Burnside v Promontoria (Chestnut) Ltd, 2017 WL 06761108 (2017)

Court of Session (Outer House)

28 December 2017
Burnside v Promontoria (Chestnut) Ltd
Case Analysis

Where Reported [2017] CSOH 157; [2017] 12 WLUK 685;

[2018] B.L.R. 111; 2018 G.W.D. 2-35;
Official Transcript;
Case Digest Subject: Contracts
Keywords: Scotland; Implied terms;
Performance; Reasonable time
Summary: An agreement obliging a party
to arrange for the sale of properties was
silent as to the time for performance of
that obligation and an implied term of
performance within a reasonable time
applied. The agreement's entire agreement
clause did not exclude the implied term as
it already formed part of the contract.
Abstract: A property developer sought
inter alia declarator that an agreement with
a bank had not been validly terminated
and remained in force, and specific
implement of the obligations of a financial
intermediary under the agreement as
assignee of the bank.
The bank had loaned the pursuer funds to
purchase and develop 26 properties, which
were rented out to tenants. The pursuer
became obliged to repay the loans and in
2012 he entered into an agreement with
the bank for the sale of the properties.
Clause 3 of the agreement provided that
the bank would arrange and facilitate the
sale, the proceeds would belong to the
bank in permanent reduction of the debt,
and once the properties were sold and the
proceeds received by the bank, the debt
would be extinguished. Until the properties
were sold, cl.2 required the pursuer
to maintain them and remit the rental
income to the bank, subject to deduction
of maintenance costs. Clause 8 stated
that the agreement formed the entire
agreement between the parties, any future
variation had to be a formal variation,
the agreement superseded all earlier
meetings, discussions, understandings
and arrangements in relation to its subject
matter, and there were no collateral or
supplemental agreements. In 2015, the

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Burnside v Promontoria (Chestnut) Ltd, 2017 WL 06761108 (2017)

bank assigned to the defender its rights in

respect of the agreement and the benefit
of standard securities held over most of
the properties. The properties were not
sold and in 2016 the defender purported
to terminate the agreement on the basis
that the pursuer had failed to account for
the rent received. The pursuer founded
upon the existence of an implied term in
the agreement that the properties would
be marketed and sold within a reasonable
time, and contended that the bank's and
the defender's failure to comply with that
implied term constituted a material breach
of contract which had entitled him to
withhold performance of his obligations.
Implied term - The implied term of
performance within a reasonable time
was a term applied generally in contracts,
absent express contrary provision. In
the instant case one party had agreed
to arrange for the sale of property, in
payment of a debt owed by the other
party, and that could properly be regarded
as a class or type of relationship for the
purposes of implication of a term requiring
performance within a reasonable time.
There was no provision which, expressly
or by necessary implication, fixed a time
for the performance of the obligation to
arrange for and facilitate the sale of the
properties. What was a reasonable time
would depend upon all the circumstances
and was a matter for the court hearing
the proof. Subject to the entire agreement
clause, the implied term contended for by
the pursuer, to the effect that the obligation
in cl.3 was to be performed within a
reasonable time, fell to be implied into the
agreement, Hick v Raymond & Reid [1893]
A.C. 22, [1892] 12 WLUK 48, applied (see
paras 44-54 of judgment).
Entire agreement clause - The statement
in cl.8 that the agreement formed the
entire agreement between the parties
did not affect the implied term, the whole
point of the implication of the term being
that it already formed part of the contract.
The reference to future variation did not
affect an existing implied term. The implied
term plainly did not constitute an earlier
understanding or arrangement, nor was it
a collateral or supplemental agreement,
for the reason that it was intrinsic to and
formed part of the agreement. Accordingly,
the implied term was not excluded by the

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Burnside v Promontoria (Chestnut) Ltd, 2017 WL 06761108 (2017)

terms of the entire agreement clause in

cl.8 (paras 55-57).
Duration of reasonable period - The
pursuer neither averred the point in time at
which the bank or the defender breached
the implied term, nor specified the duration
of a reasonable time. Where that issue
was one to be determined by the court
in light of all the relevant circumstances,
there was no requirement for him to do
so. The court could determine at proof
whether such period had elapsed. The
pursuer could not be held to have failed to
make out a relevant case by not averring
the duration of the period of a reasonable
time. The obligation in terms of cl.3 of
the agreement required to be performed
within a reasonable time, by virtue of the
existence of the implied term, accordingly,
the defender's averments to the effect that
no such term fell to be implied would be
excluded from probation, and the cause
would be appointed to a proof before
answer on the whole remaining averments
of the parties (paras 60-63).
Judge: Lord Clark;
Counsel: For the pursuer: MSH Lindsay
QCFor the defender: Duthie
Solicitor: For the pursuer: DAC
Beachcroft Scotland LLP for Dallas
McMillanFor the defender: Addleshaw
Goddard
Cases Cited CSSA Chartering and Shipping
Services SA v Mitsui OSK Lines Ltd
[2017] EWHC 2579 (Comm); [2018] 2 All
E.R. (Comm) 62; [2017] Bus. L.R. 2125;
[2018] 1 Lloyd's Rep. 57; [2017] 10 WLUK
400
QBD (Comm)

Marks & Spencer Plc v BNP Paribas

Securities Services Trust Co (Jersey)
Ltd
[2015] UKSC 72; [2016] A.C. 742; [2015] 3
W.L.R. 1843; [2016] 4 All E.R. 441; [2015]
12 WLUK 67; 163 Con. L.R. 1; [2016] 1
P. & C.R. 13; [2016] L. & T.R. 8; Times,
December 12, 2015; [2016] C.I.L.L. 3779
SC

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Burnside v Promontoria (Chestnut) Ltd, 2017 WL 06761108 (2017)

Barden v Commodities Research Unit

International (Holdings) Ltd
[2013] EWHC 1633 (Ch); [2013] 6 WLUK
479
CHD

Geys v Societe Generale

[2012] UKSC 63; [2013] 1 A.C. 523; [2013]
2 W.L.R. 50; [2013] 1 All E.R. 1061; [2012]
12 WLUK 668; [2013] I.C.R. 117; [2013]
I.R.L.R. 122; Times, January 28, 2013
SC

AXA Sun Life Services Plc v Campbell

Martin Ltd
[2011] EWCA Civ 133; [2012] Bus. L.R.
203; [2011] 2 Lloyd's Rep. 1; [2011] 2
WLUK 620; [2011] 1 C.L.C. 312; 138 Con.
L.R. 104
CA (Civ Div)

Inveresk Plc v Tullis Russell

Papermakers Ltd
[2010] UKSC 19; 2010 S.C. (U.K.S.C.)
106; 2010 S.L.T. 941; 2010 S.C.L.R. 396;
[2010] 5 WLUK 51; 2010 G.W.D. 23-437
SC (SC)

Attorney General of Belize v Belize

Telecom Ltd
[2009] UKPC 10; [2009] 1 W.L.R. 1988;
[2009] 2 All E.R. 1127; [2009] 2 All E.R.
(Comm) 1; [2009] Bus. L.R. 1316; [2009]
3 WLUK 455; [2009] B.C.C. 433; [2009] 2
B.C.L.C. 148
PC (Bze)

Peregrine Systems Ltd v Steria Ltd

[2005] EWCA Civ 239; [2005] 3 WLUK
437; [2005] Info. T.L.R. 294
CA (Civ Div)

Exxonmobil Sales & Supply Corp v

Texaco Ltd
[2003] EWHC 1964 (Comm); [2004] 1 All
E.R. (Comm) 435; [2003] 2 Lloyd's Rep.
686; [2003] 8 WLUK 2
QBD (Comm)

Hoult v Turpie

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Burnside v Promontoria (Chestnut) Ltd, 2017 WL 06761108 (2017)

2004 S.L.T. 308; 2003 S.C.L.R. 577;

[2003] 4 WLUK 591; 2003 G.W.D. 15-485
OH

McCall's Entertainments (Ayr) Ltd v

South Ayrshire Council (No.2)
1998 S.L.T. 1421; [1998] 5 WLUK 99;
1998 G.W.D. 19-988
OH

Ashmore v Corp of Lloyd's (No.2)

[1992] 2 Lloyd's Rep. 620; [1992] 7 WLUK
39; Times, July 17, 1992; Independent,
July 22, 1992
QBD (Comm)

BP Refinery (Westernport) Pty Ltd v

Shire of Hastings
[1977] 7 WLUK 177; 180 C.L.R. 266;
(1977) 16 A.L.R. 363; (1977) 52 A.L.J.R.
20
PC (Aus)

Liverpool City Council v Irwin

[1977] A.C. 239; [1976] 2 W.L.R. 562;
[1976] 2 All E.R. 39; [1976] 3 WLUK 168;
(1984) 13 H.L.R. 38; 74 L.G.R. 392; (1976)
32 P. & C.R. 43; (1976) 238 E.G. 879;
[1976] J.P.L. 427; (1976) 120 S.J. 267
HL

Lister v Romford Ice and Cold Storage

Co Ltd
[1957] A.C. 555; [1957] 2 W.L.R. 158;
[1957] 1 All E.R. 125; [1956] 2 Lloyd's Rep.
505; [1956] 12 WLUK 80; (1957) 121 J.P.
98; (1957) 101 S.J. 106
HL

Evera SA Commercial v North Shipping

Co Ltd
[1956] 2 Lloyd's Rep. 367; [1956] 10
WLUK 104
QBD

Hick v Raymond & Reid

[1893] A.C. 22; [1892] All E.R. Rep. 491;
[1892] 12 WLUK 48
HL

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Burnside v Promontoria (Chestnut) Ltd, 2017 WL 06761108 (2017)

Cases Citing This Case Zahid v Duthus Group Investments Ltd

[2018] CSOH 59; [2018] 6 WLUK 21;
2018 G.W.D. 19-239
OH

Journal Articles It's all in the timing

Compliance; Contract terms; Contracts for
sale of land; Implied terms; Interpretation;
Overage; Performance; Pre-emption
rights; Reasonable time; Scotland.
Co. L.J. 2018, 79(May/Jun), 20-21

It's all in the timing

Compliance; Contract terms; Contracts for
sale of land; Implied terms; Interpretation;
Overage; Performance; Pre-emption
rights; Reasonable time; Scotland.
P.L.J. 2018, 363, 26-28

Books Building Contract Disputes

Chapter: Chapter 1 Construction Contracts

Documents: The Express Terms of

Contract

Lindley & Banks on Partnership 20th

Ed. First Supplement

Chapter: Chapter 10 - Partnership

Agreements

Documents: G. - Terms Implied to Give the

Agreement Business Efficacy

2017 WL 06761108

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