Multi-Link Leisure Developments Limited v North Lanarkshire Council [2010] UKSC 47

19 November 2010

On 17th November 2010 the Supreme Court handed down judgment in this appeal from the Court of Session (reported at 2010 SLT 57 (Ex Div) and 2009 SLT 1170 (OH)). 

The appellants are the tenants under a 50 year lease from the respondents of land on the outskirts of Cumbernauld, where they run a pay and play golf course.  The lease contains an option to purchase, which the tenant attempted to invoke several years into the term, by serving the requisite notice.  The parties then differed over the proper valuation of the subjects, which under the lease was to be fixed by the landlords.  The Council argued that development value should be included in the valuation, while the tenant contended that the land should be valued on the basis only of its use as a golf course.  Given that recent changes to the development plan had zoned the land for residential development in the medium term, the difference between these bases of valuation was very considerable.  The Council set a time limit for settlement of the consequent sale and purchase contract for the land, and when the tenant refused to settle at the higher price fixed by the valuer, the Council rescinded the option contract (on the ground that it could be invoked once only) and also the sale and purchase contract. 

After a debate the Commercial Judge, Lord Glennie, held that on a proper construction of the valuation provision development value should not be included.  On the Council's reclaiming motion, an Extra Division disagreed, holding that the use of the term "full market value" should include all considerations unless there were express words showing an intention to exclude them. 

On the tenants' further appeal, the Supreme Court considered that the key provisions of the valuation clause were contradictory, but that the proper course was to recognise the defective drafting and try to give a sensible meaning, taking account of the background known to the parties at the time the lease was entered into.  Had parties applied their minds to the possibility of development value emerging during the 50 year term, the Court held that in the circumstances parties would have agreed that full market value did include any such value.  The appeal was dismissed. 

James Mure Q.C. of Axiom acted for the respondent local authority, on the instructions of Dundas & Wilson LLP.

http://www.supremecourt.gov.uk/docs/UKSC_2010_0028_Judgment.pdf