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Fashion retailing comes to court

18 July 11

Property case update on the back letter sought to be enforced by the Ralph Lauren company; and an English decision affecting buy-to-let purchasers

by Peter Nicholson

Written reasons are awaited at time of going to press for the decision of the Inner House to reverse Lord Glennie’s refusal of interim interdict, where tenants sought to enforce a restriction in a back latter by their landlords in relation to the class of tenant to be accepted for another unit in the same development in Glasgow’s Merchant City.

In Ralph Lauren London Ltd v London Borough of Southwark Pension Fund Trustees the defenders had granted a back letter in which they undertook not to grant a first letting of the unit “to retailers other than high quality fashion retailers as are approved by” the pursuers. After the unit had stood empty for nearly 10 years they proposed to let it for use as a hairdressing salon.

The pursuers argued that the undertaking should be read in accordance with reasonable business expectations having regard to the context in which it was given, and the purpose of achieving a cluster of high fashion brands in order to attract customers. On 17 June Lord Glennie held that the terms of the undertaking were clear, and the defenders had not restricted themselves in any way concerning the grant of a first letting to non-retailers. Further, the term “retailer” did not extend to a hairdressing salon: any sale of hair and beauty treatments was merely an adjunct of its main business, the provision of hairdressing services.

This decision was reversed by the Inner House on 22 June. It is understood that the court felt that more debate was needed as to the purpose of the clause before deciding whether it came into play, and that it was not appropriate to disrupt the status quo without first hearing all the evidence.

 

Peter Nicholson

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