Inner House case relating to the sale of a house and garden in Alloway.  The seller, Mr McSorley also owned a small additional plot of land nearby, which was not part of the sale agreement.  However, the disposition mistakenly included the extra plot of land with neither solicitor noticing the error. A year later, the Drennans (the purchasers) sold on the entire estate to a third party, who asserted ownership of the additional plot.

Mr McSorley claimed damages from the Drennans on the basis that they knowingly sold property not belonging to them and that, as a third party had acquired the land in good faith, reduction of the disposition and rectification of the Land Register were not available. The sheriff and temporary sheriff principal accepted this argument and allowed a proof on the level of damages. However, on appeal, the Inner House recalled the sheriff court decisions and dismissed the action finding that a remedy of damages would be available where there was a breach of contract or breach of a delictual obligation. However, Mr McSorley’s pleadings had not contained arguments to that effect.

The Inner House also rejected the notion that purchasers like the Drennans must be deemed to be aware of the technical details of dispositions noting that, in any case dependent on allegations of deliberate and dishonest wrongdoing, it was essential for a pursuer to make specific and pointed arguments in that regard.

It was noted briefly that Mr McSorley may yet be able to pursue a remedy based on reduction of the deeds despite the third party purchase or that remedies based in unjustified enrichment or delict may also be available to him.

The full judgement of the Scottish courts is available here.

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

The weekend before last was supposed to play host to one of the biggest electronic music events in the UK, Baselogic Productions’ Bloc Festival. Following 6 successful annual events and despite a move from Butlins holiday park to the London ‘Pleasure Gardens’ the festival sold almost 15,600 tickets out of a capacity of 18,000. Replete with techno godfathers Richie Hawtin and Carl Craig it looked set to be the event of the summer.  However, it was not to be.

The chosen site in central London, which saw the festival spread out over venues including a ship moored at the Royal Victoria docks, was not equipped to handle the crowd capacity, with most punters spending the first evening queuing rather than watching any bands and those who entered the separate venues not being able to leave due to too few exits.  Ticketing was handled by the unfortunately named ‘Crowdsurge’, who maintain the site was under capacity The plug was pulled at 12:45am Saturday morning, with 15,000 festival-goers informed that the remainder of the festival was cancelled.

Interestingly, as the dust has settled, BP have gone into administration. Unable to honour their debts to the artists due to the obligation to refund 15,600 tickets, BP find themselves in a position not faced by any other festival organiser before in the UK.  After a mere 2 weeks of lectures on the Glasgow University LLB course on corporate administration, this raised more questions than I can find answers to, from a legal perspective, given how different a festival organisers business is compared to a company that trades all year round. At face value, if they are obliged to refund all tickets for the events, this would mean their liabilities (artist payments for the artists who either played Friday night or were in London prepared to play their time slot) exceed their assets, so administration would be unavoidable. But even trying to organise thoughts on the consequences into a logical order is proving impossible, almost as hard as trying to fathom why so many people like techno….

How does a ‘festival’ trade throughout the year?
How are the administrators, appointed under the Insolvency Act 1986, going to continue trading as BP? Administrators are tasked with rescuing the company as an ongoing concern, but BP only host one event a year. A festival organiser such as All Tomorrow’s Parties host events worldwide every couple of months and have a steady stream of revenue all year long, whereas bloc presumably take in ticket sales in advance of the festival and a percentage of catering /onsite entertainment/drinks/merchandise sales for only one weekend of the year.  The amount that currently remains from the proceeds of ticket sales will depend on money already expended on upfront costs – venue rent, live music and alcohol permits, flights for performers (which some insist on in advance) and other attendant costs of putting on a festival. Assuming they have the credit facilities to last until a new festival can be organised, how will BP be able to put on another festival successful enough to recoup the money lost on the 2012 fiasco and cover the costs of the make-up festival?  Do the electronic artists that travel from all over the globe have enough solidarity with the genre and festival that they will perform out of charity? How will BP convince administrators that this could even be accomplished? Do they have financial reserves built up from previous years?

How are ingoings and outgoings handled for a festival?
Organisation starts almost immediately after the end of the prior year’s festivals. Live event permits have to be paid upfront as do the costs for renting the venues.  Organisers must take a wage, either monthly or following the completion of accounts for the previous festival. The online records available for BP’s financial year ending 31/3/2011 put ‘cash at bank’ (the same value as ‘total assets’) at £167,636 and their ‘total liabilities’ at £140,886. In short, BP look roughly £27,000 in the red.  Bloc 2011 took place on the weekend accounts were filed. Whether this means all bands fees are paid out of ticket sales prior to the festival commencing and all other percentage cuts are handled after the festival, I don’t know. This puts BPs theoretical reserves at £27,000. As a small festival, it would stand to reason that BP as a private limited company lease rather than own, which would explain why total assets are the same as cash assets in their accounts. Suffice to say, their reserves do not look substantial.

Do the festival attendees and performers both rank as unsecured creditors?
BP have not announced how ticket refunds will be handled, but affirmed that they will be. Is the consequence of administration that festival goers rank as unsecured creditors?  If so, where will they rank? There are also the performers (that actually performed, those who found out about the cancellation may have been able to mitigate their losses and avoid unnecessary travel and expense) and security staff (provided by agencies).  And before this, the administrators fees have to now be satisfied, which as witnessed in the ongoing Rangers administration case can reach up to £130 per hour per administrator.  Someone has to lose out.  The bulk of the costs will be non-recoverable: permits, venue rent, alcohol licenses etc. If ticket sales went to satisfying those costs, where will refund money for 15,800 disappointed festival-goers come from? It doesn’t exist anymore, which suggests Bloc’s audience will bear the brunt of the affair. Festivals thrive on reputation and regular annual attendees, which Bloc had up until this weekend.  The shame of it is that with the disappearance of Glade festival and Barcelona’s Sonar being a more expensive affair, Bloc has always represented an excellent festival for a cheap ticket price. It begs the question, how could something as fundamental as crowd capacity and control be handled so terribly in the festival preparation?

UPDATE: – Since starting this blog, The Guardian has revealed that BP have gone into voluntary liquidation.  Sean Michaels reports that BP’s assets are going to be sapped by liquidators fees and claims of other creditors. Refunds for ticket-holders look increasingly unlikely, but I can’t imagine 15,800 ticket holders are going to techno for an answer….

Inner House case in which Ms Kirkham sought damages from her Landlords after she tripped and fell over uneven paving slabs on her garden path. She relied both on the terms of her lease and the Occupiers Liability (Scotland) Act 1960. The claim had been rejected in the Outer House and was appealed to the Inner House.

Lease
In terms of the lease, Link undertook to:

1. Clause 5.3
   “carry out all repairs within a reasonable period of becoming aware that repairs need to be done”
2. Clause 5.4
   “carry out inspections, at reasonable intervals, of the common parts”.
3. Clause 5.8
   “keep in repair the structure and exterior of the house, including … pathways, steps or other means of access …”

 Taking each of the clauses in turn the Inner house agreed with the findings of the Outer House:

1. Clause 5.3 did not come into play unless Link was made aware of a repair requiring to be done (which had not been done). Also, on a proper construction of the clause, Ms Kirkham could not rely upon deemed knowledge.
2. Ms Kirkham’s garden path was not a common part. It was not a “common facility” shared by other tenants or residents, but rather was a dedicated access to Ms Kirkham’s property.
3. Clause 5.8 did not impose any repair obligation over and above what was to be found elsewhere in the tenancy agreement or in statute. The words “take reasonable care” did not require to be read into the clause so that there could be argued to be a breach of a duty to take reasonable care by failing to inspect the pathway regularly.

Occupiers Liability
In terms of sections 2 and 3 of the 1960 Act, Ms Kirkham was entitled to such care as, in all the circumstances of the case, was reasonable to ensure that she would not suffer injury or damage by reason of danger arising from the state of the premises. In order to succeed, Ms Kirkham would have had to establish Link’s failure to take reasonable care for her safety.  For example, she would require to show a failure to set up an adequate system of inspection, or failure to properly implement a system of inspection which was already in place.

However, in this case Mrs Kirkham failed to provide evidence as to what other landlords in the same situation as Link did by way of periodic inspection. Therefore it was not apparent what Link required to do in relation to the footpath. On the evidence available, it had not been established that the system undertaken was inadequate.

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 an alleged servitude right of access to a site for development on Dundee Road in West Ferry.  Harton Homes argued that a servitude right of access had been created by implication which led from their site to Dundee Road over the southern portion of a neighbouring property owned by Mrs Durk and through a gap in a wall which separating both properties from the road.

Both Harton’s property and Mrs Durk’s property had previously formed part of larger subjects owned by Mr and Mrs Callison who split the subjects in 1985 and sold parts to Harton’s and Mrs Durkin’s predecessors in title. The break off dispositions conveying these parts made no reference to a  servitude right of access. However, the route over which Harton claimed the servitude had been created by implication had been marked as “mutual” on the plans attached to the break off dispositions.

A servitude can arise by implication on such a division of property where it is reasonably necessary for the comfortable use and enjoyment of one of the resulting parts. However, Mrs Durk argued that there were other potential alternative means of access which could be taken from the north of the properties. Potential access routes existed from Ellislea Road (situated to the east of both subjects and perpendicular to Dundee Road) or via another looping access road from Dundee Road meaning that there was arguably no necessity to imply a servitude over Mrs Durk’s property. These routes were probably not as attractive to Harton as they were less convenient and their gradient and the presence of a narrow archway made them unsuitable for construction traffic.  Although the Callisons’ title to the larger subjects made reference to rights to use the alternative access ways, Harton argued that that these rights did not extend to their part of the property (suggesting that the rights stopped short of their property, or had been abandoned and that the use by them of the rights would illegally increase the burden on the servient property).

The main thrust of Harton’s argument  was based on there being a “common intention” among the parties’ predecessors in title in 1984/5 (about the time the larger property was split) that access for both properties be taken over Mrs Durk’s property. The sheriff noted that, while common intention may be relevant as potentially throwing light on whether the parties considered the access to be necessary at the time of severance, it could not per se be a distinct ground for setting up an implied servitude. In any event the sheriff found himself unable to conclude that there was a common intention that the access right Harton argued for be granted. At best there had been an anticipation that the access would be available in 1984 when an application for outline planning permission for houses on each of the properties was submitted. Further, although later planning applications in respect of services to the plots showed the access located clearly on Mrs Durk’s property, initial planning applications for houses had shown the access located centrally. Harton could also have created a gap in the wall to the south of their property (similar to that in Mrs Durk’s property), the sheriff noting that there was no evidence of a title impediment and insufficient evidence of any planning impediment to do so. (However, evidence suggested that Harton may not have wished to create another gap in the wall as the gap situated on Mrs Durk’s property was more convenient and allowed for turning.)

After considering the evidence, the sheriff was not persuaded that there were physical difficulties or title impediments which prevented use of an alternative means of access to Harton’s property. In all the circumstances, Harton had failed to prove that the servitude through Mrs Durk’s property was reasonably necessary for the comfortable enjoyment of their property.

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.

Two new Scottish statutory instruments have been published which make changes to the EPC regime in order to transpose provisions of Directive 2010/31/EU (relating to Energy Performance Certificates) into Scots law.  The provisions  come into effect on 1 October 2012  and  9 January 2013.

You can see a note of the main changes here.

Case concerning five linked appeals in the Land Valuation Appeal Court of the Court of Session.  The appeals related to entries in the 2010 Valuation Roll for five large industrial buildings in Inchinnan (ranging from 5,311 sq. m to 52,393 sq. m).

The valuation of the subjects had been difficult due to a lack of comparable rental evidence.Instead of using a revaluation scheme by the Scottish Assessor’s Association (SAA), the assessor had used local rental evidence to devise his own scheme. The first step was to derive a basic rate from rental evidence of smaller units in the area then to make a quantum adjustment to reflect the fact that the unit rate deceases as size increases.  The principle issue in this case was the size of the quantum adjustment applied.

The assessor’s approach was accepted by the Renfrewshire Valuation Appeal Committee. However, whilst the court refused the appeals in relation to the two smallest buildings (it considered that the assessor had reliable rental evidence for buildings of up to 6,000 sq. m), it allowed appeals in relation to the three larger buildings.

The assessor was entitled not to apply the SAA valuation scheme if in his judgement the scheme was not suited to the circumstances in the valuation area. The Committee had also been correct to reject Rolls Royce’s valuation which followed the methodology of the assessor’s scheme but applied the quantum adjustment from the SAA scheme. However, there were two main problems with the assessor’s calculation of the quantum discounts:

1. the assessor had relied on agreed valuations under the 2005 Valuation Roll and evidence of rental growth from those valuations (whereas, on the correct approach, a revaluation should be based on a fresh appraisal of the subjects without regard to their earlier values); and
2. the assessor had also relied on the current rent for the Rolls Royce premises which, on the evidence before the Committee, had not been an open market rent and had been based on pre-ordained contractual increases rather than contemporaneous review.

The cases in respect of the three larger buildings were returned to the Committee for a re-hearing and the assessor directed to reconsider his valuations in the light of the decision.

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 in the Land Valuation Appeal Court of the Court of Session concerning the valuation of unit in the Silverburn Shopping Centre in Glasgow. The unit was a deli selling food and coffee as a franchise of Coffee Republic. The assessor entered the unit on the Roll as a shop with an annual value of £159,000 as it was not a licensed restaurant, was adjacent to shops and could be easily altered to shop use. However the Valuation Appeal Committee allowed an appeal by the unit’s owner, Monti Marino and applied a lower ‘restaurant’ rate entering a value of £87,000. The assessor then appealed the Committee’s decision to the Court of Session.

The court refused the appeal noting that it has long been established that lands and heritage are valued in their current state without regard to the potential for physical adaption (providing that use is beneficial and is not subject to arbitrary restrictions).

The question of whether the subjects should have been entered in the Roll as a shop or as a restaurant or café was a question of fact for the Committee. At least five considerations pointed to the unit being a café or restaurant:

1.  the layout of the premises with tables and chairs for diners and seats outside;
2. the extent of food-based spending at the premises by comparison with food outlets that are valued as shops;
3. the fact that only a minority of the trade was take-away;
4. the fact that food was prepared on the premises for service at the tables; and
5. the availability of customer toilets.

The Committee’s decision was not unreasonable and there was therefore no error in law. Also, with regard to the assessor’s contention that the Committee should not have ignored the rental evidence of the zoned shops, the Committee was entitled to adopt that valuation which it considered to be supported by the evidence relating to other food outlets at the Centre. Since the Committee regarded the subjects as a restaurant, it was entitled to reject the values taken by the assessor from shops in the mall.

The full judgement is available here.

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

Outer House case concerning an alleged breach of duty under the Occupiers’ Liability (Scotland) Act 1960 at Lakeland’s store on Hanover Street in Edinburgh. Miss Brown argued that a two-fold failure by Lakeland to install a handrail and to signpost an existing alternative exit on George Street (which had a ramp and handrail) resulted in her falling down a flight of stairs at the Hanover Street exit.

Whether or not Lakeland had breached its statutory duty depended on whether it had been negligent. The question for the court was whether Lakeland had done or omitted to do something which had, as its reasonable and probable consequence, injury to others. This was a matter of fact and circumstance. Consideration was given to the knowledge and magnitude of the risk and the practicality and effectiveness of preventative measures.

Lord Woolman found that Lakeland had not been negligent. As regards knowledge of the risk, it was noted that there had been no history of accident amongst perhaps 3 million persons to have visited the store. In relation to magnitude of the risk, there was no risk of falling far (Miss Brown had fallen four or five steps). With regard to practicality of preventative measures, Lakeland had already established a disabled entrance (on George Street) which complied with the relevant legislation and had taken steps to bring its existence to the notice of customers. As to effectiveness of preventative measures, there was no evidence that, had Lakeland installed a handrail at the Hanover Street entrance, it would have prevented Miss Brown’s accident. Further, Lord Woolman also took account of  the expert evidence of two architects which indicated that it was unclear whether planning permission would have been granted for a handrail.

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.

We have added to our range of bulletins with a monthly litigation bulletin.  This will be produced by litigation specialist Dr Dianne Millen of Baird & Company who will also be contributing regularly to our blog. A sample of the bulletin is available here. To sign up for a free trial of our bulletins click here.

Judicial Review seeking to reduce a conditional consent and the related deemed grant of planning permission for a 59 turbine wind farm development situated 5 miles south of Dufftown and just over a mile outside the northern edge of the Cairngorms National Park.

William Grant were part of a group of third party objectors. The main thrust of their argument was that, having concluded that there was a need for the wind farm at the site, the planning reporter was then “anxious not to find too many things in the way of a consent” and allowed the need for the site to override other important adverse factors.

Section 36 of the Electricity Act 1989 provides that a generating station cannot be constructed except with the consent of the Scottish Ministers. Section 57(2) of the Town and Country Planning (Scotland) Act 1997 provides that, on the granting of such consent, the Scottish Ministers may direct that planning permission is deemed to have been granted subject to any conditions specified by the Ministers.

William Grant argued that section 25 of the 1997 Act, which requires that regard must be had to the development plan in making any determination under the planning acts, also applied, contending that the Scottish Ministers’ direction under s57(2) was flawed due to a failure to afford the development plan the enhanced status required by s25.

This argument was rejected by Lord Malcolm:

“In my view it is clear that the purpose of a section 57(2) direction is to allow circumvention of the process of a planning application, including any need for a determination in terms of section 37 of the 1997 Act (which does specify that regard is to be had to the development plan). By contrast, section 25 applies to decisions under the planning acts when it is a requirement that regard is to be had to the development plan. There are several provisions in the 1997 Act where one finds such a requirement. Section 57(2) is not one of them.”

Lord Malcolm found that, although the need for the site may have played a significant part in the overall conclusion, the decision was an “entirely normal and rational exercise of the kind of judgement required” in such applications and also rejected various other grounds of challenge based on policies in the local plan and supplementary guidance.

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.