Outer House case in which the liquidators of Scottish Coal sought directions from the court in respect of several disused open cast mining sites owned by Scottish Coal.
The sites were subject to onerous statutory obligations aimed at controlling land use, protecting the environment, habitats and birds and ensuring public safety. The sites were also subject to obligations under planning legislation requiring restoration of the sites, the cost of which was estimated at £73m.
The liquidators sought directions as to whether they could abandon or disclaim:
- the sites, thereby transferring ownership to the Crown; and
- the statutory licences/permits authorising Scottish Coal to carry out its industrial activities (and imposing the obligations on Scottish Coal).
The Scottish Environment Protection Agency (SEPA) and Scottish Natural Heritage (SNH) were represented in court and argued that it is not possible for liquidator to do so as, under Scots law:
a) there is no power to abandon the ownership of land; and
b) ownerless land is an impossibility.
No authority could be found supporting the idea that an owner could abandon land in Scotland. However, after considering Roman Dutch law[1] and the German Civil Code[2], Lord Hodge found[3] that it may be possible for an owner to abandon land[4] and circumstances may arise when, on a disclaimer by the Crown, land becomes ownerless.
But, whilst the liquidators generally have power to disclaim property, where the company’s use of the land is governed by statutory permits, his ability to disclaim would depend upon the terms of the statutory provisions and the permits.
In this case the decision depended on whether the court took a wide interpretation (as argued for by SEPA and SNH) or a narrow interpretation (as argued for by the liquidators) of the relevant legislation[5]. Lord Hodge came to the conclusion that the Scotland Act 1998[6] required him to take a narrow interpretation leading to the conclusion that the liquidators could disclaim the sites and release themselves from the obligations.
The full judgement is available from Scottish Courts here.
(NB: see Inner House decision here)
All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.
[1] With which Scots property law has strong affinities and, under which, it was possible to abandon land except where the sole purpose of the abandonment was to escape dues on the property.
[2] Under which an owner of land can abandon it by tendering a declaration of relinquishment to the land register office.
[3] In coming to this conclusion Lord Hodge took account of the fact that a trustee in bankruptcy may abandon a bankrupt’s moveable property in terms of s31 of the Bankruptcy (Scotland) Act 1985 and saw no reason why it should not also be possible to abandon land.
[4] In the absence of a statutory regime (s178 – 183 of the Insolvency act 1986 which provides the statutory regime for a liquidator to disclaim an English or Welsh company’s property does not apply in Scotland), Lord Hodge took the view that the court should regulate such abandonment to prevent its abuse as a means of avoiding obligations.
[5] The Water Environment (Controlled Activities) (Scotland) Regulations 2005 and 2011.
[6] Specifically s101 which deals with interpretation of Acts and subordinate legislation of the Scottish Parliament.
