Inner House case concerning the interpretation of a dilapidations provision contained in a lease of premises at Germiston Industrial Estate in Glasgow.

Surveyors acting for Grove (the landlord) served a schedule of dilapidations on Cape (the tenant). However, the works specified in the schedule had not been carried out by Cape by the expiry of the lease .

The lease provided an obligation on the tenant “to pay to the landlords the total value of the Schedule of Dilapidations [prepared in respect of the tenant’s repairing obligations]”. Grove argued that this obliged Cape to pay the total value as shown in the schedule. On the other hand, Cape argued that they were only obliged to make payment to Grove of the loss actually suffered as a result of the failure to comply with the repairing obligations. Both the sheriff and the sheriff principal agreed with Grove’s arguments and Cape appealed to the Inner House.

Before considering the lease, the court noted that the provisions of a contract must be construed in context and in accordance with the purposes that the contract is intended to achieve and that, where a contractual provision is capable of more than one meaning, the court should adopt the meaning that best accords with commercial common sense.  Adopting this approach, the Inner House allowed the appeal for the following reasons.

1. The contractual context was the termination of a lease where the tenants had not fulfilled their repairing obligations. The most natural way of providing a remedy for the tenant’s breach of contract would be to compensate the landlords for their loss (which would involve a remedy akin to damages).
2. In a case where the landlords intended to reinstate premises in full, Cape’s construction of the clause would allow for full recovery of the costs of reinstatement. (The amount due being calculated after the works had been carried out). On Grove’s suggested interpretation, the sum payable by the tenants would be based on an estimated value before the works were carried out.
3. In cases where the landlords did not intend to reinstate the property, Grove’s construction of the clause would mean that the landlord could recover very much more than the actual loss sustained by them through the tenant’s breach of contract. (The effect being that the amount recovered would essentially be arbitrary and unrelated to the tenants’ breach of contract)
4. Cape’s proposed interpretation of the clause provided full compensation to the landlords for the loss ultimately suffered by them. In the court’s opinion that was in accordance with commercial common sense and satisfied the important requirements of proportionality and predictability.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case concerning a claim made under the Occupiers’ Liability (Scotland) Act 1960 (and concurrent common law duties of care) and the Workplace (Health, Safety and Welfare) Regulations 1992 (in particular regulations 5 and 17) following injuries caused as the result of a seagull attack.

Background
Ms Kelly worked at the Ladyburn Business Centre in Greenock which was owned and operated by Riverside (who accepted that they were also in the position of an employer). Whilst leaving the premises to buy her lunch she was attacked by a seagull which swooped at her with its wings outstretched causing her to stumble and fall on steps outside the centre.

Decision
After hearing the evidence, the court dismissed the claim finding that it had not been established on the balance of probabilities that the seagull which attacked Ms Kelly had come from the centre. Even if it could have been shown that the seagull had come from the centre, the temporary judge found that the claim  would nonetheless have failed.

Occupiers’ liability
With regard to occupiers’ liability (both at common law and under the 1960 Act) it was found that the incident was not reasonably foreseeable as Ms Kelly had been unable to show that complaints of analogous incidents had been made to Riverside prior to her accident.

Workplace (Health, Safety and Welfare) Regulations 1992
With regard to the Workplace Regulations, regulation 5 was found to relate to maintenance rather than construction of the premises and Mr Kelly’s contention that the property should have been protected by measures such as spiking, meshing and netting were matters of construction. An argument that the seagull nests should have been regularly removed also failed as such acts were found to be control measures rather than maintenance.

Regulation 17(1) of the 1992 Regulations obliges an employer to organise the workplace “in such a way that pedestrians and vehicles can circulate in a safe manner”. However Ms Kelly’s case under that provision also failed, the temporary judge finding:

“The pursuer has failed to tie in the attacking bird to the roof of the LBC. That is of course a different and antecedent point in this case, but it is also an important one in the context of consideration of regulation 17. It is simply, in my view, not feasible to consider the behaviour of wild creatures such as herring gulls and lesser black-backed gulls in the context of a regulation such as regulation 17(1) which addresses the organisation of a workplace. This is especially so when knowledge of an actual problem has not successfully been imputed to persons such as the defenders in this case.”

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Lands valuation appeal in which the assessors appealed against a decision of the Lands Tribunal in which the tribunal upheld appeals by mobile phone companies against entries made in the valuation rolls at the 2005 Revaluation in respect of various mobile mast sites.

The court outlined the typical arrangements at such sites in which there is generally a site owner who owns the site, a host who controls the mast (generally one of the mobile networks) and is a tenant of the owner, and “sharers” who are other mobile networks which the host allows to attach their equipment to the mast in return for a payment (part of which is usually passed to the site’s owner). The sharers usually erect a small cabin or cabinet close to the mast and run a cable from it to the mast.

There was no dispute that the cabin or the cabinet is heritable and is a separate rateable subject. There was also no dispute that the cable when it is attached to the mast and the aerial and other equipment to which it leads are heritable by accession but that the aerial is not rateable[1]. The question was whether the sharer is in rateable occupation of that part of the mast to which its cable and equipment are attached.

The assessors argued that the sharer’s right in the mast was either:

1. a pertinent of the cabin or the cabinet,
2. a wayleave over the mast; or
3. a right of tenancy.

On any of these interpretations the assessors contended that the sharer was in rateable occupation.

The Inner House refused the appeal. The court was not persuaded by the assessor’s argument as to the nature of the sharer’s right finding that the sharer’s right[2] in respect of the cables and equipment was at best a licence to such part of the mast as the host may, from time to time, in its uncontrolled discretion, direct. As to whether the sharer was in rateable occupation the court (the opinion being given by the Lord President) said the following:

 “The question whether the sharer is in rateable occupation turns on the nature and the terms of the sharer’s agreement and the de facto situation that is established in the evidence …. On the facts of these cases, the Tribunal concluded that the sharer was not in rateable occupation. That was pre-eminently a decision for the Tribunal. It is not one with which this court should interfere unless it is contrary to the evidence, or is unsupported by any evidence or is perverse or irrational. It is not suggested that any of these considerations apply. My own view is that the sharer cannot be said to enjoy the exclusivity and paramount control that are essential to rateable occupation; and that the conclusion of the Tribunal on this point is correct… The significant points in my view are that the sharer has no right to occupy any particular part of the mast, but has at most a licence to occupy a part of the mast at the pleasure and at the direction of the host; and that it can be made to reposition its cable and equipment whenever the host should so direct.”

 The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Supreme Court case considering a lease of premises at Wardpark South Industrial Estate in Cumbernauld.  Batley were tenants and North Lanarkshire Council were sub-tenants.

At the centre of the dispute were works which the Council carried out to the property under a minute of agreement. In terms of the minute, the Council had to remove the works and re-instate the premises at the end of the agreement if they were required to do so by Batley.  Batley served a schedule of dilapidations after the end of the sublease.  However, the Council argued that the obligation to reinstate the premises died on the expiry of the sublease and therefore it did not require to comply.

In the Outer House, the temporary judge (Morag Wise QC) found that, in terms of the minute, there was no need for Batley to give written notice requiring removal of the works and allowed a proof to consider whether Batley had adequately conveyed its requirement for re-instatement when a surveyor acting on its behalf had telephoned the Council before the end of the sublease and indicated re-instatement would be required.

The Inner House allowed a reclaiming motion finding that the minute not only amended the sublease but also ratified provisions in the sublease. These included a provision incorporating a requirement for written notice which was contained in the head lease. In the absence of such written notice there was no requirement on the Council to re-instate the premises. An attempt by Batley to claim the cost of re-instating the premises under the general repairing clause in the sublease also failed.

The Supreme Court have allowed an appeal and allowed a proof before answer to hear evidence on the facts.

Construing the words used in the context of the minute of agreement as a whole and the surrounding factual matrix the court found that:

1. the use of the words “if so required by the Mid-Landlord” in relation to the re-instatement requirement in the minute was in contrast to two other provisions in the minute which expressly required written forms (suggesting that, where writing was required, it was expressly stated);
2. to interpret the documentation as requiring written notice required a convoluted construction of both the agreement and head lease whereas the simpler construction (preferred by the court) was that written notice was not required;
3. although the minute existed in the context of the head lease and sub-lease, it was a separate contract and the starting point for interpretation was the words it contained which pointed towards the conclusion that writing was not required for communications in all circumstances and that conclusion was not overturned by the provisions of the head lease and sub-lease; and
4. it made business common sense that written notice was not required as:
   1. although the minute stated that the obligations were incorporated into the sub-lease (containing a requirement for written notice), this was done so as to give the mid-landlord the power of irritancy if the sub-tenant breached its obligations under the minute; and
   2. the landlord would only require removal of the sub-tenants works at the end of the sublease when the sub-tenant would have to address its separate and continuing repairing obligation under the lease and, at the time such repairs were being carried out, the sub-tenant could readily respond to an intimation to remove its works (without the need for formal intimation).

With regard to Batley’s attempt to recover the cost of re-instating the premises under the general repairing clause in the sublease, the Supreme Court found that the repairing obligation was a continuing obligation which did not require notice from the landlord to activate it.

The full judgement is available from the Supreme Court here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case considering a break option in leases of office premises situated on Broadway Park in Edinburgh.

The leases were due to expire in 2023 but could be broken as at 7 May 2013. In order to exercise the break option, the tenants (Scottish & Newcastle) required to give 12 months notice and not be “in breach of any of their obligations (under the lease in question) at the date of service of such notice and/or the termination date”.

Scottish & Newcastle served break notices on time but by their own admission, at the date of service of the notices, had not fully performed their repairing obligations under the lease. The business park argued that the leases continued after the notice date and sought payment of rent from the date of the notices.

Scottish & Newcastle argued that:

1. although they had not fully performed their obligations under the lease at the date of the notices, they were not in breach of the lease as the non-performance was remediable; and
2. (even if argument 1. was wrong) for the tenants to lose their option to break they had to be in breach of the lease either:
   1. both at the date the notices were served and at the date of termination; or
   2. at the date of termination.

Lord Malcolm rejected both arguments finding that, in terms of the leases, there was no distinction to be made between non-performance of the obligations and a breach of the obligations and, with regard to the second argument, the natural meaning of the words used was that a notice was invalid if the tenants were in breach of the notice either at the date of the notice, the date of termination or both.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

This is an Outer House case in which Mr Hann (the executor of the late James Wheeldon) sought reduction of a will (and confirmation on the will) which purported to leave property (Powfoot Hall) to the son of the late Doris Spence.

Mr Wheeldon had a business relationship with Mrs Spence, and in fulfilment of certain informal agreements between them, he conveyed Powfoot Hall (were he had lived for 43 years till his death in 2007) to her in 1987. In 1994 Mr Wheeldon and Mrs Spence made a further informal written agreement containing the following clause:

“… As affairs between … [Mrs Spence] … and … [Mr Wheeldon] … are now agreed by both parties concerned and fully settled, and the title deeds to the Powfoot Hall are hereby returned to … [Mr Wheeldon] …. who now assumes full legal title to Powfoot Hall on 20/12/1993 and becomes owner of said property…”.

However Mrs Spence died in 2003 without having conveyed Powfoot Hall back to Mr Wheeldon, and by her will of 2002, she left the property to her son.

After considering prior authority[1], Lord McEwan found that Mrs Spence had bound herself to leave the property to Mr Wheeldon during her lifetime notwithstanding the fact that her son may have taken it in good faith. Consideration was also given to the possible application of the offside goals rule[2]. However, Lord McEwan found that the rule did not apply in this case:

“Much was made of the “offside goal rule” in the very good natured debate before me where metaphors were freely mixed and, I suspect, both counsel knew more of soccer than I.

If I can continue in the same vein, I think the “offside goal rule” was intended to strike at bad faith; the player knowing he is out of position yet trying to secure a benefit from the offside place on the field of play. This is what Rodger is about. It does not deal with the player who takes an advantage gratuitously and who may not be offside. The problem is that the player [Mrs Spence] who passes the ball to him [Mr Wheeldon] has broken the rules and the pass is invalid.

Whether Lord Kincairney in 1893 was an aficionado of the beautiful game I know not. Even by then the game had rules. It was not called offside in those days but since the rules of football were formulated by the gentleman players of the English public schools in 1863 there was a prohibition against playing the ball if you were “out of play” (Rule 6) (See Melvyn Bragg: “Twelve books that changed the world” p102).

In my opinion this case does not depend on the doctrine in Rodger but on the principles set out in Paterson, dealing as it does with succession and not property and titles.”

The full judgement is available from Scottish Courts here.

Outer House case concerning the effect of a survivorship clause in a disposition.

Mrs Povey and her husband bought a plot of land and built a house on it between 2002 and 2003 (the purchase price and construction costs being contributed in equal portions). The disposition contained special destinations of survivorship by which Mr Povey’s share would pass to Mrs Povey in the event of him predeceasing her and vice versa. In 2008 Mrs Povey signed a power of attorney in favour of her husband (which she understood was to be used only in the event she became unwell). In April 2009 Mr Povey executed a disposition (both on behalf of himself and on behalf of his wife) which purported to revoke the survivorship destinations. Mr Povey died on 23 July 2009. The disposition revoking the destinations was submitted for registration by solicitors purporting to act for Mr and Mrs Povey on 24 July and registered in the Land Register on 27 July 2009 (the solicitors completing a question on the form 2 application so as to indicate that no party to the transaction was subject to any incapacity or disability).

Mrs Povey sought declarator that title to Mr Povey’s share of the property passed to her on his death by operation of the special destination and that she was entitled to be entered as sole proprietor of the subjects in the Land Register. Her stepson (Mr Povey’s son) who was executor of Mr Povey’s estate argued that, in terms of registration of title, there was no automatic completion of title under the special destination and that Mrs Povey only had a personal right which would not be made real until the Keeper registered the change in title. He argued that the 2009 disposition revoking the destination had been registered first.

Lord Doherty agreed with Mrs Povey’s arguments finding that there was no authority to support the stepson’s contention that there was no automatic completion of title under the special destination.

“It is erroneous to suggest that on an institute’s death a substitute acquires only a personal right to the institute’s property, and that his right does not become real until the Keeper alters the entry in the title sheet. That analysis ignores the fact that title to the subjects, including the special destination by the institute to the substitute, is registered in the Land Register before the institute’s death … On the institute’s death the substitute’s contingent right becomes a real right, by virtue of the special destination. His completion of title is automatic. It is not dependent upon the Keeper altering the title sheet to reflect the change.”

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case relating to an alleged fraud. Ms McVicar was the owner of a house in Fernieside in Edinburgh which she had purchased with the aid of a loan from GMAC-RFC which held a standard security over the property. Mr Currie was a former cohabitant of Ms McVicar who she claimed had embarked on a fraudulent scheme under which the house was sold to GED for £110k with the aid of a loan of £80.5k from Nationwide. Ms McVicar’s signature was forged on a disposition of the house to GED and some of the funds (circa £45.5k) from Nationwide were used to pay off the loan in favour of GMAC-RFC. The disposition in favour GED and a standard security over the house in favour of Nationwide were recorded in the Land Register.

Ms McVicar sought: (1) reduction of the disposition in favour of GED and declarator that the entry in the Land Register recording the transfer of the title to GED was inaccurate (2) declarator that the entry in the Land Register recording the security granted by GED in favour of Nationwide was inaccurate and of no effect between Ms McVicar and Nationwide and (3) an order requiring the Keeper to rectify the register so as to delete entries relating to the title transfer and standard security.

Nationwide defended the action. Whilst they did not oppose the orders relating to the disposition and security and rectification of the register, they counterclaimed seeking payment (from Ms McVicar) of the £45.5k which had been used to pay off Ms McVicar’s loan to GMAC-RFC, arguing that Ms McVicar had been unjustifiably enriched by the payment.

Ms McVicar sought dismissal of the counterclaim. She argued amongst other things that Nationwide had a contractual right to recover from GED (Nationwide took the view that there was no reasonable prospect of recovering from GED) and that, if there had been an unjust enrichment of Ms McVicar at Nationwide’s expense, that enrichment was indirect and there was a general rule against recovery in cases of indirect enrichment. On the other hand Nationwide argued that, whilst there was a general rule against recovery in cases of indirect enrichment, there was no absolute bar. There was, they argued, a recognised exception to the general rule which allowed recovery where money/property was obtained by fraud and used to discharge the obligations of another.

Lord Doherty found that Nationwide’s arguments were not bound to fail and allowed a proof before answer.

 The full judgement is available here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Sheriff Court case concerning the division and sale of a property on Shiskine Drive, Maryhill in Glasgow. Mr Collins and Ms Sweeney each had a one half pro-indiviso share in the property (which was incapable of division). Mr Collins sought a sale of the property on the open market and division of the proceeds. Whereas Ms Sweeney sought an order compelling the sale of Mr Collins share of the property to her arguing that there were equitable considerations which justified the granting of such an order. The principle issue was whether the court could grant decree for the sale to a co-proprietor, against the will of the other proprietor, rather than on the open market.

The sheriff concluded that, even if proved, the equitable considerations did not constitute a defence to Mr Collins’ absolute right to insist on a sale on the open market. Although there was authority for the court to make an order for the sale of a pro-indiviso share to a co-proprietor, this only applied where both parties consented. In the absence of consent, where the property cannot be divided, a co-proprietor has an absolute right to insist upon sale on the open market and cannot be obliged to sell to a co-proprietor against his will.

On appeal Ms Sweeney argued that the sheriff had erred contending, by reference to prior authority[1], that the court was bound to follow a two stage process when giving consideration to an action of division and sale. The first consideration involved recognition that the right to raise and pursue such an action is absolute. However, she also argued that there was a second consideration which involved the full equitable jurisdiction of the court in working out the remedy.

The sheriff principal rejected that argument finding that the reference to the equitable jurisdiction of the court in the prior cases referred to the courts discretion when considering (on an action for division and sale) whether the property can be divided between the parties or whether it cannot be divided and has to be sold (with the proceeds being divided between the parties). However, the court has no discretion to refuse an action for division and sale. Thus, in this case, Mr Collins could insist on upon a division and sale of the property and, as there was no question of the property being divided, the court’s discretion did not arise and a sale of the property had to take place (after which the proceeds would be divided).

The full judgment is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.