Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION
	[2014] CSOH 84
A31/14	OPINION OF LADY STACEY in the cause DEM-MASTER DEMOLITION LTD Pursuers; against ALBA PLASTICS LTD Defenders: ________________

Pursuers: Logan; Campbell Smith WS LLP

Defenders: Weatherston, Solicitor Advocate; Wilson Terris & Co SSC

27 March 2014

[1] This motion called before me in the vacation court. The defenders moved to have a minute of amendment received, to amend the defences and counterclaim in terms of it and to grant decree against the pursuer in terms of the third conclusion of the defences and counterclaim, as amended, in terms of sections 46 and 47(2) of the Court of Session Act 1988. I granted the motion. I gave an extempore judgment. The next day at approximately 3pm, the pursuers sought leave to have the interlocutor suspended ad interim, on the basis that they wished to seek leave to reclaim. I heard them and granted leave. I pronounced an interlocutor suspending the first order of court pending timeous lodging of a motion to reclaim. Counsel assured me such a motion would be made by the following Monday. The judgment which follows is my ex tempore judgment reconstructed from my notes.

[2] This case concerns premises which the defenders lease from the pursuers at Unit 1, Centrelink, by Shotts which consists of part of a unit on an industrial estate. The defenders are a limited company which manufacture plastic products within the premises.

[3] The pursuers raised an action against the defenders for payment, the first conclusion being for payment of £133,346.19 and the second conclusion being for payment of £12,000. Their averments were to the effect that they were successors in title to the landlord's interests in a lease of the premises to the defenders, the period being from 1 January 2010 until 31 December 2015. The pursuers had come into the landlord's interest in the premises in November 2012. They averred that under the lease the defenders were obliged to pay a fair and equitable proportion, as reasonably determined by the landlords acting reasonably, of all expenditure properly and reasonably incurred by the landlords in providing electricity to the subjects of let, as well as charges for other services. According to the pursuers they had provided electricity to the defenders in terms of the lease and had, with the aid of an independent consultant, worked out the quantity of electricity being used by the defenders. They averred that the sum concluded for was due for electricity by the defenders, and had been notified to them by letter dated 25 October 2013. Despite repeated attempts by the pursuers to collect the sums involved, no payment had been made. As a result of the lack of payment, the pursuers cut the electricity supply to the defenders off on 9 December 2013. The defence to those averments was, put broadly, that the sum sought as electricity charges was unsubstantiated by any documentary evidence.

[4] The pursuers averred that the annual rent for the premises is £60,000, payable at monthly instalments of £5,000. They averred that the monthly payments for December 2013 and January 2014 were not paid, hence the second conclusion. The defence was that the landlords had rendered the subjects untenantable by terminating the electricity supply and were not acting as reasonable landlords. It was averred that there was no rent due.

[5] The defenders lodged a counterclaim in which they sought payment of £200,000. The first four statements of the counterclaim related to the supply of electricity. In statement five the defenders averred that they had suffered loss and damage as a consequence of the pursuers' failure to provide reasonable basic services to maintain the premises in good repair. They went on to add by adjustment averments to the effect that the pursuers had:

"regularly obstructed the loading bays for the subjects by parking their own vehicles and plant and equipment to the detriment of the defenders' use of the subjects."

The averments are to the effect that on 24 February 2014 the pursuers secured with padlocks the gates regulating access and egress to the estate road which provided vehicular access to the rear of the subjects. As a result of that, the defenders were and are unable to use the loading bays and goods entrances to the subjects. They were thus prevented from making and taking deliveries except by moving goods and equipment through pedestrian access points. The defenders averred that they were thereby substantially inconvenienced and hampered in their capacity to use and transact business from the subjects. They averred that they had called upon the pursuers to remove the impediments, to no effect.

[6] According to the averments by the defenders, the description of the subjects in the lease included:

"all necessary rights of pedestrian and vehicular access (as may be designated from time to time by the landlords acting reasonably) thereto and egress therefrom over and across all access routes (as may be designated from time to time by the landlords acting reasonably) within the larger building of which the premises form part and the estate."

They averred that no landlord acting reasonably would prevent or limit the defenders' vehicular access to and egress from the subjects in the manner of the pursuers.

[7] The pursuers' answer to these averments was to the effect that the defenders had no right of access by the roller doors at the rear of the building. Their pleadings were to the effect that they had used such access but had no right to do so. Their averments stated:

"to the knowledge of the pursuers these routes have never been nominated in terms of clause 1.1.1 of the lease as a means of access to the building."

[8] In the discussion before me, I was advised that the case had called before another Lord Ordinary on 6 March 2014 which had resulted in an undertaking being given by the pursuers in the following terms:

"Logan for the pursuers, without prejudice to their whole rights, pleas and laws undertakes that on three hours notice between the hours of 6pm and 6am access to and egress from the subjects of let will be given along the road coloured green and the roller door marked 'Alba back door (alternative)" through the passageway shown in photograph 3, both of which are attached to the affidavit by Stuart Robertson number 13 of process.

In respect that the defenders have undertaken to pay the cost of providing a security guard on site (the said payment to be made fourteen days in advance) between the hours of 6am and 6pm access will be given on the same terms and conditions between these hours.

For the avoidance of doubt the said access is for the purpose of deliveries to or collections from the subjects of let and vehicles are not to be parked in said areas other than for that purpose."

[9] The defenders' position was that the pursuers had not allowed access in terms of the undertaking. Thus it was argued that the defenders were unable to carry on their business in the way in which they required to do. They had found other premises and that they wished to vacate the subjects, despite there being a lease in their favour, and to move their machinery out of the premises. According to the solicitor advocate the machinery, which was large and heavy, could not be moved unless access was given via the doors described as roller doors. He maintained that the undertaking had been breached and produced an email which had given notice of intention to use the doors which had been on time, but which had not resulted in access being given. It had been sent on a Friday afternoon, one day after the undertaking had been given. The solicitor advocate explained that he was not instructed to bring proceedings for breach of the undertaking, but rather to seek a practical solution to a practical difficulty. He argued that he could do so under section 47(2) of the 1988 Act.

[10] Counsel for the pursuer argued that there was no legal entitlement to the access and egress which was sought. He made reference to the lease and to the plan attached to it. He argued that the lease did not provide any access or egress via the doors which were in contention. Clause 1.1.1 provided that necessary rights of pedestrian and vehicular access (as may be designated from time to time by the landlords acting reasonably), with egress in similar terms, was all that was granted and as he put it "what the landlord gives, the landlord can take away." By that he meant that unless the landlord had granted access through these doors there was no access. I understood him to mean that even if the landlord had granted access, he could change his mind and deprive the tenant of that access, provided that he acted reasonably.

[11] Parties were in agreement that the case of Scottish Power Generation Ltd v British Energy Generation Ltd 2002 SC 517 set out the requirements under section 47(2) of the Act. There were four requirements, as follows:

(a) The court should identify the issue and identify the legal basis on which any right was asserted;

(b) The court should consider whether there is a prima facie case that an obligation exists and that there is a continuing or threatened breach of that obligation which the order will address;

(c) The court should avoid innovating significantly on the parties' contractual rights and obligations; and

(d) The court should consider the balance of convenience, bearing in mind the harm to either side and the relative strength of their cases.

Counsel for the pursuer argued that there was no legal basis for the defenders' counterclaim. He had to admit, with apologies from his clients, that there had been a failure to obtemper the undertaking on one occasion. This was caused by an email arriving at 1457 hours on a Friday when his clients' office was shut. He accepted that it arrived the very day on which it might be expected to arrive, the undertaking having been given the day before. He argued in any event that the undertaking was simply to allow deliveries and did not contemplate the use of the large roller doors for the removal of large pieces of equipment. He argued that the lease did not provide for access and egress by those doors.

[12] Counsel advised me that the landlords, the pursuers, were extremely concerned that the defenders were in financial difficulty. He made reference to published accounts, which he had produced, showing that the defenders were insolvent. He stated that the landlords were anxious to prevent the removal of machinery as the exercise of the landlord's hypothec was the only possibility they could see of recovering the sums of money that were due to them. He argued therefore that any prejudice to the defenders by not being able to carry out their business was outweighed by the prejudice to the landlords if the defenders quit the premises and took their equipment away.

[13] Counsel also argued that section 47(2) was not appropriate as the section to be used in this case. The section regulated the interim possession of property. He asserted that section 46 was the more appropriate section.

[14] In reply the solicitor advocate for the defenders argued that the prejudice to the defenders was extreme. If they could not conduct their business then they would become insolvent and he argued that the landlords were trying to put them out of business. He sought leave to amend by adding a reference to section 46. I allowed him to amend. My opinion is that section 47(2) is in very wide terms and would allow the court to "make such order ....regarding the subject matter of the cause as the Court thinks fit" but as Mr Weatherston sought to amend I was not addressed fully on that. Mr Weatherston produced affidavits from representatives of the defenders, from which I noted that they stated that they had used the doors which were in dispute in the past.

[15] I was persuaded by the defenders that they had sufficient in their pleadings, taken together with the lease and the affidavits to enable me to identify the issue in this case as including the defenders' right to access to the service road through the roller doors. I noted that the manufacture of plastic goods was stated in the lease to be the business of the defenders to be carried out in the subjects let, and I noted that the access and egress were said to be such as was necessary, albeit that it was to be designated by the landlord from time to time. The terms of the lease, the affidavits and the fact of the undertaking seemed to me to indicate that there was at least an arguable case that the defenders did have a right to access and egress in terms of the lease to the disputed areas via the disputed doors. I considered therefore that there is a prima facie case that an obligation exists and that there is a continued or threatened breach of that obligation which the order would address. I did not innovate significantly on the parties' contractual rights and obligations in so deciding. I then moved on to consider the balance of convenience bearing in mind the harm to either side and the relative strength of their cases. I took the view that the harm to the defenders was extreme, as they are a manufacturing company which was being prevented from manufacturing. On the other hand the pursuers had what appeared to be legitimate concerns about their ability to recover any sums ultimately found to be due to them by the defenders. I took into account that fact that the defenders had raised the matter in a counterclaim rather than bringing their own action but decided that that was probably not of significant weight. I considered the relative strength of the cases as best I could in the light of disputed factual assertions. Counsel for the pursuers submitted that the counterclaim did not set out a legal basis for the conclusions for payment. While I agree that some of the averments were unusual and may not have been relevant that was not the point that was raised before me; rather it was the difficulty caused by lack of access. On balance I decided that it would be proper for me to grant the order.