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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McGhie & Anor v Dunedin Property Investment Company Ltd [1998] ScotCS 53 (5 November 1998) URL: http://www.bailii.org/scot/cases/ScotCS/1998/53.html Cite as: [1998] ScotCS 53

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This dispute relates to a lease of premises in Glasgow in to which the pursuers, by way of assignation, entered on 14 November 1996. By letter dated 2 September 1997 the first pursuer wrote to the defenders' agents stating "I refer to section 2 of our leases, terms and conditions and now give notice we will be terminating our lease on the fifth anniversary." The validity of this alleged termination is challenged by the defenders who continued to claim rent and other charges from the pursuers. In that respect they executed a charge in respect of certain arrears on 16 October 1998. In this action the pursuers seek certain declarators as to the validity of the determination and in the meantime interim suspension of the charges and interdict against the defenders executing further diligence pending the outcome of the case.

The case came before me before calling but the defenders were represented, subsequent upon a caveat.

The lease, by Clause Third, allows a natural break exercisable on six months notice at the fifth anniversary of its inception, which date would be 5 March 1998.

With regard to the question of Notices, Clause Ninth of the lease contains the following relevant terms:

Mrs Wolffe who appeared for the pursuers seeking interim orders, submitted that any deficiencies as regards the letter of 2 September 1997 when viewed in the context of Clause Ninth, were not fatal to her position and she submitted that there was at least a prima facie case that a lawful termination of the lease had been effected by it, with affect from 5 March 1998 which would preclude the defenders from claiming any rent or charges subsequent to that date. She recognised in passing that as a matter of fact the pursuers had remained in occupation for some time after that date although had now completely vacated the premises. If any charges arose by reason of that occupation she submitted they could not form part of summary diligence in respect of the lease but would have to be constituted by legal action.

The basis of her position was that, properly understood, the terms of Clause Ninth imposed a mandatory requirement that a notice to terminate, had to be writing but it was only a directory requirement that it be sent to the defenders' registered office. If that be so, other forms of intimation were competent. She referred to EAE (RT) Ltd v EAE Property Ltd 1994 SLT 627; Prudential Assurance Co Ltd v Smith's Foods 1995 SLT 369 and Blythswoods Investment (Scotland) Ltd v Clydesdale Electrical Stores (in receivership) 1995 SLT 150.

She also referred to Capital Land Holding Ltd v Secretary of State for the Environment 1997 SC 109 which she correctly anticipated would be relied upon by the defenders to establish the contrary proposition, namely that, properly understood, Clause Ninth should be regarded as containing inter alia mandatory provisions as to the place to which the notice was to be despatched.

With regard to balance of convenience, she pointed out that the effect of diligence on the pursuers' status as financial advisers, licensed under the regulatory authority, was such as to endanger their professional careers as well as livelihood and could also result in bankruptcy. These factors far outweighed any inconvenience to the defenders in delaying making a full claim.

Miss Ennis who appeared for the defenders relied strongly on the Capital Land case. She submitted that the letter of 2 September 1997 was fatally defective in three ways. Firstly it was sent to the wrong place; secondly it was deficient in form since it referred to the wrong clause on the lease; thirdly it was sent to the wrong person, namely agents of the defenders rather than the defenders themselves and she disputed that properly understood those agents were to be regarded as agents in law for the defenders in this particular context.

In reply Mrs Wolffe referred me to Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd 1997 AC 749 to support the approach that the notice should be looked at as a matter of substance rather than form where there was a mistake on the face of it. She referred specifically to the speech of Lord Hoffman at page 774.

If Capital Land cannot be distinguished from the present case, I accept it as binding upon me but in my opinion it is easily distinguishable, at least for the present purposes. The relevant clause in that case contained an instruction that the notice in question must be sent to a certain place. The lease in the present case does not contain such an instruction but merely a description of how service may be properly regarded as having been effected. The Outer House authorities to which I was referred make it clear that that should be regarded as a directory rather than a mandatory instruction. On that basis it is my opinion at least for the purposes of a prima facie case that other forms of intimation of notice are competent and the question thereafter arises as to whether that was effected in this case. In my opinion the terms of the letter of 2 September are clear, despite the mistake in the reference to the Clause in the lease, and would leave the recipient in no doubt as to what the pursuers were seeking to do, precisely the point considered by Lord Hoffman in the Mannai case. The fact that it was sent to the agents causes me more difficulty but again I am of the view for the purposes of a prima facie case that where the relevant instruction is only directory potential recipients can be considered as sufficient in law always assuming that they have authority to act for the landlord. In the present case the agents were property agents for the landlord and that at least raises a question as to whether they were at least impliedly authorised to accept notices under the lease on their behalf. Again therefore that seems to me to raise a question to try, not capable of precise determination at this stage.

For these reasons in my opinion the pursuers have established a prima facie case and there remains only the question of balance of convenience.

In that respect the potentially dire consequences to the pursuers in my opinion far outweigh any economic disadvantages that may currently work against the interest of the defenders. If the termination is ultimately held to have been invalid, obviously the defenders will have certain claims limited to their duty to mitigate their losses but forestalling the present process of diligence does not seem to me to bear to any extent upon that question. On the other hand the consequences of the diligence proceeding to the pursuers are dire. In these circumstances it seems to me that everything points against the background of a prima facie case to the balance of convenience favouring the pursuers.

In these circumstances I shall grant orders ad interim in respect of Conclusions 2, 3 and 4. I should wish to re-emphasise that I have approached the issues in this case purely on the basis of seeking to ascertain whether there is a prima facie case and this opinion should not therefore be regarded as determinative of or even as attempting to determine those issues.