Grove Investments Ltd v Cape Building Products Ltd [2014] ScotCS CSIH_43 (13 May 2014)

Grove Investments Ltd v Cape Building Products Ltd [2014] ScotCS CSIH_43 (13 May 2014)

Article Twelfth of the lease does not entitle the landlord to payment of the total value of the schedule of dilapidations regardless of actual loss; rather, the sum due must be quantified by reference to the actual loss suffered by the landlord as a result of the tenant's breach of repairing obligations, which may or may not correspond to the schedule's estimated costs. The clause is to be construed as reflecting the common law measure of damages, not as a liquidated damages provision imposing an arbitrary sum.

Citation
[2014] ScotCS CSIH_43
Parties
Pursuer/respondent: Grove Investments Limited; Defender/appellant: Cape Building Products Limited
Jurisdiction
Scotland
Judgment Date
13 May 2014
Procedural Posture
Commercial Lease Dispute (dilapidations) / Appeal From Sheriff Principal to Inner House, Court of Session
Outcome
Appeal allowed; interlocutors of sheriff and sheriff principal recalled; tenants' averments held relevant; case remitted to sheriff for further procedure.
Legal Topics
Construction of Lease Provisions, Measure of Damages for Breach of Repairing Obligations, Liquidated Damages Vs. Actual Loss, Interpretation of Commercial Contracts
Contract Law Landlord and Tenant Law Commercial Property Construction of Lease Provisions Measure of Damages for Breach of Repairing Obligations Liquidated Damages Vs. Actual Loss Interpretation of Commercial Contracts

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Parties

Grove Investments Limited

Pursuer/respondent

Cape Building Products Limited

Defender/appellant

Procedural Posture

Commercial Lease Dispute (dilapidations) / Appeal From Sheriff Principal to Inner House, Court of Session

Legal Issues

  1. 1 Whether article Twelfth of the lease obliges tenants to pay the total value of the schedule of dilapidations regardless of actual loss or only the actual loss suffered by the landlord due to breach of repairing obligations.
  2. 2 Whether the clause constitutes a liquidated damages provision or merely reflects the common law measure of damages.

Ratio Decidendi

Article Twelfth of the lease does not entitle the landlord to payment of the total value of the schedule of dilapidations regardless of actual loss; rather, the sum due must be quantified by reference to the actual loss suffered by the landlord as a result of the tenant's breach of repairing obligations, which may or may not correspond to the schedule's estimated costs. The clause is to be construed as reflecting the common law measure of damages, not as a liquidated damages provision imposing an arbitrary sum.

Court Disposition

Appeal allowed; interlocutors of sheriff and sheriff principal recalled; tenants' averments held relevant; case remitted to sheriff for further procedure.

Orders

  • Allow the appeal.
  • Recall the interlocutors of the sheriff and sheriff principal.