Introduction

The case of PHG Developments Scot Limited (In Liquidation) v Lothian Amusements Limited ([2020] CSOH 58) is a significant judicial decision from the Scottish Court of Session that establishes a precedent concerning the rectification of deeds under the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985. This commentary delves into the nuances of the case, exploring the background, judicial reasoning, and its broader implications on property law in Scotland.

Summary of the Judgment

PHG Developments Scot Limited, a company under liquidation, petitioned the Court of Session to rectify a Deed of Conditions dated December 3, 2014, related to the development of 55 residential apartments at the Kilns site in Portobello. The rectification aimed to align the deed with the original intentions outlined in the Car Parking Missives of 2013 between PHG’s predecessor, KDL, and Lothian Amusements Limited (LAL). LAL contested the petition, citing protections under section 8(3A) of the 1985 Act. Lord Tyre presided over the case, ultimately allowing the rectification without requiring explicit consent from the apartment owners, thereby setting a precedent for similar future cases.

Analysis

Precedents Cited

The judgment references several key cases and legal reforms:

• Bank of Ireland v Bass Brewers: Emphasized that rectification under section 8(1)(b) hinges on whether the document accurately reflects the grantor's intention.
• Nickson v HMRC: Reinforced the distinction between failing to achieve the intended legal result versus failing to secure ancillary rights.
• Sheltered Housing Management Ltd v Cairns: Demonstrated the application of rectification in deeds that give effect to prior agreements.

These precedents collectively informed the court's approach to interpreting the 1985 Act's provisions on rectification, particularly distinguishing between unilateral and bilateral deeds and the necessity of aligning the deed's content with the grantor's original intent.

Legal Reasoning

Lord Tyre meticulously dissected the applicability of section 8(1)(b), which allows for the rectification of a document to reflect the grantor’s intention if it fails to do so accurately. The core issues revolved around:

• Unilateral vs. Bilateral Deeds: The Deed of Conditions was identified as unilateral in both form and substance, as it did not stem from a prior agreement between PHG and any other party.
• Intent vs. Expression: PHG's primary argument was that the deed did not accurately represent its intended allocation of rights concerning the car parking spaces and the common ownership of the boundary wall.
• Section 8(3A) Applicability: LAL argued that rectifying the deed without the apartment owners' consent would contravene section 8(3A). However, Lord Tyre held that this subsection was irrelevant in the present context as it pertains to rectifying ancillary documents rather than the original deed itself.

The court concluded that PHG sufficiently demonstrated that the Deed of Conditions did not encapsulate its original intentions, warranting rectification. The judgment underscored that rectification under section 8(1)(b) does not require consent from third parties, provided the applicant convincingly establishes that the document fails to reflect the grantor's true intentions.

Impact

This judgment has profound implications for property developers and legal practitioners in Scotland:

• Clarity in Document Drafting: It underscores the importance of precise drafting to ensure that legal documents accurately encapsulate the grantor's intentions.
• Rectification Processes: Establishes that rectification can be sought without the explicit consent of third parties, provided the applicant meets the stringent requirements of demonstrating misrepresentation of intent.
• Protection of Original Intent: Reinforces the judiciary's role in upholding the true intentions behind contractual agreements, even against established legal protections like those in section 8(3A).

Future cases involving the rectification of deeds will likely reference this judgment when assessing the balance between correcting contractual discrepancies and safeguarding third-party rights.

Complex Concepts Simplified

Rectification under Section 8(1)(b)

Definition: Rectification is a legal remedy that allows a court to correct a written document so that it truly reflects the parties' original intentions.

Section 8(1)(b) of the 1985 Act: Specifically pertains to unilateral documents and allows rectification if the document fails to accurately express the grantor's intention at the time of execution.

Servitude Rights

Servitude: A legal right to use another person's land for a specific purpose. In this case, rights of access and parking were central to the dispute.

Deed of Conditions

A legal document that outlines the rights and obligations of property owners within a development. It typically governs common areas and shared facilities.

Conclusion

The judgment in PHG Developments v Lothian Amusements Limited serves as a pivotal reference in Scottish property law, particularly concerning the rectification of unilateral deeds. It clarifies the boundaries within which developers can seek to align legal documents with their original intentions, even in the face of established protections for third parties. This decision emphasizes the judiciary's commitment to ensuring that legal documents faithfully represent the true intentions of their creators, thereby promoting fairness and accuracy in contractual relationships.