OPINION

Walter Harkness and Another v Senator Homes Limited and Another

Introduction and Summary

[1] This an application under Section 90(1)(a) of the Title Conditions (Scotland) Act 2003 (“the Act”), for discharge, and/or the determination of a question as to the validity, applicability or enforceability, of certain title conditions or purported title conditions relating to maintenance of open spaces at a modern residential development. The application originally related to Clauses 8(3) and 8(4) of the Deed of Conditions narrated below. Following a lengthy period during which parties have been considering their positions and the resolution of issues between them, the applicants, who are proprietors of one of the houses in the development, now wish to advance the application only in relation to Clause 8(4). Further, in correspondence, parties have agreed that the Tribunal should first consider two issues:-

(i) Whether Clause 8(4), or perhaps part of it, is a ‘title condition’ or ‘purported title condition’ within the meaning of the Act. If not, the Tribunal has no jurisdiction. In practice, this issue is whether the provision contains a real burden or purported real burden.

(ii) If so, whether that real burden or purported real burden is valid and enforceable.

[2] Parties were also agreed that the Tribunal should dispose of these issues without an oral hearing, on the basis of written submissions, under Rule 26 of the Lands Tribunal for Scotland Rules 2003. As the matter has been protracted, the Tribunal indicated that it would be prepared to consider at the same time any submissions on expenses, in order to try to save further delay and expense. The procedure and correspondence since the application was lodged are described in slightly more detail at Paras [31] to [33] below in the context of the question of expenses.

[3] The applicants are joint proprietors of one of the houses in the development (although the issues would apparently apply equally to some 71 houses in Phase 1 of the development). The first respondents, Senator Homes Limited (“Senator”), are the developers of Phase 1, but not of a later phase. They were and apparently have remained owners of the open spaces in question, and they executed the deed of conditions with which this application is concerned in 2002. The second respondents, Hacking and Paterson Property Management (“H&P”), are a firm of property factors apparently appointed by Persimmon Homes (West Scotland) Limited (“Persimmon”), who acquired and developed later phases of the development.

[4] In summary, the Tribunal has decided:-

(i) the Tribunal has jurisdiction, because Clause 8(4) contains a purported title condition;

(ii) the Tribunal determines that the purported title condition in Clause 8(4) is not a valid or enforceable real burden; and

(iii) the applicants are entitled to the expenses of the application from 11 November 2010 onwards.

The “Title Condition”

[5] Clause 8 of the Deed of Conditions by Senator Homes Limited dated 14 and registered on 25 October 2002 and narrated in the Burdens Section of the applicants’ registered title KRK5599 (“the 2002 Conditions”) provided as follows:-

“(EIGHTH)

OPEN SPACE

(1) The Company or its agents or contractors will provide such open space and amenity areas (hereinafter referred to as “open spaces”) as may be required in terms of the Consents.

(2) It is not warranted that the open spaces will be taken over by the Local Authority or other statutory or other body or company.

(3) The Proprietors shall be bound to uphold and when necessary renew and maintain in a neat and tidy condition the open spaces, which will include all footpaths crossing the same together with all trees, shrubs and other vegetation planted or to be planted therein, the boundary walls and fences thereof any Service Infrastructure thereon or there under and the Proprietors will free and relieve the Company from any responsibility for the maintenance and renewal of the open spaces and the footpaths, trees, shrubs and other vegetation, boundary walls and fences and Service Infrastructure relative thereto unless and until the same are taken over by or conveyed to any Local or other Authority or any other party.

(4) The Company may in its absolute discretion convey all or part of the open spaces to any party and in the event that the Company does so, then the Proprietors shall have no right or title to object thereto and shall have no claims in respect thereof and shall be bound to accept and comply with such terms as may be imposed by such party in relation to the management and maintenance of the open spaces.”

“The Company” was defined as Senator and its successors in ownership of “the Development”, i.e the 15.2 hectares or so on which the whole development was to take place. “The Proprietors” were the owners of individual houses.

Background to Dispute

[6] The Tribunal understands the background to problems which have arisen at the development, particularly at Phase 1, to be as follows. The 2002 Deed of Conditions contained no particular provisions for management of the open spaces and in particular for appointment of any factors or managers or for billing of individual proprietors. Phase 1 was built and houses in it, including the applicants’ house at 4 Barnhill Road, Dumfries, sold and conveyed. In 2004, Senator executed a Supplementary Deed of Conditions making provision, in relation to Phase 2, for management of common areas and appointment of a Factor. Senator sold the Phase 2 land (not including the open spaces relative to Phase 1) to Persimmon. Persimmon appointed H&P as factors. H&P commenced factoring arrangements in relation to the whole of the development. At least some, possibly all, of the Phase 1 owners did not accept this position. The present application was apparently precipitated by the service of a Small Claims Summons in which H&P sought payment of common charges from the applicants.

Parties’ Submissions: Issues (i) and (ii)

[7] The applicants’ submissions are focused on the closing words of Clause 8(4) (“and shall be bound to accept and comply.”). They say that they are “Proprietors” in terms of the deed and that they are the owners of burdened property in respect of that passage. They submit that the passage in question is an attempt to create a real burden, being an obligation relating to open spaces, the open spaces being part of the heritable property of the original title from which their ownership is derived. They argue that the words are broad and unrestricted and, in relation to the burden of maintenance of the open spaces, seek to impose an unrestricted but as yet unspecified burden on the applicants. The burden is too wide and all-encompassing. If valid, it would require the applicants to accept and comply with whatever management and maintenance obligation might be imposed by any successors to the first respondents. It is acknowledged that the applicants cannot object to the possible conveyance of the open spaces. They submit that it is necessary to provide full details of a burden within the deed creating the burden, but the words sought to be removed provide no detail of what terms might be imposed. The condition is void from uncertainty. Cf Aberdeen Varities v James F Donald (Aberdeen Cinemas) Ltd 1039 SC 788; Lothian Regional Council v Rennie 1991 SC 212. They seek a determination that the purported burden is not enforceable. They also pointed out, in response to the second respondents’ original representations, that the deed of conditions was executed prior to the coming into force of the 2003 Act.

[8] The respondents had originally submitted separate representations, maintaining, although for slightly different reasons, that the question of the appointment of H&P as factors and their right to recover factoring costs, with which the application appeared to be concerned, was unrelated to any issue about Clause 8(3) or 8(4). By the stage of closing written submissions, the respondents were jointly represented and repeated that submission.

[9] They further submit that the applicants do not have the interest of ‘owner’ as defined in Section 122 of the Act, in that they had no right of property in the ‘open spaces’ as defined in Clause 8, nor were they persons against whom that provision bore to be enforced or enforceable.

[10] Further, in the respondents’ submission, Clause 8(4), is not a ‘title condition’ within the meaning of section 122 and is not a ‘real burden’ within the meaning of Section 1(1). The submissions elaborate upon the first respondents’ original contention that Clause 8(4) was “generally a statement of fact”. The respondents described Clause 8(4) as “a single provision”. Splitting this clause, such that the words highlighted by the applicants could be taken independently and in isolation, was artificial. The terms of the first part took the matter outwith the jurisdiction of the Tribunal. The provision as a whole was something of a statement of the obvious. There was no reference to imposition on the proprietors and the liability or otherwise of the proprietors for whatever “terms as may be imposed” would be referable to provisions and general law outwith Clause 8(4). It was also to be noted that there had been no conveyance of all or any part of the open spaces in terms as would invoke Clause 8(4): there had been no purported conveyance nor any threatened conveyance, and the issue had been neither considered nor advanced by the respondents in any way.

Tribunal’s Consideration: Issues (i) and (ii)

[11] There may be room for doubt, and the respondents certainly question, whether there is in practice any dispute between the parties, since the applicants’ position is that the provision in Clause 8(4) is an unenforceable real burden and the respondents’ position is that it is simply a statement which (as well as being conditional on an event which they say has not occurred) does not itself create any obligation. We shall return to this question when considering expenses.

[12] Section 90(1)(a) of the Act, read short, provides:-

“90. (1) the Lands Tribunal may by order, on the application of –

(a) an owner of a burdened property or any other person against whom a title condition (or purported title condition) is enforceable (or bears to be enforceable) –

(ii) if the title condition is a real burden or a rule of a development management scheme, determine any question as to its validity, applicability or enforceability or as to how it is to be construed.”

[13] Issue (i) is whether we have jurisdiction in terms of that provision. The application was also brought under Section 90(1)(a)(i), but that part is not presently in issue. The applicants invoke the jurisdiction on the basis that the provision is a real burden or purported real burden (and therefore within the definition of ‘title condition’ – Section 122) which would be enforceable against them as owners of their property. The issue must be approached objectively.

[14] The respondents’ first submission on this issue is that the applicants are not “owners” as defined in Section 122 of the Act because they have no right of property in the “open spaces”. Section 122 provides that “owner” is to be construed in accordance with Section 123. The respondents’ reference is apparently to Section 123(1), where it provides:-

“in this Act “owner”, in relation to any property, means a person who has right to the property ”.

The applicants apply as owners of the burdened property. This provision would apply to them as owners, not of the open spaces, but of their property, 4 Barnhill Road. The respondents do not, and we think could not, submit, that the fact that the applicants do not own the property which the burden requires them to maintain would prevent the provision from being a real burden. The applicants are qualified as ‘owners’ to invoke the Tribunal’s jurisdiction.

[15] The respondents’ second submission appears to be that the applicants are not persons against whom the provision bears to be enforced or enforceable. That is incorrect: Clause 8(4), read short, provides that “the Proprietors” “shall be bound to accept and comply”, etc. The deed defines “Proprietor” as “the owner for the time being of any house on the Development.” Whatever the provision actually is, it is expressed to apply to individual owners such as the applicants.

[16] The substance of the argument appears to the Tribunal to lie in the respondents’ third submission, which seems to raise a question, perhaps not previously considered, as to the meaning of “purported title condition” in Section 90(1)(a).

[17] The applicants argue that the provision is not a valid and enforceable real burden. They must therefore be relying on the words “purported title condition” introduced in the Act as part of the re-casting of the Tribunal’s previous jurisdiction including the addition of the new declaratory jurisdiction in Section 90(1)(a)(ii). At this stage, therefore, the question is not whether there is a valid real burden but rather whether there is at least a purported real burden.

[17] It is not in dispute that the first part of Clause 8(4) merely affirms the entitlement of Senator as owners of the open spaces to convey away some or all of them to whomsoever they choose, notwithstanding, and apparently without prejudice to, the obligation on each individual owner under Clause 8(3) to maintain the open spaces. Until the provision of which the applicants complain, there is no suggestion of any obligation which could amount to, or purport to be, a real burden.

[18] The clause goes on, however, to provide that “the Proprietors”:-

“shall be bound to accept and comply with such terms as may be imposed by such party in relation to the management and maintenance of the open spaces”.

That is, again, reading the provision short, but this passage can only apply to “the Proprietors”, including the applicants. The crucial question appears to be whether this passage is or purports to be “an encumbrance on land constituted in favour of the owner of other land” (Section 1(1) of the Act, expressing the “praedial rule” for the validity of real burdens). In the Tribunal’s view, the words “shall be bound to accept and comply with” read naturally as imposing an obligation rather than simply stating the position which would apply as the result of some other provision or rule. It appears in a deed of conditions which undoubtedly includes a series of real burdens imposed on the individual owners when they took title, albeit the deed also contains provisions which are not real burdens. “The Proprietors” are defined to include subsequent owners, so that, whatever the result, the provision is said to run with ownership of land by both the obligee and the obligor.

[19] We do not think that the conditionality of the purported obligation alters the position. For example, obligations, such as Clause 9(2) on the same page of this deed, to rebuild in the event of fire, can operate as real burdens.

[20] The respondents argue that it is artificial to sever this passage from the preceding part of Clause 8(4). It seems to the Tribunal, however, that there is no reason why, if an obligation is expressed along with an assertion of a right, the obligation may not take effect in accordance with its wording. In the Tribunal’s experience, it is not uncommon for a real burden to be expressed along with either other real burdens or other provisions.

[21] In these circumstances, the Tribunal does not consider that any of the respondents’ arguments prevent this provision from being at least a purported real burden. The provision reads as an attempt to bind the owners of individual houses for the time being and to be enforceable by Senator’s successors as owners of the open spaces. It might possibly be read merely as a management provision, requiring the individual proprietors to abide by any management arrangements made by the owners of the open spaces, rather than as allowing expansion of the positive obligations (or, to use the Act’s terminology in Section 2(2), “affirmative burdens”) in Clause 8(3), but that would not prevent it from being a real burden.

[22] If such a provision is held unenforceable as a real burden, it might be enforceable as a personal obligation. That would not prevent it from being a “purported” real burden where, as here, it is expressed to apply to successive owners of interests in land.

[23] We conclude that Clause 8(3) includes at least a purported real burden. Accordingly, the Tribunal has jurisdiction under section 90(1)(a) and in particular, for the purpose of determining issue (ii), Section 90(1)(a)(ii).

[24] Issue (ii), whether the provision is a valid and enforceable real burden, can be disposed of shortly. The applicants argue that the provision would oblige individual house owners to accept whatever management and maintenance obligations might be imposed by any successors of Senator as owners of the open spaces, that this is too wide and the provision is void for uncertainty. The respondents do not argue that it is valid and enforceable at all, far less as a real burden. The Tribunal accepts the applicants’ submissions. Although Sections 2(5) and 14 of the Act may be said to relax the requirements for constitution and the rules for construction, it appears clear to the Tribunal that this provision does not meet the test for a valid and enforceable real burden. Even if it were held limited in its positive operation by Clause 8(3), so that it only applied to management arrangements, the clause does not contain any clear provision which can be discerned from its own terms.

[25] The Tribunal has accordingly determined that the passage referred to by the applicants does not create any valid or enforceable real burden, and has made the determination sought in the application under Section 90(1)(a)(ii).

[26] It should be noted that the Tribunal expresses no view on the validity or otherwise of the appointment of H&P as factors or on the applicants’ liability for any expenses or charges incurred in relation to maintenance of the open spaces.

Parties’ Submissions: Expenses

[27] The submissions on expenses can be summarised as follows.

[28] The applicants submit that if the application is determined in their favour expenses should be awarded against the respondents, failing which there should be no award of expenses. Firstly, they point out that it has not been necessary to determine much of the application, and they attribute that to the efforts of both parties endeavouring to reach an acceptable solution by way of extensive correspondence which had ultimately been successful in limiting the scope of the application. Secondly, they say that before they lodged the application the second respondents had insisted that they had authority, claimed to be derived from Persimmon, to manage the open spaces of Phase 1 and charge the applicants for this. The applicants refer to pleadings in the sheriff court action, in which the second respondents had relied on the supplementary Deed of Conditions, but that did not apply to the applicants as Phase 1 owners and after this application was made the second respondents had conceded that their appointment and entitlement to enforce was questionable. The applicants argue that they were justified in directing the application against the second respondents and raising the matters in the application.

[29] The respondents, in their joint submission, seek an award of expenses in their favour. They submit that the original application was sweeping and imprecise and it could not fairly be established what was sought, or why. The application was incompetent or irrelevant or both. The applicants had been repeatedly warned of this both before and after the application was lodged. If the application had at the outset been confined to Clause 8(4), there would have been no cause for this expensive and prolonged process. Expenses must be viewed in the context of the application as lodged and pled, and the mis-direction of the application towards Clause 8(3) should be met by an award of expenses. It is submitted that the respondents had repeatedly sought to achieve a solution to what they understood was the real issue. They had from the outset, in the face of an application of questionable competency and relevancy and doubtful focus, maintained a good faith approach and determination to seek a solution whilst also making clear their view that the application was mis-directed. Both the craves in the application and these provisions in the Deed of Conditions had no bearing on the second respondents’ authority to manage and the respondents had given more than fair warning of that.

Tribunal’s Consideration: Expenses

[30] Presumably, no further procedure is required in this application, i.e. the application under Section 90(1)(a)(i) can be regarded as superseded, making it appropriate for the Tribunal to proceed to deal with the issue of expenses on the basis of parties’ submissions. The submissions of course do not reflect the Tribunal’s reasoning, but as parties have taken up the Tribunal’s invitation to make submissions on expenses and it is clearly desirable to bring these somewhat protracted proceedings to an end, we do consider it appropriate to rule now on expenses.

[31] A brief resume of the procedure in this application is appropriate. The application lodged in April 2009 clearly referred to Clause 8(3) and (4) of the 2002 Conditions. In relation to 8(4), the particulars given were:-

“Real burden purportedly obliging the proprietors to accept and comply with” (terms imposed by any new owner) “in the event of the heritable proprietors conveying all or part of the open spaces to a new owner.”

It was explained that the applicants had been subject to demands from H&P and were concerned that the two clauses purportedly gave unlimited power to any subsequent owner to impose conditions; H&P had refused to accept that they had no power to pursue the applicants for payment; and discharge was required to prevent further such demands.

In addition to setting out brief further reasons why discharge would be reasonable, the applicants applied for a determination of the enforceability of conditions 8(3) and (4), in particular whether said conditions gave authority to a factor company appointed by Persimmon to seek payment of expenses incurred and management and administration expenses in relation thereto.

[32] The application was intimated to all the other owners in the development and to Senator, Persimmon and H&P. In separate Answers, Senator admitted that the applicants had been subject to demands by H&P but submitted that their concern as regards Clauses 8(3) and (4) was unfounded: there was no legitimate statutory basis for the application, as the matter of appointment of any factor was accepted as being outwith conditions, which did not relate to and were independent of the issue of appointment of a factor, which was said to be the subject of the Supplementary Deed of Conditions. In relation to the application for determination of enforceability, Senator accepted that the authority of the factors was not governed by these two conditions. In their Answers, H&P admitted that Persimmon were now the owners of the open spaces to which Clause 8(3) applied, and submitted that they had been validly appointed managers by a majority of owners acting in terms of Section 28 of the Act. Clause 8(3) did create a valid real burden, but the Answers specifically recorded that H&P had no submission to make on the enforceability or otherwise of Clause 8(4).

[33] The applicants in effect adjusted, in July 2009, maintaining their position and also challenging the suggestions that either the Supplementary Deed of Conditions or the provisions of the 2003 Act in relation to community burdens provided authority for the appointment of H&P in relation to Phase 1. The respondents did not respond in the pleadings. Mainly, the time since then has apparently been spent in protracted negotiations to try to sort matters out in regard to maintenance of the open spaces in Phase 1, there apparently being some recognition on the respondents’ side that Persimmon (who incidentally have apparently never owned the open spaces in question) may not have had authority to appoint factors in relation to Phase 1. Other than recording the Tribunal’s understanding that both sides do indeed appear to have been genuinely looking for an appropriate solution, these negotiations, the outcome of which is not known to the Tribunal, are not really relevant. The essential point made by the respondents is their assertion that the application in relation to Clauses 8(3) and (4) had no bearing on the real matters in dispute between the parties. Further, they claim that they have been making that point from the outset. Their correspondence with the Tribunal confirms that. The applicants for their part were willing to drop their claims in relation to Clause 8(3) but did insist that they wished Clause 8(4) discharged. Eventually, the Tribunal indicated that the preliminary issues considered above could be considered separately and on the basis of written submission and this was agreed. In the later stages of the proceedings, the two respondents have in effect been jointly represented.

[34] Section 103 (1) of the Act provides that the Tribunal may:-

“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.”

[35] In relation to the extent of success, the applicants have not pursued their claim in relation to Clause 8(3). In the absence of any agreement disposing of that part of their application and the expenses connected with it, they must be taken simply to have given it up and therefore to have had no success. On the other hand, they did insist on advancing their position in relation to Clause 8(4) and have been successful in relation to that. In relation to Clause 8(4), it appears to the Tribunal that the applicants clearly had an interest to bring this application. They were being told, although apparently erroneously, that the open spaces in question had been sold, and they were faced with demands and indeed court action by factors apparently appointed by the new owners. On the view we have taken that the passage in question was a purported real burden, it seems to us that the applicants were justified in asking for it to be removed. The respondents, despite indicating that they had no intention of relying on the clause, chose nevertheless to oppose the application. Prima facie the respondents are liable in the expenses of that. In particular, once it finally became clear that the applicants were only insisting on this part of the application, the respondents should be liable in expenses.

[36] This is therefore a case of divided success. The respondents, however, argue more generally, in effect, that proceedings in relation to these two clauses were unnecessary as the problem about factoring in relation to the open spaces was unrelated to these clauses. This argument falls to be considered in relation to the applicants’ success on Clause 8(4), because the respondents are in principle entitled to their expenses in relation to Clause 8(3) anyway. Was the application unnecessary, so that despite their success in relation to Clause 8(4) the applicants cannot really say that the respondents caused the expense of bringing an application in relation to that clause? Or was the continuation of the application or any part of the applicants’ conduct of it, unnecessary and unreasonable, given the respondents’ stated positions?

[37] We do not think that the application as it related to Clause 8(4) can be described as unnecessary in the situation where the applicants were being told that the land had been sold to another party and that party had appointed a factor. The fact that these respondents did not place any reliance on Clause 8(4) does not mean that some other proprietors might not do so.

[38] Senator and H & P were the only respondents and made clear in their answers that they did not place any reliance on Clause 8(4). It might be suggested that at least by this stage the applicants should have considered continuation with the application unnecessary. Here again, however, it seems to the Tribunal that the applicants were entitled to continue to take the view that they needed to dispose of Clause 8(4) as at least a purported real burden.

[39] Although the proceedings were protracted in time and marked by periods during which the parties may or may not have been actively pursuing the attempts to resolve their differences, we do not consider that we can find anything unreasonable in the conduct of the proceedings by either party.

[40] The position therefore is that, until the applicants made clear that they were only insisting in relation to Clause 8(4), the application was in two parts, the respondents succeeded on Clause 8(3) and the applicants succeeded on Clause 8(4); and thereafter, with procedure only directed at Clause 8(4), the applicants were entirely successful. Balancing the applicants’ success and the respondents’ success, there should be no expenses due to or by either party during the first phase, but the applicants should be awarded the expenses of the second phase in which they were entirely successful. In relation to the relevant date, neither the applicants’ agents’ letter of 10 September 2009 nor their letter of 11 November 2010 is 100% clear, but we consider that the latter date is the point at which they did make it clear enough that they were only concerned with Clause 8(4).

[41] The Tribunal’s decision accordingly is to award expenses in favour of the applicants but only from 11 November 2010 onwards.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 22 August 2011

Neil M Tainsh – Clerk to the Tribunal