Sheriff court case concerning servitude rights over an access road near Dounby on Orkney.  Orkney Housing Association owned former garage premises on the B9057.   Mr and Mrs Atkinson owned a property known as Esgar and also an access road leading to it known as Esgar Road.

The title to the former garage was registered in the Land Register for Scotland and included a right of access over Esgar Road.  The housing association built four houses on the property and created a parking area to the rear of the property. Access to the parking area was taken via Esgar road. When the houses were almost completed Mr and Mrs Atkinson put up some fence posts between the road and the parking area so as to prevent cars reaching the parking area. The housing association raised an action and obtained interim orders against Mr and Mrs Atkinson for the removal of the fence posts. They then completed the houses and sought damages for the loss of rental income incurred as a result of the delay in completion of the houses which they said was due to Mr and Mrs Atkinson’s obstruction of the parking area.

Mr and Mrs Atkinson counterclaimed arguing that the right of access did not exist having been abandoned or extinguished by prescription before first registration of the right in the land register. At first instance the sheriff allowed a proof, appearing to be of the view that the defences were relevant, in that, if the Mr and Mrs Atkinson were able to persuade the court that the right of access had been abandoned or extinguished before first registration, then they would be entitled to seek rectification of the register.

The housing association appealed. They contended that (in terms of the Land Registration (Scotland) Act 1979) their land certificate was conclusive of the extent of the rights over Esgar Road and the right of access could only be affected if the Keeper was capable of rectifying the register.  As the housing association were proprietors in possession of the property, the register could not be rectified to their prejudice (s9 of the ‘79 Act).

The sheriff principal agreed with the housing association’s arguments.  The starting point was the description of the subjects in the property section of the housing association’s title sheet:

 “Subjects THE GARAGE, DOUNBY, ORKNEY KW17 2HX edged red on the Title Plan, together with a right of access for all purposes over the road commonly known as the Esgar Road”.

So long as this description remained unaltered, the housing association had a right of access over the access road. Even if the Keeper had included the access right in error, the housing association  as the current proprietors of the subjects would remain entitled to the right of access unless and until the error was corrected by rectification of the register.

The question then was whether it was open to the Keeper to rectify the register (or for the court or the Lands Tribunal for Scotland to order him to do so).

 The answer to that question depended on:

1. whether the housing association was a proprietor  in possession within the meaning of section 9(3) of the ’79 Act;
2. whether, if it was a proprietor in possession, it would be prejudiced by rectification, and
3. whether any of the exceptions to the prohibition on rectification against a proprietor n possession applied (ss 9(3)(i) to (iv) of the ‘79 Act).

Having considered the authorities, the sheriff principal found that the housing association were proprietors in possession. It was also plain that they would be prejudiced (and it would have made no difference if, as was argued for Mr and Mrs Atkinson, the prejudice was not “particularly significant”). It was also found that none of the exceptions to the ‘proprietor in possession rule’ applied.

The Keeper would not therefore be entitled to exercise his power to rectify the register by deleting reference to the right of access and nor would either the court or the Lands Tribunal be entitled to order him to do so. It was therefore of no relevance that the right of access may have been extinguished/abandoned and included as the result of an error on the part of the Keeper.

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.

Petition for Judicial Review in which Mr McGinty sought reduction of National Planning Framework for Scotland 2 (NPF2) to the extent that it designates a new power station and transportation hub at Hunterston.

Mr McGinty’s argument was that the Scottish Ministers had not complied with their obligations relating to notice and consultation with regard to the proposed development.

Facts and background
The Ministers conducted a consultation process on the scope and content of NPF2 between February and October 2007. A discussion draft was issued in January 2008 with a consultation period from 8 January until 15 April 2008. The revised NPF2 was published in December 2008 and considered by the Scottish Parliament between 12 December 2008 and 6 March 2009. The finalised NPF2 was laid before the Scottish Parliament on 25 June 2009 and published on the Scottish Government’s website on 2 July 2009.

The Hunterston development was included as item 9 in a list of 14 national developments in the finalised NPF2 approved by the Ministers. However, it was not included in the discussion draft of NPF2 which had been issued in January 2008 (and contained only 9 proposed national developments). Hunterston had been proposed as a candidate for national development during the consultation process, the responses to which were posted on the NPF website on 8 August 2008.

On 19 September 2008 a supplementary consultation paper[1] was published on the NPF website and included 52 potential national developments including Hunterston.  At or about the same time the “NPF2, SEA Guide” and a newsletter were also published on the NPF website. Both of these publicised the supplementary paper and requested responses to it by 31 October 2008. Intimation of the supplementary paper was also made in the Edinburgh Gazette on 23 September 2008.

Arguments and decision
The Ministers contended that the publicity given to the supplementary paper was sufficient to comply with their requirements in terms of the legislation[2]. They also argued that, in any event, the petition was barred by mora, taciturnity and acquiescence and further that Mr McGinty had no title and interest to present the petition.

Mora
With regard to mora, taciturnity and acquiescence, Mr McGinty said that he first became aware of the Hunterston development’s inclusion in NPF2 at a public meeting in Largs on 28 July 2009, had contacted solicitors on 11 August and raised the petition on 23 September 2011.

Lord Brailsford found that, had the period of delay been confined to the 7 week period, there would probably have been no merit in the plea of mora. However, having formed the view that the procedure followed by the Ministers did not breach their obligations with regard to publicity, Mr McGinty ought to have been aware of NPF2 in September 2008.  Against that background Lord Brailsford was of the view that the plea of mora should be upheld.

Title and interest
With regard to Mr McGinty’s title and interest to raise the petition, the relevant facts were that Mr McGinty resided in Largs (about 5 miles from the Hunterston site). His only connection with the site, beyond the geographical proximity, was that he occasionally used it on an informal basis for recreational purposes.  Lord Brailsford said:

“Without in any sense wishing to denigrate such usage, from which I have no doubt the petitioner obtains both pleasure and benefit on the occasions that he exercises it, it cannot I think in fairness be regarded as other than somewhat vague and remote”.

At best, Lord Brailsford considered Mr McGinty may have been regarded as having title to sue in order to “prevent a breach by a public body of a duty owed by that public body to the public”. However, it was also found[3] that Mr McGinty did not have “a real and legitimate interest to protect” or “real and practical” interest to bring the proceedings. Lord Brailsford noted:

“He does not reside adjacent to the site and is not therefore a neighbour. His use of the site is limited, intermittent and non-essential. The type of usage he exercises over the site could in fact be exercised over any area of land to which the public has access at any location in Scotland. He does not sue as a member or representative of a group or organisation with title or interest. If an interest of this sort were to constitute sufficient interest to sue in a public law question then any member of the public who, on occasion, used a piece of ground for recreational purposes would have a title and interest to challenge a public law decision which affected that ground…. I do not consider that it is either desirable or, perhaps more pertinently, necessary for the discharge of public bodies to be subject to challenges by persons, no matter how well intentioned they may be, whose link with a site or subject are as remote as this.”

Publicity
There was also discussion as to whether advertising the Edinburgh Gazette was sufficient to comply with the requirements for publicity given that it is not of wide publication and is not ready available to, or even known by, members of the public.  However, Lord Brailsford took the view that the Edinburgh Gazette is the recognised method in Scots law of publishing formal and legal notices and, as long as that status remains, advertisement in it should be regarded as a proper means of bringing matters such as the supplementary paper to the public attention.

Also, although many members of the public would rarely visit the Scottish Government’s website, it too was an entirely proper means of making information available to the public.

Whilst publication in a local newspaper would be an effective means of bringing such matters to the public attention, Lord Brailsford did not consider it was the only means of doing so and, more importantly, did not consider it was a necessary requirement. Such a requirement would add considerably to the burden and cost of the administration of strategic planning and would constitute an unnecessary and onerous obligation on the Scottish Ministers.

The full judgement is available from Scottish courts here.

(See appeal to the Inner House here.)

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

Two Outer House cases in which Cheshire Mortgage and Blemain Finance (connected companies) were the victims of a mortgage fraud and sought to sue the solicitors instructed by the fraudsters  (the banks had instructed separate solicitors) for breach of warranty of authority.

In each case the fraudsters had pretended to be persons owning property which they were seeking to use as security for a loan (of £355,000 in one case and £203,000 in the other).  They had been able to produce evidence of their identity in the form of utility bills and driving licences to their solicitors and to the banks.  In both cases the fraudsters had approached the bank (directly in one case and via a broker in the other) before instructing their solicitors.

The banks argued that, in each case, the solicitors warranted that they had the authority of the individuals who owned the properties over which standard securities were purportedly granted. The solicitors recognised the doctrine of a solicitor giving an implied warranty of authority. However, they contended that it does not go as far as giving a warranty of the identity of the person for whom they act, nor does it include any warranty as to whether he is or is not the owner or occupier of any particular property. In effect the solicitors said that they warranted only that they had authority from persons who were already known to the banks and with whom the banks were already dealing.

Lord Glennie found in favour of the solicitors. The circumstances in which the solicitors came to transaction were of particular importance. By the time the solicitors became involved, the banks knew who they were (or who they thought they were) dealing with. They had already made the decision to lend to those individuals. The solicitors had been instructed (by the fraudsters) for the limited purpose of drawing up the loan and security documentation and liaising with the banks’ solicitors. In the words of Lord Glennie:

“The position can be viewed, perhaps more graphically, in this way. Imagine the negotiations between lender and borrower happening in a large room. Agreement in principle is reached between lender and borrower. The loan and security documentation requires input from solicitors. The lenders instruct Mellicks, who enter the room. The borrowers decide to instruct solicitors of their own to safeguard their interests. They appoint Longmuir & Co, or Balfour & Manson. They too enter the room. The solicitors begin the process of drawing up the documentation. They eventually complete it, signatures are obtained from their respective clients, the signed documentation is handed over to the lenders or to Mellicks, and the loan is advanced to the borrowers. In those circumstances, if one imagines that the lenders or Mellicks on their behalf were to ask Longmuir & Co, or Balfour & Manson, “who are you acting for?”, the terse reply would be something like: “what do you mean, we’re acting for the individuals on the other side of the room with whom you have already been in discussions and to whom you have provisionally agreed to lend money”. It is to my mind absurd to suggest that in those circumstances one could imply a promise from the solicitors that they were acting on behalf of the Cheethams of 34 Danube Street or the Morgans of 3 Menteith View, still less a promise that these individuals, calling themselves Cheetham and Morgan, did indeed own those properties”.

In one of the cases there was also discussion as to whether the solicitors were liable to the bank in terms of the letter of obligation they had granted. The bank argued that they suffered loss as a result of the solicitors’ failure to procure the title deeds recording the security in terms of the solicitors undertaking. However, Lord Glennie again agreed with the solicitors’ arguments on this point:

1. the letter of obligation was collateral to the principal transaction between the bank and the borrowers and could not be enforced if that principal transaction was void; and
2. in any event, the bank could show no damages flowing from the failure by the solicitor to produce a title encumbered with the Standard Security, since the Standard Security referred to in the letter of obligation was itself void.

Outer House case considering the interpretation of missives between two builders for the sale of land at Broomhouse in Glasgow.

The land was to be sold by Bellway to Persimmon for £4.16m. Bellway were to undertake works before the sale and the date of entry was tied to Bellway’s completion of the sellers works (which involved the upgrading of a road and construction of a roundabout).

Condition 10 of the missives made provision for completion of the works and included a longstop date of 15 December 2007. Condition 12 of the missives also related to the long stop date and provided:

“In the event that the Seller has failed to Complete all of the Seller’s Works or the Seller has not fully implemented the Seller’s Obligations by the Long Stop Date as such date may be extended in terms of Condition 10(a) hereof then the Seller will be obliged to offer to sell to the Purchaser another residential development site within Central Scotland of comparable size and value to the Subjects. Upon settlement of the transaction contemplated by the missives in respect of the said other residential development site the missives to follow hereon (of which this offer forms part) shall be terminated”.

 Bellway failed to complete the works by the longstop date and wrote to Persimmon offering to sell a site in Airdrie to them instead. Persimmon sought damages for breach of contract.

There were two questions for the court:

(1)   Whether the requirement for Bellway to offer an alternative site to Persimmon was the only remedy available to Persimmon in the event Bellway failed to meet the longstop date or whether Persimmon were also entitled damages for breach of contact.

(2)   Whether condition 12 had in fact been breached by Bellway.

The remedies available to Persimmon

Persimmon argued that when Bellway failed to fulfil the obligation contained in condition 10 by the long stop date they were in breach of contract and the existence of Condition 12 was irrelevant to that.

However, Lord Glennie took the view that Bellway were not in breach of contract at this stage. Although the right to damages for breach of contract is an important right which can only be taken away by clear provision to the contrary, Bellway were not arguing that the provisions of condition 12 were an alternative to damages for non-performance of the contract. Instead, they were arguing that breach of Bellway’s obligation under Condition 10 gave rise to a further obligation under Condition 12 to offer an alternative site. If the alternative site were not offered then, at that stage, a breach of contract would occur giving rise to damages.

If the contract were construed in the manner suggested by Persimmon condition 12 would amount to an option exercisable by them. If that was what was intended it was difficult to understand why it was not expressed as such. That damages would not be available unless there was a failure to provide an alternative site, was further supported by the commercial background to the contract. What Persimmon wanted was an alternative site for development to enable them to deploy their resources efficiently. That could best be satisfied by the provision of an equivalent site if the Broomhouse site was unavailable. Thus the obligation to provide an alternative site was an essential feature of the structure of the contract and it was only if that obligation were breached that the right to rescind and claim damages arose.

Breach of Condition 12

The next question was whether the offer of the site at Airdrie was sufficient to satisfy the requirements of Condition 12. Lord Glennie found that it was not. Whilst, the Airdrie site was (taking a broad view) of comparable size (the difference in gross areas was 6.07% and the difference in net developable areas was 13.4%), it was not of comparable value. After considerable discussion as to the method of valuation to be applied, Lord Glennie found that the value of the Broomhouse site was 17% higher than that of Airdrie and, as such, the sites were not of comparable value within the meaning of Condition 12.

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 in which Penny Uprichard challenged a decision of the Scottish Ministers to approve the Fife Structure Plan 2006-2026 with Final Modifications dated May 2009.

The Fife Structure Plan includes provision for a significant expansion of St Andrews with a view to making the town an ‘economic driver’ for Fife. The Council submitted a report containing modifications to the Structure Plan[1] and, after considering the Structure Plan and the Council’s modifications, the Scottish Ministers issued the Finalised Fife Structure Plan incorporating Scottish Government modifications for consultation. Ms Uprichard objected to the modifications to the Structure Plan as they did not reverse the plans for the expansion of St Andrews. However, the Scottish Ministers then approved the Structure Plan as modified and published a document[2] (the May Document) containing the reasons certain modifications had been made and other proposed modifications had not been made. 

Ms Uprichard challenged that approval and concentrated her argument on an objection to the effect that assessments had shown St Andrews to be at its landscape capacity. The reason given for rejection of that objection (in the May Document) was that a study[3] had shown that there was some scope for development to the west of St Andrews. Ms Uprichard argued that that was insufficient reason for rejecting the objection contending that the site to the west of St Andrews was insufficient to accommodate development on the scale envisaged in the Structure Plan. She claimed that it was for the Scottish Ministers to give a reason for proposing development to the west of St Andrews that was beyond the land available.

The Inner House refused Ms Uprichard’s reclaiming motion finding that, although her objection was described as being purely a landscape objection founded on the alleged inadequacy of the landscape capacity of St Andrews for the proposed level of development, it was in fact a root and branch objection to the fundamental aims of the Structure Plan so far as they affect St Andrews. As such it was directed against the strategic land allocation to the west of St Andrews and the identification of St Andrews as an economic driver for Fife.

The court found that there was a wealth of material entitling the Scottish Ministers to conclude that St Andrews West should be one of the strategic land allocations that were a key element in the Structure Plan. The question of landscape capacity was taken into account but did not outweigh other wider considerations that were inherent in the adoption of the overall Structure Plan strategy.

The reasoned justification that Fife Council had offered for its policy for the growth of St Andrews as an ‘economic driver’ for Fife had been constant throughout the Structure Plan. Reading the May Document in its entirety, the Scottish Ministers had given due consideration to both that justification and to the objections of Ms Uprichard and had decided in favour of the justification. Their acceptance of the Council’s justification was a clear and adequate answer to Ms Uprichard’s objection.

The Lord Justice Clerk (Gill) also made the following comments:

“In a case where the adequacy of reasons is challenged, the court should consider whether the informed reader would understand the basis for the decision complained of. The reasons must be intelligible and must deal with the substantive points that have been raised; but in my opinion it is important to begin by considering the nature of the decision that is complained against and the context in which it has been made. In a case of this kind it is also important to assess the adequacy of the reasons on the basis that they are addressed to persons who are familiar with the background and the issues.”

The full judgement is available from Scottish Courts here.

(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.

Back to the grind!

Highlight of the week for me was the publication of Reform Scotland’s latest fiscal powers paper “Devolution Plus”.  I do though have to declare an interest as I am one of the authors of this paper.  The paper outlines a possible third option, if there are to be three options put to the Scottish people instead of a straight yes or no to independence.  The paper can be found here.

The debate over the top rate of income tax also continued.  What was interesting was the claim by the Institute for Fiscal Studies that the 50p tax rate may not raise any extra revenue for HM Treasury and could actually reduce it due to high earners using avoidance measures.   HM Treasury has already revised downwards its predictions of the amount that could be raised from the 50% rate from £7 billion a year to about £2.4 billion.

Excellent article in the Herald on Tax Increment Financing.  It appears that nearly half of Scotland’s councils have made applications to the Scottish Futures Trust for permission to pilot TIF schemes.  TIF involves mortgaging the future income from local business rates to borrow money from HM Treasury’s public works loan board.   The Scottish Government has already been working with Edinburgh, Glasgow and North Lanarkshire councils for several years to set up TIF schemes for Leith Harbour, Buchanan Galleries shopping centre and Ravenscraig.  The article can be found here.

A word of caution on TIF.  I first came across TIF when working as an attorney in Chicago.  One issue that has arisen in Chicago is that if too many TIF schemes are approved the benefits are diluted.

I find myself agreeing with the comments made by Everhseds LLP on the Institute for Fiscal Studies’ Mirrlees Review of the UK’s tax system.  The problem with such a major reform is that we are not starting with a blank sheet of paper.  Making such radical changes would require a huge amount of resources and even more political will.  Neither of which appears to be present just now.

The Scottish perspective is slightly different as we will have a sheet of paper that even if not blank at least has numerous blank spaces in it when tax and fiscal powers are devolved to the Scottish Parliament.  This is in fact an opportunity, possibly a once in a generation opportunity, to do something different.  Hopefully this is a point that those on, and those giving evidence to, the Scottish Parliament’s Scotland Bill Committee will consider.   The Eversheds comments can be found here.

Always nice to get away from things for a while.  Islay gives you a different perspective.

Tax has only featured in three conversations here and as each also mentioned whisky I felt that made it acceptable.  The general sentiment seemed to be: “Islay gives a lot to the UK Exchequer every year and we get very little back in return”.

One person I spoke to told me that: “Islay’s whisky industry contributes approximately £100 million a year to the UK government in excise duty and value-added tax.”  To put that into context, and if that figure is correct,  that is about £30,000 for every man, woman and child on the island.

The main tax stories of the past week have a familiar feel to them.

The debate over devolving complete control over corporation tax to the Scottish Parliament has continued.  This week saw HM Treasury predicting doom and gloom if such a thing were to come to pass.  More ammunition for those wanting to see a Scottish Exchequer.

In a connected issue, Scotland’s First Minister said that the oil industry should be consulted on any new changes to offshore taxation.  The background to this is the proposal by the UK government to increase the supplementary charge on oil production from 20 to 32 per cent.

The other major political tax debate also rumbles on.  That being the top rate of income tax.  This still feels like a “phoney war” but you also get the feeling that a formal start to hostilities might just be round the corner.  The main warring parties in this case being the coalition partners of the UK Government.

This week saw twenty economists (makes you wonder what a group of economists is called), in a letter to the Financial Times, urging the UK Government to drop the top 50p tax rate.  They claim it is doing “lasting damage” to the UK economy.   The top rate is paid at 50p for each pound earned over £150,000 and affects around 310,000 people.  Opponents say cutting the top rate at a time of cuts would be “monstrously unfair” and “phenomenally immoral”.  UK Government Ministers continue to hedge their bets by saying that the 50p rate is temporary and that their policy is to first increase the income tax threshold to £10,000.

Although not as widely reported as the two issues above, I did like the council tax news item from the Courier.  The report explained how funds raised by increasing the council tax on second homes had helped to pay for affordable housing projects across the Perth and Kinross Council area.

In February 2005 Perth and Kinross Council agreed that additional money collected by reducing the council tax discount on second homes and long-term empty properties could be used to support the development of affordable housing.   The Council  reduced the 50% second home discount to 10%.  The reduction covers around 1,800 properties.

Back to the mainland tomorrow!

The Scottish Government’s legislative programme for 2011-12 includes as priorities the Registration Bill and Long Leases Bill (which is being re-introduced after it ran out of time in the last parliament).

The Registration Bill aims to improve land registration in Scotland includes provision for:

• an improved system for handling inaccuracies;
• the introduction of a system of advance notices to protect buyers from last-minute adverse entries in the Land Register which would bring about an end to the current practice of the use of letters of obligation;
• a new procedure for dealing with title to common areas in new housing developments;
• ensuring that electronic conveyancing is competent in all cases including missives; and
• speeding up the transfer of properties onto into the Land Register from the Register of Sasines.

The Long Leases Bill allows conversion of the rights of tenants under ultra-long leases (175 years or more with more than 100 years to run) into ownership.

The facts
Outer House case in which a trustee in bankruptcy sought declarators and reductions relating to a series of conveyancing transactions which followed an alleged fraud on the part of a bankrupt (Mr Pocock).

The transactions related to the sale of a property at Queen’s Gardens in Aberdeen. The trustee discovered that a disposition of the property by Skene Investments in favour of Mr Pocock had not been registered and that a second disposition in favour of Howemoss Properties Limited had been lodged with the Keeper.  Various transactions had then taken place in reliance on the Howemoss disposition. However, the trustee contended that Skene had not executed the Howemoss disposition and believed it to be an unauthorised alteration of the original disposition, the price and purchaser having been altered without Skene’s consent.  (Although he did not know the purpose of the alteration, the trustee believed that it may have been altered to avoid payment of stamp duty.)

The Trustee sought declarator that the Howemoss disposition and various dispositions and standard securities based on it were a non domino (i.e. by someone who is not the owner).  He also sought declarator of the tenor of the first disposition which be believed to have been lost or destroyed.

Proving the tenor of the original disposition
It was argued by the parties who transacted on the strength of the Howemoss disposition (the third parties) that it was not open to the trustee to prove the tenor of the first disposition as, rather like tearing up a will, the act of destroying the deed meant the rights created by it were lost and the trustee was in no better a position than Mr Pocock. That argument was rejected by Lord Uist who found that, in such circumstances, whether a person was precluded from proving the tenor of a deed would depend on, the nature of the deed, by whom it was destroyed and for what purpose.  In this case Lord Uist saw no reason why there should be any legal bar to the trustee proving the tenor of a disposition in favour of Mr Pocock.  Mr Pocock had paid a purchase price of £207,125 and the trustee claimed Mr Pocock had deliberately destroyed the deed order to conceal the fact that he had purchased the property.  It would be a denial of justice if the trustee were not allowed to prove the tenor of the original disposition.

The tantum et tale principle
The third parties also argued that, as a result of the tantum et tale principle, the trustee took Mr Pocock’s estate exactly as it stood in Mr Pocock’s hands at the time of the sequestration. Thus, if Mr Pocock were unable to prove the tenor of the original disposition or reduce the subsequent writs (as a result of personal bar or by the effect of his own fraud), then so too would the trustee.

However, after considering the terms of the Bankruptcy (Scotland) Act 1985 and Burnett’s Trustee v Grainger (2004), Lord Uist found that the tantum et tale argument has been discredited. Applying Burnett’s Trustee to the present case:

“the relevant picture is not of the permanent trustee stepping into the shoes of the bankrupt, but of the bankrupt’s estate being taken from him and placed in the hands of a completely different individual, the trustee for the bankrupt’s creditors, which suggests that in so far as the bankrupt himself may be subject to personal obligations, those obligations do not affect this new person, the permanent trustee.”

And with regard to fraud:

“the cases show that a trustee in bankruptcy cannot benefit from the fraud of the debtor which enlarges the estate for distribution, but that is patently not the case here. If anything, it is the contrary: the trustee’s position is that Mr Pocock fraudulently alienated part of his estate and he now seeks to reclaim, for the benefit of the whole body of creditors, the property so alienated. What the trustee is seeking to do is to annul a fraud which has wrongfully diminished the bankrupt’s estate, not benefit from the bankrupt’s fraud in order to enlarge the estate.”

The full judgement is available from Scottish Courts here.

(See appeal to the Inner House here.)

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

Outer House case considering an agricultural lease of Rockside Farm at Bruichladdich on Islay.  The tenants were Rockside Farming Company (of which Mr and Mrs French were directors). The farm had been owned by one owner but, following the grant of the lease, part of the farm (776.5ha) was sold to Crewpace.  The remaining part (14.5ha) was sold to Mr and Mrs French with the result that both Crewpace and Mr and Mrs French became landlords under a single lease.

Mr and Mrs French let part of the land to which they had title to a distillery and sold two further parts.  Crewpace argued that Mr and Mrs French should have sought their consent before doing so. They therefore sought declarator that the Frenchs had unlawfully interfered with their interest as “joint landlords”, payment of recompense (for unjustified enrichment) and an interdict preventing Mr and Mrs French from resuming or selling any further parts of the leased subjects without their consent.

Essentially Crewpace’s argument was that their interest in the lease was “common property” and held by them and Mr and Mrs French as “joint landlords”. As such Crewpace claimed to have an interest in the whole subjects similar to that of a pro indiviso owner with regard to management, control and disposal of the land.

Temporary Judge Morag Wise QC preferred Mr and Mrs French’s arguments to the effect that there is no landlord’s interest separate from the right of ownership finding that a landlord’s right is inextricably linked with its title and dismissed the action.

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.