By Bruce Robbins, business reporter

A LANDMARK Court of Session ruling that saw the Co-op landed with a bill for more than £600,000 after the company was found to be in breach of a “keep open” clause at Whitfield Shopping Centre in Dundee, will have “major ramifications” for Scotland’s retail sector, it was claimed yesterday.

The Co-op was ordered to pay £450,000 in capital losses and a further £149,000 in past losses and interest when Lord Reed found in favour of the centre’s landlords, Douglas Shelf Seven Ltd.

The landlords sued for damages when Kwik Save, who had been trading as Shoprite having sub-let the store from the Co-op, closed their doors in 1995.

This was in breach of a clause that was designed to ensure that the anchor tenant would have to trade for a certain length of time.

Lynne Cardow, a specialist litigation lawyer with McClure Naismith, who advised the landlords, said Lord Reed’s ruling was a “ground-breaking judgment” and the first time such a decision had been made in Scotland.

She added, “Landlords and tenants will now be more aware of the importance of a keep open clause in a lease and the potential consequences for tenants of breaching such an obligation.

“For landlords, they may find that tenants increasingly cite the existence of a keep open clause as a factor to be taken into account in negotiations to enter into the lease and, in particular, in relation to fixing rental levels.

“This could open the floodgates for similar actions to be brought forward.”

However, commercial property expert Alistair Todd of Dundee-based chartered surveyors Graham and Sibbald said he believed only existing leases dating back many years were likely to have keep open clauses in them.

He said, “A keep open clause is something that landlords and developers of very large shopping centres with a very large anchor tenant might try to instigate, but whether or not the tenant would accept such a provision is open to the strengths of the respective parties at the time.

“This ruling may well have repercussions for old shopping centres where leases for a long length of time were entered into.

“Thirty years ago, these clauses were common and there will be a few of them still going about as there are other Whitfield-type shopping centres up and down the country.

“Maybe, if some of these shopping centres have turned out the way Whitfield has, then landlords will be dusting off their leases but, nowadays, it’s unlikely a big retailer would enter into a keep open clause without all sorts of qualifications.”