Case dismissed: 

The Inner House has now brought to an end a long-running dispute over whether a shopping centre landlord has the right to insist upon the proposed building of a new retail unit in areas earmarked by the applicable Leases as common shared areas.  The successful reclaiming motion was presented by a pairing from Arnot Manderson.

Laurence Murphy QC and Eric Robertson Advocate for the tenant had previously refuted the landlord’s arguments in the Commercial Court (1)  that the centre’s management committee approval could amount to binding consent to the proposed development and (2)  that prior conduct of the tenant had personally barred it from opposing such development.

This latest judgment overturns the third decision of Lord Tyre (of 12 February 2015) which had ruled in the landlord’s favour that “any refusal by the [tenants] to consent to [the proposed development} would amount to an unreasonable withholding of consent” in terms of a stated clause of the Lease.

In the Opinion of the Court delivered by Lady Paton, the Inner House has applied  Arnold v Britton  [2015] 2 WLR  1593 in stating that a court seeking to construe the clause in the context of the Lease as a whole “must focus  primo loco  on what the lease actually says.  Only if there is ambiguity may it be necessary to resort to “business common sense.”

Following that approach, the Inner House examined the Lease provisions and held that the tenant’s construction was appropriate “in the context of the elaborate provisions of the lease.”   The Court held further that if, against that primary view on interpretation, there was ambiguity and therefore a need to invoke the concept of “business common sense”, that concept also pointed to the tenant’s interpretation.

The judgment underlines the importance of the accuracy and reliability of public registers such as the Register of Sasines, Land Register and the Books of Council of Session.  Allowing the type of building proposed to proceed would have resulted “in confusion and contradictions between boundaries in plans and the physical state of the ground, and questionable titles to those buildings (or parts of buildings) encroaching upon shared areas.” 

The full judgment [2016] CSIH 19 of 16 March 2016

(of Lady Paton, Lady Smith and Lord McGhie) can be accessed here