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OUTER HOUSE, COURT OF SESSION
[2006] CSOH 91
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CA111/03
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OPINION OF LORD EASSIE
(No. 3)
in the cause
MARCUS DEAN, t/a
ABBEY MILL BUSINESS CENTRE
Pursuer;
against
TONY RUSSELL FREEMAN
Defender:
________________
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Pursuer:
J. Thomson;
Heggie Alexander
Defender: Cowan, Solicitor Advocate; Simpson & Marwick, W.S.
13 June 2006
Introductory
[1] In
this action the pursuer, who is the owner of commercial premises in Paisley
known as the Abbey Mill Business Centre, seeks certain payments by the
cautioner of a former tenant, Solutions Recruitment and Management Consultants
Ltd - "SRMC" - which had leases of various parts of the Business
Centre. The background to the litigation
is described in the two earlier opinions which I have
delivered in the course of these proceedings - [2005] CSOH 3 and
[2005] CSOH 75.
[2] As
more fully narrated in those opinions, on 5 June 2003, a petition for the winding up of SRMC was presented and a provisional liquidator was appointed. (The provisional liquidator was
subsequently appointed as the official liquidator). The pursuer reacted to notification, on 9 June 2003, of the appointment
of the provisional liquidator by immediately serving a notice of irritancy in
terms of clause 9 of the leases (all of which are on a printed standard
form). At the earlier stages of this litigation the pursuer contended that his notice was invalid
and that, in any event, the liquidator had agreed that the leases should
continue notwithstanding the service of that notice of irritancy. Those issues have been decided adversely to
the pursuer. And so
the position is that it has been held that all of the leases terminated, by
reason of their being irritated by the pursuer, on 9 June 2003.
[3] The present stage of this litigation is
concerned with the claims advanced by the pursuer for payment of various sums
of money respecting (a) the redecoration of the units; (b) the replacement of the carpets or other
floor coverings; and (c) removal of
what is described as "débris" but is in fact articles such as files,
pin-boards, stationery, items of office furniture and the like which were left
behind by the liquidator's staff, presumably since the items were not regarded
as having any realisable value.
There is also a relatively small claim in respect of the replacement of
cracked window panes in the window of two of the units
let to SRMC.
[4] Among
the practical reasons for which the pursuer was anxious to undo his decision to
irritate the leases may be the fact that the leases contained repairing and
re-decorating obligations which were only prestable at
the tenant's outgo on the occurrence of the ish. By unilaterally irritating the leases on 9
June 2003 the pursuer disabled the tenant from performing those obligations and
hence disabled himself from founding on their non-performance ‑ vide the discussion and decision in
paragraphs [17] ff of the opinion [2005] CSOH 3.
[5] Thus
in the proof before answer allowed respecting the outstanding claims, counsel
for the pursuer accepted that the claims for re-decorating and re-carpeting
required to be brought within the first branch or limb of clause 6(f) of
the leases which is in these terms:
"6. Throughout the duration of this Lease
the Occupant shall:-
...
(f) keep, maintain and
repair the Premises, together with any pipes or other conduits exclusively
serving the same, in good and substantial repair and condition and good
decorative internal repair (excluding responsibility for the exterior and
structure of the Premises) and the Owners (sic) fittings, fixtures and
furnishings (if any) therein (including without prejudice to that generality
any suspended ceilings or floor coverings) and all glass in and upon the same all
to the reasonable satisfaction of the Owner;
in addition the Occupant shall promptly renew or replace any of the
Owners (sic) said fittings, fixtures or furnishings as may be in the Owners (sic)
reasonable opinion from time to time require renewal or replacement; the Owner being entitled to carry out all
works necessary to make good any failure of the Occupant to comply with his
obligations in terms of this Lease, and to recover the full costs thereof from
the Occupant."
The second branch of
clause 6(f) provides for redecoration obligations ... "Before the
tenant vacates the property ..." It
was accepted by counsel for the pursuer that the obligation so set out could
not be invoked in view of the pursuer having irritated the leases. Accordingly, whatever the initial formulation
of the claim, one is thus concerned with a claim based upon breach of
continuing obligation during the currency of the leases, not an obligation to
be performed immediately before the outgo.
[6] Since
one is thus concerned with alleged breaches of an obligation of maintenance or repair during the continuance of the tenancies rather an
obligation directed to the making good of dilapidations at outgo, it is of some
assistance to note the duration for which SRMC (or their predecessor) were in
occupation of the various units. The
summons is concerned with some 15 leases to SRMC (the business centre
having, according to the evidence of the pursuer, between 200 and
300 units contained in three buildings which
formerly were a cotton factory). From
the terms of the leases, it is apparent that the first unit taken up was
Studio 31, on the first floor of one of those buildings, the date of entry
to that Studio being 7 July 1997. The company's predecessor had that single
office unit 8 October 1999,
when it took possession of another office, along the corridor, namely
Studio 28. A few months later in
February 2000 it acquired the tenancy of another
office on the first floor, viz Studio 21 and in September 2000 SRMC
acquired Studio 30. In November 2000 it acquired Studio 22, which adjoined on either
side Units 21 and 28. During
the first six months of 2001 the company acquired the tenancy of further
studios either adjoining existing tenancies or in close vicinity, namely Studios 26,
29, 33 and 36. Studio 26 was,
in reality, a large storage cupboard.
Further storage facility was acquired in
November 2001 with the tenancy of "the Attic". At the same time, occupation was taken of Studio 65 on the third floor of the
relevant building. In the Spring of 2002 SRMC acquired two units at ground level,
which until that time had been occupied as a garage and allied premises by a
courier or transport company, namely Units 4 and 5. The former was adapted as a reception office
for SRMC. The latter was used by SRMC as
its mail room.
Finally, in May 2002 occupation was taken
of a further office on the first floor viz Studio 20.
[7] It
is also to be noted that, SRMC having acquired
tenancies of adjoining units, agreement, collateral to the leases, was reached
between SRMC and the pursuer that the partition walls might be removed to
create larger spaces. Thus by reference
to the plan number 6/85 of process, it appears that the partition walls
between Studios 28-32 inclusive were removed to make a large open-plan
office space. A similar, but more
limited, conjoining exercise took place as respects Studios 21
and 22. The cost of reinstating the
partition walls are no longer sought from the defender, possibly on the view inter alia that the obligation to reinstate
arose collaterally to the lease and hence is not the defender's cautionary
responsibility.
Redecoration
[8] With
that introduction, I turn first to consider the branch of the pursuer's claim
which relates to redecoration of the units occupied by SRMC. (As was done during the proof, I treat the
terms "unit" and "studio" as interchangeable).
[9] In his evidence the pursuer
deponed in general terms that it was necessary to redecorate nearly all of the
office before re-letting since the surfaces of the walls were marked at various
places where notices, pin-boards, or the like, had been affixed. The wooden skirtings he described as being in
fair, rather than good condition, since they had sustained some knocks and
scrapes. He had employed his customary painter
and decorator, Mr Thomas Fraser, who conducted business as
T F (Decorators) Ltd, to redecorate, but the costs had now been
adjusted to encompass only one coat of emulsion on the walls since it had been
pointed out that only one coat would have been necessary to retain the existing
colour scheme.
[10] Mr Thomas Fraser gave evidence, also in general terms,
that when tenants moved out of the Business Centre his company would be asked to go in and redecorate. Mr Fraser was taken to a number of
invoices, of various dates subsequent to 9 June
2003 (the date of irritancy), relating to the redecoration of units
previously occupied by SRMC. The variety
of dates was explained as being the result of the
pursuer's practice of delaying refurbishment until a new tenant had been
found. Mr Fraser observed that in many
instances two coats had been required since the colour was to be changed from
blue (a colour selected by SRMC as part of its "corporate colours" - see infra) to magnolia, the pursuer's preferred colour.
Had the colour change not been made, only one
coat would have sufficed. Mr Fraser
did not suggest that decoration of the units in question had
been neglected to any material extent during the tenant's occupation. He described the need to redecorate for the
new tenant as arising generally, because when a tenant moves out there will be
marks resulting from pictures, pin-boards etc. having been fixed to the walls
and those are unlikely to be acceptable to a new tenant..
[11] Mrs Janet Griffiths, an employee of the pursuer at the
Business Centre, who was principally concerned with marketing and recruitment
of new business for the Business Centre, also stated that the practice followed
was to redecorate only when a new tenant had been found. So far as the state of decoration when SRMC
ceased to occupy was concerned, Mrs Griffiths' observation in evidence was
essentially that the walls were marked by reason of things which had been fixed
to the wall and that there might have been some "grubbiness" .
[12] For his
part the defender, the former managing director of SRMC, stated in his evidence
that as the company developed it required more space and Mrs Griffiths
would tell him whenever a unit became vacant.
Generally the unit on offer would not have been
newly decorated or fitted with a new carpet following the departure of the
previous tenant. Since he was usually in
a hurry to obtain occupation, he often agreed with the pursuer that SRMC would
bring the units up to standard, they being given entry
in advance in order to do that.
Specifically as respects redecoration of the units, Mr Freeman said
that he would redecorate at the start of the lease (I inferred in agreement
with the pursuer); if it were in poor
condition; and after effecting
alterations, such as the removal of partitions.
The company in due course developed a corporate colour scheme of blue
and pale lemon and as the managing director he was
anxious to have the accommodation redecorated in accordance with that corporate
colour scheme.
[13] Much of
what Mr Freeman said respecting painting and redecoration receives support
from the documents and the evidence of Mr Alan Keith Dixon, the painter
and decorator employed by SRMC.
Mr Dixon confirmed having done work for that company on several
occasions and a number of his quotations and invoices are to be
found in the documents numbers 7/27-7/38 or process. Without descending into great
detail, those documents show a number of instances of SRMC commissioning
painting and decoration works, including the introduction of the "corporate
colours". Simply by way of example, Units 4
and 5 were decorated by Mr Dixon on the instruction of SRMC at the
time of entry (February 2002) - see 7/29. By way of a further example the document
number 7/35 (13 May 2002)
relates to the redecoration in the corporate colours carried out in the
amalgamated studio 28, 29, 30, 31 and 32. It was clear to me that, for the defender,
image, and the working environment was important and the redecoration in the
corporate colours was correspondingly important to him. There is nothing in any of
the photographs which have been produced to indicate that the premises were not
maintained in a good state of decoration during the currency of the tenancies
and in so far as there may be a conflict between the evidence given on behalf
of the pursuer and the evidence of the defender and Mr Dixon, I prefer the
latter.
[14] However,
in relation to the state of decoration.
I do not believe that there is truly a conflict of fact between the
evidence given on the respective sides of this case. For the purposes of re-letting, decoration
might well be required since pin-boards, notices, pictures and the like would
inevitably would leave marks from their fixings or differential shading as a result of exposure to sunlight. And a new tenant
might prefer his own or the pursuer's preferred colour (magnolia) to the SRMC
corporate colours. It may
be noted that Mr Fraser couched the need for redecoration along
those lines. Mrs Griffiths also saw
matters from that perspective. Such
considerations are reflected in the obligations in the
second branch of clause 6(f) to redecorate at the conventional ish.
[15] However, it
was accepted by counsel for the pursuer that reliance could
not be placed on that second branch.
Counsel instead submitted that there was a breach of the first branch of
the clause since, he said, the walls automatically ceased to be in good
decorative order whenever the tenant affixed something to them because there might
then arise a need to redecorate when the affixed article was eventually
removed. In my opinion, this submission
is plainly unsound. It implies a
prohibition on hanging any picture, mirror, pin-board, poster or notice on any
wall. If it had been the landlord's intention to impose such a highly unusual restriction
on the tenant's enjoyment of the subjects, one would have expected it to be
expressly imposed. In the absence of
express prohibition, the tenant could rightly assume he was at liberty to make
normal use of the interior walls for hanging pictures etc. Mr Dean, the pursuer, did not suggest
such a prohibition. Moreover, the
interpretation claimed by counsel for the pursuer as respects the first branch
of clause 6(f) would render the second branch otiose. I reject the attempt
by counsel for the pursuer, rather like Procrustes, to fit this claim into the confines
of the first branch of clause 6(f).
Carpets
[16] The
evidence on behalf of the pursuer respecting the state of the carpets was also adduced as a matter of generality. Thus, in chief, Mr Dean, stated that in
general terms the carpets were very worn. He ascribed this more specifically to the
movement of office chairs and patching in those instances in which the partitions
had been removed and the carpet had been patched. Consequently, he said, the carpets were not
in a condition for re-letting. The way
in which the fitting of the new carpets was gone about was that his employees
would remove, or assist in the moving of, the existing carpet. Thereafter new carpets,
purchased by the pursuer and held in store by him, would be fitted by an
outside contractor, Mr Thomas Weir.
In the course of his cross-examination, Mr Dean confirmed his
position of universality, expressly stating that each and
every carpet in every unit occupied by SRMC was very worn and defective
and required to be replaced.
[17] A similar,
universal, approach to the state of the carpets was invited
of Mrs Griffiths in her examination in chief. In response to that invitation, she said that
after the liquidator left she "went round" and, as I have her noted - "the
carpets were pretty awful, they were badly worn". However, when
cross-examined by Mr Cowan, who appeared for the defender, and having been
adverted to the fact that in taking occupation of Unit 4, SRMC wished, and
installed, a polished wooden floor (which Mrs Griffiths conceded
immediately as being very nice and a matter of her admiration) and installed
other carpeting, Mrs Griffiths conceded that the carpeting in position at
the date of irritancy was worn to varying degrees. But it would not be
adequate for marketing the units for new tenants, who, she said, expect
everything to be new.
[18] Counsel for
the pursuer also adduced as a witness the self-employed carpet fitter -
Mr Thomas Weir - to whom the pursuer had referred in his
evidence. In chief, Mr Weir gave
evidence that he had fitted new carpets to offices which he understood might
previously have been occupied by SRMC.
He stated as a generality that the carpets were well worn, to which he
added the explanation that office workers sitting on chairs with wheels could
be very sore on carpets. He was then
taken to the invoices submitted by him to the pursuer which
included - among other units - some of the units previously occupied
by SRMC. Mr Weir was
not invited to fit new carpets to all of the units immediately after the
avoidance of the leases in June 2003.
As he explained in cross-examination, his understanding was that it was
only as a new company wished to go into a unit that the pursuer would wish to
re-vamp that unit or office.
[19] In view of
that explanation of Mr Weir's instruction, it is perhaps useful to set out
chronologically the invoices relating to the carpet fitting works carried out
by him
which have been lodged in
process:
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19 August 2003
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Unit 4
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(6/66)
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17 March 2004
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Unit 5
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(6/67)
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2 August 2004
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Unit 28
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(6/64)
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21 September 2004
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Unit 33
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(6/62)
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23 March 2005
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Unit 4
(Carpet Tiles)
Unit 30
(Carpet Tiles)
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(6/61)
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26 April 2005
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Unit 29
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(6/65)
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It may be noted that some of the invoices also relate to
carpet-fitting in parts of the Business Centre which were never occupied by SRMC; and also that they do not cover many of the units in
fact occupied by SRMC, including Units 20, 21, 22, 27, 31, 36 and 65.
[20] As already
indicated, in the course of his evidence the defender stated that, apart from
the first three or four units taken on by SRMC, he would generally agree with
the pursuer that the
company should have a rent-free period of occupation in advance
of the commencing date of the lease in which to redecorate and re-carpet if
necessary. As I understood him, in some
instances the carpets initially in place were replaced
as part of the desire to have a corporate colour scheme. So, when the
partitions between Units 20, 21 and 22 were removed to form a larger
space, the resulting larger space was redecorated and re-carpeted. Moreover, the defender explained that not
every unit had a carpet when entry was taken. Unit 20 had a wooden floor. Unit 5 had been a garage, with a
concrete floor. As respects Unit 4,
SRMC also had occupation in advance and spent considerable sums in putting in
the polished wooden flooring, to which Mrs Griffiths made
reference, and some carpeting as part of the creation of a reception
area for visitors to the company which would have an image or appearance which
Mr Freeman thought appropriate to the company.
[21] The
defender went on in evidence to explain that in June 2004 he had visited
some of the units. The photographs to be found in number 7/39 of process were taken on that
occasion. The first page of the
photographs shows Unit 4, and the parquet floor installed by SRMC (and the
corporate décor). Studio 20-22 is photographed on the second page and shows, said the
defender, the same carpet as had been put in by SRMC, and the same decoration
scheme. Likewise for
Studio 27, depicted on the third page of 7/39. However, the defender readily stated that
offices 28 and 32 had old carpet which had
been patched to meet the new carpet installed in the middle of this large unit,
which had been the call centre.
[22] In
approaching the claim for costs of new carpets it is of course necessary to
bear in mind that one is concerned with the continuing obligation to maintain
and if need be renew the moveable property of the landlord, namely his
carpets. Two principal points
arise. First, if the carpet were not
provided by the landlord as part of the subjects leased, he can have no claim
to its replacement, however worn the tenant's carpet might be. Second, as respects those
carpets which are the property of the landlord - either originally, or as
a replacement for the original carpet - what has to be shown is not just
that some wear and tear had occurred, but the degree of wear and tear was to
such an extent as to dictate renewal from the standpoint, I think, of a
reasonable person in occupation of the premises.
[23] As respects
the first of those points, it appears to me that, on the evidence, the
pursuer's claim respecting Units 4 and 5 must fail. It was eventually not disputed by the pursuer
that such floor coverings as were provided in Unit 5 (the mail room) were provided by SRMC and that all of the
polished wooden parquet flooring in Unit 4 (the reception area) plus
incidental carpeting was provided and installed by SRMC. In any event, on this particular matter, I
have no difficulty in preferring the evidence of Mr Freeman, which
received support from Mrs Griffiths.
Similarly, the evidence of the defender, Mr Freeman, that
Unit 20 had no carpet when occupation was taken by SRMC was the not the
subject of any challenge.
[24] Unit 20
is, I believe, a convenient starting point for evaluating the more disputed
aspects of the evidence regarding carpets.
Entry to that unit was taken in
May 2002. The adjoining
units, 21 and 22 had some of their internal partitions removed at
some stage after November 2000 and would thus require re-carpeting. The photograph on the second sheet of
number 7/39 of process, taken on 3 June
2004, showed, said the defender, Units 20-22 and the same
carpet as had been laid by SRMC as part of its
corporate colour scheme when the units had been made into the larger
space. None of this was
challenged in cross-examination and I accept Mr Freeman's evidence
on this matter. Consistent with Mr Freeman's
evidence, none of Mr Weir's invoices relate to Studios 20-22. The photographs do not show any defect in the
carpet, which is in the SRMC corporate colour and the units have evidently been
re-let (cf the photographs of Units 20-22 in the photographs in
number 6/79). So
the subsidiary contention, inherently flowing from the pursuer's primary contention
of fact that the carpets were universally worn and required replacement, that
during its occupation of Studios 20-22, SRMC breached its obligation under
the first branch of clause 6(f) of the leases is in my view not made out.
[25] Given
the foregoing conflict with the universality of the claim advanced by the
pursuer, both in evidence, and in what is described in No. 21 of process
as a "Schedule of Invoices" (perhaps somewhat misleadingly, since the
"invoices" have no bearing to any contractual sale), I do not consider that I
can place reliance on the pursuer's evidence, delivered in such general terms
as it was adduced. Similarly in
so far as Mrs Griffiths gave evidence in chief of a universality of worn
carpets in the units occupied by SRMC, I am unable to accept that part of her evidence . However,
in fairness to Mrs Griffiths, I would record that I do not question her endeavour
to give evidence to the best of her ability.
The questions were presented to her by counsel
in universal terms. In cross-examination
by Mr Cowan, she readily agreed that there were variations in the extent
of any wear to the carpets, but she was not taken to
any detail. It was also apparent that
she approached matters solely from the point of view of what was necessary, or
might be necessary, in commercial terms to attract a new tenant. She was not asked
questions directed to whether from the standpoint of a continuing occupier SRMC
had neglected to maintain or renew the carpet during the ongoing currency of
the lease.
[26] The
same may - to an extent - be said of the evidence of
Mr Weir. He was asked to describe
the condition of the carpets which he was asked to
replace in terms of their general condition.
Given that Mr Weir was, it seems, generally
employed to replace carpets to meet the needs of an incoming tenant in the
Business Centre (at least where the in-coming tenant did not do his own fitting
out works), I have reservations in accepting the reliability of his evidence on
the condition of the carpets as being always directed to units which had been
occupied by SRMC. As is evident
from the dates of Mr Weir's invoices, the process of laying new floor coverings
in the units formerly occupied by SRMC did not take place as single operation
but rather, on an intermittent basis; and in some instances
his invoices also include for carpeting of units which SRMC had never occupied.
[27] As already
indicated, the invoices from Mr Weir which have been
produced in process do not include a number of units occupied by
SRMC. When asked about the absence of
invoices relating to those other units, the pursuer simply offered the
explanation that "it must be that the invoices have not been looked out". While it is no doubt conceivable that an odd
invoice may go missing, I have difficulty with the pursuer's riposte that the
invoices relating to the re-carpeting of seven units should
simply not have been looked out.
Such extensive omissions must have been apparent to those engaged in
preparing the claim and it was never suggested that
for some reason or other, they had been lost or destroyed. Counsel for the pursuer did not adduce from
Mr Weir that he had done work additional to the invoices in process, for
which other, supposedly mislaid, invoices existed.
[28] The
foregoing gives me reason for preferring generally the
evidence of the defender on this matter.
As already recorded, he struck me as a man to whom image was important. He would not readily tolerate shabby office
premises, whether in terms of mural decoration or floor coverings. However, the defender readily stated that in
two units SRMC had not replaced the landlord's
carpeting prior to the incurring of the irritancy and that in those units the
carpeting was indeed worn. The units in
question were, said the defender, Units 28 and 32 being - as I
understood his evidence - the units at each end of the call centre created
from the amalgamation of Units 28-32 inclusive. It is indicated on the plan, no. 6/85 of
process, that the call centre extended from
Units 28-32, entirely consistent with the defender's evidence. However, having made avizandum I find on
closer examination of the summons, and the subsequent "Schedule of Leases", that
no mention is made in either of any lease of Studio/Unit 32.
[29] This
inconsistency was not noticed, or at least was not raised, by any of those participant in the proof. No point was made in
evidence or in submission respecting the defender's identification of the end
unit of the call centre as being Unit 32.
It was thus not suggested that he was mistaken
in ascribing the number 32 to one of the parts of the call centre. The inconsistency might be explained by such
a simple error, or a lapsus linguae. But, as already
mentioned, the plan indicates the "call centre" as embracing
Studio 32. Moreover, the quotation
from Mr Dixon (SRMC's decorator) refers to the decoration of
"Studios 28, 29, 30, 31 and 32"
[my emphasis]. It
therefore appears to me as a matter of probability that the defender, who
generally in the course of his testimony had a good grasp of the enumeration of
the various units occupied by SRMC, is probably correct in identifying one of
the areas with worn carpet as being Studio or Unit 32; but for some reason
the drafter of the summons has omitted the tenancy of that studio or unit. The fact that the pleadings omit reference to
Unit 32 may, possibly, also explain the absence from the invoices from
Mr Weir which have been lodged in process of any document relating to
Unit 32 if, as is likely, the selection proceeded on the basis of the
tenancies mentioned in the pleadings.
[30] In
these circumstances, given the defender's ready acceptance that the carpeting
in Units 28 and 32 was the original landlord's carpeting, which had
not been replaced, but which was indeed worn, I am prepared to uphold the
pursuer's claim that at the date of the irritancy SRMC were in breach of the
first branch of clause 6(f) as respects Unit 28. I would have made a like finding as respects
Unit 32, assuming it to have been held under the
pursuer's standard form of lease and to have been subject to a claim in the
Summons. For the rest, the evidence
tendered does not, for the reasons indicated, persuade
me that the pursuer has established that SRMC neglected to maintain or replace
carpets in a manner in breach of the first branch of clause 6(f) of the
leases.
Removal of Debris
[31] It is clear
that the liquidator's staff did not, by any means, remove
all of the property of SRMC. The
liquidator apparently took what could be realised for the benefit of the
general creditors; but he left behind considerable amounts of files, stocks of
stationery, some office equipment and various other miscellaneous items, the
task of removing that abandoned property being left - some, indeed many
people, might think very inconsiderately - to the landlord. The pursuer gave evidence to the effect that
his employees spent much (but not recorded) time in removing the abandoned
items to skips, which he said had been hired solely for that purpose -
although the hire of skips for the removal of rubbish from the Business Centre
was apparently a matter of regular course.
[32] However, the
only basis upon which counsel for the pursuer submitted that liability arose in
respect of the removal of the "débris" was entirely ancillary to the claim for
re-carpeting. It was, said counsel,
necessary to remove articles left on top of the carpets before the carpets could be lifted, removed and then replaced with new. Counsel made plain that he did not rely on
the obligation in clause 6(c). Nor was clause 6(r) of the leases invoked. It was not submitted that any obligation to
leave the premises void and redd arose ex
lege on irritancy of a lease. I
would also record that the Summons does not invoke any such common law
obligation nor either of the provisions of
clause 6(c) or clause 6 (r).
[33] Mr Cowan,
for the defender, naturally did not question that in order to replace a carpet
with a new floor-covering it is necessary to move out
any furniture or other articles resting on the carpet. But, he observed,
the need to move furniture or other articles to lay a carpet was not to be
equiparated with removing them to a specially hired skip. As I understood him, Mr Cowan was thus
proceeding on the hypothesis of a breach of the first branch of
clause 6(f) of the lease, which the landlord
remedied at his own hand. That would
simply involve the temporary displacement of the tenant's moveable property to
the corridor or other adjacent location.
For the rest, the defender's solicitor stressed and underscored the
ancillary or dependent nature of the claim presented as respects the removal of
débris.
[34] I think it
must follow ineluctably from the ancillary or dependent basis upon which the
removal of débris claim is presented and from the findings
which I make in paragraph [30] supra
that the claim for removal of debris must be restricted to Unit 28.
Quantification
[35] On the
basis that SRMC were in breach of the first branch of clause 6(f)
respecting the carpet in Unit 28, one may conveniently turn to the report
by Mr Alan Muat, number 6/80 of process. Mr Muat is a chartered quantity
surveyor, having qualified in 1964, and a partner in John Duguid
& Partners, Dundee. He had, in broad terms, been asked to review the claimed
remedial costs. He visited the premises
along with the decorator, Mr Fraser, and my impression was that the
greater focus was on redecoration, particularly whether one or two coats
of emulsion paint were appropriate. His
contribution to the quantification of the re-carpeting costs was limited. He was unable to contribute any objective
assessment of the figures claimed by Mr Dean in his "invoices" of costs
for removal of debris. With those
observations or reservations, the figure attributed by Mr Muat to
re-carpeting and the removal of debris from Unit 28 is £1,486. Although certain criticisms were canvassed in evidence and submission respecting the
costs claimed for re-carpeting and debris, in light of what follows respecting
the deposits paid by SMRC to the pursuer, I do not think it useful to explore
those criticisms and their possible impact on the figure for Unit 28. They are, essentially matters of relatively
minor detail.
The Deposits
[36] Clause 3(ii)
of the leases provides for the Occupant making a deposit
"... which shall be retained by the Owner until the termination
hereof howsoever and whensoever terminated, and the Owner shall be entitled to
deduct therefrom all sums due or becoming due to the Owner by the Occupant in
terms of or arising from this Lease or from any breach thereof before remitting
the balance of the deposit to the Occupant without any interest".
It is not in dispute that SRMC paid such deposits and the
pursuer accepted in evidence that SRMC had paid deposits to him in accordance
with the leases, and that he still held those deposits. The pursuer accepted that the deposits from
SRMC, which he still held, amounted in round terms to some £16,000. The existence of these deposits and their
effect as extinguishing pro tanto any
liability of SRMC, and hence the cautioner, is raised, in inter alia, the revised note of issues for the defender, No. 45
of process, lodged on 31 August 2005.
[37] In
addressing this issue, counsel for the pursuer briefly contended that the
deposits were funds owed to the liquidator and that the defender, as cautioner,
was liable to the pursuer for the totality of the claim due by SRMC without any
regard to the existence of the deposits.
No authority was advanced by counsel for this
proposition. For his part
Mr Cowan submitted that the defender, as cautioner, was entitled to any
defence, including in particular any right of compensation of debt or set-off,
available to the tenant;
and that a cautionary obligation is accessory and cannot be
greater than the obligation of the principal obligant. He referred in support of that submission to
the article in the Stair Memorial
Encyclopaedia Vol. 3, para. 843 and the
passage in Gloag & Irvine on The
Law of Rights in Security pp. 846ff.
[38] In my
opinion, Mr Cowan's submission is sound and thus prevails over
Mr Thomson's contention. It is
clear that the deposits were required as a limited security for the performance
of the tenant's obligations and indeed the pursuer has, quite
understandably, held on to them for that very reason. In advancing any claim in the liquidation,
the pursuer would of course require to deduct the amount of the deposits. It follows, in my opinion, that in advancing
his claim against the defender, qua
cautioner, the pursuer is bound to make a similar deduction or offset. The amount of the deposits - though not
precisely vouched or ascertained - was readily accepted by Mr Dean as
being approximately £16,000 (made up of some £10,000 as the ordinary
deposit calculated in accordance with clause 3(ii) plus a further
additional deposit of £6,000 made as part of the collateral agreement
respecting the removal of partitions).
Since even the first of those constituent sums considerably exceeds the amount which I regard as recoverable by the pursuer,
accepting the validity of Mr Muat's figures as respects Unit 28, it
follows that no liability can attach to the cautioner for the amount placed by
Mr Muat on Unit 28. Given its
broadly similar size, the same practical result would also ensue even if the
lease of Unit 32 had been included in the pleadings.
Windows
[39] The
existence of the deposits means that in any event the same fate also befalls
the claim for the cracked window panes. The claim is advanced
respecting Unit 27 and Unit 64 and the amounts sought, in
Mr Muat's report, are £280 and £400 respectively. These amounts are clearly well within the
remaining total of the deposits held by the pursuer.
[40] Mr Cowan
also challenged this head of claim on other grounds, principally that the claim
was not vouched in any way. In giving evidence regarding Unit 27,
the pursuer explained that the windows were original "Crittal" windows dating
from the early part of the 20th Century. The cracked panes were
replaced using a "cherry picker" hoist as part of a general repair of
glazing and other works in the Business Centre.
The pursuer estimated that the cost of the glass itself might be
around £98 and the remainder of his claim was "something for the cherry
picker". The pursuer was not asked in
evidence about the replacement of window panes in
Unit 64. I have to say that I
regard the evidence tendered in support of this head of claim is unsatisfactory. It amounts in effect to the ipse dixit of the pursuer unsupported by
any documentary evidence as to the cost of, for example, the glass, or the hire
of the cherry picker and the extent to which it was used
for other windows, or other maintenance operations elsewhere in the Centre. Prima
facie a claim for sum £680 for the replacement of a limited number of
cracked window panes in two windows appears high. I would therefore have been inclined to
uphold this branch of Mr Cowan's submission, but in light of earlier findings the practical materiality of the claim is displaced
by the existence of the deposits.
Other Matters
[41] While the
foregoing is sufficient for the disposal of the action, it is appropriate that
I record certain additional matters canvassed in submission.
[42] First,
the defender's solicitor-advocate submitted that while the claim was now
presented as being the recovery of the landlord's "costs" of carrying out works
to remedy breach of an ongoing tenant's liability (as clause 6(f) would
require), reality was that the steps taken by the landlord were not in fact to
remedy the tenant's breach but to equip the premises for other extraneous
reasons. Thus, as respects a
number of the units - for example 28-32 - erection of new
partitions was carried out for the landlord's future
purposes and not with a view to remedying any breach by SRMC of the first
branch of clause 6(f).
[43] I think
there is force in this point. If, as
appears, the pursuer decided to re-configure the call centre to discrete office
units, which would involve among other things the re-decoration and individual
re-carpeting of the various re-created units, he cannot simply claim a
financial contribution on the basis that carpets which would inevitably be
replaced by different floor coverings in different configurations were
originally worn. (I am
conscious that in agreeing to the removal of the partitions, the pursuer may
have entered into agreements with SRMC for their reinstatement on outgo on the
conventional ish but those obligations may not be enforceable
against the cautioner either on the view that they are agreements outwith the lease, or, possibly, that being "prior to
outgo" obligations, performance is prevented by the pursuer's decision to
irritate the lease).
[44] Secondly, Mr Cowan,
no doubt with a view to increasing the sum of £16,000 held as deposits and
thus available for compensation of debt, maintained additionally that SRMC were
entitled to recover a proportion of the pre-paid rents for the month of June,
namely the period between 9 June and 30 June 2003. The basis of this was the condictio causa data causa non secuta
and in that connection he referred me to the well known decision in Cantieri San Rocco v The Clyde Shipbuilding and Engineering Co
Ltd 1923 SC(HL) 105. The submissions of Mr Cowan, and
Mr Thomson's response on this, in my view rather difficult matter, were
limited and since it is not necessary for my decision I think it better that I express
no view upon the matter.
[45] The final
matter to be mentioned is that Mr Cowan submitted
that interest should only run from the dates upon which the "costs" were
incurred. He pointed to the fact that
the evidence demonstrated that some of the "costs" incurred by the pursuer were
incurred only after the date of citation and that this should be borne in
mind. In the event I do not have to
consider the question of interest but in principle I
would regard that submission as being sound.
Disposal
[45] For the
reasons given, I conclude that I must grant decree of absolvitor in favour of
the defender.
