[1] This is an opposed application for expenses and certification of counsel by the successful respondents in two applications, under Section 90(1)(b)(i) of the Title Conditions (Scotland) Act 2003 (“the Act”), to renew a title condition which the respondents had proposed to terminate under Section 20 of the Act (“Sunset Rule”). The applications, which were treated jointly throughout, related to a real burden contained in an Instrument of Sasine dated 1838. The burden prohibited building in the garden of a terraced house which is now divided into flats. The applicants were ground, first and second floor flat owners who opposed the basement flat proprietors’ attempt to terminate the burden. The application was refused following a hearing in which the applicants represented themselves and the respondents were represented by counsel. The Tribunal’s Opinion dated 5 February 2008 is referred to.
[2] We have decided that the respondents are entitled to their expenses of opposing the application, modified to three-quarters; and that the case should be certified as suitable for the employment of counsel.
[3] Section 103(1) of the Act provides as follows:-
“103 (1) The Lands Tribunal may, in determining an application made under this Part of this Act, make such order as to expenses as they think fit but shall have regard, in particular, to the extent to which the application, or any opposition to the application, is successful.”
The Act makes provision in Section 97(4) for expenses in one particular situation in relation to applications of this kind which can be said in a sense to be ‘the other way round’, in that it is the respondents and not the applicants who initiate matters by seeking to use the administrative procedure of a Notice of Termination. That particular situation does not arise in this case, but we mention it because it helps to make clear that Section 103(1) applies in this sort of case as it does in the more normal situation of applications to discharge or vary title conditions. In West Coast Property Developments Limited v Lawrence Clarke and Others, 6.10.2006,LTS/TC/2005/21, we endeavoured to set out principles applicable to expenses, in the light of Section 103(1), in relation to unsuccessful opposition by benefited proprietors to applications to discharge or vary title conditions. We decided that Section 103(1) was to be interpreted as meaning that we had to depart from our previous practice of normally not awarding expenses against benefited proprietors who unsuccessfully oppose applications to discharge: we must instead pay particular attention to the normal rule in civil litigation that expenses follow success (on the basis of the general principle that the unsuccessful party has caused the expense), although the particular circumstances of each case must be considered so as to enable us to exercise our discretion appropriately. We indicated that it was helpful first to consider the extent of success but then, where relevant material was placed before us, to consider the exercise of our discretion. In the present case, while it may as the applicants contend have been reasonable for them as benefited proprietors to oppose the termination, the respondents have clearly been 100% successful and the main question is whether there are any grounds not to award expenses or full expenses in their favour.
[4] The applicants originally themselves proposed that no award of expenses due to or by either party should be made, arguing that they had been benefited proprietors and it had been reasonable for them to oppose the termination; that they had required to keep their costs to a minimum; and that the respondents, not the applicants, stood to gain financially from the proceedings. Then, in opposition to the applicants’ application for expenses, the applicants set out in rather more detail arguments as to why expenses should not be awarded against them or alternatively that expenses should be modified. In summary, the points made were mainly under two headings, firstly, alleged failure or delay by the respondents in setting out their case clearly, and, secondly, the applicants’ attempts to discuss matters with a view to reaching agreement. In addition, it was suggested that a considerable amount of time was spent both before and during the hearing on questions of changes in use of neighbouring properties; and also that the respondents must have spent a lot of time preparing submissions on negative servitudes, a matter ultimately acknowledged to be of no relevance. Further, both a case management conference and the hearing itself had been requested by the respondents, the applicants having indicated a preference for proceeding on the basis of written submissions. The applicants referred to our decision on expenses in Donnelly & Regan v Mullen and Others, 1.9.2006, LTS/TC/2005/01, which was a case in which the Tribunal set out views on expenses in similar but shorter terms than in West Coast Property.
[5] The respondents stressed that they had been totally successful and also submitted that the financial means of the unsuccessful party were irrelevant, as was the question whether the respondents stood to gain financially (a matter on which there was in any event no evidence).
[6] In West Coast Property, we said this in relation to a failure by the successful party to set the case out clearly:-
“If an application, particularly one based on a particular proposed development, is vague and not justified by detailed averments or evidence until shortly before the hearing, the objector may well be able to argue that had he known the details he would not have opposed or not maintained opposition” (page 15).
The applicants here say that the respondents did not make the particular proposed development clear. It should be remembered that although the respondents as burdened proprietors initiated the move to terminate the burden, the onus in this application was on the applicants. It was the applicants who sought to introduce their knowledge of a proposal by the respondents into the Tribunal’s consideration of reasonableness. The respondents on the other hand did not base their case at all on any particular proposed development. Nor were they in any way obliged to do so: it is perfectly legitimate to seek discharge of a title condition on general grounds and run any risk which may be involved in the absence of any particular proposal. The “Sunset Rule” envisages termination of conditions as being generally no longer reasonable. In that situation, there is no legitimate criticism of the respondents’ failure to provide details of any particular proposal. Nor is there any reason to think that the respondents’ conduct of the proceedings in this respect caused expense, because there is nothing to indicate that the applicants would not have proceeded with the application.
[7] The applicants point out, with a degree of justification, that in certain respects the respondents’ arguments had not been foreshadowed in their prior written pleadings. The respondents had not highlighted change of circumstances at the building itself, as opposed to in the neighbourhood, nor had they questioned the applicants’ assertion that the condition had been intended to protect the amenity of the property, i.e. the building itself. The applicants go so far as to suggest that if these matters had been made clear at an early stage they, the applicants, would not have continued with their case. We have considered these matters carefully but do not think that they go beyond legitimate development of the respondents’ arguments. Further, it appears to us clear from the applicants’ submissions at the hearing that they did not accept the position as developed by the respondents and we are not persuaded that they would have given up the application if these points had been set out more clearly in advance of the hearing. We are not persuaded that the respondents caused unnecessary additional expense.
[8] In relation to attempts to reach agreement, we appreciate that the applicants were sincere in their position and can accept that they would have wished to reach agreement, but when the matters to which they refer are considered, it can be seen that none of them really met the respondents’ wish to eliminate the title condition altogether. That was what the respondents wished, and that was what they achieved by resisting this application.
[9] The applicants also referred to their concern that accepting the proposal to terminate (thereby abandoning their private right) could undermine their position in a subsequent planning procedure. On our understanding of the approach of planning authorities, who generally make clear that private title matters are irrelevant to their consideration, this was a misguided concern, but in any event the reasonableness of an unsuccessful party’s motive for litigating is not, under the principles now made applicable in these cases by section 103(1) of the Act, of any relevance.
[10] Nor is it of any relevance that only the owner seeking the discharge stands to gain financially.
[11] It is a relevant consideration if the successful party has taken up substantial time unnecessarily (and therefore caused some of the expense he seeks to recover) on areas in which his position is not in fact upheld despite the overall success. This can affect expenses if substantial time is taken up with evidence – or perhaps submission – in relation to a discreet chapter of the case on which the successful party’s position is not upheld. The applicants point to two matters here. Firstly, they refer to the time spent considering questions of changes of use of neighbouring buildings, their point being that – as discussed at the case management meeting – this condition related to building not use. Secondly, they refer to the issue of negative servitudes, in relation to light. Again, however, we remind ourselves that this was the applicants’ case. In their application, they asserted that there was little change in the character of the benefited and burdened properties and the neighbourhood; and that the condition protected their ‘rights to light’. The respondents’ position must be seen in the light of these averments. We do not consider that the respondents took up an unreasonable amount of time in exploring the changes of use in the neighbourhood. They did not after all lead any evidence on that matter, and, at the suggestion of the Tribunal at the case management meeting, provided a schedule outlining the changed uses on which they intended to rely. This reduces the time involved to the time taken up in submissions on this, and we do not consider that that was substantial. We do not see anything unreasonable in the way in which the respondents answered the applicants’ claim of a right to light.
[12] Thus far, we have found no reason to modify the rigour of the ‘success’ rule. There is, however, one matter which we think does call for an exercise of our discretion to modify. The applicants point out that they would have been content for the case to be decided on the basis of written submissions. Rule 26 of the Lands Tribunal for Scotland Rules 2003 allows us to dispose of a case on the basis of written submissions (thus saving the considerable expense of a hearing) if all parties consent. In what we might describe as a normal case of an application for discharge or variation, if the unsuccessful party had requested this and the successful party unreasonably insisted on a hearing, we would consider modifying any award of expenses. This case is different, because it was the first contested case involving an application to renew where the burdened proprietor was not advancing any particular development proposal (and indeed only the second contested hearing of this type of application). The case was novel in that respect and we cannot categorise the insistence on a hearing as unreasonable. Indeed, we consider that the case required a hearing at which the submissions could be made orally and appropriately tested. So we do not criticise the respondents’ conduct of the proceedings in this respect either. Nevertheless, in the particular circumstances, where the applicants sought to minimise the expense both in this way and by not employing legal representation, so that if they had been successful their recoverable expenses would have been of a different order from those which the respondents now seek to recover, we do think it an appropriate exercise of our discretion to modify the award in favour of the respondents. Essentially, the novelty of the case has led to extra expense, and in the particular circumstances we do not think it right to land the applicants with all of that expense. We think a fair reflection of the circumstances would be to modify the award of expenses to the respondents by one quarter, to three-quarters.
[13] As regards the employment of counsel, we are of the clear view that this was appropriate and reasonable in this case, which raised issues about the application of the new legislation. Generally, we would not certify counsel in what we would describe as an ordinary discharge or variation application which amounted to an issue of reasonableness in accordance with well established principles, but the context of this case was clearly different.
Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties 24 April 2008
Neil M Tainsh – Clerk to the Tribunal