This is a Sheriff court case considering the enforcement of standard securities (in security for loans of over £1.8m) held over 6 properties in Edinburgh.

Background
The facilities lasted for 5 years and, when they expired, Promontoria[1] demanded payment, the debtors defaulted and Promontoria called up the securities. The debtors did not challenge the calling up procedure. However, they argued that, when the loans were being negotiated, a representative of the Bank had promised that their loan facility would be extended beyond 5 years and that the securities would not be enforced at the end of the 5 year term.

The debtors referred to a meeting during the negotiations at which they had indicated to the Bank’s representative that they were not happy with the proposed 5 year term and that the term of the facility should instead be 20 years. They said that they had been told that the 5 year term was a standard clause in the contract, but that the clause would not be enforced at the end of the term and that the facility would be renewed. The debtors also said that the Bank’s representative had said:

 “Imagine the public outcry if Clydesdale Bank ever pulled in its business loans, it will never happen”.

As such the debtors argued that the Bank had made a binding promise to extend the facility at the end of the 5 year term.

Decision
The Sheriff rejected the debtors’ arguments. After considering previous authorities[2] and noting that a binding promise can only be created by clear and unambiguous words, he found that the debtors had failed to demonstrate the bank’s unambiguous intention to be legally bound or that a reasonable observer in the context would have understood that the Bank had made a binding promise.

In the first place, although the debtors had asserted that they had been told that the facility would be extended beyond 5 years and that the securities would not be enforced at the end of the 5 year term, they had been unable to provide evidence of the precise words used: those words were critical as the court had to consider the words used in the context and determine objectively whether a binding promise had been made.

In the second place, although the debtors had provided evidence of the words used in relation to the representative’s comments on the public outcry that would arise if the Bank pulled in its business loans the sheriff said the following:

“I considered it inherently unlikely that the Bank’s representative would make a promise which destroyed the legal efficacy of the Bank’s securities. Notwithstanding that observation however, in my opinion, the words pled do not indicate a clear and unambiguous intention on the part of the Bank to extend the specific loan facilities beyond 5 years and not to enforce its 6 securities, nor do I consider a reasonable recipient considering the meaning conveyed by the words, who was in the process of executing formal legally binding standard securities over property, in a commercial context, would reasonably believe so. At most, I would characterise the language used and the sentiments conveyed in the words to be no more than an invitation to speculate about public opinion allied to a strong feeling of confidence and optimism, on the part of the maker in June 2007, that the Bank’s then practice in relation to business loans would not alter.”

The full judgement is available from Scottish Courts here.

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[1] The securities were originally granted in favour the Clydesdale Bank and subsequently assigned to Promontoria.

^[2] In particular, Regus (Maxim) Ltd v. Bank of Scotland plc [2013] CSIH 12, 2013 SC 331.

Sheriff court case relating to a standard security granted in favour of Outlook Finance over Harperfield Farm near Lanark.

Background
The standard security was granted by Euan Lindsay in October 2010 as security for a loan of £1,355,000. Euan Lindsay died in June 2011 and his executor continued to make contractual monthly interests payments on the loan until October 2012 but no payments were made after that. Outlook served a calling up notice in September 2014 and sought to recover possession of the property.

The description of the subjects in the standard security contained a description of the subjects by reference to the name of the subjects and by reference to a Sasines title recorded in the Register of Sasines (all of which was accurate). However, it also contained a particular description (i.e. a description identifying the boundaries of the property) of the subjects in a schedule which was incorrect (it had been taken from a prior title but text referring to exceptions from the property had been omitted.). The error was then repeated in the calling up notice.

Arguments
The executor argued that the error in the particular descriptions invalidated the documents and meant that Outlook’s action seeking repossession of the property was incompetent. The executor also argued that Outlook had failed to comply with pre-action requirements[1] requiring the provision of information to the debtor.

Decision
Descriptions
After considering the authorities, the sheriff found that a faulty description of subjects in a standard security will be sufficient so long as what is contained within the descriptions enable the subjects of the security to be correctly identified (after reasonable search and enquiry if necessary) with certainty.

The sheriff said the following:

“I conclude that there is in the standard security an error in that while the subjects were correctly described by reference, owing to a mere clerical error or oversight, part of the full particular description was omitted. So, if one sets aside the particular description, what remains is a fully sufficient description of the subjects, sufficient to accurately identify them without any reasonable doubt. That error has not led to any practical error in identifying the subjects of the standard security which is Harperfield Farm in the standard security. The precise boundaries of those subjects are apparent from the description by reference. The error has led to no confusion about that fact in anyone’s mind, not least, the present defender.”

As such, the sheriff found that both the standard security and the calling up notice were valid despite the errors in the particular description.[2]

Pre-action requirements

In terms of the legislation[3] (before commencing repossession proceedings): “the creditor must provide the debtor with clear information about-

(a) the terms of the standard security;

(b) the amount due to the creditor under the standard security, including any arrears and any charges in respect of late payment or redemption; and

(c) any other obligation under the standard security in respect of which the debtor is in default.”

Outlook argued that it had done this in a letter of 14 December 2014 but the sheriff disagreed. The main problem for Outlook related to the specification of the amount due in the letter. The letter stated that the account balance (and also the account arrears) amounted to £2,884,536.97. However, the letter did not specify how that figure had been arrived at. The sheriff found that the obligation to provide clear information meant that there should be no reasonable doubt as to how the total amount said to be due had been arrived at and that an accounting should be provided showing the principal sum borrowed, the arrears of payments due and also the charges attributable to the default. That had not been done in this case. Although it may have been possible for Mr Lindsay to attempt to work out how the figure had been arrived at, the obligation was on the creditor to provide the clear information, not for the debtor to attempt to work it out.

The full judgement is available from Scottish Courts here.

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[1] In terms of the Conveyancing and Feudal Reform (Scotland) Act 1970 as amended by the Home Owner and Debtor Protection (Scotland) Act 2010. (The pre-action requirements were applicable because part of the property was residential.)

[2] Outlook also sought rectification of the documents (under s 8 and 9 of the Law Reform (Miscellaneous Provisions) Scotland Act 1985). However, although the sheriff found that rectification was not competent in the course of these proceedings, he found it was not necessary as the deeds were valid despite the errors.

[3] Section 24A(2) of the Conveyancing and Feudal Reform (Scotland) Act 1970.

Inner House case considering a dispute as to the existence of a servitude right of access in the title of a property at Coates Crescent in Edinburgh.

Background
Nos. 6 and 7 Coates Crescent had both previously been owned by National Mutual who sold no. 6 in 1994 and no. 7 in 1996. ASA subsequently acquired title to number 6 and Kashmiri subsequently acquired title to no.7.

Although no express grant of servitude had been included in the disposition, ASA argued that when National Mutual had sold no. 6, a servitude right of access (in favour of no.6) had been granted by implication over a car parking area forming part of no.7 (to a garage and further parking area used by the owners of no.6).

Arguments
ASA pointed to the following factors in support of their contention:

1. there were steps and a gate leading from the rear garden of No 6 into the car park at No 7;
2. tenants and sub-tenants at no.6 had used the steps and gate to obtain access from the rear of No 6 across the car parking area of No 7 since at least 1988; and
3. the need for effective fire escapes from no.6 across the disputed area.

As such, ASA argued that, when National Mutual separated the ownership of no.6 from no.7, there was an inference or presumption that National Mutual would have intended that a servitude over the car park would be created as an incident of the conveyance.

Decision
In the sheriff court, the sheriff rejected ASA’s arguments and found that there was no implied servitude, noting that the crucial question to be considered was whether the alleged servitude was reasonably necessary for the enjoyment of no.6. In the sheriff’s view, whilst use of the servitude was convenient, the evidence produced by ASA did not show it to be reasonably necessary for the enjoyment of no.6 (Although there was evidence that occupiers of number 6 preferred to use the disputed access route through the rear of no.7, it was not far from the garage and parking area used by no.6 to the front entrance of no.6 via the street).

The Inner House refused ASA’s appeal stating that the law should be slow in recognising servitudes by implied grant for a number of reasons:

“First, when property is divided, it is always possible to create servitudes by express grant.  If a servitude right is important, it can generally be expected that the matter will be raised in negotiation and that an appropriate clause will be inserted into the disposition.  The question of an implied grant only arises where no express provision has been made. Secondly, claims for implied rights inevitably involve a degree of uncertainty, and if an expansive approach is taken to the creation of such rights there is a risk that a substantial number of dubious or even extravagant claims may be made.  Thirdly, and more importantly, servitude rights are real rights created over heritable property.  In this area of the law certainty has always been regarded as crucial, because of the perpetual existence of such rights.  Fourthly, perhaps the most important factor is that real rights bind the whole world, and will be binding on any future purchaser of the servient property.  Any such purchaser should be able to discover the existence of real rights easily.  Normally this is achieved by express grant and the recording of the relevant deeds in the Land Register.  Implied rights, however, do not appear in the Land Register.  Thus there are strong policy reasons for restricting the recognition of such rights to cases where their existence is reasonably obvious from the surrounding facts and circumstances.  Cases where the right is reasonably necessary for the enjoyment of the dominant tenement can be said to fall into the latter category.”

In this case, although ASA had been able to show substantial use[1] of the route, they had been unable to show that that the alleged servitude was reasonably necessary for the convenient and comfortable enjoyment of no.6.

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] But not for a sufficient period for a servitude to be created by prescription. (ASA also attempted to argue that, because the reason they were not able to rely on prescription for creation of the servitude was that the properties had been in common ownership until 1996, their application for a servitude by implication should be looked on favourably. However, the court found that it had to apply the law relating to implied servitudes on the evidence available.)

Sheriff court case considering the existence of a servitude right of parking.

Johnson, Thomson and Thomson owned an area of land in Rutherglen (part of the Cuningar Loop) which was used as a residential site for showmans’ caravans. They sought declarator that they had a servitude right of parking over a narrow strip of vacant ground owned by T G & V Properties Limited. JT&T argued that the right had been created by prescription as they and their tenants had parked vehicles on the strip openly, peaceably and without judicial interruption, for over 20 years.

The case raised the following preliminary questions for the court:

1. whether Scots law recognises a “free-standing” servitude right of vehicular parking (i.e. an independent right which is not merely ancillary/secondary to a primary right of vehicular access); and
2. whether such a right (which could be unlimited as to the number and type of vehicles to be parked there, and potentially covering the whole of the burdened property at all times) is repugnant[1] with ownership of the servient tenement.

Free standing right of parking?
After considering the authorities, the sheriff found that Scots law does recognise a free-standing servitude of parking. Although servitudes created by prescription[2] require to be “known to the law” (there is some times said to be a “fixed list” of servitudes), that requirement has some flexibility to deal with changing circumstances and modern conditions. As such, servitudes rights can be acceptable where they are “similar in nature” to existing known servitudes. The sheriff considered Moncrieff v Jamieson[3], in which it was found that a servitude right of vehicular parking could exist as ancillary to a servitude of access. The sheriff noted that, although it was not the point the case decided, the judgements had indicated in passing that a free-standing right of parking could exist and the sheriff could think of no compelling reason why a right of parking should be confined to an ancillary status:

“In summary, while I acknowledge that Moncrieff does not represent a strictly binding judicial recognition of the existence of a free-standing servitude right, in my judgment the debate on this narrow issue is ended for all practical purposes by the overwhelming current of eminent obiter dicta in that case.  It is futile to stand Canute-like against it.  From Moncrieff, it is but a short skip in logic to conclude, by analogy with the ancillary right recognised in that case, that an independent free-standing servitude right is, at least, similar in nature thereto.”

Repugnant with ownership?
T G & V and the other defenders argued that the alleged servitude was repugnant with their ownership of the servient land because the exercise of the right could result in the entire area of the servient tenement being covered by vehicles, every day and all day, thus excluding them from any practical or realistic enjoyment or use of their land. However, the sheriff took the view that the repugnancy issue was not engaged in this case and referred to the judgements in Moncrieff which pointed out that many well known servitudes involve structures being erected or objects being placed on the servient land. The sheriff pointed to Lord Stott’s test in Moncrieff which asks whether the servient owner retains “possession and control” of the servient land”:

“For my own part, I see much force in Lord Scott’s reasoned articulation of the repugnancy principle.  A servitude right of parking may well substantially restrict the rights of the owner of the servient tenement and the uses to which, from time to time, he can put the surface of the land, but his rights as proprietor are not sterilised.  He can build over the servient tenement, he can build under it, he can advertise on hoardings around it, or otherwise utilise the boundary walls.  Indeed, he can park on it himself, or use it for any other purpose, provided he does not interfere to any material extent with the reasonable exercise of the servitude right by the dominant proprietor.  The servient proprietor may not have physical occupation of the surface of the land when the servitude right is being exercised, but he remains the owner of the land, he remains in control of it, he remains in (legal) possession of it, and he is at liberty to exploit its residual uses.”

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] i.e. so restrictive that the value of ownership would be lost. Servitudes which are repugnant with ownership are not permitted in terms of s76(2) of the Title Conditions (Scotland) Act 2003.

[2] Servitude rights constituted by express written grant no longer require to be of a known type as a result of section 76(1) of the Title Conditions (Scotland) Act 2003.

[3] Moncrieff v Jamieson 2008 SC (HL) 1.

Background
Inner House case concerning an alleged contract relating to the purchase of a local authority flat at Partick Bridge Street in Glasgow in 1989.

Mr Khosrowpour claimed that he had loaned £8k to Mrs Mackay for the purchase of her flat and that the parties had entered a contract by which Mrs Mackay would remain in the property for the rest of her life without repaying the loan but that Mrs Mackay would make a will transferring it to Mr Khosrowpour on her death. Mrs Mackay also granted a standard security (securing all sums due and which may become due) in favour of Mr Khosrowpour in 1991.

Although Mr Khosrowpour said that Mrs Mackay had originally granted a will passing the property to him, she later executed a new will directing that her executors pay the sale proceeds of the flat to her children (who included Mr Khosrowpour’s former wife).

Mr Khosrowpour sought damages for breach of contract from Mrs Mackay’s executor

In the Outer House it was found that the contract related to heritage and, as such, required formal writing for its constitution. However, Mr Khosrowpour argued that, because of his payment of the funds and Mrs Mackay’s execution of the first will, Mrs Mackay was personally barred from relying on the lack of formalities to resile from the agreement. As such Lord Turnbull found that Mr Khosrowpour had set out a stateable case regarding personal bar and allowed a proof (an evidential hearing) to consider whether it could be established. The executor appealed to the Inner House.

Arguments
The pursuer argued that the rule of rei interventus (where there are important actings by the party seeking to rely on the agreement which are known to and permitted by the other party and which are unequivocally referable to the purported contract) applied. However, in the Inner House the court observed that the actings of the party who relies upon the invalidity of the bargain to escape from it fall under the rule of homologation, not rei interventus and that was the rule that applied to this case.

The consequence of this is that, unlike the rule of rei interventus, there is authority to the effect that homologation does not apply unless actings (in this case accepting the funds and writing the first will) took place at a time when the alleged homologator (in this case, Mrs Mackay) was aware of the right to resile. As such Mrs Mackay’s executor argued that Mr Khosrowpour had produced no evidence that the first will was executed at a time when the deceased knew that it was within her power to resile from the verbal agreement (meaning she could not be personally barred from changing her will). There then followed some discussion as to whether there is a rebuttable presumption that parties are aware of their rights with the onus of proving the opposite resting on the party contradicting the proposition (i.e. whether it should be presumed that Mrs Mackay was aware that the verbal agreement was not binding). However, in the view of the court, there is no presumption albeit that, in certain cases, depending upon the particular circumstances, the courts will not allow a party to rely upon alleged ignorance in the absence of clear proof.

Decision
The Inner House allowed an appeal. The circumstances in this case did not entitle Mr Khosrowpour to the benefit of any presumption that, when executing the first will, Mrs Mackay was to be taken as having been aware that she knew of her right to withdraw from the arrangement. Moreover, the court was not persuaded that Mrs Mackay should have borne responsibility for any ignorance on her part in that regard.  As to the suggestion that Mrs Mackey could have obtained legal advice, the court found:

“As a proposition no doubt that is true, and in a different context might well be significant.  However, this was a family matter, and when a formal legal document was prepared and executed, it directly contradicted the alleged oral bargain.”

The full judgement is available from Scottish Courts here.

Background
Inner 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 the 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.

In the Outer House Lord Doherty agreed with that argument finding that, in the circumstances: (1) it was not reasonable for Northern Rock to rely on the solicitor’s statements without checking them by seeking clarification from the solicitor and/or looking at their file; and (2) that it was not reasonably foreseeable by the solicitor that Northern Rock would rely on the statements without such checks.

Decision
The Inner House allowed an appeal finding that, in the circumstances, it was reasonably foreseeable that Northern Rock would rely on the solicitor’s statements and sign and return the discharges. Consequently the solicitor was to be taken to have assumed responsibility for her statements. The Inner House considered that Lord Doherty had not considered whether it was fair just and reasonable to impose a duty on the solicitor:

“As a consequence of the Lord Ordinary’s approach, he did not go on to consider whether the imposition of a duty of care would be fair, just and reasonable.  The context was, for the reasons I have explained, a background of assumption of responsibility and reasonable foresight of significant economic loss suffered by a bank in a sufficiently proximate relationship with a solicitor who had previously shown herself to be a trustworthy source.  The context was also, importantly, that that solicitor whilst acting outwith her mandate and instructions made a serious error and put in train a series of events which caused the bank to suffer significant loss.  What then of the fact that the loss could have been avoided if, having received the email which ought never to have been written and the attachments which ought never to have been sent, the bank had checked its file?  Does that mean that it would not be fair, just and reasonable to hold the solicitor liable?  I cannot identify any policy reason for doing so.  Nor can I conclude that that fact demonstrates that the solicitor should be relieved of liability.”

The full judgement is available from Scottish Courts here.

This is an Outer House case in which the Scottish Parliamentary Corporate Body sought an order for removal of a group of individuals camped within the grounds of the Scottish Parliament with the stated intension of remaining there until Scotland declares itself an independent country.

Lord Turnbull found that the corporate body was the valid proprietor of the grounds on which the camp was located, that the campers had no lawful right to encroach upon the corporate body’s property and found that arguments made by the campers concerning the impact of the Treaty of Union (leading to the creation of Great Britain) on the provision of the corporate body’s powers by the Scotland Act 1998 had no foundation. Lord Turnbull also rejected arguments based on rights claimed by the campers under The United Nations Declaration on the Rights of Indigenous People of 2007 and, in addition, found that the campers’ occupation of the camp did not fall within rights of access (the “right to roam”) created under the Land Reform (Scotland) Act 2003.

However, Lord Turnbull did find that, as the corporate body is a public body, it is unlawful for it to act in a way which is incompatible with the European Convention for the Protection of Human Rights and Fundamental Freedoms. As such, it was necessary to consider whether granting an order for removal of the campers was compatible with the rights guaranteed by the convention; in particular article 10 (freedom of expression) and article 11 (freedom of assembly and association). Consequently, Lord Turnbull granted a procedural hearing anticipating that it would lead to a further hearing to consider evidence on the proportionality of granting the order removing the camp (i.e. to allow the corporate body’s right to the removal order to be assessed against the campers right to freedom of expression and freedom of assembly and association).

The full judgement is available from Scottish Courts here.

(See decision on human rights issues here.)

Inner House case considering an appeal relating to a section 75 agreement between Elsick Development Company and Aberdeen and Aberdeenshire Strategic Development Planning Authority. EDC wished to construct a development at Elsick (near Stonehaven). The agreement provided for EDC to make payments to a Strategic Transport Fund in terms of non-statutory Supplementary Planning Guidance. EDC had concerns that the planning guidance was invalid and, in terms of the agreement, no contribution was to be paid if the guidance was found to be invalid.

EDC argued before the Inner House (amongst other things) that the Supplementary Planning Guidance was contrary to national planning policy as it failed to comply with the requirement that any planning obligation must relate directly to the development proposed (as is provided for in the Scottish Government Planning Circular “Planning Obligations and Good Neighbour Agreements (Circular 3/2012)).

The court allowed the appeal finding that:

“It is a fundamental principle of planning law that a condition attached to the grant of planning permission, whether contained in a section 75 Agreement or otherwise, must “fairly and reasonably relate to the permitted development” …  This principle is reflected and explained by the Scottish Government Circular (3/2012) …  This makes it clear to planning authorities that an obligation must be “related and proportionate in scale and kind to the development”

 However, the court concluded that the Strategic Transport Fund was designed to pay for transport projects and infrastructure (“interventions”) which were not directly related to the proposed development.

 “The STF, and the requirement in the statutory Supplementary Guidance (SG) to contribute to it, may be regarded as a sound idea in political or general planning terms.  It may be seen as an imaginative idea which allows advanced strategic planning objectives to be achieved in a structured manner, financed by new development.  That does not, however, permit the imposition of an obligation on a developer to contribute to an intervention which is simply not related to the proposed development…  It may be that legislation could authorise the type of contribution envisaged by the [planning authority] …  but it has not yet done so in Scotland.”

 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.