This is an application under section 1 of the Conveyancing and Feudal Reform (Scotland) Act 1970 ("the Act") for the discharge of a land obligation affecting the subjects at number 6 Main Street, Houston, Renfrewshire. The subjects comprise a triangular shaped area of ground, extending to about 870 square metres, at the junction of Main Street and Houston Road. The site was developed in the mid 1940s by the erection of a single storey building for occupation as a Police House and Police Office.
The relevant land obligation was created in the Feu Contract between The Elderslie Estates Limited and The County Council of the County of Renfrew dated 7 and 19 and recorded in the Division of the General Register of Sasines for the County of Renfrew 29 all days of September 1942. The obligation is expressed in the following terms:- "(First) … And the said building shall be always appropriated to and for the uses and purposes of a Police Station and dwelling house and offices as aforesaid and for no other uses or purposes whatever except with the written consent of the Superiors".
The police house was declared surplus to the requirements of the Strathclyde Joint Police Board in October 1998 and has been unoccupied since then. At that time the Board's intention was to sell the house on the open market and retain the police office. In January 1999 the Superiors' Factors were approached for a Minute of Waiver. The response, on 2 March 1999, was that their clients would consider granting the appropriate Minute on payment of a consideration of £10,000 plus payment of all reasonable legal and negotiating expenses. On 23 March the Board's solicitor replied that such a proposal was not acceptable and pointed out that the Board were simply disposing of a single house and garage for continued use as a residential dwelling and the police office would be retained. The counter suggestion was a consideration of £1,000 plus expenses which was refused by the superiors. Despite protracted correspondence over many months parties failed to agree a compromise consideration and, on 20 November 2000, the Board made application to the Tribunal for a discharge.
The application is made under section 1(3)(c) of the Act which provides that the Tribunal may vary or discharge an obligation in relation to an interest in land on being satisfied that in all the circumstances the existence of the obligation impedes some reasonable use of the land.
At the hearing on 9 July 2001 the applicants were represented by Mr Duncan Campbell, solicitor and Deputy Head of Legal Services for Strathclyde Police. He led evidence from Mr Alan N McHardy, MRICS, a chartered surveyor employed by Strathclyde Police as Principal Property Services Officer.
The Elderslie Estates are owned by Mr Mark Crichton Maitland, FRICS FRSA, who represented himself at the hearing and gave evidence; he also led evidence from Mr Christopher Barr Addison-Scott, a chartered surveyor and partner in Messrs Cluttons. (Although we touch on the separate identities below we were satisfied that Mr Crichton Maitland could be treated as eadem persona with the respondents for the purposes of proceedings before us.)
Having regard to the provisions of section 2(2) of the Act, the application was intimated to such neighbouring proprietors as the Tribunal considered might be affected. Following such intimation, letters were received from Mr G D Crawford, Kilfillan, Houston Road, Miss Marjorie Goudie, 2 Speirs Road and Ms Lorna S Dunlop, 2 Four Windings. The general thrust of the letters was to contend that any change should be for residential use in keeping with the neighbourhood of the conservation village of Houston. Reference was also made to the desirability of a continuing local police presence. None of the parties who responded to the intimation appeared or was represented at the hearing.
At the start of the hearing, Mr Campbell told the Tribunal that the Board had decided the police office was not now required and the decision had been made to sell the whole property. This did not affected the substance of the matter for determination as it was clear that the only practical use for the office section would be to convert it for use as part of the dwelling.
The evidence of Mr McHardy was that the consideration of £1,000 offered by the Board was a fair and reasonable figure arrived at by comparison with sums paid in other cases where he had had to negotiate and agree payments for waivers or the acquisition of superiorities. He gave details of several transactions involving police property and payments of between £750 and £2000.
In March 2001 he instructed and obtained a valuation of the subjects from a firm of chartered surveyors in Paisley. Their opinion of the market value, without title restrictions, was:-
|(a)||the whole property comprising the house and the police office||£105,000|
|(b)||the house excluding the police office||£ 95,000|
|(c)||the cleared site sold for the construction of one house||£ 40,000|
The parties agreed that the cost of clearing the site would be of the order £5,000/£10,000.
Mr McHardy said it was important to realise the highest price possible as the proceeds would go to police funds for use as the Board saw fit. A disposal with the obligation in place would reduce the price.
Mr Addison-Scott said that, on behalf of Elderslie Estates he had to deal with about 6 applications per year for waivers. The range of consideration varied from £250 for minor matters, such as the construction of a conservatory, to £20,000 or more for larger developments. He made particular reference to a nearby site which was marketed by estate agents in 1999 at an asking price of £75,000. It realised in excess of £80,000. Before the sale, Mr Addison-Scott had negotiated a price of £10,000 for a Minute of Waiver of the land obligation affecting that site which had restricted its use to a garden. On the basis of that sale Mr Addison-Scott considered that the subject site could be worth £94,000/£95,000 and that a consideration of £10,000 for the Minute of Waiver was accordingly entirely reasonable.
Mr Crichton Maitland suggested that when the terms of the 1942 Feu Contract were agreed, it was for reasons pro bono publico that no financial consideration was included apart from a feu duty. He supported this view by reference to an article in a local newspaper in 1949 commenting on the death of a Major D K Michie who was factor of Elderslie Estates Ltd. The article made reference to the factor's "fine record of public service" and the valuable assistance he gave to many welfare organisations and charitable institutions. We note, however, that, the article related to Major Michie's personal commitment to public service and not to his actings in exercise of his duties as factor. There was no other evidence that the consideration in 1942 was less than market value. A feu duty was to be paid and there was no evidence that it was less than would be paid for comparable subjects at that time.
Section 1 of the Conveyancing and Feudal Reform (Scotland) Act 1970 is in the following terms:
"Variation and discharge of land obligations
1. - (1) The provisions of this section and of section 2 of this Act shall, without prejudice to any other method of variation or discharge, apply for the variation or discharge of any land obligation, however constituted, and whether subsisting at the commencement of this Act or constituted thereafter:
Provided that the provisions of the said sections shall not apply in relation to an obligation specified or referred to in Schedule 1 to this Act.
(2) For the purposes of this section and of section 2 of this Act, a land obligation is an obligation relating to land which is enforceable by a proprietor of an interest in land, by virtue of his being such proprietor, and which is binding upon a proprietor of another interest in that land, or of an interest in other land, by virtue of his being such proprietor.
For the purposes mentioned in this subsection, an obligation includes a future or contingent obligation, an obligation to defray or contribute towards some cost, an obligation to refrain from doing something, and an obligation to permit or suffer something to be done or maintained.
(3) Subject to the provisions of this section and of section 2 of this Act, the Lands Tribunal, on the application of any person who, in relation to a land obligation, is a burdened proprietor, may from time to time by order vary or discharge the obligation wholly or partially in relation to the interest in land in respect of which the application is made, on being satisfied that in all the circumstances,
(a) by reason of changes in the character of the land affected by the obligation or of the neighbourhood thereof or other circumstances which the Tribunal may deem material, the obligation is or has become unreasonable or inappropriate; or
(b) the obligation is unduly burdensome compared with any benefit resulting or which would result from its performance; or
(c) the existence of the obligation impedes some reasonable use of the land.
(4) An order varying or discharging a land obligation under this section may direct the applicant to pay, to any person who in relation to that obligation is a benefited proprietor, such sum as the Lands Tribunal may think it just to award under one, but not both, of the following heads -
(i) a sum to compensate for any substantial loss or disadvantage suffered by the proprietor as such benefited proprietor in consequence of the variation or discharge; or
(ii) a sum to make up for any effect which the obligation produced, at the time when it was imposed, in reducing the consideration then paid or made payable for the interest in land affected by it;
but the Tribunal may refuse to vary or discharge a land obligation on the ground specified in subsection (3)(c) of this section if they are of the opinion that, due to exceptional circumstances related to amenity or otherwise, money would not be an adequate compensation for any loss or disadvantage which a benefited proprietor would suffer from the variation or discharge.
(5) The power conferred by this section to vary or discharge an obligation includes power to add or substitute any such provision (not being an award of money otherwise than by way of compensation under subsection (4) of this section) as appears to the Lands Tribunal to be reasonable as the result of the variation or discharge of the obligation and as may be accepted by the applicant; and the Tribunal may accordingly refuse to vary or discharge the obligation without some such provision.
(6) On the taking effect of an order under this section varying or discharging to any extent a land obligation, any irritant or resolutive clause or other condition relating to the enforcement of the obligation shall, in relation to any act or omission occurring after the date of such taking effect, be effective (if at all) only in so far as it would have been effective if the obligation had to that extent been varied or discharged by the person entitled to enforce the obligation; and any such added or substituted provision as is referred to in subsection (5) of this section shall be enforceable in the same manner as the obligation to the variation or discharge of which it relates."
The relevant provision of the Human Rights Act 1998 is section 3(1) which is in the following terms: "So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights."
Protocol 1, Article 1 (hereinafter 'Article 1') of the European Convention on Human Rights ("ECHR") is in the following terms:-
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with general interest or to secure the payment of taxes or other contributions or penalties."
Mr Campbell accepted that although the respondents did not oppose the application on its merits, he had an onus to satisfy the Tribunal that proper grounds for discharge had been established. This, he submitted, was clear. The particular purpose of the original obligation had not been established. The building was no longer needed for police purposes. The obligation impeded the reasonable use of the subjects as a dwelling. The application therefore fell within section 1(3)(c). There was no reason not to grant it.
The real issue was compensation. On this matter the onus was on the respondents. Mr Campbell acknowledged the importance of the 1998 Act. Both the Tribunal and the Police Authority had to act in accordance with the Convention. The issue here was the application of Article 1. He did not dispute the respondents' entitlement to found on this Article. He accepted that "possessions" included the right to enforce an obligation. He referred to the decision in Sporrong and Lonnorth v Sweden 1982 5 EHRR 35. In his submission the matter was governed by the test applied in that case at paragraph 69, in particular, the "fair balance" test. He submitted that the current established Scots Law was consistent with the proper application of the Protocol and that the respondent could succeed only by showing that the interpretation in the cases of McVey and Another v Glasgow Corporation 1973 SLT (Lands Tr) 15 and Robertson v Church of Scotland General Trustees 1976 SLT (Lands Tr) 11 was offensive to proper construction of the Protocol in the present circumstances.
It was to be noted that the Tribunal had always been entitled to have regard to the provisions of the ECHR: per T Petitioner 1997 SLT 724. The fact that it had never regarded its established approach as inconsistent with the Convention was relevant. In any event, it was clear that there was a very wide margin of appreciation. The Tribunal should have no difficulty in finding that its established approach was entirely consistent with the proper application of the Protocol. Any doubt was resolved by the fact that the 1970 Act did provide a route for compensation. The nature of that compensation was well within the margin of appreciation. It was not necessary that compensation should be full market value of the right being lost: Lithgow and Others v United Kingdom 1986 8 EHRR 329.
After some discussion in response to questions by the Tribunal, Mr Campbell made it clear that he did not take any point based on the date of Mr Crichton Maitland's acquisition of title. He was content that the matter be dealt with as if Elderslie Estates Ltd were respondents and by reference to their rights as in existence before the 1970 Act. This was a sensible approach in the present case where the recorded title remains with Elderslie Estates Ltd and difficult questions might have arisen had we been required to consider the interests of Mr Crichton Maitland himself. It is, for example, clear that by the time he acquired his title the rights he so acquired were subject to the operation of the 1970 Act as interpreted in McVey and Robertson. He accordingly had, at no time, a right to control the use of the dominium utile free from the possibility of recourse to the Tribunal. As will be seen Mr Crichton Maitland's argument did not require consideration of his own personal position. If the established interpretation of the Act was incompatible with the provisions of the relevant Article 1 his main argument would have been successful. The point might have had some bearing on quantum.
Mr Campbell also made it clear that the figure of £1,000 offered by the applicants should be treated as an attempt to make a proper assessment of compensation due under section 1(4)(ii). In other words, it was a sum to compensate for any shortfall in consideration in 1942 attributable to the restriction on use for police purposes. We did not find this entirely easy to reconcile with the evidence led from Mr McHardy or with the terms of correspondence between the parties. However, Mr Campbell accepted expressly that his position was that if the applicants were wholly successful, the sum of £1000 should be awarded under reference to that subsection.
Mr Crichton Maitland made a lucid submission under reference to a written statement of his case. This was a model of its kind, containing as it did succinct analysis of each step in his argument supported by reference to relevant authority and with appropriate brief quotation of salient text. Our analysis under the heading "Discussion" below is largely based on this material and for present purposes we need only summarise it shortly.
Mr Crichton Maitland submitted that under the 1970 Act the Tribunal had a wide power to award compensation under section 1(4)(i) or (ii). The respondents' claim was under section 1(4)(i), in other words, compensation for "loss or disadvantage" suffered. By the decisions in McVey and Robertson, the Tribunal had interpreted these words as not extending to the right to extract a fee for a waiver. He accepted that his claim would be precluded by this authority. However, under the 1998 Act, the Tribunal was obliged to interpret the 1970 Act in a manner compatible with the ECHR. This, he submitted, required a fresh look at section 1(3) of the 1970 Act. The rights of the superior should be assessed by regard to their real nature - the right was in reality a right to extract money; this was a possession; the established approach of the Tribunal would lead to loss of that possession; and this was, in effect, deprivation within the meaning of the Article. He referred to Sporrong; Marckx v Belgium 1979 2 EHRR 330; Van Marle and Others v Netherlands 1986 8 EHRR 483; Lithgow and Others v United Kingdom 1986 8 EHRR 320; Stran Greek Refineries and Stratis Andreadi v Greece 1994 A 301-B; Pressos Compania Naviera SA and Others v Belgium 1995 21 EHRR 301; Gasus Dosier-und Fordertechnik GmbH v Netherlands 1995 20 EHRR 403; Katikaradis and Others v Greece 72/1995/578/664.
He accepted that such deprivation could be permissible if it was in the general interest. A general interest rule had been upheld and applied in the cases of Sporrong; Katikaradis; James; Lithgow and Gasus. However, it was important to see the particular circumstances of each case. The respondents did accept that there was a legitimate public interest to be considered in the present case. The question was whether a fair balance had been applied. He submitted powerfully that it was clear that no proper balance had been attempted. The right to payment for waiver in absence of the Tribunal intervention was undisputed. This right had been removed without payment. This was disproportionate interference: see James paragraph 57. There was no justification for it. Section 1(4)(i) was capable of being interpreted so as to allow an award of compensation for their loss. The Tribunal should, accordingly, now interpret it in that way. On the evidence £10,000 was reasonable.
In response, Mr Campbell emphasised his submission that the matter was covered by the broad tests set out in Sporrong. The scheme of the Act made provision for compensation. On any view of the respondents' argument, the approach taken by the Tribunal was not inconsistent with a proper application of Article 1. However, he did not concede that the right in question was properly described as one to obtain money. This was simply a by-product. A right to extract money would not have been in the mind of the original disponer. It certainly would not have been in the mind of the original disponee that he was agreeing to a condition which would allow money to be extracted from him. Mr Campbell submitted that the Tribunal should approach the matter on a targeted assessment of the specific relevant right of the superior. The superior had an ability to give or withhold consent. It was a right to control, not a right to extract money. He did not dispute that the respondents were being deprived of their right to control use of the subjects.
Although the subjects comprise a dwellinghouse and office they can be regarded as being of the nature of a dwellinghouse. In terms of the land obligation they cannot be used as such other than for police purposes except with the superior's consent. They are no longer required for such purposes. The superior refuses to consent without payment. We have no difficulty in finding, on the evidence, that the existence of the obligation restricting use to such purposes impedes reasonable use of the subjects in terms of section 1(3)(c).
We have considered the written submissions from neighbouring proprietors as to the desirability of maintaining the obligation with a view to enforcing a continued residential police presence. However we are satisfied that it is no part of our function as a Tribunal to have any role in decisions relative to operational policing policy. We can therefore give no weight to this submission. We have also considered the submission that if the restriction to police use is removed, the use of the subjects should nevertheless be controlled in a manner similar to the adjacent subjects. We are not, however, asked to discharge all the land obligations currently burdening the subjects. We are concerned only with the restriction to police use and we consider it inappropriate to attempt to replace such an obligation with any new amenity burden.
As we have said, Mr Campbell's position was that compensation should be awarded under the provisions of section 1(4)(ii) in the sum of £1000. It could not seriously be disputed that the sum of £10,000 which was claimed as a reasonable estimate of money which would have been obtained in exchange for a Minute of Waiver, would indeed have been an entirely modest figure, but for the power given to the Tribunal by the 1970 Act. If we were compelled to seek a new construction of section 1(4)(i) in order to make it compatible with the convention and were, accordingly, able to make an award under that section, the figure of £10,000 would have been a reasonable award.
The issue between the parties turns solely on the implications of the application of Article 1. Section 3 of the 1998 Act requires legislation to be read and given effect in a way which is "compatible" with the Convention rights. It is not disputed that the relevant rights are those conferred by that Article. It is clear that we must test the established approach to the provisions of the 1970 Act by reference to the provisions of the Article.
Mr Crichton Maitland contended that the 1970 Act and the case law developed around it had to be interpreted 'afresh' in light of the incorporation of the Convention into Scots Law. As a preliminary, it may be observed that there appears to be no question of interpreting the case law afresh. The decisions in McVey and Robertson were clear in their effect and are not themselves subject to re-interpretation. The thrust of the submission is that the Act should be interpreted afresh without the constraint of these decisions.
There was no attempt to base such submission on any explicit provision of the 1998 Act and we are not aware of any other potential basis for it. The relevant provision of the 1998 Act is section 3(1) which provides as follows: "So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the convention rights".
Whatever the effect of this provision in a case where a court or tribunal is faced for the first time with a problem of interpretation, we are not persuaded that it entitles us to ignore statutory interpretation established by authority. On the face of the section, our task is simply to consider whether any particular interpretation is compatible with the relevant Convention rights. There is nothing in the terms of section 3 to require us to take an entirely fresh approach to the interpretation of section 1(4)(i) of the 1970 Act. We find nothing which would entitle us to do so. As we see it, our task is to attempt to construe the statutory provisions in the substantive legislation in the usual way and then to consider whether the result is compatible with the Convention rights. If it is not, a need will arise for consideration of whether or not the substantive statutory provisions are capable of an interpretation which is so compatible. If not, a declaration of incompatibility may be required in terms of section 3(4). If the established interpretation is compatible with the Article, section 3 has nothing more to say.
We find this approach consistent with a dictum of Lord Woolf CJ in Donoghue v Poplar Housing and Regeneration Community Association Limited and Another a Court of Appeal decision issued on 25 April 2001. At paragraph 75 he said: "However, the following points which are probably self-evident should be noted: (a). Unless the legislation would otherwise be in breach of the Convention, section 3 can be ignored; so courts should always first ascertain whether, absent section 3, there would be any breach of the Convention".
The interpretation of section 1(4)(i) as established by the cases of McVey and Robertson is not in doubt. Loss of the opportunity to extract money for permission to use subjects in a particular way is not covered by that section. "The basic question is whether Parliament intended compensation to be awarded by the Tribunal for the removal of the right to extract money. We are clearly of the view that it did not": Robertson, page 13.
We shall return to the detail of the decisions in these cases after looking at the requirements of Article 1. It may be noted at this stage that the right which was being lost was described in Robertson as a right of control. The claim presented was that the superiors, by virtue of the land obligation had a right to control building. They did not, in fact, wish to prevent building but "their right to impose a veto - if they so desired - was a valuable asset which could be quantified in money terms". The Tribunal referred to the loss as the interest "in obtaining money in return for selling the superiority or granting a Minute of Waiver" and said: "It is unnecessary to repeat the detailed reasons … for deciding that Parliament did not intend us to grant compensation for the removal of such a right". The Tribunal faced up to the reality that this right had a ransom value prior to the Act and used language appropriate to that reality. We do not consider ourselves bound to accept their reference to a 'right to extract money' as an accurate description of the respondents' possessions for the purposes of Article 1 - which was not, of course, in issue before the Tribunal at that time.
In considering the application of the relevant provisions of Article 1 to the present situation it is convenient to follow the order taken by Mr Crichton Maitland and to look first at the proper application of the term "possessions" as used in the Article. Mr Campbell conceded in broad terms that the respondents' rights in relation to the land obligation were "possessions", for that purpose but did not accept that they could be described as a right to extract money. It was a right to control use.
The main plank of the respondents' argument was that the possession which was protected by the article was the "right to extract money" in exchange for a waiver. It was not argued that such a right was, in formal legal terms, part of the bundle of rights in the superiority title. The formal legal right was the right to enforce the real obligation. There was no doubt that the superior's right could be described as the right to control use of the dominium utile by enforcement of the real conditions but that particular description was irrelevant. The right to control had a value and the reality behind any formal legal description was that the superior possessed a right to extract money.
The approach of identifying the reality of the nature of a particular possession was said to be justified by the terms of the decision in Sporrong where, at paragraph 63, the Court said: "In the absence of a formal expropriation, that is to say a transfer of ownership, the Court considers that it must look behind the appearances and investigate the realities of the situation complained off. Since the Convention is intended to guarantee rights that are "practical and effective" it has to be ascertained whether that situation amounted to a de facto expropriation as was argued by the applicants".
The issue there being discussed was that of expropriation, but we accept that it is also appropriate, in seeking to identify possessions, to look behind appearances and ascertain the reality of the situation. Although we have regard to the broad approach illustrated in Van Marle to which we return below, we consider that an important part of that reality must be the question of how any alleged right of property could have been made effective but for the actings alleged to constitute dispossession.
Mr Crichton Maitland presented his case squarely on the basis of deprivation of possession. He identified the different concepts set out in Article 1, as analysed in the relevant European jurisprudence, but in his submission there was no need to take refuge in the broad provision relating to peaceful enjoyment. It was not a case of control of use of property. He was being deprived of the right to payment for a waiver. This fell to be treated as an expropriation of his possession.
We do not find his analysis wholly persuasive. We are satisfied that the primary right of the respondents is accurately described as a right to control the use of the dominium utile. The power given to the Tribunal could well be described as a control of the use made of that right. However, as the method of control produces a permanent change effectively removing the right, we accept that there is clearly a sense in which he is deprived of a possession. But it may be misleading to refer to that as a "right to extract money". It is in no sense a right enforceable by way of legal process. No money is due to the respondents. They have no right to payment. There is accordingly no right to extract payment. Unless someone is prepared, voluntarily, to pay money in exchange for a Minute of Waiver, no money is due. Once an appropriate agreement is concluded in relation to such a waiver then, of course, a superior would be able to sue for payment. His right to money would depend on the terms of the agreement. It is not a right which he has in relation to the land obligation. However, we entirely accept that in absence of our powers under the Act, the superior's right of control would have a cash value. It is a right with some similarity to a right of ownership of a 'ransom' strip; a piece of land which has no use value in the hands of the owner but is needed for a neighbouring development.
Mr Campbell made clear his position that we should identify the precise right in question and not attempt to approach the matter by reference to what might have been described as the "whole bundle of rights' associated with the respondents' possession of the superiority. However, he accepted that the respondents did have a right which could be described as a possession for the purposes of Article 1 and that the effect of the 1970 Act was to deprive the respondents of this right. We think it unnecessary to consider the detail of the authorities referred to in this connection or to express any concluded view upon it. There is no doubt that as a result of the operation of the 1970 Act the respondents will lose a potentially valuable right to control use of the subjects. Although it may be that the matter would more accurately be dealt with as an example of control of a use of rights, the main submission on behalf of the applicants was that, on any view, the extinction of the right in this case fell within the exceptions set out in Article 1 in that it was in the public interest and subject to the conditions provided for by law. We can approach the matter giving the respondents the benefit of accepting that exercise of our jurisdiction to discharge the land obligation is properly characterised as leading to a deprivation of possessions. The question then is whether it was justifiable under the provisions of Article 1.
The Article has been described as comprising three distinct rules. "The first rule, which is of a general nature, enounces the principle of peaceful enjoyment of property; it is set out in the first sentence of the first paragraph. The second rule covers deprivation of possessions and subjects it to certain conditions; it appears in the second sentence of the same paragraph. The third rule recognises that the States are entitled, amongst other things, to control the use of property in accordance with the general interest by enforcing such laws as they deem necessary for the purpose; it is contained in the second paragraph" Sporrong, paragraph 61. However, the authorities referred to by the respondent show a repeated emphasis on the need for a balance between the general interest and the protection of the individuals rights. Mr Campbell referred to Sporrong at paragraph 69 where, in relation to the first rule, it was said: "the Court must determine whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights". In that case the Court went on to comment that "the search for this balance is inherent in the whole of the Convention and is also reflected in the structure of Article 1." A recent example of this emphasis is found in Pressos, at para. 38: "An interference with the peaceful enjoyment of possessions must strike a 'fair balance' between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, including therefore the second sentence, which is to be read in the light of the general principle enunciated in the first sentence. In particular there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions.
Compensation terms under the relevant legislation are material to the assessment whether the contested measure respects the requisite fair balance and, notably, whether it imposes a disproportionate burden on the applicants. In this connection, the taking of property without payment of an amount reasonably related to its value will normally constitute a disproportionate interference and the total lack of compensation can be considered justifiable under Article 1 only in exceptional circumstances".
We think it plain that a broad approach is required and little assistance is to be obtained in the circumstances of the present case from analysis of results in other circumstances. An example of the broad approach may be found in the decision in Van Marle. In that case, four persons who had been in practice for many years as accountants applied to be registered as certified accountants in accordance with new Acts of the Netherlands Parliament designed to regulate the profession of accountant, which until then had not been subject to statutory control. A commission was set up to assess the qualifications. It is unnecessary for present purposes to consider further the nature of that process which was itself subject to challenge. What is of interest is the approach taken by the Court to the question of deprivation of possession. The claimants alleged that as a result of the refusal to accept them as certified accountants their income and the value of the goodwill of their accountancy practices had diminished. They maintained that they had thereby been subjected to an interference with the exercise of their right to the peaceful enjoyment of their possessions and to a partial deprivation thereof without compensation. The government in opposing this argued that the applicants had no acquired right to the use of the title 'accountant'. They had freedom to use the title but it was not protected. There was, under Netherlands law, no such thing as a right to goodwill.
The Court, however, accepted that the right relied on by the applicants could be likened to the right of property embodied in Article 1. "By dint of their own work, the applicants had built up a clientele; this had in many respects the nature of a private right and constituted an asset and, hence, a possession within the meaning of the first sentence of Article 1." The refusal to register the applicants as certified accountants radically affected the conditions of their professional activities and the scope of those activities was reduced. Their income fell, as did the value of their clientele and, more generally, their business. Consequently there was interference with their right to the peaceful enjoyment of their possession. However, the Court also concluded that the interference was justified. The relevant Acts were designed to promote the "general interest". Their purpose was to structure a profession that was important to the entire economic sector by providing the public with guarantees of the competence of those who carry on that profession. A fair balance between the means used and the intended aim was at any rate ensured by transitional provisions enabling the former unqualified accountants to gain entry to the new profession on prescribed conditions. There was accordingly no breach of Article 1.
Other cases also show a broad approach. In James and in Lithgow the Court supported the view that the three distinct rules referred to in Sporrong, supra, were not entirely separate. 'The three rules are not, however, distinct in the sense of being unconnected. The second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in light of the general principle enunciated in the first rule': James para 37.
We have not found any of the cases cited to be of direct application to the circumstances of the present dispute although we take from Van Marle that the fact that the respondents have no directly enforceable right to 'extract money' is in no sense conclusive.
The respondent fully accepted that deprivation of possessions may be permissible under Article 1 if it is in the public interest. He accepted that there was a public interest element. He conceded that: "As far as money payments in return for the grant of Minutes of Waiver are concerned, … the public interest is longstanding and has been clearly set out by the Scottish Law Commission and others". He supported this by a reference to the Report of the Commission on the Abolition of the Feudal System at paragraph 5.60. It may be noted, for completeness, that the Commission, at that paragraph, were dealing with the current situation. The reference was to the right which remained after the coming into force of the relevant provisions of the 1970 Act as interpreted by the Tribunal. In other words the reference was to payments for a waiver to avoid the trouble, delay, expense and inherent uncertainty of an application to the Tribunal. This was one of the abuses of the feudal system which had led to demands for reform. The reference provides an illustration of the fact that the 1970 Act as interpreted by the Tribunal did not, itself, remove the whole value of the superior's right to control use. We have, of course, accepted that, by providing a mechanism to supersede that right in specified circumstances, the Act greatly reduced the potential value.
In their submissions, neither party made any attempt to define the nature of the public interest to be weighed against the deprivation. They expressed their respective contentions in terms of whether a 'fair balance' had been applied. Mr Campbell contented himself with the proposition that it was clear on any view that the established approach fell comfortably within a broad fair balance. The respondent contended that a fair balance had not been applied in relation to section 1(4)(i). By this he meant that there was an absence of proportionality between the means employed and the public interest aimed to be realised. It was plain, he said, that the balance was upset because the power and economic interests of the superior were clearly acknowledged but no compensation was provided for loss of these interests. It was plain that the respondents would lose their rights. They would not be compensated. Therefore, he submitted, the balance was unfair.
The analysis of the parties in this case has led to agreement that we treat it as one involving deprivation of possession. However the nature of a particular right and the way in which it becomes unenforceable are important aspects of the whole assessment. There is, for example, an obvious difference between cases where property of a party is expropriated for use by another and circumstances where a general scheme of control leads to a particular asset having no value.
In considering whether the effect of section 1(4)(i) as currently understood is compatible with Article 1 it is, in our view, essential to consider the whole scheme of the 1970 Act; the nature of the respondents' rights; and the effect on other parties involved. In the normal course it can be expected that Parliament will have carried out a balancing of the various interests of citizens before any legislation is enacted. That would be so even before the present emphasis on the importance of the Convention. The general interest may lie in the protection of individuals or bodies such as the present applicants in relation to their rights in their own possessions. What we have in the present case is a general scheme whereby an independent tribunal has been given power to consent to a proprietor of an interest in land making a reasonable use of that land in face of what can in broad terms be described as an unreasonable withholding of consent. Because of that power, the superior's ability to withhold consent no longer has the same cash value.
Although we did not hear submission on the scheme or purpose of the Act, it is plain that the relevant provisions reflected Parliament's recognition that some mechanism was required to balance the interests of superiors in enforcing their contractual rights to control use and the proprietor's right to make reasonable use of the subjects in which he held the dominium utile. As can be seen from the provisions set out above, the machinery established gave the Tribunal power to remove the rights of control only in certain circumstances. Under subsection 1(3)(a) the party applying for discharge of particular rights of control must satisfy the Tribunal that 'the obligation is or has become unreasonable or inappropriate'; under (b) that the obligation is 'unduly burdensome'; or under (c) that 'the existence of the obligation impedes some reasonable use of the land.' In other words, it can be seen that the broad thrust of the legislation was that unreasonable exercise of a right by a superior was no longer to be possible. The interpretation of the compensation provisions contended for by the respondents in McVey and Robertson rested, explicitly or implicitly, on the proposition that, although the superior's right to act unreasonably was being removed, he was nevertheless entitled to some compensation for his inability to obtain money by acting in that way. The present claim is essentially to the same effect.
It is a feature of the present case that the nature of the public interest can be illustrated effectively simply by consideration of the position of the applicants. Their circumstances can be taken as a typical example of the reality of the overall balancing exercise involved.
The applicants, or their predecessors, contracted with the superiors for the acquisition of bare land for building. As feuars they would incur the entire expense of the building work carried out. They agreed to a variety of conditions regarding the use to which the land could be put. One condition was the land obligation restricting use to police purposes. The applicants have now demonstrated that it would be inappropriate to enforce that condition because it impedes a reasonable use of the land. They might equally have persuaded us that it was unreasonable or inappropriate because of the change in policing methods or because it was unduly burdensome compared with any benefit to the superior. There is nothing to suggest that the assessment of compensation should depend upon the ground established as the basis for the Tribunal's exercise of their broad discretion to discharge. There was no suggestion that the superiors had any interest to prevent use of the subjects for a purpose other than policing. In short, they had a right to control use but no apparent interest in doing so. It may be observed, in passing, that the original use was residential use together with use as a police office. The applicants seek to free the subjects for residential use only.
But for the 1970 Act, the applicants would have had to go ahead with a change of use and take the risk that if the superiors sought to exercise their right to prevent this, the applicants would be able to discharge the onus of satisfying the Court that the superiors interest to do so had gone. The alternative would be to pay for a Minute of Waiver at whatever figure the respective negotiating strengths of the parties produced. This might depend on a variety of factors but would largely be determined by the difference in value to the applicants of the use they could make of the subjects with or without the burden. The figure would not be determined by any factors specific to the superiors. Assessment of value in such circumstances is often described as being on a ransom basis. The term is used by valuers as a recognition of the nature of the valuation exercise involved. It is not necessarily used in a pejorative sense. Prior to the Act a superior could have expected to realise a ransom value. The effect of the Act is that he is unable to extract this value. It is this loss which is the basis of the present claim.
It is plain that an important aim of the Act was to allow owners of property to use their property without being forced into ransom negotiation in circumstances where the obligation no longer had a valid purpose. The construction contended for by the respondents would require the applicants to go through the same negotiating exercise. If they could not reach an acceptable ransom figure they would then require to carry out a similar exercise before the Tribunal. As the superior's real loss on this argument would be the full ransom value, the Tribunal would be faced with the entirely artificial task of assessing an appropriate ransom value as between the parties, in circumstances where the parties would, by their very failure to agree such figure, have shown that the Tribunal's assessment was not soundly based in reality.
Mr Crichton Maitland attempted to avoid this conclusion by referring to the wide discretion which the Act appeared to confer upon the Tribunal in relation to the quantum of compensation. It is important, however, to recognise that the discretion was to award "a sum to compensate for any substantial loss or disadvantage". A Tribunal could not properly exercise a discretion in this connection without being able to make an assessment of the amount of the relevant loss or disadvantage. If loss of a right to extract money was a relevant loss for the purposes of section 1(4)(i), the Tribunal would have no basis for awarding only part of it.
The respondents do not suggest that the Act is incompatible with the terms of the Article on the basis that it provides no machinery for State compensation. There is no doubt that any compensation would have to be paid by the applicants. In other words, their argument would require the Act to be interpreted in such a way as to compel payment to be made by the person whose right to use his own property is burdened by a condition which, ex hypothesi, has been found to be unreasonable.
As we have seen Mr Crichton Maitland did not contend that the provisions of Section 1(4)(i) were incapable of construction in a way compatible with Article 1. He stressed that the section gave a wide discretion to the Tribunal and could be read without difficulty as wide enough to allow compensation for the loss he claimed. We accept that this is so. The proposition that an alternative construction was possible was supported by reference to the views of Professor Halliday in his annotation to the Conveyancing and Feudal Reform (Scotland) Act 1970, Second Edition, page 41. Although we do not doubt the proposition, this particular reference calls for further comment. After the observations to which Mr Crichton Maitland drew attention, Professor Halliday, at page 41, continued: "These criticisms are not directed to the result at which the Tribunal arrived but rather as to the reasoning on which it was based. A simpler argument would have been that the 1970 Act must be construed in the context of that field of law to which it relates, that a land obligation should therefore be one which there is a praedial interest to enforce and, although the authorities are not uniform, it is at least doubtful whether a claim to extract money for a waiver when there is no amenity value to protect is such an interest. Accordingly a land obligation of that kind, although technically enforceable in the sense that it was expressly stipulated in the feu grant, would have been of dubious value if the superior's interest to enforce it was under challenge, and so its discharge did not constitute a substantial loss within the meaning of section 1 (4)(i) of the Act.' In other words, it may be said, broadly speaking, that in circumstances in which the Tribunal has been persuaded that discharge is appropriate the superior's titular right to control use of the dominium utile may have been more apparent than real.
In McVey (at pages 18 to 19) the Tribunal examined the nature of the right in question. They commented that the nature of what they described as the superior's "right or power to obtain money" in return for a Minute of Waiver was lacking in judicial authority. They thought that it was because of a rise in land prices that the subject of waivers had come to prominence. They recognised that it was not surprising that superiors would seek to obtain a share of the increased development value realised by their consents. However they pointed out that the superior's interest did not include a reversionary interest in development value. The feuar "owns a separate estate in land, namely the dominium utile, which entitles him in perpetuity to the exclusive use of the land and its fruits." There were two proprietors of two separate estates in the land "but it is the owner of the dominium utile who is the effective proprietor. There is no indication under feudal law of any obligation on the feuar to share with his superior any unexpected increase in the fruits of his land or its development potential". The power of a superior to obtain money in return for granting a relaxation of a feuing condition was recognised as flowing entirely from his ability to prevent a desired development unless his consent was obtained.
The Tribunal observed that the superior's right or power to obtain money for a waiver could be lost if the right to enforce disappeared through absence of legal interest to enforce. Such interest was, of course, presumed in the case of a superior but could be lost at common law. Because of the presumption, the onus would be on the feuar to demonstrate loss of superior's interest. However the Tribunal, under reference to the decision in Howard de Walden Estates Ltd v Bowmaker Ltd 1965 SC 163, referred to three possible circumstances which would enable a feuar to negative the existence of a superior's interest. "These were, firstly where the superiors consent is shown to be withheld only because he is acting in mala fide or oppressively or capriciously. Secondly, where the superior can be shown to have acquiesced in encroachments on the restrictions. (A situation which clearly does not apply in the present case). And, thirdly, where it can exceptionally be proved that owing to change of circumstances the restriction has ceased to have any content or meaning, and where the superior has lost any interest to enforce a condition which is useless to him or anyone else".
Although there was no record of a case ever succeeding on the last ground the Tribunal noted that it was a ground which bore close relationship to the Tribunal's jurisdiction under the 1970 Act. They went on to quote Rankin on Land Ownership, 4th Edition, page 478, "the interest … must be maintained bona fide and not merely so as to extort a consideration for the relaxation of the condition".
In short, it was recognised that the power to obtain money depended on the right to enforce the control of use; that it was based on a right which, due largely to increase in land values, had grown to have an importance which would not have been in the contemplation of the original parties; and that it was a right which, as things stood before the Act, could have been lost where the condition to be enforced was of no practical value in relation to control of use as such. It is obvious that if the right to enforce is lost, there is no value left. The power to extract money simply does not exist.
In weighing the impact of the 1970 Act on the superior's rights for the purposes of Article 1, it may therefore be said that the Act was not creating an entirely new basis upon which a superior's right of control would be unenforceable but was giving definition to circumstances in which that would occur. There can, of course, be no doubt that the Act not only extended the circumstances in which the right would become unenforceable but made it very much easier for the burdened feuar to bring that about. Both these matters would tend to reduce the value of the right to control and consequently the figure obtainable for a minute of waiver.
Section 1(4)(i) may have to be applied in the case of a range of classes of benefited proprietors. It was not suggested that this in itself supported the view that there was any lack of proportionality. Provision is clearly made for protection of benefited proprietors with real interests to protect. If the Tribunal does decide that discharge is appropriate in such circumstances, provision is made for compensation. It may be noted that the tendency of the Tribunal is to see the prime protection as being a refusal to vary rather than payment of compensation where the obligation still serves a reasonable purpose. The Tribunal is slow to discharge a burden which serves its original purpose: Tully v Armstrong SLT (Lands Tr) 42 which was an authority listed by the applicants, is an example. Where such a discharge is made, appropriate compensation will be awarded for the loss to the benefited property: see, for example, Leney v Craig 1982 SLT (Lands Tr) 9.
We are in no doubt that the provisions of the 1970 Act serve a legitimate aim in the public interest. The discussion in both McVey and Robertson was not conducted in terms of the Convention and although it touched on the intentions of Parliament it was unnecessary for these intentions to be defined in specific terms. The effect of the decisions was to accept that it was the intention of Parliament to remove the power of superiors to hold their vassals to ransom to any extent by use of a contractual right for a purpose for which it was not intended. That is an aim which, in itself, leaves little scope for any subsequent balancing exercise. A balancing exercise has been carried out in relation to the rights of parties under the contractual arrangements. The power of one party to extract money from the other in circumstances which were unlikely to have been contemplated by the parties at the outset, has been perceived as producing an unfair imbalance of property rights. The aim has been to correct that imbalance.
We are satisfied that a fair balance has been drawn in the present case. The remedy provided by the 1970 Act is proportional to the needs of the situation. We consider it particularly relevant that the respondents' rights are protected by the requirement that the applicant satisfy the Tribunal that the situation is one where exercise of the right would, on specified grounds, be in broad terms inappropriate or unreasonable; that thereafter the Tribunal has a discretion as to whether there should be a discharge; and that where removal of the right to enforce an obligation does give rise to loss or disadvantage to a benefited proprietor of property, provision is made for assessment of compensation.
It is also relevant that if a benefited proprietor is able to establish that the intention of the original obligation was to reserve a right to make a claim of any sort, any shortfall in the consideration paid at that time could be the basis for a claim under section 1(4)(ii).
We are accordingly satisfied that the interpretation of section 1(4)(i) as established in McVey is compatible with Article 1. It should be added that we are also satisfied that there would be no difference in outcome by looking at interpretation of section 1(4)(i) 'afresh'. The factors which influenced the Tribunal's interpretation in the past remain relevant. Although it might be thought that a fresh approach would allow us to look for a construction which was 'more compliant' than the established construction, that would be an oversimplification. It is not disputed that Article 1 requires a balancing exercise. A construction which gave more weight to protection of the respondents' interests would simply change the balance. It would not, of itself, lead to a result which was in some sense better for the purposes of Article 1.
Finally, it may be observed that the report of the Scottish Law Commission, to which the respondents made reference, required to consider expressly the question of whether their proposals - for automatic discharge of a superior's rights in many cases - would infringe the ECHR. At paragraph 5.68 they said: "We are not recommending compensation for the loss of the right to exact payment from vassals for waivers of restrictions which the superior has little or no interest in enforcing as such … We consider that these recommendations are in conformity with the ECHR". These observations give some support to our view that the established construction of section 1 (4)(i) is not incompatible with the Convention. It may further be observed that although we have reached our conclusion without reference to the views of the Commission in S v United Kingdom (Application no. 10741/84) - which was not cited to us - we find our approach to be consistent with the decision in that case.
For the reasons set out above we are satisfied that the relevant obligation should be discharged to the extent sought by the applicants. Although we heard nothing in the evidence which would have justified us in making any award under section 1(4)(ii), we see no reason not to accept the concession made by the applicants that a sum of £1,000 should be awarded under this head. We shall make such an award.
For the reasons set out above we consider that the established approach to section 1(4)(i) followed by the Tribunal since the decisions in McVey and Robertson, is an approach which involves a construction of that section which is not incompatible with the rights conferred by Article 1 of the First Protocol to the ECHR. We see no reason to change that approach. We accordingly make no award under section 1(4)(i).