30 June 2021

David Gibson outlines some important lessons learned from two notable cases in the Court of Session.

CASE 1: Dilapidations: Fail to repair? Tenants beware!

The decision in Coal Pension Properties Limited v Technip UK Ltd [2021] CSOH 39 is a useful reminder of the binding nature and potentially costly consequences of dilapidation clauses in commercial leases.

The case concerned a tenant’s liability for restoration costs at the end of the tenancy. According to the terms of the lease, if the tenant failed in its repairing obligations, the Landlord could choose between having the tenant carry out necessary repair works, or demanding payment for a sum “certified by the Landlord’s surveyor as being equal to the cost of carrying out such work”.

At the end of the lease, the pursuer elected for the latter option and a schedule of dilapidations was served on the defender intimating this. The defender argued that the sum was unreasonable which led to negotiations between the parties and further notice being sent to the defender enclosing the final sum certified by the Landlord’s surveyor.

The defender argued that no valid demand for payment had been made, and that the surveyor’s certificate was not binding because it included the sum for lost rent.

The Decision

Lord Tyre stated that it was “unfortunate” the pursuers letter was not “drafted with more careful attention” to the relevant clause, as the sums stated that included lost rent were not due at that time. Nevertheless, the surveyor had indeed certified the repair costs and his fee as per the Lease, and as such, notice was valid.

When addressing the issues regarding the surveyor’s certificate, Lord Tyre held that the quid pro quo benefit of the Tenant’s ability to discharge liability for lost rent was to forgo entitlement to dispute the certified sum. In concluding that the certificate was binding on the parties, he acknowledged the main objective of the payment clause - to achieve a “speedy resolution” to any disputes about the tenant’s repair liabilities at the end of the lease.

CASE 2: Can Heads of Terms stop parties from changing their minds?

In Briggs of Burton v Doosan Babcock Ltd [2020] CSOH 100, two parties entered into Heads of Terms for the Sublease of commercial premises. It was stated that they were not to be legally binding, but the main terms would be included in the Sublease.

The solicitors exchanged drafts of the Sublease. During negotiations, the head-tenant’s solicitors changed provisions so that they no longer reflected the Heads of Terms. The sub-tenant’s solicitors did not draw attention to the changes, presuming they were noticeable. The sub-tenant did not notice until after signing.

The Court has power to rectify a document that fails to express parties’ common intention at the time of making the agreement. The sub-tenant argued that the parties’ common intention was that the Sublease would reflect the Heads of Terms.

The Decision

The Court refused to rectify the Sublease.

It explained that it is necessary to consider the subjective intention of the parties. The Heads of Terms were explicitly non-binding, which demonstrated the intention to be able to negotiate. To rectify the Sublease to reflect the Heads of Terms would have been to ignore that intention.


These cases highlight how vital it is to review and understand commercial contracts in order to ensure clear agreement between the parties involved.

If you have any questions on how the above cases might apply to you, or you would like assistance with any property concerns you may have, please don’t hesitate to get in touch.

David Gibson, Partner: dbg@bto.co.uk / 0141 221 8012