Inner House resolves right to buy dispute between two feuding families 

Joseph Sweeney and his mother Donalda Sweeney sought orders requiring the challenge of a right to buy and the assignation of a debt, respectively. In proceedings before the Outer House, in both cases opposed by Amanda Urquhart, the former application was dismissed, and the latter granted.  

The unsuccessful party appealed in each case, with the Inner House deciding it was most convenient to hear the appeals together. The appeals were heard by the Lord Justice Clerk, Lady Dorrian, sitting with Lord Malcolm and Lord Woolman. 

Ongoing feud 

The feud between the Sweeney and Urquhart families was described as having been ongoing for many years, centring on an area of land in Leachkin Brae, Inverness. The title to the land was held by West Larkin Ltd (WLL), a company formerly owned by the Sweeneys that entered liquidation.  

The Urquharts claimed they had been the agricultural tenants of the land since October 1990, with the land being leased for a period of 25 years to Ms Urquhart’s parents at that time. Over the next few years, the landlord’s interest was conveyed to a number of legal entities owned by the Sweeneys before eventually ending up with WLL, while Ms Urquhart obtained the tenant’s interest. 

The Sweeneys denied that the tenancy was still in existence. If it were the case, the Urquharts would have a right to purchase the land for £28,000. The Sweeneys believed that the development value of the land exceeded £1 million and that it would therefore sell for more on the open market. 

The leased land surrounded Woodside Croft, the former home of the Urquharts. The Sweeneys began living in this house in 1998. Since then, tensions had existed between the families, with at least three earlier court actions being raised by one or other of them. As a result of one of these actions, the Inner House held that the Urquharts did have an agricultural tenancy of the land in 2006. 

WLL was wound up in December 2018. A liquidator was appointed, who chose not to challenge a notice of interest in the land registered by the Urquharts in 2016. In February 2019 he agreed to sell the land to Ms Urquhart in terms of the right to buy scheme for 1991 Act tenancies contained in the Agricultural Holdings (Scotland) Act 1991. 

Businessman’s decision 

It was submitted for Mr Sweeney that the case for a challenge was strong and would result in a significant financial return for the creditors and contributories of WLL. However, it was held by the Lord Ordinary that the liquidator’s decision was reasonable, taken in good faith, and open to him in the exercise of his powers. 

On appeal, it was submitted that the judge applied the wrong test, failed to consider the strength of the case and an offer of funding, and wrongly placed reliance on the content of the written answers. There was a strong argument that the agricultural tenancy had been abandoned from 2006 to 2018. 

Delivering the opinion of the court, Lord Woolman said: “We regard the present case as clear-cut. The liquidator’s decision concerned the disposal of assets. He had to determine how best to realise the company’s sole asset. It was a businessman’s decision that required the exercise of his practical judgment.” 

He continued: “The liquidator had access to a professional report estimating the agricultural value of the land at £27,000. It is roughly comparable to one instructed by Ms Urquhart (£28,320). [Counsel for Mr Sweeney] says that a sale on the open market would generate a higher price. He does not, however, specify an amount, or even a range of figures.” 

Lord Woolman concluded on this note: “The liquidator, having regard to the whole picture, was entitled to determine that success was far from assured, the costs substantial, the funding problematic, and the financial return in doubt.” 

Assignation the counterpart for payment 

In her note, Mrs Sweeney wished to be recognised as a creditor of the company, and to be assigned a judgment debt of £38,000. This was for taxed expenses in a court action challenging the validity of a share transfer of rights in WLL.  

Ms Urquhart succeeded in having the transaction reduced and chose to enforce a joint and several decree for the taxed expenses against WLL only. It was submitted that this was paid by her to Ms Urquhart, thus meeting the necessary conditions under Rule 7.21 of the Insolvency (Scotland) (Receivership and Winding Up) Rules 2018 for an obligant bound to the creditor to obtain an assignation. 

On this matter, Lord Woolman said: “The assignation is the counterpart for payment. It would be odd if the creditor had a right to take with one hand and refuse with the other. In addition if a creditor can oppose any application, an obligant may have to establish matters twice. These would be unfair results.” 

For these reasons, both reclaiming motions were refused.