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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Clydeport Properties Ltd v Shell UK Ltd [2007] ScotCS CSOH_92 (31 May 2007) URL: http://www.bailii.org/scot/cases/ScotCS/2007/CSOH_92.html Cite as: [2007] CSOH 92, [2007] ScotCS CSOH_92 |
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OUTER HOUSE, COURT OF SESSION [2007] CSOH 92 |
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CA12/07 |
OPINION OF LORD GLENNIE in the cause CLYDEPORT PROPERTIES LIMITED Pursuers; against SHELL UK LIMITED Defenders: ннннннннннннннннн________________ |
Pursuers: Connal
QC, Solicitor Advocate; McGrigors
Defenders: Haywood, Solicitor Advocate; Biggart Baillie
31 May 2007
"for decree ordaining the Defender to implement its obligation to carry out the works specified in the Schedule of Remediation, prepared by EnviroCentre Limited, dated November 2006 within the reasonable period of 12 months or such other period as the court may direct from the date of decree to follow hereon; failing implement for payment by the Defender to the Pursuer of the sum of SIX MILLION EIGHT HUNDRED AND FIFTEEN THOUSAND POUNDS STERLING (г6,815,000) with interest at the rate of 8% per annum from date of citation hereof or such other date as the Court thinks fit until payment;"
The obligation of which implement is sought is contained in clauses FOURTH and TENTH of the Lease, to which I shall refer in due course. The second category of such claims is reflected in the terms of Conclusions 8, 9 and 10. Those Conclusions claim payment of, respectively, г74,165.42, г576,804.35 and г36,594.98. They are supported by averments in Articles 6, 7 and 8, in which the pursuers complain of contamination to the premises which, they say, was the responsibility of the defenders and by reason of which they contend that they have suffered damage.
"1.3 The pursuer's primary position in terms of the summons is of course that the 1988 Lease ... continues by tacit relocation, the defender being barred from objecting to that plea. The pursuer's case is that even if the 1988 Lease was validly terminated, a new lease in broadly the same terms, and with specifically the same obligations of repair, was entered into between the parties as evidenced by the change of letters in early 1992. If the pursuer is right on either of those hypotheses no issue of prescription would arise. However in order to prove either of those hypotheses it would be necessary to embark upon a potentially lengthy and inevitably expensive proof with evidence being led relating to conduct and exchanges between the parties dating back over a significant period.
1.4 This would similarly apply to arguments that the pursuer would seek to advance in relation to the defender having relevantly acknowledged the main claim; it is anticipated that this would be a matter in relation to which the pursuer would be put to proof.
1.5 The importance of the long negative prescription point however is that the pursuers position is that even if the 1988 Lease was validly terminated and there was no new lease agreed (which is the argument advanced in the defences) the obligations requiring the defender to remediate are subject to long negative prescription, and still are still enforceable by the pursuer up to twenty years after the 1988 Lease was terminated - which on the defenders argument was November 1990."
It was said that if the court found for the pursuer in relation to this issue, there would be no requirement (save in relation to the claim for rent, which in the context of the other claims was relatively minor) to consider or determine the question whether the 1988 Lease continued or whether a new lease came into existence. The claims for implement and damages could be disposed of on the basis of evidence and arguments as to causation and quantum.
(Six) to maintain the subjects and in particular the walls and fences enclosing the same and all of the Tenants' of property thereon, the said access road, the said weighbridge and office, the said Switch House No.1and the oil supply pipes, water supply pipes, underground drainage system and interceptors and conductors for telephone cables and electric cables serving the subjects or used in connection with the subjects always in a good and safe condition and repair ..."
Clause TENTH provides as follows:
"At the expiration or sooner termination of this lease as herein provided the Tenants shall be entitled either to remove the installations and other property belonging to them from the subjects with the exception of all concrete brick or stone built buildings and walls and all boundary fences or to leave the said installations and other property in position. In either event, the Tenants shall leave the subjects in a reasonable state of repair and neat and tidy and shall make the subjects safe all to the satisfaction of the Landlords."
I shall refer to these clauses respectively as the "maintaining" and "terminal" conditions. It should be observed that the pursuers in their Summons rely only upon the maintaining conditions in Clause FOURTH. However, Mr Connal told me - and it was, in the event, obvious - that the pursuers intended also to rely upon the terminal conditions in Clause TENTH. With the agreement of Mr Haywood, the debate proceeded on the basis that both clauses required to be considered; and that, if necessary, the pleadings could be tidied up afterwards.
"(e) except as provided in paragraph 1(a), [or (aa)] (aa), (ab) or (ac) of this Schedule, to any obligation relating to land (including an obligation to recognise a servitude);"
Turning to paragraph 1, the relevant sub paragraphs are (a)(v), (d) and (g). By virtue of these sub paragraphs, and always subject to paragraph 2, section 6 of the Act applies:
"(a) to any obligation to pay a sum of money due in respect of a particular period --
(v) by way of rent or other periodical payment and a lease; ...
...
(d) to any obligation arising from liability (whether arising from any enactment or from any rule of law) to make reparation;
...
(g) to any obligation arising from, or by reason of any breach of, a contract or promise, not being an obligation falling within any other provision of this paragraph."
Unlike paragraph 1(a), paragraphs 1(d) and (g) are not identified in paragraph 2(e) as exceptions to the disapplication of section 6 to obligations relating to land. Accordingly, the crucial question in the present case is whether obligations underlying the pursuers' claims are obligations relating to land certain for within paragraph 2(e).
Submissions
[10] Mr Connal argued that the
pursuers sought implement of repair obligations arising under the 1988 lease,
under which the defenders were to keep the premises in good and safe condition
and repair and were to leave them in that condition on departure. He submitted that an obligation in a lease to
keep subjects in good repair is an "obligation relating to land" within para
2(e) of Schedule 1 to the Act. He relied
upon the ordinary meaning of the words used in the Act. The position, put simply, was that this was
an obligation to repair land in a lease relating to land. Para 2(e) was not concerned only with real
rights or real burdens. It covered, as
well, personal obligations under contracts dealing with land and interests in
land, providing that the land was not merely incidental to the obligation. Schedule 1 was drafted in such a way as to
make it clear that an obligation to pay rent or other periodical payment was
included within the expression "any obligation relating to land"; otherwise it
would not have been necessary to except such obligations from the
disapplication of section 6 of the Act.
This construction was consistent with the Opinions in Barratt Scotland Ltd v. Keith 1993 SC 142. In the present case it could not be
said that the land was merely incidental to the obligations of the tenant under
the maintaining and terminal conditions; on the contrary, the obligations on
the tenant under those clauses were intrinsic to his rights under the lease. In addition to Barratt, he referred me to the following authorities: Lord Advocate v Shipbreaking Industries Ltd 1991 SLT 838; Glasgow City Council v Morrison
Developments Ltd 2003 SLT 263; and Smith
v Stuart 2004 SLT (Sh Ct) 2. He also referred me to
[12] In opening his argument on the competency point, Mr Haywood submitted that, on the hypothesis on which the debate proceeded, the lease had come to an end and with it the defenders obligations thereunder. The defenders might, depending on the evidence and subject to the argument on prescription, be found liable in damages for breach of such obligations, but they could not now be ordered to carry them out. He relied upon PIK Facilities Limited v Shell UK Limited and BP Oil UK Limited 2005 SCLR 958, Sinclair v Caithness Flagstone Company Limited (1898) 25 R 703 and A & J Faill v Wilson 1899 36 SLR 941. Sinclair, as interpreted in PIK, was binding authority on this point.
Discussion
"If this view is correct, then the expression cannot be limited to obligations relating to real rights of third parties, but must include personal obligations under contracts dealing with land and interests in land. With the exception of cases in which land is dealt with incidentally only, contractual and other forms of obligation, such as unilateral gratuitous promise, to create rights and interests in land, or to convey land or interests in land, are in my opinion typical 'obligations relating to land'. The sum of these examples would not adequately define the expression."
Yet, clearly there must be some limit, if the disapplication by paragraph 2 of the five year prescriptive period is not to be very extensive. In the passage quoted above, Lord Penrose appears to have taken that view. His suggested exception is of cases in which land is dealt with "incidentally only". In the Inner House, the Lord Justice-Clerk, at p.154A-C, took this exception to refer to the sort of situation "where someone was instructed to dig a ditch on land or a plumber was instructed to carry out repairs to heritable fixtures". Agreeing that these examples could be regarded as cases in which land is dealt with incidentally only, he added:
"... I regard these cases as examples of contracts for services in which land is merely the environment within which the services are to be performed. In these situations the obligations to be performed are not to be regarded as obligations relating to land."
Lord Kirkwood, at p.159E-F, expressed tentative agreement, though he emphasised that each case had to be decided in light of its own particular circumstances. Lord McCluskey, at p.158B-C, appeared to take a similar view but thought it unnecessary, in the circumstances of the particular case, to reach a decision as to where to draw the line. In Glasgow City Council v Morrison Developments Ltd, Lord Eassie adopted a similar approach: see paras [13] and [16]. In the latter passage, when considering an obligation in a lease upon the tenant to construct buildings, he spoke of that obligation being part of the "counter prestation respecting which the interest in the land is created". He concluded that
"The obligation to construct the shops must therefore come within the concept of an obligation relating to land by reason of its correlativity with the grant of the interest in the land."
I respectfully agree with such observations. It is not necessary in the present case to identify precisely where the line is to be drawn, even assuming that a line can be drawn in the abstract. Each case must be considered on its own facts; and the phrase "cases in which land is dealt with incidentally only" is as good a guide as one is likely to get to help identify obligations which involve land but are not obligations "relating to land". It is clear to me that the present case falls within the ambit of para.2 of Schedule 1 to the Act. Implement is sought of obligations to remediate, or restore to good condition, the subjects of a lease, which obligations are themselves contained within the lease and are an intrinsic part of the lease or, to use the expression in Glasgow City Council v Morrison Developments Ltd, correlative with the grant of the interest in the land. It cannot, on any view, be said that the land is only incidental to the obligation which the pursuers seek to enforce.
"If the tenants have failed to perform their obligations for the proper working of the quarries the landlord's remedy is an action of damages, but I know of no authority in support of the pursuer's claim to require his tenants after the termination of a contract of lease to re-enter the subjects, which, by their contract, they are bound to quit, in order to perform, after their possession has come to an end, obligations which were applicable only to the period of their possession, and which they are alleged to have already broken. They cannot be liable for a decree for specific performance, except by virtue of their contract. They have contracted to work in a certain way for a definite term which is exhausted. If they have failed they may be liable in damages for a breach of their contract which they committed while it still subsisted. But they have made no contract to do anything after the lease has expired. It appears to me therefore that in so far as it concludes for a decree for specific implement, the action must be dismissed."
Although in that passage Lord Kinnear speaks of the difficulties in requiring the tenant to re-enter premises which they were bound to quit, it seems to me that the ratio of the decision is contained in that part of it which focuses on the fact that the obligations of which implement was sought were applicable only to the period of possession under the lease. As such, it is binding on me, even if I might have come to a different view. This was also, as I understand it, the view taken of that case by Lord Kingarth in PIK Facilities. I respectfully agree with him. Although Lord Kinnear appears to address expressly only the "working obligation" and not the "terminal obligation", and the same is true of A & J Faill v Wilson, I do not think that this can make any difference, subject of course to the possibility that in any particular case such an obligation might be construed as extending for a period after the lease has ended. It follows that I too differ from the Opinion of Lord Allanbridge in Coventry v British Gas Corporation.
Disposal