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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> GYLE SHOPPING CENTRE GENERAL PARTNERS LTD v MARKS AND SPENCER PLC [2014] ScotCS CSOH_122 (06 August 2014) URL: http://www.bailii.org/scot/cases/ScotCS/2014/2014CSOH122.html Cite as: [2014] ScotCS CSOH_122 |
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OUTER HOUSE, COURT OF SESSION
[2014] CSOH 122
CA190/13
OPINION OF LORD TYRE
In the cause
GYLE SHOPPING CENTRE GENERAL PARTNERS LTD as trustee for and general partner of GYLE SHOPPING CENTRE LIMITED PARTNERSHIP
Pursuer;
against
MARKS & SPENCER PLC
Defender:
Pursuer: G Walker, L Walker (solicitor advocate); Gateley (Scotland) LLP
Defender: Murphy QC, E Robertson; DWF Biggart Baillie LLP
6 August 2014
Introduction
[1] The pursuer is the owner of the Gyle Shopping Centre, Edinburgh. The defender is the tenant of subjects in the shopping centre which were leased to it in 1992 by the City of Edinburgh District Council, a predecessor in title of the pursuer. The pursuer has entered into an agreement with Primark Stores Ltd for the construction and leasing of a new retail store building which would abut the existing shopping centre and would be constructed on currently unbuilt‑upon land including part of the car parking area. The defender contends that it has not given its agreement in probative writing to the construction of such a building, and accordingly that the pursuer is not entitled to commence construction or to grant a lease of it to Primark.
[2] In my opinion dated 25 March 2014 (published with the reference [2014] CSOH 59), I held, after a debate, that the pursuer was not entitled to declarator that the defender had given its unqualified written consent to the use by the pursuer of areas currently forming part of the Shared Areas and car parking areas of the shopping centre for construction of a new building to be leased to Primark. The basis of the pursuer’s argument was that the Management Committee established in accordance with the defender’s lease had had power to agree, and had agreed, to a variation of the lease to the effect of permitting the construction of the new building on part of the Shared Areas, including the car parking area. I held that variation of the lease was not within the power of the Management Committee. I also expressed the view that the effect of certain clauses in the defender’s lease was that probative writing was required for any agreement that had the effect of altering the area within the site allocated to car parking, roads, and/or pedestrian routes.
[3] This opinion deals with a matter which was not addressed at the previous debate. The pursuer seeks declarator that, in the event that it commences construction of the proposed new building, the defender will be personally barred from taking any action to prevent the pursuer from carrying out that construction or proceeding to lease the resulting building to Primark. The pursuer contends that the parties entered into a contract – or the defender undertook a unilateral obligation – for the variation and partial extinction of the defender’s real rights so as to permit the Primark development. That agreement — or obligation — was said to have been entered into verbally by the defender’s representatives at meetings of the Management Committee and by signature of minutes of these meetings “for and on behalf of” the defender. The pursuer acted in reliance on the contract or unilateral obligation, with the knowledge and acquiescence of the defender, by incurring fees, removing shop tenants, and entering into an agreement to lease to Primark. If the defender were permitted to withdraw from its contract or obligation, the pursuer would be materially adversely affected. The defender is accordingly barred, according to the pursuer, from insisting upon a formal variation of the lease by the provisions of the Requirements of Writing (Scotland) Act 1995, section 1(3) and (4) or, alternatively, by the pre-1995 common law of rei interventus.
[4] At a proof before answer, the pursuer led evidence from three individuals concerned with the management of the shopping centre, namely:
The defender led evidence from Adam Colton who has been the defender’s Head of Property UK since January 2013. I accept the evidence of all four witnesses as credible and reliable.
[5] In paragraphs 2 to 19 of my previous opinion, I set out the relevant clauses of the defender’s lease and also the terms of the minutes of the relevant Management Committee meetings. For ease of reference, I annex those paragraphs to this opinion. It is necessary to narrate one further clause of the lease, namely clause 104:
“No failure or delay on the part of any party in exercising any power or right hereunder shall operate as a waiver thereof (except as otherwise specifically provided herein) nor shall any single or partial exercise of any such right or power preclude any other or further exercise of any such right or power.”
[6] I require to address the following issues:
(i) Has the defender’s lease been varied, to the effect of extinguishing the defender’s real right in the areas upon which the pursuer wishes to construct the building to be leased to Primark, by oral agreement at Management Committee meetings from which the defender is not now entitled to withdraw (the statutory personal bar argument)?
(ii) Alternatively, is the defender barred by the pre-1995 law of rei interventus
from withdrawing from such an oral agreement at Management Committee meetings (the rei interventus argument)?
(iii) Has the defender otherwise barred itself, by waiver of its right under the lease, from taking any action to prevent the pursuer from constructing the building and leasing it to Primark (the waiver argument)?
The first two issues can, in my opinion, be disposed of as matters of law. The third requires consideration of evidence. I consider that I require to address an issue in these general terms because it reflects the declarator sought by the pursuer and because, at times, the pursuer’s argument was presented on a broader basis than either statutory personal bar or pre-1995 rei interventus. It is convenient to narrate at this stage the actings by the pursuer knowledge of which is said to bar the defender from withdrawing from the oral agreement claimed to have been reached at the Management Committee meetings.
Pursuer’s actings in reliance on agreement
[7] The pursuer’s case is somewhat unspecific as to when exactly the oral agreement between itself and the defender (and, of course, Morrisons) to the construction and letting of the Primark store was concluded. At paragraphs 16 to 19 of my previous opinion, I narrated the relevant terms of the minutes of Management Committee meetings held on 24 February 2011, 24 March 2011and 24 November 2011. I also noted that on each occasion an employee of the defender had, on behalf of the defender, signed a page annexed to the minute containing the following text:
“I confirm I have read the minutes of the above date and that they are an accurate reflection of the meeting. The proposals made therein are hereby approved.”
The meeting on 24 February 2011 was attended by Mr Gaffney, another employee of Colliers, Mr Cronie, and Mr Gavin Neil, the defender’s Finance and Operations Manager for their store at the Gyle, on behalf of the defender. The page approving the minutes was signed on behalf of the defender by Ms Sarah Blackburn, the defender’s Store Manager and Mr Neil’s superior. The meeting on 24 March 2011 was attended by Mr Gaffney, Mr Cronie, a representative of Morrisons, and Ms Catriona Morse, a trainee manager employed by the defender. The page approving the minutes was again signed on behalf of the defender by Ms Blackburn. The meeting on 24 November 2011 was attended by Mr Gaffney, Mr Cronie and Mr Neil. The page approving the minutes appears to have been signed by Mr Neil. References to the Primark development were also made in the minutes of Management Committee meetings held on 6 October 2011, 31 January 2012 and 16 March 2012 but these do not add anything material to those I have already quoted. The defender’s contention is that an agreement – or a unilateral obligation – for the variation and partial extinction of the defender’s real right under the lease:
“was entered into verbally by the defender’s representative at the said meetings [ie all of the six meetings to which I have referred] and then by signature of the minutes by a person that the defender allowed to hold her/himself out as signing ‘for and on behalf of M&S’”.
[8] By missives dated 30 November and 2 December 2010, prior to any of the Management Committee meetings already mentioned, the pursuer and Primark bound themselves to enter into an Agreement for Lease relative to the development of the Primark premises. These missives were not among the documents lodged for the proof, but the Agreement for Lease itself, dated 20 June and 1 August 2011 and signed on behalf of the pursuer and Primark, was lodged. In terms of clause 11.2 of the Agreement for Lease, the pursuer undertook to procure the grant to Primark of a 25-year lease of the subjects upon which the Primark store was to be constructed. The pursuer’s obligation was, however, subject to three suspensive conditions in clause 2.1. The first related to the obtaining of planning permission in terms satisfactory to the pursuer. The second was the securing of vacant possession of units 33 to 36 of the shopping centre on terms “entirely satisfactory to the [pursuer], acting reasonably”. The third suspensive condition was:
“obtaining all necessary approvals from the Management Committee (as detailed in the Lease) to the entering into of the Lease and that on terms acceptable to the [pursuer], acting reasonably”.
“Lease” in this context was defined as the lease of the Primark premises to be granted in terms of a draft in a Schedule to the Agreement. In terms of clause 2.3 of the Agreement, if any of the conditions was not purified within 18 months after “the date hereof”, either party would be entitled, but not obliged, to rescind the missives without liability.
[9] Prior to the first of the Management Committee meetings listed above, Mr Gaffney and Mr Cronie had held a meeting on 31 January 2011 with Mr Neil in order to brief him on the Primark proposal. They held similar meetings on 16 February 2011 with a representative of Morrisons and with the tenants of other units in the shopping centre. The reaction of all concerned, including Mr Neil, was enthusiastic. A public consultation was held in the shopping centre in early March 2011; again the proposal was well received. Demand by potential tenants for units in the shopping centre increased. In May 2011, the planning application for the development was submitted. Negotiations began with the tenants of units 33-36 for their relocation to other units within the shopping centre. Notices to quit were issued to them. The minutes of the Management Committee meeting held on 24 November 2011 record that planning permission had been granted, that one tenant (Game) had been relocated and that relocation of another was in progress. Part of the agreement with Game involved a payment by the pursuer of £250,000, but because Game subsequently went into administration, no payment was made. The pursuer appointed various professional teams, including architects and surveyors. Mr McKelvey estimated that around £1 million had been committed to direct costs of the proposed development.
[10] On 30 May 2012, agents for the pursuer wrote to Primark formally waiving all of the suspensive conditions in clause 2.1 of the Agreement for Lease. Notices to remove were issued to businesses which had been occupying Units 35 and 36 on monthly licences.
[11] On 7 January 2013, Mr Gaffney wrote to the defender at the Gyle Shopping Centre, noting that approval of the Primark store had been granted via the mechanism of Management Committee meetings, and advising that construction would begin as soon as possible. Mr Gaffney stated, however, that there were some “legal formalities” to deal with. The pursuer’s funders required a security over the building, and the Deed of Mutual Conditions required the consent of the defenders and Morrisons to the granting of such security. In addition, Mr Gaffney considered it appropriate to update the lease plan to reflect “the recent/proposed changes”. Enclosed with the letter was a security document and deed of variation for signature. On 22 February 2013, the defender’s solicitors wrote to the pursuer in response to Mr Gaffney’s letter, drawing attention to the formalities specified in the lease for inter alia alteration of the Shared Areas and advising that the defender did not agree to the amendments proposed to the car parking areas, pedestrian routes and roads. In the defender’s view, agreement to extension of the shopping centre area and the consequent change to the car parking areas, pedestrian routes and roads, was not within the powers of the Management Committee. The present action was subsequently raised.
Issue (i) - the statutory personal bar argument
[12] So far as relevant, section 1 the Requirements of Writing (Scotland) Act 1995 provided at the material time as follows:
“1. (1) Subject to subsection (2) below and any other enactment, writing shall not be required for the constitution of a contract, unilateral obligation or trust.
(2) Subject to subsections (2A) and (3) below, a written document complying with section 2 of this Act shall be required for—
(a) the constitution of—
(i) a contract or unilateral obligation for the creation, transfer, variation or extinction of a real right in land;
(ii) a gratuitous unilateral obligation except an obligation undertaken in the course of business; and
(iii) a trust whereby a person declares himself to be sole trustee of his own property or any property which he may acquire;
(b) the creation, transfer, variation or extinction of a real right in land otherwise than by the operation of a court decree, enactment or rule of law; and
(c) the making of any will, testamentary trust disposition and settlement or codicil.
…
(3) Where a contract, obligation or trust mentioned in subsections (2)(a) or (2A) above is not constituted in a document complying with section 2 … of this Act, but one of the parties to the contract, a creditor in the obligation or a beneficiary under the trust (“the first person”) has acted or refrained from acting in reliance on the contract, obligation or trust with the knowledge and acquiescence of the other party to the contract, the debtor in the obligation or the truster (“the second person”)—
(a) the second person shall not be entitled to withdraw from the contract, obligation or trust; and
(b) the contract, obligation or trust shall not be regarded as invalid,
on the ground that it is not so constituted, if the condition set out in subsection (4) below is satisfied.
(4) The condition referred to in subsection (3) above is that the position of the first person—
(a) as a result of acting or refraining from acting as mentioned in that subsection has been affected to a material extent; and
(b) as a result of such a withdrawal as is mentioned in that subsection would be adversely affected to a material extent.
(5) In relation to the constitution of any contract, obligation or trust mentioned in subsections (2)(a) or (2A) above, subsections (3) and (4) above replace the rules of law known as rei interventus and homologation.
(6) This section shall apply to the variation of a contract, obligation or trust as it applies to the constitution thereof but as if in subsections (3) and (4) for the references to acting or refraining from acting in reliance on the contract, obligation or trust and withdrawing therefrom there were substituted respectively references to acting or refraining from acting in reliance on the variation of the contract, obligation or trust and withdrawing from the variation.”
Section 2 provides that no document required by section 1(2) is valid in respect of the formalities of execution unless it is subscribed by the granter, and that nothing further is required for the document to be valid.
[13] The pursuer advanced the following propositions of law:
(i) If the terms of section 1(3) of the 1995 Act are met, a “contract for the… variation of a real right in land” that is not constituted in writing compliant with section 2 will still be effective.
(ii) Section 1(3) can apply to a lease.
(iii) If a contract for the variation of a real right created by a lease is duly constituted, either by writing compliant with section 2 or by way of statutory personal bar, that will vary the real right itself.
(iv) If parties to a lease have entered into a contract for variation of the real right created by the lease, and have thereby also varied the real right itself, any formal requirement for variation in the original lease that ought to have been complied with will not prevent effect being given to the parties’ agreement.
[14] The first proposition is not controversial. The second is, at least as regards a lease which creates or varies a real right in land. Section 1(3) applies to a contract, obligation or trust mentioned in section 1(2)(a); it does not apply to anything else. In particular, it does not apply to the creation or variation of a real right in land for which a written document is required by section 1(2)(b). The argument for the pursuer is based upon the fact that a lease may also be a contract and is accordingly capable of falling within section 1(2)(a)(i) as well as section 1(2)(b). The relationship between section 1(2)(a) and 1(2)(b) in the context of leases was discussed by Lord Drummond Young in The Advice Centre for Mortgages v McNicoll 2006 SLT 591. At paragraph 18, Lord Drummond Young observed that the legislative intention is clearly to separate contracts relating to land (ie transactions giving rise to merely personal rights) on the one hand from dispositions and other deeds that actually effect the creation or transfer of an interest in land (i.e. transactions giving rise to real rights) on the other hand. He accepted a submission that the personal bar provisions should be confined to transactions that create rights which are purely personal and were not intended to apply to a transaction creating rights that could be made real by registration or taking possession. That fundamental distinction had to be given effect in the case of leases. Where, therefore, it could be inferred that the intention of the parties to a lease was that real rights would be created in favour of the tenant, the document would fall within section 1(2)(b) and the personal bar provisions in section 1(3) would not apply.
[15] Counsel for the pursuer invited me not to follow Lord Drummond Young’s decision. It was submitted that common law rules concerning rei interventus applied to leases and there was nothing to indicate that Parliament intended to give the new statutory personal bar in the 1995 Act a more restrictive application. In any event, The Advice Centre for Mortgages was distinguishable in that it concerned the creation of a lease whereas the present case was concerned only with real rights in the car parking area etc which were pertinents ancillary to the pursuer’s lease of their store.
[16] I respectfully agree with Lord Drummond Young’s analysis. I agree in particular that the 1995 Act draws a fundamental distinction between the creation of personal rights, where a party’s actings may bar him from founding upon a failure to constitute the contract in a written document complying with section 2, and the creation of real rights, good against third parties, as regards whom a party’s actings can have no such effect. As Lord Drummond Young explained, there are sound policy reasons for drawing such a distinction, and it respects the “personal” character of the doctrine of personal bar explained by Lord President Rodger in William Grant & Sons Ltd v Glen Catrine Bonded Warehouse Ltd 2001 SC 901 at paragraph 29. It also accords with the views of the Scottish Law Commission, expressed in their Report no 112 on Requirements of Writing which led to enactment of the 1995 Act. As the Commission put it at paragraph 2.50 of the Report, in a passage applicable to leases as well as to dispositions of land:
“It is reasonable to say that a person cannot back out of an obligation if the requisite actings have followed on it. It also seems reasonable to say that an actual conveyance is either valid or invalid whether or not actings have followed on it.”
As the Act makes it clear (in section 1(6)) that the same rules apply to transfer, variation and extinction of rights as apply to creation of rights, it follows that the statutory personal bar provisions of section 1(3) have no application to the variation of a real right in land. I see no reason to distinguish between a real right in the principal subjects leased and a real right which is granted as a pertinent to the principal subjects.
[17] Applying this analysis to the circumstances of the present case, the statutory personal bar would be capable of applying to an agreement to vary the terms of the defender’s lease, but not to a variation of the lease itself. The difficulty for the pursuer is that its case is necessarily based on the latter, not the former, having occurred. It is not averred by the pursuer, and there has been no evidence to suggest, that the agreement said to have been reached at Management Committee meetings was an agreement to vary the terms of the lease; on the contrary, it seems from the evidence of the pursuers’ witnesses that no thought was ever given by the Management Committee to the terms of the lease. It must follow, in my opinion, that no relevant case is made by the pursuer that the lease has been varied, as a consequence of the pursuer’s actings, known to and acquiesced in by the defender, in reliance upon an oral agreement reached at a Management Committee meeting that the pursuers should construct the building for letting to Primark.
[18] The first basis upon which the pursuer’s case is presented accordingly fails as a matter of law. I should add for the sake of completeness that what I have to say later regarding the pursuer’s erroneous equation of agreement among members of the Management Committee on the one hand and agreement by the defender on the other would have applied equally to the pursuer’s argument based on statutory personal bar. Had it been necessary, I would have held, for the reasons set out below, that the pursuer has failed to prove any informal agreement, or unilateral obligation undertaken, by the defender capable of giving rise to personal bar under section 1(3).
Issue (ii) – the rei interventus argument
[19] I have already noted that the statutory personal bar in section 1(3) applies to contracts, obligations and trusts mentioned in section 1(2)(a) but not to the creation, transfer, variation or extinction of real rights mentioned in section 1(2)(b). Section 1(5), reproduced above, states that in relation to the constitution of a contract, obligation or trust mentioned in section 1(2)(a), the statutory personal bar replaces the rules of law known as rei interventus and homologation. The pursuer’s alternative contention was that because the common law rules of law were not expressly disapplied other than in relation to contracts etc mentioned in section 1(2)(a), they remained in force for the constitution of rights under section 1(2)(b). In support of this submission, reference was made to an article by Professor Robert Rennie, Requirements of Writing: Problems in Practice [1996] SLPQ 187, in which the author expressed the view that it must be assumed that for documents outwith the scope of section 1(2)(a), the common law rules of rei interventus and homologation still applied. So far as the common law was concerned, the position remained as stated by the Lord Ordinary (Kyllachy) in Carron Company v Henderson’s Trs (1896) 23R 1042 at 1049:
“A lease may also be altered by a verbal agreement proved by parole if followed by actings contrary to the lease and in pursuance of the agreement. At least it may be so to the effect of justifying or barring challenge of the particular acts done. Bargaddie Coal Co v Wark (1859) 3 Macq 467; Kirkpatrick v Allanshaw Coal Co (1880) 8R 327.”
In the present case, the pursuer had proved a verbal agreement at the Management Committee meetings followed by actings by it, contrary to the lease and in pursuance of the agreement, of sufficient importance to bar the defender from now objecting to or failing to co-operate in enabling the Primark development to proceed.
[20] There is nothing in the Scottish Law Commission report to which I have referred to suggest that the Commission envisaged that the old rules of rei interventus and homologation would continue to operate in parallel with the proposed new statutory personal bar; the discussion at paragraphs 2.38 to 2.46 is to the contrary effect. In my opinion, the terms of the 1995 Act reflect the Commission’s conclusion (paragraph 2.40) that the common law in this sphere should be replaced by the new statutory rules. This is clear from the terms of section 1(2): the requirement of a written document complying with section 2 is unqualified with regard to the creation, transfer, variation or extinction of a real right in land. For non-electronic documents, the only qualification to the statutory requirement is subsection (3), applying only to section 1(2)(a), and there is no justification for reading any non-statutory qualification into the Act as regards section 1(2)(b). On this point I respectfully agree with the opinion of Lord Drummond Young in The Advice Centre for Mortgages (above) at paragraph 22, referring in turn to Professor KGC Reid’s annotations to the Current Law Statutes print of the 1995 Act. I also agree that the plain meaning of subsection (5) is that the pre-1995 law of rei interventus and homologation is “replaced” in its entirety by the new statutory personal bar.
[21] For my part, I do not regard this as having effected as significant a change in the law as was suggested by counsel for the pursuer. I accept that there is authority that the common law rei interventus rule could apply to transactions creating real rights; Lord Drummond Young cites Clark’s Exr v Cameron 1982 SLT 68 as an example. I do not, however, accept the proposition that under the pre-1995 law, a lease conferring a real right upon the tenant could have been varied for the future by an oral agreement permitting a tenant to act in breach of the terms of the lease, followed by actings in reliance on that agreement. The cases of Bargaddie Coal Co v Wark and Carron Co v Henderson’s Trs established only that a landlord was barred from challenging past actings, in breach of the terms of the lease, of which he had knowledge; such acquiescence was not, however, held to operate as a variation of the terms of the lease for all time coming. Again it was important to distinguish, as Lord Kyllachy did in the passage to which I was referred, between, on the one hand, an agreement to vary the terms of a lease which lacked the necessary formality and, on the other, an agreement alleged to constitute, of itself, an oral variation of a lease. The former was capable of being rendered binding by rei interventus; the latter was not permitted (although in certain circumstances the lease could be altered for the future rebus ipsis et factis) but acquiescence could prevent the landlord from seeking a remedy for the past breach. I do not consider that this line of case law affords any support for the proposition that Parliament, when enacting section 1 of the 1995 Act, must have intended to retain a right to found upon rei interventus or homologation with regard to transactions creating or varying real rights. Nor do I accept the pursuer’s submission that the reference to the operation of a “rule of law” in section 1(2)(b) is intended to preserve the common law rules of rei interventus and homologation; in my opinion the reference is to circumstances in which real rights may be created, transferred, varied or extinguished otherwise than by operation of a statue or court decree: an example is property passing under a survivorship destination.
[22] For these reasons I reject the pursuers’ alternative submission that the common law rule of rei interventus survives to perfect an oral variation of a lease where one party acts upon the agreement with the knowledge and consent of the other. Moreover, my observations regarding the pursuer’s failure to prove the existence of an informal agreement or unilateral obligation by the defender, as opposed to the defender’s representatives on the Management Committee, apply mutatis mutandis to this branch of the pursuer’s case.
Issue (iii) – the waiver argument
[23] I turn to consider whether the pursuer has established, on a ground other than the operation of statutory personal bar or common law rei interventus, that the defender is barred by its actings from refusing to grant the minute of variation of its lease which is necessary in order to enable the development to proceed on land currently forming part of the Shared Areas. In support of its contention that the defender was so barred, the pursuer founded upon a number of chapters of evidence which it is necessary now to narrate.
(i) The role conferred upon the Management Committee.
[24] By the time of the pursuer’s acquisition of the shopping centre in 2006, and Colliers’ assumption of responsibility for its management in 2007, Management Committee meetings had settled into a monthly pattern. Meeting agendas followed a standard style, dealing in turn with issues affecting the defender, Morrisons, and the Multiple Occupancy Building (“M.O.B.”) tenants, followed by reports by the Centre Manager and others. Decisions were normally arrived at by consensus; it was rare for a matter to be pressed to a vote. There was agreement among the witnesses, including Mr Colton, that the Management Committee had an important role in the management of the shopping centre. Meetings were attended by the represented parties’ store managers because these were the people who had the greatest familiarity with the issues to be discussed. Mr Gaffney took notes during the meetings. The signed minutes approving decisions taken at meetings were sent to and retained by the defender at its Gyle premises.
[25] When Mr Cronie assumed his duties as centre manager in 2007, he had extensive previous experience in retail management. The manner in which the Management Committee operated was explained to him by his predecessor as centre manager. He familiarised himself with minutes of past meetings. He did not read any of the lease documentation and had no knowledge of the nature of the various parties’ rights in the car parking areas and other Shared Areas. He did not concern himself with any legal issues arising out of matters such as the Primark proposal. He was principally concerned with managing the M.O.B., common parts and Shared Areas. Mr Gaffney, on his arrival in 2007, similarly familiarised himself with management of the shopping centre by reading the minutes of previous Management Committee meetings. He would have read through the lease documentation, but did not consider it part of his function to assess whether decisions taken and approved at Management Committee meetings impacted upon the property rights of the represented parties. Mr McKelvey did not normally attend Management Committee meetings but was sent copies of the signed minutes. He was concerned to satisfy himself that any decisions regarding new lettings or extensions to units within the M.O.B. had been approved by the Management Committee. He did not regard it as his place to become involved in issues such as whether there was a need for a minute of variation.
[26] The minutes of Management Committee meetings often repeated verbatim passages from minutes of earlier meetings. It seems, therefore, that they were not intended as a precise record of what was said at a particular meeting. One may infer from this that when the parties signed the minutes this was to indicate approval of the decisions recorded rather than of the accuracy of the minutes themselves.
(ii) Previous acts of the Management Committee:
[27] (a) Frankie & Benny’s restaurant. In 2009 the layout of the site was permanently altered when a Frankie & Benny’s restaurant was constructed on an area of land near the main entrance to the shopping mall. Part of this area had been allocated in the lease plan for use as a crèche/nursery, but part had been allocated and used for car parking and pedestrian access, and accordingly formed part of the Shared Areas. The proposed letting to the restaurant operator was discussed at Management Committee meetings in February and March 2009; the minutes of those meetings were approved in the usual way. The pursuer, the defender and Morrisons were in agreement that the letting should proceed. Everyone concerned was aware that the proposal involved building out into the car parking area, with the loss of around 13 car parking spaces. This was not regarded as a problem, and it was never suggested by anyone that it was not within the power of the management to approve the plans for the development, or that a more formal mechanism was required because part of the Shared Areas would be appropriated. Construction proceeded and the restaurant opened in 2010.
(b) Defender’s refurbishment works. At the Management Committee meeting on 6 October 2011, Mr Neil announced that the defender’s store was to be extensively reconfigured internally. The defender wished its contractor to use an area within the car park as a builder’s yard, including storage of materials. This would necessitate the temporary removal from use of around 45-50 spaces at the defender’s end of the car park. For this reason Mr Neil considered it appropriate to seek the consent of the pursuer and of Morrisons through their representatives on the Management Committee. It would have been possible, but less convenient to the defender, for the contractor to have occupied space within the defender’s own leased area. Consent was obtained (subject to making good any damage) and the refurbishment work proceeded, despite the temporary loss of part of the car parking area.
(iii) The Primark development
[28] The defender’s representatives on the Management Committee were enthusiastic about the Primark proposal. In early 2011, Mr Cronie had a meeting with the defender’s Ms Blackburn who made positive comments similar to those made by the defender’s representatives at Management Committee meetings. There was no discussion of the respective parties’ property rights at any of the meetings at which the Primark proposal was discussed and approved. It was never suggested, however, by the defender’s representatives that any other consent by or on behalf of the defender was required in order for the Primark development to proceed.
Argument for the pursuer
[29] On the basis of the foregoing evidence, counsel for the pursuer submitted that the defender had by its conduct led the pursuer to believe that no objection would be taken to the Primark development and that no impediment would be put in the way of it proceeding. There was a pattern of conduct in relation to removal of parts of the Shared Areas from use as car parking, roads or pedestrian access: in each case (Frankie & Benny’s; the defender’s internal refurbishment; the Primark development), the decision was taken by the Management Committee without the defender insisting upon a formal variation of its lease. All that was required was an agreement reached at a Management Committee meeting to be approved by signature of the minutes. The defender allowed this to happen. It was reasonable for the pursuer’s representatives to believe (as they did) that the Management Committee had power to make such decisions. The pursuer had acted in reliance upon its belief that agreement had been reached: it incurred expenditure, removed tenants and waived the suspensive conditions in the Agreement for Lease to Primark. The defender was accordingly now barred from asserting that the lease had not been varied without a formal minute of variation.
Argument for the defender
[30] On behalf of the defender, it was submitted that the issue to be determined, correctly formulated, was whether by its actings the defender was barred from exercising its right under the lease to insist upon any variation thereof being effected by means of a formal minute of variation. Clause 104 (the non-waiver clause, which I set out at paragraph 5 above) required that question to be answered in the negative. In any event the test for the operation of waiver was not met. Waiver of a right required to be voluntary, informed and unequivocal: Miller v Dickson 2002 SC (PC) 30, Lord Bingham of Cornhill at paragraph 31, applied in a civil context in Hamilton v Ferguson Transport (Spean Bridge) Ltd 2012 SC 486, Lord President Hamilton at paragraphs 66-67. The issue of proprietorial rights had never been discussed by the Management Committee, which had simply proceeded to express its approval of the Primark proposal without any awareness of the terms of the defender’s lease. The Management Committee must have misunderstood either the extent of its own powers or the consequences of what it was approving. Either way, there had not been voluntary, informed and unequivocal waiver of the right to insist upon the formal variation required by the terms of the lease. Moreover, the pursuer had failed to prove that the pursuer or its agents had been induced by the defender to believe that the requirement had been waived. Inducement of a reasonable belief was a critical element of personal bar. In the present case the pursuer had acted as it did, including waiving the suspensive conditions in the Agreement for Lease with Primark, because it believed, erroneously, that by obtaining the approval of the Management Committee it had done what was necessary to enable the development to proceed. That error had not been induced by the defender and could not therefore found an argument based on personal bar.
Decision: has the defender waived its right?
[31] I agree with the defender’s submission that the correct starting point is to determine what right it is said that the defender is barred from exercising. It seems to me, however, that the defender’s formulation of the right in question, i.e. the right to insist upon a formal minute of variation, is too narrowly stated. In this action, the pursuer is not merely seeking a decree ordaining the defender to execute a minute of variation (although that is part of what the pursuer would wish to be found entitled to), but a declarator that the defender is barred from any action (or, presumably, inaction) that would prevent the pursuer from constructing the building shown on the plans produced and leasing it to Primark. The question, then, is whether the defender’s right to prevent the construction and leasing of such a building has been waived.
[32] In my opinion, the evidence falls well short of establishing that there has been voluntary, informed and unequivocal waiver by the defender of its right to prevent the construction and leasing of the building. It seems to me that the pursuer’s analysis perpetuates its original error of treating the defender’s representatives who attended and approved the minutes of Management Committee meetings as equivalent to the defender itself. It wrongly characterises the conduct of those individuals as the conduct of the defender. As I have already held, those individuals were not empowered in terms of the defender’s lease to take decisions affecting the defender’s real rights in the Shared Areas. There was no evidence to indicate that they were even aware of what those rights were, although it was clear that the question of real rights was given no consideration by those representing the pursuer. Nor was there any evidence of actings on the part of any person within the defender’s organisation who was truly responsible for taking decisions regarding the variation of real rights under the lease which might induce the pursuer to believe that the defender regarded such decision-making as falling within the competence of the Management Committee.
[33] Counsel for the pursuer sought to draw support from the fact that minutes for signature, expressing universal approval of the Primark proposal, were admittedly received by the defender at its Gyle premises. It was contended that the pursuer was entitled to proceed upon the assumption that they would be approved before signature by anyone within the defenders’ organisation whose assent was necessary. This argument reached its most extreme form in an assertion that if a trainee manager had attended a Management Committee meeting at which approval of the Primark proposal was expressed, signed the minutes as approved, and then filed his or her copy without further circulation within the defender’s management, the defender would be barred from preventing the construction and leasing of the new building. I find this proposition unacceptable, and it illustrates the confusion that I have already mentioned between the defender on the one hand and its representatives on the Management Committee on the other. It seems to me to have been entirely reasonable for the defender’s copies of Management Committee minutes to be sent to and retained at their Gyle premises, because the function of the committee was to make decisions regarding management of the shopping centre for which the individual recipients of the minutes were responsible. But in respect of matters for which formal notice was required, such as variation of real rights, clause 107 of the lease provided for such notices to be sent to the defender’s registered office, marked for the attention of its estate manager. Compliance with this mechanism would (or at least ought to) have ensured that the Primark proposal came before the person within the defender’s organisation who took decisions about variation of real rights.
[34] As regards the construction of the Frankie & Benny’s restaurant, I consider that to the extent that this development involved the amendment of the Shared Areas, including the car parking areas, it too was beyond the power of the Management Committee to approve. It seems to me, however, to be analogous on its facts to Carron Co v Henderson’s Trs (referred to above), which concerned coal workings carried out, with the landlord’s knowledge and tacit consent, in breach of the terms of the lease. In that case, the court held that although, on the authority of Bargaddie Coal Co v Wark, the landlord would have been barred by acquiescence from seeking any remedy for the past breach of contract, this did not amount to an agreement to vary the lease, and the landlord was not barred from demanding observance of the terms of the lease in the future. In the present case, there no doubt came a time when the defender became barred by acquiescence from objecting to the interference with its real rights occasioned by the construction of Frankie & Benny’s. This does not, however, bar the defender from insisting upon compliance with the terms of the lease as regards the Primark development. That is a matter of express agreement among the parties in clause 104 of the lease, but even in the absence of such agreement, it follows clearly from the case law of which the decision in Carron Co v Henderson’s Trs is representative.
[35] So far as use of an area of the car park as a builder’s yard during the defender’s internal refurbishment works is concerned, the same considerations apply as to the construction of Frankie & Benny’s. The fact that it was the defender on this occasion who regarded it as appropriate to use the Management Committee as the forum for agreement is immaterial. In addition, it seems that this matter was not raised at a Management Committee meeting until October 2011, some considerable time after the pursuer maintains that approval was given by the committee to the Primark proposal.
[36] Looking at the matter more generally, I consider that there is force in the defender’s submission that the pursuer’s belief that the defender had given its agreement to the Primark development arose from the pursuer’s own erroneous assumption that such agreement was within the competence of the Management Committee, and not from reliance induced by any act or omission by the defender. It may well be, as the pursuer asserts, that it would not have proceeded to waive the suspensive conditions in the Agreement for Lease with Primark if the defender’s representatives on the Management Committee had not indicated approval of the Primark proposal. That, however, merely brings us back to the erroneous equation of these representatives with the defender itself. Whether the pursuer was induced to proceed by the defender’s representatives’ expression of approval is neither here nor there when the pursuer is unable to identify any inducement by the defender itself, or by someone within the defender’s organisation with authority to agree to a proposal which interfered permanently with the defender’s real rights. It appears that, from the outset, the pursuer laboured under a misapprehension that it was protected by the suspensive condition requiring the obtaining of Management Committee approvals, when in fact that condition afforded no protection against the possibility of the defender – or, indeed, Morrisons – refusing to agree to the necessary variation of its lease.
Disposal
[37] For these reasons, the pursuer is not entitled to declarator in terms of conclusions 1.2 and 1.3. I shall put the case out by order in order that parties may address me on the terms of the interlocutor to be pronounced, and also to determine whether any further procedure in this action is required. Questions of expenses are reserved.
APPENDIX: EXCERPT FROM OPINION DATED 25 MARCH 2014
The defender’s lease
[2] The lease by EDC in favour of the defender (who is referred to therein as “M & S”) is for a period of 127 years from 1 October 1990. It was executed on 24, 26 and 27 February 1992 and recorded in the Register of Sasines on 23 March 1992, at a time when the site was still in course of development. It is an intricate document drafted with meticulous care and attention to detail, and provides much by way of context for the issues of interpretation that arise in these proceedings. It consists of three parts and a schedule. Part I contains recitals, definitions of 59 expressions to some of which I shall return, and a few general interpretative provisions.
[3] Part II, comprising only eight clauses, contains the operative provisions for the letting of land to the defender. Clause 2 states as follows:
“EDC hereby lets to M & S ALL and WHOLE the said subjects shown coloured blue on the Boundary Plan together with (a) the building(s) and structure(s) (or part(s) of building(s) and structure(s) to be constructed thereon from time to time and (b) a one-third pro indiviso share of and in the Shared Areas; all subject to and with the benefit of the following terms and conditions of this Part II of these presents and also subject to (so far as comprising obligations on M & S or relating to the M & S Subjects), and with the benefit of, the terms and conditions set out in Part III of these presents.”
Clause 6 made provision for the substitution by agreement of a redrawn Boundary Plan for the plan annexed to the lease. This reflected the fact that the lease was being executed at a time when details of the layout of the development had not been finalised. In due course, a revised Boundary Plan was indeed substituted by a Minute of Variation of Lease executed by the parties and recorded later in 1992. No further amendment has been made to the Boundary Plan.
[4] Part III is entitled “The Mutual Conditions”. The context of this part was the intention of EDC and other parties, narrated in Recital C, that the shopping development should consist of three separate but connected buildings being (1) a retail store for M & S, (2) a retail store for Asda, and (3) a shopping mall between and directly adjoining these two stores to be let by EDC for multiple occupancy by retail traders. Provision was to be made in relation to each of the three buildings for possible future expansion within specified areas. Recital C also narrated the parties’ desire that the site should include a petrol filling station for Asda, car parking spaces, roads, pedestrian routes, landscaped areas and other services and facilities. Recitals F, G and H stated:
“(F) It is necessary that M & S and Asda should each have (as pertinents of their respective Stores) interests in land in, and common rights to, parts of the remainder of the said development and the ground on which it is to be constructed;
(G) For the benefit of all of the parties hereto and their respective successors and the tenants or other occupants from time to time of the said property between the two Stores, and for the purposes of maximising and preserving the value and amenity of the asset to be produced by the said development (and any future redevelopment of the Site) and the value and amenity of the respective properties comprised and to be comprised therein it has been agreed that mutual obligations shall be imposed as hereinafter written so as to be binding on EDC and persons deriving right from them and also on M & S and Asda;
(H) These presents comprise the Lease in favour of M & S and incorporate the said mutual obligations. The Lease in favour of Asda is granted contemporaneously herewith and also incorporates the said mutual obligations.”
[5] The Mutual Conditions begin with clauses (10 and 11) in terms of which the parties bind themselves to one another to implement and observe the provisions of Part III, to the intent and effect that M & S, Asda and EDC and its successors shall be entitled to enforce these provisions against one another. Clause 12 notes that the terms of Part III of the M & S lease and of Part III of the Asda lease are identical. The M & S lease was executed by Asda as well as by EDC and M & S; no doubt the same applied to the Asda lease. The tenant’s interest in the subjects leased to Asda is now held by Safeway Stores Ltd, trading as Morrisons. Clause 13.1, 13.2 and 13.3 are in similar terms mutatis mutandis as regards each of the parties; by way of a representative example, Clause 13.3 provides:
“The rights and obligations of EDC under this Part III and under the Management Regulations shall endure in respect of the Letting Currency and accordingly shall remain enforceable after the Letting Currency insofar as they relate to the Letting Currency.”
“Letting Currency” means whichever is the longer of the currency of the Asda lease and the M & S lease.
[6] A number of clauses in Part III are potentially of relevance to these proceedings. I need not take these in strictly numerical order.
Use of the premises
[7] Clauses 61 to 71 impose restrictions on use of the various elements of the site. Except to the extent that Asda and M & S give prior written consent, Clause 61 permits the use of the shops in the shopping mall only as a complex of separate retail shops and other separate premises providing services for consumers. Clauses 62 and 63 permit the use of the M & S store and the Asda store respectively only for retail purposes and certain other consumer services. Clause 64 concerns use of the mall itself and provides inter alia:
“Except to the extent that the Represented Parties may otherwise agree in writing, the Mall shall be used only:-
64.1 For the following purposes during Normal M.O.B. hours:-
64.1.1 For the purposes of pedestrian access and recourse to and from the M & S Store, the Asda Store and the premises from time to time let by M.O.B. Leases;
64.1.2 (Subject to Clause 66 hereof) for the purposes of such exhibitions, displays or events as the Management Committee may from time to time decide…
64.1.3 (Subject to Clause 66 hereof) for the purposes of such (if any) leisure-related or community-related activities as may from time to time be agreed among the Represented Parties as appropriate to be held in the Mall…”
“M.O.B.” stands for Multiple Occupancy Building, i.e. the building containing the mall and retail units located between the M & S and Asda stores. References in the lease to “M.O.B Proprietors” are to EDC and its successors in title (i.e., for present purposes, to the pursuer); references to “M.O.B. Tenants” are to the grantees of leases or licences in respect of retail units within the M.O.B. For an explanation of the references to the Management Committee and the Represented Parties, see paragraph 11 below. Clause 66 is not material for present purposes.
[8] Clause 65 is similar in structure to Clause 64 but concerns the car parking areas. It provides:
“Except to the extent that the Represented Parties may otherwise agree in writing, the Car Parking Areas shall be used only for:-
65.1 Car parking for customers and staff of the Shopping Centre…
65.2. For the purposes of such exhibitions, displays or events as the Management Committee may from time to time decide…
65.3 (Subject to Clause 66 hereof) for the purposes of such (if any) leisure-related or community-related activities as may from time to time be agreed among the Represented Parties as appropriate to be held in the Car Parking Areas.
65.4 For access to and egress from the Mall and access to and egress from any separate door of either Store…”
“The Car Parking Areas” are defined in Clause 1.9 as the areas shown coloured purple on the Boundary Plan or such other areas within the Shared Areas as shall from time to time be agreed in probative writing among the Represented Parties to be the parts of the Shared Areas on which car parking shall be permitted. In terms of Clause 1.52, “the Shared Areas” means the Site and the buildings and structures from time to time thereon, under exception of the M & S Subjects, the Asda Subjects, the Filling Station Subjects and the EDC Subjects (the latter being in essence the mall and shops therein, including the designated space for M.O.B. expansion).
[9] Clause 67 provides that the Roads shall be used for vehicular access to the Shopping Centre or any part thereof, and to the Car Parking Areas, by service vehicles and by the vehicles of customers using the Shopping Centre or any part thereof. Obstruction of the Roads is prohibited. The clause also provides that the Pedestrian Routes shall be used for pedestrian access to and egress from the Shopping Centre or any part thereof. In terms of Clause 1.50, “the Roads” means the roads to be constructed on areas shown coloured orange and unhatched on the Boundary Plan or such other roads within the Shared Areas as shall from time to time be agreed in probative writing among the Represented Parties to be available for use among M & S, Asda and the M.O.B. tenants. There is a similar definition mutatis mutandis of “the Pedestrian Routes”, referring to such other routes as shall from time to time be agreed in probative writing among the Representative Parties.
[10] Clause 68.1 provides that the Shared Areas (other than the Car Parking Areas, the Roads and the Pedestrian Routes) shall be used for landscaping in such manner as the Management Committee may from time to time determine and/or for access to and egress from the Mall or separate doors of the M & S and Asda stores, or for such other purposes common to the interests of M & S, Asda, the M.O.B. Proprietors and the M.O.B. Tenants as the Represented Parties may from time to time agree among themselves. Clause 68.2 deals with use of the Common Internal Parts and Shared Services. Clauses 69 and 70 respectively concern use of the Filling Station Subjects and of the Expansion Spaces in so far as remaining unbuilt-on from time to time; I need not set these clauses out here.
The Management Committee
[11] Clause 85 requires the M.O.B. Proprietors, M & S and Asda (collectively described as “the Represented Parties”) to appoint a Management Committee to discharge functions given to it by the lease, and any other functions which the Represented Parties may agree to be appropriate to be given to the committee. The Management Committee comprises four members, two of whom are to be appointed by the M.O.B. Proprietors and one each by Asda (now by Morrisons) and by M & S. Each member of the committee has one vote and is referred to in the lease as a “representative” of the appointing party. The clauses following Clause 85 make detailed provision for the holding of meetings of the Management Committee, the appointment of managing agents etc. Clause 93 provides that
“any decision which is within the scope of the powers and duties given to the Management Committee pursuant to these presents shall be deemed to be a valid decision of the Management Committee, and to be binding on the Represented Parties as such, if and when copies of the Minute thereof are duly given to the Represented Parties pursuant to Clause 91 hereof…”
[12] Clause 77 sets out a list of 27 duties agreed to be imposed on the Management Committee as agents for the Represented Parties jointly. In summary, the duties relate to the maintenance and operation of the shopping centre. Clauses 80 to 84 impose further duties on the Management Committee with regard to refurbishment works. The Represented Parties are also required by Clause 99 to procure that the Management Committee shall operate and enforce regulations having the effect set out in Part I of the Schedule to the Mutual Conditions; these consist of detailed rules imposed upon M.O.B. Tenants regarding the manner in which they conduct business in the mall. No particular form of procedure is prescribed for any agreement among the parties giving additional functions to the committee.
Works
[13] Clause 24 contains provisions applying to any works within the Mall or the Shared Parts (i.e. the Shared Services, Shared Areas and Common Internal Parts). Clause 24.2 states:
“Except in case of emergency or where such works are carried out by the Management Committee pursuant to the duties of the Management Committee under Clause 77 hereof, such works shall not be carried out unless all of the Represented Parties either previously consent that they respectively accept that such works will not render the Mall or the Shared Parts materially less adequate, materially less commodious or materially less convenient to them respectively than the Mall and the Shared Parts as existing immediately prior to the commencement of such works (which consents shall not be unreasonably withheld) or previously confirm in writing that they do not object to such works.”
Clause 24.10 provides:
“Except to the extent any of the Represented Parties previously agree in writing to the contrary, the visibility of and access to the property to which such party has right shall be no less after the completion of any works under this Clause 24 than before the commencement of such works.”
Variation of the lease
[14] Clause 105 states:
“Neither the M & S Lease nor the Asda Lease nor any part of these presents shall be varied except in accordance with the provisions of these presents or by agreement (recorded in the Register of Sasines, Land Register of Scotland or other successor Register) among M & S, Asda and all parties comprised in the definition of ‘EDC’ at the time of the variation…”
Notices
[15] Clause 107 provides that any “notice, request, consent, approval, demand or intimation under these presents” is to be in writing.
The pursuer’s averments of agreement to construction of a Primark store
[16] The pursuer has produced minutes of meetings of the Management Committee held on 24 February 2011, 24 March 2011 and 24 November 2011. In each case an employee of the defender (though not always the individual who attended the meeting) has, on behalf of the defender, signed a page annexed to the minute containing the following text:
“I confirm I have read the minutes of the above date and that they are an accurate reflection of the meeting. The proposals made therein are hereby approved.”
[17] Paragraph 2.1 of the minute of the meeting on 24 February 2011 includes the following bullet points under a heading “New Lettings”:
Public consultation presentation to go on Mall in early March 2011.
The lease will be a term of 15 years.”
[18] Paragraph 2.2 of the minute of the meeting on 24 March 2011 includes the following bullet points under the same heading:
The pursuer avers that the plans referred to in the first bullet point above showed the use required of the Shared Areas, including Car Parking Areas, for the Primark store.
[19] Paragraph 2.1.3 of the minute of the meeting on 24 November 2011 repeated that Units 33, 34, 35 and 36 had been “agreed to Primark”. It was noted that “Circa 100 car parking spaces will be lost. However planners have factored this into their decision making.” It was further noted that planning approval for the project had been granted in November 2011: works were to commence in January 2012 with the store opening in February 2013. The minute states “General chat ensued detailing the scope, nature, extent and use of” inter alia the Primark development. The paragraph concludes with the observation “No objections raised to proposals”.
