Tenant of Glasgow office building with defective curtain walling entitled to abate rent
A former tenant of an office complex in Glasgow that had to vacate the premises for necessary repairs has successfully established its entitlement to abate the rent as a result of the works.
Fern Trustee 1 Ltd and Fern Trustee 2 Ltd, trustees of the Buchanan House Unit Trust, originally raised the action against their former tenant, Scott Wilson Railways Ltd, seeking payment of various sums. The defender counterclaimed for declarator that they were entitled to abate the rent.
The case was heard in Glasgow Sheriff Court by Sheriff John McCormick.
Not enjoyed the benefit
The subjects, the north wing of the 6th floor of an office building at Buchanan House, were leased by the pursuers’ predecessor in title, Stannifer Developments Ltd, to Scott Wilson Railways (Scotland) Ltd in May 2005. The defender was assigned the tenant’s interest in June of the same year.
On 28 November 2019, the lease was terminated having reached its ish. This was not fully reflected in pleadings, but it was conceived that it did not prevent arguments from being heard.
During the course of the lease remedial works were required to address curtain walling in the common parts of the building that was defectively installed by the original contractor, MCLH, prior to the lease’s commencement. Both parties entered into a Remedial Works Agreement with MCLH to permit repairs. The work was completed by MCLH at no cost to either party.
Under the clauses of the RWA, the parties were obliged to allow MCLH access to the premises. MCLH in turn was required to use reasonable endeavours to complete the work within 93 working days. The work was successfully completed by MCLH but overran.
It was submitted for the defender that it was entitled at common law to abate the rent as it had not enjoyed the benefit of the subjects, even if this was not due to the actions of the pursuer. The true principle of abatement was simply that the tenant had lost the subjects by no fault of his own, a condition that was met by the extensive and intrusive repair works to the building.
In seeking payment of contractual interest and outstanding rent it was submitted for the pursuer that the interference with the defender’s possession was a result of its own agreement with MCLH. The surrender of its possession was a “reasonable sacrifice” to avoid liability towards the capital cost of the remedial works.
In his decision, Sheriff McCormick began by citing the leading authority on abatement, Muir v McIntyre (1887), in which Lord President Inglis said: “It is quite settled in law that an abatement is to be allowed if a tenant loses the beneficial enjoyment of any part of the subject let to him either through the fault of the landlord or through some unforeseen calamity which the tenant was not able to prevent.”
Sheriff McCormick elaborated on this: “The tenant avers that as a consequence of the ongoing work it was denied access to part or all of the subjects let. The tenant claims not to have received the beneficial enjoyment it had contracted for in terms of the lease. If those averments are proved, in my opinion the circumstances here would represent an unforeseen calamity of the nature contemplated in Muir v McIntyre.”
Addressing the pursuer’s submissions on the tenant voluntarily allowing MCLH access, he said: “I see the attractiveness of that argument. The defender did sign the Remedial Works Agreement. The defender had allowed access. The work has been completed. However, in my opinion the submission is flawed.”
He continued: “The pursuers aver ‘Had the RWA not been entered into, the remedial works would still have had to have been instructed or carried out by the pursuers pursuant to clause 11.4 and Schedule Part IV of the lease’. That being so, the issue of abatement of rent would have arisen irrespective of any consent to the works by the tenant. The significance of the defender’s consent (by signing the RWA and allowing access) is therefore irrelevant to the issue of abatement.”
Examining the circumstances in which the repairs were commenced, he said: “Those works could not be described as common repairs. They were instead substantial works needed to remedy deficient earlier works completed before either party had taken title. The lease does not provide for such a scenario.”
He continued: “Analogies to situations where a tenant allows contractors access for, for example, refitting or improvements, are not apt. There a tenant has a choice. Here the choice available to the defender was to agree to the works or to have the works carried out in the teeth of refusal. In relation to the equitable principle of abatement of rent the choice was illusory.”
Sheriff McCormick concluded: “The defender is entitled to an abatement of rent. The extent of any abatement is a matter upon which evidence will be required. There are averments that the work overran its anticipated duration on the one hand and, on the other, that the defender may have chosen to vacate the subjects (i.e. not out of necessity) and/or chosen not to re-occupy the subjects. These are matters which will require proof.”
For these reasons, the case proceeded to proof on the basis that the defender had successfully established entitlement to abate rent. A separate argument regarding unjustified enrichment was also successful.