Supreme Court case of some complexity in which the Liquidator of the Letham Grange Development Company sought reduction of a security over the Letham Grange resort near Arbroath. The case involves a number of companies all controlled by a Mr Liu and his family.

The Liquidator argued that the holder of the security, Foxworth (a company controlled by Mr Liu), had not acquired the rights under the security in good faith and for value. The Liquidator had previously successfully challenged a disposition by Letham Grange in favour of Nova Scotia Limited (also a company controlled by Mr Liu) on the basis that it was a gratuitous alienation. (The property which had been purchased by Letham Grange for £2,105,000 was sold to Nova Scotia for only £248,100.)

In the Outer House Lord Glennie found that there had not been a gratuitous alienation accepting Mr Lui’s evidence that the price had been reduced as there had been loans made by Mr Liu’s family in favour of Letham to finance the original purchase and that Foxworth (having assumed liability) was obliged to repay those loans to the family.

The Inner House have allowed an appeal finding that, to avoid a gratuitous alienation, the consideration given in exchange for the granting of the disposition of the resort to Nova Scotia required to be enforceable at the time when the disposition was granted. However, at that date, there was no enforceable obligation binding Nova Scotia to repay the loans to the family. Even if that had not been the case, taking account of all of the circumstances, the Inner House found that the various transactions surrounding Letham Grange had been intended to defeat the claims of lawful creditors.  For those reasons a decree granting reduction of the standard security was given. The Inner House also found that Lord Glennie had failed to give satisfactory reasons for the factual conclusions he had reached on the evidence.

The Supreme Court unanimously allowed an appeal of the Inner House decision.  Whilst the Inner House had been correct to identify that an appellate court can interfere where it is satisfied that the trial judge has gone “plainly wrong”, it had erred in concluding that Lord Glennie had been “plainly wrong” in this case.

Lord Glennie had clearly understood that the critical issue was whether “the alienation was made for adequate consideration”. He was aware that an obligation on the part of Nova Scotia could only constitute part of the consideration for the sale if it was undertaken as the counterpart of the obligations undertaken by Letham Grange. His opinion had focused whether, and not when, any obligation was taken to assume the Letham Grange debts and he had been entitled to accept Mr Liu’s evidence on that point. The Supreme Court noted that Lord Glennie had taken into account the various criticisms of Mr Liu’s evidence before concluding that his evidence was credible and reliable and also noted that the weight given to the material evidence was pre-eminently a matter for the trial judge (subject only to the requirement that his findings be reasonable).

The full judgement is available from the Supreme Court here.

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

Inner House case considering whether damages were due in respect of wrongful interdict after an interim interdict was granted on the basis of a deed which was later rectified with retrospective effect.

Background
Mr Mirza was the owner of a shop and yard on Cumberland Road in Glasgow. Mrs Salim took an assignation of a lease of the premises. The parties had intended that only the shop (and not the yard) be let to Mrs Salim. However, due to an error, both the shop and yard were included in her title.

Mr Mirza commenced construction of a new shop in the yard. A dispute then arose as to who had a real right in the yard and, in February 2008, Mrs Salim sought and obtained an interim interdict preventing Mr Mirza from entering the yard and building and operating the new shop. However, in August 2009 the Court found that the yard had been included in the lease as the result of a conveyancing error (for which neither of the parties were responsible) and granted a judicial rectification[1] of the lease removing the yard from the leased subjects (the rectification being retrospective in effect). Mr Mirza then sought damages for wrongful interdict.

In the Outer House Lord Woolman refused to grant damages taking the view that, although rectification altered the deed and the register, “it did not airbrush history. It did not convert a rightful interdict into a wrongful one”.

Decision
By majority decision[2] the Inner house allowed an appeal and found that Mr Mirza was entitled to damages[3].

After construing ss8 and 9 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (which deals with rectification of defectively expressed documents) and s9(3A) of the Land Registration (Scotland) Act 1979[4] (rectification of the Land register), the court found that the clear effect of the legislation was that rectification would act retrospectively (i.e. the rectified entry would take effect from the date the original entry was made)[5].

The court also confirmed that the obtaining of an interim interdict is at the risk of the applicant meaning that, if an application is ultimately found to be unsuccessful, the applicant will be liable for loss caused by the interim interdict. In the words of Lady Dorrian:

“The position in relation to interim interdict is clear, and well understood by practitioners, namely that such an order is sought periculo petentis [at the risk of the perpetrator].  This rule means that, in general, where loss has been caused, damages will automatically follow where an interdict has turned out to be unjustified.  A petitioner for interdict perils his case, and places himself at risk of damages if it prove to be otherwise, that he will eventually be vindicated in his claim.”

The full judgement is available from Scottish Courts here.

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

Case from the Lands Tribunal for Scotland considering the title to the common parts of a development at Corstorphine Road in Edinburgh.

The case follows on from PMP Plus Ltd v The Keeper of the Registers of Scotland and others[1] and Lundin Homes Ltd v. the Keeper. PMP confirmed that it was not competent to convey the common parts of a development which are described by reference to a future event (e.g. conveying what will be left when the development has been completed). Lundin also made it clear that, for titles registered in the Land Register, there must be a sufficient description[2] of property within the conveyance[3] (whereas for Sasines titles it is competent for the extent of property to be identified by extrinsic evidence).

This case considers whether the owners of houses within the development with titles recorded in the Register of Sasines[4] may have obtained rights in the common parts by prescriptive possession.

The dispositions in favour of the home owners contained the following clause:

 “… (Three) a right in common with the proprietors of all the other dwellinghouses in the development of which the subjects hereby disponed form part to areas of open space amenity ground and/or wooded areas and unallocated parking spaces formed or to be formed in accordance with the requirements of the Local Planning Authority (the exact extent of which areas may not yet have been defined) unless and until said areas and unallocated parking spaces may be formally taken over by the Local Authority …”.

The developer (Miller Homes) received a conveyance of an undeveloped area of ground within the development from a group company and registered a title to it in the Land Register. The Keeper excluded indemnity on the basis that proprietors of the houses who held Sasine titles may have acquired prescriptive rights of common ownership in the area.

Miller argued that, in accordance with the decision in PMP, the house owner’s titles were not habile to found prescription as they were described by reference to an uncertain future event.

The Tribunal found that, whilst it was not possible to found prescription on titles to common areas still to be formed or to be defined[5] at the time the dispositions of the individual plots within the development were granted, the clause also refers to areas which had been formed and defined and it was possible that prescription could run on Sasine titles where the common area had been formed and defined at the time a disposition[6] of the relevant plot was granted.

No individual owner had entered appearance in appeal and the Tribunal decided to re-intimate the appeal to all the individual proprietors in order that they should have an opportunity to enter appearance and attempt to set up a competing title.

The full decision is available from the Lands Tribunal for Scotland here.

A blog on Registers of Scotland’s policy with regard to development common areas is available here.

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

Sheriff Court case considering whether a servitude right of access had been created by prescription. Mr and Mrs Sidebottom sought declarator that they had established a servitude right of access to their property (in Fyvie in Aberdeenshire) across the properties of Mr and Mrs Green and Sir George Forbes-Leith.

Mr and Mrs Green argued that the Sidebottoms had not taken access over the route for the necessary 20 year period and that the use had been infrequent and not of the “right kind”. The Greens contended that the Sidebottoms use of the access had been based on a mistaken belief that their title contained a servitude right of access over the roadway in question. They also argued that use of the access had not been peaceable pointing to a letter written by Mrs Sidebottom which referred to an ongoing dispute over the access and to the fact that the access had been obstructed.

The sheriff found that the decision came down to a question of reliability and credibility and preferred the evidence of the Sidebottoms. Although the access had been obstructed, the sheriff accepted Mrs Sidebottom’s evidence that they had nevertheless continued to use the access and inferred from that and the lack of evidence to the contrary that use of the access was nonetheless peaceable. Even although the Sidebottoms’ use of the access may have been based on a mistaken belief that they had a right to use the access in their title, the sheriff found that Mrs Sidebottom’s letter was further evidence that the Sidebottoms were asserting their right to use the access.

The full judgement is available from Scottish Courts here.

Outer House case in concerning the interpretation of the lease of a plot in a chalet park in Lochgoilhead.

Mr and Mrs Ramsay bought a (removable) chalet in the park (for £20.5k) from Drimsynie. As part of the same transaction, the Ramsays entered into a 10 year ground lease of the plot on which the chalet was located. The lease provided that, on expiry of the lease, Drimsynie would have:

 “..the option to acquire the chalet at a price to be agreed, failing agreement at a price to be determined by an arbiter to be appointed in terms of clause FIFTEENTH…or offer to (the Ramsays) a renewal of the lease for a period to be determined by (Drimsynie)….”

When Drimsynie terminated the lease (following a change policy which involved replacing chalets with newer, larger, and more expensive chalets), an arbiter was been appointed to determine the sum to be paid for the chalet and a dispute developed as to how the arbiter should approach the valuation of the chalet. The Ramsays argued that the chalet should be valued on the assumption of a continuing right to occupy it on the plot on which it was located. Alternatively, Drimsynie contended the arbiter should consider only the market value of the chalet itself on the basis it would be removed from the plot.

Lord Malcolm found that his task was to interpret the lease by reference to the understanding of a reasonable person in the position of the parties at the time the lease was entered. It was important to note that the lease was not a stand alone contract and was linked to the associated purchase of the chalet. The effect of the relevant clause was that the Ramsays could remain in occupation of the chalet on the plot in terms of the lease until the chalet was purchased by the Drimsynie. If Drimsynie wanted to put a new chalet on the site and sell it to someone else they would require to purchase the old chalet first. In Lord Malcolm’s view the parties would have understood that Drimsynie was buying out the Ramsays’ right to continue to use the chalet on the plot in terms of the lease. As such, a reasonable person in the position of the parties at the time of the lease would have understood that Drimsynie would purchase the chalet on the same footing as they sold it. He found support for this view from the element of permanence associated with the chalet, noting that:

• the lease described the chalet as having been “erected” on the plot
• although simply resting on its foundations, it was connected to services, including water and drainage
• the chalet had been on the site since about 1967 and was shown on the OS map
• the Ramsays paid council tax in respect of the chalet.

Lord Malcolm therefore held that that the arbiter should value the chalet on the basis that it could be used on the site for so long as it remained habitable.

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.

Inner House case concerning the interpretation of a dilapidations provision contained in a lease of premises at Germiston Industrial Estate in Glasgow.

Surveyors acting for Grove (the landlord) served a schedule of dilapidations on Cape (the tenant). However, the works specified in the schedule had not been carried out by Cape by the expiry of the lease .

The lease provided an obligation on the tenant “to pay to the landlords the total value of the Schedule of Dilapidations [prepared in respect of the tenant’s repairing obligations]”. Grove argued that this obliged Cape to pay the total value as shown in the schedule. On the other hand, Cape argued that they were only obliged to make payment to Grove of the loss actually suffered as a result of the failure to comply with the repairing obligations. Both the sheriff and the sheriff principal agreed with Grove’s arguments and Cape appealed to the Inner House.

Before considering the lease, the court noted that the provisions of a contract must be construed in context and in accordance with the purposes that the contract is intended to achieve and that, where a contractual provision is capable of more than one meaning, the court should adopt the meaning that best accords with commercial common sense.  Adopting this approach, the Inner House allowed the appeal for the following reasons.

1. The contractual context was the termination of a lease where the tenants had not fulfilled their repairing obligations. The most natural way of providing a remedy for the tenant’s breach of contract would be to compensate the landlords for their loss (which would involve a remedy akin to damages).
2. In a case where the landlords intended to reinstate premises in full, Cape’s construction of the clause would allow for full recovery of the costs of reinstatement. (The amount due being calculated after the works had been carried out). On Grove’s suggested interpretation, the sum payable by the tenants would be based on an estimated value before the works were carried out.
3. In cases where the landlords did not intend to reinstate the property, Grove’s construction of the clause would mean that the landlord could recover very much more than the actual loss sustained by them through the tenant’s breach of contract. (The effect being that the amount recovered would essentially be arbitrary and unrelated to the tenants’ breach of contract)
4. Cape’s proposed interpretation of the clause provided full compensation to the landlords for the loss ultimately suffered by them. In the court’s opinion that was in accordance with commercial common sense and satisfied the important requirements of proportionality and predictability.

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 claim made under the Occupiers’ Liability (Scotland) Act 1960 (and concurrent common law duties of care) and the Workplace (Health, Safety and Welfare) Regulations 1992 (in particular regulations 5 and 17) following injuries caused as the result of a seagull attack.

Background
Ms Kelly worked at the Ladyburn Business Centre in Greenock which was owned and operated by Riverside (who accepted that they were also in the position of an employer). Whilst leaving the premises to buy her lunch she was attacked by a seagull which swooped at her with its wings outstretched causing her to stumble and fall on steps outside the centre.

Decision
After hearing the evidence, the court dismissed the claim finding that it had not been established on the balance of probabilities that the seagull which attacked Ms Kelly had come from the centre. Even if it could have been shown that the seagull had come from the centre, the temporary judge found that the claim  would nonetheless have failed.

Occupiers’ liability
With regard to occupiers’ liability (both at common law and under the 1960 Act) it was found that the incident was not reasonably foreseeable as Ms Kelly had been unable to show that complaints of analogous incidents had been made to Riverside prior to her accident.

Workplace (Health, Safety and Welfare) Regulations 1992
With regard to the Workplace Regulations, regulation 5 was found to relate to maintenance rather than construction of the premises and Mr Kelly’s contention that the property should have been protected by measures such as spiking, meshing and netting were matters of construction. An argument that the seagull nests should have been regularly removed also failed as such acts were found to be control measures rather than maintenance.

Regulation 17(1) of the 1992 Regulations obliges an employer to organise the workplace “in such a way that pedestrians and vehicles can circulate in a safe manner”. However Ms Kelly’s case under that provision also failed, the temporary judge finding:

“The pursuer has failed to tie in the attacking bird to the roof of the LBC. That is of course a different and antecedent point in this case, but it is also an important one in the context of consideration of regulation 17. It is simply, in my view, not feasible to consider the behaviour of wild creatures such as herring gulls and lesser black-backed gulls in the context of a regulation such as regulation 17(1) which addresses the organisation of a workplace. This is especially so when knowledge of an actual problem has not successfully been imputed to persons such as the defenders in this 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.

Lands valuation appeal in which the assessors appealed against a decision of the Lands Tribunal in which the tribunal upheld appeals by mobile phone companies against entries made in the valuation rolls at the 2005 Revaluation in respect of various mobile mast sites.

The court outlined the typical arrangements at such sites in which there is generally a site owner who owns the site, a host who controls the mast (generally one of the mobile networks) and is a tenant of the owner, and “sharers” who are other mobile networks which the host allows to attach their equipment to the mast in return for a payment (part of which is usually passed to the site’s owner). The sharers usually erect a small cabin or cabinet close to the mast and run a cable from it to the mast.

There was no dispute that the cabin or the cabinet is heritable and is a separate rateable subject. There was also no dispute that the cable when it is attached to the mast and the aerial and other equipment to which it leads are heritable by accession but that the aerial is not rateable[1]. The question was whether the sharer is in rateable occupation of that part of the mast to which its cable and equipment are attached.

The assessors argued that the sharer’s right in the mast was either:

1. a pertinent of the cabin or the cabinet,
2. a wayleave over the mast; or
3. a right of tenancy.

On any of these interpretations the assessors contended that the sharer was in rateable occupation.

The Inner House refused the appeal. The court was not persuaded by the assessor’s argument as to the nature of the sharer’s right finding that the sharer’s right[2] in respect of the cables and equipment was at best a licence to such part of the mast as the host may, from time to time, in its uncontrolled discretion, direct. As to whether the sharer was in rateable occupation the court (the opinion being given by the Lord President) said the following:

 “The question whether the sharer is in rateable occupation turns on the nature and the terms of the sharer’s agreement and the de facto situation that is established in the evidence …. On the facts of these cases, the Tribunal concluded that the sharer was not in rateable occupation. That was pre-eminently a decision for the Tribunal. It is not one with which this court should interfere unless it is contrary to the evidence, or is unsupported by any evidence or is perverse or irrational. It is not suggested that any of these considerations apply. My own view is that the sharer cannot be said to enjoy the exclusivity and paramount control that are essential to rateable occupation; and that the conclusion of the Tribunal on this point is correct… The significant points in my view are that the sharer has no right to occupy any particular part of the mast, but has at most a licence to occupy a part of the mast at the pleasure and at the direction of the host; and that it can be made to reposition its cable and equipment whenever the host should so direct.”

 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.

Supreme Court case considering a lease of premises at Wardpark South Industrial Estate in Cumbernauld.  Batley were tenants and North Lanarkshire Council were sub-tenants.

At the centre of the dispute were works which the Council carried out to the property under a minute of agreement. In terms of the minute, the Council had to remove the works and re-instate the premises at the end of the agreement if they were required to do so by Batley.  Batley served a schedule of dilapidations after the end of the sublease.  However, the Council argued that the obligation to reinstate the premises died on the expiry of the sublease and therefore it did not require to comply.

In the Outer House, the temporary judge (Morag Wise QC) found that, in terms of the minute, there was no need for Batley to give written notice requiring removal of the works and allowed a proof to consider whether Batley had adequately conveyed its requirement for re-instatement when a surveyor acting on its behalf had telephoned the Council before the end of the sublease and indicated re-instatement would be required.

The Inner House allowed a reclaiming motion finding that the minute not only amended the sublease but also ratified provisions in the sublease. These included a provision incorporating a requirement for written notice which was contained in the head lease. In the absence of such written notice there was no requirement on the Council to re-instate the premises. An attempt by Batley to claim the cost of re-instating the premises under the general repairing clause in the sublease also failed.

The Supreme Court have allowed an appeal and allowed a proof before answer to hear evidence on the facts.

Construing the words used in the context of the minute of agreement as a whole and the surrounding factual matrix the court found that:

1. the use of the words “if so required by the Mid-Landlord” in relation to the re-instatement requirement in the minute was in contrast to two other provisions in the minute which expressly required written forms (suggesting that, where writing was required, it was expressly stated);
2. to interpret the documentation as requiring written notice required a convoluted construction of both the agreement and head lease whereas the simpler construction (preferred by the court) was that written notice was not required;
3. although the minute existed in the context of the head lease and sub-lease, it was a separate contract and the starting point for interpretation was the words it contained which pointed towards the conclusion that writing was not required for communications in all circumstances and that conclusion was not overturned by the provisions of the head lease and sub-lease; and
4. it made business common sense that written notice was not required as:
   1. although the minute stated that the obligations were incorporated into the sub-lease (containing a requirement for written notice), this was done so as to give the mid-landlord the power of irritancy if the sub-tenant breached its obligations under the minute; and
   2. the landlord would only require removal of the sub-tenants works at the end of the sublease when the sub-tenant would have to address its separate and continuing repairing obligation under the lease and, at the time such repairs were being carried out, the sub-tenant could readily respond to an intimation to remove its works (without the need for formal intimation).

With regard to Batley’s attempt to recover the cost of re-instating the premises under the general repairing clause in the sublease, the Supreme Court found that the repairing obligation was a continuing obligation which did not require notice from the landlord to activate it.

The full judgement is available from the Supreme Court here.

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