On appeal from: [2009] CSIH 96

This appeal concerns the proper construction of a term of a lease which gives the appellant tenant the option to purchase the leased property from the respondent landlord. The question was whether, given the particular drafting, the respondent was entitled to take into account “hope value” attributable to the potential for residential development when it determined the option price. The Supreme Court unanimously dismisses the appeal. It holds that the respondent was entitled when determining the option price, to take full account of the land’s potential for development. Had reasonable commercial parties directed their mind to the benefits which would accrue to the appellant if the option was exercised, they would have agreed that the option price was to be the full market value of the land, taking account of any development potential. That is what the parties must be taken to have agreed in this case.

For judgment, please download: [2010] UKSC 47
For the Court’s press summary, please download: Press Summary
For a non-PDF version of the judgment, please visit: BAILII