In the case of Dem-Master Demolition Limited v Healthcare Environmental Services Limited, the Outer House of the Court of Session considered an interesting question regarding the interpretation of a reference to a schedule of condition in a commercial lease. The tenant, Healthcare Environmental Services Limited, was obliged to maintain the property "in like condition as is evidenced on the Photographic Schedule…" However the schedule of condition was never prepared.

The court considered the question of what repairing standard should be imposed on the tenant at the termination of the lease. The landlord, Dem-Master Demolition Limited, argued that in the absence of the schedule of condition, the repairing obligation became unqualified, and the tenant was required to maintain the property in accordance with the “absolute” full repairing and insuring standard.

The court rejected the landlord’s argument and determined that the ordinary and natural meaning of the clause is that the tenant was obliged to restore the property to the condition that it was actually in at commencement of the lease. There was no requirement to improve the condition of the property beyond that standard. The omission to prepare the schedule of condition did not change the meaning of the repairing clause. Without the schedule of condition, both parties required to present other evidence to show the condition of the property at the date of entry.

The case serves as a useful reminder that landlords and tenants should ensure that schedules of condition are prepared timeously.