News archive

Inner House case concerning a planning appeal by Patersons in respect of the refusal of an application to allow the extraction of minerals at Lamington near Biggar.

Paterson’s planning application was refused by South Lanarkshire Council on 28 March 2012. A subsequent appeal was then refused by a reporter appointed by the Scottish Minister’s on 9 January 2012 on the basis of both the landscape and visual impacts of the proposed development.

Paterson’s appealed to the court on the basis that the reporter had:

• failed to keep in mind the overriding and imperative nature of the need for mineral;
• erred in his interpretation and application of planning policies ENV4 (Protection of the Natural and Built Environment), ENV29 (Regional Scenic Areas and Areas of Great Landscape Value Policy) and MIN2 (Environmental protection hierarchy);
• reached a decision which was perverse or “Wednesbury unreasonable”; and
• failed to use the opportunity to resolve matters by imposing conditions.

The Inner House refused the appeal. It found, when the decision was read as a whole, it could not be suggested that the reporter overlooked, or lost sight of, the overriding and imperative nature of the need for minerals. It also found that the reporter’s interpretation of each of the planning policies had been correct. Further, he had taken all of the positive factors into account before exercising his planning judgement to decide that the positive factors were outweighed by the negative factors and, as such, his decision was not perverse or “Wednesbury unreasonable” (i.e. a decision so unreasonable that no reasonable person acting reasonably could have made it). With regard to the possibility of imposing conditions, the court found that the reporter had been entitled to be cautious in his approach to suggest conditions when there might be EIA publicity requirements, and moreover the reporter had not had sufficient material before him to enable him to assess the repercussions or consequences of such conditions.

 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.

This is an Outer House case in which Northern Rock sought damages from the solicitor of one of its customers. Headway Caledonian Ltd borrowed sums from Northern Rock to finance the purchase of a Business Park in Hamilton. In return it granted a standard security in favour of Northern Rock. Some years later, Headway’s solicitor sent a draft discharge of the standard security to Northern Rock requesting that it sign and return the document. In the accompanying email, the solicitor stated that the company intended to sell the subjects and redeem the loan. However, that information was incorrect as Headway only intended to sell part of the subjects and to redeem part of the loan. (The reason for the error was unknown.)

Northern Rock (which had not instructed solicitors to act on its behalf in the transaction) relied on the email and granted the discharge of the standard security. The solicitor then registered it in the Land Register. As a result the loan became unsecured. Headway then became insolvent and Northern Rock raised an action for damages against the solicitor and her firm in respect of its losses.

The solicitor argued that the lender was a third party to whom she did not owe a duty of care.

Lord Woolman considered the authorities on liability for economic loss including Midland Bank plc v Cameron, Thom, Peterkin & Duncans[1] in which Lord Jauncey identified four conditions that should normally be present for liability in such cases:

“…

1. the solicitor must assume responsibility for the advice or information furnished to the third party;
2. the solicitor must let it be known to the third party expressly or impliedly that he claims, by reason of his calling, to have the requisite skill or knowledge to give the advice or furnish the information;
3. the third party must have relied upon that advice or information as a matter for which the solicitor has assumed personal responsibility; and
4. the solicitor must have been aware that the third party was likely so to rely.”

Lord Woolman found that liability in delict[2] could not be decided without hearing the evidence and allowed a proof.

The full judgement is available from Scottish Courts here.

“The majority of fees payable to the Public Guardian will increase on 1st April 2014.

Fees relating to powers of attorney remain the same, however it is recommended that frequent users of OPG services familiarise themselves with the fees that have altered to avoid overpaying.”

More on this can be found here.

The Court of Session has approved a “scrap of paper” as being a valid will.

Under this document referred as the “November will”,  Margaret Watt (the deceased), disinherited her husband in favour of her daughter (the pursuer in this case) by her first marriage.  The deceased had handwritten the will 20 years ago in pencil on a single sheet of A5 size paper with several holes that rendered indecipherable much of the text, including the date.   The will was purported to have been witnessed by a Mrs Reid a former neighbour of the deceased.

It was common ground that the November will had been written and subscribed by the deceased and that it bore to have testamentary effect.   It was not accepted that the subscription had been on 16 November 2004.  It was not accepted that Mrs Reid had witnessed the deceased’s subscription.

Evidence was led that the deceased was unhappy with an earlier will referred to as the “October will” which was prepared by a professional will writer. The pursuer gave evidence that the deceased gave the November will to her in February 2005.

“The critical evidence came from the pursuer and Mrs Reid. If I accepted their evidence the pursuer’s case was made out. I should accept that they were credible and reliable witnesses on all material matters. In particular, there was no good reason to doubt Mrs Reid’s evidence. She was an independent witness. She had no reason to lie. There was simply no good basis for accepting the first defender’s contention that she was lying, had committed forgery, and had perjured herself in court.”

“Mrs Reid confirmed that the deceased subscribed the November will on 16 November 2004. She appended her signature as a witness at the same time. She gave her evidence clearly and in a straightforward manner. Her evidence emerged intact from cross-examination. Her reaction to the suggestion that she was not telling the truth was one of real and unaffected astonishment. The explanation which she gave for not agreeing to provide a precognition to the first defender’s solicitors also seemed to me to be genuine.”

“I accept the evidence of Mrs Reid as being credible and reliable. She is independent of the pursuer and the first defender. She has no financial interest in the outcome of the litigation. I formed a favourable impression of her in the witness box. There appears to me to be no good basis for treating her as being other than a law abiding and respectable individual. I reject the suggestions that she has acted in a partisan way, has lied, has colluded in the creation of a false document, and has perjured herself.”

“Without Mrs Reid’s evidence the damage to the document would have appeared to me to have been highly suspicious. With the benefit of her evidence I see matters in a very different light. Her evidence provides very substantial confirmation and support for the evidence of the pursuer. Mrs Reid’s evidence corroborates that the document was indeed signed by the deceased using her married name “Lennie” and that it was dated 16 November 2004. It also corroborates the pursuer’s evidence that the deceased was concerned that the October will might not adequately protect her children; and that securing that her children would be provided for was the motivation for making the November will.”

“I found the pursuer to be a credible witness. With certain qualifications, I also accept that her evidence was reliable.”

The full judgement can be found here.

For those interested in tax statistics: HM Treasury’s “estimated costs of the principal tax expenditure and structural relief’s”.

Interesting to see that the three inheritance tax associated reliefs all show an increase.

Relief for charitable donations increased to £500 million, agricultural property relief increased to £385 million and business associated reliefs to £415 million.

More on this can be found here.

Sheriff court case concerning the meaning of “a premium” in the context of residential leasing.

Mr Cross and others (the students) sought a lease of property at Elmfield Avenue in Aberdeen. They completed an application form supplied by Aberdeen Property Leasing which revealed that the rent was to be £1,300 per month, and that a deposit of £1,300 and an “Admin fee” of £125 plus VAT thereon were to be paid prior to entering into the lease. The students paid the deposit and administration fee. In June 2009 they entered into the lease and were granted an assured tenancy of the property.

The students subsequently raised a small claims action seeking repayment of the administration fee which they argued was an illegal premium.

At the time the lease was entered section 82(1) of the Rent (Scotland) Act 1984 provided:

“any person who, as a condition of the grant, renewal or continuance of a protected tenancy, requires, in addition to the rent, the payment of any premium or the making of any loan (whether secured or unsecured) shall be guilty of an offence under this section”.

And s90 of the 1984 Act provided:

““premium” includes any fine or other sum and any other pecuniary consideration in addition to rent”

On 29 November 2012 s90[1] of the 1984 Act was amended by section 32(3) of the 2011 Act and now provides:

“”premium” means any fine, sum or pecuniary consideration, other than the rent, and includes any service or administration fee or charge.”

Aberdeen Property argued that the administration fee had been legitimately charged as, at the time the lease was entered into (i.e. prior to the amendments), administration fees were not prohibited.

The students argued that administration fees were prohibited at the time the lease was entered into and that the amendments made by section 32(3) of the 2011 Act simply clarified the meaning of “a premium”. They explained that the clarification was necessary because of confusion on the part of some landlords about what they could and could not charge and because of poor and inconsistent practices adopted by many landlords in relation to the imposition of charges and fees in addition to the rent and refundable deposit.

The sheriff agreed with the students’ interpretation and granted decree for repayment of the administration fee with interest:

“In my opinion the definition was not changed – it was improved to make it crystal clear to all involved in residential leasing that administration fees ought not to have been imposed and ought not to be imposed. The administration fee imposed by the defender is “a pecuniary consideration in addition to the rent” (s90 of the 1984 Act – prior to amendment). I asked [Aberdeen Property’s representative] if she could explain to me what the administration fee of £125 could possibly be if not “a pecuniary consideration in addition to the rent”. She has yet to answer that question. I have concluded that the administration fee imposed by [Aberdeen Property] was a prohibited payment and accordingly the pursuers are entitled to the return of 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 lease of a fast food restaurant and car parking spaces at Queens Drive Leisure Park, Kilmarnock.

Background
The lease contained a prohibition on subletting but stated that the landlord could not unreasonably withhold or delay consent to a subletting to a subtenant who was “respectable and responsible”. Burger King were the tenants under the lease and wished to sublet the premises to Caspian Food Retailers Limited. Burger King’s solicitors wrote to Castlebrook requesting consent for the subletting and providing some information on Caspian. Castlebrook’s agents replied seeking further information (including 3 years audited accounts and references from at least two previous landlords). Burger said that they had no accounts or references for Caspian as it was a new company.

Arguments
Castlebrook argued that, as Caspian had no track record, they had no idea whether the company was “respectable and responsible” but indicated that, if the main company in the group were to grant a guarantee or take the sublease itself, consent would be granted.  Burger King argued that, when taken with the fact that Castlebrook could continue to rely on Burger King’s covenant as tenant, there were no reasonable grounds to refuse the subletting. Castlebrook acknowledged the excellent track record of other companies in the group but contrasted that with Caspian itself which had no track record and refused to grant consent. Burger King sought declarator from the court that Castlebrook had refused consent unreasonably and a decree ordaining Castlebrook to issue the consent.

Decision
Lord Tyre found merit in Castlebrook’s argument to the effect that the landlord should first consider whether the proposed subtenant was respectable and responsible and then, if it found that it was not, the landlord was entitled to refuse consent without justifying that refusal by reference to any reason other than the non-respectability and/or non-responsibility of the sub-tenant. Lord Tyre referred to support for this approach in Bates v Donaldson:

“It will be seen that it is only when a respectable and responsible person is proposed as assignee or undertenant that this clause (as to the permission not being unreasonably withheld) comes into play. If the person proposed be not a respectable and responsible person, the lessor has an absolute right to refuse permission; if, however, the person proposed be respectable and responsible, then the lessor cannot unreasonably withhold his permission.”[1]

With regard to the meaning of “respectable and responsible”, Lord Tyre noted that “respectability” had been held to refer to the manner in which the company in question conducted its business and to its reputation and that “responsibility” had been held to refer to financial capacity. In each case he found that supporting evidence should relate to the proposed subtenant itself and not to other group companies or other entities that could provide assistance to the proposed subtenant:

“In my opinion a landlord who stipulates that a proposed sub-tenant must be responsible is reserving to himself the right to be satisfied as to the financial soundness of the sub-tenant itself and not as to the soundness of individuals or entities who might or might not provide assistance in the event of financial difficulty. So far as respectability is concerned, it may be that little should be required to satisfy the landlord, but once again I consider that evidence of respectability should relate to the proposed sub-tenant itself. A company does not acquire respectability automatically along with its certificate of incorporation, although it may not be long before its mode of carrying on business affords sufficient indication that it could not reasonably be regarded as anything other than respectable. That is not, in my view, the same as an assessment of the respectability of the company’s owners or of other companies in common ownership.”

Lord Tyre dismissed Burger King’s action but noted that if Burger King had provided material demonstrating even a successful first few months’ initial trading by Caspian, including landlords’ references, it might have been difficult for Castlebrook to justify a refusal of consent.

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 the Court of Appeal for England and Wales considering the treatment of rent payable during an administration and whether part of a payment of rent payable in advance could be treated as an expense of administration (and thus paid in priority to unsecured debts).

One of the companies in the Game group of companies was the tenant of many hundreds of properties from which the group traded. The rent in respect of most of those properties was payable quarterly in advance on the usual English quarter days (which include 25 March). On 25 March 2012 approximately £10m in rent became due under the leases and on the following day the Game Group went into administration. Trading continued from some stores which were included in a sale of the business and assets of the group to Game Retail Limited which was outwith the group. Approximately £3m in rent was said to be outstanding in respect of those stores.

The cases of Goldacre (Offices) Limited v Nortel Network UK Limited[1] and Leisure (Norwich) II Limited v Luminar Lava Ignite Limited[2] had decided that part of an instalment of rent cannot be treated as an expense in the context of insolvency. In Goldacre  it was found that, where a quarter’s rent payable in advance fell due during a period in which the administrators were retaining the property for the purpose of the administration, then the whole of the quarter’s rent was payable as an administration expense, even if the administrators were to give up occupation later in the same quarter. In Luminar  it was decided that, where a quarter’s rent payable in advance fell due before entry into administration, none of it was payable as an administration expense even if the administrators retained possession for the purposes of the administration.

As a result of Goldacre and Luminar it has become increasingly common for companies to enter administration on the day immediately following a quarter day, thus avoiding liability to pay the rent in full even if they retain possession of their leased property. A quick sale of the business to a new company can also mean that the new company can, in effect, trade for the first three months rent free.

The High Court in this case followed Goldacre and Luminar. However, the Court of Appeal applied the “salvage principle” under which liability for rent incurred before the winding up may be treated as if it were an expense of the winding up (on equitable grounds) where a liquidator or other office holder retains the property for the benefit of the winding up or administration. Consequently, the court allowed the Landlords’ appeal and over-ruled Goldacre and Luminar finding that an application of the salvage principle means that:

“the office holder must make payments at the rate of the rent for the duration of any period during which he retains possession of the demised property for the benefit of the winding up or administration (as the case may be). The rent will be treated as accruing from day to day. Those payments are payable as expenses of the winding up or administration. The duration of the period is a question of fact and is not determined merely by reference to which rent days occur before, during or after that period.”

The full judgement is available from BAILII here.

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

“4 March 2014

Power of Attorney (PoA) Update – Manual Submissions

There is currently a 12 week waiting period before your PoA can be processed and returned to you. This week we will be working on PoAs received on and around 13th December 2013.

If there is a genuine urgency, we will expedite the registration of a PoA ‘on cause shown’. We ask that people respect this service and only use it in cases of true urgency to avoid defeating its purpose.”

More on this can be found here.

Outer House case in which Mr Leonard sought damages from the Loch Lomond and the Trossachs National Park Authority after falling and injuring himself while descending a path forming part of the West Highland Way at Balmaha.

Arguments
Mr Leonard (who had been 12 at the time of the accident) argued that the park authority had breached its duties both at common law and under the Occupier’s Liability (Scotland) Act 1960 due to  the presence of hazards and lack of preventative measures on the path. He contended that the steps provided by the park authority were very uneven, inconsistent in shape and sloping downwards at various different angles and also that there were exposed roots and other tripping hazards such as man-made drainage gullies on the steps.  There was also a steep unfenced drop from the path to the public road. Mr Leonard argued that a risk assessment of the type that was standard practice in the design and planning process for any public right of way in open areas would have revealed the need for (amongst other things) a hand rail which would have slowed Mr Leonard’s descent and prevented his fall to the road.

The park authority argued that a hand rail was not required at the relevant part of the path as the gradient was not severe and the drop was less than two metres. They also said that it was likely that a hand rail would be vandalised and would have placed a maintenance risk on them. Further they contended that, given the gradient of the slope and width of the area before the drop, Mr Leonard would not have fallen to the road if he had been descending the path at walking pace.

Decision
Lord Uist found that the circumstances leading to the fall had not been proved but, even if they had been, there would have been no duty on the park authority under the 1960 Act[1]. After considering the authorities (which suggest that, whilst an occupier will have a duty to fence off special or unfamiliar hazards, an occupier will not be liable for obvious dangers), Lord Uist adopted the approach of Lord Emslie in Graham v East of Scotland Water Authority[2]. In Graham, Lord Emslie found that the test of ‘obviousness’ was not per se satisfactory. He noted that the early authorities have used the term ‘obvious’ to denote features of the environment which are “permanent, ordinary and familiar” and went on to say that, whilst natural landscape features plainly fall into that category, so too do long standing artificial features.

Lord Uist then concluded that the path under consideration in this case was:

“a long-standing artificial feature which was neither concealed nor unusual and did not involve exposure to any special or unfamiliar hazard. It had become a permanent, ordinary and familiar feature of the landscape”.

As a result, the park authority owed no duty to Mr Leonard (or anyone else) under 1960 Act in respect of the path.

However, Lord Uist also went further and indicated that, in addition to being inapplicable to long standing features, the occupier’s duty would not apply to other obvious artificial features (even though recently constructed) which have become part of the landscape and which do not involve exposure special or unfamiliar hazards:

“it is not a requirement that the artificial feature be well established or long standing before the principle[3] of Stevenson[4] and Taylor[5] applies: it is sufficient that it is obvious, part of the landscape and does not involve exposure to any special or unfamiliar hazard. If, for example, an accident happened a week after an obvious artificial feature which became part of the landscape (such as a pond, swimming pool or path) had been constructed I see no reason why the principle in Stevenson and Taylor should not apply. Of course, by its very nature, the path in this case presented a danger in the form of the risk of tripping or slipping, but that is a risk which those venturing upon the hill must be taken to have accepted. Adapting the words of Lord Hutton in Tomlinson[6], it would be contrary to common sense, and therefore not sound law, to expect the defenders to provide protection to members of the public (by means of a handrail or barrier or anything else) against such an obvious danger. The fact that [Mr Leonard] was aged only 12 at the time is of no relevance to the issue of the existence of a duty on the [park authority].”

The full judgement is available from Scottish Courts here.

(See appeal to Inner House here.)

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