The facts
Inner House case considering a property dispute over Broadford Church and Manse on Skye between two factions of the Free Church of Scotland.  A Feu Charter in 1869 set out the terms of the trust in favour of Trustees for the “Congregation of the Body of Christians called the Free Church of Scotland in the Parish of Strath, Skye”.

In 2000 a split occurred when a substantial minority of the Church (the break aways) separated themselves from the rest of the Church (the majority) taking themselves outside the system of church government (although there was no difference between the factions on religious doctrine). The congregation at Broadford was divided and the majority brought an action for declarator that (amongst other things) the church and manse belonged to the majority rather than the break aways. They also sought a conclusion preventing the break aways from trespassing on and carrying out renovations to the manse

The decision
An extra division of the Inner House found in favour of the majority.  It was clear from the trust deed that membership of and participation in the institutional structures of the Free Church was an essential feature of the trust. Whilst the break aways claimed that, following the division in 2000, they continued to adhere to the law and practice of the Free Church, they did not claim to maintain the continuity of the Church government system nor did they seek to argue that they remained part of the system of church courts. Participation in and membership of the system of church courts was the decisive principle on which the Broadford property was held on trust and the arguments put forward by the break aways were consistent only with the view that they had withdrawn from the system of church courts existing prior to the division.

Some general principles
After reviewing the authorities, Lord Drummond Young highlighted a number of principles and factors which would be taken into account when considering property disputes within churches. He noted that property rights will always be dependent on the circumstances of the individual case and in particular the terms of the trust agreement under which the property is held but also considered the following:

Majority rule
The principle of majority rule (i.e. that property should simply go to the majority of the money contributors on any division) was prevalent in older decisions but was rejected in the judgement of Lord Eldon in the House of Lords in Craigdaillie v Aikman (1813). Lord Drummond Young also took the view majority rule is unsatisfactory:

 “In the first place, it is not clear who the majority are: are they the majority of the congregation, or the majority of the members (as against adherents) among that congregation, or the majority of the elders, or a majority of the money contributors? If the last of these, how are the contributions of the various contributors to be assessed? In the second place, and more importantly, the principle of majority rule would permit a bare majority of the congregation to effect a fundamental change in the doctrines taught in the church or the religious practices followed there.”

The distinction between church property and congregational property
There is an important distinction to be made between property which is to be held for the general governing body or ecclesiastical judiciary of the church in question (especially from the funds of parties other than the parties in the congregation) and property which is to be held in trust for a congregation and its members. Church property must be used for the benefit of those whom the Church acknowledge as part of the church. Congregational property is the property of the congregation alone and the governing body has no interest or power over the property.

Adherence to fundamental doctrine
The court must scrupulously respect the religious opinions of the parties involved in the litigation especially the differences of opinion which the parties consider important. Those who adhere to the principles on which the congregation was united will not forfeit the property merely because a majority has decided otherwise. In the event of a division, the property held for a congregation will go to the part of the congregation which adheres to the fundamental principles of the church as identified in the churches original documents.  Those fundamental principles:

“may take a number of forms. Particular doctrines may be important, but so too may be a system of church government, and so may adherence to specific structures of church government.”

Unsurprisingly, however, it seems that the most important principle is that the trust deed rules.

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 agreement for lease of subjects at the Maxim office park in North Lanarkshire.  Tritax were owners of the development and Regus were to take a lease of part of the development. Monies were to be made available to Regus in respect of its fit out costs as an incentive.  Regus did not meet qualifying criteria for type of tenant to whom parts of the development could be let imposed by the sale agreement and so HUB (a company created to run the restaurant and other facilities at the development) was interposed to sub-let to Regus.

In terms of the agreement for lease, HUB was to deliver a letter to Regus from the Bank of Scotland relating to sums which the Bank held on deposit in respect of the fit out costs. This letter formed the crux of the case and was in the following terms:

“We understand that Heads of Terms have been agreed between TAL CPT and Regus (Maxim) Limited for the lease of the first floor of Building 1 at Maxim.

It may assist the proposed tenant to have confirmation from us that, on behalf of the landlord (Tritax Eurocentral EZ Unit Trust) and TAL CPT, we hold the sum of £913,172 to meet the landlord’s commitment to fit-out costs. These funds will be released in accordance with the drawdown procedure agreed between the parties, whereby the proposed tenant’s contractors will issue monthly certificates.

This is subject always to agreement of wider commercial terms with the incoming tenant.”

Regus carried out the fitting out works and issued invoices to HUB who confirmed that the costs were properly incurred and that the contribution should be paid to Regus. However, the bank refused to release the costs as there had been a default in the facility agreement and they were exercising a right of retention over the sums referred to in the letter.

Regus put forward the following arguments:

1.  The letter was an undertaking in terms of which the bank were obliged to make payment.
2. There was a separate underlying agreement between the bank and Tritax/HUB in respect of which Regus were, by means of a jus quaesitum tertio, entitled to payment from the bank.
3. That the bank was personally barred from relying on the terms of its agreements with Tritax/the developers to resist payment to Regus.
4. That the letter contained negligent misrepresentations acted on by Regus to its detriment and the bank was obliged to make reparation to the Regus for breach of a duty of care.

Lord Menzies rejected Regus’s arguments and dismissed the action. He found that he was unable to construe the letter as amounting to a unilateral undertaking by the bank of a legally enforceable obligation to pay the sum to Regus.

The letter was no more than a letter of comfort, and as such, could carry a moral responsibility but not a legal obligation. The court could not enforce a moral responsibility where there was no legal obligation.

The full judgement is available from Scottish Courts here

(See appeal to Inner House here)

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

Criminal appeal which raises an important question regarding the mens rea of murder. In 2004 Samuel Petto stabbed his flatmate to death and, as part of a scheme to dispose of the body, set fire to the flat with petrol. Mrs Donnachie, one of the other occupants of the tenement was overcome by the smoke and died in hospital the following day. Mr Petto pled guilty to the murder of Mrs Donnachie. The following definition of murder set out in Gordon’s Criminal Law was approved by an Extra Division in HMA v Purcell in 2008:

“the actual situation is that there is murder wherever death is caused with wicked intention to kill or by an act intended to cause physical injury and displaying a wicked disregard of fatal consequences”

Mr Petto claimed that, with regard to his own case, since the libel did not allege that he assaulted Mrs Donachie, or had any intention to cause injury to her or any other person, it did not instruct a relevant charge of murder. His plea of guilty had therefore been tendered in error and he argued that he should be allowed to withdraw it.

In a unanimous five bench decision the appeal was rejected.

The Lord Justice Clerk (Gill) giving the leading opinion found that Mr Petto had not shown a relevant ground on which to allow withdrawal of the guilty plea which, in itself was sufficient to dispose of the appeal. However, the Lord Justice Clerk also noted that the appeal raised an important issue of mens rea and found that the appeal was misconceived in its reliance on Purcell. Purcell was a case in which the accused had driven a car recklessly and caused the death of a child on a pedestrian crossing. This case was different as it concerned the specific act of setting fire to a tenement. Mr Petto had set fire to the building deliberately in the knowledge that there were people living in it. Tenements are densely populated with only means of escape being an internal stairway. Where a person starts a fire on the ground floor of a tenement, the inevitable conclusion is that he does so in the certain knowledge that those on the upper floors will be at grave risk of death or serious injury. The appreciation of the virtual certainty that such a risk will occur and the deliberate acceptance of it should be equated with an intention that the consequences occur.

Since the appeal could be decided on the meaning of intent within the clear cut circumstances of the case, it was not necessary to explore current position with regard to the mental element in murder and culpable homicide more generally. However, the Lord Justice Clerk made it clear that a review of the law in this area would be desirable:

 “I have the impression that other English-speaking jurisdictions may have attained greater maturity in their jurisprudence on this topic than Scotland has. In Scotland we have a definitional structure in which the mental element in homicide is defined with the use of terms such as wicked, evil, felonious, depraved and so on, which may impede rather than conduce to analytical accuracy. In recent years, the authors of the draft Criminal Code for Scotland (2003) have greatly assisted our thinking on the matter; but we remain burdened by legal principles that were shaped largely in the days of the death penalty, that are inconsistent and confused and are not yet wholly free of doctrines of constructive malice. My own view is that a comprehensive re-examination of the mental element in homicide is long overdue. That is not the sort of exercise that should be done by ad hoc decisions of this court in fact-specific appeals. It is pre-eminently an exercise to be carried out by the normal processes of law reform.”

The full text of the decision is available from Scottish courts here.

Sheriff court case concerning an action for damages for failure to pay the purchase price timeously in terms of missives for the purchase/sale of a house in Saltcoats.

The missives provided for a date of entry of 4^th July 2008. However, settlement did not take place and the purchase price was not paid until the 28^th November 2010. No formal amendment was made to the missives. However, there was correspondence between the parties in which the sellers indicated that they were reserving the right to recover losses in terms of the original missives. There were also various references to the date of entry and date of settlement in the correspondence between the parties which led to debate in court as to whether the missives had been varied.

As is normal, the missives contained a supersession clause providing that they ceased to have effect after two years from the date of entry.  The sellers served an action for claims on 24 of November 2010. I.e. less than 2 years after entry was taken but more than 2 years after the date of entry provided in the missives.

The sellers claimed that the date of entry in the missives had been changed in the correspondence whereas the purchasers argued it had not.

Sheriff Livingstone found that the exchange of correspondence did not change the date of entry which in his view had a technical as well as a practical meaning.

 “In other words…the date that a party actually pays over the price i.e. the settlement date or the date that a party actually moves in both of which might lay claim to being the date of entry will not affect the date of entry in the missives in the absence of parties agreeing same. It might be more apt to describe the date of entry as being the agreed date for the seller to deliver a disposition in return for the buyer paying over the purchase price no matter when these things actually happen. There is no doubt in this case that the date of entry was 4^th July 2008 and it seems to me that this was a contractually agreed date of entry and could only be changed by agreement and further such an agreement would have to adhere to certain formalities. It is clear to me from the correspondence that although the Defenders solicitors asked the Pursuers to agree to a new date of entry the Pursuer never agreed to that. What the Pursuer did do was agree to settle on 28^th November 2008. That does not constitute an agreement to change the date of entry. The Pursuer did sign a disposition which refers to “WITH ENTRY and vacant possession as at 28^th November 2008 notwithstanding the date or dates hereof” but it seems to me that again that does not change the date of entry but effectively uses entry in a different sense referring to the date from which the [purchasers] became the heritable proprietor.”

 As a result the date of entry was 4 July 2008 meaning the proceedings should have been raised by 3^rd July 2010 and sellers were time barred from raising the action.

 A full report of the 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 whether a contractual clause constituted a penalty and was therefore unenforceable.

The clause in question was contained in an agreement between Stewart Milne Group, Bett Limited and Stewart and Robert Hill which related to the development of two sites in Wishaw.  Basically, the agreement provided that Stewart Milne and Bett would install sewerage and surface water drainage systems at the site they were developing which the Hills would be able to connect their site to the systems at no cost. If the drainage systems were not completed by the 28 March 2008 the Hills were entitled to receive payment from Bett and Stewart Milne of a penalty of £5,000 per calendar month until the systems were completed.

The works were not completed by 28 March 2008 and payments were made to the Hills until December 2008 but then stopped leading to the court action being raised by the Hills.

The temporary sheriff principal held that the clause imposed a liability to make payment on the occurrence of what was a breach of contract.  Whilst it was for the party seeking to show that the clause is a penalty to raise the issue, it was then for the party relying on the clause to demonstrate that it was a genuine pre-estimate of losses and damage caused by the breach.  In this case Stewart Milne and Bett had raised the issue and the Hills had put themselves in a position to show that the provision was a genuine pre-estimate of their loss. However, as the Hills had not shown that, but for the failure to complete the system by 28 March, they would have been able to complete their site, sell it and realise the return, they could not succeed.

However an Extra Division of the Inner House agreed with the submissions made on behalf of the Hills to the effect that it was for Stewart Milne and Bett as the parties claiming that the provision was an unenforceable penalty clause to show that this was the case and they had failed to do so.

In coming to his decision, the key question the sheriff principal had failed to consider was whether Stewart Milne and Bett had provided any argument in support of their contention that the provision was an unenforceable penalty. It appeared from the sheriff principal’s decision that he considered that it was not only for the Hills to show that the provision was a genuine pre-estimate of damages but also that the supposed breach of contract had given risen to a loss of the sort that the pre-estimate had been directed at quantifying.  There was no such requirement. The whole purpose of a provision such as the one used in this case is to avoid the need for proof; not only proof as to quantification of the loss but also proof that the loss had occurred.

The Inner House therefore allowed the appeal against the sheriff principal’s 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.

Sheriff Court case concerning the maintenance of part of an archway over a pend on Constitution Street in Edinburgh. The pend is a passage running through a tenement giving access to a courtyard and premises to the rear.  The issue for the court was whether the owner of the pend was liable for a share of the cost of repairs to the archway above it.

Sheriff Morrison found that the pend was not part of the tenement and, although it could be described as a “connected passage”, there were no stairs or landings within it meaning that it did not satisfy the definition of a “close” in the Tenements (Scotland) Act 2004. As a result, the owners of the tenement were unable to recover a share of the costs from the owner of the pend.

Sheriff Principal (Stephen), however, allowed an appeal finding that, whilst the pend was not a close, it was nevertheless a “sector” of the tenement in terms of s29 (1) of the Act.  The sheriff principal also took account of the fact that the pend was enclosed from the streetby large ornate gates and concluded that the pend did form part of the tenement. As such, the obligations (to provide support and shelter) contained s8 (1) to (3) of the Act, applied to it.

In finding that the owner of the pend was liable for a share of the repairs the sheriff principal noted:

“It would also offend against common sense to hold otherwise. The requirement to repair the pediment was accepted. The pediment relates to the archway over no 123. The viability and soundness of the pediment and archway must clearly be a matter of common concern to the owners of the flats and also the pend. There would be serious implications for all if there were to be a fall of masonry or a collapse of the pediment/archway. The sheriff’s judgment would excuse or exonerate the owners of the pend from responsibility for maintenance of the archway or other common parts. This cannot be a proper or reasonable outcome in the circumstances. The archway forms the roof and boundary of the pend and the owner of the pend has a common interest along with the owners of flats in 121 and 125 in maintaining the archway.”

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.

In November 2010 the Supreme Court in RBS v Wilson found that, in any case where a creditor seeks repayment of a debt, failing which, the sale of the security subjects, it must first serve a calling up notice[1] and thereafter wait two months before repossessing the property. This was contentious as, up until the decision in Wilson, practitioners had believed that the calling up procedure was not necessary[2].

Following the Wilson case, the Scottish Government issued an informal consultation[3] on whether the decision has long term implications requiring mitigation through action of the Scottish Government. The Scottish Government has now issued a report analysing the responses.

A majority of respondents thought that there were negative impacts from the judgement and the Scottish Government should act to mitigate those. Whilst the responses revealed no clear trends, lenders and lender services focused on practical issues resulting from the increased timescales and costs involved in following the calling up procedure.  In particular the two month delay in process caused concern and some consultees also commented on a lack of clarity and consistency in the law.

However, a notable minority of respondents felt that there were no long term impacts justifying action by the Scottish Government. The Law Society of Scotland took the view that “the Scottish Government should not take any measures unless or until it is clear that there are long term impacts which require to be addressed.” Professor Gretton saw no reason for emergency legislation pointing out that the calling up procedure was not unreasonable (indeed it was probably what had been intended when the 1970 Act had been drafted) and the 2 month ultimatum procedure not excessively long. He also referred[4]  to the Scottish Law Commission’s imminent project on heritable securities which includes enforcement and saw no need for an additional review. Although the decision caused some problems for enforcement proceedings in hand at the time the decision came out, Professor Gretton noted that most had already sorted themselves out and the rest would do so fairly soon.

A summary of the responses is available here.

A full analysis of the responses is available here.

Sheriff Court case concerning the competency of service of a calling up notice under the Conveyancing and Feudal Reform (Scotland) Act 1970.

After having failed to find Mr Gallagher, Sheriff Officers instructed by Santander, purported to serve the notice on Mr Gallagher by putting it through his letter box.

Santander sought to argue that service in this way satisfies s19 (6) of the 1970 Act which says:

“For the purposes of the foregoing provisions of this section, the service of a calling-up notice may be made by delivery to the person on whom it is desired to be served or the notice may be sent by registered post or by the recorded delivery service to him at his last known address, or, in the case of the Lord Advocate, at the Crown Office, Edinburgh, and an acknowledgment, signed by the person on whom service has been made, in conformity with Form C of Schedule 6 to this Act, or, as the case may be, a certificate in conformity with Form D of that Schedule, accompanied by the postal receipt shall be sufficient evidence of the service of that notice; and if the address of the person on whom the notice is desired to be served is not known, or if it is not known whether that person is still alive, or if the packet containing a calling-up notice is returned to the creditor with an intimation that it could not be delivered, that notice shall be sent to the Extractor of the Court of Session, and shall be equivalent to the service of a calling-up notice on the person on whom it is desired to be served.”

Santander referred to the unreported decision Household Mortgage Corporation plc-v-Diggory (1997)in which it was found that physical delivery to the debtor was not required where service by recorded delivery post was employed.

However, Sheriff Mackie found that Santander’s calling up notice had not been competently served.  In terms of s19 (6) service can be made:

1. by delivery in person (which means the creditor has to place the document in the hands of the debtor);
2. by recorded delivery at the last known address of the debtor (no personal delivery is required and, so long as the document is not returned  with intimation that it could not be delivered, then it can be presumed to have been served); or
3. by notice to the Extractor of the Court of Session (which refers to a situation in which the notice is valid even though the debtor knows nothing about it).

Whilst service by recorded delivery does not require that the document is physically delivered, that does not mean that alternative modes of service do not require to involve physical delivery.

Sheriff Mackie also made reference to Rule 5.4 of the Sheriff Court Rules which provides that a Sheriff Officer can serve a document by depositing it at an address after making due enquiries.  She noted, however, that this only applies to official functions carried out under Act of Sederunt (Messengers-at-Arms and Sheriff Officers Rules) 1991. When serving the calling up notice, the Sheriff Officers were carrying out an extra official function (i.e. not an official function) and, as such, the calling up notice required to be served in accordance with s 19(6) of the 1970 Act.

A full report of the decision is available from Scottish Courts here.

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

Excellent report on the “cost of caring”, and how this can be reduced by preventitive measures, by Newsnight Scotland last night.  This was the first in a series of such programmes.  I am also looking at this issue in a series of articles: “Scotland’s care industry”.  The first two parts can be found in our “Publications” section above.

The programme outlined the many challenges we face.  The main issue being the increasing cost of caring for our ageing population.   That though is not the only issue.  Others include:  the quality of our health and social care services, standard of our care homes, who owns and runs these care homes, how we pay for these services and care homes, how do we divide the cost of these services between the individual and the state, how do we improve the health and well-being of our later years and do we need to restructure our health and care services.

There is also a question of perception.  This issue is not all all negative.  The fact that our population is living longer is a good thing.  As part of this debate the positive aspects of this issue need to be publicised.  This is also not just a question of money.

The programme is available on the BBC iPlayer.

The Herald reports today that various English airport authorities are not happy that Air Passenger Duty is likely to be devolved to the Scottish Parliament.

This reaction is not unexpected.  I suspect that each time a tax is devolved similar arguments will be made.   This debate is not unique to the UK.  The on-going battle of wills between Ireland and France and Germany over Ireland’s low corporation tax rate shows its European dimension.

The Herald also reports that one option being considered is to simply devolve the right to collect this tax but not vary it.   I suspect that is not a serious proposal as only devolving the right to collect a tax does not make the Scottish Parliament more fiscally accountable nor provide it with a new economic lever.   If this is a serious proposal then it shows how hard it is going to be devolve any new tax or fiscal power to the Scottish Parliament.  Air Passenger Duty is a minor tax and in theory is fairly easy to devolve.  Even the Calman Commission recommended that it be devolved.  Last week’s Crown Estate announcement provides further evidence of how reluctant HM Treasury are to give up any power at all.

The report from the Herald can be found here.