Scottish Court of Session Decisions

By lease dated 18 and 25 November 1891 and recorded in the Division of the General Register of Sasines for the County of Lanark on 13 May 1895 ("the Lease") the Trustee of the deceased Lord Belhaven and Stenton let to William Paton and his heirs and assignees a piece of ground at Wishaw extending to two roods imperial measure ("the subjects"). The term of the Lease was 999 years from Lammas 1891. The obligations of the lessee included obligations to have upon the ground buildings to a certain value, to fence and enclose the ground and to maintain such buildings and fences.

By Assignation dated 3 February 1970 and recorded in the Division of the General Register of Sasines for the County of Lanark on 3 March 1970, the defenders acquired title to the lessee's interest under the Lease. The defenders and Rombus Materials Ltd ("Rombus") are members of the same group of companies; their ultimate parent company is RMC Group plc. All the defenders' interests in land have been held in trust for and on behalf of Rombus since at least 21 December 1990.

The pursuers are the persons in right to the dominium utile of the subjects. They acquired that right by disposition in their favour dated 26 May 1997 by Michael David Kaye and Others whose title to that interest had been registered in the Land Register of Scotland from January 1985. The pursuers' interest as proprietor was registered in the Land Register with effect from 18 April 1997. The Lease is referred to in the proprietorship section of the relative title sheet.

On 7 August 1990 Rombus executed a disposition in the following terms:-

A description of the ground then follows. The disposition then bears that the subjects are those shown on a non-taxative plan annexed and "comprise the subjects more particularly described in and let by [the Lease]...". That disposition was presented on behalf of Rombus for registration in the Land Register. It was there with effect from 26 November 1990 registered by the Keeper under exclusion of indemnity. The relative proprietorship section for some time thereafter contained a double entry under the heading "Proprietor", namely, (1) that of Michael David Kaye and others and (2) that of Rombus, with a Note in the following terms:-

On 28 November 1997 solicitors acting on behalf of Rombus lodged an application with the Keeper to rectify the Register by removing the a non domino disposition in its favour. A Land Certificate subsequently issued discloses that the pursuers are the only person with a proprietorship interest in the subjects.

In the earlier part of 1997 certain correspondence had passed. That included a letter dated 21 July 1997 from the pursuers to solicitors for Rombus which contained the following paragraph:-

That correspondence also included a letter dated 12 November 1997 from the pursuers' solicitors to the solicitors for Rombus (and for the defenders) which included the following passage:-

In this action the pursuers conclude against the defenders for declarator that the Lease "has been renounced by the Defenders and is at an end". That conclusion is supported by a plea in the following terms:-

The averments made by the pursuers on which that plea is rested contain two principal elements, namely, (1) the registration by Rombus in 1990 of the a non domino disposition (as narrated above and as to which there is no material factual dispute) and (2) the physical arrangements on the ground (as to which there are certain differences of fact). As the defenders challenge the relevancy of the pursuers' averments in respect of both elements, it is appropriate also to summarise the averments in relation to element (2).

The pursuers aver that at some time prior to 1997 the defenders ceased to occupy the subjects and, although called upon in the letter of 12 November 1997 to resume occupation, have not done so. They have, it is averred, removed all plant and equipment; the house and other buildings referred to in the Lease no longer exist; the whole boundary fence enclosing the subjects has been removed without the pursuers' consent and has not been re-erected. Those averments are denied by the defenders, save for an admission by them that the house referred to in the Lease no longer exists. The defenders aver that, having installed plant and other structures on the subjects in or about 1970, they operated those until February 1996 when extensive damage was caused by fire (apparently the result of vandalism); thereafter certain items of plant were removed but others remained and remain; they have plans to re-establish a concrete manufacturing plant on the subjects which they maintain they have taken steps to render secure. The subjects, they say, remain in their name on the Valuation Roll.

Counsel were agreed that for the purposes of the issues arising at debate the defenders and Rombus could properly be treated as the same entity.

Mr Currie for the defenders submitted that the pursuers' case, in both its elements, was fundamentally irrelevant. Neither registration of the a non domino disposition nor the alleged breaches of obligation by the tenant in respect of physical possession, being in each case unilateral, could of themselves constitute renunciation of the Lease. Renunciation as a mode of termination required the consent, express or implied, of both parties. The registration of the a non domino title by the tenants did not give rise to any presumption or inference of consent by the landlords. Moreover, the position adopted on behalf of the landlords in the letter of 12 November 1997 (whereby they insisted on performance of the tenants' obligations) was inconsistent with any relevant consent by them to renunciation. Mr Currie cited Erskine, Institute, II.6.44; Stair, Institutions, II.9.36 and Rankine on Leases (3rd edition) pages 522-5. Reference was also made to Craig - Ius Feudale II.10.7, the Stair Encyclopaedia volume 13 para 438 and McDonald - Registration of Title Manual pages 18-19. In any event, if registration of the a non domino title did give rise to a presumption that the tenants' interest had come to an end, that interest had revived on rectification to remove the relative entry in the proprietorship sheet (Erskine - op cit). The pursuers' averments in relation to alleged breaches of obligation by the tenants were irrelevant to instruct any implied renunciation; the pursuers, far from accepting such breaches, had insisted on those being remedied. On the pursuers' pleadings (which were directed solely to renunciation) no question arose as to any effect by reason of the operation of confusio. Mr Currie also referred to Stair Encyclopaedia volume 18 para 601 and to Halliday - Conveyancing Law and Practice (2nd edition) paras 39-01 and 39-53. The action, he submitted, should be dismissed.

Mr Tyre for the pursuers submitted that, in respect of the pursuers' case in so far as based on the registration of the a non domino title, the defences were irrelevant and decree should be granted de plano. Alternatively, a proof before answer should be allowed in respect of the pursuers' averments of physical abandonment of the subjects by the defenders. The pursuers' case on the first of those elements was founded on implied renunciation. In that respect it was submitted (1) that, where a tenant acquired a heritable title to subjects of let, the lease was, by virtue of his acceptance of that higher title, impliedly renounced by him, (2) that where, but only where, the heritable title had been granted by the former landlord and was subsequently reduced by that person or a successor to his interest, the lease revived but (3) that, where the heritable title had not been granted by the former landlord, reduction of that title did not give rise to revival of the lease. The rationale for revival of the lease was the operation of the principle of personal bar (Rankine on Leases (3rd edition) page 525). This had no application to circumstances in which a tenant had clandestinely sought to appropriate to itself a feudal title. By doing so, the tenant relinquished the relationship of tenancy even though the title he obtained was open to annulment by reduction or rectification. This approach was consistent with Stair and Erskine. Mr Tyre also referred to Campbell v McKinnon (1867) 5 Macph. 636 and McDougal v Campbell (1566) M 3082. Renunciation, it was submitted, was a unilateral act, though it was acknowledged that to have the effect of terminating the lease acceptance by the landlord, express or implied, was required. It was unnecessary that such acceptance should immediately follow the renunciation, especially where the latter had been a clandestine act; it remained open to the landlord to accept the renunciation at any time. The pursuers had adopted such an attitude of acceptance by at latest their letter of 21 July 1997. It was irrelevant that at a later stage their agents had written insisting that the lease obligations be performed. The pursuers' averments in respect of physical abandonment by the defenders were relevant for inquiry.

In my view the pursuers' action, in so far as based on the registration in 1990 on the application of Rombus of the proprietorship title in its favour, is irrelevant. In discussing how leases (tacks) may come to an end Stair, Institutions, II.9.36 observes:-

Erskine, Institute, II.6.44 dealing with the same subject observes:-

The passage from Erskine makes it plain that determination of a lease by the mode of renunciation requires mutual consent. The passage from Stair is consistent with that proposition, which in any event accords with the general principle that a party to a bilateral contract cannot at will bring that relationship to an end. As regards terminology, although "renunciation" in a narrow sense may be used to describe the act or conduct of the tenant in surrendering his interest, termination by renunciation occurs only on acceptance, express or implied, by the landlord of such surrender.

A presumption (or inference) of mutual consent may arise where the parties agree to the substitution for their original landlord/tenant relationship of a new lease or of a legal state of affairs incompatible with the continued subsistence of the relationship of landlord and tenant. The latter may arise where, by mutual consent of the erstwhile landlord and tenant, the latter acquires the former's heritable right. Termination by that mechanism assumes that the landlord accedes to the acquisition by the tenant of the heritable right (ordinarily for consideration) and that the tenant effectually acquires that heritable right in place of his interest under the lease. Where the latter assumption is subsequently found to be invalid, the tenant's interest under the lease revives.

In the present case there is no suggestion that the pursuers or their predecessors in title at any stage acceded to the acquisition of their heritable right by the defenders or by Rombus; accordingly, termination of the lease by a mutually agreed acquisition by the tenant of that right was never a live prospect. Nor, in my view, is it a proper inference that the defenders (or Rombus) offered or are to be treated as having offered to surrender to the landlords the tenants' interest under this 999 year lease. The act of Rombus in applying in 1990 for the registration of a proprietorship interest in its name in respect of the subjects was no doubt with a view to acquiring, by the operation of positive prescription, an unchallengable title to that interest. However, neither that act nor the consequent registration implies, in my view, a surrender or offer of surrender of the tenants' interest such that the landlords on discovering such registration were entitled forthwith to hold the lease to be at an end. The recording or registration of an a non domino title is a mechanism not uncommonly used both innocently and properly where difficulties or ambiguities exist in a progress of titles. It does not, in my view, import the surrender of other rights in respect of the subjects, albeit the existence of an alternative basis for possession (as under a lease) may make it difficult to establish for the purposes of positive prescription that the possession is founded on the proprietorial title. Although there is no suggestion here that Rombus or the defenders were faced with a genuine problem in relation to a progress of titles, I am unable to accept Mr Tyre's contention that by the registration of the a non domino title the defenders ipso facto relinquished the relationship of tenants to the original landlords and took in substitution the imperfect heritable title.

In these circumstances there did not, in my view, exist in July 1997 circumstances in which it was open to the pursuers, by virtue of the entry of Rombus' name in the proprietorship section of the relative title sheet, thereby to bring the lease, by the mode of renunciation, to an end. The letter of 21 July 1997 is, in any event, not apt in my view to constitute intimation of acceptance by the landlords of an implied renunciation by the tenants. It speaks of the tenants having "abandoned" the lease and imports that such abandonment, not any present acceptance by the landlords of a renunciation, was the basis for the position adopted by them. Moreover, this letter is properly to be read in the context of the other correspondence, so far as produced, passing between the parties and their solicitors in 1997. The letter of 12 November 1997 is wholly inconsistent with the pursuers regarding the lease as having previously been brought to an end by renunciation and acceptance.

Rankine in discussing implied renunciation refers to confusio as "another and kindred mode of extinguishing a lease" (pages 524-5). However, confusio is, in my view, properly a principle of the law of property, namely, that where lesser rights in property, previously held by a person other than the proprietor of that property, come into the same hands those lesser rights are, at least in some circumstances, extinguished. It is not a principle which appears necessarily to depend, as does renunciation, on mutual consent. It is accordingly unnecessary for the purposes of this action to discuss the possible application of confusio where, for example, a tenant, by the registration of a proprietorial title to the subjects, acquires under Section 3 of the Land Registration (Scotland) Act 1979 a real right to them, under exclusion of indemnity in terms of Section 12(2) of the Act.

In these circumstances it is unnecessary to decide whether, if the Lease was extinguished by renunciation and acceptance in or by July 1997, it revived on the rectification of the Register later that year. It is settled that, at least in certain circumstances, a lease does revive where the heritable right acquired by the tenant is subsequently reduced. Rankine (at page 525), referring to the situation where the reduction is by the lessor or someone in his right, suggests that revival is "probably on the ground of personal bar in the one case and representation in the other". Mr Tyre, relying on that tentatively expressed opinion, submitted that there was no place for revival where the heritable right had been obtained by the tenant at his own hand. The authorities referred to by Rankine do not, however, appear to restrict the circumstances in which revival may operate to those based on personal bar or any similar doctrine. Erskine speaks generally of the implied renunciation of the first tack being only provisional. Neither Craig nor Stair suggests a limitation to circumstances where personal bar or the like would operate. The principle appears to be that the implied renunciation proceeds on the assumption that the higher right acquired is good, the lesser right reviving should that assumption turn out to be unsound. Accordingly, had I concluded that there had been an extinction of the Lease by renunciation and acceptance, I should have held that on rectification of the Register the Lease had revived.

There was limited discussion at the debate of the pursuers' averments in so far as directed to the physical arrangements on the ground. I am, however, satisfied that these are irrelevant to instruct any case of renunciation - the only basis on which the present action is presented. There is no suggestion that the pursuers or their predecessors resumed actual possession of the subjects. The pursuers' position in respect of the failures complained of was clearly expressed in their agents' letter of 12 November 1997. Far from treating these as a renunciation and accepting a surrender of the Lease on that basis the pursuers insisted on their performance.

In the whole circumstances I shall sustain the defenders' third plea-in-law and dismiss the action.