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Petition for Judicial Review in which Trump International sought to challenge the Scottish Government’s decision to grant consent for an offshore wind farm near its golf resort at Menie in Aberdeenshire. There were two main challenges to the decision.

Section 36 of the Electricity Act 1989
Trump argued that the Scottish Government should not have granted consent in terms of s36 of the Electricity Act 1989 as the wind farm developer did not hold a licence to generate electricity. Trump founded on the decision in Sustainable Shetland v The Scottish Ministers[1] in which Lady Clark found that consent to build a wind farm could not be granted to developers who did not already hold a licence to generate electricity. In the Outer House Lord Doherty disagreed with the interpretation taken in Sustainable Shetland, rejected that argument and dismissed Trump’s petition. The Inner House refused an appeal finding that the entitlement to apply for a section 36 consent is not limited to developers who already hold (or are exempt from holding) a licence to generate electricity and that, where an applicant under section 36 obtains consent, it will require to obtain a licence or an exemption before it can generate electricity at the wind farm.

The Supreme Court have again rejected Trump’s arguments in that regard finding that its proposed interpretation was not supported by the structure and language of the 1989 Act. It also found that there was nothing in the policy behind the 1989 Act requiring the Court to take a different view of the statutory provisions. In coming to this conclusion the court noted, amongst other things, that it was not a necessary part of the policy that the persons who built electricity generating stations would also be the persons responsible for generating the electricity and that it has become established practice for organisations to seek s36 consents before applying for a licence to generate electricity.

Condition 14 of the consent
Trump also argued that condition 14 of the consent granted by the Scottish Government, which provides for the submission and approval of a design statement before the development could begin, was void for uncertainty. However, the Supreme Court found that, even if that condition had been unenforceable, the consent would not have been invalidated as it was found not to be a fundamental condition determining the scope and nature of the development (this also being covered by other aspects of the consent). Further, the court noted that a planning condition can only be said to be void if it can be given no sensible or ascertainable meaning and found that that was not the case with condition 14.

As such, Trump’s appeal was dismissed.

The full judgement is available from the Supreme Court here.

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[1] [2013] CSOH 158

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Background
Inner House case relating to the lease of commercial premises in Port Glasgow. @SIPP were the landlords and Insight, the tenants. @SIPP argued that, when the lease came to an end, the premises were not in good and substantial condition and a dispute arose as to the extent of the tenants repairing obligations under the lease.

The issues
There were two issues for the court to decide.

• Whether the tenants’ obligation on termination of the lease was limited to putting the premises into the condition in which they were accepted by it at the commencement of the lease.
• Whether the landlord was entitled to payment of a sum equal to the cost of putting the premises into the relevant state of repair, regardless of whether it actually intended to carry out any such work.

Outer House decision
In the Outer House Lord Tyre found in favour of the tenants on both issues holding:

•  that the obligation to keep the premises in good and substantial repair did not necessarily import an obligation to put the premises in that condition regardless of its condition at the commencement of the lease and that the tenants’ obligation was referable to the condition in which the premises were accepted at the commencement of the lease; and
• that the tenant’s obligation to make payment for the cost of the works was conditional on the landlords intending to carry out the repair works and was not as a liquidate damages provision. (Lord Tyre was persuaded that this was the interpretation which best accorded with commercial common sense as he found that very clear wording would be required before it could be concluded that a tenant had entered into an obligation to pay a sum which might bear no relation to the loss actually suffered by the landlord –in this case the estimated cost of the works required was over £1m whereas the tenant argued that, even if it had carried out all of the works, the capital value of the premises would only have increased by £175k.)

Inner House decision
The Inner House have allowed an appeal.

Putting and keeping
The repairing obligation including the following wording: (obliging the tenant)

“To accept the leased subjects in their present condition and at their own cost and expense to repair and keep in good and substantial repair and maintained, paved, heated, aired and cleansed in every respect all to the satisfaction of the Landlord and to replace or renew or rebuild whenever necessary the leased subjects and all additions thereto….. in at least as good condition as they are accepted by the Tenant all to the satisfaction of the Landlord and that regardless of the age or state of the dilapidation…”

The court came to the conclusion that the natural meaning of the clause was clear and, if the premises were not in good and substantial repair at the beginning of the lease, the tenant was required to repair them in such a way as to achieve that standard. The court took the view that the obligation “to repair” of itself was indicative of that but, if there were any doubt, previous cases support the argument that an obligation to keep property in good and substantial repair carries with it an obligation to put them in that condition[1].

In coming to that conclusion the court noted:

 “the repeated references to “the satisfaction of the landlord” not only supports the above construction and confirms that “good and substantial repair” is to be assessed by reference to the landlord’s interest in the subjects being maintained to and being delivered up in at least tenantable standard.  Further, the phrase “regardless of the age or state of dilapidation of the buildings” confirms that the tenant is not to be excused of its obligation to repair, maintain and renew etc to at least “good and substantial repair” standard by reason of them being below that standard at the commencement of the lease or, indeed, them falling below that standard during it.  The absence of a schedule or other record of condition provides further cogent support for that construction.”

Payment of sum in lieu of repairs
A further clause made provision to the effect that, at the expiry/termination of the lease, the tenant was required to carry out repairs and surrender the premises to the landlord in a state complying with the repairing obligation. However, the clause also included the following proviso:

“Provided Always that if the Landlord shall so desire at the expiry or sooner termination of the foregoing Lease they may call upon the Tenant, by notice in writing (in which event the Tenant shall be bound), to pay to the Landlord at the determination date… a sum equal to the amount required to put the leased subjects into good and substantial repair… in accordance with the obligations and conditions on the part of the Tenant herein contained in lieu of requiring the Tenant himself to carry out the work.”

The Inner House took the view that the only natural and ordinary meaning which could be given to the clause was that it was a payment clause (and not a damages clause) meaning that the sum due by the tenant did not depend on loss suffered by the landlord. Consequently, the fact that the cost of carrying out the repairs may have been disproportionately more than any increase in capital value of the premises achieved as a result was irrelevant. As such, the Inner House determined that there was no potential for interpreting the clause so as to mean that payment for the cost of the works was dependent on the landlord’s intention to carry out the works.

In coming to its conclusion, the Inner House contrasted the wording used in this case with that in Grove Investments Ltd v Cape Building Products Ltd[2] on which Lord Tyre had relied when reaching his decision in the Outer House.

The provisions in this case contained a procedure (not included in the lease in Grove) under which the Landlord made an election and served a notice on the tenant requiring the tenant to make the payment in lieu of carrying out the repairs which the court found to be significant in suggesting that the landlord’s right was to a contractual payment rather than a payment of damages.

Also, the wording used in Grove made reference to the landlord and tenant reaching a settlement based on the value of a schedule of dilapidations rather than making reference to the cost of making the repairs which the court interpreted as being analogous to a damages clause.

Ultimately the differentiating factor was that the wording in this case was interpreted as including a landlord’s right to demand a contractual payment unrelated to loss whereas the wording in Grove was not.

Some general principles
The Inner House stated:

“Care must also be taken to avoid reading anything said in Grove as being to the effect that the court can correct a bad bargain or even an unfair one; there is no general rule that a commercial contract requires to be fair”.

 And:

“it is not legitimate to re‑write parties’ agreement because it was unwise of one party to gamble on future outcomes;  the question is not whether a reasonable tenant would have entered into the obligation”

 Further:

“it is important to note that Grove did not lay down any general rule to the effect that the landlord in a commercial lease is, at termination, if repairs are outstanding only entitled to be compensated for capital loss actually suffered.”

 The full judgement is available from Scottish Courts here.

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[1] Albeit it was noted that a different conclusion may be appropriate where no obligation to renew or replace or rebuild as necessary is included.

[2][2014] CSIH 43

Supreme Court case considering the effect of a break clause contained in sub-underleases of different floors of a building known as “The Point” in London.

M&S let the property from BNP and the rent was paid quarterly in advance. When M&S exercised the break clause, the lease came to an end on 24 January 2012. M&S then brought a claim for return of the apportioned rent in respect of the period from 25 January 2012 to 24 March 2012.

There was no express term in the lease which entitled the tenant to repayment of the rent. However, M&S argued that a term should be implied into the lease.

The Supreme Court dismissed M&S’s appeal.

The Court confirmed that a term will only be implied into a contract if it satisfies the case of business necessity or is so obvious that it goes without saying.  It was noted that, although rent payable in arrears is apportionable under the Apportionment Act 1870, the 1870 Act does not apply to rent payable in advance and that common law authorities do not provide for rent (whether paid in arrears or advance) to be apportioned. The court then reached the conclusion that (aside from in very exceptional circumstances) an express term would require to be included in the lease to entitle a tenant to a refund of rent paid in advance.

Lord Neuberger said the following:

“Save in a very clear case indeed, it would be wrong to attribute to a landlord and a tenant, particularly when they have entered into a full and professionally drafted lease, an intention that the tenant should receive an apportioned part of the rent payable and paid in advance, when the non-apportionability of such rent has been so long and clearly established. Given that it is so clear that the effect of the caselaw is that rent payable and paid in advance can be retained by the landlord, save in very exceptional circumstances (eg where the contract could not work or would lead to an absurdity) express words would be needed before it would be right to imply a term to the contrary.”

The full judgement is available from the Supreme Court here.

Outer House case in which the John Muir trust sought reduction of the Scottish Ministers decision to grant consent for the construction of 67 wind turbines at Stronelairg near Fort Augustus.

Background
In their decision letter the Ministers intimated that they had decided not to hold a public local inquiry stating that they had taken into account 96 objections “and all material considerations”.  They expressed the view that there were no significant issues which had not been adequately considered “in the application, Environmental Statement and Supplementary Environmental Information, consultation responses and third-party representations” and that they had had sufficient information to be able to make an informed decision on the application without the need for a public local inquiry.

Arguments
The trust argued challenged the consent on the basis that the Ministers acted unlawfully and/or unreasonably in granting the consent:

• without the advertising of, and/or consulting on, the supplementary environmental information; and
• without giving adequate reasons for not following Scottish Natural Heritage advice (SNH having objected in principle to the wind farm on the ground of its impact on wild land).

The trust also argued that the reasons given in the decision letter for granting the consent were inadequate.

Decision
Lord Jones found that the trust’s challenge to the Ministers’ decision should succeed for the following reasons.

• A report recommending that Highland Council did not to object to the wind farm on condition that the developer make changes to the layout of the proposed wind farm was additional information which had required advertisement and/or consultation (in terms of The Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2000 and Environmental Impact Assessment Directive 2011/92/EU).
• The Ministers decision letter did not take into account SNH’s objection in principle to the wind farm (on the basis that it would have significant adverse impacts resulting in a loss of wild land and that it was not possible to mitigate those impacts).
• With regard to SNH’s objection in principle to the wind farm, the Ministers had failed to give adequate reasons for their decision in the decision letter.

The full judgement is available from Scottish Courts here.

(NB: See appeal to the Inner House here.)

Outer House case considering a contract between the Bank of Ireland and Knight Frank relating to a valuation which Knight Frank provided to the Bank in respect of a client’s property over which the Bank received a standard security.

Background
The Bank claimed that it had suffered substantial loss as a result of the valuation and sought damages for negligence from Knight Frank. However, Knight Frank’s standard terms provided that any contract to provide a survey report was subject to English law and that the English courts would have exclusive jurisdiction in respect of any dispute arising from it. The issue for the court was whether the standard terms formed part of the contract and, consequently, whether the court had jurisdiction to hear the case.

Knight Frank had provided a valuation for the Bank’s client in relation to the property (near Kilmacolm) which was to be the subject of a development. The Bank instructed its own valuation of the property from Knight Frank (by letter dated 2 May). This was provided and included Knight Frank’s standard terms. However, in a departure from its normal practice, Knight Frank had not sought to ask the Bank in advance for written confirmation that the standard terms formed part of the contract. Following receipt of the valuation, the Bank advanced a loan of £2.35m to the client in return for a standard security.

Arguments
The parties were agreed that the Bank’s letter of instruction constituted an offer that the offer had been accepted by conduct. The Bank argued that the offer was accepted by Knight Frank when it delivered the valuation report to the bank. The contract was accepted at the moment the report went through the bank’s letterbox at which point it was too late to introduce new terms (the bank argued that it would have been odd if the fulfilment of the contract –i.e. providing the valuation- were to be treated as a counter offer.)

On the other hand, Knight Frank argued that the delivery of the valuation report along with the standard terms constituted a counter offer which the bank had accepted when it relied on the report to grant the loan.

Decision
Lord Woolman preferred Knight Frank’s argument noting that it had been open to the bank to raise an issue with Knight Frank regarding the standard terms and it had not one so. It was irrelevant that the officer of the bank dealing with the transaction had not read the standard terms. The Bank could not “cherry pick” the document: i.e. it could not accept the valuation without also accepting the standard terms attached. In coming to his conclusion, Lord Woolman also took account of the facts that it had not been surprising to the bank’s employees (giving evidence in the case) that surveyors would seek to introduce their own standard terms into the valuation agreement and that the terms introduced were not unusual.

As such, Lord Woolman found that the court did not have jurisdiction to hear the dispute.

The full judgement is available from Scottish Courts here.

Outer House case considering the extent of a repairing obligation under a lease of industrial premises in Shotts.

Background
Demi-Master were the landlords and HES, the tenants. Demi-Master sought declarator that the lease had been terminated in terms of notices of irritancy which they had served following HES’s failure to respond to notices requiring HES to comply with the repairing obligations under the lease and also to make the premises clean and tidy in terms of the repairing clause in the lease.

The repairing clause provided:

“The Tenants accept the Premises as being in such condition as shown on the attached Photographic Schedule and in all respects fit for the Tenants’ purposes and shall at their sole expense and, to the reasonable satisfaction of the Landlords, repair and maintain and renew (and, if necessary for the purposes of maintenance and repair, to replace and rebuild) and decorate and keep the Premises and all permitted additions and new buildings, if any, in like condition as is evidenced on the said Photographic Schedule and in a clean and tidy condition, clear of all rubbish, for the Duration…”

Although the repairing clause referred to a photographic schedule detailing the condition of the premises at the commencement of the lease, neither party had a copy of the schedule and it may have been that it had never existed.

Arguments
Dem-master, who were seeking a summary decree (which can be granted where, even if a defender succeeds in proving the substance of its defence, its case must fail), argued that as HES had (in terms of the repairing obligation) accepted the Premises as being “in all respects fit for the tenants’ purposes” at the date of entry, they had accepted that the Premises were in a tenantable condition at that time.

On the other hand, HES argued that, the premises were already badly dilapidated at the date of entry.  They were not wind and water tight and had not been for some years previously.  The reference to the premises being fit for the tenants’ purpose in the lease was not an acceptance that the premises were wind and watertight or otherwise in a good state of repair. HES’s use of the Premises did not require them to be wind and watertight and, in contrast to Dem-master’s assertion, the effect of the reference was to make it clear that the premises had not been wind and watertight or in a tenantable condition at the date of entry.

Decision
Lord Doherty found that he was not in a position to determine the meaning of the repairing clause without an inquiry into the material circumstances surrounding the signing of the lease and, in particular, the state of the premises at the date of entry (finding that HES were not bound to fail in their defence and he could not grant summary decree in favour of Dem-Master) and put the case out by order for a discussion as to further procedure.

The full judgement is available from Scottish Courts here.

Inner House case considering an appeal from the sheriff court. The sheriff granted an order requiring J&D Pierce to remove encroachments it had built on neighbouring land owned by the McLellans in Glengarnock.

J&D Pierce approached the McLellans in 2006 with a view to purchasing land bounding their property (in order to create additional space for their business) but were told by the McLellans on a number of occasions that the land was not for sale.  In 2012 the McLellans became aware of a boundary wall encroaching onto their property and their solicitors wrote to J&D Peirce requiring them to cease all works immediately. However, despite this, a building encroaching onto their property by 4 to 6 metres, was erected and roofed by September 2012.

J&D Pierce argued that it was inequitable in all of the circumstances to order them to remove the encroaching building. However, although the sheriff acknowledged that the law recognises an equitable power in the court to refuse to order the removal of encroachments in certain cases[1], she concluded that the company’s encroachment was not in good faith and, as such, declined to exercise that discretion in this case, noting that the effect of doing so would have been to sanction the J&D Pierce’s deliberate action in simply building the on land which they had unsuccessfully attempted to purchase in 2006.

J&D Pierce appealed on the basis that the sheriff’s order was not precise enough to identify exactly what they had to remove from the property pointing to the difficulty in identifying the exact boundaries of the property on the ground. However, the Inner House refused their appeal pointing to the fact that  the extent of the encroachments had been agreed (as being 4 to 6 metres) by the parties in a joint minute and noting that the boundaries of both properties are specified in the land certificates and that J&D Pierce had knowledge of what had been built.

 The full judgement is available from Scottish Courts here.

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[1] As summarised in the cases of Anderson v Brattisani 1978 SLT (Notes) 42. See Gordon Munro v Walter Finlayson and Catherine Finlayson and Gareth Ince and Emma Bilsland, 30th January 2015.

Inner House case relating to the repossession of a residential property subject to a standard security (in favour of Swift Advances) securing a loan in respect of which the debtors (Mr and Mrs Martin) were in considerable arrears.

The main issues for the court were whether Swift had complied with the necessary pre-action requirements a creditor is required to take before repossessing a residential property[1] and whether it was reasonable, in the circumstances, for the court to grant decree allowing repossession of the property.

Amongst the pre-action requirements are obligations on the creditor:

1. to make “reasonable efforts to agree with the debtor proposals in respect of future payments to the creditor under the standard security and the fulfilment of any other obligation under the standard security in respect of which the debtor is in default”; and

2. not to make an application (allowing it to repossess the property) if the debtor is taking steps likely to result in (a) “payment to the creditor within a reasonable time of any arrears, or the whole amount, due to the creditor under the standard security; and (b) fulfilment by the debtor within a reasonable time of any other obligation under the standard security in respect of which the debtor is in default”.

The Martins property formed part of a larger property, the other part of which was owned by their daughter and son-in-law (the Hendersons). Discussions took place between the solicitors acting for Swift and those acting for the Martins regarding a potential purchase of the Martins property by Hendersons. The Hendersons were prepared to purchase the property on the basis of a valuation of £300k (obtained in July 2010). However, the property had been valued at £750k at the time of the loan (3 years previously) and Swift were concerned at the low valuation (the outstanding debt was said to be approaching £700k).  Mrs Henderson had also indicated to Swift that there was a problem with access to the Martins property (in that access to the Martins’ property depended on the consent of the owner of the Hendersons’ property). Correspondence followed in which Swift’s solicitors unsuccessfully sought the original title deeds from the Martins solicitors (which were held by the holder of a prior security) to ascertain the correct position regarding access (in order that the effect on the valuation could be ascertained) and the Martins solicitors repeatedly sought to insist that Swift accept the Henderson’s proposal of a purchase at £300k. Swift then resumed court proceedings aimed at repossessing the property (an action had previously been brought to an end to explore the possibility of resolving matters without litigation).

The Martins argued that Swift had not made reasonable efforts to agree its proposals to sell the property to the Hendersons (breaching pre-action requirement 1. above) and that, by taking steps to repossess the property while the Martins were proposing a sale to the Hendersons, Swift failed to comply with pre-action requirement 2. (above).

Those arguments were rejected by the Inner House which agreed with the findings of the Sheriff Principal to the effect that the pre-action requirements were aimed at protecting against the situation where a creditor takes action rapidly following a debtors default without communication with the debtor and without making any accommodation allowing the debtor to remain in occupation of the property with an adjusted payment regime. However, in this case, both parties were held to have made reasonable efforts to reach an agreement albeit those efforts had failed and Swift were found to have complied with the pre-action requirements.

“The pre-action requirements introduced by the 2010 Act[2] in respect of residential borrowing are designed to ensure that there is a genuine exploration of the possibility of an arrangement being reached whereby, in due course, the default can be remedied, albeit this may require indulgence on the part of the creditor.  The whole tenor of section 24A(3) and (4) is of discussions aimed at an alternative agreement whereby the debtor’s obligations can be fulfilled, for example, on the basis of a lower monthly payment extending over a longer period.  There is nothing to suggest that a proposal to pay only a fraction of the sum due must be accepted, or that it can stop the raising of court proceedings.”

The court also found that, in the whole circumstances, including the pre‑action correspondence, it could not be said that it was unreasonable for the court to sanction possession of the subjects and their sale on the open market by Swift.

The full judgement of the case is available from Scottish Courts here.

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[1] Contained in s24A of the Conveyancing and Feudal Reform (Scotland) Act 1970.

[2] The Home Owner & Debtor Protection (Scotland) Act 2010 (which amended the 1970 Act).

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