Inner House case concerning an occupancy agreement between Falkirk Council and Mr Gillies. Mr Gillies failed to pay rent and the Council gave notice bringing the occupancy to an end.

The notice given by the Council did not comply with the statutory provisions relating to the termination of Scottish secure tenancies. However, the Council argued that the provisions did not apply as the agreement was governed by separate provisions relating to temporary agreements in terms of paragraph 5 of Schedule 1 of the Housing (Scotland) 2001 Act:

“A tenancy is not a Scottish secure tenancy if the house is being let to the tenant expressly on a temporary basis, for a term of less than 6 months, in fulfilment of a duty imposed on a local authority by Part II (homeless persons) of the [Housing (Scotland) Act 1987]“.

The agreement in question provided:

 “1.4     The Occupancy Agreement will take effect from 9 December 2009 and will continue on a fortnightly basis until the Council has carried out a full investigation of your housing circumstances and, depending on the outcome of that investigation has provided you with an offer of secure permanent accommodation or given you a reasonable opportunity to secure alternative accommodation. You will be given 28 days notice when the Occupancy Agreement is being terminated as set out in part 5 of this agreement.”

The Council contended that this clause made express provision that the agreement was for a term of less than 6 months. In particular, they argued that that the phrase “on a fortnightly basis” was equivalent to an express reference to the agreement being for a term of two weeks.  They also referred a clause which provided: “The total charge for this accommodation is £304.12 per fortnight, payable in arrears, on the last day of each rental period” and argued that the words “rental period” were synonymous with “term” or “duration” and that specifying that the rent was “£304.12 per fortnight”, payable on the last day of “each rental period”, indicated that the rental period or term was a fortnight.

The court rejected the Council’s arguments and allowed an appeal. The most obvious meaning of the expression “on a fortnightly basis” was not that the agreement had a term of a single fortnight but that the right to occupancy would continue indefinitely from fortnight to fortnight. As to the words “rental period” the court took the view that, in their everyday use and in the context in which they had been used in the agreement, the words related to the period in respect of which instalments of rent were due and were not synonymous with “term” or “duration”.

The full judgement is available from Scottish Courts here.

Outer House case concerning a lease of premises in Strathclyde Business Park in Bellshill.

The lease came to an end in September 2013 and the landlord argued that, in terms of the lease, the tenant was obliged to pay a sum equal to the cost of putting the premises into good and substantial condition.

The relevant clause provided that, at the end of the lease, if the premises were not in good and substantial repair and condition, the landlord had the option either to require the tenant to carry out repairs to put it into that condition or to demand a sum certified by the landlord as being equivalent to the cost of carrying out such work:

“Provided always that (a) if at such expiration or sooner determination the Premises shall not be in such good and substantial repair and condition then at the option of the Landlord either (i) the Tenant shall carry out at its entire cost the works necessary to put the Premises into such repair and condition or (ii) the Tenant shall pay to the Landlord the sum certified by the Landlord as being equal to the cost of carrying out such work..”

The landlord sought over £395k from the tenant in respect of the dilapidations said to exist at the end of the lease. The tenant argued that nothing was due in terms of the lease because the landlord had no intention or need to carry out the works listed in the schedule and the relevant clause in the lease did not entitle the landlord to a windfall profit. The tenant argued that the clause was neither a payment clause nor a liquidated damages clause but instead should have been read as clarifying and confirming the landlord’s common law right to damages (meaning that the landlord was only entitled to the loss actually suffered as a result of the tenant’s breach of its repairing obligations)[1].

Lord Doherty rejected those arguments. Following the approach taken in @SIPP (Pension Trustees) Limited v. Insight Travel Services Limited, Lord Doherty found that the ordinary and natural meaning of the clause provided the landlord with the option of certifying a sum equal to the cost of the works necessary to put the premises into the condition in which they would have been in at the end of the lease if the tenant had complied with its repairing obligations. The tenant’s contention that the clause should be interpreted as only allowing common law damages was found not to be a possible interpretation of the clause.

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.

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[1] The tenant referred to Mapeley Acquisition Co (3) Ltd (In Receivership) v City of Edinburgh Council and Grove Investments Limited v. Cape Building Products Limited in support of its arguments.

This is an Inner House case concerning the validity of a break option served by a tenant to a landlord in respect of premises in the Glover Pavilion at Aberdeen Science and Technology Park.

Background
The lease was originally of units 3 and 4 in the pavilion and was for a period of 10 years ending in February 2014 and contained a break option exercisable after 5 years. However, in October/November 2011 the parties entered a minute of variation, which amended the lease to include additional premises (unit 1), extended the term of the lease until August 2021 and included a new break option exercisable by the tenant 5 years after the “effective date” provided in the minute of variation (on providing 6 months’ prior notice).

Arguments
The tenant served a notice exercising the break option in January 2016. However, the landlord argued that the notice was invalid as the heading of the letter containing the notice referred only to units 3 and 4 (followed by the term “the Premises” in parenthesis) and not to unit 1. The landlord argued that this created confusion by attributing a new meaning to a defined term (i.e. arguing that the premises had been redefined in the letter as being units 3 and 4 without unit 1). In addition, it was argued that, when this was error was taken with the first paragraph of the letter which referred only to the lease and not to the minute of variation (although the tenant had referred to the minute of variation in the second paragraph of the letter), it had the effect that the notice applied only to the original lease and not the lease as varied by the minute of variation.

Decision
In the Outer House Lord Tyre rejected those arguments and granted declarator that the notice had been validly served.  The test to be applied was how a reasonable recipient with knowledge of the terms of the lease would have understood the notice[1] and Lord Tyre found that, when the notice was read as a whole, a reasonable recipient with knowledge of the lease would have understood the notice to refer to the lease as it had been at the date of the notice (i.e. as varied.).

The Inner House agreed with Lord Tyre’s findings and refused an appeal. Deciding the issue was a matter of assessing the impression immediately made on a reasonable recipient of the notice with knowledge of the relevant background and context. After considering the factors which were known by the Landlord in this case[2], the court said the following:

“Against that background, what would the reasonable landlord have understood as being the meaning of the letter received?  We accept that (s)he would, no doubt, observe that the heading of the letter – not the notice itself (which is contained in paragraph 2 of the letter) – refers to only two of the leased units.  But on proceeding to read the whole letter, it would be clear that the heading was simply incomplete; what the tenant plainly intended was to intimate that the right to terminate conferred in clause 4.2 was being exercised.  That was, for the purpose of the landlord/tenant relationship, the operative part of the letter.  It was not as if any part of the letter sought to open negotiation for the termination of Tyco’s tenancy of only two units and retention of a tenancy of unit 1.  We can accept that (s)he might have paused in respect of the definition of “the Lease” in paragraph one.  However, that pause would, we consider, have been a brief one.  We agree with the Lord Ordinary that, on reading the letter as a whole, there would have been no real doubt.  It was simply too improbable that Tyco were serving notice under a lease which had expired, particularly given the specific reference to the then current break option clause in paragraph 4.2 of the Minute of Variation.”

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.

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[1] Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 as recently applied in Scotland in West Dunbartonshire Council v William Thompson and Son (Dumbarton) Ltd  2016 SLT 12.

[2] Which the court noted as follows:

• “that, by 11 January 2016, the date for the expiry of the lease entered into in 2004 was long since passed and by that time, parties’ contractual rights and obligations were contained in the whole terms of the 2004 and 2011 documents read together (the original lease read together with the Minute of Variation);
• that Tyco were tenants of units 1, 3 and 4 under contractual terms which were unitary in relation to those premises;
• that Tyco had never had any right to terminate their tenancy in relation to individual units;
• that clause 4.2 of the Minute of Variation provided only for termination of Tyco’s whole tenancy;
• that, to exercise the clause 4.2 right, Tyco required to provide written notice at least six months prior to 31 August 2016 but the notice did not need to be in any particular form;
• if Tyco were going to exercise the break option, it would be sensible to service the clause 4.2 notice well in advance of the end of February 2016 – notice in the course of January 2016 would not be at all surprising; and
• that if Tyco were, after 31 August 2016, to be tenants of unit 1 only, parties would require to enter into a new agreement as the terms of their existing agreement were not divisible and made no allowance for partial severance of the tenancy.”

Outer House case considering the repairing obligations contained in a lease and sub-lease of 3 floors of Riverside House at Riverside Drive in Aberdeen.

The lease and sublease referred to common parts which included a car park. Defects were found in the concrete decking of the car park and remedial works had to be carried out. The question for the court was whether, in terms of the lease and sublease, the cost of the works was to be met by the sub-tenant or by the landlord.

The lease (between the landlord and tenant) was a full repairing and insuring lease under which the tenant was obliged to pay a service charge which was defined by reference to “Service Expenditure” which was incurred by the landlord in carrying out “Landlord Services” (which included repairs). An express exception from the Service Expenditure was “expenditure incurred in respect of or pertaining to the initial construction of the Building or the Service Systems”.

In terms of the sub-lease, the sub-tenant was obliged to pay to the tenant the sums which the tenant was obliged to pay to the landlord by way of the service charge under the lease.

The tenant paid the costs of remedial works to the car park as part of the service charge and sought to recover those from the sub-tenant. However, the sub-tenant argued that in terms of the exception from Service Expenditure, latent defects (such as the defects in the car park) “pertained to” the initial construction of the building and could not be recovered by way of the service charge.

Lord Tyre rejected the sub-tenants argument finding that it was appropriate to place emphasis[1] on the fact that the lease was a full repairing and insuring lease under which it was intended that the tenant would relieve the landlord of the cost of repair and rebuilding even in relation to inherent or latent defects.

 In Lord Tyre’s view, a reasonable person having all the background knowledge available to the parties would have understood the phrase “in respect of or pertaining to the initial construction of the Building” extended only to works carried out during the construction phase and any related snagging. The sub- tenants interpretation placed too much weight upon the words “or pertaining to”.  Lord Tyre found that those words could be seen as a reference to costs such as professional fees associated with the construction of the building, which were not strictly costs of construction.

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.

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[1] Per the approach in @SIPP Pension Trustees v Insight Travel Services Ltd 2016 SLT 131

Outer House case concerning the validity of a break option served by a tenant to a landlord in respect of premises in the Glover Pavilion at Aberdeen Science and Technology Park.

Background
The lease was originally of units 3 and 4 in the pavilion and was for a period of 10 years ending in February 2014 and contained a break option exercisable after 5 years. However, in October/November 2011 the parties entered a minute of variation, which amended the lease to include additional premises (unit 1), extended the term of the lease until August 2021 and included a new break option exercisable by the tenant 5 years after the “effective date” provided in the minute of variation (on providing 6 months’ prior notice).

Arguments
The tenant served a notice exercising the break option in January 2016. However, the landlord argued that the notice was invalid as the heading of the letter containing the notice referred only to units 3 and 4 (followed by the term “the Premises” in parenthesis) and not to unit 1. The landlord argued that this created confusion by attributing a new meaning to a defined term (i.e. arguing that the premises had been redefined in the letter as being units 3 and 4 without unit 1). In addition, it was argued that, when this was error was taken with the first paragraph of the letter which referred only to the lease and not to the minute of variation (although the tenant had referred to the minute of variation in the second paragraph of the letter), it had the effect that the notice applied only to the original lease and not the lease as varied by the minute of variation.

Decision
Lord Tyre rejected those arguments and granted declarator that the notice had been validly served.

The test to be applied was how a reasonable recipient with knowledge of the terms of the lease would have understood the notice[1]. Lord Tyre began by rejecting the landlord’s argument that the reference in the first paragraph of the letter to “the Lease” was to the lease prior to it being varied by the minute of variation.  The notice required to be read as a whole and it was readily apparent from the notice that the sender was fully aware of the existence of the variation and of its terms. A reasonable recipient of the notice with knowledge of the lease would have understood the notice to refer to the lease as it had been at the date of the notice (i.e. as varied.). Lord Tyre took the view there was no ambiguity.

With regard to the omission of unit 1 in the heading in the letter, Lord Tyre, despite noting that careless drafting was to be discouraged, said the following:

“…in my opinion no reasonable recipient would be misled into interpreting the notice [so as to redefine the definition of “the Premises” in the contract] or even of being left in any reasonable doubt that [there had simply been a clerical error]… I am satisfied that the reasonable recipient would not have been perplexed in any way by the error in the letter heading.  The operative element of the notice is sufficiently clear and unambiguous to avoid any such perplexity, and the fact that the ingenuity of lawyers can suggest theoretical ambiguities is not to the point.”

The full judgement is available from Scottish Courts here.

[1] Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 as recently applied in Scotland in West Dunbartonshire Council v William Thompson and Son (Dumbarton) Ltd  2016 SLT 12.

Sheriff court case in which the City of Edinburgh Council sought decree for payment of arrears of rent and recovery of possession of a property at Springwell Place in Edinburgh.

The Council let the property to Mr Smith under a Short Scottish Secure Tenancy Agreement for an initial period of 6 months after which it was renewed on a month to month basis until one of the Council’s managing agents served a notice to quit on the tenant requiring him to remove from the property in February 2015. On the same date a notice of intention to raise proceedings for possession was served in terms of s36 of the Housing (Scotland) Act 2001.

In terms of s36(5), where the landlord has served the appropriate notices and raised the proceedings within the relevant timescale, the court must grant an order for recovery of possession if the tenancy has reached its end, tacit relocation is not operating and no further contractual tenancy is in place.

However, in this case, the sheriff was advised that an agreement had been reached with Mr Smith whereby he would remain in occupation of the property on payment of an agreed sum by way of rent (which also included the rent arrears). At a subsequent hearing before the sheriff the council also sought an adjournment rather than decree in order to give the tenant an opportunity to comply with his obligations before it obtained the decree.

Although Mr Smith did not appear in court and did not lodge any response to the council’s action, the sheriff found that the agreement between him and the council constituted a contractual tenancy:

“[t]hree of the essential clauses of a lease appear to have been agreed, namely, the parties, the subjects and the rent.  In those circumstances, at common law, the duration of the lease would be implied to be one year”.

As such, the sheriff found that the council was not entitled to recover possession in terms of s36(5) as a “further contractual tenancy” was in place and council’s action was dismissed.

The sheriff also noted that, according to the council’s pleadings, the notice to quit had been hand delivered by the council’s managing agent and, if so, it had not been validly served as only Sheriff’s Officers have the authority to serve such a notice personally meaning that, even if there had not been a further contractual tenancy in place, the requirements of s36(5) would still not have been met.

The full judgement is available from Scottish Courts here.

Background
Sheriff court case concerning a short assured tenancy of a flat in Edinburgh in relation to which a deposit of £550 was paid to the landlord but not paid into an approved tenancy deposit scheme as required under the Tenancy Deposit Schemes (Scotland) Regulations 2011. The tenant applied to the sheriff for an award of an amount of money as a sanction for the landlord’s failure to comply with his obligation under the regulations.

Arguments
The landlord argued that:

1. the tenancy was not protected by the 2011 regulations because the property was not ‘the principal home’ of the tenant during the duration of the lease (as the tenant had worked 3 and half days a week in Skye for a period of 6 months); and
2. even if the tenancy was protected by the regulations, a new tenancy was created in June 2014 in respect of which no deposit was made (meaning any action under the original lease would have been time barred at the time of the court action);  and
3. if the application was not time barred, the sanction provision was unenforceable, by the tenant, due to his dishonesty and illegality.

Decision
The sheriff rejected all of these arguments.

In the first place, the question of the tenant’s principal home did not have any bearing on the case. (The landlord had referred to the definition of an assured tenancy contained in s12 of the Housing Scotland Act 1988 which requires that the property is the tenant’s only or principal home. However, this was a short assured tenancy not an assured tenancy)

In the second place, although the tenancy agreement commenced on 15 June 2013 for a period of 12 months until 14 June 2014, it continued, with the consent of parties, until it terminated on 17 July 2015. Whilst the landlord had argued that a new lease was created in June 2014, the sheriff held that the tenancy was continued after 14 June 2014 on the principle of tacit relocation[1]. In coming to this conclusion, the sheriff noted that, after 14 June, the parties to the contract were the same, the property was the same and the only change was that the landlord had abated the rent by £50 because of a problem with the water supply. As such, the sheriff had no reason to think there was anything other than an extension to the original lease. (Meaning the action had been raised in sufficient time (i.e. within 3 months of 17 July 2015) in terms of reg. 9(1) of the 2011 Regulations).

Finally, the principle of illegality referred to by the landlord had no application to this case. (Although the sheriff also found that the landlord’s allegations in this regard were unsubstantiated). The sheriff stated that, although in some cases of partial breach of the regulations where the deposit was ultimately paid into to the scheme, the conduct of the tenant could be relevant to the sanction, where the deposit is never lodged, he failed to see how the tenant’s character could ever mitigate the breach.

As such, a sanction of twice the value of the deposit[2] was awarded[3].

It is also of note that, with regard to arguments by the Landlord to the effect that he had not understood the regulations and was only an ‘amateur landlord’, the sheriff said the following:

 “the regulations do not recognise the status of ‘amateur landlord’.  Landlords who rent to the public are covered by the regulations whether they are large commercial concerns or single property, buy to let landlords.”

 The full judgement is available from Scottish Courts here.

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[1] Where the term of a lease comes to an end and the tenancy then renews itself on the same terms and conditions.

[2] The maximum award is three times the value of the deposit.

[3] Less £50 for minor damage which had occurred to the property.

Background
Inner House case concerning the interpretation of a lease of premises at the Gyle Shopping Centre in Edinburgh under which 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, M&S’s premises were let together with a one-third pro indiviso share of shared areas which included the car park. In two previous decisions Lord Tyre found (1) that M&S had not consented to the building of the Primark Store and that the building of the store without consent would be a breach of the lease[1] and (2) that M&S was not personally barred from preventing Gyle from erecting the store on the car park[2].

Gyle then wrote to M&S and requested consent but did not receive it. In this case Gyle sought declarator that a refusal of consent to the Primark development by M&S amounted to an unreasonable withholding of consent. In the Outer House Lord Tyre granted the declarator[3]. M&S then appealed that decision.

The relevant clause in the lease provided that certain works could be carried out to the shared areas by a shopping centre management committee (which included a representative from M&S) where the parties (including M&S) consented that they accepted that the works would not render the mall or shared areas materially less adequate, commodious or convenient to them. The clause also provided that the consent could not be unreasonably withheld.

Arguments
M&S argued that the clause permitted works of redevelopment, modernisation, refurbishment, replacement and renewal, but not a new development such as the new Primark store. In particular they argued that the clause did not permit removal of the shared areas from M&S’s lease and that it did not permit the piecemeal erosion of M&S’s real property rights without formal documentation recorded in the appropriate register.

Decision
The Inner House allowed the appeal. In doing so, the court noted that it is necessary to consider the structure and provisions of the lease in the context of well-established principles of Scottish land law. As to which, the court said:

“Scots law governing land tenure and leases is based upon written titles registered either in the Land Register (formerly the Register of Sasines), or in the Books of Council and Session, or in both.  A duly recorded title relating to land is a real right which can be defended against the world.  It is not a mere personal right binding only the granter and grantee.  The real right runs with the land, and is passed to successors in title.  Alterations in title generally require a written deed duly registered or, following the introduction of digitalisation, an alteration in the electronic land register.”

 And, having noted the benefits of clarity, certainty, and accessibility for the public which arise from the principles, the Court went on to say:

“Against that background, any intention by contracting parties to dispense with the well‑settled and accepted conveyancing requirements relating to real rights in land would, in our opinion, require to be very clearly expressed.  Moreover any such approach would generally be regarded as ill-advised, as the resultant informal approach to title alterations would be likely to lead to confusion and doubt about the nature and extent of a party’s title to and/or interest in the land.”

Then, looking at the particular wording in the lease, the Inner House concluded that there was nothing in the provisions of the lease which would permit an interpretation altering M&S’s real rights and boundaries and allowing the building of the Primark Store.

 The full judgement is available from Scottish Courts here.

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[1] Gyle Shopping Centre General Partners Ltd as Trustee for and General Partner of Gyle Shopping Centre Limited Partnership v. Marks and Spencer Plc, 25 March 2014. See summary here.
[2] Gyle Shopping Centre General Partners Ltd as Trustee for and General Partner of Gyle Shopping Centre Limited Partnership v. Marks and Spencer Plc, 6 August 2014. See summary here.
[3] Gyle Shopping Centre General Partners Ltd as Trustee for and General Partner of Gyle Shopping Centre Limited Partnership v. Marks and Spencer Plc, 12 February 2015. See summary here.

Background
Sheriff Court case considering a purported lease of chip shop (which was converted from a petrol station forecourt shop) on South Uist. In early 2005, the parties reached a verbal agreement under which Mr Gray would lease the premises from Mr MacNeil for 15 years in return for paying staffing and running costs which would constitute rent. The agreement was not put in writing. Mr Gray bought equipment and the property was converted for use as a chip shop which opened for business in July 2005. The relationship between the parties deteriorated and in 2008, following a dispute, Mr MacNeil cut the electricity to the property and refused Mr Gray entry to the property. Mr MacNeil died in 2015 and Mr Gray raised an action against Mr MacNeil’s excecutor (Mr MacNeil Jnr).

Issues
There were essentially two issues for the court:

1. Whether Mr Gray was entitled to the return of the chip shop equipment (or alternatively payment of the value of the chip shop equipment); and
2. Whether, despite the legal requirement for the lease to be in writing, Mr Gray could recover damages (i.e. his loss of future profits) for material breach of the purported lease on the basis of the personal bar provisions contained in the Requirements of Writing (Scotland) Act 1995.

Decision
Return of the equipment
The sheriff found, on the evidence, that the chip shop equipment belonged to Mr Gray. Although, Mr MacNeil Jnr argued that that the equipment had nonetheless acceded[1] to the property, he failed to provide evidence relating to the conditions required (physical union, functional subordination and permanency) for accession to occur and the sheriff found that accession had not taken place.[2]

Verbal lease
Although a lease for more than a year requires to be in writing[3], Mr Gray argued that, in terms of the personal bar provisions contained in the 1995 Act[4], because Mr Gray had acted in reliance of the verbal lease with the knowledge and acquiescence of Mr MacNeil, Mr MacNeil had not been entitled to withdraw from the contract. However, after considering previous authorities[5], the sheriff found that the personal bar provisions in the 1995 Act only apply to the creation of rights which are purely personal whereas the verbal lease would also create real rights[6] (i.e. rights which are enforceable against the world rather than rights enforceable only between contracting parties). As such, the verbal lease was invalid and Mr MacNeil had been entitled to withdraw from it[7].

The full judgement is available from Scottish Courts here.

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[1] I.e. that the equipment had been fixed to the building in such a way as to become part of it (meaning that the owner of the building would also become the owner of the equipment).

[2] However there were some technical difficulties with Mr Gray’s pleadings regarding relating to delivery of the equipment/payment of the value and a further heading was fixed in that regard.

[3] 1995 Act s1(7).

[4] Section 1(3) and (4).

[5] The Advice Centre for Mortgages v McNicoll 2006 SLT 591 and Gyle Shopping Centre General Partners Ltd v Marks and Spencer PLC, [2014] CSOH 122

[6] The verbal lease effected the creation of a real right in land (in the same way, for example, as a disposition effects the creation of real rights in land) in contrast to being purely a contract for the creation of a real right (i.e creating personal rights relating to the creation of a real right to be effected in a future conveyance, in the same way as missives are a contract for the creation of a real right in land – with the real right then being created by the subsequent registration of the disposition which the seller will be obliged to deliver in terms of the missives.) Although a lease can be seen both as a contract for the creation of a real right in land and as effecting a real right in land, the courts have taken the view (after consideration of the Scottish Law Commission’s, Report on Requirements of Writing (Report No112) at para 2.50) that the personal bar provisions contained in the 1995 Act cannot apply in situations where real rights are actually conveyed (even if a contract for the creation of an interest in land is created at the same time).

[7] The sheriff also noted that the result seemed harsh in the circumstances of the case.

Background
Outer House case considering a dispute as to the ownership of a semi-detached cottage near Kilmarnock. Mr McNaughton argued that the cottage had been owned by his late father (for whom he was acting as executor) and sought reduction of an a non domino[1] disposition conveying it to the Majors (which had been granted by another neighbouring proprietor). Mr McNaughton also sought a decree ordaining the Majors to vacate the cottage.

The cottage was one of two semi-detached properties in the same building. The other property in the building had been occupied by Mr McNaughton’s family since at least 1922. Mr McNaughton’s father bought the feudal superiority to both parts of the property in 1961 (and recorded the deed in 1987). The last recorded disposition of the dominum uitle (or vassal’s title) to the cottages had been recorded in 1868 and was in favour of a John Arnott but, at the time the superiority was acquired, no one was exercising any rights to the dominum uitle. Feudal Superiorities were abolished on 28 November 2004 and the estate of dominum uitle became full ownership of land[2]. Consequently, the court had to determine whether the Mr McNaughton had acquired the dominum uitle prior to 28 November 2004.

Arguments
Lord Jones found that the disposition conveying the superiority to Mr McNaughton’s father was capable of being read so as also to include the dominum uitle to the property. As such[3], it was possible for Mr McNaughton to obtain title to the dominum uitle by prescriptive possession based on that disposition. Although Mr McNaughton’s father had not occupied the part occupied by the Majors, Mr McNaughton argued that the Majors’ occupation of the cottage amounted to civil possession on his father’s behalf.

On the other hand, the Majors argued that, although there would have been civil possession of the property if they had occupied it under a lease from Mr McNaughton’s father, they had not done so and had been given possession of the property by Mr McNaughton’s mother on the basis she believed it was not owned by Mr McNaughton and would be returned to the Crown if left vacant. Although they paid £15 per week to Mr McNaughton in order to occupy the premises, they said that it was a contribution towards insurance costs and was not rent.

Decision
Lord Jones granted decree for reduction of the a non domino disposition in favour of the Majors and put the case out by order for further discussion as to the granting of a decree requiring the Majors to vacate the cottage.

In coming to this conclusion Lord Jones accepted the Majors’ evidence to the effect that they did not acknowledge Mr McNaughton’s ownership of the property but rejected their argument that civil possession could only be established if it could be proved that they had occupied the premises under a lease.  Whether or not there had been a lease in place and whether or not they acknowledged Mr McNaughton’s father’s ownership of the property, the Majors had only been able to occupy the property because Mr McNaughton’s father had allowed them to do so in return for a weekly payment. If he had withdrawn his permission, they would have had to move out of the property. As such, Lord Jones found that the Major’s possession derived from Mr McNaughton’s father’s right to the property meaning that Mr McNaughton’s father was able to establish civil possession of the property through the Major’s physical possession allowing him to acquire title to the property.

The full judgement is available from Scottish Courts here.

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[1] A disposition from someone who is not the owner which, after 10 years prescriptive possession, can give good title to the property.

[2] Abolition of Feudal Tenure etc. (Scotland) Act 2000.

[3] If it had been clear from the deed that the title conveyed had only been to the superiority (I.e. it had made it clear that the dominium utile was not included) then the title would not have been sufficient in its terms (under s1(1)(b) of the Prescription and Limitation (Scotland) Act 1973) to found the prescriptive possession necessary to acquire title to the dominium utile.