The MFMac Real Estate Litigation team was instructed to act for a client who was the landlord of one of the largest logistics hubs in Scotland. At the end of the lease, the site was left in such a dilapidated condition that it was not possible to find an alternative tenant.
An extensive programme of remedial works was then instructed by our client to remedy these defects and put the site into a condition attractive to new tenants. Unfortunately, the cost of these works was extremely high, leaving our client with a significant financial loss.
Novel approach
What made the case challenging for our client was the absence of Scottish case law on a particular provision of the lease in respect of whether our client was entitled to replace defective parts of the site or whether, in all the circumstances, they were only entitled to repair certain parts.
The discrepancy in the cost between repair and replacement was significant.
We used our expertise to find a solution relying on case law from other jurisdictions. Using this case law we argued that this case law ought to be followed in Scotland and instigated arbitration proceedings to enforce our client's rights.
Delivering results
In the face of imminent arbitration proceedings, the tenant entered into extensive negotiations and we managed to secure a favourable commercial settlement in excess of £1.5 million for our client.
Without this settlement, the viability and profitability of the site were at risk and the client would not have been able to proceed with their future plans for the site.
