Outer House case concerning the title to land near Tullochgribban Quarry (situated close to Grantown-on-Spey). The Trustees sought declarator that they owned the disputed land.  They argued that a disposition in 1991 in their favour formed a habile title which had been fortified by prescription. As such, they contended that a 2008 disposition in favour of G Hamilton (Tullochgribban Mains) Limited  (the quarry owners) was a competing title and should be reduced. The question for the court was whether the Trustees title was habile and therefore capable of founding the prescriptive possession claimed by the Trustees.

What is a habile title?
After some strongly worded comments about the quality of the pleadings, Lady Clark considered what was necessary to constitute a habile title drawing in particular from Auld v Hay (1880) in which the Lord Justice Clerk stated:

 “A habile title does not mean a charter followed by sasine, which bears to convey the property in dispute, but one which is conceived in terms capable of being so construed. The terms of the grant may be ambiguous, or indefinite, or general, so that it may remain doubtful whether the particular subject is or is not conveyed, or, if conveyed, what is the extent of it. But, if the instrument be conceived in terms consistent with and susceptible of a construction which would embrace such a conveyance, that is enough, and 40 years[1] possession following on it will constitute the right to the extent possessed.”

 And Lord Deas said:

 “It is not necessary, in my opinion, that a party who pleads prescription should produce a title which ex facie comprehends everything he claims under it. If its terms be such as may comprehend the whole, and prescriptive possession of the whole has followed, that is sufficient. … Of course if the disputed subjects cannot be claimed without contradicting the terms of the prescriptive deed, as in the base of a bounding charter, no length of possession can establish that claim.”

The Trustees title
In this case, the 1991 disposition conveyed the lands both described in and shown on a plan attached to a disposition in 1977. The 1977 disposition in turn described the subjects conveyed by it, not only by reference to the plan attached to it, but also stated that the subjects were “PART AND PORTION” of subjects shown on a plan attached to a disposition in 1968. However, the plan attached to the 1968 disposition clearly did not include the disputed land.   The 1977 disposition therefore made reference to two contradictory plans and Lady Carlton took the view that it was not possible to interpret it as referring only to the plan attached to it[2]. As, in Lady Carlton’s opinion, it was not possible to interpret the description in the 1977 disposition[3] as including the disputed land, the trustees did not have a habile title on which to found their prescription possession[4].

On the other hand, the 2008 disposition in favour of the Quarry Owners did convey the disputed land and gave them valid title to it.

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 RBS’s sale of an interest rate swap agreement to Grant Estates Limited (a property development company) in 2007.  RBS put Grant into administration in February 2011 after Grant had suffered financial difficulties during the economic downturn. Grant claimed that RBS had mis-sold the agreement, which the bank had represented as a device to protect Grant from a rise in interest rates. In actual fact, when interest rates fell sharply and remained low, the agreement prevented Grant from benefitting from those lower interest rates it would have otherwise paid on its borrowing. Grant maintained that, were it not for the agreement, it would not have gone into administration.

Although Grant had accepted RBS’s terms of business which, amongst other things, expressly stated that RBS was not providing advice on the merits of the transaction and advised Grant to obtain independent financial legal advice, Grant contended that:

1      the agreement breached the Conduct of Business Sourcebook issued by the FSA and the Markets in Financial Instruments `Directive (2004/39/EC);

2.1   RBS had entered into a contract to give it advice on financial products and had given negligent advice on those products; and

2.2    the agreement was entered as a result of fraudulent or negligent misrepresentation by RBS.

Grant sought reduction of the agreement and repayment of the sums paid under it together with damages in respect of the breach the Sourcebook and Directive.

Lord Hodge rejected Grant’s arguments.

Conduct of Business Sourcebook
In terms of the Financial Services and Markets Act 2000, breaches of the Sourcebook and Directive are only actionable by “private persons”. As a limited company acting in the course of business, Grant was barred from raising an action.

Negligence and misrepresentation
There had been no contract to provide advice. Although Grant argued that, when they had asked for financial advice and been given it by RBS, a contract arose by implication, Lord Hodge found that the terms of business contradicted any such implied contract and there was no evidence of an express agreement to depart from the terms of business. If Grant had relied on the statements by RBS as investment advice, that reliance had not been reasonable in the face of the contractual arrangements the parties had entered.

The full judgement is available from Scottish Courts here.

Outer House case concerning the termination of a wind farm agreement relating to property in Aberdeenshire.   In terms of the agreement, Backmuir granted an option to Mountwest to develop a wind farm on the property. The option period was ten years (with a right to extend for a further five years).  Mountwest was entitled to apply for planning permission and other consents but Backmuir had a right to see and make representations about the proposed application before its submission to the planning authority. If Mountwest obtained the necessary permissions, it could choose to exercise the option in which case Backmuir required to grant a twenty five year lease of the property to Mountwest. The agreement also contained a termination provision in the following terms:

“[Backmuir] may determine this Agreement by written notice to [Mountwest] if:-

 [Mountwest] materially fails to perform or observe any of its obligations in this Agreement and such failure or event is incapable of remedy or it is capable of remedy and [Backmuir] have [sic] served on [Mountwest] written notice specifying the failure or event and requiring it to be remedied within a reasonable time (to be specified in the notice and taking into account the nature of the obligation in question) and [Mountwest] has failed to do so;”

In June 2011 Mountwest lodged a planning application but failed to send a copy to Backmuir in advance. When it learned of this, Backmuir wrote to Mountwest advising them that they had breached the agreement and requiring them to remedy the breach “if it was capable of being remedied”. The letter also required Mountwest to provide the documentation required by the agreement within 21 days.  Mountwest then wrote to Backmuir enclosing a copy of the application and asking for comments. However, Backmuir’s solicitors replied purporting to terminate the agreement on the basis that Mountwest had failed to remedy the breach of the agreement.  The issue for the court was whether the agreement had been validly terminated.   Three questions required to be answered.

1. Was there a material failure by Mountwest?
2. If so, was it remediable?
3. Did Backmuir serve a valid notice of termination?

Material failure?
On a commercial construction of the contract Lord Woolman found that there had been a material failure by Mountwest. The purpose of the contract was to facilitate Mountwest’s wish to develop a wind farm at the property. But it contained built in checks drawn in Backmuir’s favour of which the right to make representations about the planning application was the most important. The parties had not intended that right to be illusory. Rather, they provided a mechanism which allowed Backmuir to influence the planning at a critical stage in the procedure.

Remediable?
Lord Woolman found that Mountwest’s failure to send the planning application to Backmuir was plainly capable of remedy; the application being at an early stage and local planning committee not yet having considered it.

Valid termination?
The clause allowing termination of the agreement had been a bespoke irritancy clause. The potency of the clause suggested that Backmuir would have to adhere to its precise requirements (it required Backmuir to serve written notice on Mountwest specifying the failure and requiring it to be remedied within a reasonable time). However, Backmuir’s initial letter notifying the breach had not been clear. It had both expressed doubt as to whether the breach was remediable and had required Mountwest to provide the documentation within 21 days. Lord Woolman found that the reasonable recipient of the letter would read it as requiring delivery of the documentation within 21 days and, if it were done, that would comply with the terms of the agreement.

Another approach was to ask whether the mischief created by Mountwest’s omission had been cured. Lord Woolman concluded that it had. Backmuir had asked for the documents. Mountwest had supplied them in return. If Backmuir had wished to insist on Mountwest withdrawing its application and beginning the process again, that would have been a simple message to convey and could have been easily and clearly set out in its letter.

The purported termination was therefore invalid.

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.

Sheriff Court case relating to the blockage of a sewer on Queen Anne Street in Dunfermline which Scottish Water were responsible for maintaining. A monobloc thought to be causing the blockage was discovered by Scottish Water in February 2009 after excavating and opening the pipe.  Scottish Water claimed damages from Dunne who had carried out reconstruction and resurfacing works for Fife Council in November 2007. The works had involved replacing the surface of the road and pavement with monobloc.

At first instance the sheriff found that on the balance of probabilities the blockage had been caused by the monobloc used by Dunne to resurface the road but was unable to make a finding as to how the monobloc had found its way into the sewer. As the Scottish Water had no direct evidence as to what had happened in 2007 and were not able to prove that there was no other way the block could have entered the sewer, the sheriff refused Scottish Water’s action for damages.

However, the sheriff principal allowed an appeal, finding that Scottish Water’s evidence was sufficient to raise a prima facie inference of negligence which had not been answered by Dunne. As such, damages of £12,585 were awarded to Scottish Water.

The full judgement is available from Scottish Water here.

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

Sheriff Court case relating to the service of a calling up notice by sheriff officer. The notice was posted through the door by the sheriff officer having established that the debtor (Mr Stevenson) lived at the address and given 6 audible knocks (in accordance with the rules of court).

Mr Stevenson argued that, as the notice had been not served on the Defender personally and had been put through the letter box, the bank had failed to serve it properly in terms of the Conveyancing and Feudal Reform(Scotland) Act 1970 (section 19(6)). Mr Stevenson contended that the bank’s action under the 1970 Act should therefore be dismissed.

Sheriff George Jamieson found that s19(6) of the 1970 Act permits certain methods of service but does not contain exhaustive provisions on the service of calling up notices. A sheriff officer was entitled to serve the notice acting in his official capacity as an officer of court in accordance with the rules for citation set out in the relevant legislation and rules of court. Consequently, Mr Stevenson’s motion to dismiss the action was refused.

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.

Sheriff Court case considering a lease of residential property at 39 Calside Road in Dumfries.  The landlords (Calmac) were seeking to recover possession of the property from the tenant at the end of the term. The issue for the court was whether the lease was a short assured tenancy (in terms of the Housing (Scotland) Act 1988).

For a tenancy to qualify as a short assured tenancy, it must be “for a term of not less than 6 months” (s 32(1) of the 1988 Act).

The lease stated:

 “The Date of Entry will be 29th April 2011. The Let will run from that date until 28th October 2011…”

The general rule for calculating time periods, known as the civilis computatio, is that the whole of the day on which a period commences is excluded and the whole of the day on which it ends is included (days being indivisible for the purposes of the rule).

Following that rule, the period of the lease in question would be one day short of 6 months. The sheriff rejected Calmac’s argument that there is a general exception to the rule for leases (on the basis that the date of entry should always be counted when computing the term of a lease).  However, after considering the authorities, he found that use of the words ‘date of entry’ in the lease meant that it had been contemplated that the tenant would take entry on that date thus creating an exception to the general rule[1].

Consequently, the lease ran from midnight on the 28^th April meaning that its term was exactly 6 months and the lease was correctly constituted as a short assured tenancy.

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.

Appeal to the Inner House in respect of decision of the Outer House on 1 September 2011.  The case relates to a disposition of flats at Queen’s Gardens in Aberdeen. Skene disponed the property to Mr Pocock in 2000. However, a page of the disposition was substituted changing the recipient of the property to Howemoss Properties Limited (a company of which Mr Pocock was a director) and the price (possibly for SDLT reasons) without Skene’s consent. In 2002 Howemoss sold one of the flats to a Mr Torr.

In 2003 Mr Pocock was sequestrated and Mr Alexander was appointed as permanent trustee and began to investigate Mr Pocock’s property transactions. A judicial factor was also appointed in respect of the law firm which had acted for Mr Pocock and who, following an investigation, produced a report in June 2004 outlining the changes made to the disposition. The trustee raised successful actions in relation to other properties transferred by Mr Pocock but in April 2005 was still trying to locate the conveyancing file relating to the Queen’s Gardens property. In July 2007 the trustee received an opinion from senior counsel relating to the Queen’s Gardens property and wrote to the Keeper of the Registers of Scotland and Mr Torr’s solicitors (in August and September 2007) indicating that he intended to raise an action proving the tenor of the original disposition in favour of Mr Pocock. The police became involved in November 2007 and in early 2008 the trustee instructed agents to commence proceedings.

Mr Torr granted a standard security over the flat in favour of Abbey National plc in February 2008 at which point Abbey National are believed to have discovered that the disposition in favour of Mr Torr had not been registered (despite being granted 6 years previously) although the extent of their title investigation was unknown.

In the Outer House Lord Uist rejected arguments by Abbey National that:

1. the trustee’s action was barred by mora, taciturnity and acquiescence; and
2. the trustee was personally barred from reducing the Howemoss disposition (meaning Howemoss had no title to grant the disposition in favour of Mr Torr) as a consequence of the common law principle of adoption of forgery.

The Inner House refused Abbey National’s appeal and indeed went further allowing the trustees cross appeal to the effect that Abbey National’s arguments relating to mora, taciturnity and acquiescence were irrelevant.

Mora, taciturnity and acquiescence
It was necessary to consider all the circumstances of the case. However, Abbey National’s arguments referred only to the date of the judicial factor’s report (in 2004) and the date the action was raised (2008) which was to ignore the events which occurred between those dates. Those events did not support a categorisation of the trustee’s conduct as taciturnity and acquiescence:

“On the contrary, the steps taken by the [trustee] amounted to investigation, consultation, the seeking of appropriate advice, warnings to both the Keeper and to a current heritable proprietor (Mr Torr), and the raising of an action. For this reason alone we find Abbey’s averments of taciturnity and acquiescence to be inadequate and irrelevant. Furthermore we agree with senior counsel for the [trustee] that the [trustee] was entitled responsibly to seek information and advice before raising a court action with all its consequences. In other words, while the [trustee] was alerted to the problem in June 2004 by [the judicial factor’s] report, he was entitled to take the steps he did before launching into a litigation which, if not well-based in fact and law, could result in considerable losses to the sequestrated estate.”

Adoption of forgery
The crucial element  of adoption of forgery is that a person who knows about the forgery, and knows that a third party is being misled into relying upon the forgery, says or does nothing to alert the third party to the problem. In effect it was therefore necessary for Abbey National to prove that the trustee not only knew that the disposition was falsified, but also that Abbey National were intending to lend Mr Torr money in reliance upon that falsified disposition, and yet did nothing to prevent Abbey from relying upon the falsified disposition. Abbey National did not argue that they relied upon the falsified disposition itself – the nature and extent of their investigation into the title in respect of 5 Queen’s Gardens being unclear.  Perhaps more importantly, there are no arguments made on Abbey National’s behalf that the trustee knew that Abbey National were, or were likely to, rely upon the falsified disposition. Furthermore, the trustees actings (in particular the letter to Mr Torr’s solicitor), did not disclose a picture of an adoption of forgery. On the contrary, the trustee had taken active steps to warn Mr Torr’s agents that his disposition was from a non-owner and that court proceedings challenging that disposition would be raised.

The full report 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 GP practice operating at the Terra Nova Medical Centre on Dura Street, Dundee.  Michael John Morris and others (the pursuers) were doctors who had retired from the practice. They argued that they were the current tenants of the centre and that (following a number of changes in the composition of the practice) all bar one of the current partners and the partnership practising at the centre had no right or title to occupy the premises.  One of the original partners (and tenant under the lease), Dr Ritchie remained in the practice but chose neither to pursue the action nor raise defences to it.

The pursuers had bought the centre from the Dundee City Council in 1993 then entered a sale and leaseback transaction with MPIF Holdings Ltd in 2006. The lease contained a general prohibition on assignation and subletting but allowed assignations between partners in the practice without the landlord’s consent whilst requiring notification of assignations to the landlord. Despite the pursuers’ retirement from the practice, there had been no assignation of the lease to the new partners. Indeed the new partners had refused to accept an assignation of the lease from the pursuers. As a consequence, the pursuers and Dr Ritchie retained the tenancy obligations meaning that if the partnership failed to pay the rent, MPIF’s claim would be against the pursuers and Dr Ritchie rather than the partnership.

The new partners and partnership contended that none of the pursuers had occupied the premises as individuals and argued that the partnership paid the rent and occupied the centre with knowledge of the landlord and the agreement of the tenants (i.e. the pursuers and Dr Ritchie).  As such, a right of occupancy subsidiary to the lease (possibly similar to a licence) had been created.

Lord Woolman rejected these arguments:

“The transfer of a real right, which includes “a right to occupy or use land”, requires to be in writing: Requirements of Writing (Scotland) Act 1995 s. 1(2) and 1(7). The defenders do not point to any document in support of their claim. Even if such an agreement could be established by actings, many questions would arise about the contours of the agreement. Who are the parties? When was it made? What is its duration? Was a new agreement made each time a new partner was assumed? Can the permission be withdrawn and if so by whom – the landlord or the pursuers or both? The complete absence of specification on these points is in my view unsurprising. It demonstrates that there was no such agreement. It is also unclear how this private arrangement would fit with the Lease. I cannot see how an agreement arose which is in some way derivative of the lease, yet contradicts its terms.”

Consequently, it was held that the new partners and partnership had no right or title to occupy the centre.

Lord Woolman also rejected an argument by the new partners that the pursuers had no title to sue due to the absence of Dr Ritchie from the action. This argument was based on the rule of common property that the consent of all common owners must be obtained in decisions relating to the management of the property (including in the granting of a lease and in a removing). However, after reviewing the authorities, Lord Woolman noted a modification of the rule to the effect that a mere squatter would not be entitled to a defence based on the rule. As it had been held that the new partners and partnership were in occupation without a right, they were therefore not entitled to query the pursuers’ title to sue.

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.

Note by Sheriff Peter J Braid relating to a case concerning a standard security over property at Mucklets Crescent in Musselburgh. The debtor had died and her estate had been sequestrated.

Following the service of calling up notices and the expiry of the notice period, Accord (the creditor) sought declarator that:

1. Miss Edwards’ representative was in default (within the meaning of standard condition 9(1)(a) of schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970);
2. the subjects were not used to any extent for residential purposes within the meaning of section 20(2A) of the 1970 Act; and
3. Accord had the right to sell the subjects, to enter into possession of them and exercise all other rights and powers under the standard security, in terms of the 1970 Act.

The question arose as to whether Accord was entitled to seek declarator by ordinary action or whether they were bound to proceed under s24 of the 1970 Act (which provides for certain pre-action requirements to provide protection for the debtor).

The sheriff agreed with Accord’s argument that it was not necessary to proceed under s24. In terms of s20, which contains the right of sale, “where the standard security is over land…used to any extent for residential purposes“, the creditor can only exercise its rights by proceeding under s23A (which deals with a voluntary surrender and had no application to this case) or under s24. However, in this case, the property was not being occupied by any person at the time of enforcement and, as such, it could not be said that they were being used by anyone for any purpose, let alone used for residential purposes. The point of time at which the use was to be considered was that at which the creditor wished to exercise its remedies.

The purpose of the pre-action requirements was to give the debtor information and assistance. Since there was no living debtor, nor anyone using the house for residential purposes, it would be impossible for Accord to comply with the pre-action requirements. Further, the court had no power to dispense with those requirements. The sheriff agreed that the court should therefore proceed upon the basis that residential protections did not apply, meaning that the action should continue as an ordinary action with no pre-action requirement.

The sheriff noted that infelicities in the drafting of the Act could result in problems arising where the subjects were occupied; a creditor not necessarily being in a position to know what use is being made of the subjects. Moreover, there may be cases where the debtor has died but the subjects are still being used for residential purposes. The question would then arise as to how a creditor is to comply with the pre-action requirements.

The full note 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 an arbitration in relation to a lease and option to purchase (governed by missives, a minute of agreement and a minute of lease) Pentlandfield Business Park in Roslin.

Robert Ferguson had been a partner in a firm (subsequently dissolved) which was the landlord and seller of the business park. MITT was the purchaser and tenant. An arbitration commenced between the parties in respect of a clause imposing liability for repair and maintenance of the business park on the landlord. Mr Ferguson sought an interim interdict preventing the arbitration from progressing arguing:

1. that (by ruling on a claim that arose under the missives and minute of agreement rather than the lease when only the lease contained an arbitration clause) the arbiter had exceeded his jurisdiction; and
2. that the arbiter had no power to assess or award damages as the arbitration was governed by the common law.

Lord Hodge was not persuaded that Mr Ferguson had demonstrated a prima face case for interim interdict. The court would only interdict an arbiter from proceeding with an arbitration in exceptional circumstances which did not exist in this case. If, as Mr Ferguson contended, MITT did not have a valid claim under the clause in the lease, the arbiter would be able to dismiss the claim as irrelevant after a proof, the arbiter having jurisdiction to decide whether the claim under the lease was relevant.

With regard to the jurisdiction to award damages, Lord Hodge’s prima face view was that he was entitled to do so as the solicitors to both parties had signed an application to the chairman of RICS conferring a power to award damages. Also, by failing to raise any objections to the claims in the first three years of the arbitration, the parties had impliedly consented to confer on the arbiter the power to award damages.

 The full judgement of the Scottish courts is available here.

(See also related decision here.)

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