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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Minevco Ltd v Barratt Southern Ltd [2000] ScotCS 72 (16 March 2000) URL: http://www.bailii.org/scot/cases/ScotCS/2000/72.html Cite as: [2000] ScotCS 72

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[1] In this action the pursuers, who are the heritable proprietors of subjects at Schoolhill, Aberdeen, seek, in accordance with the first conclusion, a declarator that the defenders are in breach of a contract of lease entered into between the pursuers and tenants whose interest in the lease was subsequently assigned to the defenders:

In terms of the second conclusion the pursuers seek decree ordaining the defenders:

The pursuers also seek, failing implement, payment of £1,500,000 with interest from the date of decree until payment.

[2] The defenders have reclaimed against the interlocutor of the Lord Ordinary in which he allowed parties a proof before answer of their averments.

[3] The planning and contractual background to the present action is somewhat complex, but it is convenient for us to set out an outline of the main stages as follows:

(i) On 9 September 1976 the local planning authority granted outline planning

(ii) In 1978 the pursuers entered into missives to let their property, to which we

(iii) By disposition dated 22 December 1978 and recorded in the General Register

(iv) The missives of let referred to in para. (ii) were superseded in due course by

(v) On 28 August 1981 the local planning authority granted outline planning

(vi) In 1990 part of the leased subjects and part of the additional subjects required

(vii) Due to a number of circumstances, including the effect of the road-widening,

(viii) On 28 September 1989 the local planning authority granted outline planning

(ix) In 1981 Properties, with the consent of the pursuers, assigned their interest

(x) On 24 June 1993 the local planning authority granted planning permission, on

[4] The lease referred to in the first conclusion was a ground lease for a period of 150 years from 5 September 1978. By clause FIRST it was provided:

By Minute of Agreement between the pursuers, Properties and Barratt Developments plc dated 5 May, 15 June and 12 October 1983 and recorded in the General Register of Sasines on 17 November 1983, clause FIRST of the lease was varied by the deletion of "within three years after the date of entry" and the substitution of "prior to First March, Nineteen Hundred and Eighty-six". The deed stated that "except as herein varied the said lease is confirmed in all its clauses". Under clause SECOND of the lease the tenants undertook to pay a basic ground rent, which was to be replaced, when the buildings were erected, with a rent equal to 10% of the rentals paid by the tenants who occupied them. By an Addendum to the lease dated 14 and 27 January and recorded in the General Register of Sasines on 12 February 1986, the parties agreed that the ground rent would be increased to £34,500, which is the current rent payable under the lease. In terms of clause SECOND of the lease no upward rent review can occur until the buildings are erected and rentals are payable by the tenants in occupation of them. The Addendum also provided: "Save as hereby altered the terms of the said lease will continue in full force and effect". Similar words appeared in the Minute of Agreement and Amendment of Lease referred to in para. (vi).

[5] Clause FIRST of the lease sets out an obligation on the part of the tenants to use their best endeavours to erect buildings which fall within one of three alternative descriptions. The first refers to the planning permission to which we have referred in para. (i). As we have already noted, it expired on 9 September 1981, shortly after the contract of lease was entered into. The pursuers accept that the description of the buildings referred to in the second alternative, namely "pure office buildings" was insufficiently specific to be given effect. The pursuers' case is based on the third alternative, namely "such other buildings as the Tenants shall be permitted to build by the Local Planning Authority". Whether or not it is material, it is common ground between the parties that the time limit referred to in the clause related to the completion of the erection of the buildings, as distinct from the date when the permission was granted. As we have already noted the expiry of that time limit was extended by express agreement to 1 March 1986.

[6] As Mr. Williamson for the pursuers submitted, the case for the pursuers is that after 1 March 1986 the defenders remained under an enforceable obligation to erect buildings in accordance with this branch of clause FIRST. The pursuers had the right, he said, to require the defenders to implement the planning consent which had been granted on 4 December 1996. It related to the planning permission which had been granted on 24 June 1993, which in turn had renewed the planning permission which had been obtained on 28 September 1989. In applying for and obtaining planning permission the defenders had defined the subject-matter of the obligation to build. As regards the time limit the pursuers' case was that the circumstances were such as to be capable of being construed as establishing that there had been an agreement between the parties that the time limit should be departed from, or at any rate that there had been a waiver by the defenders of their right to maintain that they were no longer under obligation to build in accordance with the clause.

[7] The principal argument submitted by Mr. Currie on behalf of the defenders was that, having regard to the expiry of the time limit of 1 March 1986, there was no subsisting obligation on the part of the defenders to erect buildings in accordance with clause FIRST. This was so whether the time limit was interpreted as relating to the obtaining of planning permission or to the erection of buildings. As at 1 March 1986 the only existing planning permission was that which had been granted on 28 August 1981. It expired after five years. The defenders could not be required to erect buildings, save in accordance with a defined obligation. A time limit was necessary, in conjunction with a subsisting planning permission, in order to give the necessary definition to the obligation. When the permission granted on 28 August 1981 expired, that was an end of the obligation to build. Whether, by reason of their failure to comply with the clause, the defenders were exposed to irritancy of the lease or a claim of damages was a separate matter. It would not do to suggest that after 1 March 1986 there was no time limit, or that the time limit was no more than the expiry of a reasonable period, since this meant that the obligation would lack definition or specification. It could not be at the whim of the pursuers as to what the defenders were under an obligation to erect or when. Between 1 March 1986 and 1993 there had been no suggestion by the pursuers that the defenders were under a subsisting obligation to erect buildings.

[8] Mr. Currie submitted that, in any event, to suggest that the time limit had been removed contradicted the express intention of the parties. On each occasion when they had varied the contract of lease to some extent they had expressly provided that, except in so far as varied, the original terms of the lease remain unaffected. It was inconceivable that they had overlooked the existence of the time limit.

[9] For the pursuers Mr. Williamson said that under clause FIRST the tenants, and hence the defenders, were obliged to erect buildings which satisfied one of the three branches set out in the clause. The original time limit had been intended to bear a relationship to the mechanism for dealing with rent. Under clause SECOND, the pursuers and the tenants were to share the rents. Where the buildings were to go on the site was a matter for the tenants. The obtaining of a financial return by the pursuers as well as the tenants depended on the erection of buildings on the site. In the absence of buildings there was nothing to be gained by a later rent review. Development in accordance with the permission granted on 28 August 1981 had been frustrated by the taking of land for the widening of Denburn Road.

[10] Mr. Williamson emphasised that it was important to recognise that the parties were in a long-term relationship which developed in the light of the changing circumstances. The pursuers' pleadings set out a catalogue of ways in which they had acted together.

[11] In Article 3 of the condescendence the pursuers aver, with reference to the fact that Properties did not erect buildings on the subjects prior to 1 March 1986:

The pursuers also aver that they agreed, at the request of the defenders, to pay various fees required by the planning authority in connection with the planning application which was granted on 24 June 1993, and that in 1996 the defenders requested that the pursuers pay these fees to enable a new detailed planning consent to be granted based on the 1989 and 1993 outline consents. The pursuers also aver:

[12] Mr. Williamson submitted that it was not irrational for a party who was not in breach to take the view that it was better to affirm the contract than to determine it. It was not surprising that when the parties' intentions were frustrated by the fact that land required to be taken for the purposes of road widening they simply let the time limit go by. As a result of the changes which had been made the amended subjects of lease were very different from the original both in shape and extent. Mr. Williamson submitted that it was possible to construe the actings of the parties in the period from 1986 to 1996 as contradicting the ending of the obligation to construct buildings in accordance with clause FIRST. The time limit disappeared, he submitted, when the parties worked together to achieve planning permission for the development. This defined the subject-matter of the defenders' obligation. The terms in which the parties had expressed their intention when making subsequent alterations to the lease were not inconsistent with the pursuers' case that the time limit had been departed from either by agreement or by waiver.

[13] Mr. Williamson also emphasised that the submissions which he had made, as noted above, were predicated on the time limit being specific and mandatory. However, there was no reason to suppose in the present case that time was of the essence, standing that (a) the tenants were bound only to use their "best endeavours", and (b) the irritancy of the lease was not automatic but depended on the pursuers giving written notice of failure on the part of the tenants in the performance or observance of any of the conditions which applied to them.

[14] Mr. Currie also submitted that in the circumstances the part of clause FIRST which was founded on by the pursuers was not sufficiently specific to be enforceable. This was because there was more than one way in which the clause could be satisfied, and because the clause did not define "such other buildings as the tenants shall be permitted to build by the local planning authority". The pursuers could not point to a single identifiable set of buildings which the defenders were obliged to construct. It could hardly be within the discretion of the pursuers to select what they would seek to enforce. It should be noted that the last permission had arisen from an application made by the pursuers, and, although it had not happened, an application for planning permission could have been made by a third party. On any view the second conclusion was inept in respect that it focused on one particular planning consent.

[15] Finally, Mr. Currie submitted that what the pursuer sought to enforce was objectionable in respect that it sought to oblige the defenders to erect buildings not only on the amended subjects of lease but also on the adjacent subjects which were in their own ownership. Clause FIRST could not be used in order to compel the defenders to construct a monolithic building on land of which the amended subjects of lease were a non-severable part.

[16] It is not in question that a clause of written contract cannot be varied or altered by verbal agreement. However, the position may be different if there are facts and circumstances which are explicable only on the basis that there was an express or implied agreement. As Lord Robertson observed in Baillie v. Fraser (1853) 15 D. 747 at 750:

In such a case parole evidence may be led in order to prove such a case. In Sutherland v. Montrose Shipbuilding Company (1860) 22 D. 665 the question was whether a shipowner had extended the time for completion of the vessel by the ship builder. In that context the Lord Justice Clerk (Inglis) stated at page 673 that the rule of law, in the light of the decision in Wark v. Bargaddie Coal Company (1859) 3 Macq. 467, was that "where there are averments of acquiescence in operations inconsistent with the terms of the written contract, they may be admitted to proof; and if it appear that the acquiescence was the consequence of a previous arrangement, that is then competent to prove that arrangement". Thus in Wark the landlord's acquiescence in the tenant's breach of a prohibition under the lease provided a relevant answer to the landlord's claim that the tenant had been in breach of contract. In Baillie v. Fraser the fact that the tenant had tendered, and the landlord had accepted, rent on a different basis from that stipulated under the lease effected a permanent conversion in the rent which was payable.

[17] In the present case Mr. Currie submitted strongly that the pursuers did not offer to prove actings which were inconsistent with the termination of the defenders' obligation to erect buildings in accordance with the clause. The pursuers' averments were consistent with the tenants merely having co-operated with the pursuers when that was in their interest to do so. Mr. Currie also submitted that it was not enough that it was possible that the actings were inconsistent with termination of the obligation to erect.

[18] There is some force in Mr. Currie's submissions, but we consider that it would be going too far and too fast to hold that the pursuers should not be entitled to put their case to the proof. The present case has a number of unusual features. The pursuers found on the actings of both parties after the expiry of the time limit and at a time when the permission which had been granted in 1981 could not be put into effect due to the effect of road widening. Clause FIRST was the only provision in the lease which entitled the tenants, and hence the defenders, to erect buildings. It is arguable that the actions of the parties, after the time limit had expired, were attributable to a common interest in enabling the provisions of the lease, and in particular clause FIRST, to be implemented. In its terms the clause was capable of applying to the consent to which the second conclusion relates. The pursuers did not irritate the lease, but acted in such a way as to indicate that they were affirming it. We do not agree with Mr. Currie's criticism that it is fatal that Mr. Williamson went no further than to say it was possible to construe the actings of the parties as contradicting the ending of the obligation to erect. At the present stage we are concerned only with whether the pursuers have set out a case which should go to enquiry, and for that purpose whether, on their averments, they could not succeed.

[19] Accordingly, while the whole matter is not free from difficulty, we are satisfied that the pursuers' case that the time limit was departed from rebus et factis should be the subject of enquiry. It also follows that the same applies to the pursuers' case that the defenders in any event waived their right to found on the time limit. Whether there has been a waiver is a matter of fact, and during the course of his submissions Mr. Currie accepted that the requirements of averment and proof for a case of waiver were less exacting than for a variation of the term of a written contract.

[20] As regards the other arguments presented by Mr. Currie, we are not persuaded that either of them should be sustained as a matter of relevancy without enquiry into the facts. We note that Mr. Currie did not submit that clause FIRST was void from uncertainty, but that in the circumstances it was not sufficiently specific to be put into effect. However, the pursuers should be given the opportunity, in our view, of establishing that the actions of each of the parties, known to and acquiesced in by the other, served to identify the planning consent referred to in the second conclusion as being the development which the defenders were under obligation to erect. As regards the argument that the pursuers were seeking to impose as an obligation something greater than was covered by the clause, we are not persuaded of this, as matters stand. As Mr. Williamson pointed out, since the time of the planning application which was granted on 28 September 1989 the applications which have been made for planning consent and the approval of reserved matters have all related to a site comprising the amended lease subjects and the adjacent subjects. The latter subjects were acquired by the defenders' predecessors in 1978. While it is true that, if there is a valid obligation under the clause, it can only be enforced in regard to the amended subjects of lease, it does not follow that in order to do so the defenders will not also require to erect buildings on other land which is in their ownership.

[21] In these circumstances we will adhere to the interlocutor of the Lord Ordinary and refuse the reclaiming motion.