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OUTER HOUSE, COURT OF SESSION
[2021] CSOH 125
CA139/19
OPINION OF LORD CLARK
In the cause
PACCOR UK LIMITED
Pursuer
against
UNITED UK PROPCO 8 SARL
Defender
Pursuer: Jones QC sol-adv; Brodies LLP
Defender: Garrity; DWF LLP
14 December 2021
Introduction
[1]
The pursuer is the tenant of premises, leased from the defender. The premises are
located in an industrial estate known as Brucefield Industry Park, Livingston. This action
concerns units 5, 6, 7 and 8 Young Square, in the industrial estate. Another action (case
number CA138/19) has been raised by the pursuer in relation to units 3 and 4 Young Square,
also let by the defender to the pursuer and covered by different leases.
[2]
The pursuer occupied the premises referred to in each case until around
December 2015. Thereafter, the leases remained in force and the pursuer continued to pay
the rent for a period of time. In the present case, the pursuer avers that the premises let
2
under the lease for units 5-8 were subject to malicious damage, caused by travellers, on or
about 26 July 2017 (in contrast to the other action, CA138/19, in which damage to units 3
and 4 is said to have occurred on a different occasion, in April 2019). The pursuer seeks a
declarator that the lease came to an end on 26 July 2019 as a consequence of the averred
events in July 2017. The pursuer also seeks repayment of rent it had paid for a period of
time, alleging that there was a full abatement of rent and service charge from the date of
the premises being damaged. The defender denies the pursuer's contentions and in its
counterclaim seeks recovery of unpaid rent.
[3]
A debate took place, dealing with both cases, with each party challenging the
relevancy and specification of the other party's averments. I have issued an Opinion in the
case CA138/19, dealing with a number of issues raised in relation to units 3 and 4 which
were also raised in the present case. While the lease terms were not identical to those here,
parties rightly proceeded upon the basis that the terms were very similar and on certain
issues the same questions arose. Given parties' agreed position, there is no need to quote the
terms of the present lease. Accordingly, the decisions I reached and the reasons given on
those same issues, which can be found in that Opinion, apply mutatis mutandis to this case. I
need not set these out in any detail, but in summary the outcome on the same issues is as
follows. I rejected the contentions for the defender and accepted the pursuer's submissions
as to: (i) the pursuer's averments on damage to the premises; (ii) the pursuer's averments
on intimation of damage; and (iii) the defender's averments on an implied term. I also
rejected the contentions for the pursuer and accepted the defender's submissions on: (i) the
implied term averred by the pursuer; (ii) the defender's averments about the pursuer's
additions/fixtures and fittings; and (iii) the pursuer's averments in answer to the
counterclaim that the defender had waived its right to payment of rent and service charge
3
during the period of abatement. While some averments fell to be excluded from probation, I
concluded that on the remaining matters a proof before answer is required. Thus, on those
same issues, that is also the position in the present case. However, this case also involves
certain additional points.
Additional points
Damage to the premises
[4]
In relation to the nature and extent of the damage, the pursuer has lodged two expert
reports. The supplementary reports issued in September 2020 concerned only units 3 and 4,
dealt with in CA138/19. The pursuer's summons in the present case does not make any
reference to the expert reports. On behalf of the defender, it was argued that this was an
additional reason for rendering the pursuer's averments on damage as irrelevant or lacking
in specification.
Decision
[5]
The pursuer makes averments about the actions of the travellers and the damage
caused. It is also averred that an employee of the pursuer, acting as caretaker of the
premises, "recorded the events of on or around 26 July 2017 in a contemporaneous written
account" and reference is then made to the terms of that account. In that context, with
expert reports produced in support of the claims concerning damage to the premises, which
are plainly intended to be relied upon, I do not regard it as essential for the pursuer to have
referred to those reports or sought to incorporate any part of them in its pleadings. In a
commercial action, fair notice is required but when there are sufficient averments of the
actual damage alleged, supported by expert reports which the court is advised are to be
4
relied upon, that test is met. This additional point does not therefore alter the decision I
reached in CA138/19 that the issue is one to be determined at proof.
The pursuer's "enjoyment" of the premises
[6]
In answer 3, the defender avers: "The pursuer's enjoyment of the Premises was not
restricted or denied as a result of any averred events in July 2017". This averment is made
after averments that the pursuer had ceased to occupy or use the premises.
[7]
Paragraph FOUR of Part IV to the schedule to the lease states:
"The said annual rent and Service Charge shall be payable and the tenancy under
the foregoing Lease shall continue notwithstanding damage to or the destruction
of the lease subjects or any part thereof by fire or otherwise. Notwithstanding the
foregoing in the event that the leased subjects are damaged or destroyed in whole
or in part by fire or otherwise the rent and Service Charge payable hereunder shall
cease to be payable to the extent that the Tenants' enjoyment of the premises is
restricted or denied thereby and in the event that the leased subjects are not
reinstated, rebuilt or repaired in terms of Part VI of this Schedule within two years
from the date of damage or destruction requiring such reinstatement, rebuilding or
repair this Lease shall be at an end,"
[8]
For the pursuer, it was submitted that it was wrong for the defender to assert that
ceasing to occupy or use meant that the tenants were not entitled to the enjoyment of the
Premises. "Enjoy" meant having the use or benefit or satisfactory possession of the
premises. Even if the premises were not used for day-to-day business, anything that
interrupted the ability to use them for the purposes of the lease "restricted or denied" the
tenant's enjoyment. The defender as landlord was obliged to put in place loss of rent and
service charge insurance for 2 years, payable if the premises are damaged or destroyed by
any of the listed insurance risks. The pursuer as tenant paid the premium. Payment by the
insurer under the policy was not agreed to be contingent upon the tenant being in actual
5
occupation. Of course, if enjoyment was not restricted or denied the landlord was entitled
to receive rent and service charges even if the tenant was not in actual occupation.
[9]
Counsel for the defender argued that the terms of the lease were clear and
unambiguous: abatement of rent and service charge was linked to the extent that the
tenant's enjoyment of the premises is restricted or denied. Th at was a matter for the pursuer
to prove. It was accepted that the pursuer was free at any time to use the property. The fact
that the pursuer had ceased to be in occupation of the premises over a year before the
averred damage was a matter of agreement.
Decision
[10]
Viewed in simple terms, this was a lease which required the pursuer to pay rent
and service charges and required the defender to take out insurance cover, with the pursuer
paying the premium. The fact that the pursuer was not actually using the premises at the
time of the damage is in my view of no relevance to the question of whether its enjoyment of
the premises was restricted or denied. If the pursuer is correct about the damage, which is a
matter for proof, then its enjoyment would have been restricted or denied. Paying the rent
and service charge necessarily meant that the pursuer was entitled to use, and in that sense
enjoy, the premises, even if in fact it had not done so for a period prior to the damage. If the
averment complained of is to be read as meaning that the pursuer's enjoyment was not
restricted or denied because it had ceased to occupy or use the premises, I would therefore
have rejected the defender's contentions on this point and excluded from probation the
averment noted above.
[11]
However, there is of course the wider question before the court as to whether, as
a matter of fact, the pursuer's enjoyment of the premises was restricted or denied by the
6
averred events or damage, and if so to what extent. If the averment is merely asserting that
the events and damage did not cause restriction or denial of enjoyment, that remains a
relevant point. Construed in that way, the averment should not be excluded.
The defender's averments about non-receipt of funds and not being in breach of contract
[12]
On behalf of the pursuer, it was argued that the defender's averments that no
insurance payments had been received and that the defender was not in breach of any
obligation (in answer 5) and that the defender was under no obligation to reinstate (in
answer 6) were irrelevant and ought to be excluded from probation. The relevant lease
provisions meant that rebuilding and reinstatement was required within the 2 year period,
and if that did not happen then the lease would automatically terminate.
[13]
Counsel for the defender argued that the landlord's obligations under the lease, as
regards insurance and reinstatement of insured risk damage, were clear and unambiguous.
The landlord's obligations are conditional upon obtaining all statutory consents, and the
landlord's obligation is to lay out "monies received by virtue of such insurance".
Accordingly, it was submitted that the defender's averments that no monies have been
received by reference to any insurance claim and that the defender was not obliged to
reinstate were relevant and fit for proof.
Decision
[14]
As noted above, the orders sought by the pursuer in this case are for declarator that
the lease came to an end on 26 July 2019 as a consequence of the events averred to have
occurred in July 2017, and for repayment of rent it had paid for a period of time (from
February 2019) when the premises were said to be damaged. I accept the submissions for
7
the pursuer that the averments in answers 5 and 6 to which reference has been made have
no bearing on those conclusions or the grounds for them averred by the pursuer. Put
simply, that basis of the claim is that there was damage to the premises and they were not
repaired, with the result that the clause resulting in termination after two years came into
play. Having regard to the basis on which the claim is averred, it is not a relevant defence
that the defender has not received any insurance payments or that the defender was not in
breach of its obligations. The provisions in paragraph FOUR of Part IV (quoted above),
which deal with termination, do not require the pursuer to establish receipt of insurance
payments or breach of contract by the defender. Of course, if the pursuer fails to establish
that there was within the terms of the lease damage that caused enjoyment of the premises
to be restricted or denied, the claim for repayment of rent will fail as will the contention
that the lease has terminated. Accordingly, the averments identified by the pursuer are
irrelevant and I shall exclude them from probation.
Waiver
[15]
In the Opinion in the case concerning units 3 and 4, CA138/19, I have already dealt
with the relevancy of the pursuer's averments on waiver, in its answers to the counterclaim.
For the same reasons, in this case those averments fall to be excluded from probation. In
addition, the wording of the letter relied upon for the purposes of waiver relates only to
units 3 and 4 and a separate part of the letter deals with the lease in the present case. That
separate part of the letter does not contain any language which could support or even relate
to waiver and for that reason alone the averments on waiver are irrelevant.
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Conclusion
[16]
For the reasons given, certain averments will be excluded from probation, but on
other matters the case must proceed to proof.
Disposal
[17]
I shall fix a by-order hearing to deal with further procedure and to determine the
specific averments which require to be excluded from probation as a consequence of my
findings above. In the meantime, I reserve all questions of expenses.
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