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Background
This is an Outer House case concerning a lease of premises at the Gyle Shopping Centre in Edinburgh under which Gyle was the landlord and Marks & Spencer, the tenant.

Gyle entered an agreement with Primark for the erection of a new store on land which included part of a car park. However, Marks & Spencer’s premises were let together with a one-third pro indiviso share of shared areas which included the car park. In an earlier decision Lord Tyre had found that (1) the building of the Primark store would breach the lease with Marks & Spencer and (2) a meeting of the shopping centre management committee approving construction of the new building was not sufficient to vary the terms of the lease.

Arguments
Here Gyle argued that, although the lease had not been varied, Marks & Spencer were personally barred from objecting to the construction of the building as Marks & Spencer’s representatives had agreed to the building at the shopping centre management committee and that Gyle had relied on that agreement with their knowledge.

In particular Gyle argued that M&S was personally barred:

1. in terms of s1(3) of the Requirements of Writing (Scotland) Act 1995;
2. in terms of the (pre-1995 Act) common law rule of rei interventus; or
3. by waiving its right under the lease.

Decision
Lord Tyre rejected those arguments.

The 1995 Act
Lord Tyre found (in accordance with the decision of Lord Drummond Young in Advice Centre for Mortgages v McNicoll[1]) that s1(3) does not apply to leases; noting that s1(3) applies only to separate contracts relating to the land (i.e. transactions giving rise to merely personal rights) and not to dispositions and other deeds which actually effect the creation or transfer of an interest in land (i.e. transactions giving rise to a real right).

Rei interventus
With regard to the common law rule of rei interventus, Lord Tyre found that the (pre-1995 Act) common law rules (relating to both rei interventus and homologation) had been replaced in their entirety by the statutory rules contained in the 1995 Act and did not continue in parallel.

Waiver
On the subject of a potential waiver of Marks & Spencer’s rights in the lease, Lord Tyre said the following:

 “In my opinion, the evidence falls well short of establishing that there has been voluntary, informed and unequivocal waiver by [Marks & Spencer] of its right to prevent the construction and leasing of the building.  It seems to me that [Gyle’s] analysis perpetuates its original error of treating [Marks & Spencer’s] representatives who attended and approved the minutes of Management Committee meetings as equivalent to [Marks & Spencer] itself.  It wrongly characterises the conduct of those individuals as the conduct of [Marks & Spencer].  As I have already held, those individuals were not empowered in terms of [Marks & Spencer’s] lease to take decisions affecting [Marks & Spencer’s] real rights in the Shared Areas.  There was no evidence to indicate that they were even aware of what those rights were, although it was clear that the question of real rights was given no consideration by those representing [Gyle].  Nor was there any evidence of actings on the part of any person within [Marks & Spencer’s] organisation who was truly responsible for taking decisions regarding the variation of real rights under the lease which might induce [Gyle] to believe that [Marks & Spencer] regarded such decision-making as falling within the competence of the Management Committee.”

The full judgement is available from Scottish Courts here

(See also summaries of decisions finding (1) that M&S had not consented to the building of the Primark Store and that the building of the store without consent would be a breach of the lease (2)  that M&S was not unreasonably withholding consent to the Primark development.)

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

A deceased Scots resident’s land outside Scotland cannot be taken into account when evaluating a surviving partner’s claim on the estate under s29 of the Family Law (Scotland) Act 2006.

This is from the judgement:

Background:

“Anthony Mangan cohabited with Margaret Kerr for twenty–two years before he died on 10 August 2007 but did not marry her.  He did not make a will.  However, the law had changed before he died and Ms Kerr was able to apply to the court for an order for money to be paid to her out of the net intestate estate of the deceased, even although she was not a surviving spouse.  The sheriff awarded her the sum of £5,502 but the sheriff principal, on appeal, decided that a house and land in Ireland which was owned by the deceased was not part of the net intestate estate. The result was that the award was reduced to nil. Ms Kerr now appeals to this court.”[1]

The issue:

“Does “net intestate estate”, in terms of section 29 of the Family Law (Scotland) Act 2006 (“the 2006 Act”), include heritable property outside this jurisdiction?  If it does not, the sheriff principal was correct to reduce the award to nil.  If, on the other hand, it does include such property, then the appellant’s claim will have to be remitted to the sheriff to consider, of new, what award, if any, to make.  I am persuaded, for the reasons explained below, that the deceased’s net intestate estate did not include his Irish property and that the result is, therefore, that no money is payable to the appellant.” [2]

Reasons for decision:

“Section 29 of the 2006 is about rights arising on a “Scottish” death.  In particular, it is about a right that arises where a deceased domiciled in Scotland has died intestate survived by a cohabitant; it gives a right to that cohabitant to ask the court to direct that some part of the estate be distributed to him or her. “Intestate” has to be construed in accordance with the Scots law of succession.  “Legal rights” has to be construed in accordance with the Scots law of succession.  “Prior rights” has to be construed in accordance with the Scots law of succession.  The definition of “net intestate estate” is an updated version of the definition of that phrase as it is used in the Scots law of succession.  The definition of “net intestate estate” accords with the approach that would require to be adopted by an executor–dative, under the Scots law of succession, in determining the extent of the free estate available for distribution to the heirs on intestacy.  The court’s power is limited by reference to an assessment of, amongst other things, what would have been the value of the rights of a surviving spouse under the Scots law of intestate succession.  The order of the court must be directed at the executor-dative appointed under the Scots law of succession, whose powers, duties and liabilities are as provided for by the Scots law of succession.” [35]

“It is, of course, true to say that section 29 does not, of itself, entitle the cohabitant to any part of the estate and it does not make a cohabitant a member of the class of persons upon whom intestate estate automatically devolves under Scots law.  Rather, it gives power to the court to confer benefit on the cohabitant where no such right arose under the Scots law of succession before the 2006 Act.  However, its provisions are clearly designed to enable a member of the family of the deceased who could not previously have benefitted under the Scots of succession to succeed to some part of the estate.  That omission was seen as a flaw. Social circumstances had undergone a transformation since 1964 and statistics showed that many couples, including those who lived in family together for many years, were, for whatever reason, not marrying.  Had they been married, the law of succession would have applied so as to confer a benefit on the surviving spouse in the event of an intestate death.  The same would have applied had they entered a civil partnership. There was a gap that required to be filled in some way; the cohabitant ought to be able to inherit. That was the easy part. Precisely how to fill that gap raised and raises difficult issues of policy, some of which are referred to above. One of the things that was and is, however, clear is that what was identified was a hole in the law of succession. The conclusion that section 29 reformed the law of succession and is, accordingly, a part of the Scots law of succession is inescapable. It is also, I would add, inherently unlikely that Parliament intended to establish a special regime that was independent of other legal categories, for the reasons which Lord Drummond Young explains at paragraphs 45 and 46 below.” [36]

The full judgement can be found here.

Inner House case concerning a lease of a unit in a large (and mostly unoccupied) industrial complex in Shotts. Dem-Master were the landlords and Alba, the tenants.

Background
Dem-Master raised an action for payment in respect of electricity and outstanding rent. Alba disputed that the sums were due and a secondary issue arose regarding access to the property. Alba argued that Dem-Master had restricted vehicular access to the property by securing gates and locking loading bay doors which were used to allow heavy goods plants and equipment to be manoeuvred into the premises.

Alba sought an interim interdict to prevent Dem-Master restricting access to the premises in such a way as to prevent their rights under the lease. Dem-master granted an undertaking allowing access via a defined route and Alba dropped their motion for interim interdict but subsequently returned to court arguing that Dem-master had failed to comply with the undertaking.

Arguments
Alba argued that they were unable to carry on their business and that they wished to vacate their premises and move to other premises but that they were unable to remove their plant and machinery without access to the loading bay door. Dem-Master argued that Alba had no right to exercise access via the loading bay doors in terms of the lease and, in view of the fact that Alba’s published accounts showed them to be insolvent, they were concerned that removal of Alba’s plant and machinery would prevent use of the Landlord’s hypothec (i.e. the right to retain a tenant’s property as security).

Decision
In the Outer House the motion for interim interdict was granted so as to allow access via the loading bay doors. The Inner House found that, on a construction of the lease (under which the landlord, acting reasonably was entitled to designate the route of the rights of access), it could not be said that Alba had the right to use the loading bay doors. However, the court did find that the balance of convenience (required to allow an interim interdict) did favour access over another route which would allow Alba to operate their business from the premises (but which would not allow the removal of their heavy plant and machinery from the unit).

The case was put out by order to discuss the exact terms of the order for interim interdict.

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 First-tier tax Tribunal in Edinburgh has ruled ‘snowballs’ should be classed as cakes and therefore be zero-rated for VAT.

This is from the decision:

“A snowball looks like a cake. It is not out of place on a plate full of cakes. A snowball has the mouth feel of a cake. Most people would want to enjoy a beverage of some sort whilst consuming it. It would often be eaten in a similar way to cakes; for example to celebrate a birthday in an office. We are wholly agreed that a snowball is a confection to be savoured but not whilst walking around or, for example, in the street. Most people would prefer to be sitting when eating a snowball and possibly, or preferably, depending on background, age, sex etc with a plate, a napkin or a piece of paper or even just a bare table so that the pieces of coconut which fly off do not create a great deal of mess. Although by no means everyone considers a snowball to be a cake we find that these facts, in particular, mean that a snowball has sufficient characteristics to be characterised as a cake.”

The full decision can be found here.

“Purpose of the Brief

This Brief explains a number of changes relating to the transfer of a business as a going concern (TOGC):

• a change in HM Revenue & Customs’ (HMRC’s) policy on whether the surrender of a property lease can be a VAT-free TOGC
• to clarify the scope of certain aspects of the policy change announced in RC Brief 30/12
• to explain a change in policy concerning TOGCs of new residential and relevant charitable developments.”

“Scotland

For the purposes of this Brief all references to ‘surrender’ of a lease include the renunciation of a lease in Scotland, all references to ‘assignment’ of a lease include the assignation of a lease in Scotland and all references to a ‘reversion’ retained by a transferor include the heritable title retained by the landlord in Scotland.”

The full “Brief” can be found here.

Sheriff Court case concerning the remedies available to a creditor (Acorn) under a standard security after it had granted a further security (and also assigned the personal obligation to pay the sums due) to a third party (Connaught) over the first security in its favour (The second security securing an advance made to Acorn by Connaught).

When Mr Smith (the debtor under the first security) failed to pay the sums due under the first security, Acorn served a calling up notice on him and, when he failed to comply, raised an action to enforce the first security and eject Mr Smith from the subjects (agricultural property). Mr Smith argued that, as the personal obligation to pay Acorn had been assigned to Connaught by way of the second security, there was no longer any debt due to Acorn. As such, Acorn had no title to sue.

The sheriff accepted Acorn’s argument to the effect that the statutory rights in a standard security which arise under the Conveyancing and Feudal Reform (Scotland) Act 1970 are separate to the common law rights in terms of the personal obligation contained in the separate contract between Acorn and Mr Smith. Both sets of rights could be held by different people. Acorn remained the creditor under the first security and, as such, was entitled to exercise the statutory rights to enforce the security albeit that the common law rights in the personal obligation had been assigned to Connaught and enforcement of the security would ultimately result in a payment to Connaught. This was logical as it provided Acorn with a powerful means of ensuring it could meet its obligation to Connaught and, from Connaught’s point of view,  it was right that a procedure by which Acorn could meet its obligation to them (along with any related costs) should be Acorn’s responsibility.

Accordingly the sheriff found that Acorn had both title and interest to sue.

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 UK Government has published a new consultation on extending the inheritance tax exemption for armed forces personnel to all emergency service personnel who die in the line of duty.

The consultation can be found here.

Chartered Accountants in England & Wales will soon have powers to licence accountancy firms to practice non-contentious probate work.

More on this can be found in an article from the Law Society Gazette and which can be found here.

Inner House case considering a petition brought by Sustainable Shetland for judicial review of the Scottish Minister’s decision to grant planning permission to Viking Energy Partnership for a 103 turbine wind farm development on a site of approximately 50 square miles on mainland Shetland.

When the relevant statutory provisions[1] were being considered in the Outer House, it was discovered that Viking did not hold a licence to generate electricity. On a construction of the provisions, Lady Clark found that it was not open to the Ministers to grant consent for the building of the wind farm to persons who were not licence holders or exempt persons[2] in terms of the legislation.

Lady Clark also concluded that there was merit in Sustainable Shetland’s argument that there had been a failure on the part of the Ministers to take proper account of their obligations under the Wild Birds Directive 2009[3], finding that they had failed to properly engage with the directive in any meaningful way when reaching their conclusion.

Arguments
The Scottish Ministers’ appealed on two grounds:

1. Whether, on a proper interpretation of the Electricity Act, an application for section 36 consent could competently be made only by a person who held a licence under section 6 or an exemption under section 5 (the competency issue).
2. Whether, having regard to the information before them, the Scottish Ministers had failed to engage with their obligations under the Wild Birds Directive (the whimbrel issue).

Decision
The Inner House allowed the appeal on both grounds.

The Competency issue
Sustainable Shetland decided not to insist on the competency issue and did not present any arguments based on it. However, at the suggestion of Lady Clark, an amicus curiae[4] was appointed to present the argument. Nevertheless, after presenting a written argument on the point, the amicus curiae indicated that he no longer considered that he could support the Lady Clark’s decision on the point. The Inner House considered that Sustainable Shetland and the amicus curiae had been correct in their decision not to support the decision of the Lady Clark on the competency issue.

The Inner House found that the holding of a licence is not a condition precedent to the granting of consent of section 36 and agreed with the reasoning of Lord Doherty in Trump International Gold Club Scotland Ltd v The Scottish Ministers in which the same argument (adopted by Trump following Lady Clark’s decision) was rejected [4].

The whimbrel issue
With regard to the whimbrel issue, the Inner House found that, instead of deciding whether the Ministers’ decision had been lawful once account had been taken of the Wild Birds Directive, Lady Clark had considered whether the Ministers had demonstrated that they had fully understood and complied with their obligations under the directive irrespective of the likely effect of the consent on the bird population. The Inner House noted that, whilst the Minister’s decision letter did not make specific reference to the Wild Birds Directive, it was clear from the letter that the decision had been made having regard to an assessment of the impact on the whimbrel population which had been put forward by Scottish Natural Heritage under reference to the Directive.

The full judgement is available from Scottish Courts here.

(See also appeal to the Supreme Court here.)

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

“Filing outside of ARTL – urgent requests for the SDLT certificate.”

More on this from HMRC can be found here.