BREAKING NEWS – retail tenant avoids contempt finding in landlord’s contempt of court application

Keep open clauses in leases require retail tenants to remain open and trading. In England, if they are breached, the landlord can sue for damages. In Scotland, a court order can be obtained to force the tenant to remain open and trading.

The latest case from the Court of Session today involved Marks and Spencer. The landlord obtained an interim order requiring M&S to re-open and remain trading. M&S did so, but operated on a much more skeletal basis than they had done prior to closing (not even opening all of the entrances to the store, notably from the shopping mall it was attached to, also owned by the landlord).

The landlord said M&S were in contempt of court by failing to comply with the court order. A finding of contempt would have serious consequences, including the potential for a substantial fine.

In this case, the court found that M&S’s restricted re-opening was not sufficient and they were in breach of the court’s order. The court gave M&S the benefit of the doubt though and did not find them in contempt.

The case is a reminder of the benefits and pitfalls of keep open orders in Scotland, which can be used effectively to a landlord’s advantage (and the risks to tenants in failing to fully complying with court orders!).

The full decision can be read here: Sapphire 16 SARL v Marks and Spencer PLC