Outer House decision concerning Trump International’s challenge to the Scottish Government’s decision to grant permission for an offshore wind farm near its golf resort at Menie in Aberdeenshire. (My blog on some of the issues surrounding the golf resort can be seen here.)

Following the recent decision in Sustainable Shetland v The Scottish Ministers in which Lady Clark came to the conclusion that it was not competent to grant planning permission for a wind farm to persons who were not licence holders or exempt persons[1] under the Electricity Act 1989, Trump International lodged a minute of amendment seeking to add the argument made by Sustainable Shetland (referred to as the “competency question”) to their pleadings. They also sought to have the competency question dealt with before the other issues in the case and referred to the Inner House.

Lord Woolman allowed Trump international to amend their pleadings[2] to include the competency question but, having regard to the potential consequences and effect it might have on the overall delay, refused the motion to detach the competency question from the other issues in the case.

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.

Sheriff Court case in which Mr Heary sought damages after suffering injury when climbing over a locked gate whilst attempting to leave a breakers yard he had been visiting.

Facts
Mr Phinn carried on a business known as Phinn Parts Auto Breakers from a yard in Dundee. Mr Heary had arrived at the yard and was directed by Mr Phinn to the part of the yard where he might find the parts he was looking for. Shortly afterwards, Mr Phinn left the yard and went home. Before leaving, Mr Phinn’s son had entered the yard and shouted to ask if anyone was there but had received no answer. When Mr Heary sought to leave the yard, he found that there was nobody else in the yard and that a communal gate, shared with four or five neighbouring businesses, was locked. He then attempted to climb over the gate to get out but fell. Mr Phinn denied locking the gate (he, along with the proprietors of the other yards, held keys to it) and it was not established who had done so.

Occupier’s Liability (Scotland) Act 1960
When considering Mr Phinn’s potential liability under the Occupier’s Liability (Scotland) Act 1960, the sheriff found that, although Mr Phinn was not the owner of the communal gate, he was an occupier in terms of the Act by reason of the control he exercised over the access. However, it was found that a gate operating normally could not be said to constitute a danger and accordingly there was no obligation on Mr Phinn under the Act.

Common Law
In contrast, it was found that, as Mr Phinn invited people on to the premises, he owed Mr Heary a duty to take reasonable care for his safety at common law. It was foreseeable that, if Mr Phinn allowed Mr Heary to be locked into the yard, he might injure himself whilst taking steps to escape. It was also foreseeable that, even if Mr Phinn did not lock the gate himself, one of the occupiers of the neighbouring yards may have done so. There was therefore a duty on Mr Phinn to take reasonable care to ensure that no one was left in the yard when he vacated it. The sheriff found that, although a check may have been carried out, given the size of the yard, the check had been inadequate. That failure to carry out an adequate check had caused Mr Heary’s injuries. However, after taking account of the fact that the incident had taken place during the day, the fact that the site was not completely isolated and that Mr Heary had decided to climb the gate (which was a significant obstacle) after waiting only 25 minutes, the sheriff found that there had been contributory negligence on the part of Mr Heary and reduced the award of damages by 50%.

 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.

Although I wrote this over six months ago, and some of the figures are out of date, the points made still apply.

Introduction

It is important in the context of the wider independence debate to remind ourselves how the UK Government, its institutions and its supporters in Scotland have reacted to the idea of devolving substantial tax powers to the Scottish Parliament.  The UK Government of whatever colour know that if they lose the tax powers debate they lose Scotland.

It is often forgotten that there were two votes in the 1997 referendum.  The first was for the establishment of a Scottish Parliament and the second for the Scottish Parliament to have tax-varying powers.  74.3% voted in favour of a Scottish Parliament and 63.5% in favour of tax-varying powers.

My renewed interest in Scotland’s constitutional debate, and in particular the tax and fiscal powers debate, began on my return from the USA in 2000.  Serious tax powers were not even considered in 1997.  The Scottish Parliament simply gained control of the matters that were for the most part already controlled by the Scotland Office despite the vote in favour of tax-varying powers in the referendum.

The view I adopted then, articulated in a number of articles, was that it was relatively easy to improve the administration of tax in Scotland.  Although these articles generated a great deal of comment nothing happened.  I also around that time accepted an invitation to join the tax committee of the Law Society of Scotland. Serious tax powers for the Scottish Parliament were still not on the political agenda.  That led me and a few others to set up the think tank, Reform Scotland which gave us the chance to add some substance to this debate.

A Brief History of Tax in Scotland in Recent Times

The Scottish Parliament was given control over the two local authority taxes: council tax and business rates.   It was also given partial control over income tax.  The Scottish Parliament is responsible for approximately 60% of government spending in Scotland but only has control over, and again approximately, 7% of all tax raised in Scotland.  The income tax power was never used and even the ability to use it lapsed a number of years ago. A great deal was made of the income tax power at the time of the 1997 referendum.  This included having a specific question devoted to it.

There were no significant developments on tax powers for the Scottish Parliament until the Liberal Democrat “Steel Commission” report was published in March 2006.  Even though the report did not receive a great deal of publicity at the time of publication it was generally well received.  This report shows how far the Liberal Democrats have retreated on devolving substantial tax powers for the Scottish Parliament.  I will come back to this point.

The real game changer happened in 2007 when the SNP become the largest party in the Scottish Parliament and formed a minority government.  The response of the Labour, Liberal Democrat and Conservative parties was the “Commission on Scottish Devolution”, more commonly referred to as “Calman”.  Why did they do this?  These parties felt they had to be seen to doing something.  They thought the SNP victory was a blip and that there was nothing really to worry about.  Normal service will be resumed in 2011.  The remit of Calman was also clear:  “… to secure the position of Scotland within the United Kingdom”.

The first Reform Scotland “fiscal powers” report was published in November 2008.  The report got a great deal of coverage.  The authors, including myself, looked at this issue from the position of the present constitutional arrangement i.e. a devolved parliament.  Our proposal was that the Scottish Parliament should be given the tax powers to enable it to raise approximately the amount it spends.   Under this proposal control over the vast majority of taxes would have been devolved to the Scottish Parliament.

In contrast to the Reform Scotland report was Calman’s interim report published in December 2008.  This report made no specific recommendations regarding tax powers and was  probably an effort to test the water.  The difference now was that there was something to compare Calman with.

Calman’s final report was published in June 2009.   The report appeared to offer as little as they thought they could concede.  It included four miscellaneous taxes (Stamp Duty land Tax, landfill tax, aggregates levy and air passenger duty) and a very restricted income tax proposal.  Calman’s membership, which included Iain McMillan of CBI Scotland, meant this was the most likely outcome.  The main report even suggested that a number of powers including parts of Scottish charity law be re-reserved. Reform Scotland updated its “fiscal powers” report in October 2009 to take account of Calman.

The reaction of the UK Labour Government and then the coalition Government to the Calman proposals was particularly telling.  They could not even countenance legislating for the powers recommended by Calman.  This involved what I then termed  “Calman minus”.  The coalition Government’s Scotland Bill was published in November 2010 and only included two minor taxes (Stamp Duty Land Tax and landfill tax) and partial control of the income tax bands.  The arguments put forward for not including the two other minor taxes are revealing.  Air passenger duty was not included as it was under review and aggregates levy was omitted because it was subject to a European court action by a trade body.  The recommendation that 50% of income tax on savings and distributions was to have been assigned to the Scottish Parliament had simply been dropped.

In response to the coalition Government’s Scotland Bill the Scottish Government produced papers on adding excise duty, corporation tax and control over the Crown Estate to the Scotland Bill.  I think it is fair to say that none of these suggestions were taken up enthusiastically by the UK Government.  In addition the UK Government ignored recommendations made by both the present and previous Scottish Parliament Scotland Bill Committees (chaired by Wendy Alexander MSP and Linda Fabiani MSP respectively) and even Westminster’s Scottish Affairs Committee for including some or all of these powers.   Reform Scotland’s third fiscal powers report, “Devolution Plus”, was published in September 2011, of which I was again one of the authors.  There were two main changes.  Control over income tax was to be given entirely to Holyrood and the devolving of substantial welfare powers to the Scottish Parliament was recommended.

The Devo Plus campaign was formally launched in February 2012 and its fiscal powers proposal is based on the Devolution Plus paper produced by Reform Scotland.  Devo Plus was set up by Reform Scotland, although it is not supported by everyone associated with Reform Scotland, and includes representatives of each of the main unionist parties.  Neither the Devolution Plus paper or the Devo Plus campaign has had any discernible effect on the Scotland Act 2012 which received Royal Assent in July 2012.  The latest devolution paper is called “devo more” and it is from The Institute for Public Policy Research and was published in January 2013.  This proposal does not go nearly as far as “devo plus” and only goes slightly further than the Scotland Act 2012.

The Wider Context

It is worth noting that Westminster has already refused to devolve control of a range of taxes, duties and charges to the Scottish Parliament.  Those listed below are the main taxes but there are a number of others.  In bold are the additional powers the Liberal Democrats would devolve under its “Home Rule and Community Rule Commission”. The figures in italics are mostly from the “Government Expenditure & Revenue Scotland 2010-11” (GERS).  The figures are included to give an idea as to the level of revenue produced by a particular tax and are a number of millions of pounds.

1. Full control over income tax including the underlying law dealing with reliefs etc (some additional powers but not complete control)  10,634
2. National insurance contributions  8,018
3. Corporation tax (assignation of revenue only)  3,114
4. North Sea revenue  7,951
5. Fuel duties  2,339
6. Capital gains tax (partial control only)  244
7. Inheritance tax (to be devolved)  159
8. Other stamp duties – stamp duty and SDRT on shares (estimated)  265 
9. Tobacco duties  985
10. Alcohol duties  (includes spirit, wine, beer and cider duties)  895  
11. Betting and gaming duties  113
12. Air passenger duty (even though included in Calman) (not clear if to be completely devolved)  183
13. Insurance premium tax  210
14. Climate change levy  61
15. Aggregates levy (even though included in Calman) (not clear if to be completely devolved)  54
16. Vehicle excise duty  470
17. Bank levy  (estimate as no separate Scottish figure)  200
18. Licence fee receipts  325
19. Crown Estate revenue  (not clear if to be completely devolved)  10
20. VAT cannot be devolved but VAT revenue could be assigned  8,560 

Taxes devolved or being devolved under Scotland Act 2012

1. Income tax (still only partial control over tax bands and will cost Scottish Parliament millions of pounds a year to administer even if not used)  (estimated partial control over)  5,000

2. Council tax  1,986

3. Business rates  1,891

4. Stamp duty land tax (Scottish Parliament control by April 2015)  330 

5. Landfill tax (Scottish Parliament control by April 2015)  99  

The Scotland Act 2012 also does not resolve the imbalance between the amount the Scottish Parliament is responsible for spending and which it raises.  The Scotland Act 2012 only takes us to about a third.

Likelihood of additional powers being devolved if Scotland votes ‘No’

Let us begin our examination with the Liberal Democrats who published their “Home Rule and Community Rule Commission’s report: ‘Federalism: the best future for Scotland’” in October 2012.  There are a number of problems with this report.  The first is the likelihood of the Liberal Democrats being part of and having a major influence in a future UK Government.  At best the Liberal Democrats will again be a junior partner in a UK coalition government.  Even if they were to persuade the senior party to implement their plans the Scottish Parliament would not see any new powers until at best 2020.

Then there is the accusation: why should anyone take the Liberal Democrats seriously on devolving substantial tax powers to the Scottish Parliament?  The Liberal Democrats are in power just now at the UK level but have had remarkably little impact on the coalition in this area: all we have is “Calman minus”.  The Scotland Act 2012 does not even devolve control of the Crown Estate in Scotland to the Scottish Parliament even though the Liberal Democrats have campaigned on this issue for many years. Then there is the report itself.  The report barely goes beyond Calman.  Inheritance tax is to be devolved and also some parts of capital gains tax and possibly control over the Crown Estate.

The Liberal Democrats have historically been willing to go further than the other main UK parties on devolving powers to the Scottish Parliament.  The Steel Commission for example goes much further.  What this report shows is that the Liberal Democrats are moving away from devolving substantial tax powers to the Scottish Parliament.

Scottish Labour has a “further devolution commission”.  There is little prospect of this commission coming up with a proposal close to “devo max” or even “devo plus”.  The UK Labour Government’s response to Calman did not go any further than the UK coalition Government’s recent Scotland Act.  The fact that the leader of the ‘No’ campaign, Alistair Darling, refuses to say anything constructive on this issue suggests that the UK Labour Party will only even consider devolving substantial tax powers if forced to do so.  Then there is the Conservative Party.  The idea of a “Constitutional Convention” is questionable.  The Conservatives have consistently adopted a policy of prevarication, kicking the matter into the longest of long grass for another generation.

In her much trailed speech, Scottish Tory leader Ruth Davidson promised no new tax or fiscal powers, no timetable for even considering the issue and no confirmation that she had moved on from saying that corporation tax and welfare powers should not be devolved.  That is what Davidson said as recently as October 2012.  All that has been hinted at is that they will consider setting up a new commission to examine the devolution of more powers to the Scottish Parliament.

No second question

The campaign for a “second question” to be included on the ballot paper in 2014 failed.  So what does that mean for those arguing for “devo max” and “devo plus”.  Devo Plus did not argue for a second question and its supporters have confirmed that they think Scotland should vote ‘No’.  They also think that Westminster will devolve substantial tax powers to Scotland if Scotland votes ‘No’.  This is not a realistic position to take.  Calman only existed because Scotland elected an SNP Government.  If Scotland votes ‘No’ in the referendum the Unionists will simply assume the pressure is off.  It is not surprising that the Devo Plus campaign has failed to gain any traction.  It is also not surprising that people like Jim McColl who support “devo max” have declared that they will vote ‘Yes’.

Arguments put forward against a Scottish tax system

So how have the opponents of substantial tax powers for the Scottish Parliament been able to ensure that substantial tax powers are not devolved to the Scottish Parliament?  A template can be seen from Calman, what might be called the “Calman doctrine”.  Make a huge fuss about having someone look at the issue, take your time, offer as little as possible, exaggerate any problems, minimise or ignore any advantages and ensure HMRC and HM Treasury remain in control.   It seems that HMRC and HM Treasury cannot help but react negatively to any policy proposed by the Scottish Parliament that deviates from or impinges on reserved matters.  An example of this was how HM Treasury withheld attendance allowance funding when the Scottish Parliament introduced free personal and nursing care.  Another example was the reaction when the Scottish Government proposed and then set up the Scottish Futures Trust.  And yet a further example was the reaction from both HM Treasury and HMRC when the Scottish Government wanted to introduce a local income tax.

Memo to Treasury and HMRC: Scotland has its own legal system

It has been well documented as to how much of a shambles the introduction of Stamp Duty Land Tax (SDLT) in Scotland was. HMRC admitted that they did not realise that Scottish property law was different to English and Welsh property law.  They also made it clear that they did not have time to change the legislation.  “Don’t worry we will have plenty of time to sort things out later”, they said.  The only reason that SDLT worked in Scotland was due to the goodwill and pragmatism of the Scottish legal community.  This experience confirms the lack of awareness and interest in Scotland and its institutions.  Even though the UK does not have a unitary legal system, the UK tax system uses English & Welsh legal principles.  This occasionally causes problems, for example where the underlying law, Scots law, differs from the law of England and Wales.  For example in some succession or charity matters.

It is not just the lack of awareness of Scots law, but the centralisation in England of the administration of certain taxes that has caused problems for us in Scotland.  Two examples:  Birmingham for SDLT and Nottingham for inheritance tax.  The centralisation of the administration of these taxes has meant increasing problems with getting expert advice on particular Scottish legal issues.  In addition the Edinburgh Stamp Office has been under constant threat of closure and the Trusts and Estates office in Edinburgh is being run down.

Then there was the proposal for a UK wide planning-gain supplement.  Before the recession the debate was all about how much developers should contribute.  Again the level of knowledge of Scots law and the extent of the powers held by the Scottish Parliament was disappointing.  The main argument against a UK planning-gain supplement was a simple one.  This was a matter for the Scottish Parliament as planning and housing are devolved matters, a point so obvious that they said it had never occurred to them.  This debate went on for many months but finally the proposal in Scotland was dropped.

There was also the Scottish Government’s local income tax proposal.  It was unclear why anyone expected HMRC to cooperate and work to Scottish Government deadlines.  The attitude of the UK Government and its institutions meant there was little likelihood of this proposal being implemented.  This should not have come as a surprise as HM Treasury had withheld attendance allowance funding since the Scottish Parliament introduced free personal and nursing care.

What about Northern Ireland?

A similar pattern emerges when considering VAT and the proposed new Scottish national police and fire services.  These forces will have an annual VAT bill of approximately £30m.  Under the current structure police and fire services are treated like local authorities and are exempt from VAT.  However on merger they may be subject to VAT.  HM Treasury has rejected the Scottish Government’s request that these new bodies should be able to recover VAT.  It has of course been pointed out to HM Treasury that the Police Service of Northern Ireland is exempt from VAT.

The “just because it happens in Northern Ireland” is not likely to work with HMRC and HM Treasury.  Northern Ireland already has borrowing and welfare powers.  Anyone involved in the Scotland Act deliberations knows how hard HM Treasury resisted calls for borrowing powers to be included.  They succeeded in ensuring that only restricted powers be included.  Welfare powers were simply not even considered.  It does not seem to matter that Northern Ireland is also to get partial control over air passenger duty and also possibly corporation tax although not any time soon.  Nick Clegg has indicated that the UK Government will not devolve corporation tax to Northern Ireland in the short term due to the “knock-on effects” in Scotland.

The argument does not just stop with Northern Ireland.  The Scottish construction sector would like to see a reduction in VAT for building repairs and renovations.  The UK Government has so far refused this request notwithstanding that it allows a similar reduction in the Isle of Man.

This would complicate the tax system 

The UK has one of the most complicated tax systems in the world.  Each UK Budget adds further complications.  Tax simplification is simply not taken seriously by the UK Government.   A Scottish tax system could actually simplify the UK system though this is rarely considered.  As mentioned above, the UK does not have a unitary legal system.  Therefore a Scottish tax system would simplify the system for the rest of the UK.  For example, when SDLT is devolved there will be no need for the guidance and forms to explain the differences in Scotland due to our different system of property law.   The same applies for inheritance tax guidance and forms.

This also applies to Scottish charity law.   As previously mentioned, Calman recommended re-reserving parts of charity law.  A more sensible proposal would have been to agree that when the Office of the Scottish Charity Regulator (OSCR) registers a charity it automatically becomes entitled to the tax reliefs associated with charitable status.  At present, to gain charitable status and the various tax benefits it is necessary to apply to OSCR and HMRC.  There may be a lot of talk about tax simplification but an obvious opportunity was missed.

Tax competition is bad

The argument that tax competition within the UK is bad is made fairly regularly.  Gordon Brown made this claim again last year.  He claimed devolving tax powers to the Scottish Parliament automatically means a “race to the bottom” for tax rates and in particular business tax rates.  One major problem with this statement is that tax competition already exists.  Not just within the European Union but throughout the world.  Why is the UK Government reducing the rate of corporation tax to 20% by 2015?  In short, to ensure competitiveness.  Why does the UK Government object to a Financial Transaction Tax?  Because it thinks it will affect the competitiveness of the City of London.

Always stay in control

Tax reliefs are just as important as tax rates to businesses.  Business does not just consider the headline rate of tax when deciding where to locate.  Many other factors are analysed, and not just tax.  The underlying law that allows for the creation of reliefs or to vary the tax base as well as connected legislation that affects the tax legislation, for example the tax residency rules or employment legislation for income tax.   This makes the case for a tax being devolved in its entirety.   On its own, the ability to vary a rate of tax is not much of a power.  By not devolving a tax in its entirety, control is retained.  That is why the Scottish Parliament is not being given complete control of income tax.  The argument that any such changes would be in breach of EU “state aid” rules used to be a favourite of the opponents of substantial tax powers until the European Court of Justice ruled that tax powers can be devolved if certain conditions are met.  These conditions are easily met.

Westminster always knows best

The UK Government does not consult the Scottish Government or Parliament on issues such as whether to introduce a Financial Transaction Tax.  Westminster would not think twice about amending the income tax legislation without consulting the Scottish Parliament.  It is no coincidence that HM Treasury is opening an office in Scotland with a “Head of Scotland Analysis and Stakeholders Engagement”, in other words someone to argue against independence.   The appointment, only runs to the end of 2014.

What could have been done?

Westminster could have relatively easily devolved substantial tax powers to the Scottish Parliament but it did not want to.  A number of taxes are closely associated with the responsibilities already devolved to the Scottish Parliament which would have given the Scottish Parliament a substantial number of economic levers and the chance to develop policy more effectively.

Below are some examples.:

• Property law is devolved but SDLT (not until 2015) and the property parts of capital gains tax are not.
• Succession law is devolved but inheritance tax is not.
• Environmental law is devolved but environmental taxes are not.
• Health is devolved but alcohol and tobacco duties are not.
• Transport is devolved but transport related taxes are not.

Much could have been done during the last few years if even some of these powers had resided with the Scottish Parliament.

It will cost too much 

The Scottish Government recently announced the creation of Revenue Scotland.   Revenue Scotland will be responsible for collecting the two miscellaneous taxes being devolved.   The Scottish Government is in no doubt that Revenue Scotland will be able to administer the two new Scottish taxes at a lower cost than HMRC.  Those arguing against substantial tax powers for the Scottish Parliament disagreed with this.  That is all the more surprising given the problems HMRC are having with matters such as tax avoidance and tax evasion just now.

The Scottish Parliament will need an Exchequer that ideally combines the functions presently undertaken by HMRC and HM Treasury. During the Calman deliberations, it was claimed by the Scotland Office that the cost of administering a separate Scottish tax system would be the same as the present UK system. In short, absolute nonsense.  Scotland does not need a separate Stamp Office, Registers of Scotland, Trusts and Estates Office and Companies House.  It could create a one stop shop to combine these and other government tax, legal and registration services.   By doing this we could also have sub-offices throughout Scotland, just as London is not the UK, Edinburgh is not Scotland.

Conclusion

If Scotland votes ‘No’ we will not see substantial tax powers devolved to the Scottish Parliament.  The actions of those arguing against such powers speaks for itself.  Creating a Scottish tax system is a once in a generation chance to create a simpler and more progressive tax system.  Scotland literally has a blank sheet of paper.  Let us not waste this opportunity.

James Aitken

Outer 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 considering the relevant statutory provisions[1], 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.

However, Lady Clark rejected Sustainable Shetland’s arguments relating to the need for a public enquiry finding that, on reading the Ministers’ decision letter as a whole, the Ministers had considered that they had sufficient information to come to a conclusion without holding a public enquiry and Sustainable Shetland had failed to demonstrate that the Ministers were not entitled to reach that conclusion.

The full judgement is available from Scottish Courts here.

(NB: See appeal to Inner House  and further appeal to the Supreme Court here. See also related decision in relation to intervention by interested parties and Trump International v Scottish Ministers).

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

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Sheriff Court case concerning liability for the maintenance of Carbeth House in Killearn. The property comprised 9 flats each of which was subject to a deed of conditions.

Facts
A large crack which appeared in the west wall of the property on 16 August 2007 was examined by a building standards surveyor from Stirling Council on 17 August 2007 and found to be dangerous. The surveyor wrote to the owners of the flat requiring a protective fence to be erected around the wall and intimated that a dangerous buildings notice would be served on the owners by the Council. On the recommendation of a civil engineer and, following a majority vote of the proprietors (by email), a protective fence was erected together with scaffolding to support the wall (on 20 August 2007).

The crack in the wall was discussed, and the measures taken, explained at a meeting of the proprietors on 23 August 2007 (convened primarily to discuss another matter) and no objection was raised. A dangerous buildings notice was issued to the proprietors on 24 September 2007. Contractors were asked to tender for the repair works required by the dangerous buildings notice and, in September 2008, the proprietors voted by majority (again by email) to accept one of the tenders.

The proprietors were then asked to contribute money into a repair fund. However, Mrs Wallace and Mr Crossan declined to contribute. After some legal correspondence, solicitors acting for Mrs Wallace and Mr Crossan indicated in a letter (on 29 May 2009) that they would pay their share of the costs of the repairs on receipt of the appropriate engineer’s certificate and were anxious for the work to be carried out and the scaffolding removed.

In June 2009 the repair commenced. The repairs, along with additional works revealed as necessary when the initial work began, were completed on 12 October 2009. Mrs Wallace and Mr Crossan failed to pay their share of the costs and Mrs Garvie was authorised by a majority vote of the other proprietors to recover the sums due from Mrs Wallace and Mr Crossan.

Argument
Mrs Wallace and Mr Crossan argued that the sums could only be recovered if the works had been done in terms of the title deeds. In terms of the deed of conditions there had to be a meeting of the proprietors before works could be instructed (and, they argued, no scheme for works had been agreed at the meeting on 23 August 2007).

Decision
The sheriff found Mrs Wallace and Mr Crossan were liable to pay their share of the cost of the repairs (£6,483 in the case of Mrs Wallace and £6,858 in the case of Mr Crossan). He concluded that the wording of the deed of conditions was permissive and that the procedure in the deed of conditions was not the only method by which the proprietors could instruct repairs. Against that background the sheriff considered the situation by reference to the common law, consent and the Tenements (Scotland) Act 2004.

Common law
The wall was common property and, in terms of the common law, all of the proprietors were obliged not only to contribute towards the cost of the repairs but to actively ensure that the repairs were carried out. It is also a well known principle of the common law of common property that any one proprietor can instruct common repairs and then look to fellow co-proprietors for a contribution towards the cost. Quite apart from the deed of conditions, the sheriff took the view that all of the repairs were necessary and could be instructed by any of the co-proprietors and that Mrs Wallace and Mr Crossan were obliged to pay a share of the costs.

Consent
With regard to consent, Mrs Wallace and Mr Crossan had attended the meeting on 23 August 2007 at which the works and costs had been discussed and made no objection. The letter of 29 May 2009 could be treated as unconditionally binding Mrs Wallace and Mr Crossan to the costs including the increased costs and additional work. Even if not, they had been provided with information at each stage and were to be deemed to be renewing the authority given in the letter by failing to revoke it.

The Tenements Act
Initial scaffolding works
With regard to the Tenements (Scotland) Act 2004, the initial scaffolding work amounted to an emergency repair[1] and, as the deed of conditions did not provide for emergencies, the tenement management scheme contained in the 2004 Act applied. Any owner can instruct emergency repairs and the costs of such work are “scheme costs” (meaning they would be shared[2] amongst the proprietors).

Retention of the scaffolding
As to the retention of scaffolding in place after the meeting on 23^rd August 2007, the procedure for making the decision to do so was provided in the deed of condition (i.e. by majority vote at a meeting of the proprietors). In this case the meeting had not been convened in accordance with the deed and there was no vote. However, there had been a meeting at which it was discussed and the proprietors knew the scaffolding would need to remain in place until repairs could be organised. There was no evidence that Mrs Wallace and Mr Crossan had disputed the need to retain the scaffolding and there had been consensus amongst the proprietors at the meeting. As such, the sheriff found that a scheme decision had been made (in terms of the 2004 Act) but that the decision had been reached by an irregular procedure[3]. However, the irregularity did not affect the validity of the decision[4].

Completion of the works
The same analysis applied to the repairs carried out. A vote took place by email after circulation of the projected scheme costs. The majority approved the scheme and, even though Mrs Wallace and Mr Crossan may not have voted in favour of the scheme, they did consent. Again, although this did not follow the procedure contained in the deed of condition, the sheriff found that there had been a valid scheme decision (albeit reached by an irregular procedure).

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.

“7 October 2013

Power of Attorney (PoA) Update – Manual Submissions

There is currently a 13 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 8th July 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 fund here and Electronic Power of Attorney submission (EPOAR) here. EPOAR is proving to be very successful and is being looked at enviously by practitioners in the rest of the UK.

“As a result of customer feedback, HMRC has updated several areas of charity guidance.

New and updated publications include:

• ‘Gift Aid Small Donations Helpsheet’ – new helpsheet giving an overview of how the Gift Aid Small Donations Scheme works
• Annex II: non-charitable expenditure – detailed guidance notes updated
• Annex VIII: Tainted Charity Donations – detailed guidance notes updated”

More on this can be found here.

Sheriff Court case in which commercial estate agents sought payment of fees under a sole selling agreement they entered with Mr and Mrs Ferguson in respect of the sale of licensed premises (known as “the Lounge”) in Bathgate. In terms of the agreement the estate agents were entitled to payment “upon conclusion of a contract for the sale of or other disposal of the business and premises…”.

The estate agents were initially instructed (in October 2010) to sell the premises at offers over £300k with sitting tenants. However no offers were received and the tenant of the downstairs bar area gave up his tenancy. The Fergusons decided to refurbish the whole premises and the tenant of the upstairs music venue (a Mr Ward, who had continued to trade for a short time after the bar stopped trading) relocated to other premises owned by the Fergusons. The premises were then remarketed without a sitting tenant at offers over £200k.

Discussions took place between the Fergusons and the estate agents to the effect that it was preferable to sell the premises with a sitting tenant which led to a belief, on the part of the estate agents, that the Fergusons wished to dispose of the premises by lease rather than sale. A former barman also intimated interest in the premises. The estate agents prepared further sales particulars (which were not approved by the Fergusons) advertising the premises for let.

The estate agents then (in July 2011), in the mistaken belief[1] that the former barman had, or was to, acquire an interest in the premises stopped marketing the property and invoiced the Fergusons for fee of £5k plus VAT. The Fergusons then entered missives for a 5 year lease of the premises with Mr Ward in August 2011.

The sheriff found that the estate agents were not entitled to payment in terms of the sole selling agreement finding that the existence of missives of let between the Fergusons and Mr Ward was not an event which gave rise to the estate agent being entitled to remuneration in terms of the agreement.  In particular the word “disposal” in the agreement related to the disposal of the sellers’ interest in land and that the missives entered into between the Fergusons and Mr Ward did not constitute a disposal of an interest in land nor was it a long lease and therefore did not trigger any entitlement to payment under the contract.

Appealing that decision, the estate agents argued (amongst other things) that the sheriff had been wrong to read the words “interest in land” into the agreement after the word disposal and that the word “disposal” should be given it’s plain and ordinary meaning which was the “rearranging of affairs”. The estate agents also contended that the missives of let were not simply a renewal of the existing lease: the missives referred to both parts of the property (upstairs and downstairs); there was a change in rent and a new date of entry. In coming to his conclusions the sheriff, it was argued, had placed an interpretation on the contract which was contrary to commercial sense or reality.

Those arguments were rejected by the sheriff principal who refused the appeal finding that, against the factual and statutory background[2], the sheriff had not erred in coming to his conclusions. The Sheriff Principal also took the view that the ordinary meaning of the word “disposal” was “alienation” and, with regard to the commercial purpose of the agreement, said the following:

“The suggestion that the commercial purpose of the agreement is to ensure the [the estate agent’s] remuneration in circumstances which include the other party entering into missives of let with the sitting tenant is, in my view, absurd. That contention disregards completely the fact that there are two parties to the contract and in respect that the purpose of the contract is to achieve either a sale of the premises or, as contended for by [the estate agents], a lease of the premises. The commercial reality or purpose of the contract is for both parties to achieve such a result. Without achieving the sellers’ purposes the estate agent will not receive remuneration. The commercial purpose contended for on behalf of [the estate agents] would be to have the other party as a “hostage” for the duration of the contract. It would mean that the seller would be unable to conduct and regulate their business affairs by renewing a lease or renegotiating a lease with an existing trading tenant without triggering liability to pay a fee to the estate agent”.

 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.

I have updated this blog again after being reminded of what David Cameron has said on this issue and also to make greater reference to the welfare powers part of this debate.  Two quotes from an article in the Scotsman sum up the position nicely:

“Scots have been warned a substantial increase in financial powers for Holyrood is not an option if Scotland wants to remain in the United Kingdom.”

“The sources said a unified tax and benefits system across the UK, was at the “heart” of a single country, and could not be devolved to Scotland.”

Has anything changed since these comments were made?  It appears not.  Neither the Conservative, or Labour or the Liberal Democrat parties are proposing anything that comes even close to what is proposed by ‘devo plus’ let alone ‘devo max’.

Add to this the recent comments from Kenneth Calman, chair of the Calman Commission, and it is clear nothing has changed.  Calman is proposing yet another UK Commission of Scotland votes ‘NO’.  More on this can be found here and here.  The implications for those still arguing for “devo  plus” or “devo max” are obvious.

Now to the welfare powers debate.  Both Michael Moore and Ruth Davidson have suggested that some relatively minor welfare powers might be devolved to the Scottish Parliament if Scotland votes ‘NO’.  Both have ruled out devolving substantial welfare powers.

This is in stark contrast to the position taken by the Scottish Council for Voluntary Organisations.  The SCVO have stated that Scotland needs a separate welfare system from the rest of the UK regardless of the result of next year’s referendum.  This is an extremely important contribution given recent comments from those on the ‘NO’ side.  More on this can found here.

Tax Powers

Although the Scottish Conservatives now appear to be moving towards arguing for the devolving of further tax powers there is as as yet no firm proposal from them.

Listed below are the taxes, duties and charges that Westminster has so far refused to pass control to the Scottish Parliament.

In bold are the additional powers the Liberal Democrats are putting forward for devolving.  This information is from its “Home Rule Commission” published in October 2012.

In red are the additional powers the Scottish Labour party might argue for devolving.  I say “might” as its report is an “interim” report only.

The figures are mostly from the “Government Expenditure & Revenue Scotland 2011-12” (GERS).  The figures are included to give an idea as to the level of revenue produced by a particular tax and are a number of millions of pounds.

1. Full control over income tax including the underlying law dealing with reliefs etc (some additional powers but not complete control)  (similar proposal from Labour) 10,790
2. National insurance contributions  8,393
3. Corporation tax (assignation of revenue only)  2,976
4. North Sea revenue  10,573
5. Fuel duties  2,296
6. Capital gains tax (partial control only) (similar proposal from Labour) 246
7. Inheritance tax (to be devolved)  (possibly)  164
8. Other stamp duties – stamp duty and SDRT on shares (estimated)  276
9. Tobacco duties  1,129
10. Alcohol duties  (includes spirit, wine, beer and cider duties)  981
11. Betting and gaming duties  115
12. Air passenger duty (even though included in Calman) (not clear if to be completely devolved)  (similar proposal from Labour)  213
13. Insurance premium tax  251
14. Climate change levy  64
15. Aggregates levy (even though included in Calman) (not clear if to be completely devolved) (similar proposal from Labour)  52
16. Vehicle excise duty  (possibly)  475
17. Bank levy (estimate as no separate Scottish figure)  180
18. Licence fee receipts  325
19. Crown Estate revenue  (not clear if to be completely devolved) (if Scottish Parliament accepts UK Government terms)  10
20. VAT cannot be devolved but VAT revenue could be assigned  9,554

Taxes already devolved to be devolved under Scotland Act 2012

1. Income tax (still only partial control over tax bands and will cost Scottish Parliament millions of pounds a year to administer even if not used)  (estimated partial control over)  5,395
2. Council tax  1,987
3. Business rates  1,933
4. Stamp duty land tax (Scottish Parliament control by April 2015)  330
5. Landfill tax (Scottish Parliament control by April 2015)  97

The Scotland Act 2012 also does not resolve the imbalance between the amount the Scottish Parliament is responsible for spending and which it raises.  The Scotland Act 2012 only takes us to about a third.