The recent case of Apcoa Parking (UK) Limited v Crosslands Properties Limited , heard in the Outer House of the Scottish Court of Session, concerns liability for defects in a multi-storey car park in Dunfermline. While not binding in England, it nevertheless underlines the need for a developer to follow carefully the provisions of an agreement for lease, or other development agreement, if it wishes to benefit from any clause in the agreement releasing it from such liability.
The facts were that under an agreement for lease, Crosslands agreed to build and lease the car park to Apcoa. As is usual, the agreement contained obligations on Crosslands to carry out the works in an appropriate manner. The agreement also gave Apcoa rights to make representations on the standard of the works. In particular, Apcoa was entitled to make representations to Crosslands on defects ahead of issue of the certificate of making good under the building contract for the works. However, the certificate was issued without Apcoa having been given that opportunity. Apcoa was not aware of the certificate and made a claim against Crosslands for defects. Crosslands sought to rely on a developer’s release clause in the agreement. The clause provided that Crosslands would be released from liability to Apcoa for defects on issue of the certificate of making good.
The judge held that the release was ineffective. While the clause did not refer to any preconditions to release other than issue of the certificate of making good, he decided that the parties could not have intended that Crosslands could benefit from the release, having disregarded the defects provisions in the agreement. That would allow Crosslands to benefit from an exclusion of liability, having failed to follow related provisions clearly designed to allow Apcoa to accept the principle of a release.
Developers take note. In order to rely on a release clause in a development agreement, make sure you comply with associated inspection and notification obligations. Remember also that development obligations in agreements for lease will bind your successors in title unless the agreement provides otherwise.