Outer House case considering a break option in leases of office premises situated on Broadway Park in Edinburgh.

The leases were due to expire in 2023 but could be broken as at 7 May 2013. In order to exercise the break option, the tenants (Scottish & Newcastle) required to give 12 months notice and not be “in breach of any of their obligations (under the lease in question) at the date of service of such notice and/or the termination date”.

Scottish & Newcastle served break notices on time but by their own admission, at the date of service of the notices, had not fully performed their repairing obligations under the lease. The business park argued that the leases continued after the notice date and sought payment of rent from the date of the notices.

Scottish & Newcastle argued that:

1. although they had not fully performed their obligations under the lease at the date of the notices, they were not in breach of the lease as the non-performance was remediable; and
2. (even if argument 1. was wrong) for the tenants to lose their option to break they had to be in breach of the lease either:
   1. both at the date the notices were served and at the date of termination; or
   2. at the date of termination.

Lord Malcolm rejected both arguments finding that, in terms of the leases, there was no distinction to be made between non-performance of the obligations and a breach of the obligations and, with regard to the second argument, the natural meaning of the words used was that a notice was invalid if the tenants were in breach of the notice either at the date of the notice, the date of termination or both.

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.

This is an Outer House case in which Mr Hann (the executor of the late James Wheeldon) sought reduction of a will (and confirmation on the will) which purported to leave property (Powfoot Hall) to the son of the late Doris Spence.

Mr Wheeldon had a business relationship with Mrs Spence, and in fulfilment of certain informal agreements between them, he conveyed Powfoot Hall (were he had lived for 43 years till his death in 2007) to her in 1987. In 1994 Mr Wheeldon and Mrs Spence made a further informal written agreement containing the following clause:

“… As affairs between … [Mrs Spence] … and … [Mr Wheeldon] … are now agreed by both parties concerned and fully settled, and the title deeds to the Powfoot Hall are hereby returned to … [Mr Wheeldon] …. who now assumes full legal title to Powfoot Hall on 20/12/1993 and becomes owner of said property…”.

However Mrs Spence died in 2003 without having conveyed Powfoot Hall back to Mr Wheeldon, and by her will of 2002, she left the property to her son.

After considering prior authority[1], Lord McEwan found that Mrs Spence had bound herself to leave the property to Mr Wheeldon during her lifetime notwithstanding the fact that her son may have taken it in good faith. Consideration was also given to the possible application of the offside goals rule[2]. However, Lord McEwan found that the rule did not apply in this case:

“Much was made of the “offside goal rule” in the very good natured debate before me where metaphors were freely mixed and, I suspect, both counsel knew more of soccer than I.

If I can continue in the same vein, I think the “offside goal rule” was intended to strike at bad faith; the player knowing he is out of position yet trying to secure a benefit from the offside place on the field of play. This is what Rodger is about. It does not deal with the player who takes an advantage gratuitously and who may not be offside. The problem is that the player [Mrs Spence] who passes the ball to him [Mr Wheeldon] has broken the rules and the pass is invalid.

Whether Lord Kincairney in 1893 was an aficionado of the beautiful game I know not. Even by then the game had rules. It was not called offside in those days but since the rules of football were formulated by the gentleman players of the English public schools in 1863 there was a prohibition against playing the ball if you were “out of play” (Rule 6) (See Melvyn Bragg: “Twelve books that changed the world” p102).

In my opinion this case does not depend on the doctrine in Rodger but on the principles set out in Paterson, dealing as it does with succession and not property and titles.”

The full judgement is available from Scottish Courts here.

Outer House case concerning the effect of a survivorship clause in a disposition.

Mrs Povey and her husband bought a plot of land and built a house on it between 2002 and 2003 (the purchase price and construction costs being contributed in equal portions). The disposition contained special destinations of survivorship by which Mr Povey’s share would pass to Mrs Povey in the event of him predeceasing her and vice versa. In 2008 Mrs Povey signed a power of attorney in favour of her husband (which she understood was to be used only in the event she became unwell). In April 2009 Mr Povey executed a disposition (both on behalf of himself and on behalf of his wife) which purported to revoke the survivorship destinations. Mr Povey died on 23 July 2009. The disposition revoking the destinations was submitted for registration by solicitors purporting to act for Mr and Mrs Povey on 24 July and registered in the Land Register on 27 July 2009 (the solicitors completing a question on the form 2 application so as to indicate that no party to the transaction was subject to any incapacity or disability).

Mrs Povey sought declarator that title to Mr Povey’s share of the property passed to her on his death by operation of the special destination and that she was entitled to be entered as sole proprietor of the subjects in the Land Register. Her stepson (Mr Povey’s son) who was executor of Mr Povey’s estate argued that, in terms of registration of title, there was no automatic completion of title under the special destination and that Mrs Povey only had a personal right which would not be made real until the Keeper registered the change in title. He argued that the 2009 disposition revoking the destination had been registered first.

Lord Doherty agreed with Mrs Povey’s arguments finding that there was no authority to support the stepson’s contention that there was no automatic completion of title under the special destination.

“It is erroneous to suggest that on an institute’s death a substitute acquires only a personal right to the institute’s property, and that his right does not become real until the Keeper alters the entry in the title sheet. That analysis ignores the fact that title to the subjects, including the special destination by the institute to the substitute, is registered in the Land Register before the institute’s death … On the institute’s death the substitute’s contingent right becomes a real right, by virtue of the special destination. His completion of title is automatic. It is not dependent upon the Keeper altering the title sheet to reflect the change.”

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 relating to an alleged fraud. Ms McVicar was the owner of a house in Fernieside in Edinburgh which she had purchased with the aid of a loan from GMAC-RFC which held a standard security over the property. Mr Currie was a former cohabitant of Ms McVicar who she claimed had embarked on a fraudulent scheme under which the house was sold to GED for £110k with the aid of a loan of £80.5k from Nationwide. Ms McVicar’s signature was forged on a disposition of the house to GED and some of the funds (circa £45.5k) from Nationwide were used to pay off the loan in favour of GMAC-RFC. The disposition in favour GED and a standard security over the house in favour of Nationwide were recorded in the Land Register.

Ms McVicar sought: (1) reduction of the disposition in favour of GED and declarator that the entry in the Land Register recording the transfer of the title to GED was inaccurate (2) declarator that the entry in the Land Register recording the security granted by GED in favour of Nationwide was inaccurate and of no effect between Ms McVicar and Nationwide and (3) an order requiring the Keeper to rectify the register so as to delete entries relating to the title transfer and standard security.

Nationwide defended the action. Whilst they did not oppose the orders relating to the disposition and security and rectification of the register, they counterclaimed seeking payment (from Ms McVicar) of the £45.5k which had been used to pay off Ms McVicar’s loan to GMAC-RFC, arguing that Ms McVicar had been unjustifiably enriched by the payment.

Ms McVicar sought dismissal of the counterclaim. She argued amongst other things that Nationwide had a contractual right to recover from GED (Nationwide took the view that there was no reasonable prospect of recovering from GED) and that, if there had been an unjust enrichment of Ms McVicar at Nationwide’s expense, that enrichment was indirect and there was a general rule against recovery in cases of indirect enrichment. On the other hand Nationwide argued that, whilst there was a general rule against recovery in cases of indirect enrichment, there was no absolute bar. There was, they argued, a recognised exception to the general rule which allowed recovery where money/property was obtained by fraud and used to discharge the obligations of another.

Lord Doherty found that Nationwide’s arguments were not bound to fail and allowed a proof before answer.

 The full judgement is available here.

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

Sheriff Court case concerning the division and sale of a property on Shiskine Drive, Maryhill in Glasgow. Mr Collins and Ms Sweeney each had a one half pro-indiviso share in the property (which was incapable of division). Mr Collins sought a sale of the property on the open market and division of the proceeds. Whereas Ms Sweeney sought an order compelling the sale of Mr Collins share of the property to her arguing that there were equitable considerations which justified the granting of such an order. The principle issue was whether the court could grant decree for the sale to a co-proprietor, against the will of the other proprietor, rather than on the open market.

The sheriff concluded that, even if proved, the equitable considerations did not constitute a defence to Mr Collins’ absolute right to insist on a sale on the open market. Although there was authority for the court to make an order for the sale of a pro-indiviso share to a co-proprietor, this only applied where both parties consented. In the absence of consent, where the property cannot be divided, a co-proprietor has an absolute right to insist upon sale on the open market and cannot be obliged to sell to a co-proprietor against his will.

On appeal Ms Sweeney argued that the sheriff had erred contending, by reference to prior authority[1], that the court was bound to follow a two stage process when giving consideration to an action of division and sale. The first consideration involved recognition that the right to raise and pursue such an action is absolute. However, she also argued that there was a second consideration which involved the full equitable jurisdiction of the court in working out the remedy.

The sheriff principal rejected that argument finding that the reference to the equitable jurisdiction of the court in the prior cases referred to the courts discretion when considering (on an action for division and sale) whether the property can be divided between the parties or whether it cannot be divided and has to be sold (with the proceeds being divided between the parties). However, the court has no discretion to refuse an action for division and sale. Thus, in this case, Mr Collins could insist on upon a division and sale of the property and, as there was no question of the property being divided, the court’s discretion did not arise and a sale of the property had to take place (after which the proceeds would be divided).

The full judgment 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 lease of premises at the Gyle Shopping Centre in Edinburgh under which the Gyle was the landlord and Marks & Spencer, the tenant.

Gyle entered an agreement with Primark for the erection of a new store on land which included part of a car park. However, Marks & Spencer’s premises were let together with a one-third pro indiviso share of shared areas which included the car park. Gyle sought declarator from the court to the effect that (1) that the building of the Primark store did not breach the lease and (2) Marks and Spencer had consented to the building of the new store. (Gyle also made a further argument based on personal bar, which would only require to be considered if the Court found in favour of Marks & Spencer on the first two arguments).

A breach of the lease?
The essence of Gyle’s argument was that the right to the car park granted to Marks & Spencer under the lease was not a real right.  In particular they argued that a self-standing grant of tenancy to a pro indiviso share in land could not meet the requirements of a lease conferring a real right. As a consequence they contended that the right was only enforceable against the original landlord (Gyle’s predecessor in title) and not Gyle. Lord Tyre rejected that argument finding that the right in the car park was granted as a pertinent of the lease which conferred a real right enforceable against the landlord’s successors and, as such, the right in the car park was also enforceable against the landlord’s successors. Consequently, building the Primark store in the car park would constitute a breach of Marks and Spencer’s lease.

Consent to the new store?
In the absence of a variation recorded in the appropriate register, the lease could only be varied in accordance with its terms. Gyle argued that Marks and Spencer had approved the building of the store at a meeting of the shopping centre management committee and that the approval had been recorded in the minutes and signed by all of the parties (including Marks and Spencer). However Lord Tyre found that there was nothing in the lease conferring a power to vary the lease upon the management committee. Although he did not require to decide the issue, Lord Tyre also found that the terms of the lease required that a change to the car parking area would require probative (i.e. signed and witnessed) writing.

Having regard to the outstanding issue of personal bar, Lord Tyre put the case out By Order to discuss further procedure.

The full judgement is available from Scottish Courts here.

(See also summaries of decisions in which the court found (1) that M&S was not personally barred from preventing Gyle from erecting the store on the car park and (2) that M&S was not unreasonably withholding consent to the Primark development.)

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

The problem
It has long been common practice for developers to dispose of the common parts to developments by selling individual plots with a right of common property in whatever is left at the completion of the development. (This has the advantage that the developer does not have to decide on the ultimate layout of the development before it starts and has the flexibility to change the layout as building proceeds).

However, in terms of both property law [1] and registration law [2], it is incompetent to convey an area that is indeterminate. Although there have long been doubts about the competence of the practice [3], the practical benefits to developers have meant that it was nevertheless common practice and the common areas of many developments have been described in this way.

PMP
In 2008 the case of PMP Plus Ltd v The Keeper of the Registers of Scotland and others [4] confirmed that the practice is not competent. In that case a developer sold plots in a development with a share in the common areas (which were described as being those areas not exclusively alienated to the home owners) but decided prior to the completion of the development to sell a part of the development (which would otherwise have formed part of the common areas) to PMP for the building of a health centre. The Keeper excluded indemnity in respect of PMP’s title  on the grounds that the home owners may have acquired title to the common parts as a result of the conveyances in their favour. However, the Lands Tribunal for Scotland decided that the home owners did not have an effective title to the common areas due to the absence of a sufficient description.

Update 27
In response to PMP, the Keeper issued update 27 which contained guidance on how the Keeper would deal with applications relating to such developments post PMP. It made it clear that, for developments where the first split off deed/plot sale occurred on or after 3 August 2009 (described as “new developments”) there was a change in policy and, where identification of the common areas depended on completion of the development (or other future uncertain event), the Keeper would no longer show the conveyance of the common areas in the title sheet.

However, for developments where plots had been sold before 3 August 2009 (described as “existing developments”), the Keeper would continue to reflect the terms of the conveyancing showing the conveyance of common areas in the title sheet even where identification of the common areas was dependent on completion of the development (or other future uncertain event). This approach was intended to ensure consistency and equality within developments. It was also intended to take account of the possibility that rights in the common areas may be created when the last plot is sold[5].

Lundin
In June 2013, the Lands Tribunal for Scotland issued the decision in Lundin Homes v Keeper of Registers of Scotland[6]. Lundin went a step further than PMP as it made it clear that the identity of the common areas does not become fixed merely because the last plot in the development has been sold and, where the common parts have been insufficiently described in the original purchases from developers, subsequent sales of the properties will not cure the defect[7].

AI27
Following Lundin, rather than issue a replacement for Update 27, the Keeper issued an “additional information” paper (referred to here as “AI27”) to be read alongside it. This approach can be slightly confusing as some of the guidance in AI27 conflicts with Update 27. The following is an attempt at consolidating the provisions of Update 27 and AI27.

New developments (First registrations)
AI27 makes no change to the guidance issued in Update 27 in respect of “new developments”. In such cases, the Keeper will continue to take steps to remove wording from the title sheets which identifies the common areas by reference a future uncertain event.

Existing developments

First Registrations and transfers of part
As noted above Update 27 takes account of the possibility that rights in the common areas may be created when the last plot is sold.  AI27 acknowledges that, following the decision in Lundin, the occurrence of a future event/sale of the final plot by itself will not create rights in the common areas.

However, AI27 also makes the point that, if a deed is drafted so as to properly identify the common areas, it may[8] (along with the positive effect of registration/“the Midas touch”) have the effect of creating rights in the common areas. The Keeper will therefore consider applications for a first registration or transfer of part within an existing development where there is an attempt to identify the common areas and recommends that solicitors considering this approach should contact pre-registration enquiries.

AI27 makes it clear that, where there is no attempt to identify the common areas, the Keeper will continue to reflect the terms of the conveyancing. This is the same approach as Update 27. However AI27 goes on to suggest that, where a solicitor considers that rights in common have not been validly created in a split off disposition, he or she may wish to reflect that in the deed submitted for registration.

Dealing of a whole
The hierarchy of the headings in Update 27 is slightly confusing and may at first sight seem to indicate that the guidance relating to applications for the registration of the dealing of a whole falls under “new developments”. However, as noted above, the Keeper will remove wording transferring rights in common areas from the title sheets to new developments where it refers to a future uncertain event[9]. Such wording will not therefore arise on a “dealing” occurring in a “new development”. On the dealing of a whole within “existing developments”, Update 27 made it clear that the Keeper’s policy (as with first registrations) will be to make no changes to wording relating to common areas (and not to exclude indemnity). That does not change. However, Update 27 did indicate that completion of the development may create rights in common areas. Whereas, AI27 makes it clear that it will not.

In addition AI27 acknowledges that it may be possible in some cases to fix the problem with some remedial conveyancing. In this regard we are advised that the Keeper will consider applications which attempt to identify the common areas[10].

Vague verbal descriptions (no reference to future uncertain events)
PMP made reference to deeds containing verbal descriptions of common areas which do not specifically identify the common areas by reference to the OS map. Update 27 advises that the Keeper’s policy is, and will continue to be, to reflect the terms of the conveyancing without requiring a full bounding description of or plan delineating such common areas[11]. However, Update 27 also notes comments in PMP to the effect a description without reference to extraneous material might well be thought to be a central feature of a map based registration system and suggests that applicants consider those comments. This advice proved to be well founded as Lundin makes it clear that reference to extraneous material (with the possible exception of other publicly accessible registered titles) for description is incompetent. Consequently, where such wording appears on a registered title it will be superfluous and ineffectual. (However, see comments on prescription below.)

Update 27 also suggests than an applicants may want to request (with the support of a certified plan or deed plan) to have such areas mapped on to the title plan for its interest (albeit indemnity is likely to be excluded unless the other owners and developer are also parties to the plan). No further guidance on this issue was given in AI27.

Sale of potential common areas by developer

Registered titles
This policy on the sale of potential common parts by a developer perhaps represents the biggest change in policy. Update 27 provides that, where a developer was attempting to convey possible common areas, the Keeper would require evidence that the developer’s title to the land being sold was not void or voidable.  That is changed in AI27. In cases where the developer’s title is registered in the Land Register the Keeper will no longer require such evidence and will register titles without exclusion of indemnity.

Sasine titles
However, where the developer’s title and subsequent plots sales have been recorded in Sasines the situation is treated differently as prescription may play a role in creating rights to the common areas[12]. Where the relevant split off deed has been recorded in Sasines, and the title is habile[13] prescription may have cured defects in the title thus giving the owners of individual units in the development title to the common areas. Thus, where a developer is attempting to sell parts of a development in which the dispositions conveying individual plots have been recorded in the Register of Sasines, the developer will require to provide evidence that there is no conflicting possession by persons other than the developer.

Superfluous wording
The Keeper’s policy with regard to “existing developments”[14] will result in superfluous and ineffective wording in registered titles and we are again told that no steps will be taken to remove such wording at present due to the effect of prescription. In addition to its role with regard to Sasine titles, AI27 also refers to the impact of prescription on Land Register titles.

Land Registration (Scotland) Act 2012 and prescription
Whilst prescription does not currently play a part in Land Register titles[15], the Land Registration (Scotland) Act 2012[16], changes that and will allow prescription to run on deeds presented for registration[17]. AI27 advises that the Keeper is currently considering the implications of the 2012 Act. She will not  therefore take steps to rectify the Register (unless she receives an application for rectification) until that consideration is complete.

It may be that the operation of prescription under the 2012 Act helps to shore up titles in need of fortification. However, we should bear in mind that it will also bring about an end to the “Midas touch” (which, where common areas are correctly identified, can presently cure defective descriptions).

Prescription as a cure
Whether under Land Register titles or Sasine titles, it will seldom be that prescription provides a complete fix for the problem and we should also bear in mind some of the limitations of possession to demonstrate title. Whilst a proprietor is likely to be able to show prescriptive possession of the common areas it uses regularly (e.g. a communal bin store), there will be other areas for which it may be hard to show (and harder yet to prove) possession (e.g. communal flower beds). And others that may prove more useful to some people than others (e.g. communal parking bays may not be of too much to a plot owner who doesn’t own a car). Consequently relying on prescription is therefore likely to lead to patchy, inconsistent and unclear ownership of the common areas in developments.

The lack of a share in a communal flowerbed will most likely not be of huge importance to most owners. Carless proprietors are unlikely to be overly concerned about the parking bays until they come to sell the property to someone with a car. However, in all cases a lack of ownership in the common areas is likely be more of an issue if they come to be sold by the developer and used for something the plot owners find undesirable.

Where we are now?
The combination of PMP, Lundin, Update 27 and AI27 leaves us in the following situation.

• Many units within developments do not include a share of the common areas[18]. Clients and their lenders will require to be advised accordingly.
  • This should be clear from the land certificate on the dealing of property within a “new development”[19]. (Albeit there may be some instances where the applicant has not paid heed to the advice in update 27 and ineffectual vague verbal descriptions which do not identify the common areas by reference to a future event remain on the title.)
  • When involved with first registrations, or dealings of properties in “existing developments”, descriptions will need to be examined carefully. Those purporting to identify and convey common areas by reference to a future event[20] will be ineffective[21]. However, AI27 makes it clear that the Keeper will consider attempts to rectify the situation which do correctly identify the common areas.
• On a purchase of potential common areas (identified by reference to a future event) from the developer, the Keeper’s approach, after Update 27 but prior to AI27, was to require evidence that the applicant’s title was not void or voidable and would exclude indemnity if not satisfied.  Since AI27:
  • The Keeper will not require such evidence nor exclude indemnity for Land Register titles.
  • But, where plot sales have been recorded in Sasines, she will require evidence that there has been no possession adverse to that of the developer.

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Outer House case in which Fordell sought £338k from Deloitte it said was due under an alleged agreement relating to a dilapidations claim in respect of a lease of property at 18 Charlotte Square and 4 Charlotte Lane in Edinburgh.

The lease came to an end in March 2012 and before that a schedule of dilapidations was served. A dispute then took place as to the scope and cost of the remedial works required following which surveyors liaised on behalf of each of the parties with a view to reaching a negotiated agreement.

Fordell argued that a binding agreement had been reached between the parties that Deloitte would pay £338k in full and final settlement of the claim. Deloitte argued that there had been no concluded contract because:

1.     the communications did not record an intention to be bound by the exchange of emails;
2.     there was no evidence that Fordell would use the money for the dilapidations works;
3.     the phrase “without prejudice” was used in Deloitte’s surveyor’s emails;
4.     there was a need for a formal legal document; and
5.     there was no agreement on a date for payment.

After considering the authorities[1] Lord Malcolm found that the proper approach in such cases was well settled:

“In summary, both parties must have manifested an intention to be immediately bound to all the legally essential elements of the bargain. In assessing this, the court adopts an objective approach, based upon what an informed reasonable person would have understood by the words and conduct of the parties or their agents.”

Lord Malcolm held that the negotiations had not resulted in a concluded contract between the parties. One of Deloitte’s emails contained a condition that Fordell would use the money for the dilapidations works which was not withdrawn and remained unmet. An email which Fordell argued had concluded the bargain did not waive or abandon that requirement. Fordell contended Deloitte were not entitled to require such evidence. However, Lord Malcolm took the view that, whatever the law on dilapidations claims, Deloitte were entitled to insist on such evidence as they wished, and to make it a condition for payment.

Lord Malcolm also took the view that the use of the words “without prejudice” and the need for a formal agreement reflected a shared understanding that neither of the surveyors could bind the parties. That was made clear in the correspondence. At each stage, before making a binding offer, or counter offer, the surveyors had required direct instructions from their respective clients and the words “without prejudice” required to be seen in that context[2]. Lord Malcolm described the lack of agreement regarding a date for payment as a “loose end” but saw it as further demonstration that the parties’ minds had not met on the key aspects of the deal.

Fordell’s claim for payment was dismissed.

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 a planning appeal by Patersons in respect of the refusal of an application to allow the extraction of minerals at Lamington near Biggar.

Paterson’s planning application was refused by South Lanarkshire Council on 28 March 2012. A subsequent appeal was then refused by a reporter appointed by the Scottish Minister’s on 9 January 2012 on the basis of both the landscape and visual impacts of the proposed development.

Paterson’s appealed to the court on the basis that the reporter had:

• failed to keep in mind the overriding and imperative nature of the need for mineral;
• erred in his interpretation and application of planning policies ENV4 (Protection of the Natural and Built Environment), ENV29 (Regional Scenic Areas and Areas of Great Landscape Value Policy) and MIN2 (Environmental protection hierarchy);
• reached a decision which was perverse or “Wednesbury unreasonable”; and
• failed to use the opportunity to resolve matters by imposing conditions.

The Inner House refused the appeal. It found, when the decision was read as a whole, it could not be suggested that the reporter overlooked, or lost sight of, the overriding and imperative nature of the need for minerals. It also found that the reporter’s interpretation of each of the planning policies had been correct. Further, he had taken all of the positive factors into account before exercising his planning judgement to decide that the positive factors were outweighed by the negative factors and, as such, his decision was not perverse or “Wednesbury unreasonable” (i.e. a decision so unreasonable that no reasonable person acting reasonably could have made it). With regard to the possibility of imposing conditions, the court found that the reporter had been entitled to be cautious in his approach to suggest conditions when there might be EIA publicity requirements, and moreover the reporter had not had sufficient material before him to enable him to assess the repercussions or consequences of such conditions.

 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.

This is an Outer House case in which Northern Rock sought damages from the solicitor of one of its customers. Headway Caledonian Ltd borrowed sums from Northern Rock to finance the purchase of a Business Park in Hamilton. In return it granted a standard security in favour of Northern Rock. Some years later, Headway’s solicitor sent a draft discharge of the standard security to Northern Rock requesting that it sign and return the document. In the accompanying email, the solicitor stated that the company intended to sell the subjects and redeem the loan. However, that information was incorrect as Headway only intended to sell part of the subjects and to redeem part of the loan. (The reason for the error was unknown.)

Northern Rock (which had not instructed solicitors to act on its behalf in the transaction) relied on the email and granted the discharge of the standard security. The solicitor then registered it in the Land Register. As a result the loan became unsecured. Headway then became insolvent and Northern Rock raised an action for damages against the solicitor and her firm in respect of its losses.

The solicitor argued that the lender was a third party to whom she did not owe a duty of care.

Lord Woolman considered the authorities on liability for economic loss including Midland Bank plc v Cameron, Thom, Peterkin & Duncans[1] in which Lord Jauncey identified four conditions that should normally be present for liability in such cases:

“…

1. the solicitor must assume responsibility for the advice or information furnished to the third party;
2. the solicitor must let it be known to the third party expressly or impliedly that he claims, by reason of his calling, to have the requisite skill or knowledge to give the advice or furnish the information;
3. the third party must have relied upon that advice or information as a matter for which the solicitor has assumed personal responsibility; and
4. the solicitor must have been aware that the third party was likely so to rely.”

Lord Woolman found that liability in delict[2] could not be decided without hearing the evidence and allowed a proof.

The full judgement is available from Scottish Courts here.