Scottish Enterprise, Scotland’s main economic development agency, has lost a £2m legal bid to exercise a break clause on offices in central Dundee.
Last week, the Scottish Court of Session upheld a claim by landlord Ben Cleuch Estates, a subsidiary of property investor Bonnytoun, that Scottish Enterprise had not validly terminated its lease of Enterprise House, in North Lindsay Street.
Lord Reed ruled that the agency had wrongly sent the break notice to Bonnytoun instead of Ben Cleuch, as stipulated in the lease, and although the notice had been forwarded to the landlord within the contractual time limit, it was still invalid.
The decision means that Scottish Enterprise, which has already vacated the building, will be forced to resume the lease for the remaining 10 years at a rent of at least £210,700 pa.
The judge heard that after Bonnytoun a joint venture between developer Scott Cairns, the Bank of Scotland and NAI Gooch Webster bought the building through subsidiary Ben Cleuch in 2002, rent invoices were sent in Bonnytoun’s name.
However, he said that the break notice sent in January 2005 was required to “comply strictly” with the terms of the lease, which stipulated that notice should be sent to the landlord.
“The failure to serve the notice on the landlord, when service on the landlord is required, is as fatal to the effectiveness of the notice as failure to serve it on blue paper would have been if service on blue paper had been required,” he said.
“The parties have agreed, as it were, on the key that is to be capable of turning the lock: if the tenant has not used the right key, then the lock will not turn.”
Scottish Enterprise, which moved into the converted newspaper depot in 1991, has now missed its February 2005 deadline to break the lease and, subject to any appeal, will now keep the building until the lease expires in 2016.
References: EGi News 06/03/06
