Gyle Shopping Centre General Partners Limited v Marks & Spencer Plc, 16 March 2016 – Interpretation of commercial lease at Gyle Shopping Centre in Edinburgh

This is an Inner House case concerning the interpretation of a lease of premises at the Gyle Shopping Centre in Edinburgh under which Gyle was the landlord and Marks & Spencer, the tenant.

Gyle entered an agreement with Primark for the erection of a new store on land which included part of a car park. However, M&S’s premises were let together with a one-third pro indiviso share of shared areas which included the car park. In two previous decisions Lord Tyre found (1) that M&S had not consented to the building of the Primark Store and that the building of the store without consent would be a breach of the lease and (2) that M&S was not personally barred from preventing Gyle from erecting the store on the car park.

Gyle then wrote to M&S and requested consent but did not receive it. In this case, Gyle sought declarator that a refusal of consent to the Primark development by M&S amounted to an unreasonable withholding of consent. In the Outer House Lord Tyre granted the declarator[1]. M&S then appealed that decision.

The relevant clause in the lease provided that certain works could be carried out to the shared areas by a shopping centre management committee (which included a representative from M&S) where the parties (including M&S) consented that they accepted that the works would not render the mall or shared areas materially less adequate, commodious or convenient to them. The clause also provided that the consent could not be unreasonably withheld.

Arguments

M&S argued that the clause permitted works of redevelopment, modernisation, refurbishment, replacement and renewal, but not a new development such as the new Primark store. In particular, they argued that the clause did not permit removal of the shared areas from M&S’s lease and that it did not permit the piecemeal erosion of M&S’s real property rights without formal documentation recorded in the appropriate register.

Decision

The Inner House allowed the appeal. In doing so, the court noted that it is necessary to consider the structure and provisions of the lease in the context of well-established principles of Scottish land law. As to which, the court said:

“Scots law governing land tenure and leases is based upon written titles registered either in the Land Register (formerly the Register of Sasines), or in the Books of Council and Session, or in both. A duly recorded title relating to land is a real right which can be defended against the world. It is not a mere personal right binding only the granter and grantee. The real right runs with the land, and is passed to successors in title. Alterations in title generally require a written deed duly registered or, following the introduction of digitalisation, an alteration in the electronic land register.”

And, having noted the benefits of clarity, certainty, and accessibility for the public which arise from the principles, the Court went on to say:

“Against that background, any intention by contracting parties to dispense with the well‑settled and accepted conveyancing requirements relating to real rights in land would, in our opinion, require to be very clearly expressed. Moreover any such approach would generally be regarded as ill-advised, as the resultant informal approach to title alterations would be likely to lead to confusion and doubt about the nature and extent of a party’s title to and/or interest in the land.”

Then, looking at the particular wording in the lease, the Inner House concluded that there was nothing in the provisions of the lease which would permit an interpretation altering M&S’s real rights and boundaries and allowing the building of the Primark Store.

The full judgement is available from Scottish Courts:

https://www.scotcourts.gov.uk/search-judgments/judgment?id=da9f0ca7-8980-69d2-b500-ff0000d74aa7

[1] Gyle Shopping Centre General Partners Ltd as Trustee for and General Partner of Gyle Shopping Centre Limited Partnership v. Marks and Spencer Plc, 12 February 2015. See summary here.

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