Court tells Marks & Spencer to trade properly in lease dispute

Marks & Spencer has been told to trade in good faith, and not to carry on business half-heartedly, following a dispute with a landlord over the terms of the lease on one of its stores.

The court heard that Marks leased a unit within a shopping mall from landlord Sapphire 16.

The ground and first floors constituted the retail space. There were two entrances: one leading from within the mall, the other leading from the street.

Until March 2020, approximately 30% of the sales floor space was designated for food, with the remaining 70% designated for general merchandise, including clothing. When COVID-19 restrictions were introduced in March 2020, the store remained open for the sale of essential foodstuffs, but otherwise it was closed.

The doors into the store from the mall were locked, black film was applied to the glass frontage and notices were applied directing customers wishing to purchase food to the other entrance.

When restrictions were lifted, food stocks were greatly depleted, there was no stock within the clothing area, and a sign on the door directed customers to another of Marks’ outlets.

Marks wished to close the store; however, one of its obligations under the lease was to keep it open and to trade from it until 2071.

Saphire brought took legal action to enforce that obligation.

The court made an interim order requiring Marks to “re-open the whole of the premises … and thereafter for so long as it remains the tenant of the said premises in terms of the Lease … keep them open for business during normal business hours … and to keep the premises sufficiently staffed, stocked, furnished and otherwise equipped for that purpose”.

Marks proceeded to operate the unit primarily as an outlet store. The entrance from the mall remained closed and the windows continued to be blacked out. There were no signs directing shoppers to the other entrance or informing them that the store remained open for business. Stock levels and staffing levels were reduced.

The Court of Session ruled that Marks had failed to comply with theorder because it required the whole of the premises to be re-opened and to remain open for business.

It held that it could fairly be taken from the order that the whole of the ground and first floors were to be re-opened so that Marks might resume its business of selling products to shoppers.

The phrase “keep the store open for business” read in conjunction with the later requirement to keep the store “sufficiently staffed, stocked, furnished and otherwise equipped” carried with it a necessary implication that the order required Marks to trade in good faith, and not to carry on business half-heartedly.

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Sapphire 16 S.a r.l v Marks and Spencer Plc
Court of Session (Outer House)
15 October 2021
[2021] CSOH 103
Lord Braid