A recent decision from the Outer House of the Court of Session in the case of Malcolm Snowie (and others) v Museum Hall LLP highlights another failed attempt by property purchasers to try to avoid completion.
The Facts
The case concerned Museum Hall in Bridge of Allan, a listed building recently converted into 15 luxury apartments. In 2007/2008, four members of the Snowie family entered into missives with the developer, Museum Hall LLP, to buy six apartments. A deposit was paid for each.
As settlement approached, the Snowies took issue with a clause in the deed of conditions which stated that the apartments must be used "as a private house only" and prohibited the carrying out of "any trade, business or profession" in them. The Snowies raised 6 separate actions in the Court of Session seeking (1) declarator that the clause was unusual and unduly onerous, entitling them to resile (walk away) from the missives, and (2) repayment of the deposit paid for each apartment.
For their part, the developers raised four actions against the individual members of the Snowie family seeking implement of the missives and payment of the balance of the purchase price.
The cases centred on a very narrow point – whether the provisions of the deed of conditions were indeed "unusual and unduly onerous" and therefore constituted a material breach of missives.
The Arguments
The Snowies argued that the wording was extremely restrictive. Read properly, they said, it would prevent professionals from working from home or even taking work home from the office. They also argued that the clause would prevent any of the apartments from being leased, since commercial letting constitutes a "trade or business". This, they said, was inconsistent with the right of ownership: in principle, an owner should be allowed to do what he likes with his own property.
The developer argued that the wording of the clause was far from unusual, and in fact was a standard and commonly used style, found in practice styles used industry-wide. They also argued that the clause would not prohibit the apartments from being leased, because the 'business' of commercial letting is not typically carried out from within the property which is let.
The Decision
In a decision issued by Lord Glennie on 6th August 2010, the court found in favour of the developer. Lord Glennie's view was that an occasional use of the home for work purposes would not breach the deed of conditions. Such provisions are commonplace - particularly for properties which are part of a common development – and their purpose is to prevent the residential amenity of the development from being spoiled. Such residential amenity would not be spoiled by someone bringing work home from the office.
Clearly, the courts take a reasonably pragmatic approach to the interpretation of deeds of conditions/missives. Purchasers wishing to avoid completion on the basis of a highly technical argument should take heed.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.