News archive

Decision of the Lands Valuation Appeal Court regarding an appeal by the assessor against a decision of the Dundee Valuation Appeal Committee. (After noting that strict adherence with the legislation would create a situation that was inequitable and unfair) the Committee had allowed 49 appeals by Land Securities and others against the valuation of shops in the Overgate Centre in Dundee on the basis that a fall in the retail rental values caused by the recession (agreed to have happened on 1 April 2009) amounted to a material change in circumstances after the valuation date. The valuation date was 1 April 2008 and took effect two years later on 1 April 2010.

The issue for the court was whether a material change of circumstances which had occurred during the 2005 roll at a date (agreed to be 1 April 2009) after the valuation date for the 2010 roll should be reflected in the 2010 roll. The ratepayers did not argue that the values entered on the 2010 roll should be reduced due to a supervening material change of circumstances. Instead their contention was that the values should not have been entered into the roll in the first place.

 This argument did not find favour with the court. The Lord President said:

 “In my opinion, this argument is fallacious. It overlooks the basis on which a revaluation is carried out. It confuses the date at which a value has to be struck with the date on which it will come into force. The fundamental principle on which a revaluation is carried out is that all of the lands and heritages entered in the new roll are valued to a common base. With one exception, there is no warrant in the legislation for the assessor’s adjusting tone date[1] valuations in respect of changes in value that occur between the tone date and the revaluation date. Inevitably, there will be increases and decreases in the values of various groups or classes of lands and heritages during that period; but for there to be consistency in the roll it is essential that all lands and heritages in the new roll must be valued as at one fixed date. The exception is the power given to the assessor in section 1(6)(c) of the 1975 Act (supra) to take account of a material change of circumstances in the period after the roll has been made up and before it has come into force.”

Appeals can be made under s 3(2) and 3(4) of the Local Government (Scotland) Act 1975. The right of appeal under section 3(4) extends to a material change of circumstances occurring between the date of delivery of the roll and the date on which the roll comes into force. It does not apply to a material change of circumstances occurring before the entry was made.

Section 3(2) also provides a general right of appeal against a new entry. It would have been open to the ratepayers to appeal under section 3(2) (within the 6 month time limit) in respect of a material change of circumstances occurring after the date of delivery of the roll. That did not assist the ratepayers in this case. The change of circumstances on which they relied had affected values by 1 April 2009 and there was no suggestion that the 2010 roll had been made up by that date.

The court allowed the assessor’s appeal and recalled the decision of the Committee.

The full judgement is available from Scottish Courts here.

A similar decision was reached in respect of properties at the Mercat Shopping Centre in Kirkcaldy in The Assessor for Fife v. Mercat Kirkcaldy Limited and others. The full text of that judgement is available here.

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

Last year HMRC queried more than 10,000 estate valuations, according to figures obtained by UHY Hacker Young. The average challenge netted extra tax of £27,000.

More on this from IFA Online can be found here.

Judicial Review of the City of Edinburgh Council’s decision to appropriate part of Portobello Park to build a new Portobello High School.

In the Outer House Lady Dorrian had dismissed a petition for Judicial Review by the Portobello Park Action Group Association. The Action Group argued that it was unlawful for the Council to appropriate the park land which is common good land. Lady Dorrian dismissed the petition on the basis it was barred by mora, taciturnity and acquiescence (i.e. the Action Group had delayed their action, failed to speak out and impliedly accepted the position.) As the petition had been barred, Lady Dorrian did not have to decide on the lawfulness of the Council’s decision, however, she indicated that, if she had been required to do so, she would have found in favour of the Council. Her reasoning was that, whilst the Council’s power to alienate common good land is limited, its power to appropriate such land is unfettered, meaning that its Children and Families Department  could appropriate the park land from its Services for the Community department.

The Inner House has now allowed an appeal of the Outer House decision.

Mora, taciturnity and acquiescence
Lady Dorrian had found that (although it was unclear exactly when the decision to appropriate the park had been reached) “at the very latest” the decision had been made in March 2010. As the Action Group did not bring the case until July 2011 there had been considerable delay which was indicative of taciturnity and acquiescence. On the other hand, the Inner House held that the Action Group was, at the very least, entitled to wait until planning permission had been granted (which occurred in February 2011) before resorting to litigation. It was observed that, if planning permission had been refused, the dispute would have been at best premature and at worst academic and pointless. The Inner House also considered the Action Group’s behaviour, noting:

“The regular statements over the years of the Association’s reasons for their opposition can scarcely be characterised as “taciturnity”. Moreover, bearing in mind the conduct, letters, e-mails, and deputations noted in the chronology in paragraph above, we are unable to accept that there were circumstances entitling the reasonable observer to draw any inference that the Association had at any stage acquiesced in the Council’s proposed intention to construct a new school on Portobello Park. On the contrary …there was a steady and unwavering opposition for the clearly articulated reason that the ground in question was inalienable common good land.”

Appropriation and alienation
After considering the Council’s powers of appropriation and disposal of land contained in sections 73 to 75 of the Local Government (Scotland) Act 1973, the Inner House found:

 “..we are, with great respect, unable to support the Lord Ordinary’s reasoning and conclusions in this area. To our mind there is no question of a local authority’s right to appropriate inalienable common good land (such as the southern section of Portobello Park) being unfettered. On the contrary, the true position would appear to be that, for so long as inalienable common good land remains within the ownership of a local authority, Parliament must be taken to have intended all pre-existing fiduciary obligations, and corresponding community rights, to remain extant and enforceable. It would indeed be an extraordinary situation if, by the mere expedient of appropriating inalienable common good land to some function other than parks and recreation, a local authority could at a stroke free itself from all common law restraints and, having done so, perhaps also facilitate onward disposal without any need to obtain the sanction of the court under section 75(2). In the absence of clear authority requiring us to affirm such an apparently unreasonable state of affairs, we are not persuaded that we should go down that line. We therefore hold that, for present purposes, the Council can lay claim to no statutory power of appropriation under the 1973 Act.”

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 considering whether a rating authority was entitled to levy rates on the owner of a newly erected and unoccupied building without first having served a completion notice (under schedule 3 to the Local Government (Scotland) Act 1966) on the owner.

Cosmopolitan and Almondvale argued that demands for rates at office premises in Bellshill were illegal as the Council had not served a completion notice on them to establish a deemed date of completion of the office. As such they sought repayment of £289k on the grounds of unjustified enrichment.

However, Lord Hodge held that the action by Cosmopolitan and Almondvale was irrelevant. He found that the language in the 1966 Act did not indicate that the completion notice procedure was intended to be the only method by which the owner and rating authority could establish the date of completion of a building. There was also no policy reason for adopting such an approach.

Taken together, s24 of the 1966 Act and regulation 2 of the Non-Domestic Rating (Unoccupied Property) (Scotland) Regulations 1994 require the levying of rates on all relevant buildings which have been unoccupied for a continuous period of more than three months. In order to be classified as unoccupied for rating purposes a newly erected building must be complete in the sense that it is capable of occupation. The date of completion of a building is a question of fact and is one which the rating authority and the owner can agree upon or contest in litigation. The completion notice procedure provides an additional mechanism by which a rating authority can establish an undisputed deemed date of completion.

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.

Two Inner House cases in which Cheshire Mortgage and Blemain Finance were the victims of a mortgage fraud and sought to sue the solicitors instructed by the fraudsters  (the banks had instructed separate solicitors) for breach of warranty of authority.

In each case the fraudsters had pretended to be persons owning property which they were seeking to use as security for a loan (of £355,000 in one case and £203,000 in the other).  They had been able to produce evidence of their identity in the form of utility bills and driving licences to their solicitors and to the banks.  In both cases the fraudsters had approached the bank (directly in one case and via a broker in the other) before instructing their solicitors.

The banks argued that, in each case, the solicitors warranted that they had the authority of the individuals who owned the properties over which standard securities were purportedly granted. The solicitors recognised the doctrine of a solicitor giving an implied warranty of authority. However, they contended that it does not go as far as giving a warranty of the identity of the person for whom they act, nor does it include any warranty as to whether he is or is not the owner or occupier of any particular property. In effect the solicitors said that they warranted only that they had authority from persons who were already known to the banks and with whom the banks were already dealing.

Outer house
In the Outer House Lord Glennie found in favour of the solicitors. The circumstances in which the solicitors came to transaction were of particular importance. By the time the solicitors became involved, the banks knew who they were (or who they thought they were) dealing with. They had already made the decision to lend to those individuals. The solicitors had been instructed (by the fraudsters) for the limited purpose of drawing up the loan and security documentation and liaising with the banks’ solicitors.

In one of the cases there was also discussion as to whether the solicitors were liable to the bank in terms of the letter of obligation they had granted. The bank argued that they suffered loss as a result of the solicitors’ failure to procure the title deeds recording the security in terms of the solicitors undertaking. However, Lord Glennie again agreed with the solicitors’ arguments on this point:

1. the letter of obligation was collateral to the principal transaction between the bank and the borrowers and could not be enforced if that principal transaction was void; and
2. in any event, the bank could show no damages flowing from the failure by the solicitor to produce a title encumbered with the Standard Security, since the Standard Security referred to in the letter of obligation was itself void.

 The Inner House refused an appeal of Lord Glennie’s decision.

Inner House –agent’s authority
An agent’s warranty authority is of limited scope. Whilst an agent will impliedly warrant that he has authority to act on his client’s behalf it does not follow that he warrants the identity of his client nor the client’s title to the property in question. Although it would be open to the agent to expressly warrant these things, it is almost inconceivable that the agent would agree to this. The court should not readily impose upon a person rendering professional services an absolute, unqualified obligation amounting, in effect, to a guarantee of his client’s identity and title. Where the risks are commercial risks involved in lending to a person who may not be all he claims to be, there is no reason why the risks should be transferred from a commercial firm to a professional firm such as a firm of solicitors.

Inner House –letter of obligation
The Inner House agreed that the letter of obligation was collateral to the void security transaction (and consequently unenforceable). Also (although it may simply have been another way of expressing the same thing) the Inner House agreed that the bank could show no loss since the obligation to which the letter was ancillary was void.

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 placed this article back on the front page of our blog as a result of the article written by Joan McAlpine MSP in the Daily Record on Free Personal and Nursing Care.  This is the first time in many months that I have seen the Attendance Allowance issue mentioned.     

My article on the UK Government’s decision to withhold Attendance Allowance funding when the Scottish Parliament introduced its policy of Free Personal and Nursing Care can be found can be found here.  This article was written on 24 August 2011. 

Joan McAlpine’s Daily Record article can be found here.   

Case from Manchester Crown Court concerning the prosecution of a letting agent and building owner for failing to carry out an asbestos assessment at Brownlow Mill on Tennyson Street in Bolton.

Several small businesses rent units at the mill and, after a contractor had raised concerns that asbestos insulation boards had been ripped out of unoccupied floors of the building, inspectors discovered that asbestos was also present in parts of the building occupied by the tenants.

Although the letting agent had raised the issue of a lack of an asbestos assessment in 2006, they did not follow it up and no asbestos survey was carried out.

The letting agent and the owner both pled guilty to a breach of the Health and Safety at Work Act 1974 in respect of their failure to ensure the safety of the people at the mill. The owners had also breached the Control of Asbestos Regulations 2006 by failing to properly assess the risks of asbestos at the site.

The letting agents were fined £15,000 (and ordered to pay costs of £11,011). The owner was fined £40,000 (with costs of £8,969).

The press release from the Health and Safety Executive is available here.

Outer House case concerning the title to land near Tullochgribban Quarry (situated close to Grantown-on-Spey). The Trustees sought declarator that they owned the disputed land.  They argued that a disposition in 1991 in their favour formed a habile title which had been fortified by prescription. As such, they contended that a 2008 disposition in favour of G Hamilton (Tullochgribban Mains) Limited  (the quarry owners) was a competing title and should be reduced. The question for the court was whether the Trustees title was habile and therefore capable of founding the prescriptive possession claimed by the Trustees.

What is a habile title?
After some strongly worded comments about the quality of the pleadings, Lady Clark considered what was necessary to constitute a habile title drawing in particular from Auld v Hay (1880) in which the Lord Justice Clerk stated:

 “A habile title does not mean a charter followed by sasine, which bears to convey the property in dispute, but one which is conceived in terms capable of being so construed. The terms of the grant may be ambiguous, or indefinite, or general, so that it may remain doubtful whether the particular subject is or is not conveyed, or, if conveyed, what is the extent of it. But, if the instrument be conceived in terms consistent with and susceptible of a construction which would embrace such a conveyance, that is enough, and 40 years[1] possession following on it will constitute the right to the extent possessed.”

 And Lord Deas said:

 “It is not necessary, in my opinion, that a party who pleads prescription should produce a title which ex facie comprehends everything he claims under it. If its terms be such as may comprehend the whole, and prescriptive possession of the whole has followed, that is sufficient. … Of course if the disputed subjects cannot be claimed without contradicting the terms of the prescriptive deed, as in the base of a bounding charter, no length of possession can establish that claim.”

The Trustees title
In this case, the 1991 disposition conveyed the lands both described in and shown on a plan attached to a disposition in 1977. The 1977 disposition in turn described the subjects conveyed by it, not only by reference to the plan attached to it, but also stated that the subjects were “PART AND PORTION” of subjects shown on a plan attached to a disposition in 1968. However, the plan attached to the 1968 disposition clearly did not include the disputed land.   The 1977 disposition therefore made reference to two contradictory plans and Lady Carlton took the view that it was not possible to interpret it as referring only to the plan attached to it[2]. As, in Lady Carlton’s opinion, it was not possible to interpret the description in the 1977 disposition[3] as including the disputed land, the trustees did not have a habile title on which to found their prescription possession[4].

On the other hand, the 2008 disposition in favour of the Quarry Owners did convey the disputed land and gave them valid title to 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 RBS’s sale of an interest rate swap agreement to Grant Estates Limited (a property development company) in 2007.  RBS put Grant into administration in February 2011 after Grant had suffered financial difficulties during the economic downturn. Grant claimed that RBS had mis-sold the agreement, which the bank had represented as a device to protect Grant from a rise in interest rates. In actual fact, when interest rates fell sharply and remained low, the agreement prevented Grant from benefitting from those lower interest rates it would have otherwise paid on its borrowing. Grant maintained that, were it not for the agreement, it would not have gone into administration.

Although Grant had accepted RBS’s terms of business which, amongst other things, expressly stated that RBS was not providing advice on the merits of the transaction and advised Grant to obtain independent financial legal advice, Grant contended that:

1      the agreement breached the Conduct of Business Sourcebook issued by the FSA and the Markets in Financial Instruments `Directive (2004/39/EC);

2.1   RBS had entered into a contract to give it advice on financial products and had given negligent advice on those products; and

2.2    the agreement was entered as a result of fraudulent or negligent misrepresentation by RBS.

Grant sought reduction of the agreement and repayment of the sums paid under it together with damages in respect of the breach the Sourcebook and Directive.

Lord Hodge rejected Grant’s arguments.

Conduct of Business Sourcebook
In terms of the Financial Services and Markets Act 2000, breaches of the Sourcebook and Directive are only actionable by “private persons”. As a limited company acting in the course of business, Grant was barred from raising an action.

Negligence and misrepresentation
There had been no contract to provide advice. Although Grant argued that, when they had asked for financial advice and been given it by RBS, a contract arose by implication, Lord Hodge found that the terms of business contradicted any such implied contract and there was no evidence of an express agreement to depart from the terms of business. If Grant had relied on the statements by RBS as investment advice, that reliance had not been reasonable in the face of the contractual arrangements the parties had entered.

The full judgement is available from Scottish Courts here.

Let’s start with the latest UK coalition Government spat.  This time on Nick Clegg’s call for a “wealth tax”.  An article on this from the Herald can be found here.

The Deputy Prime Minister said: “If we are going to ask people for more sacrifices over a longer period of time, a longer period of belt tightening as a country, then we just have to make sure that people see it is being done as fairly and as progressively as possible.”  George Osborne’s response was as expected and criticised Nick Clegg’s proposal claiming that a wealth tax would drive away Britain’s wealth creators.    

There has been lots of commentary on this.  My favourite piece was by Iain MacWhirter in the Herald.  This article can be found here.  The following is from his article:

“It is astonishing that anyone still subscribes to the myth that the enrichment of the few leads to the prosperity of the many.  It just doesn’t happen.  Wealth does not “trickle down” to the rest of society from the troughs of the very rich – if anything the reverse is the case.  It is sucked up through the concentrations of asset wealth held by the top 1% in property, shares and bonds. The story of the last three decades is that the wealthy have become immensely, shockingly, incomprehensibly richer while the middle has been squeezed and the poor remain pretty much as they always have – at the bottom of the heap struggling to hold their lives together.”

The UK Government is reportedly considering creating a scheme of “mini-jobs” which would allow employees to take on work without paying tax or national insurance, in a bid to boost employment.  The scheme is modelled on a German programme under which employees can earn up to €400 a month before any tax is paid.  An article on this from the Guardian can be found here.

Now to an old favourite, MPs’ expenses.  HMRC is reportedly in a dispute with the Westminster’s expenses watchdog, the Independent Parliamentary Standards Authority, with the latter defending the right of MPs to employ accountants to fill in their expenses forms and tax returns and insisting that the cost should be tax deductible.  An article from the Guardian on this can be found here.  The article quotes some of the correspondence between the parties which makes interesting reading and suggests that MPs, or at least IPSA, has a short memory.  Taxpayers are not generally permitted a tax deduction for the costs of complying with tax law.

UK public sector borrowing reached £600m last month, leading to further criticism of the UK Government’s economic strategy.  Borrowing in the first four months of the year was £9.3bn higher than the equivalent period last year whilst there was a 20% drop in the corporation tax take, according to official figures.  An article from the Scotsman on this issue can be found here.  This is an issue which is not going away anytime soon.

“The war on the motorist is a myth and fuel taxes should be raised without delay”.  A report by the Institute of Public Policy Research, a think tank, has recommended that fuel taxes be raised and congestion charging extended.  An article on this challenging proposal from the Telegraph can be found here. 

The Scottish Daily Express claims that Scotland’s local authorities are set to write off more than £320m of unpaid poll tax.  For a more balanced view of what is actually happening read the article all the way through.  The article can be found here.

The UK Public Accounts Committee has urged HMRC to prosecute more people for alcohol smuggling.  HMRC estimate that £1.2bn in tax is left uncollected each year on smuggled beer and spirits, yet there have been no more than six successful prosecutions each year, in the four years to 2009-10.  An article on this from the BBC news website can be found here. Another argument for devolving control over alcohol duty to the Scottish Parliament? 

Some Italian tax inspectors are disguising themselves as holidaymakers to detect tax evaders on the crowded beaches, while others are questioning the owners of luxury yachts.  Great work if you can find it.  An article on this from the Telegraph can be found here. 

Riots erupted on the tranquil Greek island of Hydra after tax inspectors arrived in force to arrest shopkeepers for not issuing receipts.  Angry crowds stoned the inspectors and besieged the building in which they took refuge until riot police arrived to restore order.  An article on this from the Athens News can be found here. 

Now to the USA.  The US media continues to analyse the tax-planning methods used by Republican presidential candidate Mitt Romney.  More on this from the STEP Journal can be found here.    

Have a good weekend.