Sheriff court case considering the repairing obligations contained in a lease of commercial premises between (the partners and trustees of) the Bridge Street Partnership (the landlord) and William Hill (the tenant).

In terms of the lease the tenant was obliged to “render the Premises into a satisfactory tenantable state and adequate for the Tenant’s purposes” and to maintain the premises to “at least such satisfactory tenantable state”. In a subsequent clause the tenant was also required to return the premises (at the expiry of the lease) to the landlord “in such good and substantial repair and condition as shall be in accordance with the obligations undertaken by the Tenant under the Lease”. The sheriff found that this meant that William Hill was obliged to leave the premises in a satisfactory tenantable state and adequate for William Hill’s purposes as tenant. The sheriff principal allowed an appeal by the Partnership which argued that the phrase “adequate for the tenant’s purposes” referred to an obligation on the tenant to fit out the premises for its purposes rather that an obligation to leave the premises in that state.

Business common sense
The sheriff principal noted that the lease was a full repairing and insuring lease, the overall commercial purpose of which is that the landlord lets the premises in return for rent, and passes on to the tenant the whole responsibility for its upkeep and maintenance. This generally means that the landlord has little or no interest in the works which the tenant might carry out to suit its particular purposes, provided that the property is returned to the landlord at the end of the lease in its original condition. Here, there was nothing in the lease to suggest that the landlord wanted the lease returned as a licenced betting shop.

A construction of the lease as a whole
In agreeing with the Partnership’s interpretation of the lease, the sheriff principal took account of the following:

1. the lease provided that the tenant accepted the premises “in their present condition”;
2. the term “satisfactory tenantable state” had been repeated in the context of the continuing nature of the repairing obligation during the currency of the lease (rather than just at its commencement) but the reference to the tenant’s purposes had not;
3. the tenant was required to remove its fixtures and fittings on termination and, if  adequacy for the tenant’s purposes was the standard by which the repairing obligation was to be tested, it made little sense that all such fixtures and fittings required to be removed; and
4. it was impossible to see how a chartered surveyor (or, indeed, the court) could apply what were ultimately two different tests to the same premises. Part of the premises might be in a satisfactory tenantable state but not be adequate for a licensed betting shop, or vice versa.

 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.

Sheriff court case concerning an alleged servitude right of access over a property in Aberdeen. In 1992 Jessie Sharp granted a disposition of a small area to the owner of the neighbouring property (her brother, Peter Sharp) in which she purported to reserve a right of access over the property to any garage to be built on the part she retained. No garage was built until her successors in title, the Gardens, built one in 2010. However, the Arrowsmiths (the successors in title to Peter Sharp) argued that the clause in the 1992 disposition created only a personal right between Jessie and Peter Sharp which did not transmit to their successors in title. They contended that, without a garage, there could be no servitude right as the purpose of the servitude could not be achieved.

The sheriff principal rejected that argument finding that the 1992 disposition did create a heritable and irredeemable servitude right of access over the Arrowsmiths’ property. The clause satisfied many of the common requirements for the creation of a servitude. Although the word “servitude” was not used, that is not fatal to the creation of a servitude and the clause contained a reference to successors in title and an obligation to insert in future transmissions. There also was an express declaration that it was a “real and preferable” burden, the deed did not expressly exclude the constitution of a servitude and there were no indications that the right was intended to be personal. Further, the sheriff principal took account of the fact that the garage was likely to be a permanent construction when coming to the conclusion that it was likely that the parties had contemplated that the right would continue for the benefit of singular successors.

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 considering the interpretation of a break clause in a lease of premises at Almondvale Office Park in Livingston.

The clause was clear in that CBS (the tenant) was required to serve notice exercising the break and pay a lump sum before terminating the lease. However words had been omitted from a third part of the clause and, although a third and additional requirement appeared to be intended, it was unclear what it was.

CBS sought to exercise the break, served the notice and paid the lump sum. However, RPS (the landlord) argued that CBS had not validly terminated the lease contending that payment in respect of repairs required to be made in terms of the clause before CBS could terminate. (A schedule of dilapidations had been served on CBS by RPS prior to the termination but the parties had been unable to agree the sum due.) In RPS’s view the third part of the clause had three possible meanings. These were that: prior to the termination date, the tenant had to either (a) pay and perform all its obligations in full; or (b) pay all its monetary obligations; or (c) pay all sums over and above the lump sum.

In the first place Lord Woolman found that omission of words left the third part of clause with no natural meaning. In the second place, when considering what a reasonable person would have understood the clause to mean, although use of the words “in addition” did indicate that a third requirement was intended, omission of the words meant that it was not clear what the requirement was (the fact that RPS had offered three possible meanings in itself suggested this).  As such, it was not possible to interpret the clause as imposing a third obligation on CBS prior to termination of the lease.

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 arbitration proceedings in respect of a lease over Pentlandfield business park at Roslin in Midlothian. Midlothian Innovation let the premises from Robert W Ferguson & Co.

The lease was for 5 years and included an option to purchase as at 1 July 2007. The parties had also signed a minute of agreement. Both of the documents stipulated that, if the option were exercised, Robert W Ferguson would grant a renunciation of the lease.  Midlothian exercised the option on 1 December 2006 and a renunciation was signed on 2 July 2007. However, on 16 August 2007 both parties signed a joint application form seeking the appointment of an arbitrator in respect of a dispute over compliance with the repairing obligations in the lease. The arbitration proceeded slowly but in 2011 Robert Ferguson (the surviving partner of the firm of Robert W Ferguson & Co) changed his position and argued that, given the granting of the renunciation, the arbitrator had no power to make an award.

Lord Woolman rejected that argument. Although the acceptance of a renunciation by a landlord implies a discharge of all claims against the tenant, the renunciation is potentially subject to any further agreement made by the parties. The parties had freedom of contract and were entitled to agree not only that they had a dispute arising out of the lease, but also that they wished to resolve it by arbitration. The signing of the joint application form demonstrated the parties’ intention to have the dispute referred to arbitration and Mr Ferguson’s participation in the proceedings until 2011 implied that he consented to the arbitration. Lord Woolman found that the arbitrator had jurisdiction and the proceedings should proceed to a conclusion.

The full judgement is available from Scottish Courts here.

(See also related decision here).

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

Inner House case concerning an application to exercise a right to buy croft land at the Pairc Estate in South East Lewis. Pairc Crofters Limited was the owner of the land and had leased it to Pairc Renewables Limited. The Pairc Trust is the crofting community body which sought to exercise the right to buy. It sought purchase both the interest of Pairc Crofters as owner and the interest of Pairc Renewables as tenant.

The Scottish Ministers granted the trust’s application. Pairc Crofters and Pairc Renewables appealed to the sheriff. The sheriff referred the devolution issues arising from the appeal to the Inner House. The court required to consider whether Part 3 of the Land Reform (Scotland) Act 2003 (which contains the crofting right to buy) is incompatible with the European Convention on Human Rights. Specifically the landowners and their tenants claimed that Part 3 contravened Article 6(1) (right to a fair trial) and/or Article 1 of Protocol 1 (right to protection of property) of the Convention. If Part 3 had been incompatible with the Convention rights, the making of the 2003 Act would as a consequence have been outwith the legislative competence of the Scottish Parliament (in terms of the Human Rights Act 1998 and the Scotland Act 1998).

The landowner argued that Part 3 does not provide sufficient safeguards for landowner’s rights. Although A1P1 makes no mention of procedural requirements, the landowner contended that the procedure employed must give the proprietor a reasonable opportunity of putting its case to the decision maker. And, in the landowner’s view, Part 3 did not do that.

The court took the view that the landowner’s case depended on the proposition that the safeguards for a landowner’s rights required to have been explicitly spelled out in the 2003 Act. However, this is not the case. The question of competence depends on how the legislation operates in practice and not on how any specific provision may appear if looked at in isolation. (It may be that proper interpretation of the Act, the terms of other legislation, or the principles of the common law may restrict the impact of the Act so that it cannot be said to be incompatible with Convention rights.)

As regards Part 3 of the 2003 Act:

1. The provisions requiring the crofting community’s approval (to exercise of the right to buy) by ballot were compatible with article 6 (the right to a fair trial). Regulation 2 of the Crofting Community Right to Buy (Ballot) (Scotland) Regulations 2004 requires that the ballot be carried out in a “fair and reasonable manner”. In the event that the landowner considers the ballot to be unfair, it had a judicial remedy under the same regulation.
2. The exercising of the right to buy is at the discretion of the Scottish Ministers. Section 74(1)(n) of the 2003 Act requires that the applicant must in every case satisfy the Ministers that the proposed purchase is in the public interest. In making a judgment as to the public interest, the Ministers must act compatibly with A1P1 (right to protection of property). In assessing the broad overall consideration of the public interest, the Ministers must take account of the interests of persons who may be adversely affected by the decision, such as the landowner. When the Ministers decide where the overall public interest lies, the central consideration will be that of balancing the harm to the landowner against the benefit of the proposal to the wider public.
3. The 2003 Act gives the landowner adequate means to put forward his case. On receipt of the community body’s application, the Ministers are obliged to invite a number of interested parties, including the landowner, to submit their views in writing on the application (s 73(8)(a)). The Ministers are then under an express obligation, when considering whether to grant the application, to have regard to all views that have been received (s73(12), (13)). In addition to the statutory procedure the Ministers also have a duty at common law to observe such additional procedural safeguards as are necessary to attain fairness.
4. Lastly, the legislation provides for an adequate level of scrutiny of the factual issues that an application to exercise the right to buy may raise. It does so in three separate ways:
   1. in the requirement of the details that the crofting community body must provide in the prescribed form of application;
   2. in the requirement that the Ministers must invite views on the proposal from interested parties, including the landlord, and from the public; and
   3. from the right given to any interested party, again including the landlord, to refer any question relating to the application to the Land Court.

The Inner House found that, when considered as a whole, the legislative provisions and principles of administrative law offer a level of protection “equal to or surpassing that” which is required by the European Convention on Human Rights.

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.

Inner House case considering an appeal by Bagmoor against a decision of the Scottish Ministers to adopt the recommendation of their reporter and reject Bagmoor’s planning application for a 14 turbine wind farm at Stacain near Inveraray in Argyll.

The site lies within Glen Etive and Glen Fyne Special Protection Area which was created to protect golden eagles and the reporter’s recommendation to reject the application was based primarily on the effect the wind farm would have on the eagles.

In essence Bagmoor’s appeal was based on their complaint that the reporter had not given adequate reasons for his decision. This was rejected by the Inner House which found that on each substantive or determining issue the reporter had given intelligible reasons for his decision and refused Bagmoor’s appeal.

Procedure
Central to the decision was the procedure to be followed under Conservation (Natural Habitats etc.) Regulations 1994 (SI 1994 No 2716), which implement the Habitats (92/43/EEC) and Birds (2009/147/EC) Directives. Regulation 48 requires that an appropriate assessment is carried out as regards plans which are likely to have a significant effect on a European site (in this case, the Glen Etive and Glen Fyne SPA). This involves a two stage procedure, the first stage being a preliminary examination to determine whether an appropriate assessment requires to be carried out. The second stage is a detailed assessment of the plans. If plans can be clearly carried out without an effect on the site, there is no need for the more detailed assessment. The court had the following to say on the matter:

 “There is no prescribed formula as to how the two stage exercise contemplated by regulation 48 and the Court of Justice is to be carried out. There are several ways in which it might be done in the context of domestic planning legislation and, no doubt, the precise form will depend upon a range of facts and circumstances, including the nature of the permission sought and the conservation objectives to be protected. However, with an application such as the present, at least by the time the respondents elect to call it in and order a public inquiry, it ought to be made clear, at least in the normal case, that any preliminary examination stage has been passed and that what is to be carried out at the inquiry is an “appropriate assessment” in terms of regulation 48(1)(a). Public inquiries are not held in order to undertake preliminary examinations.

It may just be possible, in a rare case, for the respondents to order an inquiry yet leave it to the reporter to decide whether an appropriate assessment is required. If that were done, the first “screening” stage ought to take the form of a preliminary examination undertaken (or the form of which could be agreed) at a pre-inquiry meeting and before any assessment is embarked upon. What should not occur, as happened here, is that the reporter carry out a detailed assessment and then decide that such an assessment was required before re-assessing the same evidence to reach a substantive decision. Put another way, there was no point in the applicants adducing a body of detailed evidence and then inviting the reporter to determine whether there was any need to adduce it.”

The reporter’s decision
In coming to his conclusion the Reporter had taken account of evidence of displacement of eagles from another wind farm at Beinn Ghlas. Bagmoor argued that this evidence was too qualified or limited in character to justify a finding either that eagle’s occupation of  Beinn Ghlas had been affected by  the wind farm, or that a wind farm at Stacain would cause a similar abandonment. However the court noted that, in terms of the legislation, the reporter required to recommend approval of the application only if he could be “certain”, that the plan would not adversely affect the SPA’s integrity. In these circumstances, it had been sufficient for the reporter to find that the evidence left open the possibility that a wind farm at Stacain would lead to abandonment of part of the site by the eagles. The reporter had not therefore required to resolve every aspect of the evidence or every subsidiary issue relating to the site at Beinn Ghlas.

Bagmoor also objected to the reporter’s consideration of evidence from Scottish Natural Heritage that eagles had 99% chance of avoiding a collision with the turbines and the contribution that “behavioural displacement” (i.e. the eagles moving away from the wind farm site to avoid collisions) made to that figure. However, it was common ground the eagles would tend to shy away from use of the wind farm and that constructing the wind farm would represent a loss of foraging ground. The court found that the reporter’s reference to the 99% avoidance rate in this context was simply confirmation of what had already been clear and had been ascertained during his screening exercise. The displacement of the eagles had been “effectively confirmed” by that rate.

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.

The Legal Knowledge Scotland Property and Conveyancing Casebook containing all of our property and conveyancing case summaries is now available here.

The UK Supreme Court has found that sections 1 and 9 of the Tobacco and Primary Medical Services (Scotland) Act 2010 are within  the legislative competence of the Scottish Parliament.

(Section 1 of the 2010 Act prohibits the display of tobacco products in a place where tobacco products are offered for sale. Section 9 prohibits vending machines for the sale of tobacco products)

A summary of the judgement is available from the Supreme Court here.

The full judgement is available here.

Outer House case concerning an appeal by the City of Edinburgh Council against the decision of a reporter appointed by the Scottish Ministers.

The case relates to a listed tenement near the junction between Ferry Road and Newhaven Road in Edinburgh.  The owner of the property sub-divided the principal front room (with stud partitions) to create two bedrooms and a corridor without obtaining listed building consent.

The Council served an enforcement notice on the owner requiring re-instatement of the room to its original condition.  The owner appealed against the enforcement notice contending that: (1) listed buildings consent was unnecessary; or (2) that the consent should nevertheless be granted. In support of the second argument the owner pointed to the fact that the alterations came to light when he had made an HMO (Houses in Multiple Occupation) application for the property as a result of being accepted by the Council’s Adult Resource Team to provide supported lodgings for vulnerable adults. The reporter rejected the owner’s first contention but accepted his second contention (attaching considerable weight to what he called the “special needs argument” and noting that the changes were easily reversible) allowed the appeal and quashed the enforcement notice subject to the condition that the partitions be removed and the property be returned to its original condition when it ceased to be on the Council’s register of supported accommodation for vulnerable adults. The Council appealed to the court.

Lord Tyre refused the appeal. The appropriate starting was section 14(2) of the Planning (Listed Buildings and Conservation Areas) (Scotland)  Act, which requires the reporter to have special regard to the desirability of preserving the building or any features of special architectural interest which it possesses. It also creates a presumption against the granting of listed building consent in respect of alterations which have an adverse effect on the special interest of the building. Reading the decision letter fairly and as a whole, Lord Tyre found that the reporter, having identified the correct starting point, proceeded to assess whether there were considerations of sufficient force to overcome the presumption against alteration. His reasons for deciding that there were such considerations were clearly explained.  So far as the adverse effect is concerned, the reporter concluded that the external visibility of the subdivision was negligible and that the works were easily reversible without damage to internal decorative features. He regarded this “modest” impact on the building as outweighed by what he described as the special needs argument put forward by the property owner.

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 in which the Scottish Ministers sought an interim order bringing to an end a prohibition under regulation 47(10) of the Public Contracts (Scotland) Regulations 2006. The prohibition prevented the Ministers from entering contracts relating to the provision of services in relation to trunk roads.

In November 2010, the Ministers (acting through Transport Scotland) advertised two contracts for the management, maintenance and improvement of trunk roads. After adopting the competitive dialogue procedure the Ministers invited tenders. Amey and three other operators submitted tenders. However, the Ministers wrote to Amey advising that they considered Amey’s tender to be abnormally low. They stated that this presented them with unacceptable financial, operational and reputational risks in fulfilling their statutory duties. They considered that Amey had manipulated the prices and rates and explained their concerns in some detail. Correspondence followed in which Amey argued that it had taken a “holistic approach to the tender” and provided price and other information. However, the Ministers rejected Amey’s bid concluding that the offer: (a) carried significant unacceptable risks; (b) was neither economically viable nor sustainable; and (c) was not genuine.”

Noting that Courts function was limited reviewing the Ministers’ decision solely to see whether or not there is a manifest error and/or whether the process was in some way unfair, Lord Hodge saw no legal basis on which Amey could challenge the Minister’s conclusion that its offer (a) carried unacceptable risks for them and (b) was neither economically viable or sustainable. However, if by concluding that the offer was not genuine, the Scottish Ministers were suggesting that the offer was a sham that was more problematic. Lord Hodge though did not consider that that was what was meant. The bids were assessed on the “Comparative Cost of Tender” which was a figure based on prices and rates entered by the tenderers. Lord Hodge interpreted the use of the word “genuine” as referring to the way in which Amey chose to present its offer, noting that the prices and rates Amey provided bore little relationship to the turnover that Amey expected from the contract. However, even the Ministers’ use of the term ‘genuine’ had been incorrect, that would not have undermined their conclusions about the risk, economic viability and sustainability of the bid.

With regard to the limited scope of the court’s review, Lord Hodge found that Amey had at best a weak prima face case (for continuing the prohibition). That was an important factor when considering the balance of convenience.  Lord Hodge also took account of the need to avoid delay in the process which would in turn lead to mobilisation issues for the successful contractors and increased costs for both the successful contractor and the Scottish Ministers. On the other hand, if the contract went ahead and Amey subsequently successfully challenged the Ministers decision, it would then have a remedy in damages. Taking these factors into account, Lord Hodge found that the balance of convenience favoured lifting prohibition. He also found that consideration of the public interest favoured lifting the prohibition (noting the need for an effective and non-discriminatory procurement process but also taking account of the need for economic and efficient operation of the procurement process and the need for proper provision of the required services to Scotland’s trunk roads).

Consequently, Lord Hodge granted the Scottish Ministers’ motion and lifted the prohibition preventing Transport Scotland entering the proposed contracts with other contractors.

The full judgement is available from Scottish Courts here.