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Scottish Sheriff Court Decisions
You are here: BAILII >> Databases >> Scottish Sheriff Court Decisions >> Ashford and Thistle Securities Llp v. Kerr [2006] ScotSC 63 (01 September 2006)
URL: http://www.bailii.org/scot/cases/ScotSC/2006/63.html
Cite as: [2006] ScotSC 63, 2006 SCLR 873
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(A1560/05)
JUDGMENT OF
SHERIFF
PRINCIPAL EDWARD F BOWEN QC
in the appeal
in the cause
ASHFORD AND THISTLE SECURITIES LLP
Pursuers
and Respondents
against
MAUREEN KERR
Defender
and Appellant
Act: J G Thompson, Advocate, instructed by DLA Piper Rudnick Gray Cary
Alt: Barne, Advocate, instructed by
Warners, Solicitors
The Sheriff
Principal, having resumed consideration of the cause, sustains the appeal and
recalls the Sheriff's interlocutor complained of dated 19 December 2005; sustains the second plea-in-law for the
defender and dismisses the action;
reserves all questions of expenses.
NOTE:
1. The
defender and appellant is a tenant of premises at
2. It is
not in dispute that as at 11 February 2005 the defender had not paid any rent
in respect of the subjects. According to
her averments the reason was that she had an agreement with Parkcross Limited that,
notwithstanding the terms of the lease, she would not pay rent until March 2009
but would carry out repairs and refurbishment work on the property.
3. On 11
February 2005 the pursuers and respondents presented for registration a
Disposition of the subjects at
4. In the
present action the pursuers seek to enforce that irritancy and have the
defender removed from the subjects. They
obtained decree, following debate, on 19 December 2005. Thereafter the defender marked an
appeal. The matter came before me in
relation to a motion for caution for violent profits and, as I observed in a
Note appended to an interlocutor dealing with that matter dated
28 February 2006, at that stage the only line of defence which the
defender sought to maintain subsequent to debate was based on the alleged
verbal agreement with a representative of Parkcross Limited whereby no rent was
to be payable as previously indicated.
It falls to be emphasised, however, that the Note of Appeal lodged on 22
December 2005 commenced by stating that:
"The learned Sheriff did not take into account what effect the verbal
variation of the lease had on subsequent rights and liabilities of the
defenders". It proceeded to contain
contentions (a) that the Sheriff was wrong to proceed on the basis that the
defender had admitted an averment by the pursuers that "as at 14 February
2005 the rent remained unpaid for a period in excess of 21 days"; (b) that "notwithstanding whether the verbal
variation of the lease is unenforceable against singular successors or not"..the
defender was not in arrears to Parkcross Limited as at 27 January 2005. By 14 February 2005 the rent had not remained
unpaid for a period in excess of 21 days.
In terms of the lease, the pursuers were not entitled to serve notice on
the date they did. The notice of
14 February 2005 demanding payment is therefore invalid; and (c) that the successor landlord cannot be
in a better position to enforce an obligation of the lease than the
predecessor: assignatus utitur jure auctoris. The Notice of 14 February 2005 was
invalid because the pursuers demanded in terms of it a sum to which they were
not entitled. An attempt to irritate the
lease on the basis of an invalid Notice fails.
5. Before
turning to the arguments presented on behalf of parties to the appeal it is
appropriate to identify the issues as presented to the Sheriff, and the manner
in which these were disposed of by her.
The opening part of Answer 3 for the defender is in the following
terms: "Explained and averred that it
was the previous owner Parkcross Limited who let the premises to the
defender. Said company is now in
receivership. No Notice of change of
ownership from Parkcross Limited in receivership to Ashford and Thistle
Securities LLP was intimated to the defender.
The defender is entitled to look to Parkcross Limited , in receivership,
as her landlord. Any Notice of Irritancy
served by the pursuers is defective and incompetent. The pursuers had no title vis a vis the
defender to serve such a Notice. Further
explained and averred that prior to agreeing to enter into said lease the
defender and Parkcross Limited agreed, that not withstanding the terms of the
lease, no rent would be paid to the landlord until March 2009". Following detailed averments about the need
to upgrade and repair the premises the averments proceed: "The agreement of Parkcross Limited and the
defender as detailed above amended and varied the terms of the lease. The actings of Parkcross Limited and the
defender following the agreement amounted to rei interventus". The
averments go on: "The pursuers are bound
by the terms of the lease and the variations that were made to the lease as per
the agreement between Parkcross Limited and the defender as detailed as above".
6. These
averments might fairly be interpreted as indicating two lines of defence namely
that the pursuers had no title to serve a Notice of Irritancy in the absence of
intimation of the change of ownership and that the terms of the lease had been
varied by a verbal agreement followed by rei
interventus. The first of these
lines of defence does not appear to have been maintained either by any
appropriate plea-in-law or by argument at debate. In that situation it is not wholly surprising
that the two issues which appear to have been focussed before the Sheriff were
first, whether as a matter of law the written lease could be varied by
verbal agreement and subsequent actings (a matter on which the Sheriff was
prepared to allow a proof before answer), and second, whether any such
agreement if valid was binding on singular successors. On the latter the Sheriff was satisfied that
any such agreement would not be binding on singular successors and on that
basis held the defences to be irrelevant.
7. I
pause to observe that the defender's averments also contained an averment,
immediately following those above quoted, that: "As no rent was due the
defender did not incur an irritancy of the lease. The Irritancy Notices served by the pursuers
on the defender on 14 February 2005 and 3 March 2005 are accordingly not
valid". The first of these sentences
takes on a particular significance in relation to the appeal because counsel
for the defender and appellant did not seek to mount any direct attack on the
Sheriff's decision. He submitted (1)
that the Notice of Irritancy was defective because it overstated the amount due
to the pursuers. (2) that it was
defective because the pursuers were not due rent prior to the date of entry
under the disposition; (3) that even if
there was some form of assignation of pre-date of entry arrears the pursuers
could not be in a better position in relation to arrears than the previous landlord
and (4) that the pursuers had not set out a valid basis on which they had title
to issue a Notice of Irritancy. As I
think counsel for the defender accepted these submissions embraced a line of
argument which was not advanced at debate.
Counsel for the pursuers maintained that the argument was still not
focussed by the pleadings and argued that if it had been he would have had an
opportunity to investigate any question of the assignation of earlier rents in
terms of the Missives between his clients and Parkcross. As matters have evolved I have a measure of
sympathy with that contention, but it does seem to me that the argument as now
formulated has been before the Court since the Note of Appeal was lodged and
there is sufficient basis for it in the defender's averment that "as no rent
was due the defender did not incur an irritancy of the lease". At all events it appears to me that the
question as presented is one of fundamental importance. It is whether a new landlord, on taking over
title to the subjects of let, is entitled to serve a Notice of Irritancy and
proceed to enforce it on the basis of arrears of rent allegedly due to his
predecessor in title without giving the tenant notice of the basis upon which
arrears are owed to him. I propose to
deal with it although it is not a matter on which I have the views of the
Sheriff.
8. In
support of his four submissions Counsel for the defender began by referring to
section 4(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985
which requires a Notice of Irritancy, before it can be effective, to require
the tenant "to make payment of the sum of which he has failed to pay". Section 4(2) had been judicially described as
laying down "minimum requirements of an adequate notice": see Lord Morton of Shuna in CIN Properties
v
9. In
response, Counsel for the pursuers contended that the point taken by the
defender was not in the pleadings as they stood, and the Court should not
entertain her argument without amendment.
It was, in any event, in the nature of a contrived argument. Counsel accepted that section 4 of the 1985
Act set out the minimum requirements of a Notice of Irritancy. That in effect meant that the tenant had to
be advised of the fact that monies were due and what should be done about
it. There was never any room for doubt
in the mind of the present defender as to the extent of the arrears of rent -
she had never paid any. The fact that
the notice may have "overstated" the amount due was inconsequential. The purpose of section 4 was to give the
tenant notice as to what would happen if arrears of rent were not paid; it was open to her to pay part if she thought
a lesser sum was due than that stated, and take issue with the remainder. Precise accuracy in the notice was not
fundamental: see Bellevue Cash and
Carry Ltd v Singh (Sheriff Lothian, Edinburgh Sheriff Court 8 September
1995) GWD 1996 4-220. As for intimation
of the right to rent the position was simply that the pursuer had title to
receive rent as infeft proprietors.
Counsel advanced a tentative submission that if necessary the notice of
14 February 2005 could be treated as intimation of the assignation of the
pursuers' right to rents prior to 31 January 2005. At all events he founded on the provisions of
Clause Twenty First giving the landlord power to put an end to the lease if the
rent was unpaid for a period of 21 days.
There was no doubt that as at that date the rent was unpaid for more
than 21 days. If there was a problem
arising from the amount of rent stated in the notice of 14 February that
was of no importance because the tenant was no in any doubt about the position.
10. In
response to these submissions Counsel for the defender submitted that irritancy
of a lease was a matter which could only be carried out by a landlord for the
time being in relation to sums due to that landlord. He again emphasised, under reference to the
case of Bencleuch Estates that the whole point of the notice was that
the tenant should be able to identify what he required to do to avoid
irritancy.
DECISION
11. As
indicated in paragraph 7 above I am satisfied that the defender's pleadings
contain sufficient by way of averment to provide a basis for the defence now
argued. I accordingly reject the
submission by Counsel for the pursuers that the line of argument presented at
the appeal should not be entertained. As
to the substance of the argument itself, I agree with both Counsel that a
proper interpretation, and application, of the terms of section 4 of the 1985
Act is fundamental to the decision in this case. Sub-section 1 thereof provides that "A
landlord shall not...be entitled to rely" on a provision of a lease which
purports to terminate it, or enables him to terminate it, unless sub-section 2
or 5 applies. Sub-section 5 is not
relevant to this case. Sub-section 2
applies if the landlord has served a notice "requiring the tenant to make
payment of the sum which he has failed to pay" and the tenant fails to comply
with that requirement. The combined
effect of these provisions, it appears to me, is that a landlord can only
proceed to irritancy if, as Counsel for the defender submitted, the tenant is
told at the time of service of the notice what he is required to do to avoid
irritancy. The words "require the tenant
to make payment" are not followed by the words "to him" and it appears to be
perfectly possible for a landlord to serve a Notice of Irritancy on the basis
of arrears of rent owed to his predecessor.
To make the provision workable - in the sense that a tenant is unlikely
to be required to settle a debt with someone to whom it is not owed - and to
comply with the intention of giving notice of what is required to avoid
irritancy, such a situation would require intimation of a requirement to settle
with the earlier landlord. The only
sensible alternative would be for the new landlord to assert the basis on which
the debt should be paid to him. The
notice in the instant case does neither of these things.
12. The
argument advanced on behalf of the pursuer relied too heavily, in my opinion,
on the bold assertion that the rent was prima
facie in arrears. It appears to
exclude any possibility that it was not recoverable by the previous
landlord. It is to be noted that the
words used are "make payment of the sum which he has failed to pay" as distinct
from "make payment of arrears" or "alleged arrears". They embrace the notion of payment of a sum
to the person to whom it is owed; indeed
the only interpretation which makes practical sense is that it involves payment
of a sum to the person to whom it is owed.
The Sheriff, it is to be noted, was prepared to allow a proof before
answer on the issue of whether there was an agreement to waive rent with the
pursuers' predecessors. If that approach
was correct - and there seems no reason to doubt it - it would be open to the
defender to prove, in a question with the original landlord, that there was no
sum "which she had failed to pay". I
accept the defender's Counsel's proposition that a successor landlord cannot be
in a better position to enforce an obligation of a lease than his
predecessor. That appears to me to
strike at the basis upon which the Notice of Irritancy was served.
13. In
these circumstances I am persuaded by the defender's Counsel's argument that
the Notice of Irritancy founded upon by the pursuers in this case did not
comply with the terms of section 4 of the 1985 Act. If, however, I am wrong in that view and all
that such a notice requires is to inform the tenant that there are arrears and
that they require to be settled, it nevertheless appears to me that as a matter
of pleading the pursuers have failed to disclose why it is that rent allegedly
due prior to 31 January 2004 should have been paid to them. That was what was required in terms of the
notice and the absence of any averment to support that requirement in my view
deprives it of its validity for the purposes of this action.
14. I
accept that the argument which has succeeded in this case is one which has not
been properly focussed until a late stage.
It may be that the pursuers were granted an assignation of rents due in
respect of the subjects prior to 31 January 2004 and indeed their Counsel
hinted at that in the course of his submissions. As I have indicated the pursuers have
nevertheless had notice of the line of argument since the Note of Appeal was
lodged. In the absence of any amendment,
or motion to amend it appears to me to be proper to recall the Sheriff's
interlocutor and grant decree of dismissal.
There are, however, significant questions of expenses which will require
to be addressed in due course.
(signed) EFB