Outer House case considering a motion for recall of inhibitions served on Cordelt Limited and Mako Property Limited by Playfair Limited. Mako and Cordelt argued that the inhibitions prevented them showing clear searches to purchasers in implement of  contracts to sell properties in Edinburgh.

An important issue for the court was whether s160 of the Bankruptcy and Diligence (Scotland) Act 2007 changed the law regarding the effect of an inhibition on a pre-existing contract to convey property. Under the prior law it was clear that an inhibition did not prevent the transfer of property in implementation of a contract that pre-dated the inhibition. After detailed consideration of the 2007 Act and Scottish Law Commission’s Report on Diligence, Lord Hodge found that the law had not changed in this respect. He also noted that if (and he doubted that it had) advice from Registers of Scotland had indicated otherwise then he would respectfully disagree with that advice. Although s160 defines a breach of the inhibition as occurring when a debtor delivers a deed conveying property over which the inhibition has effect, it does not strike at a deed in implement of a pre-existing obligation.

“I conclude that an inhibition does not strike at a transaction which the inhibited person is bound to carry out as a result of a pre-inhibition obligation. The reforms of the 2007 Act did not create a statutory code which excluded that common law characteristic of the diligence. Had the 2007 Act had that effect it would have created a diligence which forced the inhibited person either to breach the inhibition or break his contract. That would not have been good law reform”

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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Decision of the Lands Valuation Appeal Court regarding an appeal by the assessor against a decision of the Dundee Valuation Appeal Committee. (After noting that strict adherence with the legislation would create a situation that was inequitable and unfair) the Committee had allowed 49 appeals by Land Securities and others against the valuation of shops in the Overgate Centre in Dundee on the basis that a fall in the retail rental values caused by the recession (agreed to have happened on 1 April 2009) amounted to a material change in circumstances after the valuation date. The valuation date was 1 April 2008 and took effect two years later on 1 April 2010.

The issue for the court was whether a material change of circumstances which had occurred during the 2005 roll at a date (agreed to be 1 April 2009) after the valuation date for the 2010 roll should be reflected in the 2010 roll. The ratepayers did not argue that the values entered on the 2010 roll should be reduced due to a supervening material change of circumstances. Instead their contention was that the values should not have been entered into the roll in the first place.

 This argument did not find favour with the court. The Lord President said:

 “In my opinion, this argument is fallacious. It overlooks the basis on which a revaluation is carried out. It confuses the date at which a value has to be struck with the date on which it will come into force. The fundamental principle on which a revaluation is carried out is that all of the lands and heritages entered in the new roll are valued to a common base. With one exception, there is no warrant in the legislation for the assessor’s adjusting tone date[1] valuations in respect of changes in value that occur between the tone date and the revaluation date. Inevitably, there will be increases and decreases in the values of various groups or classes of lands and heritages during that period; but for there to be consistency in the roll it is essential that all lands and heritages in the new roll must be valued as at one fixed date. The exception is the power given to the assessor in section 1(6)(c) of the 1975 Act (supra) to take account of a material change of circumstances in the period after the roll has been made up and before it has come into force.”

Appeals can be made under s 3(2) and 3(4) of the Local Government (Scotland) Act 1975. The right of appeal under section 3(4) extends to a material change of circumstances occurring between the date of delivery of the roll and the date on which the roll comes into force. It does not apply to a material change of circumstances occurring before the entry was made.

Section 3(2) also provides a general right of appeal against a new entry. It would have been open to the ratepayers to appeal under section 3(2) (within the 6 month time limit) in respect of a material change of circumstances occurring after the date of delivery of the roll. That did not assist the ratepayers in this case. The change of circumstances on which they relied had affected values by 1 April 2009 and there was no suggestion that the 2010 roll had been made up by that date.

The court allowed the assessor’s appeal and recalled the decision of the Committee.

The full judgement is available from Scottish Courts here.

A similar decision was reached in respect of properties at the Mercat Shopping Centre in Kirkcaldy in The Assessor for Fife v. Mercat Kirkcaldy Limited and others. The full text of that judgement is available here.

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

Judicial Review of the City of Edinburgh Council’s decision to appropriate part of Portobello Park to build a new Portobello High School.

In the Outer House Lady Dorrian had dismissed a petition for Judicial Review by the Portobello Park Action Group Association. The Action Group argued that it was unlawful for the Council to appropriate the park land which is common good land. Lady Dorrian dismissed the petition on the basis it was barred by mora, taciturnity and acquiescence (i.e. the Action Group had delayed their action, failed to speak out and impliedly accepted the position.) As the petition had been barred, Lady Dorrian did not have to decide on the lawfulness of the Council’s decision, however, she indicated that, if she had been required to do so, she would have found in favour of the Council. Her reasoning was that, whilst the Council’s power to alienate common good land is limited, its power to appropriate such land is unfettered, meaning that its Children and Families Department  could appropriate the park land from its Services for the Community department.

The Inner House has now allowed an appeal of the Outer House decision.

Mora, taciturnity and acquiescence
Lady Dorrian had found that (although it was unclear exactly when the decision to appropriate the park had been reached) “at the very latest” the decision had been made in March 2010. As the Action Group did not bring the case until July 2011 there had been considerable delay which was indicative of taciturnity and acquiescence. On the other hand, the Inner House held that the Action Group was, at the very least, entitled to wait until planning permission had been granted (which occurred in February 2011) before resorting to litigation. It was observed that, if planning permission had been refused, the dispute would have been at best premature and at worst academic and pointless. The Inner House also considered the Action Group’s behaviour, noting:

“The regular statements over the years of the Association’s reasons for their opposition can scarcely be characterised as “taciturnity”. Moreover, bearing in mind the conduct, letters, e-mails, and deputations noted in the chronology in paragraph above, we are unable to accept that there were circumstances entitling the reasonable observer to draw any inference that the Association had at any stage acquiesced in the Council’s proposed intention to construct a new school on Portobello Park. On the contrary …there was a steady and unwavering opposition for the clearly articulated reason that the ground in question was inalienable common good land.”

Appropriation and alienation
After considering the Council’s powers of appropriation and disposal of land contained in sections 73 to 75 of the Local Government (Scotland) Act 1973, the Inner House found:

 “..we are, with great respect, unable to support the Lord Ordinary’s reasoning and conclusions in this area. To our mind there is no question of a local authority’s right to appropriate inalienable common good land (such as the southern section of Portobello Park) being unfettered. On the contrary, the true position would appear to be that, for so long as inalienable common good land remains within the ownership of a local authority, Parliament must be taken to have intended all pre-existing fiduciary obligations, and corresponding community rights, to remain extant and enforceable. It would indeed be an extraordinary situation if, by the mere expedient of appropriating inalienable common good land to some function other than parks and recreation, a local authority could at a stroke free itself from all common law restraints and, having done so, perhaps also facilitate onward disposal without any need to obtain the sanction of the court under section 75(2). In the absence of clear authority requiring us to affirm such an apparently unreasonable state of affairs, we are not persuaded that we should go down that line. We therefore hold that, for present purposes, the Council can lay claim to no statutory power of appropriation under the 1973 Act.”

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 whether a rating authority was entitled to levy rates on the owner of a newly erected and unoccupied building without first having served a completion notice (under schedule 3 to the Local Government (Scotland) Act 1966) on the owner.

Cosmopolitan and Almondvale argued that demands for rates at office premises in Bellshill were illegal as the Council had not served a completion notice on them to establish a deemed date of completion of the office. As such they sought repayment of £289k on the grounds of unjustified enrichment.

However, Lord Hodge held that the action by Cosmopolitan and Almondvale was irrelevant. He found that the language in the 1966 Act did not indicate that the completion notice procedure was intended to be the only method by which the owner and rating authority could establish the date of completion of a building. There was also no policy reason for adopting such an approach.

Taken together, s24 of the 1966 Act and regulation 2 of the Non-Domestic Rating (Unoccupied Property) (Scotland) Regulations 1994 require the levying of rates on all relevant buildings which have been unoccupied for a continuous period of more than three months. In order to be classified as unoccupied for rating purposes a newly erected building must be complete in the sense that it is capable of occupation. The date of completion of a building is a question of fact and is one which the rating authority and the owner can agree upon or contest in litigation. The completion notice procedure provides an additional mechanism by which a rating authority can establish an undisputed deemed date of completion.

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 Manchester Crown Court concerning the prosecution of a letting agent and building owner for failing to carry out an asbestos assessment at Brownlow Mill on Tennyson Street in Bolton.

Several small businesses rent units at the mill and, after a contractor had raised concerns that asbestos insulation boards had been ripped out of unoccupied floors of the building, inspectors discovered that asbestos was also present in parts of the building occupied by the tenants.

Although the letting agent had raised the issue of a lack of an asbestos assessment in 2006, they did not follow it up and no asbestos survey was carried out.

The letting agent and the owner both pled guilty to a breach of the Health and Safety at Work Act 1974 in respect of their failure to ensure the safety of the people at the mill. The owners had also breached the Control of Asbestos Regulations 2006 by failing to properly assess the risks of asbestos at the site.

The letting agents were fined £15,000 (and ordered to pay costs of £11,011). The owner was fined £40,000 (with costs of £8,969).

The press release from the Health and Safety Executive is available here.

Outer House case concerning the title to land near Tullochgribban Quarry (situated close to Grantown-on-Spey). The Trustees sought declarator that they owned the disputed land.  They argued that a disposition in 1991 in their favour formed a habile title which had been fortified by prescription. As such, they contended that a 2008 disposition in favour of G Hamilton (Tullochgribban Mains) Limited  (the quarry owners) was a competing title and should be reduced. The question for the court was whether the Trustees title was habile and therefore capable of founding the prescriptive possession claimed by the Trustees.

What is a habile title?
After some strongly worded comments about the quality of the pleadings, Lady Clark considered what was necessary to constitute a habile title drawing in particular from Auld v Hay (1880) in which the Lord Justice Clerk stated:

 “A habile title does not mean a charter followed by sasine, which bears to convey the property in dispute, but one which is conceived in terms capable of being so construed. The terms of the grant may be ambiguous, or indefinite, or general, so that it may remain doubtful whether the particular subject is or is not conveyed, or, if conveyed, what is the extent of it. But, if the instrument be conceived in terms consistent with and susceptible of a construction which would embrace such a conveyance, that is enough, and 40 years[1] possession following on it will constitute the right to the extent possessed.”

 And Lord Deas said:

 “It is not necessary, in my opinion, that a party who pleads prescription should produce a title which ex facie comprehends everything he claims under it. If its terms be such as may comprehend the whole, and prescriptive possession of the whole has followed, that is sufficient. … Of course if the disputed subjects cannot be claimed without contradicting the terms of the prescriptive deed, as in the base of a bounding charter, no length of possession can establish that claim.”

The Trustees title
In this case, the 1991 disposition conveyed the lands both described in and shown on a plan attached to a disposition in 1977. The 1977 disposition in turn described the subjects conveyed by it, not only by reference to the plan attached to it, but also stated that the subjects were “PART AND PORTION” of subjects shown on a plan attached to a disposition in 1968. However, the plan attached to the 1968 disposition clearly did not include the disputed land.   The 1977 disposition therefore made reference to two contradictory plans and Lady Carlton took the view that it was not possible to interpret it as referring only to the plan attached to it[2]. As, in Lady Carlton’s opinion, it was not possible to interpret the description in the 1977 disposition[3] as including the disputed land, the trustees did not have a habile title on which to found their prescription possession[4].

On the other hand, the 2008 disposition in favour of the Quarry Owners did convey the disputed land and gave them valid title to it.

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 termination of a wind farm agreement relating to property in Aberdeenshire.   In terms of the agreement, Backmuir granted an option to Mountwest to develop a wind farm on the property. The option period was ten years (with a right to extend for a further five years).  Mountwest was entitled to apply for planning permission and other consents but Backmuir had a right to see and make representations about the proposed application before its submission to the planning authority. If Mountwest obtained the necessary permissions, it could choose to exercise the option in which case Backmuir required to grant a twenty five year lease of the property to Mountwest. The agreement also contained a termination provision in the following terms:

“[Backmuir] may determine this Agreement by written notice to [Mountwest] if:-

 [Mountwest] materially fails to perform or observe any of its obligations in this Agreement and such failure or event is incapable of remedy or it is capable of remedy and [Backmuir] have [sic] served on [Mountwest] written notice specifying the failure or event and requiring it to be remedied within a reasonable time (to be specified in the notice and taking into account the nature of the obligation in question) and [Mountwest] has failed to do so;”

In June 2011 Mountwest lodged a planning application but failed to send a copy to Backmuir in advance. When it learned of this, Backmuir wrote to Mountwest advising them that they had breached the agreement and requiring them to remedy the breach “if it was capable of being remedied”. The letter also required Mountwest to provide the documentation required by the agreement within 21 days.  Mountwest then wrote to Backmuir enclosing a copy of the application and asking for comments. However, Backmuir’s solicitors replied purporting to terminate the agreement on the basis that Mountwest had failed to remedy the breach of the agreement.  The issue for the court was whether the agreement had been validly terminated.   Three questions required to be answered.

1. Was there a material failure by Mountwest?
2. If so, was it remediable?
3. Did Backmuir serve a valid notice of termination?

Material failure?
On a commercial construction of the contract Lord Woolman found that there had been a material failure by Mountwest. The purpose of the contract was to facilitate Mountwest’s wish to develop a wind farm at the property. But it contained built in checks drawn in Backmuir’s favour of which the right to make representations about the planning application was the most important. The parties had not intended that right to be illusory. Rather, they provided a mechanism which allowed Backmuir to influence the planning at a critical stage in the procedure.

Remediable?
Lord Woolman found that Mountwest’s failure to send the planning application to Backmuir was plainly capable of remedy; the application being at an early stage and local planning committee not yet having considered it.

Valid termination?
The clause allowing termination of the agreement had been a bespoke irritancy clause. The potency of the clause suggested that Backmuir would have to adhere to its precise requirements (it required Backmuir to serve written notice on Mountwest specifying the failure and requiring it to be remedied within a reasonable time). However, Backmuir’s initial letter notifying the breach had not been clear. It had both expressed doubt as to whether the breach was remediable and had required Mountwest to provide the documentation within 21 days. Lord Woolman found that the reasonable recipient of the letter would read it as requiring delivery of the documentation within 21 days and, if it were done, that would comply with the terms of the agreement.

Another approach was to ask whether the mischief created by Mountwest’s omission had been cured. Lord Woolman concluded that it had. Backmuir had asked for the documents. Mountwest had supplied them in return. If Backmuir had wished to insist on Mountwest withdrawing its application and beginning the process again, that would have been a simple message to convey and could have been easily and clearly set out in its letter.

The purported termination was therefore invalid.

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 relating to the blockage of a sewer on Queen Anne Street in Dunfermline which Scottish Water were responsible for maintaining. A monobloc thought to be causing the blockage was discovered by Scottish Water in February 2009 after excavating and opening the pipe.  Scottish Water claimed damages from Dunne who had carried out reconstruction and resurfacing works for Fife Council in November 2007. The works had involved replacing the surface of the road and pavement with monobloc.

At first instance the sheriff found that on the balance of probabilities the blockage had been caused by the monobloc used by Dunne to resurface the road but was unable to make a finding as to how the monobloc had found its way into the sewer. As the Scottish Water had no direct evidence as to what had happened in 2007 and were not able to prove that there was no other way the block could have entered the sewer, the sheriff refused Scottish Water’s action for damages.

However, the sheriff principal allowed an appeal, finding that Scottish Water’s evidence was sufficient to raise a prima facie inference of negligence which had not been answered by Dunne. As such, damages of £12,585 were awarded to Scottish Water.

The full judgement is available from Scottish Water here.

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

Sheriff Court case relating to the service of a calling up notice by sheriff officer. The notice was posted through the door by the sheriff officer having established that the debtor (Mr Stevenson) lived at the address and given 6 audible knocks (in accordance with the rules of court).

Mr Stevenson argued that, as the notice had been not served on the Defender personally and had been put through the letter box, the bank had failed to serve it properly in terms of the Conveyancing and Feudal Reform(Scotland) Act 1970 (section 19(6)). Mr Stevenson contended that the bank’s action under the 1970 Act should therefore be dismissed.

Sheriff George Jamieson found that s19(6) of the 1970 Act permits certain methods of service but does not contain exhaustive provisions on the service of calling up notices. A sheriff officer was entitled to serve the notice acting in his official capacity as an officer of court in accordance with the rules for citation set out in the relevant legislation and rules of court. Consequently, Mr Stevenson’s motion to dismiss the action was refused.

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.