Trade Development Bank v Warriner and Mason (Scotland) Ltd [1979] ScotCS CSIH_3 (21 December 1979)

Trade Development Bank v Warriner and Mason (Scotland) Ltd [1979] ScotCS CSIH_3 (21 December 1979)

The defenders' lease was granted in breach of standard condition 6 of the standard security, which prohibits letting or sub-letting without the creditor's written consent. Although the standard security referred to an unrecorded Minute of Agreement, the published terms and statutory framework put the defenders on inquiry as to the existence and applicability of standard condition 6. By taking the lease without creditor consent or inquiry, the defenders acted at their peril and are to be treated as having taken the lease in mala fide. The lease is therefore reducible at the instance of the pursuers. The defenders' counter-claim for recompense is irrelevant as creditors cannot be made...

Citation
[1979] ScotCS CSIH_3
Parties
Pursuer: Trade Development Bank; Defender: Warriner & Mason (Scotland) Ltd; Third Party (debtor): Lyon Group Ltd (in liquidation); Parent Company of Defender: Tobacco Sales Ltd (T.S.L.); Landlord: Lanarkshire County Council
Jurisdiction
Scotland
Judgment Date
21 December 1979
Procedural Posture
Civil / Appellate (reclaiming Motion Before Inner House, Court of Session)
Outcome
Appeal dismissed; decree granted for pursuers; counter-claim dismissed.
Legal Topics
Standard Security, Heritable Security, Lease Reduction, Publication of Title Conditions, Sub Letting Without Creditor Consent, Recompense, Bona Fide Purchaser, Personal Bar
Property Law Secured Transactions Land Law Scots Law Standard Security Heritable Security Lease Reduction Publication of Title Conditions +4 more

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Parties

Trade Development Bank

Pursuer

Warriner & Mason (Scotland) Ltd

Defender

Lyon Group Ltd (in liquidation)

Third Party (debtor)

Tobacco Sales Ltd (T.S.L.)

Parent Company of Defender

Lanarkshire County Council

Landlord

Procedural Posture

Civil / Appellate (reclaiming Motion Before Inner House, Court of Session)

Legal Issues

  1. 1 Whether a lease granted by a debtor in breach of standard condition 6 of a standard security is void or voidable at the instance of the creditor
  2. 2 Whether publication of standard condition 6 in the Register of Sasines is sufficient to affect third parties
  3. 3 Whether the defenders were in bona fide in taking the lease without creditor consent

Ratio Decidendi

The defenders' lease was granted in breach of standard condition 6 of the standard security, which prohibits letting or sub-letting without the creditor's written consent. Although the standard security referred to an unrecorded Minute of Agreement, the published terms and statutory framework put the defenders on inquiry as to the existence and applicability of standard condition 6. By taking the lease without creditor consent or inquiry, the defenders acted at their peril and are to be treated as having taken the lease in mala fide. The lease is therefore reducible at the instance of the pursuers. The defenders' counter-claim for recompense is irrelevant as creditors cannot be made...

Court Disposition

Appeal dismissed; decree granted for pursuers; counter-claim dismissed.

Orders

  • Reduction of the 1975 lease granted by Lyon to the defenders
  • Declarator that the defenders have no right, title, or interest in Unit 2