Outer House case relating to a development at Watling Street in Motherwell which was alleged to have been built on contaminated land. The McManuses sought damages from City Link Development Company (the Developer), Scott Wilson Scotland (which the McManuses claimed had been environmental consultants on the development project) and Lanarkshire Housing Association (from whom the McManuses had leased properties on Watling Street) after suffering illness which they said had resulted from vapour given off by the contamination.

Arguments
The McManuses sought damages from City Link and Scott Wilson on the basis:

1. that their illness had been caused by the fault of City Link and Scott Wilson in terms of the common law; and
2. that City Link and Scott Wilson had breached the Environmental Protection Act 1990 (s33(1)(a)).

The McManuses also argued that the Housing Association had breached an implied term of their tenancy agreement, and were later in breach of certain provisions of the Housing (Scotland) Act 2001.

Decision
City Link
Common law fault
In terms of the common law, the McManuses argued that City Link knew or ought to have known that the property had not been properly investigated for contamination and had not ben remediated so as to be fit for residential development. However, the court found that reports produced by Scott Wilson were such that a layperson would have understood that the site was suitable for residential development. As such, City Link would only have been liable (1) if they had sufficient expertise to ascertain that Scott Wilson’s investigations had not been sufficient to determine that the site was fit for residential development or (2) if City Link owed a non-delegable duty of care (which can arise in respect of particularly hazardous operations) to the McManuses. The court found that, in the circumstances, neither applied in this case and City Link’s duty did not extend to checking Scott Wilson’s work meaning that City Link were not at fault.

Scott Wilson
Common law fault
Scott Wilson argued that it had not been employed as environmental consultants on the project and pointed to other contractors involved in the project who may have fulfilled that role. As such they argued that the McManuses’ case against them was irrelevant. However, Lord Jones found that the McManuses’ case against Scott Wilson was not bound to fail. It was noted that other contractors involved had been subordinate to Scott Wilson and that it would be possible for the McManuses to prove that it was Scott Wilson’s responsibility to investigate the contamination and to advise on the remediation necessary to make the site suitable for residential development. Further proceedings were allowed in that regard.

City Link and Scott Wilson
The 1990 Act
The MacManuses also argued that City Link and Scott Wilson had been responsible for depositing controlled waste on the site (contrary to s33(1) of the Environmental Protection Act 1990) when materials were redistributed around the site during remediation works. However, Lord Jones accepted arguments made by City Link and Scott Wilson to the effect that the works had taken place prior to the relevant provisions of the 1990 Act coming into force and could not give rise to liability under the act.

The Housing Association
The first property was held under an assured tenancy (in terms of the Housing (Scotland) Act 1987)  until September 2002 and a secure tenancy (under the Housing (Scotland) Act 2001) thereafter. The second property was also held by virtue of a secure tenancy. The court found that, in both situations, the Housing Associations obligations and duties related to the fabric of the let property itself and the McManus’s arguments which were based on the location and construction of the properties were irrelevant.

Time bar
The court also considered arguments to the effect that the McManuses case was time barred but the McManuses were given an opportunity to amend their pleadings and no decision was reached in that regard.

 The full judgement is available from Scottish Courts here.

English Court of Appeal case concerning leases of commercial premises at 104 Cromer Street and at 106/108 Cromer Street in London. The subjects in both leases included the ground and basement premises but not the upper floors (which consisted of residential flats retained by the Landlord) nor the soil pipes on the rear wall of the building which served the upper floors.

The leases contained an obligation on the tenant to put and keep the subjects in good and substantial repair, decoration and condition. There was no corresponding obligation on the landlord to repair the parts of the building it had retained; the landlord’s only express obligations being in relation to insurance (of both the premises and the retained subjects) and allowing the tenant quiet enjoyment of the premises.  A cesser of rent clause (i.e. ceasing liability for rent) also applied in the event the premises (or any part of them) were unfit for occupation and use.

The premises were damaged on at least 4 occasions between April 2004 and June 2005 by water and sewerage coming from the parts of the property retained by the landlord. The damage was repaired and insurance payments made. The tenant continued to pay the rent until June 2008 then stopped. The landlord took steps to forfeit the leases and re-enter the premises. The tenant argued that, as she had continued to pay the rent during the period in 2005 when the premises had been (in the tenant’s opinion) unfit for use, she was entitled to set that off against the rent due in 2008. The tenant also sought substantial damages for financial losses (including loss of business) arising from the leaks.

In order to succeed in such a claim the tenants had to establish a breach of duty on the part of the landlord in either contract or in delict arising from the various leaks. The basis of such liability was said to be either an implied obligation to keep the retained parts in repair or alternatively a common law duty as adjoining occupier to remedy any defect in those premises which was capable of causing damage to the leased subjects.

The Court of Appeal found that there was no reason to require the implication of an obligation on the landlord to keep the retained subjects in good repair. Although there was no express repairing obligation imposed on the landlord, the repair of the structure of the building was catered for through the provisions of the insurance clause. In the face of these provisions there was no reason based on necessity or business efficacy to alter the balance of the scheme by imposing an implied obligation to repair on the landlord, let alone one (as was argued for by the tenant) under which his liability to repair was absolute.

For much the same reasons, the existence of what the parties obviously intended should be a comprehensive scheme for the repair of both the leased subjects and the retained parts of the building was sufficient to exclude any liability in delict to which the landlord might otherwise be subject to in relation to the retained premises.

The full judgement is available from BAILII here*.

*We believe that the tenant disputes the facts as reported in the judgment (see here) and is appealing the case to the Supreme Court.

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