Batley Pet Products v. North Lanarkshire Council, 8 May 2014 – whether written notice required for re-instatement following tenants works

Supreme Court case considering a lease of premises at Wardpark South Industrial Estate in Cumbernauld.  Batley were tenants and North Lanarkshire Council were sub-tenants.

At the centre of the dispute were works which the Council carried out to the property under a minute of agreement. In terms of the minute, the Council had to remove the works and re-instate the premises at the end of the agreement if they were required to do so by Batley.  Batley served a schedule of dilapidations after the end of the sublease.  However, the Council argued that the obligation to reinstate the premises died on the expiry of the sublease and therefore it did not require to comply.

In the Outer House, the temporary judge (Morag Wise QC) found that, in terms of the minute, there was no need for Batley to give written notice requiring removal of the works and allowed a proof to consider whether Batley had adequately conveyed its requirement for re-instatement when a surveyor acting on its behalf had telephoned the Council before the end of the sublease and indicated re-instatement would be required.

The Inner House allowed a reclaiming motion finding that the minute not only amended the sublease but also ratified provisions in the sublease. These included a provision incorporating a requirement for written notice which was contained in the head lease. In the absence of such written notice there was no requirement on the Council to re-instate the premises. An attempt by Batley to claim the cost of re-instating the premises under the general repairing clause in the sublease also failed.

The Supreme Court have allowed an appeal and allowed a proof before answer to hear evidence on the facts.

Construing the words used in the context of the minute of agreement as a whole and the surrounding factual matrix the court found that:

  1. the use of the words “if so required by the Mid-Landlord” in relation to the re-instatement requirement in the minute was in contrast to two other provisions in the minute which expressly required written forms (suggesting that, where writing was required, it was expressly stated);
  2. to interpret the documentation as requiring written notice required a convoluted construction of both the agreement and head lease whereas the simpler construction (preferred by the court) was that written notice was not required;
  3. although the minute existed in the context of the head lease and sub-lease, it was a separate contract and the starting point for interpretation was the words it contained which pointed towards the conclusion that writing was not required for communications in all circumstances and that conclusion was not overturned by the provisions of the head lease and sub-lease; and
  4. it made business common sense that written notice was not required as:
    1. although the minute stated that the obligations were incorporated into the sub-lease (containing a requirement for written notice), this was done so as to give the mid-landlord the power of irritancy if the sub-tenant breached its obligations under the minute; and
    2. the landlord would only require removal of the sub-tenants works at the end of the sublease when the sub-tenant would have to address its separate and continuing repairing obligation under the lease and, at the time such repairs were being carried out, the sub-tenant could readily respond to an intimation to remove its works (without the need for formal intimation).

With regard to Batley’s attempt to recover the cost of re-instating the premises under the general repairing clause in the sublease, the Supreme Court found that the repairing obligation was a continuing obligation which did not require notice from the landlord to activate it.

The full judgement is available from the Supreme Court here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

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