INTERIM POSSESSION AND UNDERTAKINGS: LESSONS LEARNED

The Court of Session recently considered the issue of interim possession of property in Dem-Master Demolition Ltd v Alba Plastics Ltd [2014] CSOH 84.

The Facts

Dem-Master Demolition (the 'Landlord') raised an action against Alba Plastics (the 'Tenant'), a manufacturer of plastics products, in connection with the lease of an industrial unit. The Landlord argued that the Tenant was required under the lease to pay a proportion of expenditure reasonably incurred by the Landlord for providing electricity. When the Tenant failed to pay, the Landlord cut off the electricity and sued for the unpaid sums and rent.

The Tenant said the Landlord rendered the subjects untenantable and counterclaimed for loss and damages due to the Landlord not keeping the property in good repair, obstructing loading bays, and locking the gates to the estate road, which forced the Tenant to load its goods via pedestrian access.

The Issues

At a previous hearing, the Landlord undertook to provide access and egress from the estate road and back 'roller door' on three hours notice between the hours of 6pm and 6am. The Tenant said access had not been allowed and sought interim possession under sections 46 and 47(2) of the Court of Session Act 1988 to remove equipment to an alternative site.

The Landlord argued that the undertaking was to allow deliveries and not to use the roller door to remove heavy machinery. Further, any prejudice to the Tenant was outweighed by the prejudice to the Landlord of the equipment being taken away as the lien on the property in the premises (the 'landlord's hypothec') might be the only way to recover monies.

The Decision

In terms of section 47(2), the court must: (1) identify the issue and legal basis for the right asserted, (2) consider if there is a prima facie case, and if there is a continuing or threatened breach of the obligation that the order would address, (3) avoid innovating significantly on the parties' contractual rights and obligations, and (4) consider the balance of convenience.

The court held that the first three criteria were met as the lease provided that the Tenant would carry out a business manufacturing plastic goods, and access and egress was necessary for this. Further, it was appropriate to grant the order as the Tenant was not able to carry out its' business.

Comment

The court usefully set out the requirements for interim possession, and reminded parties of the perils of not following through on undertakings. The decision is currently on appeal to the Inner House of the Court of Session.