Warehouse owner ordered to pay £147,000 for failure to repair roof has damages reduced by just £1,200 on appeal

About this case:

• Citation:
  [2025] SAC (Civ) 24
• Judgment:
  External link
• Court:
  Sheriff Appeal Court
• Judge:
  Sheriff Principal N A Ross

Hillington Cash & Carry Ltd raised a claim against appellant Shindo Kooner after water damage rendered their business unviable and were awarded damages under seven heads of loss. The appellant disputed both liability and the recoverability of the respondent’s losses, arguing that the sheriff had conflated the missives of let with the final version of the lease.

The appeal was heard by Sheriffs Principal Sean Murphy KC and Nigel Ross, with Appeal Sheriff Brian Mohan. Bowen KC and Anderson, advocate, appeared for the appellant and McConnell KC and Ram, advocate, for the respondent.

Two months of trading

In 2014, the respondent was looking for new premises and its sole director, Mr Marwaha, identified a warehouse owned by the appellant as suitable. He viewed the premises, which had been vacant for two years at that time, and noted the dilapidated condition of the building, with the roof in particular requiring substantial repair. The parties entered into a lease on the condition that the appellant would carry out works to the roof to render the premises wind and watertight.

Despite agreeing to that condition, the appellant did not carry out remedial works to the roof, resulting in loss of business for the respondent. The respondent ceased trading 13 months after taking occupation, having only managed to trade from the premises for two months. An action was raised before the sheriff, who awarded damages in respect of rent payments, professional fees, return of a deposit, various business costs, insurance, and damaged stock.

Senior counsel for the appellant submitted that the missives obligation was to carry out work to the satisfaction of the tenant’s surveyor, and no evidence had been led in that respect. Breach of the missives was therefore not established, and clause 5.20 of the lease required notice of any defect to be given to the landlord in writing. Further, it was not a term of the contract that the respondent would be able to trade from the premises, and on analysis each of the heads of loss was irrelevant and wrongfully indemnified the respondent.

For the respondent it was submitted that the condition relating to the surveyor’s satisfaction related to the remedial works, not the breach. In respect of lack of notice, there was written correspondence demonstrating the parties’ awareness of the state of the roof. While the appellant correctly identified the normal measure of damages for breach of contract, there was an accepted alternative ground, namely wasted costs, which here flowed directly from the breach.

Heart of the bargain

Sheriff Principal Ross, delivering the opinion of the court, said of the basis for damages: “We accept the respondent’s submission that wasted expense was a relevant basis on which to claim damages. The appellant’s submission did not attempt to engage with that position, but only urged that the normal rule of damages fell to be applied. The respondent relied on authority of English origin, but the principles are recognised by Scots law.”

He continued: “The breach of obligation caused trading to falter, to the extent that it was possible for only 2 months out of 13 months of occupancy. No general trading position is easily identified. The prospects for the business at the new locus are unknown. Start-up expenses are generally incurred before profit can be realised. The appellant did not identify any mitigating or limiting factor to show that the sums claimed, for wasted expense, would result in over-recovery.”

Analysing the respondent’s heads of loss, Sheriff Principal Ross noted: “The breach of contract went to the heart of the bargain, in that use of the premises in any ordinary business sense was rendered impossible by the breach of contract. This was a relatively extreme case, where water ingress was sufficiently copious not only to prevent trading but actively to create danger to the occupants. The payment for that occupancy, the rent, was wasted expenditure, save for the relatively short periods when trading was possible.”

However, in respect of a £1,200 charge for a preliminary inspection of the premises, he added: “While this may have been a wasted expense, it cannot be categorised as wasted as a result of the breach of obligation. It would have been incurred, and wasted, if the transaction had never subsequently proceeded. There is no causal connection with the breach. Allowing this expense was therefore in error. We allow the appeal under this head.”

The Sheriff Principal concluded: “It was apparent that the appellant’s position was that the whole claim should have been a claim for loss of profits. The basis of claim was an election for the respondent to make, then attempt to prove. They duly succeeded. The fact they might have chosen a different, or more traditional, basis of claim and quantification does not invalidate that result, and does not permit this court to take a different approach. We do not accept the appellant’s submission that this amounted to indemnity to the respondent.”

The appeal was therefore allowed solely to the extent of disallowing the £1,200 inspection fee, reducing the award to the respondent to the sum of £146,501.73.