Howgate Shopping Centre & Ors v. Catercraft Services Ltd [2004] ScotCS 2 (07 January 2004)

Howgate Shopping Centre & Ors v. Catercraft Services Ltd [2004] ScotCS 2 (07 January 2004)

The rent review clause in the sub-lease, when interpreted in light of the language used and the relevant background circumstances known or available to both parties, does not incorporate the 23.15% discount from the head lease. The commercial context and absence of any objective reason for Mathiesons to pass on the benefit of the discount to the defenders, as well as the express incentives already provided, support the conclusion that the reviewed rent under the sub-lease is to be the open market rent, not 23.15% thereof.

Citation
[2004] ScotCS 2
Parties
Pursuers: The Howgate Shopping Centre Limited and Others; Defenders: Catercraft Services Limited
Jurisdiction
Scotland
Judgment Date
07 January 2004
Procedural Posture
Civil (commercial Lease Dispute) / Outer House, Court of Session – Opinion on Merits (final Judgment)
Outcome
Declarator granted in favour of the pursuers; defenders' counterclaim refused.
Legal Topics
Lease Interpretation, Rent Review Clauses, Incorporation by Reference, Rectification, Commercial Leases
Property Law Contract Law Landlord and Tenant Lease Interpretation Rent Review Clauses Incorporation by Reference Rectification Commercial Leases

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Parties

The Howgate Shopping Centre Limited and Others

Pursuers

Catercraft Services Limited

Defenders

Procedural Posture

Civil (commercial Lease Dispute) / Outer House, Court of Session – Opinion on Merits (final Judgment)

Legal Issues

  1. 1 Whether the rent review provisions in the sub-lease require the reviewed rent to be the open market rent or 23.15% of the open market rent as in the head lease.
  2. 2 Whether the background circumstances and commercial purpose support the pursuers' or defenders' construction of the rent review clause.

Ratio Decidendi

The rent review clause in the sub-lease, when interpreted in light of the language used and the relevant background circumstances known or available to both parties, does not incorporate the 23.15% discount from the head lease. The commercial context and absence of any objective reason for Mathiesons to pass on the benefit of the discount to the defenders, as well as the express incentives already provided, support the conclusion that the reviewed rent under the sub-lease is to be the open market rent, not 23.15% thereof.

Court Disposition

Declarator granted in favour of the pursuers; defenders' counterclaim refused.

Orders

  • It is declared that the rent review provisions in the sub-lease require the reviewed rent to be the open market rent, not 23.15% of the open market rent.
  • The defenders' counterclaim for declarator that the reviewed rent is to be 23.15% of the open market rent is refused.