Schedules of Condition as Evidential Baselines, Not Conditions Precedent: Commentary on Nicol's Worsteds Ltd v HLT Stakis Operator Ltd [2025] CSOH 116

1. Introduction

This Outer House decision of Lord Richardson addresses a recurrent and commercially important problem in Scottish leasing practice: what happens to a tenant’s repairing and yield-up obligations where the lease limits them by reference to a “Schedule of Condition”, but the original Schedule cannot be found years later?

The dispute arises out of the Grosvenor Hilton Hotel in Glasgow. The pursuer, Nicol's Worsteds Ltd, is the tenant under a head lease and landlord under a sub-lease of the hotel. The defender, HLT Stakis Operator Ltd, was tenant under the sub-lease, operating the hotel as a Hilton-branded first-class hotel. The sub-lease expired on 31 December 2021. The pursuer sues for dilapidations, alleging breach of the defender’s repairing and maintenance obligations.

Before delving into the numerous individual items in the Scott Schedule, the parties agreed a preliminary proof on the construction of two key aspects of the sub-lease:

The meaning and effect of the references to the “Schedule of Condition” in clauses 3.5.1(a) (repairing obligations) and 3.19 (yield-up).
The construction of the “fair wear and tear” carve-out in clause 3.5.1(b), and specifically whether the decoration obligation in clause 3.5.2 is qualified by the Schedule of Condition proviso.

Although much of the factual material was agreed in a joint minute, the case raises difficult questions at the intersection of:

construction of commercial leases;
the evidential status and legal role of schedules of condition; and
the operation of the best evidence rule and the Scots law remedy of proving the tenor where originals are lost.

The judgment is particularly significant because the court:

treats a surveyor’s video and overview report expressly identified in the lease as constituting the Schedule of Condition, even though the initialled copy referred to in the definition is missing;
clarifies that such a Schedule “evidences” the pre-lease condition but does not itself create or constitute that condition;
rejects attempts to use the best evidence rule and proving the tenor doctrine to exclude copies of the Schedule produced by the tenant; and
expressly disapproves, on points of principle, the approach taken by the Lands Tribunal in Archyield Ltd v Network Rail Infrastructure Ltd [2024] LTS 6.

For leasing and dilapidations practice in Scotland, this decision provides authoritative guidance on how Schedule of Condition provisions will be read and how courts will approach evidential gaps many years after lease commencement.

2. Factual and Contractual Background

2.1 The parties and the hotel

The case concerns the Grosvenor Hilton Hotel in Glasgow. The property structure is as follows:

A head lease dated 6 March 2001 between Stakis plc (landlord) and RBS Hotel Investments Ltd (tenant).
A sub-lease (the “Sub-Lease”) of the hotel. The original parties were RBS (landlord), Stakis (tenant) and Hilton Group plc (guarantor).
The defender became tenant under the Sub-Lease by assignation on 6 November 2007.
The pursuer became landlord under the Sub-Lease by assignation from RBS on 6 September 2011.

The parties agreed that the hotel was operated as a first-class hotel under the Hilton brand during the defender’s tenure. The Sub-Lease expired on 31 December 2021.

2.2 The repairing, decoration and yield-up provisions

The key clauses of the Sub-Lease are:

(a) Repair and decoration – clause 3.5

Clause 3.5.1 imposes the primary repairing obligation:

“To keep the Hotel in good and substantial repair and condition and to remedy any inherent defects in the design or construction of the Hotel howsoever arising (fair wear and tear as defined below in paragraph (b) excepted and damage by any of the Insured Risks excepted to the extent that the insurance moneys are irrecoverable through any act or default of the Landlord) Provided that:

(a) without prejudice to Clauses 3.5.3 and 3.5.4 nothing herein shall require the Tenant to deliver up the Hotel in a better state of repair and condition than that evidenced by the Schedule of Condition

(b) damage will be deemed to be caused by fair wear and tear if …”

Clause 3.5.2, the decoration clause, provides:

“To decorate or otherwise treat the Hotel … in accordance with the Operating Standards.”

Operating Standards and Permitted Use are defined in a sophisticated way by reference to Hilton Standards and to the operation of a first-class hotel having regard to location and economic climate. These definitions were not the focus of the preliminary proof, but they underscore the commercial context: a branded, first-class hotel where both parties have an economic interest in the hotel’s performance.

Clause 3.5.4.2 is also relevant:

“accepts the hotel in its current condition;”

This reinforces that the tenant took the hotel as found, while clause 3.5.1(a) limits the tenant’s obligation to improve its state.

(b) Yield-up – clause 3.19

Clause 3.19 governs the tenant’s obligations on expiry:

“3.19.1 yield up the Hotel with all additions and improvements thereto in a state and condition consistent with due compliance by the Tenant with its covenants and obligations under this Sub-Lease …
…
Provided always that nothing herein shall require the Tenant to deliver up the Hotel in a state and condition better than that evidenced by the Schedule of Condition.”

The words “nothing herein” and the repetition of the Schedule of Condition limitation are central. They show that the qualification applies, at least, to yield-up obligations and, as the court holds, informs the extent of the condition required under all relevant covenants, including decoration.

(c) Definition of “Schedule of Condition”

Clause 1 defines “Schedule of Condition” as:

“the video and accompanying explanatory statement prepared by Messrs Robert Brown Associates a copy of which has been initialed by the parties and marked ‘Schedule of Condition dated March 2001’ referred to in a lease made between (1) RBS Hotel Investments Limited (2) Stakis PLC and (3) Hilton Group plc”

The subtlety of this definition drives the whole case. The structure is:

“the video and accompanying explanatory statement” prepared by Robert Brown Associates are the Schedule;
“a copy of which has been initialled … and marked ‘Schedule of Condition dated March 2001’” is language about a copy, not the essence of what the Schedule is.

2.3 The loss of the original Schedule and the Brown materials

By 2011, when the pursuer acquired the Sub-Lease, neither RBS (seller) nor Hilton could locate a copy of the Schedule of Condition. A “Bidder Note” prepared for prospective purchasers stated that despite extensive searches:

“… the Seller believes that its schedule of condition was destroyed in a fire. Accordingly, a copy of the schedule of condition cannot be provided and the original will not be provided on completion.”

In the present action, the pursuer lodged affidavits from its director (Mr Girish Sanger) and its and RBS’s solicitors (Mr James Roscoe and Mr Amar Wali) confirming that no Schedule could be found at the time of the 2011 transaction.

The defender, however, later located:

a report by Robert Brown Associates titled “Overview Report on Video Schedules of Condition on Hilton Hotels (11 No.)”, dated March 2001 (the “Overview Report”); and
two VHS cassettes labelled “Hilton Hotel Glasgow Grosvenor Survey 6/3/01” with reference “Copy 2 011184/4” and “Copy 3 011184/4”.

The footage was shot on 6 and 7 March 2001. The Overview Report identified survey reference “011184/4 – Hilton Glasgow Grosvenor, Glasgow” with a running time of about 2 hours. The running times of the two tapes were approximately 2:06:30 and 2:03:49 respectively.

Martin Long, the hotel’s chief engineer from 1996 to around 2021, confirmed that the video showed a fair and accurate representation of the hotel’s condition during the March 2001 survey which he had attended.

Separately, Robert Brown (who died in 2024) had provided written answers in 2023. He confirmed that:

Robert Brown Associates were jointly instructed by RBS and Hilton to prepare video schedules of condition on 11 hotels, including the Grosvenor;
the schedules were recorded in video format;
the only document prepared pursuant to the joint instructions was the Overview Report; and
a copy of the video schedule and the Overview Report was sent to RBS and Hilton.

2.4 The issues before the court

In light of these facts, the parties framed two legal disputes.

First issue – the Schedule of Condition

The pursuer’s position:

The Overview Report and the video cassettes are not the Schedule of Condition defined in the Sub-Lease, because there is no initialled copy as described in the definition, and there is no evidence that the parties ever “agreed” the Schedule.
There is no proof that a Schedule, as defined, ever existed.
On that basis:
- the limitations in clauses 3.5.1(a) and 3.19 “fly off” – i.e. are of no effect; and
- the defender cannot rely on the Brown materials at all to limit its repairing or yield-up obligations.

The defender’s position:

The definition in the Sub-Lease makes the video and Overview Report prepared by Robert Brown Associates the Schedule of Condition; the initialling of a copy is merely an evidential mechanism and not constitutive.
On the evidence, the Overview Report is the “accompanying explanatory statement”, and the two VHS cassettes are copies of the “video” referred to in the definition, so together they are the Schedule of Condition.
Even if the “initialled copy” has been lost or destroyed, that does not prevent reliance on other copies, nor does it mean there was no Schedule.

The pursuer also sought to deploy:

the doctrine of proving the tenor (with reference to Promontoria (Henrico) Ltd v Friel 2020 SC 230); and
the best evidence rule (with reference to Scottish & Universal Newspapers Ltd v Gherson’s Trs 1987 SC 27),

to argue that the defender could not use “secondary evidence” to establish the contents of the missing Schedule.

Second issue – extent of qualification of obligations by the Schedule

There were two strands:

(Hypothetical) If there were no operative Schedule of Condition, do the qualification words in clause 3.5.1(a) (and by extension in clause 3.19) fall away, leaving the tenant with an unqualified obligation to “keep the Hotel in good and substantial repair and condition”?
(Decoration) Is the separate decoration obligation in clause 3.5.2 affected by the Schedule of Condition proviso (via clause 3.19), or is it unqualified?

The parties ultimately agreed that most questions about “fair wear and tear” in clause 3.5.1(b) should be left to proof before answer. Only the narrow decoration point required determination at this stage.

3. Summary of the Judgment

3.1 The Schedule of Condition exists and consists of the Brown video and Overview Report

Lord Richardson held that:

The natural reading of the definition of “Schedule of Condition” is that the video and accompanying explanatory statement prepared by Robert Brown Associates themselves constitute the Schedule.
The reference to “a copy of which has been initialled … and marked ‘Schedule of Condition dated March 2001’” relates only to a copy and serves as an evidential identification device; it is not a requirement for the Schedule to have contractual effect, nor does it require further negotiation or agreement between landlord and tenant.
On the agreed evidence, the Overview Report is the “accompanying explanatory statement”, and the VHS tapes (productions 7/22 and 7/25) are copies of the “video” survey described in the definition.

He therefore rejected the pursuer’s declarators that:

no Schedule of Condition, as defined, exists; and
the Brown materials are not the Schedule and must be ignored.

Findings in fact were made to the effect that:

A Schedule of Condition comprising a video survey and accompanying explanatory statement was prepared by Robert Brown Associates on 6 and 7 March 2001.
Copies of both were sent to RBS and Hilton.
The Overview Report is the explanatory statement; and
the two VHS cassettes are copies of the video survey.

3.2 Best evidence rule and proving the tenor do not bar use of the Brown materials

The court held that:

The defender was not seeking the special remedy of proving the tenor. That doctrine was inapposite.
The Brown Overview Report and videos were the primary evidence of the Schedule of Condition, not “secondary evidence” of its contents.
Accordingly, the best evidence rule did not prevent the defender relying on them; and even if it did apply, the defender had never controlled the missing initialled copy, and the loss of RBS’s copy in a fire could not prejudice the defender.

3.3 Effect of the Schedule of Condition on repairing obligations

Having found that the Schedule of Condition exists and is constituted by the Brown materials, it was unnecessary to decide what would happen if no Schedule existed. Nonetheless, Lord Richardson expressed clear views:

Properly read as a whole, clause 3.5.1 imposes an obligation:
- to keep the hotel in good and substantial repair and condition; and
- to remedy inherent defects in design and construction,
subject to:
- the fair wear and tear carve-out; and
- the limitation that “nothing herein shall require the Tenant to deliver up the Hotel in a better state of repair and condition than that evidenced by the Schedule of Condition”.
There is no obligation to renew, replace, reinstate or rebuild; the wording is materially weaker than many full repairing and insuring (“FRI”) covenants.
The Schedule of Condition evidences the state of repair and condition at the outset; it does not constitute or create that state.
Thus the tenant cannot be required to deliver up the hotel in a state of repair or condition better than existed in March 2001 as shown (or evidenced) by the Schedule.

In adopting this approach, the court expressly aligned itself with Lord Hamilton’s reasoning in McCall's Entertainments v South Ayrshire Council (No 2) 1998 SLT 1421 and distinguished @SIPP Pension Trustees v Insight Travel Services 2016 SC 243. It also criticised the Lands Tribunal’s reasoning in Archyield Ltd v Network Rail Infrastructure Ltd [2024] LTS 6.

3.4 Decoration obligations are also limited by the Schedule via the yield-up clause

On the second issue, the court held that:

The decoration obligation in clause 3.5.2 operates in the context of the whole lease and in particular the yield-up clause (3.19).
Clause 3.19.1 obliges the tenant on expiry to yield up the hotel in a state and condition “consistent with due compliance … with its covenants and obligations under this Sub-Lease” – including the decoration covenant.
That obligation is expressly followed by the proviso that “nothing herein shall require the Tenant to deliver up the Hotel in a state and condition better than that evidenced by the Schedule of Condition.”
Even if the proviso were confined to clause 3.19, it would still limit the state and condition required on yield-up and therefore limit, in practice, how far the decoration obligation could be insisted upon at the end of the lease.

The pursuer’s arguments based on punctuation, redundancy and clause structure were rejected. The court noted the inconsistent use of full stops throughout the Sub-Lease and considered that repetition of the Schedule of Condition limitation underscored its importance rather than suggesting redundancy.

As a result, the defender’s argument that its decoration obligations at lease-end were subject to the Schedule of Condition limitation was held relevant, and the pursuer’s attempt to exclude those averments failed.

3.5 Disposal

Lord Richardson:

sustained the defender’s second and third pleas-in-law; and
dismissed the action quoad the first and second conclusions (i.e. in so far as it sought the declarators that the Schedule was non-existent or inapplicable).

The case was put out By Order to consider further procedure on the remaining dilapidations issues in the Scott Schedule. Expenses were reserved.

4. Detailed Analysis

4.1 Contractual interpretation – reading the lease as a whole

Lord Richardson explicitly applied the familiar modern approach to interpretation of commercial contracts as summarised in:

Paterson v Angelline (Scotland) Ltd 2022 SC 240; and
Lagan Construction Group Ltd v Scot Roads Partnership Project Ltd [2023] CSIH 28.

Those cases reaffirm that:

contracts must be interpreted objectively, by asking what a reasonable person, with the relevant background knowledge, would understand the parties to have meant;
the contract must be read as a whole, avoiding an overly technical or clause-by-clause approach; and
the court should aim for a construction that is coherent and commercially sensible, though not at the expense of clear language.

Applying that method, the judge emphasised that:

the definitions clause must be read alongside the operative clauses (3.5 and 3.19);
the repairing and yield-up obligations are intertwined; and
the references to the Schedule of Condition in both clause 3.5.1(a) and clause 3.19 must be read consistently.

4.2 What is the “Schedule of Condition”? – Textual and evidential analysis

4.2.1 The textual starting point

The key question was whether the Brown Overview Report and videos matched the contractual definition:

“the video and accompanying explanatory statement prepared by Messrs Robert Brown Associates a copy of which has been initialed by the parties and marked ‘Schedule of Condition dated March 2001’…”

Lord Richardson held that the “natural meaning” is that:

the identity of the Schedule is fixed by the origin and form of the materials (“video and accompanying explanatory statement prepared by Messrs Robert Brown Associates”);
the words about an initialled copy do not add a further requirement for contractual validity; they simply specify how an authentic copy is to be marked.

In other words, the parties chose to have a professional surveyor create the Schedule, rather than negotiating the Schedule between themselves. That choice is consistent with the use of expert determination in other parts of the Sub-Lease (cf clause 8).

This directly undercuts the pursuer’s argument that the parties might have refused to initial the surveyor’s work and that no Schedule existed unless and until that further step was completed.

4.2.2 Evidence supporting existence and identity of the Schedule

The court then examined whether the Brown materials were the same “video and explanatory statement” described in the definition. The evidence was one-way:

The pursuer’s own witnesses accepted that the loss of the Schedule was attributable to RBS’s copy being destroyed in a fire. That suggests a Schedule once existed but was lost – not that it never came into being.
Robert Brown’s written answers confirmed:
- joint instructions by RBS and Hilton to prepare video schedules of condition;
- that the schedules were recorded in video format;
- that the only written document produced under the joint instruction was the Overview Report; and
- that copies of the video and Overview Report were sent to RBS and Hilton.
The Overview Report is dated March 2001, is clearly described as connected with the proposed sale and leaseback, and lists the Grosvenor survey as:
- reference “011184/4”; and
- running time “about 2 hours”.
The two VHS tapes bear the same reference and date (6 March 2001), with running times consistent with “about 2 hours”.
The content of the tapes is a detailed survey of the hotel; Martin Long confirmed it fairly reflected the condition of the hotel as at March 2001.

From this, the court concluded:

The Overview Report is the “accompanying explanatory statement”.
The VHS tapes are copies of the “video” survey.
Together, they are the Schedule of Condition as defined in the Sub-Lease.

4.2.3 Rejection of the pursuer’s counter-arguments

The pursuer’s main counter-arguments were rejected on clear grounds.

(a) The “7 March” footage problem

The pursuer contended that because parts of the video were recorded on 7 March 2001, after the date of the Sub-Lease (6 March 2001), the video could not be the Schedule. Lord Richardson saw no legal or factual logic in this:

There is no rule of law preventing parties agreeing in a lease that a particular survey, carried out contemporaneously or even slightly later, will be the Schedule.
It was reasonable to infer that, by the time the Sub-Lease was executed, both RBS and Hilton knew they had instructed Brown Associates to produce such a schedule.
The short “addendum” footage on 7 March simply covered areas not accessible on the first day of the survey; that did not undermine its status as the Schedule.

(b) The “editing and negotiation” theory

The pursuer relied on evidence from Mr Stephen Freeth (who only began working with Robert Brown in 2007) to suggest that Brown typically edited raw footage and that there might have been negotiations between the parties about what would be included in the final Schedule.

The court found this unpersuasive:

Mr Freeth was not involved in the 2001 survey, and his evidence concerned practices at a later date.
He did not challenge or contradict Brown’s direct evidence that the Schedules were recorded and submitted in video format with the Overview Report.
The contract definition itself fixes the identity of the Schedule by reference to what Brown “prepared”, not by reference to what the parties might later agree.

(c) “Nonsensical” to record defects not to be repaired

The pursuer argued that because the video commentary identified certain immediate repair needs which, on the defender’s position, neither party was obliged to fix, it must follow that a further stage of negotiation was envisaged to determine actual obligations.

The court disagreed:

The Schedule’s role is to record the condition, not to allocate responsibility for each defect.
The fact that the record and the contractual allocation of repair risk are not “exhaustively” aligned does not mean the record is not the Schedule (cf Little Cumbrae Estate Ltd v Island of Little Cumbrae Ltd 2007 SC 525).
There is no requirement in the lease that the Schedule must distinguish between items to be repaired and items to be tolerated.

4.3 Best evidence and proving the tenor – why they did not bite

4.3.1 The pursuer’s reliance on evidential doctrines

The pursuer contended that:

the defender was effectively trying to “prove the tenor” of a lost Schedule of Condition without satisfying the strict requirements for that remedy (Promontoria (Henrico) Ltd v Friel 2020 SC 230); and
the best evidence rule, as explained in Scottish & Universal Newspapers Ltd v Gherson’s Trs 1987 SC 27, precluded reliance on “secondary evidence” of such a central document unless it was shown to be lost or destroyed without fault of the party relying on the secondary evidence.

In Scottish & Universal Lord President Emslie had stressed that secondary evidence of missing documents is “a manifestly unsatisfactory expedient” and a “privilege to be earned”, particularly where the documents are of central importance. The pursuer argued that the Schedule here was crucial yet not preserved and that the defender could not satisfy the necessary preconditions.

4.3.2 The court’s response

Lord Richardson characterised these arguments as “somewhat beside the point” in the context of this case:

Proving the tenor was not engaged. The defender expressly disavowed reliance on this special remedy. More importantly, the court’s factual finding was that the Overview Report and videos are themselves the Schedule of Condition defined in the lease, not secondary evidence of its contents. There was therefore no need to reconstruct a lost document.
The best evidence rule was satisfied. On the same basis, the Brown materials are the best available evidence of the Schedule. The rule is concerned with preventing parties from relying on weaker evidence where stronger direct evidence exists. Here, no better evidence was available, and the defender had never controlled the missing initialled copy.

Even if the best evidence rule had technically applied, the judge noted (by analogy with Lord Ericht’s approach in Glasgow City Council v First Glasgow (No 1) Ltd 2022 SLT 164) that:

the defender had not caused the loss of RBS’s copy;
the defender had taken proper steps by producing what lay within its control (the video copies it held); and
it would be unjust to prevent the defender relying on those materials because of a loss attributable to another party years earlier.

Thus, neither proving the tenor nor the best evidence rule restricted the court from treating the Brown materials as the contractually defined Schedule.

4.4 The nature and effect of the tenant’s repairing obligation

4.4.1 Limited “keep in repair” vs full FRI

The court placed weight on the precise wording of clause 3.5.1. The tenant must:

“keep the Hotel in good and substantial repair and condition”; and
“remedy any inherent defects in the design or construction”.

Notably absent are the more onerous verbs often found in FRI leases: “renew”, “replace”, “rebuild”, “reinstate”. Lord Richardson recognised that in a typical FRI lease, these words may require the tenant to return the property in an “as new” or substantially upgraded condition regardless of age.

Here, by contrast:

the obligation is restorative and preservative, not one of improvement;
when read with clause 3.5.1(a), the tenant is expressly protected from having to deliver up the hotel in a state of repair and condition any better than its evidenced starting point.

4.4.2 The role of the Schedule of Condition

Clause 3.5.1(a) states that nothing in the clause shall require the tenant to deliver up the hotel in a better state of repair and condition than that “evidenced by the Schedule of Condition” (emphasis added by the judge).

This is critical. The Schedule:

is a factual record, prepared by an independent surveyor, of the condition at the outset; and
serves as a comparator against which the state at expiry can be measured.

It does not itself constitute the legal measure of the tenant’s obligations; those obligations are expressed in clause 3.5, subject to the Schedule as a cap on the standard required at the end of the term.

4.4.3 Consequence if the Schedule were missing (obiter)

Although hypothetical given his findings, Lord Richardson addressed the pursuer’s argument that in the absence of a Schedule the qualification “flies off”, leaving an unqualified obligation.

He rejected this analysis in principle, aligning instead with Lord Hamilton’s reasoning in McCall's Entertainments. Clauses must be read as a whole; one should not prioritise the so-called “primary obligation” (to keep in repair) in a way that marginalises the qualification. If the Schedule did not exist, one would have to ask what, objectively, the parties intended, but it does not follow that the limitation vanishes and the tenant becomes an insurer of improvements.

His analysis offers a clear contrast with the Lands Tribunal’s approach in Archyield, where the non-existence of a Schedule was treated as disabling the tenant from relying on a “no better condition than at entry” proviso. Lord Richardson considered that approach to be misconceived because it:

failed to read the clause as a whole; and
treated the Schedule as constituting rather than evidencing the entry condition.

4.5 Precedents and their influence

4.5.1 McCall's Entertainments v South Ayrshire Council (No 2) 1998 SLT 1421

In McCall's Entertainments, Lord Hamilton considered a lease clause requiring the tenant both to keep the premises in good condition and to “leave at the expiry … in a condition no less good and substantial than their present condition … to the satisfaction of the Landlords”, with a Schedule of Condition referred to, but not available.

Lord Richardson noted that:

the language in McCall's was similar, though not identical, to clause 3.5.1(a);
Lord Hamilton had not been troubled by the absence of the Schedule; and
the key analytical move was to read the obligation and qualification together, rather than treating the latter as contingent on some further event.

He “respectfully” agreed with both the approach and outcome in McCall's, seeing it as supportive of:

construing repairing obligations with their qualifications rather than in isolation; and
treating schedules as evidential, not constitutive, unless the wording clearly indicates otherwise.

4.5.2 @SIPP Pension Trustees v Insight Travel Services Ltd 2016 SC 243

The pursuer argued that @SIPP was closer to the present case than McCall's. In @SIPP, the lease contained a much more onerous repairing covenant, including express obligations to “renew”, “replace” and “rebuild”.

The Inner House in @SIPP treated that language as central, concluding that the tenant had undertaken a very broad obligation not limited by any Schedule of Condition in the same way as in McCall's.

Lord Richardson distinguished @SIPP on that basis: the Sub-Lease here lacks the renewal and rebuilding wording, and its structure and context are different. The present case fits better within the McCall's/Dem-Master line of authority.

4.5.3 Archyield Ltd v Network Rail Infrastructure Ltd [2024] LTS 6

Archyield concerned a clause stating that the tenant accepted the premises in their present condition and undertook to keep them in good order, “provided however that the Tenants will not be obliged to maintain the premises in any better condition than they are at the date hereof, as such condition shall be evidenced by a Schedule of Condition … to be agreed by the parties or, failing agreement, to be settled by arbitration”.

The Lands Tribunal held that, absent an agreed or arbitrated Schedule of Condition, the proviso did not operate; in effect, the tenant could not rely on the “no better condition than at entry” limitation.

Lord Richardson was critical of this reasoning:

The Tribunal appears to have treated the Schedule as constituting the entry condition rather than evidencing it. That, in his view, misapprehends the conceptual role of a Schedule of Condition.
The approach was inconsistent with the principle that the clause must be construed as a whole. The Tribunal seemed to give undue primacy to the “primary obligation” while treating the qualification as a contingent afterthought.

While noting that Archyield was distinguishable (it contemplated future agreement/arbitration of the Schedule, whereas here the Schedule was already specified by reference to Brown’s work), Lord Richardson went further and indicated, respectfully but clearly, that the Tribunal’s construction was wrong in principle.

This is a significant signal to practitioners and to the Lands Tribunal that Archyield should not be followed where it conflicts with the Outer House’s analysis.

4.5.4 Dem-Master Demolition Ltd v Healthcare Environmental Services Ltd [2017] CSOH 14

Dem-Master had followed McCall's in construing a similarly worded repairing covenant with a Schedule of Condition limitation. Lord Richardson referred to it as further confirmation that the McCall's approach represents orthodox Scots law.

4.5.5 Evidential authorities: Scottish & Universal, Promontoria, Glasgow City Council

The evidential cases were primarily deployed by the pursuer, but were ultimately found not to govern the present scenario:

Scottish & Universal Newspapers Ltd v Gherson’s Trs 1987 SC 27: authority for a stringent application of the best evidence rule when documents under a party’s control go missing. Lord Richardson accepted the general principle but held it inapplicable because the Brown materials were primary evidence, and the defender had never controlled the lost copy.
Promontoria (Henrico) Ltd v Friel 2020 SC 230: concerned proof of the tenor of lost loan documents. The judge recognised that the correctness of some aspects of Promontoria had been doubted, but in any event, the remedy was irrelevant here.
Glasgow City Council v First Glasgow (No 1) Ltd 2022 SLT 164: used analogically to support the proposition that where a document has been lost without fault of the party relying on alternative evidence, secondary evidence can be admitted consistently with the best evidence rule.

4.6 Decoration and yield-up – how clause 3.19 pulls everything together

4.6.1 The pursuer’s argument