Aberdeen City Council v Stewart Milne Group Ltd [2010] ScotCS CSIH_81 (14 October 2010)

Aberdeen City Council v Stewart Milne Group Ltd [2010] ScotCS CSIH_81 (14 October 2010)

The profit share under clause 9 is to be calculated by reference to the open market value at the date of sale if the sale is not at arm's length and at market value. To hold otherwise would defeat the commercial purpose of the clause and allow the purchaser to avoid the uplift by selling at an artificially low price to an associated company.

Citation
[2010] ScotCS CSIH_81
Parties
Pursuer and Respondent: Aberdeen City Council; Defender and Reclaimer: Stewart Milne Group Limited
Jurisdiction
Scotland
Judgment Date
14 October 2010
Procedural Posture
Commercial Contract Dispute / Appeal (reclaiming Motion) Before the Inner House, Court of Session
Outcome
Reclaiming motion refused; interlocutor of the Lord Ordinary adhered to.
Legal Topics
Construction of Contract, Profit Share Clauses, Open Market Value, Artificial Transactions, Interpretation of Missives
Contract Law Commercial Law Construction of Contract Profit Share Clauses Open Market Value Artificial Transactions Interpretation of Missives

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Parties

Aberdeen City Council

Pursuer and Respondent

Stewart Milne Group Limited

Defender and Reclaimer

Procedural Posture

Commercial Contract Dispute / Appeal (reclaiming Motion) Before the Inner House, Court of Session

Legal Issues

  1. 1 Whether the profit share payable under clause 9 of the missives should be calculated by reference to the actual sale price to an associated company or by reference to the open market value at the date of sale.

Ratio Decidendi

The profit share under clause 9 is to be calculated by reference to the open market value at the date of sale if the sale is not at arm's length and at market value. To hold otherwise would defeat the commercial purpose of the clause and allow the purchaser to avoid the uplift by selling at an artificially low price to an associated company.

Court Disposition

Reclaiming motion refused; interlocutor of the Lord Ordinary adhered to.

Orders

  • Declarator granted that the profit share is to be calculated by reference to the open market value at the date of sale, deducting allowable costs.