Commercial property landlord wins legal action for removal of tenant Amazon

A judge in the Court of Session upheld the landlord’s claim that the tenant was obliged to remove, and granted a decree for removal.

‘Notice to quit’

Lord Ericht heard that the action brought by M7 Real Estate Investments Partners Ltd against Amazon UK Services Ltd raised a short point of interpretation of section 34 of the Sheriff Courts (Scotland) Act 1907.

Section 34 provides a procedure under which a landlord, on giving the requisite period of notice prior to the end of a lease, can eject a tenant at the end of the lease without raising an action of removing, but contains the following proviso: “Provided that if such written notice as aforesaid shall not be given the lease shall be held to be renewed by tacit relocation for another year, and thereafter from year to year”.

The court was told that the pursuer was the landlord and the defender the tenant of commercial premises in Gourock under a written lease, which met the prerequisites for the application of section 34.

The period of the lease was from 2 August 2004 until 1 August 2019, but on 7 February 2019 the pursuer’s agents issued a notice to quit to the defender, which notice stated: “On behalf of the landlord, we hereby give you notice that the lease will terminate as at 1 August 2019 and you are required to remove from the premises on or before 1 August 2019 being the final day of the term of the lease and as such the contractual date of termination thereof”.

The period of notice of slightly under six months met the requirement at common law of 40 days’ notice to found an action for removing, but it was less than the period of notice of one year required in respect of a lease under section 34.

The pursuer raised an action seeking decree de plano in respect of his first, second and third conclusions, which were respectively for declarator that the notice to quit was valid to terminate the lease, declarator that the defender was obliged to remove, and decree for removal.

If the court found in favour of the pursuer, further procedure would be required in respect of the fourth conclusion, which was for damages for occupation of the premises after the termination of the lease on 1 August 2019.

‘Tacit relocation’

But the defenders sought dismissal of the action, arguing that the language of the proviso was “clear and definite” in providing that where the landlord has not given a year’s notice the lease is held to be renewed by “tacit location” for another year.

It was argued that the proviso imposed a “consequence” on a landlord who failed to give a year’s notice, and that the pursuer’s interpretation would render the proviso “meaningless”, as despite the clear wording of the proviso, tacit relocation would not occur if the landlord subsequently gave common law notice and proceeded by way of an action of removing, which could not have been the intention of Parliament.

The defender submitted that the legislation gave new rights to the landlord and in return greater protection to the tenant, and the provision made a substantive change to the law in respect of tacit relocation.

However, the pursuer argued that the defender’s submissions were “unsound” and since no other defence was or could be advanced the pursuer was entitled to decree de plano.

It was submitted that section 34 was not the only means by which a landlord may give notice to quit in respect of probative leases of three years or more in relation to land exceeding two acres in extent.

It was argued that the section provided a new but additional means of removing a tenant from leased subjects, which left in place the existing common law alternative of service of a notice to quit, in accordance with the requirements of the common law, followed by an action of removing.

The pursuer had given the 40 days’ notice which was required for an action of removing.

The proviso did not make a substantive change to the law on tacit relocation; if it did, that was irreconcilable with decisions in cases where the tenant had given notice of less than a year, it was submitted.

‘Valid notice’

The judge agreed with the pursuer that the proviso does not make a substantive change to the law on tacit relocation: it is not a free-standing provision independent of the procedure for removal without an action for removing introduced by section 34, and it applies only when that procedure is used.

In a written opinion, Lord Ericht said: “I have come to that opinion for the following three reasons. Firstly, section 34 is procedural and not substantive. This is made clear in Lormor v Glasgow City Council 2014 SC 213, with which I agree and which is in any case binding on me.

“In that case the appellants argued that ‘although part of the purpose of section 34 was to create an expedited procedure, it went beyond this and expressly affected tacit relocation and the termination of the lease’. That argument, which in essence is the same argument as that of the defenders in this case, was rejected by the Extra Division.

“Secondly, an examination of the consequences of the interpretations advanced by each party demonstrates that the pursuer’s interpretation is the correct one. On the defender’s interpretation, once the one year deadline has passed without notice, tacit relocation has occurred once and for all purposes.

“If that were the situation, then tenants could not prevent tacit relocation taking place by subsequently giving notice of less than a year: that this is not the law is amply demonstrated by case law… On the other hand, on the pursuer’s interpretation, tacit relocation will not necessarily occur a year before and parties can be aware of that and plan accordingly.

“Thirdly, the correct construction of the words of section 34 in accordance with the principles of statutory construction is that the proviso does not alter the substantive law. A proviso is not a free-standing provision. It is a proviso to the principal provision in the section.

“The scope of a proviso is determined and limited by its principal provision. In this case the principal provision is the introduction of a procedural remedy. The scope of the proviso is limited to that procedural remedy.”

“Further,” he added, “where a well-established principle of the common law is to be altered by statute, clear definite and positive words must be used. It has been well recognised by judges and academic writers throughout the many years that section 34 has been on the statute book that its wording is not clear and definite.

“In my opinion the well-established common law on tacit relocation is not substantively replaced by such unclear statutory drafting. Rather, the proviso supplements the common law of tacit relocation by setting out how tacit relocation is to apply when the new statutory procedure is used.”

The judge granted decree de plano and put the case out by order to discuss further procedure in respect of the pursuer’s claim for damages.