Keep Open Clauses and Remedies for Breach of Lease
Rights and Obligations of the Parties:
The lease generally governs the obligations of both the tenant and the landlord. If the lease
is silent then the common law will imply certain conditions.
Legal Remedies:
Lease= contract and therefore the standard contractual remedies are available both to the
landlord and the tenant.
Specific Implement:
o Forces the other party to comply with their obligations under the lease.
o Can also get an interdict for refraining the party from doing something.
o However, the extent of these remedies being useful for commercial developments is
questionable for example, in commercial leases, where the tenant is normally
responsible for repairs, the landlord is generally given the power, if a tenant fails in a
repairing obligation, to step in and do the repairs and charge them to the tenant;
this is particularly useful at the end of the lease, allowing the landlord, after the
tenant has vacated the property, to carry out all necessary repair work (known in
this context as dilapidations) and then forward the bill to the tenant. This practice is
not implied by law, but ahs to be expressly states in the contract. Given the nature
of commercial leases in today’s age it would be covered therefore almost rendering
SI and Interdict a useless remedy.
o Recovery of a liquid debt Specific implement cannot be used in order to recover a
liquid debt; such a decree could not be easily enforced, since imprisonment for debt
is no longer possible and increasing a debt by the imposition of a fine likely to be
futile. It is not therefore possible for a landlord to obtain a decree ad factum
praestandum to recover rent. As we will see below, there is a separate type of court
action designed for the recovery of debt. [11] The best remedy for recovering rent was
formerly the landlord's hypothec, but this has now been considerably restricted in
its scope
Keep open obligations:
o In commercial leases, however, this common law obligation of taking and keeping
possession of the property, is generally reinforced by an express undertaking on the
tenant's part not only to occupy the property but also to carry on business there for
the purpose or purposes specified in the use (or user) clause of the lease. [17] It is this
provision that has come to be known as a 'keep-open' obligation.
o Using specific implement to enforce keep open obligations:
Grosvenor Developments v Argyll Stores- it was doubted whether a general
and continuing obligation to occupy property for the purposes stated in the
use clause could be enforced by specific implement. In the words of Lord
Kincraig: 'An order from the court must be precise and specific so that the
defenders know throughout the period when the order is in force exactly
what they are required to do and what they are prohibited from doing.
, Retail Parks Investments v Royal Bank- Retail Parks Investments Ltd v Royal
Bank of Scotland plc (No 2).[22] This related to premises occupied by the
Royal Bank in the Sauchiehall Centre in Glasgow, which the tenants had
occupied since 1977. On learning that the tenants were planning to close the
premises, the landlords successfully obtained an interim interdict against
them vacating the premises and an interim order ordaining the tenants to
use and occupy the property in terms of the lease. However, in the Outer
House of the Court of Session, Lord Coulsfield (following Grosvenor
Developments) refused to grant a permanent order of specific implement.
This was reversed on appeal to the Inner House. It was held that in principle
specific implement was competent to enforce keep-open obligations. The
court granted a decree of specific implement, requiring the tenants to use
the premises as bank offices during all normal business hours. Lord
McCluskey was able to formulate some general statements of the legal
considerations to be kept in mind when assessing the competence of an
action ad factum praestandu: (1) The material wording of the contract must
make it certain what the defender has to achieve in order to fulfil the
obligation, though this will not by itself guarantee the granting of a decree
of specific implement. (2) The grant of an interim order will not prevent the
court, after full consideration of the case, from refusing to grant a
permanent one. However, the history of the defenders' compliance with the
order during the interim period may assist the court in reaching a view as to
the sufficiency of its precision and specification. (3) An order of specific
implement may require a number of distinct acts in order to secure
compliance, and it may also remain effective over a period of years.
However, the more numerous the required acts and the longer the period of
time during which it is envisaged that the order will remain effective, the
more necessary will it be to find terms for the order that will satisfy the
need for adequate precision. (4) An order may specify the end to be
achieved but leave open the precise means whereby that end is to be
achieved, thereby allowing a degree of flexibility. (5) In considering the
necessary degree of precision (bearing in mind that breach of the order
could have serious, including penal, consequences) the court should
consider the commercial realities which form the background to the
undertaking of the parties' mutual obligations. In the present case, the
defenders were a large commercial organisation that freely undertook the
obligation with legal advice, and they had already occupied the subjects for
the purpose stated in the lease for nearly 20 years without any apparent
difficulty or misunderstanding. (6) Even if the defenders experienced
difficulties in knowing what was required of them, the matter would have to
come before the court again before any penalty for breach could be
imposed. The court would have to be satisfied that the breach was wilful
and any imprecision in the wording of the order would be exposed; if
satisfied that the breach was not wilful, the court could even give the
defenders a further opportunity to comply before imposing a penalty. There
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