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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Co-operative Wholesale Society v. Ravenseft Properties Ltd & Anor [2003] ScotCS 62 (11 March 2003) URL: http://www.bailii.org/scot/cases/ScotCS/2003/62.html Cite as: [2003] ScotCS 62, 2003 SCLR 509

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Co-operative Wholesale Society v. Ravenseft Properties Ltd & Anor [2003] ScotCS 62 (11 March 2003)

OUTER HOUSE, COURT OF SESSION
CA14/14/00	OPINION OF LORD EASSIE in the cause CO-OPERATIVE WHOLESALE SOCIETY LIMITED Pursuers; against (FIRST) RAVENSEFT PROPERTIES LIMITED and (SECOND) DOUGLAS SHELF SEVEN LIMITED Defenders:   ________________

 

 

Pursuers: Ferguson, Q.C., G McColl; Dundas & Wilson

Defenders: Abercrombie, Q.C., Di Emidio; McClure Naismith

11 March 2003

1. In this action the pursuers seek rectification in terms of section 8(1)(a) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 of a Minute of Variation and Agreement - "the Minute of Variation" - between themselves and the first defenders ("Ravenseft") dated 14 July and 19 August 1993 which varied the terms of a contract of lease of a supermarket in a shopping centre in Dundee. At the time of the Minute of Variation the pursuers and Ravenseft were respectively tenant and landlord in that contract of lease. Ravenseft subsequently disposed of their interest to the second defenders and have not entered defences, the defence to the action resting with the second defenders. The contract of lease which was varied by the Minute of Variation is a sublease, the land upon which the whole shopping centre was constructed being in the ownership of the local authority which, in 1971, granted a ground lease to Ravenseft's predecessors. The Minute of Variation flowed from an approach, in the Spring of 1993, by Shoprite Limited ("Shoprite") to take a sublease of the supermarket from the pursuers.
2. Details of the conveyancing history and the transmissions of the respective interests are contained in the Opinion of Lord Macfadyen given at an earlier stage of this litigation on 4 July 2001 and it is unnecessary to rehearse those details. Put shortly, the present controversy does not involve the ground or head lease between the local authority and the developer of the shopping centre. It relates to the sublease of the supermarket within the shopping centre and the further sub-letting, or under-letting to Shoprite. For convenience I shall endeavour consistently to refer to the sublease, granted by the tenant under the ground lease, of the supermarket as "the Sublease" and the further sub-letting to Shoprite as "the Underlease" substituting those terms, as appropriate, for the different terminology sometimes used in the contemporaneous correspondence.
3. The Sublease (No. 6/8 of process) was executed in December 1972 although entry was taken on 15 May 1970. The ish under the Sublease is on 15 May 2033. The clauses of the Sublease pertinent to the present dispute are Clause SIXTH and Clause TENTH (Sixteen) which are respectively in these terms:-

"SIXTH The Tenants shall take possession of and use and occupy the premises for the foregoing purposes from the said Twenty ninth day of June Nineteen hundred and seventy and shall within three months thereafter commence trading therefrom and shall continue to so use and occupy the premises and trade therefrom throughout the whole period of this Sub-Lease. If the Tenants without first having obtained the written consent of the Landlords, leave the premises unoccupied for a period exceeding twenty one days, they shall be bound to indemnify the Landlords for all loss or damage suffered by the Landlords as a consequence of the failure by the Tenants to occupy the premises, including without prejudice to the foregoing generality any loss or damage through depreciation in the capital value of the premises and/or whole subjects. The foregoing provisions for indemnity are without prejudice to the rights and remedies of the Landlords at common law and otherwise under Clause (FIFTEENTH) of this Sub-Lease."

...............

"TENTH The Tenants bind and oblige themselves... (Sixteen) To keep the premises open for retail trade during the usual hours of business in the locality (subject to the Tenants having the right to fix such early closing day as may be in their best interests) the shop display windows being kept dressed in a suitable manner and in keeping with a good class shopping centre, and at all times to comply with all requirements of the Local Authority, Local Planning Authority and any other competent Authority and of any Statute order or regulation affecting or in connection with the use of the premises for the purposes of the business permitted to be carried on therein for the time being."

4. The Minute of Variation (No. 6/11 of process) altered the terms of the Sublease in a number of respects, the one relevant to the present dispute being the recital and declaration on the second page which reads:-

"AND WHEREAS it has been further agreed between the Landlords and the Tenants that the provisions of Clause (SIXTH) shall no longer apply THEREFORE the Landlords and Tenants DO HEREBY DECLARE that Clause (SIXTH) of the said [Sublease] shall be deleted and shall cease to have any force and effect;".

The Clause of the Minute of Variation preceding the consent to registration and the testing Clause reads thus:-

"And save as hereby varied the whole provisions of the said [Sublease] ... will continue in full force and effect;".

5. In the summons the pursuers originally concluded for rectification of the Minute of Variation by the insertion of the words "and Clause TENTH (Sixteen) after the words 'Clause (SIXTH)'" where they occurred in the recital and declaration quoted above. After the leading of evidence in the restricted proof, the ambit of which I shall shortly describe, had been concluded, I allowed the pursuers to amend the terms of the rectification sought. The amendment may be summarised as being to the effect that the pursuers no longer sought to include the whole of Clause TENTH (Sixteen) in the provision which would be deleted in terms of the recital and declaration quoted above. Instead there would be inserted after the recital and declaration quoted above the following additional declaration and recital:-

"AND WHEREAS it has been agreed between the Landlords and the Tenants that the provisions of Clause (TENTH) (Sixteen) will be varied AND NOW SEEING that it is right and proper that these presents be granted THEREFORE the Landlords and the Tenants DO HEREBY AGREE and DECLARE that Clause (TENTH) (Sixteen) of the said [Sublease] will be varied so as to read as follows:-

'(Sixteen) To keep the shop display windows dressed in a suitable manner and in keeping with a good class shopping centre, and at all times to comply with all requirements of the Local Authority, Local Planning Authority and any other competent Authority and of any Statute order or regulation affecting or in connection with the use of the premises for the purpose of the business permitted to be carried on therein for the time being.'"

It will be noted that what is omitted from the proposed amended or varied version of Clause (TENTH) (Sixteen) are the words immediately following the initial "to keep", which read - "the premises open for retail trade during the usual hours of business (subject to the Tenants having the right to fix such early closing day as may be in their best interests)".

6. In their pleadings the pursuers narrate that in May 1993 negotiations took place "among Shoprite, the Pursuers and the First Defenders with a view to the pursuers sub-letting the premises to Shoprite. The Pursuers were keen to sub-let the premises and to transfer to Shoprite the obligations undertaken by them (the Pursuers) in terms of the [Sublease]. In these circumstances the pursuers were willing to agree to the demands of Shoprite provided they (the Pursuers) were not adversely affected thereby". Having thereafter set out the terms of Clause (SIXTH) and Clause (TENTH) (Sixteen) the pleader continues thus:-

"In entering into the proposed [Underlease] Shoprite were not prepared to undertake the keep-open obligation in the [Sublease]. The Pursuers and the First Defenders were advised of this. On or about 28^th May 1993 David Steel (the solicitor acting for the First Defenders) telephoned Ian Wattie (the solicitor acting for Shoprite) and advised him that the First Defenders were concerned that the keep-open obligation could have an adverse effect [sic] in a rent review and that the First Defenders were therefore willing to delete the keep-open obligation from the [Sublease]. By letter dated 28^th May 1993 David Steel confirmed that 'the keep-open provisions [were] to be deleted in their entirety'. The solicitors acting for the Pursuers were informed of the First Defenders' intention and on 28^th May 1993 wrote to the Pursuers advising them of this and that 'Therefore it would not be necessary for the [Pursuers] to pass on this obligation to [Shoprite] in the [Underlease].' It was agreed that the entire keep-open obligation in the Sub-Lease would be deleted and would cease to have any force and effect. In order to express and give effect to that agreement the pursuers and the first defenders entered into the [Minute of Variation]. By oversight the [Minute of Variation] failed to express and give effect to the common intention of the pursuers and the first defenders at the date when it was made. While Clause (SIXTH) was deleted from the Sub-Lease, Clause (TENTH) (Sixteen) was not deleted. Rectification of the [Minute of Variation] as concluded for would express and give effect to this common intention."

On that basis the pursuers invoke the court's power to rectify a document under section 8(1)(a) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 - "the 1985 Act" - which provides:-

"(1) Subject to section 9 of this Act, where the court is satisfied, on an application made to it, that -

(a) a document intended to express or to give effect to an agreement fails to express accurately the common intention of the parties to the agreement at the date when it was made; or

(b) ...

it may order the document to be rectified in any manner that it may specify in order to give effect to that intention."

7. The second defenders, in addition to contesting the contention of the pursuer set out in the pleadings which I have quoted, also invoke the defences for which provision is made under section 9 of the 1985 Act. Those aspects of the defence were the subject of an earlier debate before Lord Macfadyen resulting in the allowance of a proof before answer, which was thereafter assigned to me for hearing.
8. However, as emerged in the course of that proof, it was apparent, that, whereas on the one hand the evidence pertinent to the section 9 issues was extensive and very unlikely to be concluded within the allotted diet, on the other hand the evidence respecting the primary question whether the document whose terms were sought to be rectified failed to reflect the parties' common agreed intention constituted a discrete chapter of evidence which could be dealt with in isolation. In other words, the question whether the pursuers could surmount the essential hurdle of establishing a prima facie case for rectification in terms of section 8(1)(a) might be decided on that discrete, limited body of evidence. Of consent, the scope of the proof was so limited, reserving to parties the right to refer to the evidence so led in the event that it should prove necessary to hold a further diet of proof respecting the issues arising under section 9 of the 1985 Act and the inherent exercise of discretion under section 8 of that Act.
9. At the proof so restricted the pursuers adduced as witnesses (1) Mr John Ian Wattie, a solicitor with Burness, Solicitors, who acted on behalf of Shoprite at the time; (2) Mr Michael John Barrett who, at the relevant time in 1993, was a solicitor with Keyden Strang & Co., who acted for CWS, the pursuers; (3) Mr John Thomson who was the deputy property manager with Land Securities Plc, the parent company of Ravenseft; and (4) Mr David Alexander Steel, at the relevant time a solicitor with Breeze Paterson & Chapman, who acted for Ravenseft. No evidence was led on behalf of the compearing defenders.
10. It is appropriate to record at the outset that it is clear from the averments and from the evidence that the negotiation of the arrangements for the under-letting of the supermarket by CWS to Shoprite were conducted entirely through the medium of the three firms of solicitors acting for Shoprite, CWS and Ravenseft respectively. There was no evidence that members of the principals ever met directly to discuss or agree the matters pertinent to the issues before the court. It is further to be observed that the bulk of the inter-solicitor communication was conducted in the form of letters or fax messages. There were, of course, also telephone calls, the tenor of some of which has been recorded on file notes. Generally, and understandably, the witnesses had little by way of clear and reliable recollection of telephone conversations going beyond what had been contemporaneously noted.
11. A convenient starting date in the history of matters is 9 April 1993 when Mr Wattie, on behalf of Shoprite, despatched to the solicitors for CWS, Keyden Strang & Co., an offer (6/20 of process) to [under] lease the supermarket from CWS. The offer was conditional upon a number of matters, including satisfaction with the terms of the Sublease and the ground lease and agreement on the terms of a formal Underlease. Having thereafter been provided with the Sublease (between Ravenseft and CWS) Mr Wattie prepared for his clients a report on the Sublease. The report is No. 6/21 of process. Under the heading "Use" Mr Wattie reported as follows:-

"The premises are to be used only for the retail trade or business of a supermarket primarily for the sale of food and as ancillary thereto an off-licence and for no other purpose without the Landlords' consent. They have absolute discretion on this. There is an obligation continually to occupy and trade from the premises. There is provision that if the premises are left empty then the tenant must indemnify the Landlords for any loss suffered by them, including an depreciation in the capital value."

Mr Wattie accepted in his evidence that in that paragraph he had summarised the provisions of Clauses (FIFTH) and (SIXTH) of the Sublease. Later in his report on the Sublease under the heading "Signage", Mr Wattie writes as follows:-

"No signage or other external projection is permitted without the Landlords' consent. They have absolute discretion on this. This does not apply to non-illuminated signs from a part of the Tenant's shop window display. The Tenant must keep the premises open for retail trade during the usual business hours in the locality. The shop display windows must be kept dressed in a suitable manner and in keeping with a good class shopping centre."

Mr Wattie agreed that the foregoing text encompassed a summary of, among others, Clause (TENTH) (Sixteen). He further accepted while it thus appeared that a "keep-open" obligation, albeit not in identical terms or effect, was included at two points in the Sublease, he had not noted this to be an unusual feature.

12. Having taken instruction from Shoprite (cf. file notes 7/310 and 7/301 of process) Mr Wattie wrote by letter (6/22 of process) dated 7 May 1993 to Keyden Strang & Co., the solicitors for CWS, raising in paragraph (3) of that letter, the point that the Sublease:

"also provided that in the event of the Tenant failing to occupy and trade from the premises, they must indemnify the Landlord for any loss suffered, including any depreciation in capital value of the premises and/or the whole development. This gives our clients some considerable concern and they would wish a declaration in the [Underlease] that the keep-open clause will not apply or alternatively that they will not require to indemnify your clients or the Head Landlords in respect of any such depreciation."

Mr Wattie accepted that that paragraph of his letter of 7 May 1993 could only refer to Clause (SIXTH) of the Sublease. His clients' concern had been with the possibility of a claim for depreciation under the indemnity provision contained within Clause (SIXTH) and whether the indemnity applied to the whole development. That concern could be met either by removing Clause (SIXTH) in its entirety, as an obligation to be imported into the Underlease, or by likewise removing the provision for indemnity.

13. In response to Mr Wattie's letter, the solicitors for CWS then wrote to Land Securities Properties Limited (the then parent company of Ravenseft) by letter dated 11 May 1993 (No. 6/23 of process) in which, among other matters, they wrote:

"Finally, there was a clause in the [Sublease] and it is proposed that there be a similar clause in the [Underlease] to the effect that if the tenant fails to occupy and trade from the premises, they must indemnify for any loss suffered, including any depreciation in the capital value of the premises and/or the whole development. The [Under-tenants] advise us that they would wish a declaration in the [Underlease] that the 'keep-open' clause will not apply or alternatively, they will not be required to either indemnify our clients or you as head landlords in respect of any such depreciation."

Contemporaneously the solicitors, Keyden Strang & Co., wrote to their client, CWS, expressing pessimism as to whether Ravenseft would agree to discharge their rights under Clause (SIXTH) of the Sublease. The instructions from CWS were, put shortly to maintain opposition to any arrangement whereby CWS, as tenants under the Sublease, would not have recourse against the intending under-tenant, Shoprite. In her letter to Keyden Strang of 12 May 1993 (6/24 of process) Dr Noah of CWS put the matter in these words:-

"I agree the head landlord is unlikely to give any undertaking.

Our position must be that the keep-open clause will apply and that the [Underlease] provides for the same indemnity as the [Sublease]. I believe precedents have shown that it is arguable whether with a FRI lease depreciation in the capital value of the premises would occur.

I have discussed with our agents who agree Land Securities are highly unlikely to agree to their request. Should Shoprite come back again on this point, we will then need to approach the landlord."

By letter of 14 May 1993 (6/27 of process) Keyden Strang & Co. advised Burness of that standpoint saying that the keep-open clause must apply and that the Underlease must provide for the same indemnity as that contained in the Sublease. Mr Barrett accepted that the only clause of the Sublease under contemplation in this correspondence was Clause (SIXTH). Putting matters shortly, it thereafter continued to be the position of CWS and their solicitors, Keyden Strang & Co., that for so long as the Sublease contained the keep-open and indemnity provisions of Clause (SIXTH), similar provisions had to be included or reflected in the proposed Underlease to Shoprite.

14. Meanwhile, Keyden Strang & Co.'s letter of 11 May (6/23 of process) to Ravenseft's parent company, Land Securities, was being considered by Mr Thomson and Mr Steel of Breeze Paterson & Chapman. By letter of 14 May 1993 (No. 6/319 of process) Mr Steel wrote to Mr Thomson. The letter deals with various matters pertaining to the draft Underlease then in circulation and the proposed under-letting but, as regards the matters germane to the present dispute, in point (8) of the letter, following reference in the preceding point (7) to the letter of 11 May, Mr Steel's letter states:

"(8) As you are aware it is not now Ravenseft's policy to include a keep-open clause in their Leases on the basis that this may be regarded as an onerous clause likely to affect the Leases marketability and therefore the rent achievable on review. Indeed in a recent English arbitration the arbiter held that the rent should be discounted by 30% consequential upon this obligation being contained in the Lease. The law in Scotland has not been tested but my inclination is that Clause SIXTH on page THIRD of the [Sublease] be deleted."

In his evidence Mr Thomson accepted that only Clause (SIXTH) was brought to his attention. At no time did he ever have in contemplation Clause (TENTH) (Sixteen). He agreed that Clause (TENTH) (Sixteen) contained obligations other than the keep-open obligation, which were important to him. Mr Steel also confirmed in his evidence that the only keep-open clause which he discussed with Mr Thomson was Clause (SIXTH). By letter dated 20 May 1993 (No. 6/320 of process) Mr Thomson replied to Mr Steel's letter. He did so by taking in turn the numbered points in Mr Steel's letter. As respects point (8) he wrote "agreed". He and Mr Steel confirmed that their agreement thus related to the deletion of Clause (SIXTH).

15. By letter of 26 May 1993 (No. 6/31 of process) Mr Steel wrote to Keyden Strang & Co. confirming in principle the agreement of his clients, Ravenseft, to the proposed under-letting by CWS to Shoprite. Various conditions immaterial to the present controversy were mentioned, some of which may be related to points taken by Mr Thomson in his letter of 20 May. However, none of the matters related to the issue of "the keep-open clause". Mr Steel's letter did not convey any offer to remove the provisions of Clause (SIXTH) from the obligations for which the proposed under-tenant would assume responsibility in the Underlease, let alone any offer to remove all keep-open obligations in a universal sense. Mr Steel was unable to assist by offering, at this distance in time, any explanation for that omission.
16. There are certain other communings in the period leading up to the eventual agreement which I think it unnecessary to rehearse in detail. So far as pertinent to the matters currently in dispute they all had in contemplation only Clause (SIXTH) of the Sublease and the position of CWS remained that the provisions of Clause (SIXTH) should be reflected in the proposed underlease. For their part, Shoprite were not prepared to accept that Clause (SIXTH) of the Sublease should be imported into the Underlease. Thus, in a telephone conversation on 27 May 1993, noted in No. 6/442 of process, with Mr Stuart Hall of his client, Shoprite, Mr Wattie recorded that Shoprite "would not accept the keep-open clause and this should come out altogether". In his evidence Mr Wattie accepted that the keep-open clause in contemplation was Clause (SIXTH) of the Sublease. In view of those instructions Mr Wattie then inserted into the draft Underlease then circulating among the solicitors a clause qualifying the undertaking by the under-tenant to accept and perform the obligations incumbent on its landlord by virtue of the provisions of the Sublease. The clause proposed is to be found as a manuscript addition on page 7 of the photocopy of the draft [Underlease] attached to the fax from Mr Wattie to Mr Steel of 27 May 1993, No. 6/428 of process and is in these terms:-

"The [under-tenant] shall have no obligation or liability to implement the terms of the Clause (SIXTH) of the [Sublease] and, without prejudice to the foregoing, shall have no obligation to reimburse the [tenant in the Sublease] any sums payable by the [tenant in the Sublease] to the [landlord] in terms of the said Clause (SIXTH)."

The fax (No. 6/428 of process), which was sent directly by Mr Wattie to Mr Steel adverted to that revisal:-

"I have been instructed to insert a new clause regarding the 'keep-open' clause in the [Sublease]. I have already raised this with CWS's Solicitors and they have not responded to me. I have assumed that CWS's Solicitors would have advised you of my clients' further requirement in this regard. In terms of Clause (5)(b) CWS's obligation to their client would of course remain in respect of Clause (SIXTH)."

17. The following day, 28 May 1993, appears to have been a crucial date since, as appears from No. 6/430 of process, missives required to be concluded on that day if Shoprite were to proceed at that stage with a licensing application. In that production, which is a letter faxed from Keyden Strang & Co. to Mr Wattie of Burness, the writer dealt with various points in Mr Wattie's fax of the preceding day (No. 6/428 of process). The letter however contains a postscript which reads:-

"P.S. Having now spoken to Mr Wattie we note:-

(1) The ten month rent free period is agreed.

...

(3) Messrs Breeze Paterson & Chapman have indicated that their clients will consent to the deletion of the keep-open clause from their lease to our clients [the Sublease] and if so the keep-open clause can be deleted from the [Underlease]. We will require the Minute of Variation with Breeze Paterson & Chapman to be adjusted accordingly. Once we receive confirmation of this position we would be happy for you to delete the clause in the [Underlease] and insert the ten month rent free period clause."

The postscript is consistent with and explained by the notes of telephone conversations between Mr Wattie and Mr Steel which took place on 27 and 28 May. It appears from the note in the file of Breeze Paterson & Chapman (No. 6/437 of process) that Mr Wattie telephoned Mr Steel on 27 May and that on the next day Mr Steel telephoned Mr Wattie. Mr Steel's note (6/437) is in these terms:-

"Attendance at telephone with Ian Wattie of W. & J. Burness discussing Shoprite/CWS, 116 Whitfield Drive, Dundee. Thereafter perusing his fax of 27 May and considering the terms of the [Underlease] and also the [Sublease].

Thereafter on 28 May telephoning Mr Ian Wattie getting everything agreed and stressing that we require Clause [SIXTH] of the [Sublease] to be deleted. This is perfectly acceptable to him confirming that we would have to deal with it by means of the Deed of Variation of the [Sublease]."

Mr Wattie notes this part of the conversation in broadly equivalent terms in his note No. 6/441 of process:-

"The keep-open clause can be deleted provided that it is also deleted in the [Sublease]. His [Mr Steel's] clients are of the view that it is probably unenforceable and could have an adverse effect on rent review."

Mr Wattie's file note confirms that, understandably, Mr Wattie conveyed the import of this discussion and agreement to Keyden Strang & Co., who equally understandably faxed to Breeze Paterson & Chapman (No. 6/38 of process) seeking confirmation that Ravenseft were agreeable to deletion of "the 'keep-open' clause". Mr Barrett, the author of that fax, confirmed that what was intended by the reference to "the 'keep-open' clause" was Clause (SIXTH) of the Sublease. By a further letter of 28 May 1993 (No. 6/440 of process) Mr Steel informed Mr Wattie, under point 5 of that letter:-

"As already mentioned our clients require Clause (SIXTH) of the [Sublease] to be deleted in their (sic) entirety. In these circumstances it seems that there is no need to incorporate your marginal amendment on page 7."

The reference to the marginal amendment is a reference to the amendment to the draft Underlease proposed by Mr Wattie and referred to in para. [16] above. By a further letter also dated 28 May 1993 and sent by fax, Mr Steel intimated to Messrs Keyden Strang & Co. that their instructions were that Clause (SIXTH) of the [Sublease] was to be deleted in its entirety.

18. Although perhaps not worthy of the description deus ex machina, Mr Steel's communication to the solicitors for the proposed under-tenant of a willingness by Ravenseft to release the effective mid-landlord (CWS) from its obligations under Clause (SIXTH) of the Sublease resulted in the conclusion on 28 May 1993 of a contract between CWS and Shoprite for the under-letting of the supermarket. The bargain was conditional on a number of matters, including in particular agreement among Ravenseft, CWS and Shoprite on the terms of the Minute of Variation. In that respect reference may be made to the missives of 28 May 1993, Nos. 6/42 (cf. qualification 5B) and 6/43 of process. The intention was that the proposed Minute of Variation would include deletion of Clause (SIXTH) of the Sublease. Thus in their letter of 31 May 1993 (No. 6/45 of process) the solicitors for Shoprite say:

"We understand that the draft Minute of Variation will require to be adjusted to include deletion of Clause (SIXTH) of the [Sublease] (and it is on that basis that we have made no reference to that Clause in the [Underlease]). We look for receiving for approval the draft Minute of Variation adjusted between yourselves and Breeze Paterson & Chapman."

By letter of 3 June 1993 (No. 6/47 of process) Mr Barrett of Keyden Strang & Co. tendered an adjustment to the then extant draft Minute of Variation (which was of course also necessitated by matters with which this action is not concerned). The amendment took the form of a "paper apart" which is to be found within No. 7/179 of process and is in these terms:

"AND WHEREAS it has been further agreed between the landlords and the tenants that the provisions of Clause (SIXTH) shall no longer apply THEREFORE the landlords and tenants DO HEREBY DECLARE that Clause (SIXTH) of the said [Sublease] shall be deleted and shall cease to have any force and effect."

That adjustment was duly accepted by all parties and thereby the Minute of Variation came to be executed in the terms in which it was so executed.

19. While I have set out, at some length, the course of the negotiation by way of exchange of letters, commonly sent by fax, and also some telephone conversations, there are a number of short, but in my view, important, observations to be made respecting that negotiation of the contractual relationships.
20. First, so far as relevant to this dispute, the discussion among the parties concerned the terms of the Sublease and the extent to which the proposed under-tenant, Shoprite, was prepared to undertake to perform the tenant's obligations in the Sublease. Those obligations presented themselves in the shape of the existing causes of the Sublease, each being the subject for consideration by Shoprite either individually or in combination.
21. Secondly, while the terms of Clause (TENTH) (Sixteen), insofar as requiring the tenant to keep the premises open for retail trade during the usual business hours were noted in general terms in the paragraph of the report on the Sublease initially prepared by Shoprite's solicitors under the hearing "Signage", it is in my view clear that the existence of that clause was either quickly forgotten or overlooked, or was thought not to be material. That latter lack of materiality might explain the former, particularly since the file notes Nos. 7/310 and 7/301 of process and the terms of the letter from Burness to Keyden Strang & Co. No. 6/22 of process all suggest that the concern of Mr Grant of Shoprite was with the indemnity for loss of capital value in the whole development. It was thus in accordance with that view that in the letter No. 6/22 of process Mr Wattie wrote in terms unquestionably conveying an intention on the part of Shoprite to alter or remove only Clause (SIXTH) of the Sublease insofar as it might affect them. No mention is ever made of Clause (TENTH) (Sixteen) in the communings between the parties' solicitors or between solicitor and client and in all the subsequent references one finds either a reference in terms to Clause (SIXTH) or a reference to "the keep-open clause" in the singular. Although at one point in the course of his evidence-in-chief Mr Wattie appeared partially to succumb to the efforts of counsel for the pursuers to persuade him to construe the reference to "the keep-open obligation" as having been actively intended to include both clauses, it was clear from his evidence as a whole that he accepted that the only clause of the Sublease which was the subject of negotiation was Clause (SIXTH). The solicitors acting for CWS and Ravenseft were also clear that they had in view only Clause (SIXTH) throughout the negotiation and were collectively inattentive to the existence of Clause (TENTH) (Sixteen).
22. Thirdly, it may be observed that although Mr Steel's thinking proceeded on the basis of what he understood to be the general policy of Ravenseft of no longer including keep-open clauses in their leases, his advice to Mr Thomson was couched only in the specific terms that Clause (SIXTH) should be deleted. Mr Thomson readily recognised that the only clause to which his attention was directed was Clause (SIXTH). He never had Clause (TENTH) (Sixteen) in contemplation and his instruction was accordingly confined to Clause (SIXTH).
23. Fourthly, as a corollary, I would add that in this context the averment for the pursuers that "By letter dated 28 May 1993 David Steel confirmed that 'the keep-open provisions' [were] to be deleted in their entirety" is perhaps misleading insofar as it might imply that the agreement reached in the exchange of correspondence expressly extended to both clauses and that, as suggested in the succeeding averments, which I have already set out, the Minute of Variation simply failed to translate the terms of the agreement reached in the preceding correspondence by omitting through some sort of clerical or drafting error to take into account an earlier reference, within the correspondence, to Clause (TENTH) (Sixteen).
24. In his submissions counsel for the pursuer stated, in summary, that the true intentions of the three parties were to remove from the Sublease all obligations to trade continuously and he adverted to various commercial or trading considerations supporting that view of their general intention, such as Shoprite's unwillingness to accept an obligation which they might not fulfil; their eventual unwillingness to accept "the keep-open clause" in its entirety; Ravenseft's policy, narrated by Mr Steel and Mr Thomson, of no longer including a keep-open clause in their leases to shopkeepers; and their belief that in deleting Clause (SIXTH) they were removing all keep-open obligations in accordance with that policy. CWS were, said counsel, to a large extent neutral in that they would do what Ravenseft and Shoprite wished, provided they were not thereby disadvantaged. Their intention was to broker a deal whereby Shoprite would take the Underlease. Accordingly, said counsel, their intention was a shared or common intention in what Ravenseft and Shoprite had by way of common intention. The problem was presented by reason of the collective failure or mistake of all parties' respective solicitors to notice that a keep-open obligation existed in two clauses, albeit that each was of different ambit. The parties' common intention could not therefore be derived from the correspondence since looking simply to what had been agreed in the correspondence would thus allow the parties true or underlying intention to be defeated. The test, under section 8(1)(a) of the 1985 Act, was not whether the document which it was sought to rectify failed to express or to give effect to the agreement of the parties but whether it failed to express the wider common intention of the parties, which in this case had been the removal of all of the keep-open obligations contained in the Sublease.
25. For his part, counsel for the defenders treated the concept of the common intention to which the statute referred as being narrower. The common intention of the parties to which the statute referred was to be deduced from an agreement, the document to be rectified being a document which sought to express or give effect to that underlying agreement. In the present case the parties could have had no common intention to remove Clause (TENTH) (Sixteen) (or some part of it) since the existence of any obligation continuously to trade imposed by Clause (TENTH) (Sixteen) was a matter of which none of them were aware. One cannot, said counsel, have a common intention respecting something of the existence of which both (or all) parties are in fact unaware at the time of concluding their agreement. The only common intention at the time of the agreement was to delete Clause (SIXTH) and the Minute of Variation exactly reflected that intention, being the intention of which the parties were possessed in reaching the earlier agreement in the correspondence.
26. Before turning to the terms of the 1985 Act and the authorities on its interpretation to which I was referred by counsel, it is I think convenient to attempt an analysis of the issue. As already observed, this case is not an example of those cases in which the formal document, through a drafting or other error, does not faithfully reflect the terms of the earlier, less formally constituted, written agreement. Nor is it the case that, Clause (TENTH) (Sixteen) having been the subject of discussion and negotiation in the correspondence passing between the solicitors, it was erroneously omitted from the terms of the principal missives, albeit that it had been included in the drafts. The conclusion which I consider may be drawn from the evidence is that the parties agreed upon the deletion of Clause (SIXTH) in ignorance or oversight of the existence of the particular obligation to trade contained within the provisions of Clause (TENTH) (Sixteen). That ignorance or oversight was present from the outset of their negotiations, since the initial letter questioning the keep-open obligation was clearly directed, as Mr Wattie accepted, only to Clause (SIXTH). To that extent therefore counsel for the defenders is correct in saying that the agreement ultimately reached had within its common intention only the deletion of Clause (SIXTH). In agreeing that Clause (SIXTH) be deleted the parties may well have believed that they had thereby secured the commercial purpose of their agreement. I am for the present prepared to infer that had they, through their solicitors, been aware of the relevant part of Clause (TENTH) (Sixteen) they might well have agreed to delete that part of that clause. But in essence the problem which presents itself is that the agreement which the parties concluded was reached on the basis of a flawed factual understanding, namely that there was but one clause in the Sublease imposing a keep-open obligation. The question (at this stage in the proceedings and without prejudice to the section 9 defences) therefore appears to me to be whether an agreement, accurately recorded in terms of its constitutive documents, but proceeding on a shared error of underlying fact, may be rectified by the court pursuant to the particular powers given to it under section 8(1)(a) of the 1985 Act, in order to bring about the ultimate commercial or practical result which parties had or may have had in contemplation. (I would add that in these proceedings any question of the attribution of responsibility for the circumstances in which that flawed understanding arose is of course not a matter for decision.)
27. In the course of his submissions counsel for the defenders pointed out that the rectification provisions of the 1985 Act stemmed from the Report (No. 79) of the Scottish Law Commission on rectification of contractual and other documents. That report flowed in turn from the decision in Anderson v Lambie 1954 SC (HL) 43 in which it had been held that in Scots law where a formal deed (in casu a disposition) intended to give effect to an antecedent agreement failed properly to express or give effect to that earlier agreement (in casu missives of sale) the only remedy available was reduction of the former (Report para. 2.6). Having narrated the practical difficulties presented by confining the remedy to that of reduction, the Commission recorded in the first sentence of para. 2.11 its view that "the law at present, insofar as it does not provide a clear, direct remedy for cases of defective expression is unsatisfactory". It may be added, importantly, that in para. 2.1 the Commission recorded that the problem with which it was concerned "is not an error in contractual understanding but simply a defect in the written expression of an agreement which has already been concluded".
28. In the subsequent judicial decisions to which I was referred the existence of an already concluded agreement, the terms of which are not faithfully recorded in the subsequent document intended to express or give effect to the prior agreement, has been confirmed as an essential feature of an application for rectification in terms of section 8(1)(a) of the 1985 Act. Thus, in the first reported decision following the entry into force of the Act, namely Shaw v William Grant (Minerals) Limited. 1989 S.L.T. (Notes) 121, the Lord Ordinary (McCluskey) analysed section 8 as requiring the court:-

"... to be satisfied: (1) that there is a document to be rectified; (2) that that document was intended to express or give effect to an already existing agreement arrived at between two (or more) parties; (3) that there was, when the document was executed such a pre-existing agreement - whether or not enforceable; (4) that that agreement itself embodied and was an expression of one or more intentions common to (that is to say, shared by) the parties; (5) that the intentions were actual (not deemed) intentions; (6) that the agreement itself must have been reached at a definite point in time (cf. 'the date when it was made')."

The application in that case failed because the court considered that no sufficient averments of a prior agreement had been made.

29. George Thompson Services Limited v Moore 1993 S.L.T. 634 concerned a conveyancing transaction in which the disposition which it was sought to have rectified was wholly consistent with the preceding missives, which also omitted reference to the disputed parcel of land. The petitioners contended that the disposition failed accurately to reflect a common intention of the seller and the buyer to include the disputed parcel but did not aver that the claimed common intention related to any agreement prior to the missives. In dismissing the petition the Lord Ordinary (Weir) said this (1993 L ff):-

"In considering section 8(1)(a) it is important to note that the document which may be subject to rectification is one 'intended to express or give effect to an agreement'. The question which arises in this case is: what agreement? If it is the missives, there is no problem about them because the disposition expresses exactly the terms of the missives as to the extent of the subjects conveyed. The missives themselves state quite clearly what is the extent of the subjects for sale and need no further interpretation. In my opinion it is implicit in the terms of the subsection that one has to discover the existence of an earlier agreement from which a common intention can be discerned. The word 'intention' has a positive character. It is suggestive of something more than a wish or a belief, an indication or even a general understanding. It has a purpose to it and in this context, in my view, it must be related to an agreement."

The Lord Ordinary went on to observe that there was no averment of any existing facts and circumstances demonstrating a verbal agreement between the Thompsons and the respondents antecedent to the missives. It may be noted that in that case the contention that a general belief or understanding as to the effect of the missives was insufficient.

30. A broadly similar analysis of the requirements of the section was reached by the Lord Ordinary (Penrose) in Rehman v Ahmed 1993 S.L.T. 741. At page 751L of the report the Lord Ordinary says this:

"What is required, in my opinion, is proof of an agreement made independently of, and at or prior to the date of, the document or documents intended to give effect to it, coupled with proof that the writing failed to express accurately the common intention of the parties at the point at which the agreement was made ...

Common intention, in the context of making an agreement, has to be determined objectively: Thomson v James and Muirhead v Turnbull & Dickson. In the former case, the 'actual' intention of Mr James to enter into any contract at all had been departed from but there was held to be a completed bargain, on an application of the postal rule. In the latter, one finds the statement of Lord President Dunedin: 'But commercial contracts cannot be arranged by what people think in their own minds. Commercial contracts are made according to what people say'. The description of intention as 'actual' leaves open, perhaps, the question whether one is concerned with a party's intention as a matter of subjective perception, or as a matter of expression, objectively determined. In my opinion the common intention of parties referred to in the provision is the common intention ascertained objectively in accordance with the normal canons of construction of agreements, and in particular the rules applicable in ascertaining whether consensus in idem has been achieved, and to what effect."

I was also referred to what was said by the Lord Ordinary (Macfadyen) in Renyana-Stahl Anstalt v Macgregor 2002 S.L.T. 1247 in which, having adverted to the opinions in Rehman v Ahmed and George Thompson Services Limited, the Lord Ordinary said this (at 1256J):

"... The aspects of the statutory language which are important in the individual case will be a matter of circumstance. For the purposes of the present case I would analyse section 8(1)(a) in the following way: (1) there must be a document which the petitioner seeks to have rectified by order of the court; (2) there must an earlier 'agreement'; (3) that agreement must disclose that 'at the date when it was made' the parties to it possessed a 'common intention'; (4) the document must have been 'intended to express or give effect to' the agreement; and (5) rectification will be available if it is shown that the document fails to express accurately the common intention mentioned in (3) above."

Counsel for the pursuers also referred to Norwich Union Life Insurance Society v Tanap Investments VK Limited 2000 SC 515 as supporting a broader view of intention. However, it is apparent that the case involved an application for rectification of a formal document intended to give effect to what was averred to be an informal prior agreement, the complication being that there might be more than one method of giving effect to the informal agreement [552 B-F]. In the event the court held that the pleadings did not merit dismissal without inquiry.

31. An essential parameter emerging from those analyses of section 8(1)(a) of the 1985 Act is the existence of an antecedent agreement which the document whose rectification is sought was intended to express, or by means of which effect was to be given to that agreement, plus in either case failure of the document in issue fully to achieve those purposes. The power to allow rectification is thus a limited one. In my view it is not available to recast an initial agreement in the terms which might have been used had the parties been alert to some particular overlooked factual circumstance. That the remedy available under section 8(1)(a) of the 1985 Act is a limited one is also reflected in the concluding passages of the opinion of the Lord Ordinary in Rehman, which were viewed with approval by the Inner House in Huewind Limited v Clydesdale Bank Plc 1996 S.L.T. 369, 375G. And, as was put in a passage in the speech of Lord Hoffman in Bank of Scotland v Brunswick Developments (1987) Limited 1999 S.C. (H.L.) 53, 55D to which counsel for the defenders adverted, section 8 cannot be used "to rewrite history". In that connection I also refer to the speech of Lord Clyde at 59B-D.
32. Accordingly, in my view, against a proper construction of the terms of section 8(1)(a) of the 1985 Act the present action must fail. As already indicated, there is no discrepancy between the terms of the executed Minute of Variation and the agreement contained in the prior, inter-solicitor communings. It cannot therefore be said that the former, that is to say the formal, document fails to express the terms of the agreement concluded in the latter. Given that the pursuers seek rectification of the Minute of Variation and do not seek rectification of the draft Minute of Variation agreed upon in the inter-solicitor communings it might be said - as did counsel for the defenders in the final branch of his submission - that rectification of the executed Minute of Variation should be refused since that underlying contractual obligation remained in place unaltered. In light of considerations to which I shall briefly revert, that contention is, I think, technically correct. More importantly, since the conclusion does not seek to rectify the underlying agreement, it appears to me that the omission to seek rectification of that underlying agreement emphasises the absence of any offer of proof of an agreement antecedent to the agreement constituted in terms of the communications and correspondence between the solicitors. In the respect that the Minute of Variation precisely matches the underlying agreement concluded in the correspondence the present case finds its parallel in George Thompson Services in which the disposition precisely matched the missives of sale. There is, in my view, the further parallel in that just as the pursuers in George Thompson Services could not aver and establish any agreement other than that contained in the missives, so also in the present case the pursuers cannot point to any agreement among the parties other than that contained in and constituted by the offers and acceptances within the inter-solicitor correspondence. To alter those elements, constitutive, as opposed to simply expressive, of the initial agreement on the ground that if one or other of the parties had been alert to a particular factual circumstance the terms of the offer or acceptance, and hence the agreement, would have been different is, in my opinion, to go beyond the scope of section 8(1)(a). In George Thompson Services, as respects such a contention, (broadly similar to that of the pursuers in the present case) the Lord Ordinary (Weir) expressed the opinion that it "would result in the introduction of uncertainty into an area where it is important that the law should be, and has hitherto been, plain". That maintenance of certainty in commercial - and other - contractual relationships is, in my view, an important consideration for not extending the power of rectification beyond the parameters which I have indicated.
33. As already foreshadowed, counsel for the defenders contended that even if there were a common intention extending to the partial deletion of Clause (TENTH) (Sixteen), rectification of the Minute of Variation should be refused because the underlying agreement would remain unrectified, the terms of the first conclusion applying only to the executed Minute of Variation. That underlying agreement was a tripartite arrangement, since the terms of the missives for the under-letting required Shoprite's consent to the terms of the Minute of Variation. The draft Minute of Variation was thus agreed by the three solicitors involved. In this context, counsel referred to Angus v Bryden 1992 S.L.T. 884. Put shortly, the pursuer in that case sought rectification of a disposition which, on one of two competing interpretations of the missives of sale, accurately gave effect to the missives of sale but it was said that the missives failed to reflect properly an earlier informal agreement. On the hypothesis of that interpretation being the correct one, at the end of the penultimate paragraph of his Opinion the Lord Ordinary (Cameron of Lochbroom) indicated that, on that hypothesis, reduction of both the disposition and missives would be required. Counsel for the defenders further referred to the decision in Aberdeen Rubber Limited v Knowles & Sons (Fruiterers) Limited 1994 S.L.T. 662.
34. If one leaves aside any potential complication presented by the rules relating to the constitution of contracts for the sale of heritable property, the analogy of the standard conveyancing transaction of the sale of land - with which both Angus v Bryden and Aberdeen Rubber were concerned - is of some help. If there were averred and proved an antecedent informal agreement, not properly reflected in missives which were intended simply to record and give effect to that agreement and did not in themselves constitute an active, material part of the negotiating process, logic would dictate the need to rectify (or reduce) both the missives and disposition. That is on one level perhaps, a matter of pleading which, in an appropriate case, might be overcome by amending the pleadings. But the need to consider all the levels or stages of negotiation and, particularly agreement, is important. In the present case I believe that the pursuers' focus on the executed Minute of Variation while not seeking any rectification of the preceding contractual arrangement identifies the underlying fundamental difficulty in the pursuers' position which I have discussed.
35. Though also not necessary for disposal of the action there is one remaining submission which it is appropriate to record. That submission, from counsel for the defenders, was to the effect that the contention by counsel for the pursuers that there was a "common intention" of all parties to delete all the "keep-open obligations" overarching their ignorance of Clause TENTH (Sixteen) was unjustified on the evidence. The submission involved a close examination of the evidence relating to the communications between the parties' solicitors (for, as already mentioned, there was no direct communication, or at least no evidence of any direct communication, between their principals). Put shortly, the submission was that while Ravenseft might have had a general policy of getting rid of all keep-open obligations in this and other subleases on the basis that it would secure a more advantageous position at rent review, that general policy or intention was not shown to have been shared by others. The attitude of the pursuers (CWS) so far as disclosed by the correspondence to their solicitors was described as being "piggy in the middle" and being content to go with what might be agreed between Ravenseft and Shoprite. They therefore had no positive intention commensurate with that of Ravenseft. As respects Shoprite, their concern was with the indemnity provision contained within Clause (SIXTH). Their proposal was for them not to be bound to give equivalent indemnity or alternatively for them to be exempted from the provisions of Clause (SIXTH) in its entirety. There was therefore no evidence from Shoprite that Shoprite actively shared a general policy decision on the part of Ravenseft to remove all keep-open obligations of whatever nature.
36. As I understand it, the submission proceeds upon the basis that the existence of a Ravenseft policy of no longer inserting keep-open clauses in their then current new leases is seen by the pursuers as effectively implying an instruction from Mr Thomson to his company's solicitors to remove from the terms of the Sublease any possible keep-open obligation, the existence of which might diminish the rent obtainable on review. I do not consider that the evidence justifies such a view of Mr Thomson's instruction to Mr Steel. However, on a contrary assumption, I think it correct that the position of CWS was neutral. They had no positive intentions that the Sublease be cleared of any potential "keep-open" obligation, irrespective of the potential effect on the amount of rent payable on a rent review. Likewise, as counsel for the defenders pointed out, there was no evidence that Shoprite actively considered and agreed upon a policy decision that the lease arrangements should have no "keep-open" provisions whatever, to match the claimed then current policy of Ravenseft, advanced late in the negotiation. Although Mr Wattie said that he detected a "hardening" of the attitude of Shoprite in the course of negotiations, there is nothing in the correspondence or notes of telephone calls which clearly substantiates that Shoprite ever departed from the alternative position set out in the letter No. 6/22 of process respecting Clause SIXTH. I am unwilling to proceed on the basis of Mr Wattie's subjective impression of "hardening" as proof of a departure by Shoprite from that position.
37. The point take by counsel for the defenders is perhaps a subtle one. At first sight, one thinks that liberty from all "keep-open" obligations must be seen as to the tenant's advantage. But it appears that, at the time, any keep-open obligation was viewed by some landlords - and arbiters - as depressing rental levels. It therefore does not follow that the Ravenseft policy of not including any keep-open obligation whatever would be welcomed by all tenants, who might otherwise be exposed to the risk of a higher level of rent. In these circumstances, although a matter of difficulty and nicety, if it were necessary to prove a common intention matching Ravenseft's policy of having no "keep-open" obligations of whatever extent, I incline to the view that the pursuers have failed to discharge that burden. While I have endeavoured to reach a view on this matter, the issue is illustrative of the very difficulty involved in looking beyond the terms of the intention to be derived, in accordance with normal terms of construction, from the established or proved terms of an agreement, towards the motives or the general commercial objectives of the parties, with the effect of thereby rewriting commercial agreements and thus involving the consequent loss of legal certainty to which I have already adverted.
38. Although, as already mentioned, it was recognised that, if the position of the defenders on this branch of the action were sound, that defence would be complete, counsel for both parties nonetheless were agreed that I should put the case out "By Order" for further discussion in the light of the conclusions which I have reached. I shall accede to that course.