Issue
Outer House case in which property developers sought to appeal a decision of a reporter appointed by the Scottish Ministers. The reporter had refused an appeal by the developer of Perth & Kinross Council’s decision to reject a planning application for a mixed use development (initially including 1800 and latterly 1500 houses) adjacent to Huntingtower and Ruthvenfield in Perthshire.

The developers’ challenge was based on grounds of irrationality in various forms but also raised the issue of the significance to be attached to an emerging local plan as a material consideration when making planning decisions.

Background
The Perth area local plan (adopted in March 1996) included the developers’ site as a long-term development site. However, the Council refused permission for the development on 4 January 2012 on the basis that it did not comply fully with the development plan. On 10 January a decision was made to amend a new and emerging development plan (not yet adopted) so as to remove the developer’s site from the proposed housing allocation. As a result, the emerging local plan, which was published in January 2012, did not include the developers’ site within the housing allocation.

On 12 September 2012 the Scottish Minister’s reporter refused the developer’s appeal of the Council’s refusal of planning permission. The reporter found that the emerging local development plan was a material consideration and the conflict between it and the developer’s application was sufficient to justify refusing the permission (and thus departing from the adopted existing local plan).  The developer argued (amongst other things) that the reporter had been wrong to do so and also that the decision to remove the developers’ site from the housing allocation in the emerging plan (on 10 January 2013) was simply a consequence of the Council’s rejection of the developers’ planning application (on 4 January).

Decision
Lord Glennie refused the appeal. The reporter had been entitled to consider whether the emerging local development plan was a material consideration. The developer’s site was of a scale and importance such as to make it of major significance in the development of West/North West Perth. That being so, the fact of the emergence of the local development plan was a material consideration. In such circumstances, while recognising the statutory priority given to the plan-led planning process (i.e. the existing development plan), it was legitimate, when assessing the weight to be afforded to that consideration, to take into account the benefits to the public interest of the wider planning framework of the statutory local development plan process. The reporter found these factors to be of sufficient weight to outweigh the provisions of the existing development plan and her decision had made it clear that she had approached the issue in that way.

Lord Glennie also noted that the reasons for removing the developers’ site from the emerging local development plan (other than the simple refusal of the developer’s application on 4 January) had been before the reporter and that her reference to them had made it clear she had taken account of them.

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 a planning application made by Archid in October 2009 to convert an office on Thomson Street in Dundee into a residential building.

Background
Archid received a notice dated 1 December 2009 advising that Dundee City Council had granted planning permission for their development on 26 November 2009. The notice also contained the reasons for the decision and, although the notice purported to grant the permission, the reasons appeared to be justifications for a refusal of permission. Archid then applied for and were granted (on 18 March 2010) a building warrant in connection with the works.

However, on 11 May 2011, Archid received a second notice (also dated 1 December 2009) from the Council advising that planning permission for the works had in fact been refused on 26 November 2009 and that an incorrect decision notice had been issued[1]. The covering letter also stated that the Council’s Enforcement Officer had visited the site, asked that all works cease and that the site be restored to its original condition.

Arguments
Archid sought judicial review. They argued that, having issued their original decision notice, the Council could not thereafter just ignore it and issue a new decision letter refusing the permission. Until the planning permission was revoked or modified in accordance with the statutory procedure[2] (which provides protection for the applicant in respect of work already carried out and provides a separate review process[3]) or reduced by an order of the court, the permission stood.

The Council argued that the person within the planning department who sent out the first notice had had no authority to do so. His authority extended only to giving notice of decisions taken to grant or refuse planning permission. The decision taken by the Council was to refuse permission. In those circumstances he had no authority to give notice that permission had been granted. It followed, they contended, that the first notice was simply a nullity and could be ignored.

Decision
Lord Glennie took the view that the presumption expressed by the maxim omnia praesumuntur rite esse acta (“all things are presumed to have been done duly and in the usual manner”) was applicable with the consequence that the first notice was presumed to be validly made and to have legal effect unless and until reduced following a court process.

 “An interested member of the public should be able to rely upon a notice issued by a public authority as having been issued correctly and with the appropriate authority; that is all the more pertinent in the case of a document granting planning permission, since the grant of planning permission runs with the land, and may be relied on by persons who were not party to the original application or privy to any correspondence or telephone communications passing between the applicant and the authority.”

The validity of the second notice depended on the status of the first notice (at the time the second was issued). The first notice being valid, the Council could not[4] then correct it as the Council was functus (i.e. having discharged its duty, the Council could not then review its own decision.).  Also it could not simply ignore it and make another order, because then there would be two conflicting orders in respect of the one matter. Lord Glennie therefore concluded that the first notice was valid and that the second notice was ultra vires (i.e. outwith the Council’s powers) and had to be reduced.[5]

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 in which Mr and Mrs Motion sought interdict to prevent their neighbours, Mr and Mrs Binnie from encroaching on, or interfering with their property (consisting of two cottages, a paddock and a strip of land) and from interfering with or obstructing servitude rights of access (over farm roads) to that property. The Motions’ titles to the property and servitude rights were registered (and defined on plans) in the Land Register without exclusion of indemnity.

In their defence, the Binnies argued that the Motions did not have a vehicular right of access over part of the access route, contending that to exercise a vehicular right would involve them driving over part of the Binnies’ property. This, they argued, was not a challenge to the Motions’ title but a challenge to the physical extent of the servitude rights.

However, in the view of Lord Bannatyne, it was impossible to read the Binnies’ arguments as anything other than a challenge to the Motions’ title. The Motions’ rights were set out clearly on plans and registered in the land register but the Binnies did not seek to rectify the register. As such, the Binnies’ defences were found to be irrelevant. In coming to his conclusion Lord Bannatyne quoted from the Scottish Law Commission’s Report on Land Registration (SLC Report No. 222) which states:

“Rights in land are what the Register says they are and the Register says what the Keeper decides it should say. The Keeper giveth and the Keeper taketh away.”; and

“Everything that the Keeper touches turns to valid.”

 The full judgement is available from Scottish Courts here.

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

The Land and Buildings Transaction Tax (Scotland) Act was passed on 25 June and received royal assent on 1 August 2013. Some points of note:

• The new tax will to come into effect in April 2015 (when SDLT ceases to apply in Scotland);
• the Act is the first of three- a Landfill Tax Act and Tax Management Act will follow;
• the Scottish Ministers are the tax authority (s54) but the authority can be changed by order (a new body, Revenue Scotland has been established for that purpose);
• the tax authority can delegate administration and collection of the tax to Registers of Scotland (s55) (an idea first suggested by my colleague James Aitken);
• the tax will be progressive, i.e. tax is charged on the proportion of the price exceeding the threshold (like income tax) rather than charging the higher rate of tax on the whole price (per SDLT)(ss24-26)
• like SDLT, LBTT will be charged on VAT (para 2, Schedule 2)
• the Act contains a number of targeted anti-avoidance rules applying to specific exemptions and reliefs. The Scottish Government has consulted on the introduction of a general anti-avoidance rule (“GAAR”) and it is likely that a GAAR will be included in the Tax Management Act;
• LBTT on commercial leases will (like SDLT) be based on net present value of the rent payable (s52 and Schedule 19) but the Act also makes provision for a return to be made every three years (and for additional payments or refunds) throughout the whole term of the lease so that the tax will reflect the actual rent paid;
• residential leases are exempt (s16 and para 3, Schedule 1);
• licences to occupy are exempt (s16 and para 3, Schedule 1) but “prescribed non-residential licences” which are to be prescribed in future regulations will be taxed; and
• the Act replicates existing SDLT provisions on partnerships (s49 and Schedule 17) & trusts (s50 and Schedule 18). However, the Scottish Government may make changes to these provisions (in the interests of greater clarity) before LBTT comes into effect.
• The rates and bands can be seen here.

The full Act is available here.

Outer House case relating to a development at Rubislaw Quarry in Aberdeen. The developers sought the co-operation of those with interests (proprietors/tenants) in nearby office blocks (who were concerned that the new development would have a detrimental effect on the value of their properties) with respect to[1] access to the development site. An agreement was entered into between the developers and the proprietors/tenants which included a restriction on the office space available for rent within the new development in the following terms:

“The northern quarry proprietors undertake (to the relevant parties) that the maximum net lettable floor area of Office Space which may be provided within the northern quarry subjects at any given time shall not exceed 2,025.29 sq. m. (in total)”.

The court action involved successors to the original parties to the agreement. The developers sought declarator that the clause:

1. allowed the amount of office space in the development to exceed 2,025.29 sq. m but restricted the space actually available for let to 2,025.29 sq. m (i.e. they argued the figure did not include owner occupied or vacant office space); and
2. was not a real burden and, as such, bound only the original parties to the agreement and not their successors.

 Lord Malcolm rejected both of those arguments.

Meaning of the clause
After considering the whole terms of the contract “in the light of the general setting and purpose of the agreement”, Lord Malcolm found that the overall intention was to provide for a maximum floor area which was capable of being let for office use. In coming to this conclusion, account was taken of the preamble to the agreement, which required the developer “to accept certain restrictions with regard to office space within any development of the northern quarry subjects…”, and a further clause containing a requirement that developers exhibit floor plans and internal layout, which would have been irrelevant had the only restriction been on letting floor of space with no limit on the amount constructed.

Whether binding on successors
Whether the burden was real (i.e. binding on successors) depended on whether the restriction on office space was:

1. purely a trading condition, designed solely to protect the personal commercial interests of those  interested in the offices; or
2. whether it, in addition to any personal benefit, also conveyed a material benefit on the properties themselves.

The proximity of the development to the offices was an important consideration. The existing office blocks and the new development site presented a “distinct neighbourhood”. The proprietors/tenants were seeking protection against reductions in rental values arising from the introduction of additional competition within that neighbourhood. The restriction therefore benefited the offices as commercial properties by protecting their rental value. Also of relevance in coming to the judge’s conclusion that the burden was binding on successors, was the fact that the offices were specifically adapted for office use meaning future owners would be likely to use them for the same purpose and, consequently, the burden on the new development would be reflected in the value of the existing properties.

Title and Interest of the developers
Lord Malcolm also rejected an argument made on behalf of the proprietors/tenants to the effect that the developers did not have title and interest to bring the action as, although they had entered missives for the purchase of the site, they had not yet recorded title to it. The court would refuse to entertain declarators concerning purely academic, speculative or hypothetical issues, or where the pursuer has no practical interest in the outcome. However, in this case the developers had a good reason for discovering the correct legal position at the time they raised the action: they had entered into missives (with a view to developing the site) with the current owners who, as a result, had no interest in the matter.

The full judgement is available from Scottish Courts here.

(See appeal to the Inner House here.)

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

Outer House case in which HFD sought to challenge Aberdeen City Council’s decision to appoint Muse Development Limited as preferred bidders for the development of a site (the former Council headquarters) at Broad Street in Aberdeen.

HFD argued that:

1. there had been various quantitative errors in the scoring matrix used to assess the bids;
2. what had been advertised had been a sale of the site but the successful bid was made on the basis of a sale and leaseback; and
3. a revised version of the HFD bid (based on a sale and leaseback) submitted after the closing date should, if the Council considered themselves precluded from accepting it, have given rise to recommencement of the bidding procedure.

Lord Brailsford refused HFD’s petition.

Errors in the scoring matrix
The alleged errors in the scoring matrix were not sufficient to impugn the bidding process and did not affect the overall ranking of the bids.

Sale and leaseback
The language used in guidance documents (issued for potential bidders by the Council), which indicated that the Council would accept joint venture and partnership agreements, made it “tolerably clear” (having regard to the importance/value of the subjects and the fact that the bidders were commercial bodies with expertise in the property market and with access to skilled professional advice) that the Council were actively seeking and encouraging innovative proposals for what was a major commercial development. As such, the language of the documents was sufficiently wide to encompass a sale and leaseback arrangement.

Submission after the closing date
Lord Brailsford agreed with reasoning in a prior case[1] to the effect that, although a seller can accept higher bids after a closing date, the practice is not well regarded and would involve the seller departing from the competitive tendering process which may be seen as an act of bad faith by the bidders. It would put into question the reliability of any future tendering process and, if it were to be routinely sanctioned by the courts,  the degree of certainty which a bidding process is designed to achieve would be lost. That reasoning also applied to HFD’s suggestion that the bidding process should have been started afresh after receipt of the Muse’s offer.

The full judgement is available from Scottish Courts here.

Inner House case considering an appeal from the Outer House in which a residents group challenged decisions made by East Renfrewshire Council (1) to grant planning permission and (2) to confirm fulfilment of a planning condition relating to drainage, in respect of a proposed development at Ayr Road in Newton Mearns.

The residents group had applied for a protective costs order (which puts a cap on a party’s liability for the expenses of the court action.) Protective costs orders can be granted where the issues raised are of general public importance and where the applicant has no private interest in the outcome of the case. However, in the Outer House, Lord Tyre refused the application on the basis that the issue was one of local community interest rather than general public importance.

The Inner House refused the appeal. After noting that the residents group could fairly be characterised as an association of local residents whose primary objective was the safeguarding of their respective private interests, the court came to the conclusion that the issue was not one of general public importance:

“What is challenged, in the sense of being sought to be reduced, is a planning permission for a relatively modest development. Any increased risk of flooding is of importance to all the individuals who fear that their properties may be affected. In a sense it is true to say… that flooding is a matter of public concern and that in the event of an incident of flooding public services are engaged. None of that makes what is in issue here a matter of general public importance. The interests involved are predominantly local and predominantly private. There may be applications for judicial review where the issues raised are at once local and yet of general public interest. This is not such an application.”

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 in which the liquidators of Scottish Coal sought directions from the court in respect of several disused open cast mining sites owned by Scottish Coal.

The sites were subject to onerous statutory obligations aimed at controlling land use, protecting the environment, habitats and birds and ensuring public safety. The sites were also subject to obligations under planning legislation requiring restoration of the sites, the cost of which was estimated at £73m.

The liquidators sought directions as to whether they could abandon or disclaim:

1. the sites, thereby transferring ownership to the Crown; and
2. the statutory licences/permits authorising Scottish Coal to carry out its industrial activities (and imposing the obligations on Scottish Coal).

The Scottish Environment Protection Agency (SEPA) and Scottish Natural Heritage (SNH) were represented in court and argued that it is not possible for liquidator to do so as, under Scots law:

a)    there is no power to abandon the ownership of land; and
b)    ownerless land is an impossibility.

No authority could be found supporting the idea that an owner could abandon land in Scotland. However, after considering Roman Dutch law[1] and the German Civil Code[2], Lord Hodge found[3] that it may be possible for an owner to abandon land[4] and circumstances may arise when, on a disclaimer by the Crown, land becomes ownerless.

But, whilst the liquidators generally have power to disclaim property, where the company’s use of the land is governed by statutory permits, his ability to disclaim would depend upon the terms of the statutory provisions and the permits.

In this case the decision depended on whether the court took a wide interpretation (as argued for by SEPA and SNH) or a narrow interpretation (as argued for by the liquidators) of the relevant legislation[5]. Lord Hodge came to the conclusion that the Scotland Act 1998[6] required him to take a narrow interpretation leading to the conclusion that the liquidators could disclaim the sites and release themselves from the obligations.

The full judgement is available from Scottish Courts here.

(NB: see Inner House decision here)

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

Inner House case in which the Cairngorms Campaign and others applied to the court for reduction of a decision by the Cairngorm National Park Authority to adopt the Cairngorm’s National Park Local Plan. In particular they complained about the adoption of development policies in the Local Plan which made provision for developments at Nethy Bridge (40 dwelling houses and business units),  Carrbridge (up to 117 dwelling houses), An Camas Mòr  (1,500 dwelling houses) and Kingussie (300 dwelling houses).

In the Outer House Lord Glennie rejected the campaigner’s arguments finding that, in adopting the Local Plan, the Park Authority had neither acted unlawfully or illegally (in the Wednesbury sense – i.e. it had not reached a decision that no reasonable person in that position properly informed of the facts could have reached) nor had it failed to give adequate reasons for its decision, the reasons given for the decision being clear. In coming to his decision, Lord Glennie also rejected a number of more specific arguments made by the campaigners.

The campaigners argued that Lord Glennie had erred in law by failing to appreciate what was necessary in terms of the  “appropriate assessment” required  under  the Conservation (Natural Habitats etc) Regulations 1994 (implementing Habitats Directive 92/43/EEC) when assessing the implications of the Local Plan on the Park’s conservation objectives. They contended that a far more detailed assessment should have been made at the point the Local Plan was approved.

This argument was rejected by the Inner House which agreed with the decision of Lord Glennie. Although referred to as an appeal, it was appropriate to consider the campaigners’ action on judicial review grounds. Taking that approach, the Park Authority’s appropriate assessment could not be said to be one which no reasonable authority would have produced in the circumstances. It was, therefore, open to the Authority to adopt a Local Plan which relied on that assessment.

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 a Property Enquiry Certificate obtained by Manorgate from First Scottish which failed to reveal that the site for which the certificate was obtained was designated as being one of archaeological significance. It intended to demolish the existing buildings and erect new commercial premises. One of the new units was to be used as a retail branch for its flooring business. The other units were to be let to complementary traders. However, following purchase of the site, the designation led to Manorgate mothballing it after concluding that the intended development was uneconomic. Manorgate then sued First Scottish for damages in respect of (a) the lost capital value of the Site (b) site investigation costs; (c) trading losses; and (d) development losses.

First Scottish accepted that the Certificate should have referred to the archaeological designation and that they had been negligent in omitting it. However, amongst other things, they argued that (1) the omission had not caused Manorgate’s losses (2) that there had been contributory negligence on Manorgate’s part and (3) Manorgate’s losses were too remote to have been foreseeable by First Scottish.

Lord Woolman rejected the First Scottish defences and awarded damages (albeit the damages were reduced as some of the losses were not foreseeable).

Causation
Lord Woolman found that Manorgate had relied on the certificate and would have withdrawn from the missives for the purchase of the site if the certificate had been accurate.

Contributory negligence
First Scottish argued that Manorgate should have queried or double-checked the accuracy of the information in the certificate. Lord Woolman found that a surprising position for it to adopt noting that, if purchasers were obliged to carry out their own separate investigations, it would deprive Property Enquiry Certificate of any real utility.

Foreseeability
Whilst the diminution in value of the site, site investigation costs and loss of business profits (First Scottish knew the site was zoned for commercial use) were foreseeable, First Scottish could not have reasonably foreseen a sequence of events that led to the buildings being demolished. Nor could they have foreseen that the purchaser of the site would both seek to carry on business there and also sell the site and generate development profit and, as a result, no damages were awarded for development profit.

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.