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LANDS VALUATION
APPEAL COURT, COURT OF
SESSION
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Lord Philip
Lord Eassie
Lord Penrose
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[2007] CSIH 7
XA45/06
OPINION OF THE COURT
delivered by LORD EASSIE
in
in the Appeal of
JOHN ALEXANDER McPHERSON
and JOSEPHINE BREW McPHERSON
First Appellants;
and
WILLIAM FRASER
Second Appellant;
against
a decision of the Lands
Tribunal for Scotland dated 28th February 2006
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For the Appellants: Sir Crispin
Agnew, Q.C.; Fyfe Ireland
For the Respondents: Wallace; Drummond Miller
18 January 2007
[1] This
is an appeal against a decision of the Lands Tribunal for Scotland - "the
Tribunal" - refusing applications made to it by the appellants under Part 9 of
the Title Conditions (Scotland) Act 2003 -
"the Act"- for discharge of certain title conditions. The first appellants are the owners of a
house and garden ground the postal address of which is No 7 Queens Point, Croy,
Shandon near Helensburgh. The second
appellant is the owner of a small piece of unbuilt ground adjoining the first
appellants' property on its northeastern side, that is to say to the rear of
the back garden of the first appellants' house.
Before the Tribunal and before this court the application by the first
appellants was treated as the leading application since, were it not to succeed,
the application by the second appellant lacks utility and it raises no further
or independent issues. We shall
therefore follow that concentration of attention on the first appellants' application.
[2] The
title conditions which the applications to the Tribunal seek to have discharged
are imported into the appellants' titles by reference to a Deed of Conditions
by Cala Management Ltd - "Cala"- registered in the Land Register of Scotland on
4 July 1990. The Deed of Conditions was registered as
respects an area of ground which Cala were in the course of developing, or at
least were proposing to develop, for housing by constructing 10 houses.
[3] In
order to provide access to the houses to be built on the development at Queen's
Point an internal road required to be constructed leading from the A814 road
running along the shore which lies generally to the southwest of the
development. At the time of execution of
the Deed of Conditions Cala had intentions of developing, for housing, land
lying immediately to the northeast of the Queen's Point development, for the
purchase of which they had contracted an option. This land has been referred to in these
proceedings as "the Bergius land". Apparently
with a view to constructing an access road into the Bergius land (which had,
and has, no other suitable means of access for purposes of its development) a
gap was left in the Queen's Point development between the two plots which
became the residential properties numbers 7 and 9 Queen's Point (the houses
being initially enumerated for address purposes with only odd numbers). The gap is signalled, as an omission from the
feuing plan contemplated by the Deed of Conditions, by clause THIRTEENTH of the
Deed which, translated into the burden section of the title certificate of the
applicants' title, states:
"THIRTEENTH. That part of the said area of ground shown
coloured green on the plan annexed hereto ... shall be retained by us and remain
in the ownership of us the said Cala Management Limited."
While there was, in the course of
discussion before this court, some uncertainty as to the precise extent of the
area coloured green, it was accepted before the Tribunal and, in the event,
before this court that the area embraced at least the plot which subsequently
became number 8 Queen's Point.
[4] Because
it became apparent that the Bergius land could not meet the then prevailing
conditions for a grant of planning consent for housing, Cala withdrew their
application for planning consent for the Bergius land on 29 October 1990. In 1993 Cala sold land forming part, at
least, of the area referred to in the reservation in clause THIRTEENTH of the
Deed of Conditions to a Dr. Johnston. A
house was constructed upon the land sold to Dr. Johnston which acquired the
postal address No. 8 Queen's Point. The
title of Dr. Johnston was made subject to the terms of the Deed of Conditions.
[5] In
recent times the planning considerations which in 1990 impeded the grant of
planning consent for the development of the Bergius land for housing have
altered. On 21 February 2006 detailed planning consent
for the construction of 16 houses on the Bergius land was granted by the local
planning authority. The second appellant
had previously entered into missives with the owner of the Bergius land for its
purchase, subject to the obtaining of that planning consent. The second appellant had also entered into an
agreement with the first appellants involving the demolition of the house at No.
7 Queen's Point to enable the construction of an access road through the first
appellants' property in order to service the Bergius land development. Consent was also given by the local authority
for the stopping up of a short section of adopted thoroughfare (in practical
terms a turning or reversing point) which had been constructed on the reserved
area in 1990, evidently as the initial break-off from the Queen's Point road of
the envisaged road giving access to the Bergius land.
[6] The
current proposal to construct an access road to the Bergius land through the
property No. 7 Queen's Point encounters the difficulty that the construction
would be in breach of certain conditions of the Deed of Conditions, which, as
already mentioned, had been imported into the appellants' titles. Hence this application to the Tribunal.
The
particular title conditions, discharge of which is sought, are these:
"(THIRD) The house is to be used and occupied solely
as a private dwellinghouse (and any ground effeiring thereto shall be used as a
garden and for no other purpose whatever) ... nor shall anything be done on the
subjects or in the house which may be deemed a nuisance or occasion disturbance
to adjoining proprietors ...
(FIFTH) The ground appertaining to any house shall be
laid out as a garden ground or shrubbery and shall be maintained as such ...
(SEVENTH) Each proprietor shall maintain his house and
garden in good state of repair and decoration and take all appropriate steps
either by himself or in conjunction with others to prevent damage to the fabric
of the same which may prejudice the stability thereof or create a nuisance to
other proprietors ...
(ELEVENTH) The proprietors shall be bound to insure the
dwellings comprehensively with an established insurance company for the full
replacement value thereof ... and in the event of the subjects or any part
thereof being destroyed or damaged by fire or other insured cause, the
proprietors shall be bound to restore within one year after such destruction or
damage the subjects ... ".
[7] The
applications to the Tribunal were made in terms of section 90(1)(a) of the
Act; they were opposed by the
respondents; and thus section 98 comes
into play. For present purposes its
effect is that the Tribunal might grant the applications for discharge of the
title conditions in question only were it
satisfied that it was reasonable to do so having regard to the "factors
set out in section 100" of the Act. Section
100 of the Act simply catalogues a number of factors, back referenced to section
98. The factors said by counsel to be
relevant in this appeal were:
"(b) the extent to which the condition -
(i) confers benefit on the benefited
property; or
(ii) where there is no benefited property
confers benefit on the
public;
(c) the extent to which the condition
impedes enjoyment of the burdened
property;
...
(f) the purpose of the title condition;
(g) whether in relation to the burden
property there is the consent, or
deemed
consent of a planning authority, or the consent of some other regulatory
authority, for a use which the condition prevents;
(h) whether the owner of the burden property
is willing to pay
compensation;".
[8] Counsel
for the appellants referred us to a number of decisions of the Tribunal which
illustrated the approach adopted by the Tribunal to consideration of these
factors. The decisions were: George
Wimpey East Scotland Limited v Fleming
2006 SLT (Land Court) 2; Ord v
Mashford 2006 SLT (Land
Court) 15; and Church
of Scotland General Trustees v McLaren
2006 SLT (Land Court) 27. Counsel for the appellants stated that he did
not take issue with the general approach of the Tribunal to the Act. The passages in the Tribunal decisions to
which counsel made particular reference were those discussing the purpose of a
title condition and the possibility of the payment of compensation. Reference was also made by counsel to Anderson v Trotter
1998 SC 925.
[9] Turning
to the grounds of appeal lodged on behalf of the appellants, counsel for the
appellants observed that the first three grounds were interlinked. They related to the Tribunal's approach to
the passage of construction traffic along Queen's Point and the proposed road
during the construction of the Bergius development. The basic proposition which counsel sought to
advance was that the Tribunal had misunderstood the purpose of the title
conditions in question and as a consequence had misunderstood the proper
approach to the relevant factors and had given inappropriate weight to the
issue of disturbance through construction traffic.
[10] In respect of construction traffic, the Tribunal, having found
that once the Bergius development was completed the traffic volumes on Queen's
Point road would remain light, went on in its Opinion to narrate (at page 7):
"During the
construction phase, however, very substantial disturbance would be caused by
the actual work of constructing the new roadway leading off from Queen's Point
and by construction traffic while the estate road and new houses were being
built. The work of constructing the new
roadway through might be expected to be completed reasonably quickly, but the
period of time during which the residents of Queen's Point would, at least
intermittently, suffer from the intrusion of heavy traffic while the new estate
itself was being built is very uncertain.
The proposed development will be a speculative development of high value
housing which would proceed according to the dictates of the market. It might not be completed for several years."
In its consideration of factor (b) (benefit)
the Tribunal also considered factor (f) (purpose). Clearly, the purpose and the benefit of a
title condition will usually be interlinked.
The Tribunal, at page 15 of its decision, said this:
"Factor (b)
concerns the extent of benefit from the condition. There is no doubt that in a general sense the
conditions continue to fulfil their original purpose of preserving the amenity
and setting of the benefited properties, and we reject the submission that
because the proposed development is of a totally different sort the benefited
proprietors would be losing no benefit of the kind envisaged by the condition
and would therefore not be prejudiced. The
question is the extent of benefit involved in being able to prevent the
particular proposed development."
The Tribunal then stated that
"there is a tangible real benefit here, although the extent of that benefit is
not quite as large as the respondents suggest".
The Tribunal then noted that the proposed development would increase the
level of traffic using the Queen's Point road but the traffic level would still
properly be classed as light. The
Tribunal agreed that once completed the impact of the new road on visual
amenity would be negligible; that the
risk of members of the public loitering in the area of the proposed new roadway
was very slight; and that there was no
threat to the existing community spirit.
The Tribunal then turned its attention to construction traffic and in
the succeeding paragraph of its Opinion (page 16) stated:
"The
conditions also protect against the actual disturbance involved in the proposed
development, i.e. during the
construction phase. This is not
generally a material consideration, because such disturbance is usually quite
short -lived, for example when a neighbour wishes to build an extension, house
in the garden or the like. Here,
however, what is involved is not only the actual construction work at the
subjects but also the construction traffic using the estate road. While the demolition of No. 7 and the
construction of the road passing through the subjects may not take very long,
there will be heavy construction traffic using the estate road, which is quite
narrow, for much of the period in which the actual housing is being built. There is an inevitable uncertainty about the
likely duration of this, but it seems to us that two to four years might be a
reasonable estimate. That seems to us to
amount to substantial disturbance from which the conditions presently protect
the respondents as benefited proprietors."
[11] Counsel for the appellants submitted that in holding that the
conditions whose discharge is sought gave protection against disturbance from
construction traffic the Tribunal had erred in law. The Deed of Conditions had to be construed in
the factual circumstances obtaining at the time of its execution and
registration. At that time it was known
that Cala intended to develop, if possible, the Bergius land taking access
through the "gap site". From the Deed of
Conditions it was evident not only that Cala had excluded the gap site from the
conditions in the Deed of Conditions but also that they had reserved
unqualified rights of access to it over the Queen's Point road. The title conditions in question therefore
did not have the purpose, and could not confer on the individual proprietor the
benefit, of preventing the use of the Queen's Point road by construction
traffic.
[12] Counsel for the appellants further submitted that the Tribunal
was in error in considering that the title conditions were concerned with
disturbance of the short-term nature of construction traffic. The title conditions in question were
designed to protect amenity but that was amenity in the long-term. Temporary disturbance from construction
traffic or construction works would not be a matter of weight where it was
otherwise appropriate to discharge a condition.
In support of this proposition counsel referred to the decision of the
Lands Tribunal (Douglas Frank, QC) in the case of Re Kershaw's Application (1975) 31 PCR 187 and the recent decision
of the Court of Appeal in England and Wales in Shephard v Turner [2006]
EWCA Civ. 8.
[13] In his response counsel
for the respondents recognised that the feuing of the Queen's Point development
would proceed in stages and he accepted that it was difficult to say that the
title conditions allowed proprietors acquiring their houses in the initial
stages of the development to object to the construction traffic consequent upon
the development of later plots. But, it
was said, once all the Queen's Point houses had been completed the title
conditions provided full protection against the use of the estate road for
construction traffic. Counsel for the
respondents further submitted,
particularly as respects the second limb of the argument for the appellants,
that short term construction nuisance was not an immaterial consideration. The question
was the weight which should be given to it in the circumstances of the
particular case. That was entirely a
matter for the Tribunal, which was an expert tribunal. The court should not interfere with the
weight which the Tribunal had attached to this matter.
[14] We have come to the view that there is force in the submission
advanced by counsel for the appellants. It
is not entirely clear upon what basis the Tribunal concluded that "the
conditions also protect against actual disturbance involved in the proposed
development, i.e. during the
construction phase." It is clear, of
course, that the title conditions do not give express protection against the
use of the Queen's Point road for construction traffic. As counsel for the respondents recognised,
the Deed of Conditions contemplated feuing of plots over time, with the
consequent need for the initial feuars to accept construction traffic, but his
submission that once the Queen's Point development had been completely feued,
absolute protection against construction traffic was provided by the title
conditions cannot be sustained. A
proprietor of any house in Queen's Point is not prevented from demolishing it
and replacing it with another house - which inevitably involves construction
traffic. Indeed, in the event of
destruction by fire or other insured cause, Clause ELEVENTH of the Deed of
Conditions requires the proprietor to rebuild.
Moreover, and importantly, the area reserved by Cala in terms of Clause
THIRTEENTH of the Deed of Conditions was not subject to any restriction
preventing it being built upon or developed in any way. Unfettered right of access to the reserved
area was also retained by Cala. Development
by way of building, road works or other civil engineering works was therefore
possible and with it the prospect of construction traffic passing over the
Queen's Point road is evident. We have
some difficulty in understanding the sentence in the Tribunal's decision,
page 14, -
"We do not
think it is open to the applicants to say simply that it was part of the
original purpose that an access road might be built through to another
development. That was nothing to do with
the purpose of these title conditions".
The possibility of development of
the reserved area, for whatever purpose, but also including access to the
Bergius land, was in evident contemplation of the Deed of Conditions.
[15] The second strand of the argument for the appellants in respect
of construction traffic invoked the decision in Shephard. In that case the
restrictive covenants which were the subject of the application to the Lands
Tribunal, confined the user of the land to that of a private dwellinghouse and
enjoined the proprietor not to do or to permit to be done, anything which was
or might become a nuisance or annoyance to the neighbouring proprietors. One of the grounds of objection by
neighbouring proprietors was disturbance during construction on the application
site, which in the event the Tribunal considered would not be substantial and
could be dealt with by an award of compensation. The application proceeded under paragraph
(aa) of section 84 of the Law of Property Act 1925, the terms of which are set
out in paragraph 15 of the judgment of Carnwarth LJ as follows:
"(aa) that ... the continued existence [of the
restriction] would impede some reasonable user of the land for public or
private purposes or, as the case may be, would unless modified, so impede such
user ... .
At paragraph 58 his Lordship
stated:
"In my
view, account must be taken of the policy behind paragraph (aa) in the amended
statute. The general purpose is to
facilitate the development and use of land in the public interest having regard
to the development plan and pattern of permissions in the area. The section seeks to provide a fair balance
between the needs of development in the area, public and private, and the
protection of private contractual rights.
'Reasonable user' in this context seems to me to refer naturally to a
long term use of land, rather than the process of transition to such a use. The primary consideration therefore is the
value of the covenant in providing protection from the effects of the ultimate
use, rather than from the short term disturbance which is inherent in any
ordinary construction project. There may
however be something in the form of the particular covenant or in the fact of
the particular case which justifies giving special weight to this factor."
His Lordship thereafter referred in
the following paragraph of his judgment to Re
Kershaw and the apparently conflicting approach of the Tribunal in Re Tarhale Limited 1990 60 P & CR
368 and reconciled the cases on the view that the covenants in the latter case
contained a specific covenant relating to the use of the roadway there in
question preventing its use by lorries or heavy vehicles. The contention of the appellant objectors in Shephard that construction disturbance
was covered by the prohibition against acts constituting a nuisance or
annoyance is then dealt with in paragraph 60 as follows:
"In the
present case the appellants rely principally on a distinct form of covenant:
one providing protection against acts causing 'nuisance or annoyance'. I agree with the appellants that such a
covenant is intended to provide protection against temporary as well as long
term annoyance and further that it is not necessarily to be confined by analogy
with the common law of nuisance. The
cases give little guidance on the scope of such a covenant other than that,
like the law of nuisance, it is to be applied 'according to robust and common
sense standards' (per McGarry J. Hampstead and Suburban Properties Limited v
Diomedous [1969] 1 Ch. 248, p.
258). However we have been referred
to no authority in which ordinary construction work carried out with reasonable
care has been held to involve a breach of such a covenant. Dodd-Heatley
was not such a case ... I do not think such a covenant is to be equated with a
covenant providing specific protection from construction disturbance".
The other members of the Court of
Appeal agreed with Carnwarth LJ on this aspect of the case.
[16] While Shephard (and
the Tribunal decisions referred to in it) were decided against a background of
different statutory provisions from those in the present case, we nonetheless
find the views expressed in Shephard
to be of assistance. In principle what
is being sought in such applications, under both statutory regimes, is
discharge or modification of title conditions in order to allow a development
to proceed. Title conditions such as
those in issue in the present case are directed towards continuing long-term
user - the ultimate user - rather than transitional matters such as
construction disturbance. If the long-
term user is acceptable it will usually be difficult to deny its allowance on
the basis of short-term construction disturbance. As respects the provisions of clause (THIRD)
of the Deed of Conditions which relate to nuisance or disturbance we were provided
with no reason to disassociate our views from those of the Court of Appeal
expressed in paragraph 60 of the judgment of Carnwarth L.J. in Shephard.
[17] In these circumstances we have come to the conclusion that the
approach of the Tribunal to the purpose of the title conditions in question and
the extent to which they protect against disturbance from construction traffic
was flawed. It will be appreciated,
however, that the judgments in Shephard
were not available to the Tribunal.
[18] The fourth ground of appeal is to the effect that in
considering disturbance from construction traffic the Tribunal erred in failing
to give consideration to whether compensation would be an adequate remedy. As we understood him, counsel for the
respondents did not dispute that, as exemplified in Re Kershaw, it would have been open to a Tribunal to address the
matter of construction traffic disturbance by means of making discharge of the
title conditions subject to prior payment of compensation for that disturbance.
[19] In giving the reasoning of its decision the Tribunal touches on
the matter of willingness to pay compensation at page19, foot, where it states:
"Factor
(h), willingness to pay compensation, is neutral: Mr Geddes [the applicants' solicitor] pointed
out that the respondents had not sought compensation earlier and Mr Brownlie
[the respondents' solicitor] did not found on it. It is important to keep in mind that
'compensation' in this context is limited to compensation for loss or
disadvantage which would be caused to the benefited proprietors rather than
being related to development value of the burdened property. This factor does not permit us to enter into
any consideration of whether a windfall ransom value should be shared with
benefited proprietors."
We understand that this passage has
to be read against the very late intimation by the respondents of an intention
to seek compensation and an apparent agreement between parties that
consideration of claims for compensation in the event of the applications being
granted was to be deferred (cf page 3 of the Tribunal's decision). There was not unanimity of view in what was
said by counsel as to how this apparent agreement on procedure was reached. But, perhaps inhibited by that agreement, it
does appear that the Tribunal was not invited to consider whether payment of
monetary compensation, as a condition of discharge of the title conditions,
might appropriately address the construction traffic issue. Accordingly, while it can be said that the
Tribunal's decision is flawed to the extent that it did not consider
compensation as recompense for any detriment arising from construction traffic,
that flaw appears to stem from the way in which parties approached procedure
before the Tribunal.
[20] The fifth and final ground of appeal relates to factor (c) of
section 100 of the Act, namely "the extent to which the condition impedes
enjoyment of the burdened property". The
Tribunal deals with this aspect of the case at page 18 as follows:
"As to (c),
[the respondent's solicitor] accepted that a development value which is being
denied by the existence of a title condition is relevant. On the assumptions, which are fulfilled this
case, that planning permission would be available for the development through,
and of course that Mr. Fraser's land is
also available, and given Mrs. Bergius'
willingness to sell, there does appear to be a form of 'ransom' value in No. 7. We suppose that theoretically that might be
diluted by the ability of at least one other house (No. 8) similarly to
facilitate the proposed development. [The
respondents' solicitor] argued correctly
that there was absolutely no evidence as to the level of that value and
therefore as to the extent to which the condition was impeding enjoyment of the
burdened property. We might perhaps add
that for all that is known the proprietor of No. 8 might also have been in the
same market. We are however prepared to
assume that there is some substantial value, in addition to the open market
value of No. 7 as an ordinary house bound by these conditions. So there is undoubtedly a relevant factor
here even if we have no quantification of it.
However it
seems to us also to be relevant that the conditions do not in any way at all
impede the ordinary normal use of this house or diminish its value as a house
and garden. To the contrary, they
underpin that value. This is not a case
in which for example a house or garden has become too large or in some other
way unattractive or uneconomic in modern conditions. The applicants will have purchased it
without, presumably, having to pay any premium to reflect this new potential
value, there being no evidence of any market knowledge of it. The house continues to be a most attractive
and desirable house in an attractive and desirable development. In any consideration of reasonableness, the
unquantified potential windfall development value seems to us to carry little
weight as a material factor."
[21] Counsel for the appellants criticised the Tribunal's treatment
of this issue in the respects, first, that having recognised that there was a
substantial value to the appellants in achieving discharge of the title
conditions in question, that substantial value was thereafter disregarded on
the basis, apparently, that it was not quantified. The second criticism was that no reason was
given for the Tribunal's effectively "writing off" a development value taken as
substantial other than that the current use as a home could be continued and
that the value constituted a "windfall".
[22] We consider that there may also be force in this criticism of
the Tribunal's decision. It is not clear
whether the Tribunal dismissed the development value which would result from
the removal of the impediment to the development presented by the title conditions
in question because the development value was unquantified or because it was,
in the Tribunal's view, a "windfall" and hence objectionable on that account,
or for both of these possible reasons.
[23] It is convenient to take the latter possible reason first since
if it is legitimate to discount development value on the basis that it is a
"windfall", the issue of quantification does not arise. The development value in question arises
because the appellants' property and possibly also No. 8 Queen's Point, are the
properties in Queen's Park best situated to meet the need for access to the
Bergius land. But where variation or
discharge of a title condition is sought it will often be the case that the
burdened property is the fortuitous beneficiary of its situation in changing
circumstances or is the beneficiary of the discovery of some other feature
which enhances its value if that feature were to be exploited. Discovery of gold under farmland may be a
wholly fortuitous benefit to the farmer, who bought the farm for farming
purposes and who could happily and
profitably continue to farm there, but the fortuitous nature of the benefit
would not, in our view, be a good reason for denying discharge of the title
conditions impeding the mining of gold. We
therefore think that in its characterisation of the development value as
"windfall", with the possible moral judgment implied in the selection of that
adjective, the Tribunal may have fallen into error if that were material to its
reasoning. We would add that we do not
think it possible to consider reasonableness of the development of the
appellants' property for the construction of the access road in isolation from
the potential public benefit of the development of the Bergius land for housing
in accordance with the detailed planning consent.
[24] Given that the development value should not be discounted simply on the basis of its being "windfall"
we consider next the possible reason relating to want of quantification in
monetary terms. The Tribunal accepted
that the development value was "substantial".
Having done so, it would appear to us not to be legitimate thereafter to
dismiss the substantial development value
as a consideration simply on the ground that it lacked actual
quantification.
[25] In these circumstances we shall grant the appeal and remit both
applications to the Tribunal for reconsideration.
