Property Litigation Quarterly Case Law Catch-up
As the days shorten and the mad rush to resolve disputes before the winter holidays starts to kick in, it seems a good opportunity to embark on an examination of a selection of judgments concerning three interesting property litigation issues coming out of the courts this autumn.
Can a specified route in a servitude of access be varied by acquiescence?
In an appeal to the Sheriff Appeal Court in the case of AC & IC Fraser & Son Ltd v Gordon Munro, Sheriff Principal Pyle issued his decision at the beginning of September tackling the question of whether one parties action or inaction could be said to vary a servitude contained within the titles to a property.
The facts were that the defender's predecessor in title had disponed an area of land but reserved a servitude right of vehicular and pedestrian access over part of that land. In reality, however, the defender's predecessor and the defender used a different route to that specified in the disposition albeit with the same terminus. In addition, the defender and his wife had requested and were granted pedestrian access across a different area of the land.
At first instance, after proof, the sheriff held that positive prescription had not been established for the alternative access route, nor did the doctrine of acquiescence apply. He also decided that the additional pedestrian access route was one that had been in existence before the sale in 1996, and accordingly it had subsisted for a period in excess of the 20-year prescriptive period. The defender appealed on the basis that, upon the facts, the Sheriff ought to have held in fact and law that the variation of the vehicular access right had taken place due to the knowledge and acquiescence of the pursuer. The pursuer, meanwhile, submitted that the pedestrian access was only allowed by sentiment and "good neighbourliness" rather than as of right and the Sheriff ought not to have determined that such a servitude had been created by prescription.
Sheriff Principal Pyle, delivering the opinion of the court, said of the defender’s appeal: “A plea of personal bar by way of acquiescence arises where one party fails to comply with an obligation in the contract and the other party does not object. The inaction by both parties creates in effect a variation of the contract. It follows, therefore, that to succeed the defender required to establish that the contract as contained in the 1996 disposition was varied by the inaction of the pursuer’s predecessor in title in the face of the actings of the defender to create and use an alternative access route.” The Sheriff Principal held that it does not automatically follow that simply by the action and inaction of the parties that acquiescence varied the contract and therefore varied the rights and obligations of singular successors as contained in the disposition. The Sheriff Principal accordingly refused the Defender's appeal.
With regard to the pedestrian right of access, the Sheriff Principal considered that the Sheriff had erred in law in taking into account the period of time when access was allowed simply by way of permission and that only a period when access was taken as of right ought to be taken into account. The Sheriff therefore upheld the pursuer's appeal.
What is the validity of notices where statutory or contractual procedures have not been complied with?
There have been a couple of cases in quick succession which have considered this issue and are worthy of a closer look.
The first case is that of A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd which was an appeal to the UK Supreme Court direct from the English Upper Tribunal (Lands Chamber). This case concerned the validity of a notice where a copy of that notice had not been served upon every party it required to be served upon in terms of the relevant legislation. The FTT considered, in the original decision, it was bound by the Court of Appeal decision in Elim Court RTM Co Limited v. Avon Freeholders Limited namely that trivial defects in notice procedure should not invalidate a claim and accordingly the FTT determined that the failure to serve a notice on A1 Properties (being one of the parties on which a notice required to be sent) did not invalidate the notice. The Upper Tribunal upheld that decision as did the Supreme Court.
In considering this issue the Supreme Court considered that when faced with cases such as this the first question is to review whether Parliament intended that an act done in breach of the provision should invalidate the notice, with an emphasis on the consequences of non-compliance. In particular the Supreme Court held that t was necessary in each case to focus on:
1) The purpose served by the statutory requirement as assessed in light of a detailed analysis of the particular piece of legislation; and
2) The specific facts of the case having regard to whether any prejudice might be caused if the validity of the statutory process is affirmed even though there has been a breach of a procedural requirement.
There then followed the case of Zdravka Ivanova Atesheva v Halifax Management Limited which was an appeal to the Upper Tribunal. In this case the Upper Tribunal assessed whether a tenant’s notice to the First Tier Tribunal (FTT) looking to challenge a rental increase proposed by her landlord was valid despite not being submitted in the form prescribed by The Housing Act 1988 – the tenant having used email instead of an online form.
The Upper Tribunal adopted the approach of the UKSC in A1 Properties and found that the statutory scheme, taking into account the construction of the relevant sections relating to method of service, would not have intended a failure to use the prescribed form to invalidate the tenant’s notice.
In reaching this decision they weighed the potential prejudice to each party. This is an interesting decision as in Scotland there is a plethora of contractual and statutory provisions as to the content, form and method of service of notices. For example, where certain notices such as the old Form AT6 required to be served by Recorded Delivery or Sheriff Officer the Tribunal has held that such a notice served by email was invalid. Similarly, in terms of contractual notice provisions the effect of non-compliance with these formalities will depend upon whether the specific formality amounts to an absolute condition for the effective exercise of that notice or not. The well-known principle established in Mannai Investment Co Ltd v Eagle Star Life Assurance continues to apply where the Court gave the now well-known example of an absolute condition: ‘if the clause requires notice to be given on pink paper, the notice will not be effectively exercised if given on blue paper regardless of how clear the intention to exercise might be.’ On the other hand, if the requirement falls short of an absolute condition, Mannai, and these two more recent judgments, provide that whether a notice with minor defects is invalidated by those mistakes depends upon whether the ‘reasonable recipient’ of the notice would be misled by the error and what the purpose of the relevant contractual or statutory provision was.
Judicial challenges to adjudicator's decisions.
Whilst the case of ATG Services (Scotland) Ltd v Ogilvie Construction Ltd considered the validity of an adjudicator's decision in a construction dispute, it is of wider significance particularly to those in the property sector as it considered the extent and appropriateness of a court's interference with an adjudicator's decision.
On a related theme to the issue considered above as to validity of notices, this particular adjudication considered whether, in Scots Law, a course of conduct adopted by parties was sufficient to override an express contractual provision as to the appropriate manner of service of a contractual notice.
In this case the contract stipulated that any notice (including payment applications) had to be served to two specific email addresses. The payment application in question was served to a different email address albeit one that the parties had been using for communicating. No pay less notice was served by the employer and the adjudicator considered that the conduct of the parties had been sufficient to entitle the contractor to rely upon the payment application sent to the other email address and accordingly found in favour of the contractor.
The adjudicator came to this decision relying on a specific English authority referred to by the pursuer. The defender did not, in the adjudication, expressly set out why that authority ought not to be relied upon.
Following the adjudication, the defender refused to pay citing a breach of natural justice on the part of the adjudicator and the pursuer raised the present proceedings to secure enforcement of the adjudicator's award.
Lord Sandison was quite forthright in his views and held that "the defence to this action is entirely without merit." The Court held that it was perfectly settled that an adjudicator's decision ought to be upheld unless he had gone off on a "frolic of his own" so as to upset the principles of natural justice. In the present case, both parties accepted that a live question in the adjudication was whether the defender’s behaviour in having accepted and dealt with earlier payment applications from the pursuer which had not been served by the means prescribed by the contract resulted in its not being entitled in point of law to insist on those means having been used for the application in question.
English legal authority had been referred to by the pursuer despite it being accepted that Scots law applied. The defender failed to make any specific submission as to why this authority ought not to be followed. The question was therefore appropriately considered by the adjudicator.
Lord Sandison held that the nature of the legal principle being asserted as applicable by the pursuer was entirely clear. It was open to the defender to submit whatever it chose in response to that assertion, for example it could have denied the existence of such a legal principle, or argued that any such principle was inapplicable to the facts of the case etc. Instead, the defender simply contented itself with "the somewhat delphic pronouncement", as described by Lord Sandison, that the pursuer had failed to evidence any principle of Scots law upon which it is seeking to rely in relation to its submissions on course of conduct.
Lord Sandison stressed in his judgment it is not part of the function of the Court to act as a general appeal tribunal in respect of an adjudicator’s decision. If the issue in question was a live one and both parties were given ample opportunity to make representations on that issue and the adjudicator decided the issue by applying the legal principle claimed to be applicable by the party or parties it cannot be said that the adjudicator went off on a frolic of his own so as to breach natural justice and the court had no place to interfere.
Conclusion:
As is evident from these cases, property litigation disputes are often highly fact sensitive and a great deal of time and expense can be avoided by taking considered legal advice at an early juncture. Fortunately, our experienced team are on hand to advise and assist across a broad spectrum of disputes in what can be a complex and fast moving area of law.
