A lease, or not a lease? That is the question.
The Sheriff Appeal Court has issued its judgment on the question of whether the occupiers of a property were subject to a licence agreement or a private residential tenancy. The case is a lesson in the importance of clear drafting.
The Facts
Jamie and Louisa O’Rourke moved into a residential property to redecorate and carry out renovations on behalf of Kirstin Sherriff, the owner. When the owner tried to recover possession of the property, the occupants refused to move out. They sought to argue that they occupied the property under a private residential tenancy (a type of lease) and not a license as claimed by the owner.
The owner raised an action for recovery of possession in the Sheriff Court, arguing that the contract was a licence and so could be dealt with by the Sheriff Court. The occupiers argued that they were subject to a private residential tenancy, which falls under the jurisdiction of the First-tier Tribunal for Scotland, and offered them more protections.
The Sheriff Court heard evidence and considered the terms of the contract in dispute, before agreeing with the owner that the contract was a license. The occupiers appealed that decision to the Sheriff Appeal Court.
The Decision
The Sheriff Appeal Court highlighted that this dispute was one of contractual interpretation. They concluded that the contract was indeed a license and upheld the decision of the Sheriff Court. The full judgment can be found here.
One of the reasons for the disagreement between the parties was lack of clarity in what the contract actually said. In assessing the construction of the contract, Sheriff Principal Ross said:
“The contract is poorly drafted. It has a number of obvious and careless errors, such as misnumbering. It has drafting inconsistencies, such as referring to purposes where no purposes are set out. The contract contains mainly obligations, not purposes, and any purposes which can be identified require to be teased out of long lists of prohibitions and obligations. Occasionally, words of lease creep in. Some clauses are apparently absurd in the context of a licence. It is riddled with poorly-applied standard terms. The penalty for poor drafting is litigation.”
What does this mean for you?
This case illustrates the crucial importance of clear drafting when entering into contractual relationships. Documents such as leases, licenses, break notices and notices to quit all have legal implications. The cost of getting those contractual documents wrong can be significant, both commercially and financially.
It is a salient reminder in the importance of investing in legal advice at an early stage to ensure your contractual documents are as clear and concise as possible, and do exactly what they need to do.
If you have any queries in relation to your contractual lease documentation, please get in touch with our specialist Property Litigation team.
Property Litigation at MacRoberts
MacRoberts can help with all types of property disputes and propose potential routes for resolution, allowing you to move matters forward efficiently and effectively.
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Please contact us for further information on how we can assist you.
