Outer House finds Marks & Spencer not in contempt of court for limited re-opening following order to fully re-open Glasgow store

Sapphire 16 SARL, the landlord under a lease of the premises to Marks and Spencer Plc created in 1972, originally raised a commercial action seeking to enforce a keep-open clause in the lease in 2020. It argued that the defender had wilfully failed to comply with the terms of an interim court order to re-open the premises.

The case was heard by Lord Braid. The pursuer was represented by Stephen O’Rourke QC and Usman Tariq, advocate, and the defender by Dean of Faculty, Roddy Dunlop QC and Andrew McWhirter, advocate.

Outlet store

The defender entered into a 99-year lease of the retail unit at East Kilbride Shopping Centre in 1972, with the pursuer having later acquired the landlord’s interest. A clause in the lease obliged the defender to keep the unit open for business during normal business hours and to maintain lighting in the shop window display from sunset until 11pm.

At the start of the first coronavirus lockdown in March 2020, the defender kept the store open only for the sale of food, with only one entrance to the store kept accessible. Following the lifting of restrictions, the defender did not resume trading as previously but instead greatly decreased the extent of its trading activities, putting up a sign redirecting consumers to another M&S store elsewhere in East Kilbride.

Witnesses for the defender stated that the change in its manner of trading was motivated by a desire to close the store and focus on the other location in Kingsgate Retail Park, which it considered to offer a better shopping environment. It was reported in the press in July 2020 that the defender was in negotiations with the pursuer to set a closure date for the store, which the pursuer denied.

In July 2020, Lord Braid ordained the defender to re-open the whole of the store on 24 August 2020 and to keep the premises sufficiently stocked, staffed, and furnished. The store re-opened at that time, however it remained inaccessible from within the shopping centre and traded only as an outlet store selling clearance goods, with limited staff and no food offering. The pursuer claimed that this activity was in breach of the interim order and in contempt of court.

It was submitted for the pursuer that the defender was persisting in the same breaches that led to the initial making of the order. As these failings were deliberate decisions, they ought to be found in contempt of court. In response, counsel for the defender submitted that it could not be held in breach of the order long as it was in fact trading in some form, and that the court was unable to micro-manage the exact nature of how the store was operated.

Half-hearted manner

In his decision, Lord Braid said of the running of the store following its re-opening: “The overall impression of the level of stock within the store is that it is more redolent of a store destined for closure, than of one which is open for business as usual. This is borne out by statements by staff working at the store.”

He noted: “The reason why the present dispute has arisen is not because of any uncertainty in the mind of the defender as to the obligation which it has been under since the inception of the lease, but because of its commercially inspired wish to close the store, and the decision, in pursuance of that aim, to change the manner in which it traded from the store by converting the store to an outlet store, reducing its stock and staff and by changing the means by which the store could be accessed.”

Assessing what the order actually required the defender to do, Lord Braid said: “The premises were not to be re-opened simply so that members of the public could enter them: once re-opened, they were to remain open for business. Thus, it can fairly be taken from the order that the whole of the ground and first floors (in other words, 27,400 square feet of retail space) were to be re-opened so that the defender might resume its business of selling products to shoppers.”

Comparing this with the conduct of the defender, he observed: “A comparison of the store as it is currently trading with the store as it traded previously leads to the conclusion that the store is not sufficiently stocked or staffed; and that this is so tends to be confirmed by the fact that there is no other store of this size operated by the defender as an outlet store.”

He continued: “The half-hearted manner of trading is also such as to put the defender in breach of the order. One is led to the inexorable conclusion that the defender is not interested in attracting business to its store, and that it is doing the bare minimum which it considers it need do in order to comply with its obligations.”

On the contempt of court issue, Lord Braid concluded: “I will on this occasion give the defender the benefit of the doubt, recognising that there is some degree of uncertainty and that those taking the decisions relied upon legal advice. I also have in mind that any penalty which I did impose would of necessity be a financial one; and that the defender may already have exposed itself to a damages claim in the event that a breach is ultimately established after proof.”

The case was therefore put out by order for the defender to decide what action to take to properly comply with the order and to determine the future progress of the action.