In the recent case of Granton Central Developments Limited v Len Lothian Limited  SAC (Civ) 7, the Sheriff Court of Appeal considered whether the express terms of lease imposed an implied obligation on a landlord to supply water to the premises.
Granton Central Developments Limited ("the Landlord") are the landlords of commercial premises at a harbour in Edinburgh. The premises were let to Len Lothian Limited (the "Tenant") as a warehouse and office. The Landlord had been supplying water to the Tenant from the date of entry, however a dispute arose between the parties as to whether the Landlord was in fact obliged to do this in terms of the lease.
The Landlord raised an action in the Sheriff Court against the Tenant for payment of past water charges. They also sought an order to the effect that there was no obligation, or right for the Tenant to demand, a water supply to the premises.
The terms of the lease did not contain an express obligation on the Landlord to supply water. However, they did provide that the Tenant should maintain, repair and replace sanitary and water apparatus. The Tenant was also obliged to relieve the Landlord of all water charges. The Tenant's position was that, taken together, these clauses made it clear that the landlord was obliged to supply water or not to take any steps to interfere with the water supply to the premises.
The sheriff decided that the lease contained an implied obligation on the Landlord to supply water to the premises. The Sheriff concluded that the clauses within the lease meant that the parties must necessarily have intended that the Tenant was entitled to receive a supply of water. This was, according to the Sheriff, a factor so obvious given the terms of the lease, that it went without saying.
Sheriff Appeal Court Decision
The Landlord appealed this decision on the grounds that there was no obligation to provide, or a right for the Tenant to demand, a water supply, as there were no words within the lease capable of being construed as imposing an obligation on the Landlord to do this.
Ultimately, the appeal court agreed with the Landlord and found that, properly construed, the clauses relied upon by the Tenant did not impose any obligation on the Landlord to supply water to the premises.
The Tenant had not argued that there was an implied term of the lease that obliged the Landlord to provide water to the Premises. It was therefore not possible for court to decide that such a term existed.
What to take from this?
It seems slightly absurd for a tenant to be provided with premises that are designed (and indeed, probably required by law) to have a water supply, for the lease to make provisions relating to the supply of water, but yet for there to be no obligation on the landlord to supply water. Nonetheless, absent wording to the effect that the landlord was obliged to provide water – even if that wording was ambiguous - the court was not prepared to fill the gap in the lease and make up the obligation. It's not the job of the court to fix a bad bargain, especially when it is drafted by solicitors. The court's decision may, however, have been different if the tenant had argued that there was an implied term in the lease that required the landlord to provide water to the premises.
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