The parties disputed the effect of an option clause in a lease, and particularly whether, when fixing the price, potential for development was to be included. The clause required the ‘full market value’ to be paid. The tenant appealed.
Held: The appeal failed.
Lord Hope said: ‘The court’s task is to ascertain the intention of the parties by examining the words they used and giving them their ordinary meaning in their contractual context. It must start with what it is given by the parties themselves when it is conducting this exercise. Effect is to be given to every word, so far as possible, in the order in which they appear in the clause in question. Words should not be added which are not there, and words which are there should not be changed, taken out or moved from the place in the clause where they have been put by the parties. It may be necessary to do some of these things at a later stage to make sense of the language. But this should not be done until it has become clear that the language the parties actually used creates an ambiguity which cannot be solved otherwise.’ The Lord Ordinary had departed from his task in ignoring certain parts of the clause. The insertion of a phrase descriptive of an expected use did not exclude taking account of other possible uses.
Judges:
Lord Hope, Deputy President, Lord Rodger, Lady Hale, Lord Clarke, Sir John Dyson, SCJ
Citations:
[2010] UKSC 47, [2010] 47 EG 141, [2011] 1 All ER 175, [2011] 4 EG 102, 2011 SLT 184, UKSC 2010/0028
Links:
Bailii, Bailii Summary, SC Summary, SC
Jurisdiction:
Scotland
Citing:
Outer House – Multi Link Leisure Developments Ltd v North Lanarkshire Council SCS 31-Jul-2009
The tenant exercised an option in the lease for the purchase of the land. The parties disputed the price payable.
Held: The tenant succeeded. The full market value was to be assessed by reference only to the use of the subjects as a golf . .
Appeal from – Multi-Link Leisure Developments v North Lanarkshire Council SCS 30-Dec-2009
Landlords appealed against a ruling that the ‘full market value’ of the presents to be paid by the tenants on exercising an option contained in their lease was to be set by reference to its intended use.
Held: The appeal succeeded. The words . .
Cited – Raja Vyricherla Narayana Gajapathiraju v Revenue Divisional Officer, Vizagapatam PC 23-Feb-1939
Land adjoining a harbour at Vizagapatam which at that time was malarial was to be valued for compulsory purchase. The land contained a spring of clean water. The only potential purchaser of the special adaptability of the land as a water supply was . .
Cited – Arthur Bell and Sons v Assessor for Fife 1985
Lord Avonside said, with reference to the estimation of the annual value of subjects under the 1956 Act, that it was notorious that one must take a building according to its use at the time of the valuation. . .
Cited – Mitsui Construction Co Ltd v Attorney General of Hong Kong PC 1986
Lord Bridge said that poor drafting in a contract itself provides: ‘no reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language that they have used . .
Cited – Griffiths v WE and DT Cave Ltd CA 4-Dec-1998
The parties had entered into an option agreement, but now disputed the price to be paid on its exercise. . .
Cited – Prenn v Simmonds HL 1971
Backgroun Used to Construe Commercial Contract
Commercial contracts are to be construed in the light of all the background information which could reasonably have been expected to have been available to the parties in order to ascertain what would objectively have been understood to be their . .
Cited – Ravennavi Spa v New Century Shipbuilding Company Ltd CA 7-Feb-2007
Moore Bick LJ considered the interpretation of poorly drafted contracts and said: ‘Unless the dispute concerns a detailed document of a complex nature that can properly be assumed to have been carefully drafted to ensure that its provisions dovetail . .
Cited by:
Applied – Barts and The London NHS Trust v Verma SC 24-Apr-2013
The parties disputed the effect of the NHS terms for employment of doctors, and in particularly the provisions as to maintenance of pay grade. The doctor had become a consultant trust grade doctor in oral surgery, but was then required to retrain . .
Cited – L Batley Pet Products Ltd v North Lanarkshire Council SC 8-May-2014
The appellant was mid-landlord and the respondent the sub-tenant under a now-expired lease. The appellant had wanted repairs to be executed but told the tenant informally. The tenant argued that the lease required formal notice to create an . .
Lists of cited by and citing cases may be incomplete.
Land, Contract
Updated: 04 September 2022; Ref: scu.426025