In March 2014, the Outer House of the Court of Session provided a judgment which will be of interest to parties to commercial landlord and tenant arrangements, particularly those which involve tenant committees.

The case, Gyle Shopping Centre Limited Partnership v Marks and Spencer plc [2014] CSOH 59 (“Gyle” and “M&S”), concerned the validity of M&S’ apparent approval of a redevelopment of part of Edinburgh’s Gyle Shopping Centre. The relationships between the parties to the matter were complex but the relevant facts were as follows;

  • M&S held a long term lease relating to the shopping centre, which included a one third share of the centre car park.
  • The original landlord of the lease had been the local council but, at the relevant time, the landlord was Gyle, which owned a further one third share of the car park.
  • ASDA held the remaining one third share of the car park under a similar lease to that of M&S
  • Gyle had entered into an agreement with Primark Stores Ltd to erect a new 55,000sq ft retail store on land adjacent to the existing shopping centre, including part of the car park.
  • The leases granted to M&S and ASDA stated that no variations were permitted without the consent of each other and the landlord, as well as their successors in title.
  • The day-to-day management of the shopping centre was delegated to a committee, at which both M&S and ASDA were represented
  • The committee had reviewed and approved the redevelopment of the shopping centre, which would result in the loss of spaces in the shared car park. No further consent was requested or obtained from M&S.

Gyle became aware that M&S was not satisfied with the decision of the committee. It therefore sought a declarator to the effect that M&S had agreed to the redevelopment and that Gyle would not be in breach of the lease if the project was to continue.

Gyle’s first argument was that the rights restricting variations to the M&S lease could not apply to the car park, as the right was a pro indiviso share of an area of which Gyle also held a share. Gyle claimed that this was more akin to a licence than a lease and could only be enforced against the original landlord.

Lord Tyre held that the letting of the one third share of the car park was incidental and essential to the lease as a whole. Furthermore, it could not be seen as unusual for a lease of a shopping centre to include rights relating to parking facilities for customers and staff. It was therefore held that the right to the car park was pertinent to the lease and could be enforced against Gyle.

Gyle also argued that M&S had consented to the variation by way of the committee meetings. Again, this argument was rejected by the Court. Having reviewed the lease, Lord Tyre stated that it did not allow for the delegation of such a decision to a committee. The relevant clauses indicated that the committee was intended to respond to routine management issues, rather than to approve significant variations in the structure and allocation of space in the shopping centre.

The case raises two important issues. Firstly, it indicates that a tenant may expect to enforce its rights over pro indiviso shares of land under a lease where such rights are pertinent or adjunct to the lease as a whole.

Secondly, it serves as a warning to commercial landlords who might otherwise seek to rely on decisions provided by tenant committees. The consent of the tenants as individuals should be sought if significant variations to a lease arrangement are intended. The risk of dispute may also be reduced through appropriate drafting of the lease to clarify the extent to which committee decisions will bind the committee members.