Keep-open clauses
A recent decision from one of Scotland’s leading judges serves to widen the gap between the treatment of keep-open clauses in leases in Scotland and England. These clauses have been at the forefront of commercial conveyancing litigation in recent years, with tenants arguing that they should not be forced to trade and landlords contending that tenants should abide by their contracts.
In England, the position is clearly set out in the House of Lords decision in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1997] 1 EGLR 52, which ruled against the enforcement by landlords of keep-open clauses. Conversely, in Scotland, the Court of Session, in Highland & Universal Properties Ltd v Safeway Properties Ltd [2000] 3 EGLR 110, put beyond doubt that these clauses were in fact enforceable north of Hadrian’s Wall.
The position in each country is based on very different age-old legal principles: the use of the legal enforcement remedies of “specific performance” and “specific implement” respectively. However, the comments of Lord Drummond Young in Oak Mall Greenock Ltd v McDonald’s Restaurants Ltd [2003] GWD 17-540 served to exacerbate the difference between the two jurisdictions. To justify a court in Scotland exercising its discretion to refuse specific implement and consequently, in this context, to allow a tenant to negate an obligation to keep open, Lord Drummond Young said that the tenant must suffer “severe detriment” that is “seriously disproportionate” to any corresponding benefit to the landlord. These comments go further than what has, up until now, been the position.
Mark Shelton, professional support lawyer at DLA
Related items:
Caledonian gap widens 12 July 2003 (Craig Connal QC comments on Oak Mall Greenock Ltd)Scottish independence 6 May 2000 (Craig Connal comments on Highland & Universal Properties)
