Clare Kelly

As one of Scotland’s biggest exports, Scotch Whisky accounts for around 70 per cent of Scottish food and drink export.

But what makes a real Scotch? The age, type of cask, ‘peatiness’, quality of the ingredients and the integrity of the water all contribute to a good dram. To be legally described as ‘Scotch Whisky’, the spirit must also mature in an oak cask in Scotland for a minimum of three years. This latter requirement is no secret.

However, as a Welsh distiller recently discovered in Mulberry Bank Auctions Limited v Mr John Savage Onstwedder, being matured in Scotland is not enough. Moving a cask out of Scotland, even to a quiet corner of Wales, may invalidate the pedigree of a Scotch; even after 10 years of it having been based in its home country.

The result of removing a Scotch’s status? In this case, it drained the value of a £50,000 cask and entitled the purchaser to a full refund.

Background

Mr Savage-Onstwedder engaged Mulberry Bank Auctions to sell a cask of “Da Mhile Organic Springbank 1992 Malt Scotch Whisky”.

Having been produced in 1992 and matured at the Springbank Distillery in Campbeltown, Argyll, the whisky spent most of its life in an oak cask in Scotland. However, in 2012, Mr Savage Onstwedder moved his whisky 500 miles south to his distillery near Carmarthen, Wales.

Under the Scotch Whisky Regulations 2009, Scotch Whisky can only be moved from Scotland to another country if it is in a bottle, made of any inert material, and labelled for retail sale. Mr Savage Onstwedder had complied with the requirement to move his whisky in an inert container, however, where he went wrong was re-canting the whisky back into an oak cask when it reached Wales, to continue maturing until such time as it was sold by Mulberry Auctions. In doing so, he voided the right to the whisky being labelled Scotch.

In August 2017, the cask was sold as “Scotch” for £50,000 at auction. When the purchaser later requested paperwork in order to arrange transport of the cask from Wales back to Scotland, its problematic heritage came to light.

The purchaser sought a refund of the £50k purchase price and £6k buyer’s premium paid to the auctioneers and transferred the right to pursue Mr Savage Onstwedder to Mulberry Bank Auctions.

The decision

The auctioneers claimed that Mr Savage Onstwedder was in breach of the 2009 Regulations in describing the cask he had put up for sale as “Scotch Whisky”. Mr Savage Onstwedder tried to argue in his defence that liability lay with the auctioneers and their experts for not discovering the quirk before allowing the cask to be advertised as Scotch. The auctioneer’s T&Cs accepted liability for any opinions given negligently or fraudulently by them, albeit liability for the correctness of any opinions given was excluded.

The Sheriff’s decision emphasised the fact that “Scotch Whisky is a term defined by law” and has protected status under Regulation 3 of the 2009 Regulations. The Sheriff considered that whether a cask contains Scotch Whisky is “a matter of fact and not an expression of opinion”.

In considering the auctioneer’s T&Cs, the Sheriff explained that “the court must consider the ordinary and natural meaning of the language used by the parties”. The court determined that all the wording of the T&Cs did was limit the auctioneer’s liability to matters of opinion and not to statements of fact. As the question of whether whisky can be classified as Scotch was one of fact, then the distiller couldn’t escape liability by relying on the auctioneer’s T&Cs.

Clare Kelly is a senior solicitor at Brodies LLP