Proven Properties (Scotland) Ltd v Upper Tribunal for Scotland
| Jurisdiction | Scotland |
| Judgment Date | 12 May 2020 |
| Neutral Citation | [2020] CSIH 22 |
| Date | 12 May 2020 |
| Docket Number | No 27 |
| Court | Court of Session (Inner House) |
[2020] CSIH 22
Extra Division
Upper Tribunal for Scotland
Davies v Sumner [1984] 1 WLR 1301; [1984] 3 All ER 831; (1985) 149 JP 110; [1985] RTR 95; 84 LGR 123; 149 JPN 11; 82 LSG 45; (1984) 128 SJ 814; (1985) 4 Tr L 1
Havering London Borough Council v Stevenson [1970] 1 WLR 1375; [1970] 3 All ER 609; [1971] RTR 58; (1970) 114 SJ 664
Macdonald v Pollock [2012] CSIH 12; 2013 SC 22; 2012 SLT 462; [2012] 1 Lloyd's Rep 425
Pepper (Inspector of Taxes) v Hart [1993] AC 593; [1992] 3 WLR 1032; [1993] 1 All ER 42; [1992] STC 898; [1993] ICR 291; [1993] IRLR 33; [1993] RVR 127; 143 NLJ 17; [1992] NPC 154; The Times, 30 November 1992; The Independent, 26 November 1992
R & B Customs Brokers Co Ltd v United Dominions Trust Ltd [1988] 1 WLR 321; [1988] 1 All ER 847; [1988] RTR 134; 85 (11) LSG 42; 132 SJ 300
Stevenson v Rogers [1999] QB 1028; [1999] 2 WLR 1064; [1999] 1 All ER 613; 96 (2) LSG 29; 149 NLJ 16; 143 SJLB 21; The Times, 31 December 1998
Ferguson, PJ, and Govan Law Centre, Property Factors (Scotland) Bill: Policy memorandum (SP Bill 51–PM) (Scottish Parliament, Edinburgh, June 2010), para 2 (Online: www.parliament.scot/S3_Bills/Property%20Factors%20(Scotland)%20Bill/b51s3-introd-pm.pdf (29 May 2020))
Scottish Government, Code of Conduct for Property Factors (DPPAS13181) (Scottish Government, Edinburgh, July 2012), r 9.3.3A (Online: www.gov.scot/publications/property-factors-scotland-act-2011-code-conduct-property-factors/ (30 June 2020))
Scottish Parliament, Standing Orders (3rd ed, Scottish Parliament, Edinburgh, 2007), r 9.3.3A
Heritable property — Property factors — Property developers' management of building containing flats owned by them — Whether property developers engaged as property factors — Whether Upper Tribunal erred in law — Property Factors (Scotland) Act 2011 (asp 8), sec 2(1)
Proven Properties (Scotland) ltd were the subject of a homeowner application to the First-tier Tribunal for Scotland (Housing and Property Chamber) in terms of sec 17 of the Property Factors (Scotland) Act 2011. The FTT determined as a preliminary matter that the appellants were property factors in terms of sec 2 of the 2011 Act (FTS/HPC/PF/17/0323). The appellants appealed against that decision to the Upper Tribunal for Scotland. By decision issued on 30 July 2018, the UT refused the appeal ([2019] UT 12). The appellants appealed to the Court of Session in terms of sec 48 of the 2011 Act.
The Property Factors (Scotland) Act 2011 (asp 8) (‘the 2011 Act’) provides for the registration of property factors, dispute resolution between homeowners and property factors, and connected purposes. Section 2(1) provides for the meaning of “property factor” including “(a) a person who, in the course of that person's business, manages the common parts of land owned by two or more other persons and used to any extent for residential purposes”. Section 9(2)(c) also acknowledges that “homeowners may … decide to manage their properties without appointing a property factor” in accordance with their title deeds.
The appellants carried on business as property developers. In 2007, they erected a building consisting of 15 residential flats in Helensburgh. The appellants sold two of the flats, and were marketing a third flat for sale, but, due to the adverse effects of the recession, decided to let the remaining flats. The appellants initially engaged property factors until 2011, when they took over management of the building themselves. They arranged for servicing of the lift, cleaning of the common hallways and stairs, maintenance of the landscaped area, payment of the electricity account for the common lighting and for any necessary repairs and maintenance of the common parts of the building. The appellants also arranged the common insurance policy for all the flats in the building until the insurance renewal date in 2017. The appellants recovered the share of these costs pertaining to each flat from the homeowner but did not charge any factoring or management fees. A homeowner in the building came to be in dispute with the appellants in respect of a repair, and made an application to the First-tier Tribunal for a determination as to whether the appellants had failed to carry out the property factor's duties and to ensure compliance with the property factor code of conduct in terms of the 2011 Act. The FTT determined that the appellants were property factors, and that decision was upheld by the Upper Tribunal. The appellants appealed.
The appellants argued that they were not property factors within the meaning of sec 2 of the 2011 Act and that any management works had been carried out not in the course of their business but as property owners who decided to manage their properties without appointing a property factor.
Held that: (1) it was clear from the context of the statute as a whole, which was intended to regulate persons who were charging fees for the provision of management services, that homeowners who chose to manage their properties themselves in terms of sec 9(2)(c) of the 2011 Act were not property factors for the purposes of sec 2(1) (paras 13, 24, 34); (2) the phrase “in the course of that person's business” was to be given a restricted meaning and referred to business as property factors only, rather than any form of business carried on by persons who organise work to the common parts of a property (paras 16, 26); (3) the appellants had decided to manage their properties without appointing a property factor, as they were entitled to do in terms of their title deeds, not in the capacity of property factors, but as developers and owners of the majority of the properties in the development and, accordingly, the UT had erred in law (paras 19, 27, 30); and appeal allowed.
The cause called before an Extra Division, comprising Lord Menzies, Lord Drummond Young and Lord Pentland, for a hearing on the summar roll, on 11 February 2020.
At advising, on 12 May 2020—
Lord Menzies—
[1] This appeal concerns the proper interpretation of the Property Factors (Scotland) Act 2011 (asp 8), and in particular whether the appellants fall within the definition of ‘property factor’ provided by sec 2 of that Act.
[2] The appellants carry on business as property developers. In 2007 they erected a building consisting of 15 residential flats. The following agreed background of matters not in dispute was set out by the First-tier Tribunal for Scotland (Housing and Property Chamber) in its decision letter dated 16 February 2018 (it should be noted that in this extract, the present appellants are referred to as ‘the respondents’):
‘The development at Charlotte Court, 37 East Princes Street is a building consisting of fifteen flats which were erected in 2007 by Proven Properties (Scotland) Limited. Marketing of them was adversely affected by the recession. The homeowner purchased Flat 7 which is on the second floor. The respondents decided to let the other units and in 2017 another flat was sold. As at the date of the Hearing the respondents own thirteen of the flats and one is currently being marketed for sale. The flats were factored by B and B Estate Agents and Property Managers (B and B) until 19th November 2011 when the respondents took on the management of the building. The respondents arrange for servicing of the lift, payment of the BT account in respect of the emergency call function of the lift, cleaning of the common hallways and stairs, maintenance of the landscaped area, payment of the electricity account for the common lighting and any necessary repairs and maintenance of the common parts of the building. Until the insurance renewal date in 2017 the respondents arranged the common insurance policy for all the flats in the building including that belonging to the homeowner. The respondents sent various accounts to the homeowner since 2011 in respect of a one fifteenth share of the costs of all the matters previously referred to with the exception of matters pertaining to the lift for which a one thirteenth share of costs was sought. The respondents have never sought to be paid a factoring or management fee by the homeowner in respect of the work it has carried out in managing the building. The respondents no longer arrange property insurance in respect of the homeowner's flat.’
[3] The matter came before the First-tier Tribunal on an application by the owner/occupier (‘the homeowner’) of one of the flats in the development which had been sold by the appellants. The homeowner was in dispute with the appellants regarding a leaking roof, and made an application to the First-tier Tribunal in terms of sec 17 of the 2011 Act for determination of whether the appellants had failed to carry out the property factor's duties and to ensure compliance with the property factor code of conduct. The appellants disputed that they were property factors in terms of the 2011 Act, and the First-tier Tribunal considered this point as a preliminary matter. The tribunal found that the respondents (ie the present appellants) were property factors in terms of the 2011 Act, and that the homeowner's application could proceed to determination on the merits.
[4] The appellants appealed this decision to the Upper Tribunal. In a decision undated, but communicated to the appellants on 30 July 2018, the Upper Tribunal refused this appeal. The appellants have now appealed to this court in terms of sec 48 of the Tribunals (Scotland) Act 2014 (asp 10). The homeowner has taken no part in the appeal to this court.
[5] Section 2 of the 2011 Act provides as follows:
‘Meaning of “property...
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