J H & W LAMONT OF HEATHFIELD FARM AND OTHERS AGAINST CHATTISHAM LIMITED [2018] ScotCS CSIH_33 (01 May 2018)

J H & W LAMONT OF HEATHFIELD FARM AND OTHERS AGAINST CHATTISHAM LIMITED [2018] ScotCS CSIH_33 (01 May 2018)

The obligation to discharge the standard security under clause 11.3 of the Option Agreement is not interdependent with the pursuers’ other obligations and is triggered by expiry or termination of the agreement. The right of retention does not apply post-termination when the primary obligation is no longer prestable. The contract expressly provides for discharge in defined circumstances, and equitable considerations further preclude withholding discharge pending a damages counterclaim. The defenders must discharge the security regardless of their unresolved damages claim.

Citation
[2018] ScotCS CSIH_33
Parties
Pursuers and Respondents: J H & W Lamont of Heathfield Farm and Others; Defenders and Reclaimers: Chattisham Limited
Jurisdiction
Scotland
Judgment Date
01 May 2018
Procedural Posture
Reclaiming Motion (appeal) in Commercial Action / Inner House, Court of Session, Post Interlocutor
Outcome
Reclaiming motion refused; interlocutor of 5 October 2017 adhered to.
Legal Topics
Standard Security Discharge, Retention and Mutuality, Contractual Construction, Remedies for Breach of Contract, Equitable Remedies
Contract Law Property Law Commercial Law Standard Security Discharge Retention and Mutuality Contractual Construction Remedies for Breach of Contract Equitable Remedies

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Parties

J H & W Lamont of Heathfield Farm and Others

Pursuers and Respondents

Chattisham Limited

Defenders and Reclaimers

Procedural Posture

Reclaiming Motion (appeal) in Commercial Action / Inner House, Court of Session, Post Interlocutor

Legal Issues

  1. 1 Whether defenders are entitled to withhold discharge of a standard security pending resolution of a damages counterclaim
  2. 2 Whether the right of retention or withholding performance applies after contract termination
  3. 3 Whether the security covers only primary obligations or also secondary (damages) obligations

Ratio Decidendi

The obligation to discharge the standard security under clause 11.3 of the Option Agreement is not interdependent with the pursuers’ other obligations and is triggered by expiry or termination of the agreement. The right of retention does not apply post-termination when the primary obligation is no longer prestable. The contract expressly provides for discharge in defined circumstances, and equitable considerations further preclude withholding discharge pending a damages counterclaim. The defenders must discharge the security regardless of their unresolved damages claim.

Court Disposition

Reclaiming motion refused; interlocutor of 5 October 2017 adhered to.

Orders

  • Defenders ordered to execute and deliver a discharge of the standard security to the pursuers.