Scottish High Court of Justiciary Decisons

SHEILA MILLER v. CLERICAL MEDICAL INVESTMENT GROUP LIMITED AND ANOTHER [2001] ScotHC 57 (18th July, 2001)

[1] The pursuer is the tenant of a shop within the Princes Square Shopping Centre, Buchanan Street, Glasgow which she occupies pursuant to a Lease granted to her by G. R. E. Compass Ltd in June 1994 (No. 6/1 of Process). G.R.E. Compass Ltd subsequently disposed of the shopping centre to the defenders who have accordingly succeeded to the landlords' interest under that Lease, which expires in March 2004.

[2] The first conclusion of the summons seeks declarator that:

In the second conclusion the pursuer seeks interdict of the defenders from granting any such lease, licence or other right of occupation and there is a further conclusion seeking payment of damages.

[3] The matter evidently prompting the pursuer to raise this action is set out in averment on her behalf in Article 10 of the Condescendence of the summons as follows:

[4] For their part the defenders admit that, commencing on 1 December 2000, they granted a personal right of occupancy of the area known as Kiosk 1 to 925 Ltd who have a sales position along the lines described in Article 10. The defenders go on further to aver that prior to 925 Ltd taking up occupancy of the kiosk the area known as Kiosk 1 was let to i2i International Ltd by Lease dated 13 September and 26 October 1996 and registered in the Books of Counsel and Session on 3 January 1997. The area known as Kiosk 1 is only one of several kiosks within the Centre which are occupied by other traders selling a variety of goods. The defenders also aver that the area occupied by the kiosk was never part of the "common parts" described in Part 2 of the schedule to the Lease. These averments on behalf of the defenders are not admitted by the pursuer and for the purpose of the arguments advanced at the debate which I heard it must be assumed that at the time of concluding the pursuer's Lease the area in question was not let or occupied as a trading kiosk.

[5] Although the summons makes reference to various provisions of the Lease, it does not contain any substantial exposition of the legal ground or grounds upon which the pursuer seeks declarator and interdict. During the course of the debate, counsel for the pursuer explained that the pursuer's case was advanced on two bases.

[6] First, it was the pursuer's submission that the landlord was disabled from granting any right of occupancy of any part of the "common parts" particularly any part of the floor surface of the shopping mall, because, it was said, the pursuer had right thereto in common with other tenants in the Centre.

[7] Secondly, in the alternative, it was contended that from the circumstances of the relationship of landlord and tenant constituted by the Lease in question there was to be implied a restriction on the landlord from his granting any right of occupancy within the Centre to any trader carrying on a business competing with the pursuer's business, her business being the purpose for which the shop was let to her.

[8] Since, as I understood it, the essence of the first ground advanced by counsel for the pursuer was that the pursuer had some right in common with other tenants to the floor space occupied by the kiosk, with which right the granting of a right of occupancy to a third party to set up a kiosk was incompatible, it is appropriate to examine - as did counsel - the terms of the grant to the pursuer under the Lease.

[9] In terms of its structure the document No. 6/1 of process contains a relatively short number of clauses which might be described as the lease proper but which refer to a comparatively voluminous schedule to the lease which is divided into different "Parts". By virtue of Clause Second of the lease, what is given to the pursuer as tenant is a lease of "the Premises" plus the "the pertinents set out in Part III of the Schedule" but subject to the "exceptions and reservations set out in Part IV of the Schedule."

[10] The "Premises" are defined in Part I of the Schedule and, put briefly, consist of what is described as "Unit 26" on the ground floor extending to 496 square feet, outlined in red on the plan annexed to the Lease. Nothing turns on the precise terms of the definition of the "Premises" and, where convenient, I shall refer to the Premises as "the shop". The "pertinents" are defined in Part III and certain of their provisions are of more materiality. In particular, paragraph (1) confers:

Part III of the Schedule makes no reference to "Common Parts". That term is defined in Part II of the Schedule. Part II is in fact simply a defining provision and defines the "Common Parts" as being:

- following which certain particular provisions ensue such as references to the roof, foundations, external walls, the floor wall and ceiling finishes of the pedestrian malls, toilets, car parking etc. Some of those are qualified to the extent that they are not comprised within a unit.

[11] It may be observed that the "Common Parts" are defined by reference to the areas of the Centre let or available for let and effectively encompass all that is not so let or available for letting. It is also to be observed that despite these parts of the Centre being described as "Common Parts" the Lease does not give to the pursuer any general rights of occupancy or possession in common with others to the "Common Parts" beyond such limited rights as are contained in the pertinents set out in Part III of the Schedule. The landlords, as part of their obligations, undertake various duties concerning the maintenance and cleaning of the Common Parts. The Common Parts are also the subject of provision in Part IV of the Schedule, paragraph 6 of which contains the following reservation in favour of the landlords:

[12] In relation to this branch of his submissions the right upon which I understood Mr Nicol, for the pursuer, to rely was the right of access contained in head 1(a) of the pertinents in Part III of the Schedule, quoted above. His position was that the placing of a kiosk within the pedestrian mall amounted as I understood it, to a breach of the right conferred by that particular provision.

[13] For his part, Mr Di Emidio, who appeared for the defenders pointed out that it was not averred that the presence of the kiosk prevented the pursuer or members of the public from walking to and from the pursuer's shop or adversely affected her or their ability to do so. Further, he submitted the right of access over the shopping malls conferred in Part III of the Schedule fell to be read along with the reservations contained in Part IV of the Schedule, particularly paragraph 6 which gave the landlord a general right to regulate or control the use of the Common Parts. Moreover, the lease envisaged the placing of barrows and stalls on the malls since one found among the provisions on rent in Part XII of the Schedule the definition of a "turnover lease" which referred to leases "other than (a) units K7-K14 inclusive [which are the Food Court], (b) barrows and (c) other temporary or semi-permanent retail outlets".

[14] In my opinion the submissions of counsel for the defenders on this branch of the case are clearly to be preferred. It is not claimed by the pursuer that the presence of a kiosk at the location in question has any effect upon her ability to walk to or from her shop or on the shopping public's ability to reach the shop or to circulate through the Centre along the shopping malls. Especially when regard is had to the terms of paragraph 6 of Part IV of the Schedule it is to my mind evident that the right to use the malls, access ways, etc. is not an absolute one extending to the right to place one's foot on every possible square centimetre of the floor and that it is within the landlords' power to place objects on the surface of the floor, including such as a barrow or a kiosk. It may well be that there are limits to that power in the sense that access and circulation cannot be prevented or impaired to a substantial degree but that is not suggested as being the position in the present case. I would add that in so far as it was suggested by counsel for the pursuer that sub-heads (a)-(c) of paragraph 6 were limitative of the defenders' rights in respect of the use of the mall I do not regard that submission to be sound. The particularisation plainly contained in the sub-heads is stated to be without prejudice to the generality of the preceding general power. On the other hand, the particularisation indicates that within the general power is contained the power to remove some area or areas of floor space within the mall from the receipt of the footsteps of the shopping public.

[15] Although, as I understood it, this first ground of action was presented as a breach of the express terms of the contract of lease, at certain points in his submission it was also suggested by counsel for the pursuer that the allowing a kiosk to be present at the location in question amounted to a breach of an implied term that the landlord should not derogate from his grant.

[16] In relation to the nature and scope of an implied obligation on a landlord not to derogate from his grant I was referred by counsel for the defenders to certain authorities including in particular Huber v Ross 1912 S.C. 898. In his opinion in that case, the Lord President (Dunedin) had noted (913) that before a landlord might be said to have derogated from his grant, there had to be tangible injury to the subject of the tenancy. Counsel for the defenders went on to point out that the right, from the grant of which the defenders had supposedly derogated, was the right under Part III of the Schedule, paragraph 1(a). However, it was not averred or suggested that the presence of a kiosk at the location in issue had any tangible effect on pedestrian use of the malls leading to and from the shop. Accordingly no relevant case of derogation from grant was thus advanced.

[17] In my view, the submissions of counsel for the defenders on this branch of the discussion ought also to be upheld. It is not averred that the presence of a kiosk at the location in question has any material effect on the pedestrian circulation and movement of shoppers within the shopping centre. Indeed, it may be observed from the terms of the summons that the pursuer's objection is not to the physical presence of a kiosk and its effect on access, but to its having an occupier selling goods similar to those sold by her.

[18] I accordingly consider the first basis advanced by counsel for the pursuer to be misconceived.

[19] The concept of the derogation from grant was also inherent in the second ground advanced by counsel for the pursuer in his efforts to justify the relevancy of the pursuer's case. His proposition was that, having regard to the terms of the Lease, it was to be implied that the landlords would not grant any right of occupancy within the Centre to any other trader who engaged in a business competing with that conducted by the pursuer.

[20] In his criticism of this branch of the case, Mr Di Emidio referred to the decision of what was, with one dissenting exception, the decision of the whole Court in Craig v Miller (1888) 15 R1005 for the proposition that a landlord having let subjects for the purpose of a particular business or trade was under no implied obligation not to use or let his remaining property for a competing enterprise, unless there be some express or other particular provision in the Lease to a contrary effect. Counsel for the defenders further referred to the opinion of the Lord President in Huber, at page 911 and also to what was said by Professor Gloag in the second edition of his Work on Contract at pages 296-297.

[21] Counsel for the pursuer, for his part, referred to Inglis v Moir's Tutors (1871) 10 M 204 particularly the remarks of Lord Neaves in the penultimate paragraph of his Opinion. He further referred me to certain English authorities, namely the passage in the speech of Lord Templeman in British Leyland Motor Corporation v Armstrong Patents Co [1986] A.C. 577 at 641 at which his Lordship quoted a dictum from Browne v Flower [1911] 1 C.H. 219 and to the decision of the Court of Appeal in England in Chartered Trust Plc v Davies [1997] 2 E.G.L.R. 83.

[22] Inglis v Moir's Tutors was concerned with a claim by an agricultural tenant against inter alios his landlord who had resumed part of the original grant for forestry but had taken no steps to control the proliferation of rabbit, which inflicted damage on the tenant's crops. The case suffered the complication that there was also a separate lease of shootings over the subjects. It appears that the Court held the landlord, having resumed possession of part of the land for planting was under an obligation to prevent the rabbit population becoming "unreasonable and excessive". The case precedes the whole Court decision in Craig v Miller and I do not find it to be of any assistance. I was unclear as to counsel's purpose in referring to the English authorities. In so far as he relied on the first for its reference to Browne v Flower, counsel appear to have overlooked the fact that the case had been before the Court in Huber. That apart, at one point I understood counsel for the pursuer to maintain that the law as expressed in the English authorities to which he had referred was in no way different from that expressed in the Scottish authorities, principally Craig v Miller. However, at another point he appeared to submit that English law was more restrictive of the landlord's freedom to deal with his remaining property than in Scotland. And it was possible to detect a suggestion that the wider approach of English law should be followed in preference to what had been held in the Scottish cases.

[23] In this particular area of the law of landlord and tenant it is, I think, recognised that there may be differences between English law and Scots law may exist. Thus Professor Gloag, at 298, recognises that in England the principle that a landlord may not derogate from his ground is more widely applied than in Scotland. In his opinion in Huber the Lord President was at pains to advert to the differences between English and Scots law. At all events, however, the decision in Craig v Miller is of course binding on me. It is clear from that decision that the granting of a lease to one tenant for the purposes of a particular business does not in itself restrain the landlord from letting his other remaining property to others for a business which may be in competition with that of the tenant. In order to advance the existence of such a restraint there must be found in the lease either an express undertaking by the landlord to that effect or distinct provision from which it may clearly be implied that such an undertaking is given.

[24] In the present case counsel for the pursuer prayed in aid the terms of paragraph 15 of Part V of the Schedule. That part of the Schedule deals with the tenant's obligations and it enjoins the tenant:

[25] In my opinion the terms of that undertaking of the part of the tenant do not imply any undertaking on the part of the landlord that he will not permit a competing business to be carried on within the Centre. Even if one assumes such a clause to be contained in all other leases thereafter to be granted, (and there is no undertaking in the lease to insert such a clause in other leases), the reference to the landlord's consenting to the carrying on of a competing business implies rather the contrary to that which counsel for the pursuer sought to infer.

[26] Counsel for the pursuer also relied generally, and without any specific reference, to the provisions relating to the payment of a service charge. The assertion was that the occupier of a kiosk would not pay a service charge whereas the pursuer, as tenant of the shop, was liable to pay such a service charge. Accordingly there would not be what counsel described as "a level playing field".

[27] I have to say that I am unable to see how one could begin to infer from the provisions on payment of the service charge an undertaking by the landlord not to let any other sales space in the Centre to a competing trader. Moreover, as counsel for the defenders pointed out, the percentage service charge payable by the pursuer under her lease is not immutable but may be altered to such as the landlord considers fair and reasonable. I would further add that in so far as counsel for the pursuer advanced some vague conception of a "level playing field" there is of course no provision with the Lease requiring the landlord to impose similar levels of rent on other traders in the Centre.

[28] In these circumstances I conclude that the claims advanced in this action are unsound and irrelevant. I shall therefore uphold the first plea-in-law for the defenders and dismiss the action.