Sheriff court case concerning an alleged servitude right of access over a property in Aberdeen. In 1992 Jessie Sharp granted a disposition of a small area to the owner of the neighbouring property (her brother, Peter Sharp) in which she purported to reserve a right of access over the property to any garage to be built on the part she retained. No garage was built until her successors in title, the Gardens, built one in 2010. However, the Arrowsmiths (the successors in title to Peter Sharp) argued that the clause in the 1992 disposition created only a personal right between Jessie and Peter Sharp which did not transmit to their successors in title. They contended that, without a garage, there could be no servitude right as the purpose of the servitude could not be achieved.

The sheriff principal rejected that argument finding that the 1992 disposition did create a heritable and irredeemable servitude right of access over the Arrowsmiths’ property. The clause satisfied many of the common requirements for the creation of a servitude. Although the word “servitude” was not used, that is not fatal to the creation of a servitude and the clause contained a reference to successors in title and an obligation to insert in future transmissions. There also was an express declaration that it was a “real and preferable” burden, the deed did not expressly exclude the constitution of a servitude and there were no indications that the right was intended to be personal. Further, the sheriff principal took account of the fact that the garage was likely to be a permanent construction when coming to the conclusion that it was likely that the parties had contemplated that the right would continue for the benefit of singular successors.

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 considering the interpretation of a break clause in a lease of premises at Almondvale Office Park in Livingston.

The clause was clear in that CBS (the tenant) was required to serve notice exercising the break and pay a lump sum before terminating the lease. However words had been omitted from a third part of the clause and, although a third and additional requirement appeared to be intended, it was unclear what it was.

CBS sought to exercise the break, served the notice and paid the lump sum. However, RPS (the landlord) argued that CBS had not validly terminated the lease contending that payment in respect of repairs required to be made in terms of the clause before CBS could terminate. (A schedule of dilapidations had been served on CBS by RPS prior to the termination but the parties had been unable to agree the sum due.) In RPS’s view the third part of the clause had three possible meanings. These were that: prior to the termination date, the tenant had to either (a) pay and perform all its obligations in full; or (b) pay all its monetary obligations; or (c) pay all sums over and above the lump sum.

In the first place Lord Woolman found that omission of words left the third part of clause with no natural meaning. In the second place, when considering what a reasonable person would have understood the clause to mean, although use of the words “in addition” did indicate that a third requirement was intended, omission of the words meant that it was not clear what the requirement was (the fact that RPS had offered three possible meanings in itself suggested this).  As such, it was not possible to interpret the clause as imposing a third obligation on CBS prior to termination of the lease.

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 arbitration proceedings in respect of a lease over Pentlandfield business park at Roslin in Midlothian. Midlothian Innovation let the premises from Robert W Ferguson & Co.

The lease was for 5 years and included an option to purchase as at 1 July 2007. The parties had also signed a minute of agreement. Both of the documents stipulated that, if the option were exercised, Robert W Ferguson would grant a renunciation of the lease.  Midlothian exercised the option on 1 December 2006 and a renunciation was signed on 2 July 2007. However, on 16 August 2007 both parties signed a joint application form seeking the appointment of an arbitrator in respect of a dispute over compliance with the repairing obligations in the lease. The arbitration proceeded slowly but in 2011 Robert Ferguson (the surviving partner of the firm of Robert W Ferguson & Co) changed his position and argued that, given the granting of the renunciation, the arbitrator had no power to make an award.

Lord Woolman rejected that argument. Although the acceptance of a renunciation by a landlord implies a discharge of all claims against the tenant, the renunciation is potentially subject to any further agreement made by the parties. The parties had freedom of contract and were entitled to agree not only that they had a dispute arising out of the lease, but also that they wished to resolve it by arbitration. The signing of the joint application form demonstrated the parties’ intention to have the dispute referred to arbitration and Mr Ferguson’s participation in the proceedings until 2011 implied that he consented to the arbitration. Lord Woolman found that the arbitrator had jurisdiction and the proceedings should proceed to a conclusion.

The full judgement is available from Scottish Courts here.

(See also related decision here).

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

Inner House case concerning an application to exercise a right to buy croft land at the Pairc Estate in South East Lewis. Pairc Crofters Limited was the owner of the land and had leased it to Pairc Renewables Limited. The Pairc Trust is the crofting community body which sought to exercise the right to buy. It sought purchase both the interest of Pairc Crofters as owner and the interest of Pairc Renewables as tenant.

The Scottish Ministers granted the trust’s application. Pairc Crofters and Pairc Renewables appealed to the sheriff. The sheriff referred the devolution issues arising from the appeal to the Inner House. The court required to consider whether Part 3 of the Land Reform (Scotland) Act 2003 (which contains the crofting right to buy) is incompatible with the European Convention on Human Rights. Specifically the landowners and their tenants claimed that Part 3 contravened Article 6(1) (right to a fair trial) and/or Article 1 of Protocol 1 (right to protection of property) of the Convention. If Part 3 had been incompatible with the Convention rights, the making of the 2003 Act would as a consequence have been outwith the legislative competence of the Scottish Parliament (in terms of the Human Rights Act 1998 and the Scotland Act 1998).

The landowner argued that Part 3 does not provide sufficient safeguards for landowner’s rights. Although A1P1 makes no mention of procedural requirements, the landowner contended that the procedure employed must give the proprietor a reasonable opportunity of putting its case to the decision maker. And, in the landowner’s view, Part 3 did not do that.

The court took the view that the landowner’s case depended on the proposition that the safeguards for a landowner’s rights required to have been explicitly spelled out in the 2003 Act. However, this is not the case. The question of competence depends on how the legislation operates in practice and not on how any specific provision may appear if looked at in isolation. (It may be that proper interpretation of the Act, the terms of other legislation, or the principles of the common law may restrict the impact of the Act so that it cannot be said to be incompatible with Convention rights.)

As regards Part 3 of the 2003 Act:

1. The provisions requiring the crofting community’s approval (to exercise of the right to buy) by ballot were compatible with article 6 (the right to a fair trial). Regulation 2 of the Crofting Community Right to Buy (Ballot) (Scotland) Regulations 2004 requires that the ballot be carried out in a “fair and reasonable manner”. In the event that the landowner considers the ballot to be unfair, it had a judicial remedy under the same regulation.
2. The exercising of the right to buy is at the discretion of the Scottish Ministers. Section 74(1)(n) of the 2003 Act requires that the applicant must in every case satisfy the Ministers that the proposed purchase is in the public interest. In making a judgment as to the public interest, the Ministers must act compatibly with A1P1 (right to protection of property). In assessing the broad overall consideration of the public interest, the Ministers must take account of the interests of persons who may be adversely affected by the decision, such as the landowner. When the Ministers decide where the overall public interest lies, the central consideration will be that of balancing the harm to the landowner against the benefit of the proposal to the wider public.
3. The 2003 Act gives the landowner adequate means to put forward his case. On receipt of the community body’s application, the Ministers are obliged to invite a number of interested parties, including the landowner, to submit their views in writing on the application (s 73(8)(a)). The Ministers are then under an express obligation, when considering whether to grant the application, to have regard to all views that have been received (s73(12), (13)). In addition to the statutory procedure the Ministers also have a duty at common law to observe such additional procedural safeguards as are necessary to attain fairness.
4. Lastly, the legislation provides for an adequate level of scrutiny of the factual issues that an application to exercise the right to buy may raise. It does so in three separate ways:
   1. in the requirement of the details that the crofting community body must provide in the prescribed form of application;
   2. in the requirement that the Ministers must invite views on the proposal from interested parties, including the landlord, and from the public; and
   3. from the right given to any interested party, again including the landlord, to refer any question relating to the application to the Land Court.

The Inner House found that, when considered as a whole, the legislative provisions and principles of administrative law offer a level of protection “equal to or surpassing that” which is required by the European Convention on Human Rights.

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.

The Legal Knowledge Scotland Property and Conveyancing Casebook containing all of our property and conveyancing case summaries is now available here.

Outer House case concerning an appeal by the City of Edinburgh Council against the decision of a reporter appointed by the Scottish Ministers.

The case relates to a listed tenement near the junction between Ferry Road and Newhaven Road in Edinburgh.  The owner of the property sub-divided the principal front room (with stud partitions) to create two bedrooms and a corridor without obtaining listed building consent.

The Council served an enforcement notice on the owner requiring re-instatement of the room to its original condition.  The owner appealed against the enforcement notice contending that: (1) listed buildings consent was unnecessary; or (2) that the consent should nevertheless be granted. In support of the second argument the owner pointed to the fact that the alterations came to light when he had made an HMO (Houses in Multiple Occupation) application for the property as a result of being accepted by the Council’s Adult Resource Team to provide supported lodgings for vulnerable adults. The reporter rejected the owner’s first contention but accepted his second contention (attaching considerable weight to what he called the “special needs argument” and noting that the changes were easily reversible) allowed the appeal and quashed the enforcement notice subject to the condition that the partitions be removed and the property be returned to its original condition when it ceased to be on the Council’s register of supported accommodation for vulnerable adults. The Council appealed to the court.

Lord Tyre refused the appeal. The appropriate starting was section 14(2) of the Planning (Listed Buildings and Conservation Areas) (Scotland)  Act, which requires the reporter to have special regard to the desirability of preserving the building or any features of special architectural interest which it possesses. It also creates a presumption against the granting of listed building consent in respect of alterations which have an adverse effect on the special interest of the building. Reading the decision letter fairly and as a whole, Lord Tyre found that the reporter, having identified the correct starting point, proceeded to assess whether there were considerations of sufficient force to overcome the presumption against alteration. His reasons for deciding that there were such considerations were clearly explained.  So far as the adverse effect is concerned, the reporter concluded that the external visibility of the subdivision was negligible and that the works were easily reversible without damage to internal decorative features. He regarded this “modest” impact on the building as outweighed by what he described as the special needs argument put forward by the property owner.

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.

The Land and Buildings Transaction Tax (Scotland) Bill was introduced to the Scottish Parliament on 29 November. Some points of note:

• the Bill is expected to come into effect  on 1 April 2015;
• the Bill is the first of three-  a Landfill Tax Bill and Tax Management Bill will follow;
• the Scottish Ministers are the tax authority (s52) but the authority can be changed by order (a new body, Revenue Scotland has been established for that purpose);
• the tax authority can delegate administration and collection of the tax to Registers of Scotland (s53) (an idea first suggested by my colleague James Aitken);
• the tax will be progressive, i.e. tax is charged on the proportion  of the price exceeding the threshold rather than charging the higher rate of tax on the whole price (per SDLT)(ss24-26)
• like SDLT, LBTT will be charged on VAT (para 2, Schedule 2)
• the Bill contains a number of targeted anti-avoidance rules applying to specific exemptions and reliefs. The Scottish Government also intends to introduce a general anti-avoidance rule following a consultation on tax management;
• commercial leases are to be dealt with by subordinate legislation (s55) following consideration of the options (one of which is making tax payable annually on actual rent paid);
• residential leases are exempt (para 3, Schedule 1);
• licences to occupy are not exempt (ss14-16); and
• the Bill replicates existing SDLT provisions on partnerships & trusts. However, the Scottish Government intends to carry out further work on the provisions during the Bill’s Parliamentary passage to produce clearer legislation (to be brought forward at Stage 2).

The Bill is available here.
The Explanatory Notes are available here.
The Policy Memorandum can be found here.

Sheriff court case considering the interpretation of missives for a property in Ellon. Missives were concluded on 9 June 2010 and provided for a date of entry of 6 August 2010. The following clauses (from the Aberdeen and Aberdeenshire standard clauses) were incorporated:

 “(i)         So far as the Seller is aware the Property is not affected by:-
…

(g)          any proposals, applications or re-development plans affecting the Property or any adjacent or neighbouring property which could reasonably be considered to be detrimental to the Property.

 (ii)       Without prejudice to the foregoing, the Seller warrants that he has not been served with nor received any neighbour notification notice issued in terms of planning legislation by any third party. If such notice is served on or received by the Seller prior to the date of settlement, the Seller will immediately forward the notice to the Purchaser’s Solicitor. If the proposals contained in the notice would have a materially detrimental effect on the Property the Purchaser will be entitled to resile from the Missives without penalty due to or by either party.”

The sellers then sent the purchasers a letter (dated 27 July) purporting to re-open the missives and changing the date of entry to 5 August 2010. The purchasers replied (on 30 July) accepting the terms of the seller’s letter and again concluding the missives.

When the purchasers moved into the property following settlement they discovered a handwritten note from the sellers attached to a letter (which had been received by the sellers on 15 July) to the sellers from Aberdeenshire Council.  The letter advised that the Council had published the proposed local development plan and that it included a proposal for development on or adjacent to the property. The notice and plan were, it was said, being issued to the sellers in line with regulation 14(2) of the Town and Country Planning (Development Planning) (Scotland) Regulations 2008. The purchasers raised an action for breach of contract.

The sellers argued:

1. that the notice was not a “neighbourhood notification notice”; and
2. that the warranty in the missives applied as at the date of conclusion of the “original” missives (5 weeks before the Council’s letter was received) and not as at the date the “amended” missives were concluded (2 weeks after receipt of the letter).

The sheriff principal, agreeing with the sheriff’s interpretation of the missives, rejected these arguments.

The neighbour notification notice
The sellers had argued that “neighbour notification notice” is a term of art derived from the statutory scheme contained in The Town and Country Planning (General Development Procedure) (Scotland) Order 1992. In terms of that order, the owner of ground required to intimate his intention to develop its property to its neighbours. However, the scheme was changed when the 2008 Regulations (above) came into force, making the local authority responsible for intimating proposed planning developments (and containing no reference to a “neighbourhood notification notice”). The sheriff principal found that, nevertheless, the clause referred to “any neighbour notification”, the word ‘any’ being significant and indicating that the clause was intended to cover planning legislation as a whole[1].

The warranty
As regards the warranty, the sellers argued that the contract was concluded on 9 June and that the sole purpose of the later letters was to amend the date of entry (effectively meaning that the warranty was given as at 9 June). However, the sheriff principal found that the best approach was to consider what the parties intended to be the date at which the warranty was given. The parties agreed that the warranty was as at the date of conclusion of the missives rather than as at the date of the original offer. The effect of the later letters was to create a new date for the conclusion of missives. Thus the natural consequence of amending the date of entry was to create a new date as at which the warranty was given.

The sheriff principal refused the appeal and agreed with the sheriff’s finding to the effect that the sellers were in breach of contract.

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 the Westwood Neighbourhood Centre in East Kilbride. The centre contains a mix of flats, offices and shops. Dundas Heritable Limited owned the Westwood pub in the centre and concluded missives to lease part of the pub to Tesco for use as a Tesco Express. Russel Properties (Europe) Limited owned much of the non-residential property in the centre including two car parks. They sought an interim interdict preventing use of the pub as a shop pointing to a burden in the title to the pub which restricted its use to that of a pub or a restaurant:

“Subject to the provisions of these presents the feu and the buildings and others erected thereon, or any part thereof, shall not be occupied or used for any trade, business or purpose other than that of a licensed public house and/or public restaurant and purposes ancillary thereto … without the written consent of the Superiors.”

Although the feudal superior had been granted the primary right to enforce the burden, Russel argued that, on abolition of the feudal system, it had acquired the right to enforce the burden under s53 of the Title Conditions (Scotland) Act 2003. Put simply, s53 provides that, where burdens have been imposed under a common scheme on a group of related properties, the burdens can be enforced by any of the related properties.

Lord Woolman refused the motion for interim interdict finding that Russel had failed to establish that there was a case to answer. To do so they would have required to have shown evidence that there was a common scheme and that the properties were related.

Although there were also burdens in the titles to other properties at the centre which restricted the use of those properties, the burdens were not identical or even similar and did not show the required mutuality of interest or sense of equivalence which would give rise to the creation of reciprocal rights under a common scheme. Also, although the term “related properties” is not defined in the 2003 Act and the court has some discretion, Russel failed to argue that the properties fell within the classes of related property illustrated by examples provided in the Act. Lord Woolman therefore found that Russel had not satisfied the criteria necessary to enforce the burden.

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.

Inner House case considering a lease of premises at Wardpark South Industrial Estate in Cumbernauld.  Batley were tenants and North Lanarkshire Council were sub-tenants.

At the centre of the dispute were works which the Council carried out to the property under a minute of agreement. In terms of the minute, the Council had to remove the works and re-instate the premises at the end of the agreement if they were required to do so by Batley.  Batley served a schedule of dilapidations after the end of the sublease.  However, the Council argued that the obligation to reinstate the premises died on the expiry of the sublease and therefore it did not require to comply.

In the Outer House, the temporary judge (Morag Wise QC) found that, in terms of the minute, there was no need for Batley to give written notice requiring removal of the works and allowed a proof to consider whether Batley had adequately conveyed its requirement for re-instatement when a surveyor acting on its behalf had telephoned the Council before the end of the sublease and indicated re-instatement would be required.

The Inner House allowed a reclaiming motion finding that the minute not only amended the sublease but also ratified provisions in the sublease. These included a provision incorporating a requirement for written notice which was contained in the lease. In the absence of such written notice there was no requirement on the Council to re-instate the premises. An attempt by Batley to claim the cost of re-instating the premises under the general repairing clause in the sublease also failed.

The full judgement is available from Scottish Courts here.

(NB: See appeal to Supreme Court)

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