Heritable property - Land Obligation - Discharge - Claim for compensation - Preliminary hearing - Relevance of purpose of obligation - "Just" - Conveyancing and Feudal Reform (Scotland) Act 1970, section 1 (4) (i)

Railtrack v Aberdeen Harbour Board
29 August 2002
LTS/LO/2001/13, 14 to 21 and 28 to 31

By interim Order the Tribunal proposed to discharge land obligations relating to various plots of land at the railway goods yard in the centre of Aberdeen to allow development of a transport and shopping centre complex. The Respondents submitted a claim for compensation based upon loss of the expected increase in business of the harbour which would, be lost if the rail freight facility was not available. Although parties were agreed that it would not be appropriate for the Tribunal to dismiss the claim as a matter of relevancy it was suggested that guidance from the Tribunal would be of assistance in preparation for proof. The Tribunal heard debate. At the heart of the Applicant's challenge to the Respondent's claim was the proposition that the claim was based on the false proposition that the land obligations in question were to provide a rail freight facility for such volumes of traffic as the customers or users of the Harbour Board might care to provide. It was stressed that there was no such obligation. The Applicants were entitled to use the site with no rail freight facility whatsoever. They could use it for any other railway purposes. The debate proceeded on the assumption that although the obligation did not compel the burdened proprietor to provide any rail freight facility, if the obligation was not discharged the Applicants would in practice require to maintain the rail freight facility. The operators would accordingly seek to increase usage and would improve and extend handling facilities at the yard. Because of this the Respondents would be able to attract very significant new business based on their customers' use of container facilities. This would be able to be accommodated at the harbour without loss of existing or other prospective new trade. It would accordingly provide a source of wholly additional profit for the Respondents. If the freight facility was lost the probability of such additional profit would also be lost.

It was recognised, by reference to the "granite wall" condition, that the same chain of events would apply in relation to any of the land obligations which required to be discharged to allow the development to go ahead. The obligation to maintain a granite wall as a boundary had plainly been imposed in the interests of visual amenity.

For the Applicants it was submitted that it was of critical importance to recognise that section 1 (4) was concerned with legal obligations. Damages should be assessed against fulfilment of contractual duty in the way least burdens to the obligated party. The matter could be considered as an issue of remoteness of loss. The granite wall condition would support the same argument. The losses claimed could hardly have been in contemplation in respect of that condition. Although the Tribunal might be entitled to have regard to practical consequences at the stage of deciding whether or not to discharge, there was no basis for this at the stage of compensation. Compensation ought to be assessed by reference to the value of the benefit conferred by the obligation and not the negative burden it created. The Respondents argued that section 1 (4) gave the Tribunal a discretion and by the use of the word "just" allowed a wide approach. The real issue turned on the term "in consequence". The Tribunal could consider what would have been likely to happen had there been no discharge. It was accepted that no compensation would be expected in respect of discharge of the granite wall condition. Such compensation would not be "just". The purpose of that condition had not been to protect the business of the harbour. However, the railway purpose did provide a benefit to the harbour and the conditions could be distinguished.

Held The Tribunal was not satisfied that assessment of compensation under section 1 (4) should be viewed as equivalent, or analogous, to damages for breach of a contractual obligation. The Tribunal discretion was wider and, in any event, the availability of the remedy of interdict or specific implement might have the effect of imposing consequences going far beyond any assessment of damages. Damages was not necessarily the best measure of assessment. However the scheme of the Act was to deal with legal obligations and comparison with assessment of damages for breach of contract was something which the Tribunal could have in mind. The discretion allowed consideration of the fairness of imposing liability to make compensation. The fact that protection from the adverse consequences was not an identifiable purpose of an obligation would not be determinative on the merits but was an important element in assessing the weight to be given to the consequences. Exercise of the discretion could approached by recognising it as prima facie unreasonable or unjust to require a party to make payment, by way of compensation, for not doing something which he was under no obligation to do. There was nothing in the circumstances of the case to displace that view. Other relevant factors included consideration of the different type of freight which might have been contemplated at the time when the burden was imposed and that the burden did not commit the proprietor to the provision of facilities which would meet the particular needs of the Respondents. It was also of significance that the claim was not based on loss of any established benefit to the claimants. Current use was different in kind from the nature of the use postulated by the claim. To allow use at the level contemplated by the claim would require significant input by the Applicants. It was based on the availability of facilities which the Applicants have never provided and were under no obligation to provide. Another factor, relevant in the context of exercise of a discretion was that the loss would not, on any view, arise for several years and was dependant on a number of factors out with the control of either party. In conclusion the Tribunal expressed the view that their decision might have allowed the matter to be determined as a matter of relevancy by excluding from probation the bulk of the claim as formulated.

Cases referred to:

Abrahams v Reich (Herbert) Ltd (1922) 1 KB 536, 553
Devlin v Conn 1972 SLT (Lands Tr) 11
Elboramhor Limited v Brand (4 October 1990; LTS/LO/1989/97)
Re Kennet Properties' Application 1996 72 P&CR 353
Lavarack v Woods of Colchester Limited 1967 C.A.278, 294
Morran v Glasgow Council of Tenants Association and Others S.C.279
SJC Construction C Ltd v Sutton London Borough Council 29 P&CR 322
Stockport Metropoliltan Borough Council v Alwiyah Developments 1983 52 P&CR 278
Strathclyde Joint Police Board v The Elderslie Estates Limited and Others (17 Aug 2001); LTS/LO/2000/42)

See full decision:  LTS/LO/2001/13, 14-21 and 28-31