New Cases: Keep Open and Notices to Quit

There have been two new property litigation cases worthy of mention in the last couple of weeks.

KEEP OPEN - Sapphire 16 Sarl v Marks and Spencer

Like many retailers during COVID-19, Marks and Spencer closed one of their stores. In Scotland, assuming the lease contains a valid keep open clause, a landlord can obtain a court order requiring the tenant to trade.

The landlord did exactly that and the court issued an interim order in July 2020 for Marks and Spencer to re-open the store and trade. Marks and Spencer complied perhaps somewhat half-heartedly and changed the store to an outlet, reduced stock levels, staffing and reduced the entrances to the store. In short, they continued to trade but did the bare minimum to do so.

The landlord went back to court arguing that Marks and Spencer were in contempt of the court order issued in July 2020. The court found Marks and Spencer had failed to comply with the order but did not go as far as holding Marks and Spencer in contempt of court.

Takeaway: think carefully before closing a store with a valid keep open clause within the lease.

NOTICES TO QUIT: Rockford Trilogy Ltd v NCR Limited

A party to a lease must issue a valid notice to quit forty clear days prior to termination to prevent "tacit relocation" (the lease continuing for another year on the same terms and conditions).

In this case NCR argued various emails regarding negotiations to terminate the lease and enter into a new lease amounted to sufficient notice to the landlord that the lease was to terminate and as such not continue by tacit relocation.

The landlord argued the lease continued for another year as no notice to quit had been issued. Somewhat bizarrely, the court agreed with the landlord and held that the email correspondence was sufficient to terminate the lease. Not surprisingly, NCR appealed and in a recent decision, the appeal court agreed with the court of first instance in favour of the landlord.

Takeaway: always issue a written notice to quit to avoid tacit relocation and be mindful of the consequences of informal correspondence between agents.

#property #scotland #litigation #realestate #keepopen #tacitrelocation

Rockford Trilogy Ltd v NCR Ltd

Sapphire 16 S.a r.l v Marks and Spencer Plc