Scottish Property Investment Ltd v Scottish Provident Ltd [2004] ScotCS 17 (23 January 2004)

Scottish Property Investment Ltd v Scottish Provident Ltd [2004] ScotCS 17 (23 January 2004)

The lease must be construed so that the landlord's discretion to withhold consent to sub-letting is qualified by a requirement of reasonableness, and refusal of consent cannot be based solely on the user clause without considering all relevant circumstances and the reasonableness criterion. The defender's approach, treating its discretion as absolute and refusing consent solely by reference to the user clause, is not supported by the lease and may be unreasonable.

Citation
[2004] ScotCS 17
Parties
Pursuer: Scottish Property Investment Limited; Defender: Scottish Provident Limited
Jurisdiction
Scotland
Judgment Date
23 January 2004
Procedural Posture
Commercial Lease Dispute / Debate on Relevancy and Specification (pleadings) Before Proof
Outcome
No final decree; action put out By Order for further procedure and fixing of proof.
Legal Topics
Reasonableness of Withholding Consent to Sub Letting, Interpretation of Lease Clauses, User Covenants, Material Breach and Rescission
Landlord and Tenant Contract Law Commercial Property Reasonableness of Withholding Consent to Sub Letting Interpretation of Lease Clauses User Covenants Material Breach and Rescission

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Parties

Scottish Property Investment Limited

Pursuer

Scottish Provident Limited

Defender

Procedural Posture

Commercial Lease Dispute / Debate on Relevancy and Specification (pleadings) Before Proof

Legal Issues

  1. 1 Whether the landlord (defender) unreasonably withheld consent to the pursuer's proposed sub-letting under the lease
  2. 2 Proper construction and reconciliation of Clause SECOND (user clause) and Clause THIRD (22) (alienation/sub-letting clause) of the lease
  3. 3 Whether refusal of consent solely on the basis of user clause is reasonable

Ratio Decidendi

The lease must be construed so that the landlord's discretion to withhold consent to sub-letting is qualified by a requirement of reasonableness, and refusal of consent cannot be based solely on the user clause without considering all relevant circumstances and the reasonableness criterion. The defender's approach, treating its discretion as absolute and refusing consent solely by reference to the user clause, is not supported by the lease and may be unreasonable.

Court Disposition

No final decree; action put out By Order for further procedure and fixing of proof.

Orders

  • Action continued for discussion as to further procedure and fixing of proof on the issue of reasonableness and materiality of breach.