(first) John Allan Law And Gillian Margaret Law And Legal & General Assurance Society Limited; (second) J A L Fish Limited; (third) Gillian Margaret Law Against Robertson Construction Eastern Limited
| Jurisdiction | Scotland |
| Judge | Lord Doherty |
| Neutral Citation | [2017] CSOH 70 |
| Court | Court of Session |
| Published date | 28 April 2017 |
| Year | 2017 |
| Date | 28 April 2017 |
| Docket Number | CA121/16 |
OUTER HOUSE, COURT OF SESSION
[2017] CSOH 70
CA121/16
OPINION OF LORD DOHERTY
In the cause
(FIRST) JOHN ALLAN LAW and GILLIAN MARGARET LAW and LEGAL & GENERAL ASSURANCE SOCIETY LIMITED as trustees of the JAL Fish Limited Small Self-Administered Pension Scheme; (SECOND) J A L FISH LIMITED; (THIRD) GILLIAN MARGARET LAW
Pursuers
against
ROBERTSON CONSTRUCTION EASTERN LIMITED
Defender
Pursuers: B Malone, solicitor advocate; Brandon Malone & Company
Defender: Burnet; Clyde & Co
28 April 2017
Introduction
[1] The short issue in this Preliminary Proof on the commercial roll is whether an obligation in missives which the pursuers seek to enforce against the defender is an “obligation relating to land” in terms of the Prescription (Scotland) Act 1973 (“the 1973 Act”), Schedule 1, paragraph 2(e). If it is, the obligation is a subsisting one. If it is not, it is common ground that it was extinguished by the short negative prescription before the action was raised.
The Facts
[2] Although the case was set down for a Preliminary Proof, by the time of the Proof there was no material dispute as to the facts. No evidence required to be led. The following matters were either a matter of admission or the subject of agreement in the Joint Minute No 17 of process.
[3] By a missive offer dated 29 April 2008 the defender offered to purchase from the pursuers 34, 36 and 47 South Esplanade West, Torry, Aberdeen (“the Subjects”). In Clause 1 of the offer “the Purchase Price” was defined (Clause 1(c)) as meaning £475,000 excluding VAT; and “the Overage Agreement” was defined “the overage agreement to be entered into by the parties the draft of which is annexed and forms part III of the Schedule.” Clauses 3, 8.1 and 14 of the offer provided:
“3. The Purchase Price in respect of the Subjects will be payable on the Date of Entry when full vacant possession of the Subjects will be given to the Purchaser.
…
8.1 In exchange for payment of the Purchase Price, there will be delivered (a) a validly executed Disposition of the Subjects in favour of the Purchaser … and (b) the duly executed Overage Agreement (in duplicate to allow the parties hereto to retain one copy each).
…
14. The terms and conditions of this offer and all that may follow hereon will remain in full force and effect and binding on both parties, in so far as not implemented, notwithstanding entry having been taken, delivery of the Disposition hereinbefore mentioned and payment of the Purchase Price.”
Part III of the Schedule to the offer contained the terms of the proposed Overage Agreement. For present purposes it is unnecessary to describe its contents at length. It suffices to say that its provisions were detailed and that, if executed, it would have obliged the defender to make a payment to the pursuers in the event of certain types of development consent being obtained and the Subjects being sold. In the event of the compulsory purchase or acquisition of the Subjects by a statutory or other authority the defender would have been bound to pay the pursuers half of the sum by which the relevant compensation or payment exceeded £475,000. By missive letter dated 2 May 2008 the pursuers accepted the defender’s offer.
[4] The transaction settled on 9 May 2008. The defender paid the pursuers the purchase price of £475,000 and a disposition of the Subjects was delivered to it by the pursuers. The defender obtained entry. In Condescendence 10 and 11 the pursuers aver:
“10. The Overage Agreement had not been prepared at this point, and was not executed by either party at that time…
11. Shortly after the Date of Entry, the market for commercial property collapsed due to the banking crisis and the defender did not progress the development of the Subjects…”
Those averments are admitted by the defender.
[5] On 7 August 2013 the defender applied for planning permission for development of the Subjects as offices. In about October 2013 the pursuers’ agents wrote to the defender’s agents claiming a payment in terms of the Overage Agreement. The defender did not accept that it had any obligation to make any payment to the pursuers.
[6] In October 2016 the pursuers raised the present action. The first conclusion of the summons is for specific implement of the defender’s obligation under the missives
“to execute and deliver to the pursuer (sic) a duly executed Overage Agreement in duplicate in the form of the Minute of Agreement (re. Overage) annexed to and forming part III of the Schedule to the offer to purchase dated 29 April 2008…”
Alternatively, failing implement, the second conclusion seeks payment by the defender of £1,025,000. The defender maintains that any obligation to enter into an Overage Agreement has been extinguished by the short negative prescription.
[7] It was common ground that the obligation which the pursuers seek to enforce was not superseded by delivery of the disposition (Contract (Scotland) Act 1997, s. 2).
The Relevant Provisions of the 1973 Act
[8] As at 9 May 2013 (the fifth anniversary of the obligation having become enforceable) the relevant provisions of the 1973 Act provided:
“Section 6.— Extinction of obligations by prescriptive periods of five years.
(1) If, after the appropriate date, an obligation to which this section applies has subsisted for a continuous period of five years—
(a) without any relevant claim having been made in relation to the obligation, and
(b) without the subsistence of the obligation having been relevantly acknowledged,
then as from the expiration of that period the obligation shall be extinguished:
…
(2) Schedule 1 to this Act shall have effect for defining the obligations to which this section applies.
…
15.— Interpretation of Part I.
…
(2) In this Part of this Act, unless the context otherwise requires, any reference to an obligation or to a right includes a reference to the right or, as the case may be, to the obligation (if any), correlative thereto.
…
Schedule 1 OBLIGATIONS AFFECTED BY PRESCRIPTIVE PERIODS OF FIVE YEARS UNDER SECTION 6
1. Subject to paragraph 2 below, section 6 of this Act applies—
(a) to any obligation to pay a sum of money due in respect of a particular period—
(i) by way of interest;
(ii) by way of an instalment of an annuity;
[...] 1
(v) by way of rent or other periodical payment under a lease;
(vi) by way of a periodical payment in respect of the occupancy or use of land, not being an obligation falling within any other provision of this sub-paragraph;
(vii) by way of a periodical payment under a [title condition] 2 , not being an obligation falling within any other provision of this sub-paragraph;
[(aa) to any obligation to pay compensation by virtue of section 2 of the Leasehold Casualties (Scotland) Act 2001 (asp 5);] 3
[(aa) to any obligation to make a compensatory payment (‘compensatory payment’ being construed in accordance with section 8(1) of the Abolition of Feudal Tenure etc. (Scotland) Act 2000 (asp 5), including that section as read with section 56 of that Act);] 4
[(ab) to any obligation arising by virtue of a right–
(i) of reversion under the third proviso to section 2 of the School Sites Act 1841 (4 & 5 Vict. c.38) (or of reversion under that proviso as applied by virtue of any other enactment);] 5
[(ii) to petition for a declaration of forfeiture under section 7 of the Entail Sites Act 1840 (3 & 4 Vict. c.48);] 6
[(ac) to any obligation to pay a sum of money by way of costs to which section 12 of the Tenements (Scotland) Act 2004 (asp 11) applies;] 7
…
(g) to any obligation arising from, or by reason of any breach of, a contract or promise, not being an obligation falling within any other provision of this paragraph.
[Notes
1. Repealed by Abolition of Feudal Tenure etc. (Scotland) Act 2000 asp 5 (Scottish Act) Sch.13(1) para.1 (November 28, 2004: as SSI 2003/456)
2. Words substituted by Title Conditions (Scotland) Act 2003 asp 9 (Scottish Act) Sch.14 para.5(3)(a) (November 28, 2004 being the day appointed by SSI 2003/456 art.2 for the purposes of 2003 asp.9 s.71)
3. Added by Leasehold Casualties (Scotland) Act 2001 asp 5 (Scottish Act) s.4(a) (April 12, 2001)
4. Possible drafting error, para.1(aa) is purportedly inserted but that provision already exists so a second para.1(aa) is inserted by Abolition of Feudal Tenure etc. (Scotland) Act 2000 asp 5 (Scottish Act) Pt 3 s.12(a) (November 28, 2004)
5. Added by Title Conditions (Scotland) Act 2003 asp 9 (Scottish Act) Pt 8 s.88(a) (April 4, 2003: as 2003 asp 9)
6. Added by Title Conditions (Scotland) Act 2003 asp 9 (Scottish Act) Pt 8 s.88(a) (November 28, 2004: as SSI 2003/456)
7. Added by Tenements (Scotland) Act 2004 asp 11 (Scottish Act) s.15(a) (November 28, 2004
...]
2. Notwithstanding anything in the foregoing paragraph, section 6 of this Act does not apply—
…
(e) except as provided in [paragraph 1(a) , (aa) , (ab) or (ac)] 2 of this Schedule, to any obligation relating to land (including an obligation to recognise a servitude);
…
[Notes
…
2. Words substituted by Tenements (Scotland) Act 2004 asp 11 (Scottish Act) s.15(b) (November 28, 2004)].”
Submissions for the Pursuers
[9] Mr Malone submitted that the obligation to enter into the Overage Agreement arose from the missives. It had become enforceable at the date of entry at the latest. It was an “obligation relating to land” (1973 Act, Sched. 1, para 2(e)). The words “any obligation relating to land” were to be given their natural meaning. They were capable of encompassing a large number of obligations, including personal obligations. Some personal obligations in missives could be collateral to the sale of the heritage, but the obligation to enter into the Agreement did not fall into that category. It had been one of the core obligations under the missives, part of the quid pro quo or counterpart for the sale and disposition of the Subjects. It was one of the obligations which were correlative to the grant of the disposition. The main...
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(first) John Allan Law And Gillian Margaret Law And Legal & General Assurance Society Limited As Trustees Of The Jal Fish Limited, (second) J A L Fish Limited, (third) Gillian Margaret Law Against Robertson Construction Eastern Limited
...action having been raised after expiry of the quinquennial prescriptive period. The Lord Ordinary’s decision [6] The Lord Ordinary held ([2017] CSOH 70) that the relevant obligation was personal and collateral, in the latter sense that it did not form part of the purchase price of the land ......
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Law v Robertson Construction Eastern Ltd
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