Scottish Sheriff Court Decisions

SHERIFFDOM OF LOTHIAN & BORDERS AT EDINBURGH

 

[2016] SC EDIN 46

Court Ref:  SE34/14

 

JUDGMENT

 

by

 

SHERIFF MORRISON, QC

 

in the summary cause

 

SELECT SERVICE PARTNER LIMITED

 

Pursuer

 

against

 

 

NETWORK RAIL INFRASTRUCTURE

LIMITED

 

Defender

 

 

Act: Dalziel; DLA Piper Scotland LLP.

Alt:  Easton; Maclay, Murray and Spens LLP

 

 

Edinburgh, 8 April 2015.

The sheriff, having resumed consideration of the cause, dismisses the application by the pursuer under section 1 of the Tenancy of Shops (Scotland) Act 1949 for renewal of the lease between the pursuer and the defender dated 2 February and 16 March and registered in the Books of Council and Session on 22 March, all dates in 2006.

 

NOTE

The background

[1]        This is an application under the Tenancy of Shops (Scotland) Act 1949 for renewal of a lease.  Under section 1 of that Act, a tenant, “unable to obtain a renewal of his tenancy on terms satisfactory to him”, may apply to the sheriff for renewal of the tenancy for such period not exceeding one year, at such rent, and on such terms and conditions as the sheriff, in all the circumstances, thinks reasonable.

[2]        The pursuer has an outlet, called Upper Crust, on the western concourse of Waverley Station, Edinburgh.  It is a food-based take-away outlet, selling fresh baguettes, coffees, teas and soft drinks.  For the purposes of the 1949 Act, the premises are a shop.  The pursuer leases the property from the defender, and the lease dates from 2006.  The original lease expired on 18 December 2011 but was continued by tacit relocation for a year.  A one-year extension was obtained by an undefended application under the 1949 Act until 18 December 2013 on the same conditions as the original lease and that tenancy was continued by tacit relocation until 18 December 2014.  This application arises after the defender’s notice to quit in October 2014 seeking termination of the lease in December 2014.

[3]        The defender has plans for yet further development of Waverley Station.  The main booking hall is to be redeveloped.  As a consequence, all the outlets in the booking hall, of which the pursuer owns or has the franchise of four, will be closed for up to two years during redevelopment.  There is an intervening development, called EGIP, which is the platform extension scheme on the south side of the station for longer trains operating between Edinburgh and Glasgow.  It is proposed to start that development in mid-2016.  That platform extension will prohibit certain vehicular access on the west side of the station and will necessitate the creation of a new permanent road from the east of the station along the north side of the main booking hall building.

[4]        To create that road, the building between the north side of the booking hall and the through-railway lines (platforms 2 and 19) will have to be demolished.  That building, referred to as the north mall, currently contains a Caffè Nero outlet and another food outlet leased by the pursuer.  It has not yet been decided whether the platform extension work will be completed before the postponed redevelopment of the main booking hall starts.  While the booking hall redevelopment is taking place, there will only be one coffee outlet in the station and that will be at the site currently occupied by the pursuer’s Upper Crust food-based outlet on the western concourse.  The area around that site must be one of the busiest places in the station.

[5]        The defender would like to have what it describes as a well-known and readily recognised retailer of specialist coffee and related foodstuffs for railway travellers on the site currently leased by the pursuer on the western concourse.  The defender considers that the pursuer’s Upper Crust operation does not meet that need.  The defender has identified Costa Coffee as the market leader.  It no longer wishes to lease the Upper Crust site to the pursuer and wishes to lease it to Costa Coffee, a coffee-based outlet, which will be the only coffee outlet until completion of the booking hall redevelopment at Waverley.  The defender wishes to give Costa Coffee a lead-in time.  Hence the defender sought to bring the pursuer’s lease to an end in December 2014.

 

The meaning and application of the 1949 Act

[6]        For both parties, it was submitted that section 1(2) of the 1949 Act gave the court a discretion to renew a shop tenancy if in all the circumstances it was reasonable to do so.  That is not so.  What section 1(2) does, in my opinion, is to provide a discretion for the conditions of the tenancy, if the court renews it.  Hence, the subsection states that a renewal shall be “for such period, not exceeding one year, at such rent, and on such terms and conditions as [the sheriff] shall, in all the circumstances, think reasonable”.  The discretion whether to renew at all is in section 1(3):-

“(3) Notwithstanding anything in the last foregoing subsection, the sheriff may, if in all the circumstances he thinks it reasonable to do so, dismiss any application under this section, and shall not determine that a tenancy shall be renewed, if he is satisfied [there then follow six mandatory grounds].”

 

[7]        Section 1(3) is in two parts.  First, there is a general ground that the sheriff may dismiss the application “if in all the circumstances he thinks it reasonable to do so” (the discretionary ground); and, second and separately, the sheriff shall not determine that the tenancy be renewed if satisfied on one or more of six specified grounds, some of which contain room for discretion (the mandatory grounds), one of which is hardship and relevant in this case.  I was referred to Robertson v Bass Holdings Ltd, 1993 SLT (Sh Ct) 55, for authority, if it were needed, that “may” does not mean “must”.

[8]        What is reasonable in all the circumstances is a wide discretion.  There is a desire to help judges, and to assist lawyers in advising clients, as to how and when the discretionary ground in section 1(3) may be exercised.  In Loudon v St Paul’s Parish Church, 1949 SLT (Sh Ct) 54, to which I was referred, the sheriff-substitute mentioned that the 1949 Act is primarily designed to protect sitting tenants.  That is clearly the case.  Sheriff Poole in Robertson, above, went further and stated that the scheme and wording of the Act suggested an inclination towards the granting of a renewal.  I can see that this conclusion may have been reached, for example, because section 1(3) provides that the sheriff may, if it is reasonable in all the circumstances, dismiss the application and must do so in certain circumstances.  The power could have been expressed the other way round so that the sheriff may refuse the application unless it was reasonable in all the circumstances to grant it or must refuse it in certain circumstances.  There is no presumption or inference and the discretionary ground, where it applies, is so wide that it hardly merits the description of an inclination towards granting a renewal.  I notice that the sheriff in the case of Edinburgh Woollen Mill Ltd, below, reached a similar view.  In protecting a sitting tenant, the Act gives the tenant a right and protection to have a court decide.

[9]        I was referred to the decision in Edinburgh Woollen Mill Ltd v Singh, 2013 SLT (Sh Ct) 141, by the pursuer to distinguish it on its facts and by the defender to rely on it as helpful on the application of the 1949 Act.  For the defender, it was denied that that case restricted the application of the Act and the discretionary ground while at the same time arguing that it established that the discretion was exceptional and to be used sparingly.  That argument, it seems to me, involves a restriction of the discretionary ground.  In that case, the sheriff, after applying Pepper v Hart, [1993] AC 593, examining what some MPs said during the Third reading of the Bill and what was said in MacLeod v MacTavish, 1952 SLT (Sh Ct) 20, 21, and, while accepting that the mischief in 1949 was not self-evident today, concluded at paragraph [29], that the Act “empowers, and requires, the court to act to avoid injustice, in the historic context of widespread economic oppression of small scale shop traders.”  He goes on to give three examples of the types of protection so envisaged and finds that no such considerations existed in the case before him.  In my opinion, what the sheriff has done is restrict the meaning of the discretionary ground; he looked at outside aids to construe the Act.  I do not think that he was entitled to do that.

[10]      The general rule is that an Act of Parliament is construed according to the ordinary meaning of the words used in the Act.  Another rule is that, where the meaning of a statutory provision is not clear, that is, ambiguous or obscure, it is permissible to look at certain external aids of construction.  The rules of construing a provision so as to avoid injustice, and to consider the mischief for which the previous law did not provide or with which the provision was intended to deal, are rules that apply where the meaning is not clear.  It is also permissible, where it is not clear, to look at decisions construing the Act at the time.  I know of no rule in Scots Law which permits a different approach to the interpretation of a United Kingdom statute.

[11]      In my opinion, there is nothing in section 1 of the 1949 Act which is ambiguous, obscure or could lead to absurdity, that would justify looking outside the Act for aids to construction.  Where it is permissible to do so, there are limits.  It may be that the 1949 Act is far less sophisticated than the comprehensive provisions of Part II of the Landlord and Tenant Act 1954 in England and Wales, but the restriction of its application is not justified if the language of the Act does not permit it.

[12]      Just because an Act of Parliament was passed many years ago does not mean that its application is necessarily restricted to the circumstances of the time.  The reference, in Edinburgh Woollen Mill Ltd, to Pepper v Hart, above, is, with respect, not justified.  For obvious reasons mentioned in the case, the decision in Pepper v Hart modified the rule against referring to Parliamentary material to aid the construction of a statutory provision only to a limited extent.  This is what Lord Browne-Wilkinson, with whom all but the Lord Chancellor agreed, said at page 634D:-

“In my judgment, subject to the questions of the privileges of the House of Commons, reference to Parliamentary material should be permitted as an aid to the construction of legislation which is ambiguous or obscure or the literal meaning of which leads to an absurdity.  Even in such cases references in court to Parliamentary material should only be permitted where such material clearly discloses the mischief aimed at or the legislative intention lying behind the ambiguous or obscure words.  In the case of statements made in Parliament, as at present advised I cannot foresee that any statement other than the statement of the Minister or other promoter of the Bill is likely to meet these criteria.”

 

[13]      There is, therefore, not legitimate ground in this case for looking at Parliamentary material or otherwise in trying to construe section 1(3) of the 1949 Act.  The suggestion, on the other hand, that its application is restricted to applications by “small shopkeepers” against “speculators”, or “to avoid injustice, in the historic context of widespread economic oppression of small-scale shop traders” involves ambiguous language.  How does one define a “small shopkeeper” or a “speculator”?  If Parliament had intended to restrict the Act to small shopkeepers, it could easily have said so.  Instead, the Act defines “shop” in section 3(2) by reference to the definitions in the various Shops Acts, of which the Shops Act 1912 provided that “shop” “includes any retail trade of business”, and that is still the basic definition of “shop” for the purposes of the 1949 Act.  I notice also that the 1949 Act applies to the Crown where the Crown is a landlord.

[14]      When it is permissible to look outside the Act to find the mischief which Parliament was seeking to remedy, there are limitations on doing so.  In Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG, [1975] AC 591, 614; Lord Reid explained that this cannot be used to construe the wording of the statute; if the enactment is ambiguous that meaning which relates the scope of the Act to the mischief may be taken.  In other words, one can look for the mischief to see if the enactment covers it, but one cannot use the mischief to construe the terms of the enactment.  One reason for this is that, as Lord Reid explained, Parliament may have intended to go further than to deal with the perceived mischief. 

[15]      It is not legitimate, therefore, to construe the 1949 Act so as to restrict its meaning to a perceived mischief in 1949.  As I have already pointed out, the definition of “shop” in the 1949 Act does not restrict the application of the Act to small shopkeepers.

[16]      What is overlooked is that, while the 1949 Act was originally a temporary measure kept in force by successive Expiring Law Continuance Acts, it was made permanent by the Tenancy of Shops (Scotland) Act 1964.  That is another reason for concluding that the 1949 Act does not apply only to a mischief envisaged in 1949.  If it were permissible to search for a mischief, one should be looking for what the mischief was thought to be in 1964, or one should be seeking to discover what Parliament intended in a ministerial statement in Parliament at that time.

[17]      Reference was made in Edinburgh Woollen Mill Ltd at paragraph [25], to what the sheriff-substitute said in MacLeod, above:- “Counsel for the respondents asked me to take into consideration the policy of the Act which he said was to prevent small shopkeepers being evicted by speculators who purchased properties and gave the shopkeepers the option of buying at an exorbitant price or being evicted”.  What the sheriff-substitute himself goes on to say at page 21 is-

“… no doubt that was one of the main purposes of the Act” (emphasis added)”. 

 

So, even in 1952 judicial opinion was not that the Act was restricted to protecting small shopkeepers against speculators.

[18]      In summary, in my opinion, the 1949 Act, and section 1 in particular, is clear, unambiguous, not obscure and does not lead to absurd results.  It is not permissible to look at outside aids to construe it.  If it were permissible to look at outside aids, the mischief to be looked at is the mischief in 1964 and not 1949 and even then, that cannot be used to construe the Act as Parliament may have intended to go beyond that; judicial opinion at the time did not limit the application of the Act to the perceived mischief; the Act contains a definition of shop which is not restricted to a particular perceived mischief; and the construction or restriction in Edinburgh Woollen Mill Ltd put upon the Act is not legitimate.  There is nothing in the 1949 Act to suggest, as argued for the defender, that the protection given to the tenant is exceptional or that any discretion is to be used only sparingly.

[19]      Unfortunately, therefore, there is no guidance for judges or lawyers on how the discretionary ground in section 1(3) will be exercised.  If this breathes new life into the 1949 Act or makes guidance necessary it is for Parliament to restrict its application if it wishes.  For the defender, I was informed that there were some 25 cases on the Act.  I was not referred to them all, and I do not, therefore, attempt an analysis in order to give guidance.  All that can be said is that the discretionary ground gives the sheriff the widest discretion, to refuse a renewal, which is reasonable in all the circumstances, fettered only by the mandatory grounds in the remainder of that subsection.  What I will say is that, while that discretion is not limited to small shopkeepers or to circumstances pertaining only to small shopkeepers and speculators, it may be more difficult for a multi-million pound company than a small shopkeeper to rely on circumstances such as hardship justifying renewal of a tenancy.  There was no discussion about whether a tenant could waive and contract out of the statutory protection.

 

The evidence

[20]      The pursuer has a revenue of almost £2 billion, operating in 29 countries, has more than 300 brands including “Upper Crust”, operates a number of international brands such as Starbucks (as franchises), has over 30,000 employees and has about 2,000 outlets.  It operates in the UK mainly in railway stations (52) and airports (5).

[21]      The pursuer’s chartered surveyor, Mr Brook, gave evidence that the pursuer, though aware of proposals for redevelopment of the booking hall, was taken by surprise when, at a catering meeting with the defender in October 2014, he was informed about the proposed notice to quit.  He said that he was not aware of the proposed demolition of the north mall except in the context of the main booking hall redevelopment, and did not think that EGIP had been discussed although there is a reference to it on a PowerPoint slide for a meeting held in November 2014.  He thought that a mid-2016 start for the EGIP was optimistic. The defender had never offered to discuss a new lease or increased rent with the pursuer.  The pursuer would lose a substantial annual revenue and would probably have to make 17 employees redundant.  The Waverley site was the only Upper Crust site that the pursuer had in Edinburgh.

[22]      Mr Martin, a surveyor and the defender’s asset manager for retail, indicated that the retail offering at Waverley Station was one of the poorest, and the defender was seeking to improve it.  The redevelopment of the booking hall had started in 2011; but further redevelopment was postponed for the EGIP development which was due to begin in mid-2016.  Demolition of the north mall had been considered for the end of 2015.

[23]      Mr Martin referred to the defender’s production 1/9 to show that Upper Crust had the worst brand performance at Waverley; though Mr Brook said it was not the poorest performer per square foot. 
[24]      Mr Martin referred to the defender’s production 1/10 to show that Costa Coffee was the market leader for coffee-focused outlets, having the most outlets and being the consumer’s favourite coffee chain.  Mr Brook pointed out that, as the documents state, the favourite status may really reflect brand estate size and distribution.  In other words, Costa Coffee comes out as favourite only because it has the largest number of outlets.  Mr Brook did accept that other reports mention Costa Coffee as the No.1 brand. 
[25]      Mr Martin relied on the defender’s production 1/5 as showing that more income would be generated for the defender from Costa Coffee than from Upper Crust.  That comparison of forecast income, it seems to me, showed that Costa Coffee would provide the defender with an income of nearly 1.8 times that of Upper Crust.  The Costa Coffee sales are based on sales figures from the time that Costa Coffee last traded at Waverley, which was a couple of years ago.  Mr Brook indicated that the figures could not be relied upon because Costa Coffee had traded in the booking hall with a seating area and not as a fast-food coffee shop, and their method of making coffee was slower than that of Upper Crust.
[26]      I accept the evidence that Costa Coffee is a market leader whether or not it is the travellers’ favourite and, notwithstanding the fact that it may be the biggest, is a popular and well-known brand.  While the figures must be to some extent a guesstimate, I think it probable that the defender could obtain a larger income from Costa Coffee as a market leader than from Upper Crust.
[27]      Mr Brook indicated that the pursuer would be prepared to pay an increased rent and would even consider operating one of its franchises, Starbucks, the second market leader, from the western concourse.  He did not think that it was appropriate for the pursuer, as tenant, to suggest an increase in rent.
[28]      There was a dispute about whether the pursuer knew about EGIP.  I do not think that the issue is critical to my decision, but I think that Mr Brook and the pursuer must have known something about it from the slide on the PowerPoint presentation at the meeting in November 2014. 

Whether a tenant must negotiate before action
[29]      Before turning to the merits of the discretionary and mandatory grounds in relation to renewal, there is a preliminary requirement of the 1949 Act to consider.[30]      For the defender, it was argued that a prerequisite of an application under section 1(1) of the 1949 Act is that the tenant must, beforehand, have sought to obtain a renewal of the tenancy from the landlord.  Section 1(1) provides –

“…if… the tenant is unable to obtain the renewal of his tenancy in terms that are satisfactory to him, he may, apply to the sheriff”.

 

The subsection also states that the application must be made before the notice to quit takes effect “and not later than the expiry of twenty-one days after service of the notice”.  Here, the pursuer, having received notice to quit on the 3 October 2014, made the application to the court on 23 October without ever seeking to negotiate renewal with the defender.  The pursuer’s application failed, therefore, at this first hurdle.  If the court were not willing to take such a robust stance, the argument could be considered as part of the argument against exercising the discretion in favour of renewal. 

[31]      For the pursuer, it was agreed that the pursuer had not had enough time to negotiate, having had only 21 days to apply to the court from the date of the notice.  Mr Brook had said that the pursuer was surprised by the notice to quit and was not forewarned at either the six weekly catering reviews or the three monthly meetings on redevelopment matters.  If it had been in advance, by the defender, the pursuer would have discussed it with the defender as Mr Brook had indicated in his evidence.

[32]      It is clear that the pursuer never sought a renewal of the lease before or since this application was made.

[33]      I think that the terms of section 1(1) of the 1949 Act indicate that something must be done by the tenant to negotiate or seek renewal from the landlord before coming to court.  I recognise that 21 days does not give very much time to do that.  On the other hand, the pursuer would have been aware of the precarious position it was in when the lease was continued by tacit relocation at the end of the lease in December 2011 and after the one year renewal on the pursuer’s undefended application to the court in 2012 and the tacit relocation from 2013 to 2014.  Even though Mr Brook said he was unaware of the EGIP project or the demolition of the north mall only of the redevelopment of the booking hall, I think the pursuer must have been aware that, at some point, if it wished to remain, it would have to renegotiate a lease with the defender.

[34]      Because of the short timescale and where a notice to quit is wholly unexpected, I would not consider that a tenant need do more than start the process of negotiation, and be met with something other than a favourable reaction, before presenting the application to the court.

 

The pursuer’s reasons for granting renewal

[35]      The pursuer relied on a number of reasons for the renewal of the tenancy.  I have groped these under eight heads.

 

(1)   No suitable alternative offered

[36]      This is the converse of section 1(3)(d) which is that renewal shall be refused if the landlord has offered alternative premises which the sheriff considers suitable on reasonable terms and conditions.  The defender is not, of course, obliged to offer an alternative.  EGIP will cause the permanent closure of one coffee outlet, in the north mall, and subsequently the redevelopment of the booking hall will cause the temporary closure of all retail outlets there.  Upper Crust will be the only food and coffee outlet for up to two years.   It does not seem to me that there is an alternative site that could be offered to the pursuer.  There may be a doubt as to the exact commencement date of EGIP and the subsequent closure of the booking hall, but it is not reasonable to expect the defender to encumber itself with a one year lease, or indeed with the uncertainty of another 1949 Act application which could hinder the Waverley developments.

 

(2) Loss of revenue

[37]      According to Mr Brook, the pursuer would lose a substantial annual revenue and would probably have to make 17 employees redundant.  The pursuer is, however, a very large multi-million pound company.  The court is not restricted to looking at the Upper Crust brand.  The pursuer is far bigger than just the Upper Crust brand.  The pursuer will not face significant financial loss in losing one outlet.  While there may not be work for 17 employees at Upper Crust at Waverley, with other outlets currently operating at Waverley, and in an organisation as large as the pursuer’s, I do not find it credible that all 17 employees must be made redundant.

 

(3)   Loss of goodwill

[38]      It was submitted that Upper Crust would lose its goodwill in the Edinburgh market because there will be no other Upper Crust units in Edinburgh.  The pursuer, being an organisation much larger than one of its brands, will not, it seems to me, lose goodwill.

 

(4) Renewal of the lease could result in another location in Waverley being found

[39]      The pursuer would like a lease in the hope that another unit could be identified to allow Upper Crust to remain in Waverley Station.  This is another aspect of the first point.  The number of units will be reducing until the only retail units, and the only coffee led outlet, will be on the western concourse for a period of up to two years.  I do not see how another unit for the pursuer could be identified. 

 

(5) Lead in time

[40]      The point here is that since the earliest any development will start (EGIP in mid-2016), and since Costa Coffee does not need a lead-in time, the pursuer could be granted another renewal for one year.  It was argued by Mr Brook that Costa Coffee does not require a lead-in time if it is such a strong popular brand and will occupy that part of the station which is the busiest with passengers.  Mr Martin indicated that a lead-in time was necessary because people are creatures of habit and a new tenant needs time to grow. He described the situation as urgent. The defender would also like a coffee outlet at the pursuer’s site before the other coffee outlet, Caffé Nero in the north mall, has to close for the demolition of that mall in preparation for the EGIP development.

[41]      It seems to me that, if the pursuer’s tenancy is not renewed now, the defender will have the freedom to act to provide a coffee outlet as soon as it needs to do so.  I can also understand why the defender wishes to allow for a lead-in time while there is in existence another coffee outlet (Caffé Nero) to maximize its income: the basic rent is supplemented by two tranches of percentage increases depending on volume of the tenant’s revenue.  A lead-in time is reasonable.

 

(6) Amount of income

[42]      Mr Martin’s evidence was that Costa Coffee would generate more income from rent than obtained from the pursuer; in fact 1.8 times it would appear from production 6/9.  Mr Brook accepted that the pursuer was not performing that well but there had been a massive improvement this year.  He had challenged the basis of the calculation. There needed to be refurbishment but the pursuer could not refurbish – he would have to spend about £100,000 to refresh the premises (on the basis of the length of the contract remaining).  I can understand that spending money on refurbishment hardly seems worthwhile for only a one year contract.

[43]      There is a degree to which the evidence about how much more money Costa Coffee would generate for the defender was speculative, based on figures for a previous different location with seating for Costa Coffee.  It is possible that, as a market leader, as a coffee provider and if newly located to the Upper Crust site, the busiest location, Costa Coffee could probably generate more income for the defender.  The pursuer would be prepared to pay more rent, but Mr Brook did not say what that would be.

 

(7) Costa Coffee’s popularity

[44]      The argument for the pursuer was that Costa Coffee was said to be the public’s favourite brand simply because it had the most outlets.  I was referred to the defender’s production 6/10 which explained that Costa Coffee’s popularity could be explained by the fact that it had more outlets than its competitors.  Just because Costa Coffee was more prevalent did not mean that it was more popular it was argued. 

[45]      It is not, of course, for the pursuer to dictate to which brand of coffee outlet the defender should lease its premises.  The defender was criticised for not producing reports other than the one produced which, according to Mr Martin, also showed that Costa Coffee was the No 1 brand.  On the other hand, I note that the pursuer did not produce evidence that Starbucks, currently on Waverley Steps, would like to or be able to move into Waverley Station.  It was, however, the assertion of Mr Brook.  I think that the evidence, such as it was, was to the effect that Costa Coffee may be the No 1 brand.  It is not the case that Upper Crust is the No 1 brand, Upper Crust is a food-based outlet and not a coffee led outlet.    I think that it is reasonable to conclude that Costa Coffee is a leading brand and that it is reasonable for the defender to wish to lease this busy and valuable site to such a brand.

 

(8) Hardship

[46]      Hardship was relied on by both parties in relation to the discretionary and the mandatory ground.

[47]      Section 1(3)(f) contains the hardship provision.  The provision is that the sheriff –

   “shall not determine that a tenancy shall be renewed, if he is satisfied –

(f) that, having regard to all the circumstances of the case, greater hardship would be caused by determining that the tenancy shall be renewed than by refusing to do so”.

 

In Marriott v Cockburn Hotel (Edinburgh) Co Limited, 1954 SLT (Sh Ct) 76, to which I was referred, the sheriff-substitute stated that, while the 1949 Act did not lay down expressly whose hardship is to be taken into account, the provisions of paragraph (f) must be broadly interpreted; and, where a limited company or partnership is involved as landlord or tenant of a shop, it would be neither just nor equitable not to consider the position of persons interested in it as shareholders or partners.  In Jalota the Salvation Army Trustee Co, 24 February 1994, Sheriff Principal Risk QC held that, given the nature of the defender’s services and the defender’s relationship with its “end users” which made the end users’ interests so proximate to that of the defender, it was legitimate to consider the effect on those in receipt of the services in assessing the defender’s hardship.  On that basis, it was argued for the defender in this case that the defender had to ensure that rail travellers, the “end users”, were well-served and was bound to see that a proper return was obtained for the Treasury. 

[48]      I agree that section 1(3)(f) must be interpreted broadly.  That paragraph does not state whose hardship has to be considered and it is not expressly limited to the hardship of the landlord.  I agree that it is proper to have regard to the “end user”.  The need, to provide rail passengers with coffee at Waverley Station and generate more income for the defender than it gets from the pursuer and a proper return for the Treasury, may not be the strongest argument of hardship for a company such as the defender.  The consequences for the defender in the Jalota case were far more dramatic.  It is of some significance, however, that EGIP and the redevelopment programme will result in there being no coffee based outlet as distinct from a food-based outlet at Waverley Station. 

[49]      Having regard to all the circumstances of the case I do not think it can be said that greater hardship would be caused to anyone by determining that the tenancy shall be renewed than by refusing to do so.  On the other hand, I do not think that a multi-million pound company such as the pursuer can argue hardship from the loss of one outlet of one of its brands at one location.

 

What is reasonable in all the circumstances?

[50]      Having regard to what I have said above about the arguments for and against renewal, I think it is reasonable in all the circumstances that the application be dismissed.  I do not think that a suitable alternative site can be offered to the pursuer; there will not be a loss of revenue to the pursuer that is even significant for an organisation of its size; there will be no loss of goodwill; and no hardship to the pursuer.  I do not think that it is reasonable that the lease should be renewed in case another location becomes available; it is not evident where such a location would be until after the end of the redevelopment of the booking hall.  I think that it is reasonable for the defender to seek to have a leading brand coffee-based outlet at the site when there will be no coffee-based outlet, and, indeed no food-based outlet, for up to two years in the station during the redevelopments and no other site for such an outlet during that time.  It is also reasonable that that brand outlet has a lead-in time.

 

Expenses

[51]      The issue of expenses is to be dealt with at the hearing on 10 April 2015.