Upper Tribunal for Scotland rules homeowners cannot retrospectively acquire right to complain to property factor

Dr Brian Lynas and Dr Annette Ferrari appealed to the Upper Tribunal for Scotland against a decision of the First-tier Tribunal for Scotland Housing and Property Chamber that they did not have sufficient title to bring a complaint against the factor, James Gibb Property Management Ltd. An appeal from the Housing and Property Chamber can be heard in the Upper Tribunal by a single Sheriff sitting alone. Sheriff Deutsch heard the appeal.

‘No extraordinary repairs anticipated’

The grounds of appeal were as follows: the appellants had purchased a flat in Bothwell, near Glasgow, concluding missives on 2 July 2015 with a date of entry of 4 September of the same year. In a letter from the respondent’s solicitors dated 3 September 2015 it was stated that “Our records do not show any, extraordinary repairs anticipated under our instruction”.

Some weeks after the date of entry, the appellants were presented with a substantial bill for common repairs to the property, at which point they discovered that the statement made to them by the respondents was false, and thus a breach of Paragraph 2.1 of the Code of Conduct for Property Factors.

Furthermore, the appellants contended that they acquired title to make a complaint on conclusion of the missives, and therefore the respondents had a duty of care towards them and a duty to provide true and accurate information, following on from a well-settled line of authority starting from Hedly Byrne & Co v Heller & Partners Ltd 1964 [AC] 465.

The appellants also submitted as an esto argument that, in the event that they did not acquire title to complain upon conclusion of the missives, they did acquire such title upon learning the full extent of the factor’s misrepresentations, drawing an analogy from section 17 of the Prescription and Limitation (Scotland) Act 1973 where time-barred actions can be extended where it would not be reasonably practical for any pursuer to become aware of the existence of certain facts which would found an action.

No written response was made by the respondents to the appeal, leaving the Upper Tribunal to consider it based on the case papers.

‘Common law has no bearing’

In the Tribunal’s judgment, published only recently, Sheriff Deutsch highlighted that “[t]he right to make an application to the tribunal for a determination that there has been a failure on the part of the property factor rests entirely upon the terms of section 17 of the Property Factors (Scotland) Act 2011 […].The tribunal is a creature of statute which has no common law jurisdiction”. As such, common law matters such as negligent misrepresentation had no bearing here, and the Tribunal’s jurisdiction “cannot be extended by means of analogy with other different statutes”.

As such, the complaint could only be considered in respect of whether or not Paragraph 2.1 of the Code of Conduct had been breached. Section 17 of the 2011 Act requires that the person bringing the complaint be a “homeowner”. Thus, the case came down to “whether, in terms of the 2011 Act, they require to have been homeowners when the alleged breach occurred and if so whether a person with a right under missives falls within the definition of “homeowner”.

Sheriff Deutsch went on to say that “[i]t follows that in relation to any present homeowner a failure of duty owed to a previous homeowner would not be a breach of duty which could ground an application to the Tribunal”. Paragraph 2.1, when read in full context, applies to “current homeowners,” so a breach would only exist if the appellants could be considered homeowners with “only personal rights under missives”.

Examining the meaning of the term “homeowner,” Sheriff Deutsch said, interpreting the 2011 Act, that it was “an owner of residential property or land used to any extent for that purpose. The word “owner” is not defined. […] In its most common and well established use the word signifies a person with a right to control and possess a piece of property. A person who has yet to pay the price for or take possession of a piece of property would not ordinarily be understood to be its owner”.

Turning to Gordon and Wortley’s Land Law, Sheriff Deutsch also gave a more specific definition of “owner” as having the right to exclusive use or enjoyment of the land, including the right to grant that to others, which do not “ordinarily arise under missives and there is no suggestion that they did in the present case”. Thus, the appellants could not be homeowners based on the missives alone.

Turning to the esto argument, Sheriff Deutsch drew on Upper Tribunal precedent, and said “in Shields and Blackley (June 2017) which concerned complaints brought by former homeowners against the factors of properties, which each had owned at the time of the events giving rise to their complaint, the Upper Tribunal held that properly construed section 17 (1) of the 2011 Act required only that the applicant should have been a homeowner at the time of the alleged failure on the part of the property factor. That reasoning does not assist the present appellants. The required nexus between factor and homeowner did not exist at the time of the failure now complained of”. The appeal was therefore refused.

This article was originally published by Mitchell Skilling on Scottish Legal News.