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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Wolanski And Company Trustees Ltd v. First Quench Retailing Ltd [2008] ScotCS CSOH_50 (26 March 2008)
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Cite as: [2008] ScotCS CSOH_50, [2008] CSOH 50
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OUTER HOUSE, COURT OF SESSION [2008] CSOH 50 |
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CA35/06 |
OPINION OF LORD DRUMMOND YOUNG in the cause WOLANSKI & CO TRUSTEES LIMITED Pursuer; against FIRST QUENCH RETAILING LIMITED Defender: ญญญญญญญญญญญญญญญญญ________________ |
Participating parties:
Pursuer: Thomson; DLA Piper
Defender: Connal, QC; McGrigors
Non-participating parties:
Tods Murray LLP (for the first third
party)
Mains, Solicitors (for the second third
party and third third party)
[1] The
pursuer is the trustee of a named pension plan administered by J. Rothschild
Assurance. In that capacity it is the
heritable proprietor of premises at
[2] By
sublease dated 15 and
[3] The
pursuer avers that, notwithstanding the removal of Degreefresh Ltd, the persons
who had been in occupation continued to occupy and trade from the premises as
an Italian buffet restaurant under the name "Mangiare". The liquor licence was held by a body known
as "The Marco Guarino, Gordon Craig and Aristide Moccia Partnership". The pursuer avers that it had not consented
to the occupation of the premises by such an entity. The pursuer began summary cause proceedings
for removal of the occupiers on
The defender's contentions
[4] The
action is defended on a number of distinct grounds. So far as material for present purposes,
these are as follows. In the first
place, it is averred by the defender that on
The terms of the lease and assignation
[6] Clause
6 of the lease prohibits the tenant from assigning or subleasing the premises
or parting with possession or occupation without the previous consent of the
landlord, which consent is not to be unreasonably withheld (clause 6.3.2). Clause 6 further stipulates (clause 6.3.3.3(c))
that any sublease should include provisions that prohibit any assignation or
other dealing with the subtenant's interest without the previous consent of the
head landlord, which consent is not to be unreasonably withheld. Prima
facie those provisions would apply to any assignation of the sublease or
any other transfer of possession to the individuals who have been convened as
third party.
[7] The
defence to the action turns in large measure on the terms of the assignation in
favour of Soulband Ltd. It is averred by
the defender that the pursuer consented to the assignation and thereby
consented to the provisions found in the assignation that enabled the
guarantors, the third party, to assume the place of the subtenants. In that document the defender is referred to
as "the Landlords", Big Mammy K Ltd is referred to as "the Tenants", Soulband
Ltd is described as "the Assignee" and the three individuals convened as third
party are referred to as "the Guarantors".
Clause (Second) of the assignation provides:
"The Landlords have agreed
to consent to the Assignation hereinafter granted; therefore the parties have
agreed and do hereby agree as follows:-
(i) The Tenants hereby
assign to the Assignee and its permitted successors and Assignees, whomsoever,
the [Tenants'] whole right, title and interest in and to the Sub-Lease..., with
entry as at the Twenty Fourth December Two Thousand and One;...
...
(iii) The Landlords consent
to the foregoing Assignation.
...
(vi) In Clause 13 of the
Sub-Lease the words 'Ladies Retail Fashion Outlet'... shall be deleted and the
words 'Licensed Restaurant' shall be substituted".
Clause (Third) of the assignation provides:
"(i) In consideration of the
grant of these presents, the Guarantors hereby agree and bind and oblige themselves
as cautioners, co-obligants and full debtors for and along with the said
Soulband Limited as Sub-Tenants under the Sub-Lease... in the whole of the
obligations whatsoever (present and future) undertaken by or incumbent on the
Sub-Tenant directly or indirectly under or by virtue of these presents and that
in all respects;
...
(iii) The Guarantors hereby
further bind and oblige themselves that if the Sub-Tenant shall go into
liquidation or shall refuse to adopt or shall otherwise disclaim the Sub-Lease
or the Sub-Tenant shall be wound up or otherwise cease to exist during the
three year period specified in sub-clause (iv) hereof then, and in any of such
cases, if the Landlord shall [by] notice within three months after such refusal
or disclaimer or other event as aforesaid require, the Guarantors shall accept
a new Sub-Lease of the subjects for a period commensurate with the residue
which, if there has been no refusal or disclaimer or other such event, would
have remained for the period of endurance of the Sub-Lease, at the same rent
and subject to the like obligations and conditions as are contained in the
Sub-Lease with exception of this clause;...".
The assignation was executed by the three individual
guarantors.
The pursuer's
arguments
[8] The action
was appointed to debate. Counsel for the
pursuer submitted that the defender's averments were irrelevant in four
respects: first, the defender did not relevantly aver that the pursuer had
expressly consented to any assignation of the sublease to the guarantors (the
third party); secondly, there were no relevant averments that the pursuer had
by words and actions impliedly consented to any such assignation; thirdly, the
defender's averments in support of an implied term that the pursuer should
refer to the defender as tenant before removing any occupier were irrelevant;
and fourthly, the defender failed to make any relevant averments of material
breach of contract by the pursuer such as to justify the defender's recession
of the lease. The defender's position
was that the first of these issues, express consent, might be decided at
debate; subject to that, the whole of the parties' averments should go to proof
before answer; the nature and extent of the proof would require to be discussed
in further case management hearings.
Whether the pursuer consented expressly to an
assignation of the sublease to the guarantors
[9] It is
clear that the pursuer's consent is required for any assignation of the
sublease; it was not disputed that that was the effect of clauses 6.3.2 and
6.3.3.3(c) of the lease. So far as the
guarantors are concerned, any expression of consent to an assignation in their
favour must be found in the pursuer's consent to the assignation in favour of Soulband
Ltd. In that respect two averments are
made by the defender. First, it is said
that on 12 November 2001 the pursuer's then agents acknowledged that the
pursuer had had sight of the assignation; in the chronology agreed between the
parties for the purposes of the present debate this is developed, and it is
agreed that on 12 November a letter was sent by the pursuer's previous agents
confirming agreement by the pursuer to the assignation. Secondly, it is averred that on
[10] For the
pursuer it was submitted that the consent expressed in those letters only
extended to the assignation in favour of Soulband Ltd, and not to any further
transfer in favour of any other party.
That was, it was submitted, the plain meaning of the words used in the
assignation; that deed effected a transfer of the sublease to Soulband Ltd. Consequently when the letters from the
pursuer's agents expressed consent to the "assignation" that plainly denoted
the transfer in favour of Soulband Ltd, and not a transfer to any other
person. There is an attractive
simplicity about this argument, but I have come to the conclusion that it is
mistaken. In my opinion the critical
question is to identify precisely what was consented to in the two
letters. It seems to me that the obvious
and natural import of the consent was not that the pursuer agreed to a transfer
in favour of Soulband Ltd, the named assignee, and no one else. It was rather that the pursuer agreed to the
transaction embodied in the assignation document, and to the whole of that
transaction. This point is, I think, of
general significance: if a party states that he consents to either a named
document or an identified transaction, that consent will normally be construed
as extending to the entire transaction embodied in the document, or the
totality of the identified transaction.
Such a construction follows from the principle that any document should
be construed as a whole. It also follows
from the basic nature of nearly all commercial transactions, in which a complex
of rights, obligations, powers and the like is negotiated as a package;
consequently any reference to a transaction will normally denote the totality
of that package. Obviously exceptions to
that norm may exist, but in my opinion there is nothing in the present case to
suggest that it is exceptional. The
guarantee and step-in provisions contained in clause (Third) of the assignation
are scarcely unusual in modern commercial practice; they fulfil an obvious
function in providing for the possible insolvency of a small private company,
and to that extent they confer an element of security on the intermediate
landlord. These provisions clearly form
a significant part of the transaction that is embodied in the assignation
document. When, therefore, the pursuer
consented to that transaction, I am of opinion that it consented to the operation
of the guarantee and step-in provisions.
[11] Counsel
for the pursuer submitted that the consent to the assignation should not extend
to a further transfer in favour of a third party about whom the pursuer as head
landlord might know nothing. In my
opinion the answer to this argument is that, on seeing the assignation
document, the pursuer or its agents should have read the document and noted its
terms; those terms made it clear that in some circumstances a third party might
be compelled to accept a transfer of the sublease. In those circumstances, the simple and
obvious step is to investigate who the third party is. In fact it seems clear that at least one of
the guarantors was a director of Soulband Ltd and that the other two were
closely connected with that company; consequently it should not have been
difficult to obtain satisfactory information about the three individuals
concerned. The fundamental point,
however, is perhaps that the pursuer cannot claim that it was in ignorance of
the possibility of a transfer to the three guarantors when such a transfer was
expressly contemplated in the transaction to which consent was given. I accordingly conclude that, on the facts set
out in the agreed chronology, the pursuer consented expressly to the
assignation in favour of the guarantors.
Whether the
pursuer impliedly consented to an assignation to the guarantors
[12] In view
of my answer to the previous question this issue is superseded. I must, however, express an opinion on the
question of implied consent. The
defender avers that following the assignation Soulband Ltd took occupation of
the premises. That occupation continued
until Soulband Ltd was wound up on
[13] If this
argument is to succeed, it is obviously critical that the pursuer was aware of
the full terms of the assignation. It is
averred by the defender that on
[14] In
relation to these averments and agreed facts a number of submissions were made
on behalf of the pursuer. First, it was
submitted that it might be possible to infer consent to acquiescence to an
assignation in favour of Soulband Ltd, but this could not be transposed to
consent to occupation by anyone else, such as the third party acting as
guarantors. That argument would have
considerable force if the full terms of the assignation in favour of Soulband
Ltd had not been seen by the pursuers.
In the present case, however, it is averred by the defender that the
pursuer's former agents had acknowledged that the pursuer had had sight of the
assignation. If that is so, the pursuers must have been aware of the terms of
the assignation, including the guarantee and step in provisions. On that basis, it might well be a reasonable
inference that the pursuer had consented by acquiescence to all of those
provisions. For present purposes it is
unnecessary to go further than that; the question of precisely what was
consented to would require to be decided at proof.
[15] It was
further submitted on behalf of the pursuer that the defender's averments did
not satisfy the requirements of acquiescence.
It was clear from discussions of the law, notably that in William Grant & Sons Ltd v Glen Catrine Bonded Warehouse Ltd, 2001 SC 901, that before a party could found on the principle of acquiescence it was
necessary for him to aver that he had acted in reliance on the conduct of the
other party. Such reliance was not
averred in the present case. Indeed, on
the dates averred by the defender, it was impossible to say that there had been
any such reliance. The only actings that
the defender could found on by way of reliance were executing the assignation
in favour of Soulband Ltd and giving entry to that company. Those events, however, had occurred by
January 2002 at the latest; that was before the pursuers had done anything that
might constitute acquiescence.
[16] The
requirements of acquiescence are set out in William
Grant & Sons Ltd v Glen Catrine
Bonded Warehouse Ltd, supra. In that
case the Lord President stated (at 923A-B):
"[T]he bar to a pursuer
proceeding arises only where two conditions concur: first, the pursuer acts in
such a way that he intimates that he consents to an act which has been done
and, secondly, he thereby induces others to do that from which they might
otherwise have abstained. In other
words, the pursuer acquiesces in an act so as to induce a reasonable belief
that he consents to it, and the position of others is altered by their giving
credit to his sincerity".
In the same case Lord Nimmo Smith stated (at 938F):
"It appears to be to be
entirely clear... that in order for a defender to succeed in a plea of
acquiescence he must be able to establish a causal relationship between the
pursuer's failure to act and his own actings; that he would not have acted as
he did if the pursuer had not induced a reasonable belief that he consented to
his doing so. In the present case the
defenders' plea of acquiescence must fail because proof of this essential
feature is lacking; indeed they never offered to prove it".
In my opinion the actings by the pursuer referred to
in the defender's pleadings and the agreed chronology are capable of amounting
to acquiescence in Soulband's occupation of the premises. Counsel for the
pursuer submitted that the only reliance by the defender on the pursuer's
actings consisted of the execution of the assignation, on 6 and
[17] Counsel
for the pursuer further submitted that the pursuer had done nothing more than
remain silent in the face of the transaction involving the defender, Big Mammy
K Ltd and Soulband Ltd. In those
circumstances, however, there was no duty on the pursuer to speak, and consequently
mere silence could not give rise to any inference of personal bar, including
acquiescence. Reference was made to William Grant & Sons Ltd v Glen Catrine Bonded Warehouse Ltd, supra,
and to British Linen Co v Cowan, 1906, 8 F 704. In the former case
the defenders argued that the pursuers had acquiesced in their selling
alcoholic drinks using the same name as the pursuers, because no objection had
been taken at an earlier stage to the use of that name. That argument was rejected. The Lord President stated (at 2001 SC 925E):
"[T]he defenders' plea of
acquiescence is based on an inference which they seek to draw from the pursuer's
silence or failure to object. Inferences
of that kind are legitimate only where the party concerned is under a legal duty
to speak or object".
In the latter case bills of exchange had been drawn
over a period of years making fraudulent use of the defender's name. The pursuers, who had discounted the bills,
had sent notices to the defender from time to time stating that the bills were
lying under protest. The defender had
not replied. The Lord Justice-Clerk
stated (at 8 F. 710):
"Passivity can never
constitute an unreal obligation into a real, can never make a man into a debtor
who has neither said nor done anything to make him a party to the obligation,
which has no existence apart from some action on his part".
In neither of these cases, however, was there any
pre-existing relationship between the parties.
In the former case the parties were merely rival traders; and in the
latter the defender had no relationship whatsoever with the pursuers. In the present case, by contrast, there was a
pre-existing relationship between the parties: they were landlord and tenant. Moreover, the defender's averments state that
the defender or those acting on behalf of the defender had provided a copy of
the draft assignation to the pursuer on or prior to
[18] For the
foregoing reasons, I am of opinion that the defender's averments relating to
acquiescence are relevant. Had it been
necessary to consider the matter further, I would have allowed a proof before
answer on those averments.
The defender's
averments relating to an implied term that the pursuer should refer to the
defender before removing any occupier
[19] The
defender avers that the lease between the parties contained an implied term to
the effect that the pursuer would not take steps to remove an occupier without
first referring the matter to the defender; the relevant averments are set out
at paragraph [5] above. The pursuer
asserts that the averment of such an implied term is irrelevant. The existence of such an implied term is not
material if, as I have held, the pursuer consented to the guarantee and step-in
provisions of the assignation; if such consent were granted the third party
would be the authorized occupier by virtue of the step-in provisions, and any
attempt to remove or reject the third party would amount to a breach of the
lease. Nevertheless, a detailed argument
was presented on the question of an implied term, and I will now deal with
that.
[20] This
part of the dispute between the parties turns in large measure on the terms of
clause 9 of the head lease. Clause 9 is
headed "Landlord's remedies on default by Tenant". Clause 9.2 provides that, in the event of the
tenant's making any alteration or addition to the premises otherwise than in
accordance with the provisions of the lease, the landlord should be entitled to
remove such alteration or addition, restore the premises and make good any
damage. Clause 9.3 then provides as
follows:
"In the event of the Tenant
failing to fulfil the obligations undertaken by it under the Lease...
the Landlord shall be
entitled to serve notice on the Tenant requiring the Tenant to make good any
such deficiency (whether before or after the Date of Termination) and in the
event of the Tenant failing to comply with any such notice to the satisfaction
of the Landlord within three months of the service of such notice (or sooner if
appropriate or requisite) the Landlord shall be entitled to make good such
deficiency".
Clause 9.5 provides:
"Exercise of any of the
rights conferred upon the Landlord by clause 9 shall be without prejudice to
any other right of action or remedy available to the Landlord".
In considering the application of clause 9.3 to the
circumstances of the present case, the terms of clause 6.3.2 of the head lease
must also be borne in mind; this involves an obligation on the tenant "Not...
to part with or share the possession or occupation of the whole of the
Premises... without the previous consent of the Landlord". It follows that, if the tenant permits any
person to occupy the premises without the landlord's consent, the landlord can
make use of clause 9.3 to compel the tenant to remove the unauthorized
occupier; if the tenant fails to take action, the landlord can take action at
its own hand.
[21] It was
submitted for the defender that, if a notice had been served under clause 9.3
in relation to the occupation by the third party, the defender would have had
the opportunity to confirm whether or not occupation by the third party was
authorized. If the defender had confirmed
that occupation was authorized, no proceedings would be necessary; otherwise
the defender would have been in a position to take proceedings against the
unauthorized occupier. For the pursuer it was submitted that this argument for
the defender was remarkable; it necessarily involved the proposition that there
might be a person authorized to occupy the premises about whom the pursuer was
ignorant. In my opinion that criticism
is correct. Clause 6.3.2 of the head
lease clearly involves the proposition that the pursuer as head landlord must
be aware of any subtenant or any other person authorized by the defender as
tenant to occupy the premises; if the pursuer is not aware of any such person,
either directly or as a member of a category of persons who have been permitted
to take occupation of the premises in defined circumstances, the necessary
authorization cannot have been given.
[22] Counsel
for the pursuer went on to submit that, if a term were to be implied into the
lease in the way averred by the defender, the test would be necessity, founded
on business efficacy; that was the basis averred by the defender for the
implied term. The implication of a term
must be consistent with of the intention of the parties; consequently the
express terms of the contract are primary and cannot be contradicted by an
implied term: McBryde, Contract,
9-10. In the present case the defender's
suggested implied term contradicted clause 9.3 of the lease. Under clause 9.3 a specific procedure was
laid down whereby the landlord served notice on the tenant in relation to a
breach of the terms of the lease, and was given a direct right of action only
if the tenant failed to comply with the notice.
That dealt with the situation averred by the defender. In the support of the proposition that an
implied term of a contract must be consistent with the express terms, reference
was made to well-known statements of the law in BP Refinery (Westenpoint) Pty Ltd v Shire of Hastings, (1977) 180 CLR, 266, at 283; Reigate v Union Manufacturing Co (Ramsbottom) Ltd, [1918] 1KB592, at 605 per
Scrutton LJ; William Morton & Co v Muir Brothers & Co, 1907 SC 1211,
at 1224 per Lord McLaren; and F. Brown
PLC v Tarmac Construction (Contracts)
Ltd, 11 February 2000, unreported, at page 5 per Lord Macfadyen. Counsel also referred to cases which consider
the question whether a landlord could eject a subtenant without reference to
the principal tenant. In Earl of
[23] In my
opinion it is contemplated by clause 9.3 of the head lease that the pursuer as
landlord should normally act through the defender as tenant in dealing with any
unauthorized occupier. It is obvious
that the defender should be aware of who is in occupation of the premises;
indeed, that formed an important element in the defender's argument on this
matter. If the occupier is not
authorized, permitting him to remain in possession of the premises is clearly a
breach of clause 6.3.2 of the head lease.
That amounts to a failure by the tenant to fulfil the obligations
undertaken by it, and that brings clause 9.3 into operation. On that basis, the landlord should normally
act through clause 9.3, by serving a notice on the tenant and, in the event
that the tenant fails to comply with the notice, taking direct action. That seems to me to provide a perfectly
coherent scheme for dealing with unauthorized occupation of the premises, at
least in cases where there is no urgency; in such cases it is a scheme that
provides the landlord with an effective remedy.
It is accordingly difficult to see why it is necessary as a matter of
business efficacy to imply a term into the lease along the lines averred by the
defender. In cases of urgency, or where
it is otherwise not reasonably practicable to proceed in the manner specified
in clause 9.3, I am of opinion that the landlord might proceed directly against
an unauthorized occupier without going through the procedures in clause
9.3. The right of a landlord to take
such a course of action is supported by the decision in Gray v Low, supra; to the
extent that the decision in Morison v Grant, supra, is to the contrary I am
of opinion that it is not correct.
Nevertheless, it seems to me that Morison
was concerned with a plea of all parties not called in a situation where it was
reasonably practicable to call the tenant as a party to the action; it does not
deal with the relevancy of an action brought directly by the landlord of property
against an unauthorized occupier. The
basis for such an action is in my opinion the landlord's ownership of the
subjects; he is entitled to take such steps as are necessary to protect his
interest in the property, and if it is not reasonably practicable to use the
procedures contemplated by provisions such as clause 9.3 I am of opinion that
the landlord can proceed directly against the occupier. If possible he should call the tenant as a
party, but in an extreme case, such as where the tenant cannot be discovered or
where there is a clear need for urgency, I do not think that that is necessary.
In this connection, I am of opinion that the terms of clause 9.5 are
significant; that clause makes it clear that the rights conferred on the
landlord by inter alia clause 9.3 are
without prejudice to any other rights of the landlord.
[24] Counsel
for the pursuer further submitted that no causal connection was averred between
any breach of an implied term by the pursuer, through the failure of the
pursuer to serve a notice on the defender, and the removal of the third party
from the premises. The defender averred
as a mere assertion that, if a notice had been served by the pursuer, the
summary cause action would not have been raised. It was submitted that this did not give the
defender the notice of how the proceedings came to result in the vacation of
the premises by the third party, especially in view of the admissions that no
decree was ever obtained against the third party and that the third party vacated
the premises voluntarily. This argument appears to proceed largely on the basis
of a failure to give adequate specification.
If so, in a commercial action it should not form part of the argument at
debate but should have been dealt with at an earlier stage, in preliminary or
procedural hearings. Apart from that,
however, I am of opinion that the defender's averments regarding causation of
loss are relevant. What is said is that
the proceedings raised by the pursuer to obtain removal of the occupiers first
called on
[25] Nevertheless,
I am of opinion that the defender's averments of an implied term are not
relevant. For that reason I hold that
the following passage in answer 5 of the defences should be excluded from
probation:
"The tenant of a lease has
the primary interest in occupation. In
practical terms the tenant is better placed than the landlord to know the
status of any occupier, be that occupier in place under a sub-lease, licence or
other arrangement. It was an implied
term of the Lease, particularly given that any action would be at the expense
of the Defender, that the Pursuer was not entitled to eject any occupier
without reference to the Defender, and ought to have made inquiries of the
Defender or served a notice on the Defender pursuant to Clause 9 of the
Lease. In recognition of this term of
the Lease, necessarily implied for business efficacy, the Pursuer had
previously (as regards the occupation of Degreefresh Limited) instructed the
Defender to remove an unauthorized occupier, with which instruction the
Defender complied. Had a notice been
served by the Pursuer on the Defender in terms of clause 9 of the Lease in June
2005, the action by the Pursuer against the Third Party (in occupation in terms
of the step in provision of the Assignation) would not have been raised".
I should add two further observations. First, there is a suggestion in these
averments that the procedure in clause 9.3 of the Lease could have been
followed but was not. It seems to me
that that procedure, which is contained in an express term of the Lease, could
have been available; in that event that would have been no need for any implied
term, and the averments should have concentrated on the consequences of the
failure to make use of the procedure in clause 9.3. Secondly, as mentioned above, I am of opinion
that in cases of urgency or where the tenant cannot be discovered the landlord
may proceed directly against the subtenant.
In the present case, however, there was no suggestion that the use of
the procedures in clause 9 was impossible or impracticable.
Whether the defender has made relevant averments of
material breach of contract
[26] The
last argument for the pursuer was that the defender had not made any relevant
averments of material breach of contract such as to justify recession of the
lease. The breach of contract that is
founded on by the defender is a failure by the pursuer to refer to the defender
before raising summary cause proceedings against the third party. The pursuer''s argument is that, even if
there were a breach of contract through the raising of summary cause proceedings,
it could not be said that that amounted to a material breach of contract such
as to justify rescission. This part of
the argument clearly proceeds on the hypothesis that there was a breach of
contract, but it seems to me that it is not dependent on the existence of an
implied term; the same argument could apply to a failure to observe the
provisions of clause 9.3.
[27] The
specific acts that are said to constitute a breach of contract are as
follows. The pursuer raised summary
cause proceedings for removal of the third party. At the first calling of the action agents for
the defenders in the action, who are the present third party, obtained a
continuation to take counsel's opinion and consider their position. No decree was in fact obtained; the first
hearing was continued, and then the proceedings were subsequently dismissed
with no expenses due to or by either party.
Immediately before the date to which the first hearing was continued,
the defender received the keys for the premises. An attempt was made to return
them to the third party, but the ultimate result was that the third party
removed voluntarily from the premises.
It is said by the defender that that was a consequence of the
proceedings taken against them.
[28] Counsel
for the pursuer conceded that the averments of material breach would have been
relevant if it had been said that the pursuer had actually removed an
authorized occupier by way of decree of ejection. In the present case, however, the averments
were not material for three reasons.
First, the case involved removal of an unauthorized occupier. Secondly, all that had happened was the
raising of proceedings; no decree had been taken. Thirdly, in assessing whether a breach of
contract is material, regard should be had to the nature of the reach rather
than its consequences; nevertheless, the consequences may illustrate the materiality
of the breach: Scotmore Developments Ltd v Anderton, 1996 SC 368. In the present case, the guarantors' decision
to remove did not result from a decree.
Thus any breach of contract would not have had any consequences, and
that indicated that it would not have been material.
[29] In my
opinion it is not possible at this stage to hold that the defender has not made
averments sufficient to support a material breach of contract. In relation to the factors founded on by
counsel for the pursuer, the first is in my opinion misconceived, for reasons
already stated; I have held that the occupation by the third party was in fact
authorized by the pursuer. The second
and third points are largely a matter of causation; it is said that the raising
of proceedings had no actual consequences and therefore could not have been a
material breach. In my opinion it is
impossible to draw such a conclusion at this stage. The defender avers that the third party's
removal from the premises was a consequence of the court proceedings. In my opinion the question of whether the
third party's removal from the premises was caused by the proceedings is a
question of fact. It is obvious that the
raising of proceedings may cause the defender in those proceedings to take the
action sought by the pursuer even though no decree is pronounced. In such a case it can readily be said that
the raising of proceedings has caused that result. I am further of opinion that
the defender's averments are sufficient to go to probation. The pursuer's argument was founded in part on
inadequate specification. In commercial
procedure, as I have already mentioned, points of specification should be taken
prior to any debate. In the present case
I am of opinion that sufficient has been said to enable evidence to be led,
possibly from the individuals who together make up the third party, as to
whether their removal was a consequence of the court proceedings.
[30] As to
the materiality of any breach, it is in my opinion obvious that the removal of an
authorized subtenant must be capable of amounting to a material breach; what is
involved is the eviction of a person who has a right of occupation. If the subtenant had been unauthorized, for
reasons already discussed I consider that proceedings by the landlord might in
some circumstances be justified. In
others, however, the failure to proceed through the tenant in accordance with
clause 9.3 might constitute a breach of contract. In my view it is impossible to determine
without proof whether such a breach of contract might be material. Nevertheless, on the basis of my findings in
paragraphs [11] and [12] above, I am of opinion that the third party was an
authorized subtenant. On that basis I consider that raising proceedings against
the third party could readily be considered a material breach. That is sufficient to reject this part of the
argument for the pursuer.
Conclusion
[31] For the
foregoing reasons I reject the first, second and fourth of the pursuer's
arguments but uphold the third. I will
exclude from probation the passage quoted at paragraph [25]. Otherwise, the case will be put out by order
in order that further procedure may be considered.