Court Orders Developers To Discharge Security When Option Terminated, Despite Alleged Breach By Security Granter

The Inner House has refused an appeal against a commercial judge's order that developers discharge a standard security granted in terms of an option agreement that had been lawfully terminated.

Background

In 2010, the owners of land in North Lanarkshire (the pursuers) entered into an option agreement with developers (the defenders). Pursuant to the option agreement, the defenders were granted an option to purchase the land (or parcels of it) in exchange for £135,000.

To secure performance of the obligations undertaken by the pursuers in terms of the option agreement, the pursuers were required to grant a standard security over the land. The pursuers were to ensure that the land was allocated for residential development on the local plan. The option agreement also provided that if by a particular long-stop date not more than 10 acres were allocated either party could "walk away"...