Midlothian Innovation & Technology Trust v Robert William Ferguson, 6 July 2012 -arbiter’s jurisdiction, lease and option to purchase

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.

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David Kipling v Dunbar Bank, 6 March 2012 – Factors to be considered on suspension of interim interdict

Outer House case relating to a personal guarantee granted by Mr Kipling to Dunbar Bank.  The bank issued a charge for the payment of over £1m on Mr Kipling on the basis of the guarantee.

Mr Kipling argued amongst other things that he was not liable to pay as the bank had agreed to waive its right to recover under the guarantee.

Lord Pentland granted an interim suspension and interdict preventing the bank from taking diligence against Mr Kipling following on from the charge.

Subsequent to the granting of the interim interdict, Mr Kipling made amendments to his pleadings which led the bank to enrol a motion to recall the interim interdict, arguing that, given the amendments, the interim interdict was obtained in circumstances where Mr Kipling had failed to make full and frank disclosure on all matters material to his application for the interim orders and also that, following the amendments, the pleadings no longer disclosed a prima face case.

Lord Drummond Young refused the motion to recall the interim interdict.  Five general matters are relevant when considering the application for, or suspension of, such an order:

  1. the court’s decision on an interim order is not a conclusive determination of the parties’ dispute;
  2. the orders under consideration are merely temporary orders;
  3. the court must give consideration to the balance of convenience. I.e. the prejudice that may occur to each of the parties in the event that an interim order is made or recalled (which requires a judgment as to both the likelihood and the seriousness of such prejudice);
  4. the relative strength of the cases put forward by the parties;
  5. the relative strength of the case that is said to justify an interim order must always be weighed with balance of convenience in the sense of likely prejudice.

As regards the matter before him, Lord Drummond Young found that, although the relative strengths of the cases tended to favour the bank (Mr Kipling’s case relied on the bank having given up its guarantee for no obvious return), given that, if the interim order were withdrawn, the bank could proceed with diligence and ultimately sequestration against Mr Kipling, Mr Kipling’s case on the balance of convenience outweighed the relative strength of the bank’s case.

The full judgement is available from Scottish Courts here.

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

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