[1] In this opposed application to discharge a servitude right of access over the applicant’s property, the Tribunal indicated in its earlier Opinion on the merits that it would grant the application but the respondent should be allowed to make a claim for compensation, as it was the view of the Tribunal that the discharge will cause loss to the respondent. Our Opinion dated 26 November 2009 is referred to. A claim for compensation has now been made, and answered, and the Tribunal has accordingly considered whether to make an award of compensation and if so for how much. This matter has been considered on the basis of written submissions. The Tribunal had previously visited the site and has not considered it necessary to do so again.
[2] The applicant accepts that an award of compensation would be appropriate. Having considered parties’ submissions as to the amount of compensation, the Tribunal has decided to make an award in terms of Section 90(7)(a)(i) of the Title Conditions (Scotland) Act 2003 (“the Act”) of £7,500.
[3] Section 90(6)(a) authorises the Tribunal, when discharging or varying a title condition, to direct the applicant to pay the benefited proprietor “such sum as the Tribunal may think it just to award” under one or other of the heads mentioned in Section 90(7). The relevant head, under section 90(7)(a)(i), is:-
“a sum to compensate for any substantial loss or disadvantage suffered by … the owner, as owner of the benefited property … in consequence of the discharge or variation”.
[4] The respondent’s primary claim is for the cost of demolition of the existing garage building and construction of a replacement, stated at £24,000 plus VAT, with the construction cost being “abated to some extent to reflect the position of him then having a new garage”. Reference is made in his submission to four figures: the differential in value between a double garage accessible to vehicular traffic and such an outbuilding restricted to storage purposes only, “in the region of £10,000”, based on evidence given at the hearing on the merits by Mr Millar FRICS of Allied Surveyors (existing - £12,000–15,000 ; store - £5,000); “Option 1”, the estimated cost of repositioning the garage door so as to be accessible from the remaining access, including necessary work in relation to the septic tank (£14,780 plus VAT); “Option 2”, demolition and replacement with a new double garage in the present location ; and “Option 3”, retaining the present garage and constructing a new double garage in another location (£18,000 plus VAT). It is pointed out that “Option 1” in fact carries a significant risk that the alteration would be found not feasible. “Option 2” is referred to as the only way to restore his position following removal of the right of access.
[5] The applicant submits that a figure of £5,000 would be reasonable, on the basis of the differential in value between having the existing garage accessible to vehicles and having it simply as a store. An opinion from Mr Richmond FRICS, of Messrs J & E Shepherd, following inspection of the garage, values it in its existing state – “a poor state of repair”, but accessible, at £10,000 and, as only a store, at £5,000. It is submitted that “Option 1” is not worth considering, on an economic basis; “Option 2” would produce a totally disproportionate gain, having regard to the lack of use of the garage, its age and its poor condition; and in relation to “Option 3”, although this is referred to as “the cleanest method of resolving this matter”, it is submitted that the estimate is too high, considering an alternative estimate produced, at £14,300 plus VAT. The value differential was the best way to quantify any compensation payment. The respondent would enjoy betterment should he decide to construct a new garage.
[6] Mr Richmond also offered the opinion that discharge of the servitude would not in fact increase the value of the applicant’s property. This elicited a competing view of Mr Millar to the effect that the marketability of the applicant’s property would increase, to an undetermined extent.
[7] We first reject any consideration of any increase in value of the applicant’s property as a result of discharge of the access right, for a number of reasons. However, it may be sufficient to say that the respondent has not in fact advanced a claim on this basis.
[8] The loss occasioned by discharging this servitude right is the loss of vehicle access to a 50-year old garage in fair condition but not apparently in recent times used as a garage (although there is agreement that it can be valued as a garage), there being suitable alternative vehicular access to parking within the respondent’s property. It should not be forgotten that the access being lost is a secondary access over a neighbour’s drive. It is the loss of use of this old garage, as a garage, rather than the loss of access itself, which is here under consideration.
[9] We have considered the three cost-based options. This is not the normal basis of compensation but our jurisdiction might be thought to permit it if it represented a reasonable assessment of the loss or disadvantage suffered by the respondent. As regards “Option 1”, both sides seem to regard this as problematic. It has not really been established whether it is possible. In relation to each of “Option 2” and “Option 3”, it appears to us that there would be such substantial betterment as to make an award on that basis unjust. Unless very heavily discounted, we would be putting the respondent in a very much improved position.
[10] Mr Millar’s evidence at the hearing was admittedly given on a quite generalised basis as to the value added to such a house in such a location by an accessible double garage (less the value of a store building of that size). We had no reason to doubt his opinion, which was not challenged on that basis although Mr Richmond arrived at a somewhat lower figure for the value of this particular garage. What we take from this is that, whichever of the three options were exercised, the expenditure would not be fully reflected in the increased value of the respondent’s property. The respondent would not be under any obligation to follow through the particular, or any, option: he might not in fact carry out any works. As he has made very little use of the garage as a garage, his enjoyment of his property would not have been much affected by the discharge but he might be enriched by a figure which bears no relationship to the diminution in the value of his property.
[11] This leads us to the clear view in this case that the diminution in the value of the respondent’s property is the fair way to measure his loss.
[12] We have then to choose between the two valuations of the garage, one at £12,000 to £15,000 and the other at £10,000, with each valuer apparently agreeing the deduction of £5,000 for the residual value of the garage as a store. Mr Richmond has clearly taken a closer look at the garage, to which Mr Millar did not have internal access. As the garage is old and in poor condition, the top of Mr Millar’s range does not appear to us appropriate. On the basis, however, that we accept Mr Millar’s approach, to the effect that it is the existence of an accessible garage (including of course its site) which produces the value, we think that £12,000 is a reasonable lower limit (and £15,000 a reasonable upper limit even although a modern double garage might cost rather more to provide). Accepting each valuer’s opinion as reasonably reached, we feel that £12, 500, near the bottom end of Mr Millar’s range, leading to an award of £7,500, is fair.
[13] We shall accordingly now allow the application to discharge this title condition subject to a direction to pay compensation of £7,500 to the respondent. Rule 6(2) of the Lands Tribunal for Scotland Rules 2003 provides that the order for discharge will not take effect until endorsed by the Tribunal to the effect either that the compensation has been paid or that the respondent has agreed to the order taking effect. First however, the applicant requires, under section 90(9), to consent to the direction to pay compensation and such consent will now be sought by the Clerk.
[14] The remaining matter is expenses, both in relation to the application on the merits and in relation to the claim of compensation. The Tribunal proposes to deal with any application in relation to expenses on the basis of written submissions.
Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 10 February 2010
Neil M Tainsh – Clerk to the Tribunal