time limit attached to the tenant's right not to occupy the premises while its interest is being marketed. It is thus a limitation on a right of the tenant rather than a right of the landlord. For waiver to operate in the present circumstances, the right waived must be a right of the landlord. That can only be the right of the landlord to enforce the obligations in clause 4.12.2 to keep the premises open and to carry on trade. If waiver is to operate, therefore, it must be possible to hold that the pursuers have abandoned their right to enforce the defenders' obligations to keep the premises open and carry on trade.
19. The defenders' averments amount to a claim that waiver can be inferred from the pursuers' failure to enforce clause 4.12.2 during a period of some months after December 2001; it was during that month that the three-month period referred to in paragraph (d) expired. In my opinion it is impossible to draw any such inference from the pursuers' inaction. That is so even though they are said to have been aware of the defenders' efforts to market their interest in the premises, and indeed to have scrutinised the defenders' attempts to do so. All that can be inferred in my opinion is that the pursuers decided not to insist immediately on their rights under clause 4.12.2; in other words, they merely postponed enforcement of their rights under that clause. That is a wholly different matter from the permanent abandonment of those rights. In this connection, two considerations are in my opinion of particular importance. The first is that in cases where parties are in dispute about their contractual rights it is usually desirable that they should try to reach a solution by negotiation. That will frequently involve ignoring time limits, to enable discussions to continue to a conclusion. If, however, failure to take action prior to a time limit, or within a relatively short period thereafter, could give rise to an inference of waiver, such a course would be extremely hazardous. For that reason I would be most reluctant to draw any inference that a right had been waived through mere failure to take action before or shortly after a time limit. The second consideration is that failure to assert rights promptly is dealt with by the law of prescription. In my view a court should always be slow to hold that inaction for less than the prescriptive period involves the abandonment of a right. Finally, I should mention the two cases founded on by the defenders, Waydale Limited v MRM Engineering, supra, and Banks v Mecca Bookmakers (Scotland) Limited, supra. Both involved waiver by a landlord of a right to a review of rent. In both cases rent had been accepted at the existing rate for a significant period following the review date; thus the foundation for waiver amounted to more than mere inaction on the landlord's part. In my opinion neither case is of assistance in the present circumstances.
20. For the foregoing reasons, I will sustain the pursuers' first, fourth and fifth pleas-in-law and will repel the defenders' first, second, third, fourth and sixth pleas-in-law. I will accordingly pronounce decree in terms of the first and second conclusions of the summons. A time limit must be set for compliance, however, and I have not heard detailed submissions on that matter. I will therefore appoint the case to be heard By Order to enable the details of the interlocutor to be discussed.