OPINION

Teague Developments Ltd v City of Edinburgh Council

Introduction

1. The applicants own a substantial development site. Two smaller areas of ground within the site were the subject of feudal burdens. The respondents, who were the feudal superiors, followed the procedure under Section 18B of the Abolition of Feudal Tenure, etc. (Scotland) Act 2000 (“the 2000 Act”) for conversion of these burdens into continuing burdens as ‘economic development burdens’. The applicants have applied to the Tribunal under Section 44 of the 2000 Act and Section 90(1)(a) of the Title Conditions (Scotland) Act 2003 (“the 2003 Act”). They argue that:-

(i) the burdens were not economic development burdens within the meaning of Section 18B and have accordingly not been validly converted;

(ii) alternatively, the respondents have no interest to enforce the burdens; and

(iii) alternatively, the Tribunal should exercise its jurisdiction to discharge them.

In this hearing, the Tribunal considered (i) and (ii).

2. In summary, the Tribunal has decided that:-

(i) the burdens do qualify as ‘economic development burdens’; and

(ii) as a matter of law, the respondents do have an interest to enforce.

The applicants’ challenge to the conversion notices accordingly fails, and their application for discharge of the burdens will require to proceed.

The Title Conditions

3. The applicants are the registered owners of 6.5 hectares of land at 9-21 Salamander Place, Edinburgh, which they acquired in 2004.

4. A Feu Disposition of 1.93 acres ( 0.781 hectares) by the City of Edinburgh District Council in favour of I.M. Cowe & Company Limited dated 27 April and recorded in the General Register of Sasines for the County of Midlothian on 29 May 1987 (“the 1987 disposition”) provided inter alia as follows:-

“(EIGHTH) The feu and all buildings to be erected on the feu and any buildings erected in substitution therefor shall be used for general industrial purposes including the feuars’ business of agricultural merchants only (provided that for the period from the said date of entry to completion of the development as aforesaid only the feu may also be used for the purposes of car parking in connection with the feuar’s business) and no part of the feu or the buildings thereon shall be used at any time for the purpose of brewing, distilling or chemical works or for the purpose of keeping a public house or tavern or clubhouse licensed for the sale of excisable liquors or for the purpose of trading in, selling or keeping for sale spirits, wines or malt liquors; Further, in no circumstances shall anything be done upon any part of the feu which shall be deemed a nuisance or which may occasion disturbance or annoyance to the Superiors or any of the neighbouring feuars or proprietors or their tenants or may injure the amenity of the neighbourhood and the Superiors shall be the sole judge of what constitutes a nuisance, annoyance, disturbance or injury to amenity; Further, no business nameplate or sign or advertisement of any kind shall be affixed or displayed anywhere on the feu without the prior consent in writing of the Superiors:”

5. A Feu Disposition of 1.41 hectares by the City of Edinburgh District Council in favour of I. M. Cowe and Company Limited dated 16 January and recorded in the General Register of Sasines for the County of Midlothian on 20 February 1990 (“the 1990 disposition”) provided inter alia as follows:-

“(SEVENTH) The feu and the buildings and any building erected in substitution therefor shall be used for industrial use only and in particular but without prejudice to the foregoing generality shall not be used at any time for the purpose of brewing, distilling or chemical works or for the purpose of keeping a public house or tavern or clubhouse licensed for the sale of exciseable liquors or for the purpose of trading in selling or keeping for sale spirits, wines or malt liquors: Further no trade or manufacture, business or occupation shall be carried out upon the feu nor shall anything be done upon the feu nor shall anything be done upon the feu whether within the building or other buildings erected or to be erected thereon which shall be deemed a nuisance or which may occasion disturbance or annoyance to the superiors or any of the neighbouring feuars or proprietors or their tenants or which may injure the amenity of the neighbourhood and the superiors shall be the sole judge of what constitutes a nuisance, annoyance, disturbance or injury to amenity: Further no business nameplate or sign or advertisement of any kind shall be affixed or displayed anywhere on the subjects without the prior consent in writing of the superiors.”

6. A Minute of Waiver by the City of Edinburgh District Council recorded in the General Register of Sasines for the County of Midlothian on 24 July 1991 provided inter alia as follows:-

(Clause (Eighth) of the 1987 disposition):-

Delete, “including the feuars’ business of agricultural merchants”

Delete, from “and no part … ” to “ … wines or malt liquors”

(Clause (Seventh of the 1990 disposition):-

Delete, from “industrial use only … ” to “ … wines or malt liquor”, and substitute: “general industrial purposes only (provided that part only of the feu may also be used for car parking in connection with the feuars’ business)”

7. The two areas of land which were the subject of the 1987 and 1990 dispositions are within the applicants’ land and will be referred to as “the subjects”.

The Issues

8. Section 18B of the 2000 Act provides for conversion, by prospective notice, of a

“real burden which is imposed for the purpose of promoting economic development and is enforceable by the Scottish Ministers or a local authority”

into an “economic development burden” enforceable under the 2003 Act.

9. By two notices each registered in the Land Register of Scotland on 6 October 2004, the respondents purported to convert Burden (Eighth) created by the 1987 disposition and Burden (Seventh) created by the 1990 disposition into economic development burdens, under and in terms of Section 18B of the 2000 Act. In each case, the notice stated inter alia:-

“The purpose of the burden was to promote economic development. The use of the property for general industrial purposes provides employment and generates income. It is of material importance to the local economy.”

10. Section 44 of the 2000 Act provides for disputes arising in relation to notices under the Act to be referred to the Tribunal. Section 90(1)(a)(i) of the 2003 Act provides for discharge or variation by the Tribunal, of a title condition (or purported title condition) applying the tests set out in Section 98(a) and 100 on the application of the owner of a burdened property. Section 90(1)(a)(ii) of the 2003 Act authorizes the Tribunal, again on the application of the owner of the burdened property, to determine any question as to the validity, applicability or enforceability of a title condition (or purported title condition) which is a real burden. Following procedural discussion, and with the agreement of the parties, the issues considered by the Tribunal at the present hearing were the applicants’ claims that:-

(i) the burdens were not “imposed for the purpose of promoting economic development”, and the Tribunal should discharge the notices; and

(ii) in any event, the respondents have no interest to enforce the burdens.

The applicants initially contended that both these issues could be determined by legal debate, but evidence on behalf of the respondents was heard without prejudice to the applicants’ legal submissions. The applicants wished to reserve the right to lead evidence on issue (ii) if so advised.

Procedure

11. At the oral hearing, the applicants were represented by Mr Martin QC and Mr MacColl, advocate, instructed by Messrs Bell and Scott, Solicitors, Edinburgh. The respondents were represented by Mr Henderson, advocate, instructed by the Solicitor to the City of Edinburgh Council, successors of the City of Edinburgh District Council. The respondents called two witnesses, viz. David Campbell, B.Sc., a consultant surveyor working on an agency basis in the Corporate Property and Contingency Planning section of their City Development Department, and William Miller FRICS, also a surveyor in the same section. The Tribunal had the benefit of a number of productions, which were agreed to be what they bore to be. The Tribunal did not carry out any formal site inspection.

Authorities referred to

Earl of Zetland v Hislop (1882) 9 R (HL) 40
Anderson v Dickie 1915 SC (HL) 79
Murrayfield Ice Rionk v S. R. U. 1972 SLT (Lands Tr) 20 ; 1973 SLT 99
Ord v Mashford 2006 SLT (Lands Tr) 15
Conveyancing and Feudal Reform (Scotland) Act 1970, S. 1(3)
Local Government (Scotland) Act 1973, SS. 69, 83
Local Government and Planning (Scotland) Act 1982, S. 7
Local Government (Scotland) Act 1994, S. 171A
Reid, Abolition of Feudal Tenure in Scotland, 4.11-12
Rennie, Land Tenure in Scotland, 3-13

Facts

12. There was no real dispute about primary facts. The Tribunal finds the following facts proved or admitted.

13. The applicants acquired and are the registered proprietors of 6.5 hectares at 9-21 Salamander Place, Edinburgh. They took entry in March 2004. This land latterly mainly comprised a whisky bottling plant and bonded warehouse. This was an industrial use. All the buildings on the land have been demolished. Development in the area is currently the subject of discussion.

14. The subjects are two contiguous areas within the applicants’ land, at the north-west corner of it. These areas were purchased by a local company of agricultural merchants, I. M. Cowe and Company Limited (“Cowe”) from the City of Edinburgh District Council, by the 1987 disposition and the 1990 disposition. Those parcels of land had formed part of a disused railway goods area and had prior to that sale been acquired by the District Council and then cleared at the expense of the Scottish Development Agency (“SDA”). Cowe were proposing to develop the land in phases for their business. As well as the burdens restricting use with which these applications are concerned, the 1987 disposition contained a positive obligation to erect industrial buildings within 4 years in accordance with plans to be approved by the Council as superiors. The 1990 disposition did not contain such a condition, although it somewhat puzzlingly contained references to “completion of the said development”. Cowe apparently at most only partially completed that development and before long disposed of the land. The Whyte and Mackay Group, who owned the adjoining bottling plant, acquired the land and obtained planning permission for a glass storage warehouse linked to the bottling plant and the buildings erected by Cowe. The Minute of Waiver, which was principally concerned with removing the restriction relating to uses involving alcohol, was granted in 1990 in connection with that development. There is no evidence of the subjects ever having been used for any purpose in breach of the title conditions which are the subject of the present application.

15. The involvement of SDA and the local authority was part of a project for the regeneration of the Leith area during the 1980s. The Leith Local Plan of 1980 had identified a prolonged decline in population and economic activity. It was seen as a declining inner city area. The then district and regional councils affirmed their intention to try to encourage new industrial and office developments in Leith and to safeguard existing industry and encourage employment growth. Industrial land was in short supply. A policy of assisting industrial growth by acquiring land and developing suitable sites with factory units (industrial warehousing being also acceptable) was stated.

16. In 1981, a ‘Leith Project Agreement’ was entered into by SDA, Lothian Regional Council and the City of Edinburgh District Council. It was recorded that they wished jointly to promote the economic regeneration of Leith, with co-ordinated measures by the three organisations. Among the main objectives was “to stem the decline in business activity and realise the potential for large and small business development, particularly in manufacturing”. The region and the district committed, among other things, to consult with SDA on land acquisition and disposal of developable sites and to consult and assist with land assembly, planning permission, etc. The potential for manufacturing industry in Leith was identified. A constraint was a lack of sites and premises for small manufacturing firms. The relevant land purchases, and any subsequent sales, were to be made by the District Council.

17. In January 1982 the District Council Planning and Development Committee approved of a report in relation to a ‘proposed industrial development site’ described as the Salamander Street/Leith East Goods Yard, an area of 3.93 hectares which had been assembled by the Council. This area included the subjects but not the bottling plant and bonded warehouse. The first stage would be to demolish buildings, railway platforms, etc. and clear the site. It was reported inter alia that:-

“The SDA, being aware of the above situation through the ongoing liaison with the District Council within the Leith Project, has now offered to carry out a Land Renewal Scheme to assist in bringing this site forward for development.”

SDA were willing to incur this expenditure on the basis that a form of ‘clawback’ (subsequently clarified as an obligation to repay the expenditure upon disposal of the site within 10 years, i.e. effectively a loan on the security of the site, to cover the cost of clearing the site) would be imposed on the Council. This clearance and land renewal project duly proceeded.

18. The Leith Project was reviewed in 1984 and again in 1986, when recommendations for the future operation of what was referred to as “the Leith initiative” beyond May 1986 were set out. Sites had been successfully assembled and prepared for development, but no appreciable land bank had been built up. A demand for sites by companies wishing to build their own premises had been experienced and met at various locations, including Salamander Street. By 1986, some 62 acres of land had been assembled and prepared, with some 18 acres, around 2 years’ supply, being uncommitted. SDA would gradually withdraw, leaving the initiative as the responsibility of the emerging Leith Enterprise Trust and the local authorities. The District Council, and subsequently the City of Edinburgh Council, have continued a policy of regeneration and job creation, although an approach to ‘business’ use, very much wider than but still including, industrial use, has developed.

19. The section or division now known as the Corporate Property and Contingency Planning section of the City Development Department is separate from the Planning Control section. The latter exercises the local authority’s statutory planning control function, in accordance with the statutory framework and provisions. In addition to that statutory responsibility, the local authority, now the City of Edinburgh Council, has statutory power to ‘promote economic development’. Prior to the passing of the Local Government (Scotland) Act 1994, under the Local Government and Planning (Scotland) Act 1982, this was referred to as ‘industrial promotion’, which was a form of promotion of economic development. Local authorities had similar powers since at least the Local Government (Scotland) Act 1973. Local authorities may thus be involved, otherwise than in the exercise of their planning control function, in transactions in relation to property. There is a degree of communication between the Corporate Property and Contingency Planning division and the Planning Control division, subject to appropriate protocols. A Property Record Management System ensures that where the council has involvement as benefited proprietor with a property, it will receive notification of planning applications even if the burdened proprietor has not already approached it. It may thus have an involvement, separate from that of the statutory planning officers, in discussion of development proposals. Beyond that procedure, the Council does not apparently maintain any general system of monitoring of land for breaches of title conditions under which it is benefited.

20. Over the years, the Edinburgh City Council, the City of Edinburgh District Council and the City of Edinburgh Council have disposed of property or land in a variety of circumstances. At least until the title conditions reforms which took effect in November 2004, use restrictions, in line with the use proposed by the purchaser or acquirer of the property, would be imposed as a matter of course, with the council being benefited as superior. This would often fulfill a land management or a public accountability purpose because it would serve to prevent redevelopment of the land for uses considered inappropriate at the particular location or uses which would increase the value of the land. If a change of use were allowed, the existence of the burden might, one way or another, generate some further payment to the council. In some cases, imposition of such a burden had a more specific purpose of promoting development. In some cases, for example disposals of land for religious or recreational purposes, such development might not have an economic purpose. In other cases, such as disposals of land in the course of initiatives such as the Leith Project, the purpose was the promotion of economic development in some form.

21. An application by the applicants for the development of their land is under consideration. Under the current proposed local plan, the applicants’ land falls within the ‘Leith Waterfront Area of Change’. A development brief prepared by the Council’s Planning Department envisages mixed use, predominantly residential but with some business or industrial use. The area in which the subjects are situated is towards the west end of the applicants’ site, closer to the centre of Leith, and is proposed, in that brief, for residential use. The Council wishes to secure some business or industrial use on the whole site.

Submissions: Whether ‘Economic Development Burdens’

22. On behalf of the applicants, Mr Martin looked first at the legislation, particularly Section 18B, the conversion notices and the terms of the burdens. In principle, former real burdens enforceable by superiors were extinguished, and the Council’s entitlement as former superior depended entirely on whether the burdens had become economic development burdens. When looking at the nature and terms of the burdens, it was necessary to consider the purpose of imposition, not what the effect of the burdens might be in due course: the burdens had to have been imposed for the purpose of promoting economic development. Section 18B(2) required the conversion notice to cover a number of matters. In this case, although it was not submitted that the notices were invalid, there were problems in relation to the requirements under Section 18B(2)(c), because the notices did not indicate that the burdens had been subject to variation by the Minute of Waiver, and because two of the three sentences at (e), being stated in the present tense, did not relate to the correct time period. There was an absence of information in the case about the purpose, and regard should be had to the lack of information given in the notices. The burdens clauses in fact each contained more than one burden, being divisible into five parts. Mr Martin submitted that if the required purpose was not established in relation to each part, the whole notices would fall. Because it was necessary to establish the purpose of the burden when imposed, it was necessary to consider the parts subsequently varied by the minute of waiver, and the fact of waiver demonstrated that the effect was to prevent, not promote, one form of economic activity. The inference could be drawn as to why that part was waived, but there was no explanation why it was imposed in the first place. On a dictionary definition, ‘promote’, there was a need for something identifiable as a purpose, as opposed to an effect, of furthering the establishment of economic development. It must go beyond preserving the status quo. ‘Development’ referred to economic activity, not development in a town planning sense.

23. On the law applicable to the construction, and approach to, burdens, Mr Martin referred to Anderson v Dickie, particularly per Lord Kinnear. There must be clear expression on the record, within the deed itself, in order to render a real burden valid, and no inferences could be taken from surrounding circumstances. Mr Martin submitted that looking at the burden itself, the relevant purpose could not be found. The burdens were in their terms restrictive. Reference was also made to Reid, Abolition of Feudal Tenure in Scotland, at page 71.

24. If this was wrong, and it was permissible to look at the surrounding circumstances, Mr Martin submitted that with the onus then being on the respondents (Section 44(3)) there was no or at least insufficient evidence to establish the purpose. There was no direct evidence as to why the burdens were imposed in 1987 and 1990. Neither witness had been an officer of the District Council at the time. Nor was there any contemporaneous documentary material, either in relation to these transactions or in relation to the Council’s policy, in support. There was no evidence of any equivalent burden on any other site round about. Further, it was apparent that by 1987/90, the focus was on preserving rather than promoting industrial development: a need to encourage wider diversification of the Leith economy had been identified and it would therefore have been expected that the stipulated uses would have gone beyond industrial. It was not good enough for witnesses not involved at the time to give evidence about what they thought might have been the position. Caution was appropriate in considering Mr Miller’s evidence, as he had given evidence of a lack of discussion by the applicants prior to raising the application but had been shown to be quite wrong about this. There was at least one other possible purpose of the imposition of the burdens.

25. In answer to a question by the Tribunal as to the correct approach to ‘purpose’, Mr Martin submitted that it was not good enough to identify a purpose of promoting economic development as only one of two or more positive purposes: the question was whether this was the purpose of the burden as a whole. The general strict approach of the law in the area of burdens should apply. It did not, however, matter in this case, because it was not established that this was one of the purposes.

26. On behalf of the respondents, Mr Henderson, after reviewing the scope of the issues argued by the applicants, agreed that notwithstanding the present tense in section 18B(1), it was the purpose at the time of creation of the burdens which was in issue. The provision, however, did not require identification of the ‘single’, or ‘only’, purpose, although it must be a material purpose. The Tribunal should use its expertise, having heard the evidence, to decide what the purpose was. Under reference to Murrayfield Ice Rink v S R U, at page 103, ‘promoting’ could be wider then performing an act with a view to completion. Promotion of economic development was a responsibility of the local authority, and economic development could be achieved by imposing a burden of this kind. A mere transitory obligation to build might not go far enough. Such a burden imposed on the sale of an existing industrial burden was also an economic development burden. It was appropriate for local authorities to have this means of control, irrespective of their planning function.

27. In relation to the jurisdiction under section 44, Mr Henderson accepted the possibility that the Tribunal might identify parts of a burden clause as not being economic development burdens or ancillary thereto, but submitted that that was not the position in this case. Section 44(3) admitted the possibility that the Tribunal would consider the purpose of the burden on the basis of evidence, just as it did under section 100(f) of the 2003 Act, as for example in Ord v Mashford. The Tribunal was charged with examining what the purpose was, although it was in reality highly unlikely that a purpose of promoting economic development would have been spelt out in the 1980s.

28. Mr Henderson then drew attention to differences between the statutory provisions in relation to newly created burdens and ‘preserved’ burdens. He argued that a ‘claw back’ burden could not be converted although a new economic development burden could be of that type. That could not therefore provide an example of expression of the purpose in an older deed. It was not necessary to get involved in questions of title and interest in relation to personal real burdens: the holder of such a burden had title and interest.

29. In relation to the proposition that it would be more difficult to regard a negative burden as an economic development burden, Mr Henderson drew an analogy with the treatment, under Section 1(3)(b) of the Conveyancing and Feudal Reform (Scotland) Act 1970, of ‘performance’ of a burden expressed negatively (Murrayfield Ice Rink v S. R. U., Bolton v Aberdeen Corporation).

Submissions: Interest to Enforce

30. Mr Martin submitted that Section 18B(3)(b) simply created a rebuttable presumption. Had it been otherwise, the provision would have read, ‘shall have title and interest to enforce’. This was consistent with common law, involving a need for the burdened proprietor to show change of circumstances (Earl of Zetland v Hislop, per Lord Watson at page 47). Some of the factors listed in section 100 of the 2003 Act, e.g. (a) and (g) were relevant. This might either be determined now, as a matter of fact, or left for consideration at the later stage of consideration of the application for discharge, if necessary. Looking to the circumstances now, it was clear that the impetus for the regeneration of Leith had changed to some extent since the Leith project which had run from 1981 to 1986. There was now a planning process seeking to re-characterise the area as one of mixed use. There was in fact a new, finalized, although as yet unconfirmed, local plan, involving ‘Waterfront Areas of Change’ and a development brief for the area including the subjects. Thus there was a change in relation to the interests of the respondents, albeit in their planning guise. Further, the respondents appeared to have paid no attention to changes which had happened, the subjects now having been vacant and unoccupied for some time. Having regard to the area of the subjects, and in the light of these changes in circumstances, it was apparent that there could be no interest in enforcing an economic development burden.

31. Alternatively, Mr Martin submitted that this issue could be reserved at this stage.

32. Mr Henderson submitted that successive statutes had empowered local authorities to promote economic development. The current provision, Section 171A of the Local Government (Scotland) Act 1973, introduced by the Local Government (Scotland) Act 1994, specifically referred to the promotion of economic development, while earlier legislation had referred to industrial promotion. Reference was made to Sections 69 and 83 of the 1973 Act and Section 7 of the Local Government and Planning (Scotland) Act 1982. Industrial promotion was to be seen as a form of promotion of economic development. The presumption in Section 18B(3)(b) of the 2000 Act was irrebuttable, reading the local government legislative provisions together with the 2000 Act.

33. Even if the presumption was rebuttable, said Mr Henderson, the argument that the existence of the planning authority removed the interest to enforce was untenable: The respondents clearly had an interest in the economic development of their area. Even accepting that there was some change in the position of the planners in relation to the area in question, that went to the slenderness of the interest, as a factor under Section 100 of the 2003 Act but not to the existence of the interest.

Tribunal’s Consideration: Whether ‘Economic Development Burdens’

34. It is clear that the survival of these formerly feudal burdens depends on whether they were ‘economic development burdens’ within the meaning of Section 18B of the 2000 Act. Otherwise, they would, like other feudal burdens enforceable only by superiors and not in one way or another saved by the Act’s provisions, have fallen.

35. Mr Martin invited us to take as the starting point the general policy of extinguishing feudal burdens. That is of course correct, but we do not think that it provides the correct approach to onus in this case. Firstly, the Act clearly, in addition to the basic policy of extinguishing feudal burdens, follows a policy of identifying quite a number of situations in which such burdens are to be kept in existence. It is not in dispute that the respondents have otherwise competently followed through the statutory notice procedure, and the applicants have brought this application, whether it is regarded under section 44 of the 2000 Act or Section 90(1)(a)(ii) of the 2003 Act. They therefore have at least the initial onus of making out their case. If, in accordance with the applicants’ primary submission, the issue is to be decided as a matter of pure construction of the terms of the conditions, it is for them to persuade us that these burdens do not qualify. There are, however, two further considerations, each of which has the effect of opening up what we think may be seen as the applicants’ most important argument, which is to the effect that there is insufficient evidence to support the respondents’ position. Firstly, Section 44(3) places the burden of proving any disputed question of fact on the person relying on the notice, here the respondents. So if it is permissible to look at evidence of fact outside the ‘four walls’ of the deeds and if there is any dispute of fact, the burden is on the respondents. Secondly, we think that the terms of these burdens themselves, being in form negative, would perhaps in any event place some persuasive onus, under either Section 44 or Section 90(i)(a)(ii), on the respondents to establish the statutory purpose.

36. We should consider first the applicants’ submission that authorities in relation to the creation of feudal burdens should apply to this issue so as to restrict our consideration to the terms of the deeds (perhaps even the conditions) themselves. Mr Martin relied on the House of Lords’ decision in Anderson v Dickie and in various particular references to the speech of Lord Kinnear, for example at page 82:-

“I apprehend that no weight can be allowed to inferences of probability from the surrounding circumstances, or to any evidence of intention, even if it were more than conjectural. The document we are to construe is not a contract but a title to land, which is said to impose burdens upon stranger purchasers, who had no intention in the matter when the title was framed, and who know nothing about it except what they find published in a recorded deed.”

We reject that submission. We do not consider that that authority is applicable to the issue before us. It was concerned with whether the wording of a recorded deed was apt and clear enough to impose a valid burden on the land. That is not in dispute here. The question is rather whether, among many validly created feudal burdens clearly enforceable before November 2004 against successive purchasers, including the applicants, these burdens do or do not meet the statutory criteria for survival beyond the feudal system. A number of situations are provided in which it was open to feudal superiors to make out certain circumstances of which it can be said, to varying degrees, that it is inconceivable that they would be spelt out in the deed, or indeed even have existed when the deed was granted, for example that the land had on it a specified type of building within 100 metres of the burdened property (Section 18). In this case, the statutory criterion is one of purpose. Prior to the Conveyancing and Feudal Reform (Scotland) Act 1970, there was no particular reason to spell out the purpose of creation of burdens and it was almost never done in older practice: to make its establishment depend solely on the terms of the deed would render this provision (and indeed Section 100(f) of the 2003 Act) virtually useless. Mr Martin properly acknowledged that Section 44(3) appears to recognize that there could be extraneous issues of fact, although that would not necessarily be conclusive in relation to section 18B because that is only one of a number of situations which can give rise to applications under section 44. It also appears to us that the main rationale of the strong common law rule, which is that a singular successor need only look at the register, has no application where the register will contain the statutory notice which had to be registered prospectively, i.e. before 28 November 2004, and which required to include a statement as to the purpose of the burden.

37. Had we accepted Mr Martin’s submission that we could only look at the burdens themselves, we would have been persuaded that these burdens were merely restrictive burdens which did not show a positive purpose of promoting economic development. However, we are not sure that it would have been as simple as that, because we doubt whether it would have been correct to confine ourselves to consideration of the expression of the burden itself rather than considering the deed as a whole. The existence of another burden, which was in the positive form of obliging the purchaser to erect an industrial building, might at least open up the possibility that the restriction to industrial use supported a purpose of securing the erection of an industrial building and thus promoting economic development. However, we do not require to pursue that point any further.

38. Both counsel, in their careful and clear submissions, accepted that the search was for the purpose at the time the deeds were entered into. We were in effect to ignore the present tense in section 18B (“ … a real burden which is imposed for the purpose of … ”). There seemed to be no better theory to explain the present tense than draftsman’s error. We do find that somewhat puzzling, but at all events proceed on the basis that counsel’s agreed position is correct and the search is for the historical purpose of imposition and not the present effect. Certainly, the Tribunal in its consideration of the purpose of title conditions in the exercise of its more common jurisdiction to discharge or vary, does look to what can properly be said about the purpose at the time when the burden was created, rather than the present effect of the burden.

39. We are clear that the burdens themselves are the starting point. As we have indicated, we accept that they read negatively. We note Mr Henderson’s reference to observations by the Tribunal, and obiter in the Inner House, in Murrayfield Ice Rink v SRU on the question whether there is or was any distinction between positive and negative land obligations in Scots law, but the context was not the same and we accept that the negative, restrictive expression is not a very good starting point in the search for a purpose of ‘promoting’. However, if we are free to look at the surrounding circumstances, and we think that we are, we find it perfectly feasible and indeed rather to be expected, that steps taken to ‘promote’ a form of development might be strengthened by a use restriction to ensure that the land would in the future only be used in the same way. It also occurs to us that the 2003 Act does in fact draw a distinction, in Section 2, between ‘affirmative’ and ‘negative’ burdens: the Acts’ detailed new provisions quite often discriminate in their application among the differing classifications of burdens, but there is no such discrimination in this provision and therefore at least no formal reason why Section 18B (introduced by the 2003 Act) cannot apply in the case of a negative burden.

40. In his cross-examination of the witnesses, Mr Martin pursued the idea that restricting to an industrial use would exclude many forms of economic development. It seems to us, however, clear enough that the promotion of industry is a form of promotion of economic development and the fact that the burden only promotes one form of economic development is no reason for it not to qualify. Similarly, the analysis of the burden into several parts, one of which – the prohibition of use for brewing, distilling or chemical works and other uses connected with alcohol – was further restrictive (until the subsequent waiver) does not trouble us: it might merely provide further specification of the type of economic development being promoted. In fairness to Mr Martin, if we understood his final submission correctly, he was at that stage relating his point about restriction to only industrial use more to the evidential question whether by the time these burdens were imposed there was still an initiative in the Leith area which was about the promotion of economic development and whether the imposition of these burdens was shown to have that purpose.

41. The witnesses seemed to accept, and we think it legitimate to draw also from our own experience (particularly of course that of our surveyor member) that there is at least one purpose other than the promotion of economic development, for which burdens like this not only might but are or at least were extremely commonly created. They might be created in the interests of good estate management, for example when subjects in an industrial estate or business park are sold. Again, the purpose might be to satisfy requirements of public accountability: the local authority will not wish to see subjects sold for one use developed for a more profitable use for which the purchaser may be able to obtain planning consent, or will wish at least to have some possibility of some financial recoupment in the event of that happening. In the past at least, such burdens have been routinely imposed. This makes establishing that they were imposed in order to promote economic development harder. However, we do not consider that the fact that burdens also had such general purposes means that this new statutory test cannot be satisfied. We agree with Mr Henderson that the burdens do not require to have had the sole purpose of promoting economic development. Section 18A does not so provide and even if the Parliament had in mind a different type of burden, such as a positive obligation to develop or perhaps a ‘clawback’ burden as such (such burdens being specifically referred to in Section 45 of the 2003 Act, in the context of economic development burdens created after 28 November 2004), construing the provision as requiring a sole purpose appears difficult. We do accept that it must have been a material or important purpose.

42. We did not understand either counsel to be suggesting that the two burdens needed to be considered differently, although the 1987 disposition also contains the positive building obligation and the 1990 disposition, somewhat puzzlingly, does not. We think it can be taken that each of these burdens was imposed in the context of the purchasers acquiring the cleared land for the purpose of their own development of industrial buildings.

43. Mr Martin criticised the quality of the evidence, coming as it did from two witnesses who clearly were not around at the time. At best, they had researched, and in the case of Mr Miller might be seen to have proceeded merely on the basis of some experience in relation to quite different transactions and of assertion as to the purpose of the burdens. His evidence might be described as, to use Lord Kinnear’s word, conjectural. However, the documentary evidence produced by the respondents was agreed to be what it bore to be, and we are in no doubt at all that some conclusions can safely be drawn from it. It is clear to us that the Leith Project had to do with promoting economic development, even if in that era there was a narrower focus on manufacturing industry. It is also, as it seems to us, clearly established from the 1982 documentation that acquisition and clearance of the former railway yard within which the subjects are situated was a part of the Leith Project. The involvement of SDA, both as a partner in the project as a whole and specifically in relation to this land, is a strong indication of a purpose of promoting economic development.

44. We are therefore fully satisfied that the subjects – both sites – comprised land which was assembled and cleared for the purpose of promoting economic development. As we have already indicated, we think that a use restriction such as this might well be expected to be imposed upon disposals of such land. That, however, may not be sufficient for the respondents, because the question is whether these burdens, which were in a form very commonly used for other purposes, are shown to have been in fact imposed for the purpose of promoting economic development. Mr Martin argued strongly that that was not established. The disposals took place in 1987 and 1990. Neither witness was involved, or was even an officer of the Council, at the time. There was, said Mr Martin, no contemporaneous documentary material to support this purpose of imposing the burdens at the time. There might have been a record of some policy decision to that effect, or, for example, conveyancing files recording somewhere such a purpose. The 1986 review, it was said, revealed a purpose of wider diversification of the Leith economy than the aim of encouraging industry, so a wider provision might have been expected if the purpose was the promotion of economic development. The evidence did not make it possible to distinguish possible different purposes.

45. In the absence of direct contemporaneous evidence on the matter, the question comes to be whether the necessary inference can be drawn. We have reached the view that it can. We appreciate that there is, in relation to the subjects themselves, an unexplained gap in time between the decision of the Council in 1982 to take up the SDA offer and proceed to clear the land and the dispositions in 1987 and 1990. The purchasers were to develop the land, and thereafter to use it, only for “general industrial purposes including the feuars’ business as agricultural merchants”. It seems clear that this was the first development and use of the land following the clearance under the project. Mr Martin drew our attention to passages in the 1986 review document as indicating a shift of emphasis so as at least to add emphasis on development of the service sector. The focus, he said, by then was on preserving industrial development. On that basis, a wider use burden might have been expected. The nature of the purchasers’ business might seem to represent at best light industry, but the important thing, as we see it, is that this was development of an industrial site which is clearly established to have been a part of the Leith initiative. The SDA’s involvement seems to underline that. A burden reflecting the proposed use of the site (which does seem to us to have been in line with the regeneration project), rather than one including all the types of development by then contemplated in the area as a whole, seems to us natural. The 1986 review was still reflecting the need, to further the initiative as a whole, for land.

46. In reaching this view, we have referred to the following commentary by Professor Reid, at page 71, para. 4.12:-

“With affirmative burdens, such as an obligation to build a factory, the position may often be clear and straightforward. But a negative burden – one restricting the use to which the feu is put – is more likely to inhibit economic development than to promote it, and would usually fail to qualify. Doubtless, however, there will be exceptions, particularly where the wider background is taken into account. For example, a restriction might be the counterpart of a reduced price, or of a public grant. In that case it is arguable that economic development is promoted. Further, there is no requirement – as there is with conservation burdens – that the statutory formula should apply to the actual land that is being burdened. It is enough if economic development is promoted in the round.”

We have found that helpful, and certainly agree that when one finds a use restriction in this form it is necessary to look for something more. In this case we consider that there is sufficient.

47. Mr Martin drew attention to some perceived inadequacy in the narratives in the statutory notices, but stopped short of challenging their competency. In that situation, it seems to us that at most the limited and somewhat general nature of the information provided in the notices underlines the need to enquire further, and that is what we have sought to do.

48. Finally, we should consider Mr Martin’s submission as to the analysis of the burdens. Each of the two clauses, he argued, contained more than one burden, and the conversion notices should fall if all the component parts did not meet the test. Here, he was looking at the clauses in their original form, i.e. prior to the removal by the minute of waiver of the restrictions related to alcohol, and we accept that this is a legitimate approach where the issue is the purpose at the time of the creation of the burdens, although it is only the burdens as they stood at the time of the conversion notices which are before us. In our view, if indeed there was more than one burden, our jurisdiction as provided by Section 44(1) of the Act – “the Tribunal may make such order as it thinks fit discharging or, to such extent as may be specified in the order, restricting the notice in question” – would enable us to discriminate among the different burdens as necessary and appropriate. Mr Henderson made an alternative submission to that effect, and we do not accept that the respondents’ position is perilled on their inclusion in the notices of parts of the clauses which might not satisfy the requirement.

49. It is certainly the case that we have so far been considering the burdens simply as industrial use restrictions. We have already indicated that we are not troubled by the further restrictions related to alcohol, as these can be seen as further identifying the scope of the restriction. The proviso in relation to car parking seems to us to be just that: a proviso and not a separate burden. It would appear in any event to be spent. The other two parts are a prohibition of nuisances and a prohibition of nameplates, signs, etc., although only without the superior’s consent. These do appear technically to be separate burdens, and they are not ‘ancillary’ burdens within the meaning of Section 2(3) of the 2003 Act. Having rejected Mr Martin’s submission that the notices would fall as a whole if all parts do not satisfy the test, we doubt if this is of much significance. It seems to us that each of these burdens takes its context from the industrial use provision – nuisance or annoyance would for example no doubt be gauged in the context of industrial use. We do not propose to restrict the conversion notices so as to exclude these parts of the two clauses.

50. For all these reasons, we shall uphold the conversion notices, which of course can only apply to the burdens as they stood at 28 November 2004, i.e. after the minute of waiver.

Tribunal’s Consideration: Interest to Enforce

51. In our opinion, as a matter of law, it is not open to the applicants, the burdened proprietors, separately to challenge the respondents’ interest to enforce these burdens following their conversion into economic development burdens. We do not agree with Mr Martin’s submission that Section 18B(3)(b) provides for such a rebuttable presumption.

52. Economic development burdens fall into the class of ‘personal real burdens’, i.e. burdens recognised despite the lack of praedial interest of the holder of the burden. Section 8(6) of the 2003 Act makes clear that the new general test of interest to enforce, based on praedial interest, does not apply in the case of personal real burdens. It does not prescribe any other test of interest to be applied in the case of personal real burdens. The choice therefore is between on the one hand reverting to the common law in relation to interest to enforce, and on the other hand taking Section 18B(3)(b) of the 2000 Act as providing, in effect, that there can be no challenge based on interest. We note that Section 47 of the 2000 Act provides in relation to all the classes of personal real burden, including therefore such burdens created after 28 November 2004, that the holder “is presumed to have an interest to enforce the burden”, i.e. essentially the same provision as Section 18B(3)(b). The common law on interest to enforce, particularly in relation to superiors, was an area of difficulty and uncertainty, and it seems highly unlikely that the Parliament intended to leave it to be applied to these new forms of burden. Nor do we find any difficulty in interpreting a provision that interest shall be presumed as providing an irrebuttable presumption although that is not spelt out. Personal real burdens have been described as anomalous, as indeed their name suggests. They are limited to some very particular situations, and in our view it is clear that what the Parliament has in effect done is to establish the interest in the prescription of the particular requirements of each case of a personal real burden. In all cases of personal real burdens, the interest does not arise from ownership of any property. In the case of economic development burdens, it is established by the character of the holder of the burden, viz. the Scottish Ministers or a local authority, and the particular purpose for which the burden was imposed. Where these two requirements are satisfied, there is an interest to enforce. Mr Henderson’s references to the statutory powers of local authorities is perhaps not necessary in order to reach this conclusion, but certainly assists in explaining why this particular form of personal real burden was introduced, and the common expression, ‘promotion of economic development’ used in the current statutes, underlines that, even if these were at the time of the deeds, powers and not duties, of local authorities.

53. Mr Martin argued that Section 18B(3) might simply have provided that the holder ‘shall have title and interest to enforce … ’ That may be so, but we are not persuaded that the actual wording used requires us to hold that the provision means that there is to be an enquiry into the holder’s interest if it is challenged.

54 . In reaching this view, we also have in mind the other aspect of the statutory scheme, which is that the Tribunal has jurisdiction to discharge or vary personal real burdens as well as ordinary real burdens, applying substantially the same test. That test includes consideration of the extent of benefit which the condition confers – in the case of personal real burdens, on the public (Section 100(b)(ii)). If the public authority in question derives little or no benefit from the condition, the application for discharge is very likely to succeed. While, therefore, there is, if we are correct on this, a perpetual burden which cannot be challenged solely or directly on grounds of lack of interest, in practice burdened proprietors who can demonstrate lack of interest have, under the statutory scheme, a recognised means of ridding themselves of the burden.

55. We are thus able to decide this issue as a matter of law without requiring evidence. Accordingly, we see no reason to accede to the applicants’ wish to reserve their right to lead evidence on this issue. Had we considered that it was open to the applicants to seek to rebut the presumption, we would have allowed that and in effect heard such evidence along with the application for discharge on its merits. It would not then have been right to offer any concluded view at this stage on Mr Martin’s attempt to persuade us that the evidence which we did hear, perhaps also with what we could infer from our specialist knowledge and experience, was sufficient to overcome the presumption. As we have mentioned above, a difficulty of such an approach is that the statute has not prescribed any test. With all respect to Mr Martin, his submissions seemed to underline this difficulty. He suggested that the issue would have to be determined in the same way as a challenge to superior’s interest at common law. This tended to come down to consideration whether there had been material change of circumstances. Reference was also made to the factors, or some of them, listed in Section 100 of the 2003 Act in relation to reasonableness of applications to discharge or vary. We can readily understand arguments about the extent, or strength, of a local authority’s interest in enforcement of a use restriction in a situation in which the whole issue of development at the subjects is the subject of active consideration by the authority itself in its capacity as planning authority. That would seem likely to be an important factor when the reasonableness of the application to discharge these burdens comes to be considered. We have, however, some difficulty with the assertion that the authority has no interest in enforcing a burden of this kind.

Decision

56. Having determined that the burdens are valid economic development burdens and that there can be no challenge on the grounds of lack of interest to enforce, we are in a position now to determine in the respondents’ favour the question whether they are enforceable. We accordingly refuse the applications under Section 44 of the 2000 Act and Section 90(1)(a)(ii) of the 2003 Act. The application under Section 90(i)(a)(i) should now proceed as soon as conveniently possible.

57. Parties may consider it appropriate to await the end of the proceedings as a whole before considering any issue as to expenses.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 27 February 2008

Neil M Tainsh – Clerk to the Tribunal