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Inner House case concerning a rent review under a lease of premises in Helensburgh. The landlords were the trustees of a pension fund. The tenants were Argyll and Bute Council.
On 19 July 2010 a surveyor wrote to the Council purporting to act for the landlord in relation to a rent review of the property and specifying that the revised fair market rent for the property was £58k. The letter contained several errors (including naming an entirely different company as landlord and stating an incorrect review date). On 24 August 2010 the surveyor again wrote to the Council in relation to the rent review of the property and specifying the rent but this time correcting the errors in the previous letter. The Council did not serve a counter notice but continued to pay the rent payable prior to the review and the trustees sought declarator that the rent had been effectively reviewed.
In the Outer House Lord Menzies held that the errors contained in the letter dated 19 July were failures to comply with the fundamental requirements of the lease and the letter did not operate as an effective rent review notice. However, the second letter did satisfy those requirements. On appeal the Council argued that the second letter had failed to address in express terms all of the errors which had been contained in the first letter and that the recipient was faced with two competing or contradictory notices and two overlapping periods for service. As a result, the Council argued, the “reasonable recipient” test had not been met.
The Inner House refused the appeal. The notices had been served under different clauses of the lease; the first under a provision dealing with a ‘timeous’ rent review at the relevant term and the second under a separate provision dealing with invoking a ‘late’ rent review. The terms of the notices were different due to the distinct purpose of the different provisions. They were not competing notices and there was no scope for confusion as a consequence of the issue of both notices, assuming that the reasonable recipient applied his common sense.
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.
The Information Commissioner has highlighted “serious concerns” with the City of Edinburgh Council’s handling of an information request relating to statutory repairs. The Commissioner’s decision is available here.
Sheriff Court case concerning the division and sale of a property on Shiskine Drive, Maryhill in Glasgow. Mr Collins and Ms Sweeny each had a one half pro-indiviso share in the property (which was incapable of division). Mr Collins sought a sale of the property on the open market and division of the proceeds. Ms Sweeney sought an order compelling the sale of Mr Collins share of the property to her. She argued that there were equitable considerations which justified the granting of such an order; pointing to the fact that she could afford to acquire and maintain the property whereas Mr Collins could not, referring to other litigation between the parties (including an exclusion order) and making a case for the purchase of the property by her for the sake of a child of the relationship between the parties.
The principle issue for the court was whether the court could competently grant decree for the sale to a co-proprietor, against the will of the other proprietor, rather than on the open market.
After considering the authorities, the sheriff concluded that, even if proved, the equitable considerations did not constitute a defence to Mr Collins’ absolute right to insist on a sale on the open market. Although there was authority for the court to make an order for the sale of a pro-indiviso share to a co-proprietor, this only applied where both parties consented. In the absence of consent, where the property cannot be divided, a co-proprietor has an absolute right to insist upon sale on the open market and cannot be obliged to sell to a co-proprietor against his will.
The full judgment is available from Scottish Courts here.
(See appeal to sheriff principal here.)
All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.
Inner House case of some complexity in which the Liquidator of the Letham Grange Development Company sought reduction of a security over the Letham Grange resort near Arbroath. The case involves a number of companies all controlled by a Mr Liu and his family.
The Liquidator argued that the holder of the security, Foxworth (a company controlled by Mr Liu), had not acquired the rights under the security in good faith and for value. The Liquidator had previously successfully challenged a disposition by Letham Grange in favour of Nova Scotia Limited (also a company controlled by Mr Liu) on the basis that it was a gratuitous alienation. (The property which had been purchased by Letham Grange for £2,105,000 was sold to Nova Scotia for only £248,100.)
In the Outer House Lord Glennie found that there had not been a gratuitous alienation accepting Mr Lui’s evidence that the price had been reduced as there had been loans made by Mr Liu’s family in favour of Letham to finance the original purchase and that Foxworth (having assumed liability) was obliged to repay those loans to the family.
The Inner House have allowed an appeal finding that, to avoid a gratuitous alienation, the consideration given in exchange for the granting of the disposition of the resort to Nova Scotia required to be enforceable at the time when the disposition was granted. However, at that date, there was no enforceable obligation binding Nova Scotia to repay the loans to the family. Even if that had not been the case, taking account of all of circumstances, the Inner House found that the various transactions surrounding Letham Grange had been intended to defeat the claims of lawful creditors. For those reasons a decree granting reduction of the standard security was granted.
The full judgement is available from Scottish Courts here.
(NB: See appeal to the Supreme court here.)
All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.
Inner 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 comply with restrictions on the type of tenant imposed by sale agreements 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 were to deliver a letter to Regus (although the letter was not addressed 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 sued for payment of the costs from the bank. In the Outer House Lord Menzies had 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. On appeal to the Inner House, Regus relied on two arguments:
The court rejected Regus’s appeal. For a promissory obligation of the type argued for by Regus, clear words are required. The letter merely confirmed that, at the date of the letter, the bank held the funds on behalf of Tritax and TAL (the developer/development manager). It did not contain an unconditional obligation on the bank to pay the funds to Regus on demand as the bank’s own debt. The bank’s freedom to pay out the money would depend on the terms and conditions on which it held the funds and the letter also spelt out that release of the money was governed by an agreed procedure. In addition, the sentence referring to wider commercial terms made it plain that the confirmation was not unconditional. For the same reasons, whilst the letter made the representation that the bank held the funds; it did not make a representation that the money would be released whatever the circumstances when Regus came to demand payment.
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.
Case from the Court of Appeal for England and Wales concerning a developer’s claim for damages against a consulting engineer who failed to perform tasks by an agreed date. The developer (a farmer) sought damages in respect of the fall in the value of his development (due to the property slump) during the period of the delay.
In terms of an oral agreement (followed by a formal letter of engagement) reached with the developer on 6 September 2006, the engineer was to design a road and drainage to the developer’s site and to obtain s38 approval (allowing adoption of the road by the roads authority in terms of the Highways Act 1980) by March 2007. An initial s38 approval was not obtained until 17 February 2008 and even then some parts had not been finalised. In April 2008 the developer engaged another consulting engineer who obtained the necessary approval in June 2008. The judge found that the first engineer’s breach of contract delayed the development by 15 months and that had resulted in loss to the developer because of the reduced value of the development.
The question for the appeal court was whether the developer’s loss was too remote to allow recovery. The appeal court dismissed the engineer’s appeal agreeing with the judge’s finding that that the loss was not too remote as it was reasonably foreseeable as a serious possibility if there was a delay. It also agreed with the judge’s finding that the case was not one of the unusual cases where the nature of the contract and the commercial background, or other relevant special circumstances, mean that an implied assumption of responsibility for losses that can be reasonably foreseen was inappropriate.
The Court of Appeal’s comments on the length of delay are also worth noting:
“It may well be that the reason for the absence of many cases of this kind is that the property market does not move as quickly as certain other types of market involving commodities and other goods, and it takes a very lengthy delay in breach of contract before a provable loss of value can occur. A few days or even a few weeks delay is unlikely to give rise to a demonstrable loss on the property market. It was the appellant’s delay of 15 months, in the Judge’s words an egregious delay, which in the present case gave rise to a quantifiable loss.”
The full judgement is available from BAILII here.
All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.
The latest addition to our website is our “Know How” page.
This page not only includes our popular “Property and Conveyancing Casebook” but a “Training and Practice Notes” section.
This includes VAT and inheritance tax slides with notes. These are aimed at a LLB or Diploma in Legal Practice class. The format and content can though be easily altered to suit a different audience.
There are also Practice Notes on landfill tax and aggregates levy. These Practice Notes provide a comprehensive introduction to these taxes.
If you would to know more about these materials please feel to contact us. See the “Who we are” section of our website.
Outer House case in which Santander sought to recover losses from the Keeper of the Registers of Scotland after the Keeper accepted a forged discharge (discharging a security held by Santander) for registration. The discharge was subsequently reduced and the Land Register was rectified to show Santander’s security. However, the security only took effect as at the date of rectification meaning that a second security registered in favour of the Bank of Scotland (after the discharge was registered but before the rectification took effect) received prior ranking to the Santander security. The Bank of Scotland later sold the property in terms of their security and no proceeds went to Santander (who were still owed more that £240k in terms of the loan secured). Santander claimed that their loss arose as a result of the fault and negligence of the Keeper.
Lord Boyd found in favour of the Keeper. After deciding that the Keeper’s decision to register the discharge was a matter on which the court could adjudicate (i.e. it was not a policy decision purely at the Keeper’s discretion), the question for the court was whether the Keeper owed a duty of care to the Bank. This would depend on whether the Caparo test was satisfied. In order to satisfy the Caparo test Santander had to show that the loss was foreseeable, the relationship between Santander and the Keeper was sufficiently proximate and that it was fair just and reasonable to impose a duty of care on the Keeper. It was the last of these requirements on which Santander’s claim failed. Lord Boyd (after noting that the Bank had assumed certain risks in lending to its client whereas the Keeper had made no assessment of the fraudster’s creditworthiness or honesty or whether the value of the property would fully secure the loan), found that in the circumstances: where the loss was caused by the criminal acts of Santander’s client, it was not fair, just or reasonable that the Keeper should be liable.
The full 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.
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:
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.
