News archive

Background
Sheriff Court case concerning a lease of property at Hopetoun Crescent in Edinburgh. The landlord initially failed to pay a deposit (of £1000) into an approved scheme and also failed to provide the tenant with the prescribed information[1] required in terms of Tenancy Deposit Schemes (Scotland) Regulations 2011.

The lease was to run from 1 July 2013 to 31 January 2014 but, despite an unsuccessful attempt to evict the tenant at the end of 2013, continued by tacit relocation until decree for recovery of possession of the property was granted on 27 June 2014. The deposit was paid into an approved scheme on 27 January 2014 (when the landlord became aware of his duties).

Where a landlord has failed to comply with its requirements under the 2011 regulations, regulation 9 provides that the tenant can apply to the sheriff for an award of an amount of money as a sanction against the landlord for its failure to comply with its duties. The question for the sheriff in this case was how much the landlord should have to pay.

Arguments
The tenant argued that he should receive (the maximum award of) three times the deposit contending that the sheriff’s discretion as to the amount of the award was unfettered[2].

The landlord’s solicitor argued that the landlord was not a commercial landlord and was a 30 year old first time amateur landlord who “had made a hash of the let”. He had also paid the deposit into an approved scheme as soon as he had become aware of the requirement and (following a dispute) the deposit had been adjudicated on under the scheme and repaid to the tenant. The landlord also contended that the tenant had been using the threat of sanction under the regulations as a weapon in a dispute over rent arrears (with the suggestion being that judicial sanction regarding the deposit would not be pursued if the landlord were to waive his claim for rent arrears.) In essence the landlord considered that he was being blackmailed by the tenant.

Decision
The sheriff accepted that he had discretion as to the amount of the award but did not agree that the discretion was ‘unfettered’ as it had to be exercised for sound reasons and could not be exercised in a manner which was arbitrary, automatic or capricious. Further, the resulting decision had to be fair and just and could not be disproportionate (in that trivial noncompliance could not result in the maximum penalty).

The sheriff noted that a landlord’s ignorance of the regulations could be no excuse. He also found that there had been no blackmail in this case.

“In my view, the bona fide use, by tenants, of this right as supplementary leverage against landlords, is not illegal and if it becomes widespread, it should further enhance good market practice and regulatory compliance. It is not a bar to sanction against the landlord.”

However, after taking account of the various mitigating factors in favour of the landlord, the sheriff took the view that the award in favour of the tenant should be at the lower end of the scale and awarded the tenant the sum of £333.33 (one third of the deposit).

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.

__________________________________________

[1] Relating to the safekeeping of the deposit, the status of the landlord as a registered landlord under the scheme and how any future disputes over the money could be resolved.

[2] See summaries of Fraser v Meehan, 2013 S.L.T. (Sh Ct) 119 and Tenzin v Russell, 28 January 2015 (and 19 December 2013 here) in which the sheriff’s discretion was described as ‘unfettered’.

The second edition of Private Client Scotland is now available.

“In this edition there are articles on the Scottish Government’s proposal to reform our law of succession and an update and hopefully some closure on the validity or otherwise of continuing Powers of Attorney made in the standard form recommended by OPG (Scotland). Included in ‘Case reviews’ is the decision of Sheriff Hammond that a relationship of approximately 13 months qualifies as ‘cohabitation’ for the purposes of section 25 of the Family Law (Scotland) Act 2006. ‘Professional updates’ include a link to HMRC’s December ‘Trusts and Estates newsletter’ and confirmation of a new and designated guardianship court sitting in Edinburgh. Lastly the ‘News items’ section includes stories that range from a new Cabinet Secretary for Justice to an unexpected tax bill for Boris Johnson.”

If you would like to subscribe to Private Client Scotland please email me at james@leglknowledgescotland.com 

We have added 6 Wills, a codicil and a number of additional/alternative Will clauses to our ‘styles bank’.  Additional Wills will be added over the next few months.

For more information on these additional styles go to the ‘styles’ section of the website or click on this link.

If you have any questions regarding these additional styles please email me: james@legalknoledgescotland.com

Background
Inner House case relating to a landlords’ failure to comply with the Tenancy Deposit (Scotland) Regulations 2011 in respect of a property at 4/6 Admiralty Street in Edinburgh.

The landlords failed to pay a deposit of £750 into an approved tenancy deposit scheme as required by regulation 3 of the 2011 regulations and made deductions from the deposit before returning it to the tenant at the end of the lease. In terms of regulation 10, where the landlord fails to comply with its duty under regulation 3, (following an application by the tenant) the sheriff must order the landlord to make a payment not exceeding 3 times the deposit to the tenant. Following an application from the tenant, the sheriff ordered the landlord to pay the maximum monetary payment of three times the deposit.

The sheriff principal refused an appeal by the landlords on the basis of technical points relating to the tenants’ pleadings[1] and on the basis that the sheriff had made an error when exercising his discretion to award the maximum penalty (noting that the sheriff had “complete and unfettered discretion” as to the award to make).

Arguments
The landlords appealed to the Inner House which refused the appeal and found no flaws in the decisions of the sheriff and sheriff principal. With regard to the sheriff’s decision to award the maximum penalty, the landlords argued that the sheriff had failed to take into account the fact that the landlords were only in breach of the regulations for 34 days and had placed weight upon the fact that the landlords had held the deposit for several months prior to the tenancy deposit protection deadline. Further, the landlords argued that the sheriff should have taken account of the facts that, at the time of the breach, the regulations were new and complex, that the breach had occurred during the transitional period of the regulations coming into force, and that the breach had occurred during a period in which the tenant had given notice of his intention to vacate the property.

Decision
The Inner House emphasised the limited role which it (as an appellate court) could play in considering an exercise of the sheriff’s discretion noting that it could only interfere where, for example, the sheriff had not exercised his discretion at all, had taken into account irrelevant considerations, or had failed to take into account relevant ones. The sheriff had set out in detail his reasons for awarding the maximum penalty and the Inner house could find no fault with his reasoning:

 “It is plain that he reached the conclusion that the breach by the defenders in this case was indeed a serious one.  There is, in our opinion, no basis upon which we would be entitled to interfere with the decision he reached.  It is not insignificant that the defenders had until 30 November 2012 to register the pursuer’s deposit with one of the approved schemes.  That was over four months after the regulations had first come into force.  They chose not to do so.”

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.

________________________________________________

[1] For which see LKS summary of earlier decision here.

If you would like to subscribe to Private Client Scotland please email me at james@leglknowledgescotland.com 

Inner House case concerning a planning appeal relating to a site on Seafield Road in Blackburn. Hallam applied for planning permission in principle for the construction of a residential development of approximately 120 houses. West Lothian Council refused planning permission for the development and an appeal to the Scottish Ministers by Hallam was also refused by the reporter appointed to determine it.  Hallam appealed to the Court of Session against the reporter’s decision.

There were two main issues at the centre of the appeal:

• whether there was a deficiency in the supply of land for new housing and whether the proposed development would help make good any such deficiency; and
• whether there was adequate school accommodation for children from the proposed development.

The reporter had found that the supply of effective housing land in West Lothian and in the area local to the appeal site was “adequate to meet current market demand for new houses” and thus the proposed development was not justified in terms of maintaining a five years’ supply of effective housing land.   The reporter also concluded that there was a lack of education capacity at Bathgate Academy and St Kentigern’s Academy to accommodate children from the proposed development meaning that the development did not comply with the relevant strategic development plan.

The Inner House found that the reporter had been entitled to conclude that insufficient capacity was available in local secondary schools to support the proposed development and, consequently, that planning permission for the development would not comply with the strategic development plan. That conclusion had been sufficient to allow the reporter to refuse Hallam’s appeal. However, the Inner House also noted that the reporter’s conclusion with regard to the supply of housing land had been erroneous and that the court would have allowed the appeal if it had not been for the lack of education provision.

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.

Background
This is an Inner House case concerning a dispute over property at Rigside in Lanarkshire. Mr McAllister had occupied the land since at least June 2006 (using it for pallet storage and lorry parking). However, Douglas & Angus Estates and Mr Carmichael argued that they were common owners of the property and that Mr McAllister was in occupation of the property without title. Whilst Mr McAllister did not claim to have title to the property himself he argued that the estate and Mr Carmichael did not own the property either (and thus had no title to sue).

The question for the court was whether a party (in this case the estate and Mr Carmichael) requires to establish a title to land where a second party, whom he is trying to remove (in this case Mr McAllister), does not have title but claims that the land may be owned by a third party (in this case, the statutory successors to Lanark County Council).

Arguments
It was accepted that, where the party being removed denies the title of the party seeking removal without arguing that he himself has title, the party seeking removal only requires to show a prima face title[1]. However, Mr McAllister contended that there is an exception to that rule where the party being removed argues that there is a competing title in favour of a third party[2]. In this case, although he did not produce a competing title, he pointed to a reference to the disputed property in his own title (of a neighbouring property) which stated that, at the time of the deed, the disputed property was thought to be owned by Lanark County Council (which, if true, would have precluded the estate and Mr Carmichael from owning the property in terms of their titles).

Decision
However, although the Inner House accepted that, if Mr McAllister had shown a competing title, the estate and Mr Carmichael would have had to establish a title to the disputed property in order to seek Mr McAllister’s removal from it, in this case, the statement in Mr McAllister’s title to the effect that the disputed property was thought to be owned by Lanark County Council was not the equivalent of a competing title. As such, the estate and Mr Carmichael only had to show a prima face title in order to pursue the action.

The court noted that what exactly may be regarded as an ex facie valid title would depend on its particular terms. And, in this case, although the descriptions in the title deeds were vague and unclear, it could not be said that the deed on which both the estate’s and Mr Carmichael’s titles relied did not include the disputed property. Consequently, the estate and Mr Carmichael (or one or other of them) had an ex facie title sufficient to allow them to pursue the action against Mr McAllister.

In those circumstances the Inner House upheld the previous decision of the Sheriff Principal granting decree in favour of the estate and Mr Carmichael and dismissing Mr McAllister’s defences as irrelevant.

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.

________________________________________________

[1] Ie a title that, “at first sight” or “on the face of it”, appears to be valid.

[2] Lock v Taylor 1976 SLT 238.

Background
This is an Outer House case in which Mr Aronson sought rectification of the Register. Mr Aronson had bought a property (on Dean Street in Kilmarnock) from the Bank of Scotland which was exercising a power of sale under a standard security following a repossession.

The property previously belonged to Mr Alexander who, in addition to granting the standard security in favour of the Bank of Scotland, had subsequently granted three further securities in favour of two other creditors. When Mr Alexander fell into arrears, the Bank of Scotland obtained a warrant to repossess and sell the property[1] (in May 2010) and subsequently disponed the property to Mr Aronson (in February 2011).  At the time of the repossession proceedings it was common for creditors to repossess and sell property without first following the calling up procedure and, in this case, the Bank had not served a calling up notice. However, in November 2010 the Supreme Court[2] decided that in any case where a creditor seeks repayment of a debt, failing which, the sale of the security subjects, it must first serve a calling up notice and thereafter wait two months before repossessing the property.

Mr Aaronson submitted an application to register the disposition in the Land Register in March 2011. In terms of the (Form 2) application, Mr Aronson required to indicate whether the necessary statutory procedures had been followed in relation to the Bank’s power of sale and, as a result of the Supreme Court’s decision noted above and the failure to follow the calling up procedure, Mr Aronson indicated that the necessary procedures had not been complied with.

When the Keeper registered the disposition, she excluded indemnity in respect of Mr Aronson’s title and, although the standard security in favour of the Bank of Scotland did not appear in the Charges Section of the Title Sheet, the three securities in favour of the other two creditors did[3].

In terms of the relevant legislation[4], where a creditor grants a disposition in exercise of a power of sale, the property is disburdened of that security and all other securities ranking equally with it or behind it. Mr Aronson sought to have the register rectified so as to delete the three remaining securities. The Keeper maintained that the register was not inaccurate as the property had not been disburdened of the standard securities on the basis that there had been no sale of the property in terms of the legislation as the Bank had not followed the correct procedure.

Decision
Lord Doherty rejected the Keeper’s argument and found that the register was inaccurate. There had been a sale by the bank, within the meaning of the legislation and, as such, the property had been disburdened of the securities.

As to a contention by the Keeper that, allowing the property to be disburdened of the securities where the correct procedures with regards to repossession and sale had not been followed, was to allow the Bank to benefit from its own wrong and was contrary to public interest, Lord Doherty said the following:

 “While I do not rule out entirely the possibility that the circumstances of some sales might be so contrary to public policy that Parliament might be taken to have intended to exclude them from the ambit of s. 26, I am very clear that the circumstances of the sale by the Bank to the pursuer do not fall within any such category.  In treating the loan default as a default in terms of standard condition 9(1)(b), and in proceeding down the s. 24 route, the Bank acted in good faith and in accordance with what was then understood (by the courts, conveyancers, and financial institutions and their advisers) to be a lawful route to sale.  There was no deception or bad faith.  There was no intention to depart from or undermine the proper procedures for sale…  …In such circumstances I see no scope for giving any weight to the canon of construction that a party should not be permitted to benefit from his own wrong.  I am equally clear that there is no justification for giving “sale” in s. 26(1) a strained construction in order to avoid the natural construction producing serious damage to the public interest.  On the contrary, in my view the natural and ordinary meaning relied upon by the pursuer serves the public interest.  On the other hand, deserving persons such as the pursuer would be prejudiced by the strained construction which the first defender suggests.  That strained construction is also one which runs counter to the presumption that a statutory provision should be construed so as not to produce injustice.”

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.

_______________________________________

[1] Under s24 of the Conveyancing and Feudal Reform (Scotland) Act 1970.

[2] Royal Bank of Scotland plc (Respondent) v Francis John Wilson and another, [2010] UKSC 50.

[3] Notes were appended to the entries excluding indemnity both in respect of any loss arising from rectification of the register to delete the standard securities or from the property being found not to have been disburdened of the above standard security.

[4] S26(1) of the 1970 Act.

If you would like to subscribe to Private Client Scotland please email me at james@leglknowledgescotland.com 

The preview edition can be found here.