By Graham Huband

SCOTTISH ENTERPRISE was vindicated by Scotland’s supreme civil court yesterday after winning a £2 million rent wrangle over its former regional headquarters in Dundee.

The Court of Session yesterday found in favour of the enterprise agency in its long-running battle with a former landlord.

The pair had been at odds since SET vacated Discovery House in North Lindsay Street in late 2005 and moved to purpose- built premises in Greenmarket.

The decision overturns a previous order locking Scottish Enterprise into the remaining 10 years of a 25-year lease at an annual cost of £210,700.

A spokesperson for Scottish Enterprise said yesterday the organisation had always been confident the situation would be resolved in its favour.

She said, “Our position throughout has been that Scottish Enterprise had solid grounds for appeal. The judgment vindicates our actions and, we regret it has taken so long to reach this stage.”

Landlords Ben Cleuch Estates took Scottish Enterprise to court, claiming the organisation had not given proper notice it wanted to end the lease.

Judge Lord Reed agreed in March 2006 that Ben Cleuch Estates was still entitled to its money. However he said it was tempting to regard Scottish Enterprise’s mistake as “a mere technicality.”

In his written ruling the judge added, “This result may be thought to confer an adventitious bonus on Ben Cleuch, enabling them to take unmeritorious advantage of Scottish Enterprise’s error.”

But he said it was not up to the court to rewrite the contract, and the agreement should stand.

Scottish Enterprise challenged his decision, and now appeal judges have reached a different conclusion, saying the mistake was “justified.”

There have been changes of name and ownership since the lease agreement was drawn up in 1991, and the Court of Session had to follow the twists and turns of the next 15 years.

The original parties to the deal were the Scottish Development Agency and Faraday Properties.

The Scottish Development Agency became Scottish Enterprise. Ben Cleuch bought the landlord’s interest in the lease in October 2002.

The row between them involved a “break option” enabling the tenants to give the landlord a year’s written notice, ending the lease, at any time up to February 2005. The notice to quit was supposed to be “given or served personally” or sent by recorded delivery to the landlord’s registered office.

But by 2005 Faraday Properties had sold out to Fiscal Estates Investments.

Another property company, Bonnytoun Estates, had arrived on the scene and one of its subsidiaries acquired the North Lindsay Street offices. The later changed its name to Ben Cleuch Estates.

Scott Cairns was the boss of both Bonnytoun Estates and Ben Cleuch Estates and the two firms shared the same address in Wellington Street, Glasgow.

The situation was further complicated by the use of another firm as management agents. They sent out the rent invoices, and Scottish Enterprise was not told of the landlord’s name change.

The appeal judges—Lord Macfadyen, sitting with Lords Kingarth and Eassie—agreed the layout of the invoices was confusing and made it seem as though Bonnytoun Estates was the landlord.

“We are of the opinion that the proper conclusion is that Scottish Enterprise were justified in believing the representation that Bonnytoun were the landlords,” they said.

“One consequence of that justified belief was that they were entitled to think that the break notice should be given to Bonnytoun.”