OPINION

Gordon Watt & Another v Eric Garden & Others

Introduction and Summary

[1] This is an application under Section 90(1)(a)(i) of the Title Conditions (Scotland) Act 2003 (“the Act”) for discharge of a title condition which is a real burden effectively prohibiting use of the subjects for the purpose of building an additional house on the applicants’ property. The applicants, Mr and Mrs Watt, are owners of a house and garden acquired by them in around 1997. The subjects are a strip of ground running on one side for the length of the property, approximately 50 metres long and between 6 and 10 metres wide. The subjects had been part of an adjoining field, and were sold by two of the respondents, as then owners of the field, to the applicants’ predecessors in title in 1995 for £1,500, subject to the burden stipulating that it was to be used only as additional access and garden ground for the house. The applicants have now obtained planning permission to erect an additional bungalow to the rear of the house, partly on the subjects and using the subjects to provide access. The respondents are now three pro indiviso owners of shares in the benefited property. Two of the respondents, Mr and Mrs Garden, each owners of 25% shares, in fact agree with the applicants that the burden should be discharged subject to compensation totalling £5,000 for the benefited property, i.e. £1,250 to each of them. The third respondent, Mrs Bruce, who has a 50% share, opposes the application and, in the alternative, submits that there should be compensation, claimed under Section 90(6) and (7)(b) of the Act, totalling £50,000, i.e. £25,000 to her. The applicants’ agreement with the two respondents can clearly only be effective if the application succeeds on the merits as against the third respondent.

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

(i) The application succeeds to the extent of variation of the burden to the extent of permitting use of the subjects for the purpose of erecting one single storey house not exceeding 72m2 in area at the applicants’ property;

(ii) The respondents are entitled to compensation totalling £5,000, i.e. £1,250 to each of Mr and Mrs Garden and £2,500 to Mrs Bruce.

The Title Condition

[3] The burden was created in a Disposition of the subjects by Mrs Joan Garden or Bruce and Eric Rae Garden in favour of Colin Black and Mrs Allison Black dated 20 and 29 March and recorded in the General Register of Sasines for the County of Aberdeen 20 April 1995 (now narrated in the Burdens Section of the applicants’ registered title ABN16261) in the following terms:-

“(TWO) The plot or area of ground hereby disponed shall be used by our said disponees and their foresaids in all time coming partly as a new access road for vehicular and pedestrian traffic to “The Meadows”, Old Port Road, Inverurie aforesaid and partly as garden ground and a play area pertaining to “The Meadows” aforesaid and for no other purpose unless otherwise approved in writing by us and our successors as owners of the larger subjects of which the said subjects hereby disponed form part.”

Procedure

[4] The application was heard at an oral hearing held at Aberdeen on 11 October 2011. None of the parties was legally represented. The applicants, who were not personally present, were, with the permission of the Tribunal, represented by their son, Philip Watt. Each of the respondents was present, the respondent Mrs Bruce along with her husband who assisted in presenting her position. Written submissions and supporting documentation had been lodged, and parties were agreed in this case that these could be taken as the evidence and that formal oral evidence was not required. Oral submissions were heard, those of Mr and Mrs Garden being confined to confirming their agreement with the applicants as narrated above. In accordance with the Tribunal’s normal practice, and as indicated to parties in advance, the issue of compensation was considered at the same time as the merits of the application. Mr and Mrs Bruce had unfortunately failed to understand this position and although they made submissions indicating the basis of their alternative claim for compensation they had not provided any vouching of that. In the circumstances, and with the applicants’ agreement, they were allowed a further period to submit further particulars and vouching. This they did, with Mr Watt having, and taking, the opportunity to respond in writing. The Tribunal inspected the site, with Mr Watt and Mr Bruce in attendance.

The Facts

[5] Although there was, as indicated above, no formal proof, the basic factual position, from the documentation (including that provided by Mrs Bruce in support of her claim for compensation) which was not the subject of any real dispute, and from our inspection at the site, may be stated as follows.

[6] “The Meadows” is a semi-detached house with a relatively narrow garden at the end of a row of houses on a narrow tarmaced lane, Old Port Road, Inverurie. The respondents’ field, which has apparently been in the ownership of members of the Garden family for some time and is presently let out, extends to about 14 acres and forms an L-shape around both the southern and the eastern boundaries of “The Meadows” and also the eastern boundaries of some other houses in a small residential enclave which take access from Old Port Road or a cul-de-sac leading off it. Old Port Road leads off Souterford Road which serves some other houses and connects to the main road, Oldmeldrum Road, running eastwards out of the town. A small business park lies to the north of the respondents’ field. The area is situated immediately to the east of the railway line running through Inverurie, on the eastern edge of the town, the respondents’ field being part of an attractive open area to the east of which lies a burn and woodland.

[7] In 1995, Mr and Mrs Black, owners of “The Meadows”, approached Mr Garden and Mrs Bruce as owners of the field, with a request to acquire the subjects as a strip of ground to be added to their garden to provide them with further access to the rear and further garden ground. This was agreed, on the clear understanding, reflected in the terms of the burden, that the subjects were not to be used for any other purpose, i.e. they were not to be built on nor were they to serve any further house. The agreed price was £1,500. The subjects extend to 365.76m2 or 0.090 acres. The subjects were duly incorporated into the garden of “The Meadows”, with entry on 12 August 1994 and Mr and Mrs Black undertaking the creation of a boundary fence. The burden may have been imposed partly to protect the amenity of “The Lea”, the other semi-detached house (which is not in the respondents’ ownership). It is, however, not in dispute that it was also imposed for the purpose of protecting the respondents’ interests, as there was a long term view that they, or one of them, might build a house for a retirement in their field, adjacent to “The Meadows”. The subjects would not have been sold but for the imposition of the burden.

[8] The applicants, apparently unaware of the burden accepted by their predecessors, developed plans for a further house on the east side, i.e. in the rear garden of “The Meadows”. Their planning application for a 1½ storey house was opposed by neighbours on amenity grounds, but was granted after they modified their proposal to a single storey. The proposal is accordingly for a modest two-bedroom bungalow of approximately 65m2, a percentage of which will be on the subjects. The subjects are not large enough themselves to take a house but are apparently essential for access to the proposed house.

[9] The respondents, and in particular Mr and Mrs Bruce who presently reside at Monymusk, still have in mind the possibility of residential development in the field. Three possibilities were referred to: a single house beside “The Meadows” and aligned similarly to it, so as to, in effect, extend the row of houses along Old Port Road and take advantage of the attractive outlook over the rest of the field towards the woodland (the burn is in fact at a lower level which would not be visible, at least from the ground floor); three executive houses with access, apparently, from Old Port Road; and a larger residential development which would, however, require to take access, through the business park, a development which would require to be in conjunction with other owners who control that access.

[10] The local planning position is apparently as follows, in summary. The current local plan apparently identifies the whole of the field, though of course presently zoned as ‘agricultural’, as allocated for ‘Emp’, i.e. suitable for appropriate employment uses. The current draft Aberdeenshire Local Development Plan, which has been out for consultation but is not finalised, considerably reduces the area, now designated ‘BUS12’, allocated for business development, to a much smaller area of perhaps 4 acres immediately to the east of the Old Port Road houses and to the south of, and taking access through, the existing Business Park. This reduced allocation apparently takes account of an identified flood risk in the lower ground beside the burn. Two representations on behalf of the respondents, one to fully reinstate the allocation as defined in the Local Plan, and the other, if that is not accepted, to allocate a small area of the remaining ‘BUS 12’ for 3 houses, are both opposed by the planning authority. Major residential development of the field appears very unlikely.

[11] During the 1990s, the respondents undertook a property development, “The Gardens”, on the 1.64 acre site of a former market garden owned by them in the main part of Inverurie, on the other side of the railway line. Planning permission for 10 three-bedroom houses was obtained in 1990. The land was valued, with that permission, in 1991 at £210,000, or around £21,000 per plot. The land was serviced at an approximate cost of £14,000 per plot. In 1994/95, two houses were sold for a total of £226,700, against which the direct build costs were £113,622 and the serviced land costs (including the underlying site value as well as the site servicing costs) were £81,660. This resulted in a profit of about £37,000. In 1995/96, one house was sold for £123,000 against direct costs of £65,300, thus producing a surplus of £57,700, inclusive of the underlying site value and the costs of servicing of £35,800.

[12] The applicants purchased “The Meadows”, including the subjects, in 1997 for £90,000.

[13] A further building plot at “The Gardens” was valued, also on the basis of planning consent, in 2011 at £115,000.

Parties’ Submissions: Merits

[14] The parties’ submissions, in writing and as supplemented at the hearing, may be summarised as follows. The applicants found strongly on the submission that the condition does not in fact benefit the respondents’ property (factor (b) of Section 100 of the Act), whereas it does substantially impede the applicants’ enjoyment of theirs (factor (c)). They refer to a report by Graham and Sibbald, Chartered Surveyors, which expresses the opinion that, whatever the position about any development value of the respondents’ land, the applicants’ proposed house in no way affects that valuation. Although we are not formally asked to determine the validity or enforceability of the burden, the applicants contend that the ‘material detriment’ test of interest to enforce in section 8(3) of the Act would not be satisfied. At the hearing, Mr Watt, who in our view represented the applicants’ position with moderation and candour, submitted under factor (a), if we understood him correctly, that the identification of the area, ‘BUS12’ in the draft plan, together with the indication of the planners’ present position, amounted to a change of circumstances preventing residential development beside “The Meadows”. Although he accepted the purpose (factor (f)) as stated by the respondents of protecting their position, i.e. not prejudicing any planning application they might make, he said that the local plan effectively stopped residential development now and for the foreseeable future. He resisted the suggestion that the proposed house would adversely affect the amenity of the respondents’ proposed site, the plans having been modified, and, he said, the outlook from the respondents’ site being in any event compromised by an existing house and also threatened in the future by the possible business use development. He acknowledged that the burden had been created relatively recently (factor (e)). He drew some support from factors (g) and (h).

[15] Mr and Mrs Bruce submitted that there was no relevant change in circumstances, and in particular no change in the character of the neighbourhood, since the burden was created. The local plan was still in draft, and even if finalised would not necessarily rule the position as far into the future as Mr Watt suggested. There were potentially huge developments in Inverurie. Although the area, ‘BUS12’, was mostly in their ownership, such development of it would not affect their own proposed development. In addressing factor (b), the extent of benefit to them, they said that they were not suggesting that the applicants’ proposed house would prejudice any wider residential development, but concentrated on the effect on the possible single retirement house beside “The Meadows”. This, they said, might arise in two or three years’ time, probably with two storeys. Because of the access position, there was a finite number of houses for which planning would be granted, so that every house added could affect the planning position. The applicants’ proposed house would also affect the amenity outlook from the respondents’ house site. They referred to the relatively short time since the condition was created. They emphasised the purpose of protection of their position, the Blacks having been emphatic that there would be no building and therefore no effect on the respondents’ site. The planning consent was only for a single storey house and there was concern about possible upwards extension if the burden was discharged. Under factor (j), it was pointed out that the respondents, in effect the original benefited proprietors, retained their interest in the land, whereas the applicants merely wanted to sell off part of theirs.

Parties’ Submissions: Compensation

[16] Mr and Mrs Bruce claim compensation, in the event of the application succeeding, of £50,000 based on the uplift in the value of the applicants’ property by removal of the burden. Firstly, they rely on some documented figures involved in their own development of 10 houses nearby in Inverurie (“The Gardens”) around 1995 and 1996. Secondly, they refer to a 2011 valuation of £115,000 for another building plot at “The Gardens”. In relation to the development of 10 houses, they provide a development valuation of around £57,000 per plot. They submit that the 2011 valuation demonstrates the increasing value of house plots in the expanding town of Inverurie.

[17] Mr Watt resisted that claim on a number of grounds. He first pointed out that there is no basis in the legislation for compensation based on any increase in the value of property sold subject to a burden. Next, he submitted that too many adjustments would be required to arrive at a comparable cost for the land at the Meadows. The Meadows did not have planning permission in 1995. No adjustment had been made for the different sizes of plots or for the smaller size of house proposed at the Meadows. There had been no adjustment for changes in land values between 1991 or 2011 and 1995. There had been no adjustment to reflect the fact that the subjects formed only part of a plot. He gave some examples of the types of adjustment required. He also pointed out that the costs figures for “The Gardens” development reflected economies of scale and in any event that profit and loss accounts produced did not show even an implied valuation of a single plot. Finally, he showed that the sale price of the Meadows in 1997 was £90,000: even if there was no uplift in values between 1995 and 1997, if the subjects were worth £51,500, then the house, garage and the rest of the garden without the plot would only be worth £38,500, although it had been shown that nearby properties were selling at an average of £116,500.

Tribunal’s Consideration: Merits

[18] Section 98(a) of the Act provides that we are only to grant an application of this kind if we are satisfied, having regard to the factors listed in Section 100, that it is reasonable to do so. The approach which we have to take is not to decide, as it were, who wins or loses on each factor, but rather to weigh up all the material before us in relation to the listed factors and decide whether or not we are satisfied overall that it is reasonable to grant the application. The application is for a simple discharge of the burden, but as was discussed at the hearing when mention was made of a concern that if the burden were discharged there would be nothing to prevent the then owners of the proposed new house from extending upwards, an alternative form of granting the application is to allow the burden to be varied only to the extent of permitting the building of the proposed house in accordance with the existing planning consent. Mr Watt was clear that the applicants wished to maintain the application for discharge, but accepted that, in the alternative, they would have no real objection to such variation.

[19] We would just mention also that, while the applicants in their written submissions referred to the test of ‘interest to enforce’ in Section 8(3) of the Act, they did not in fact apply for a determination of the validity or enforceability of this burden and we have accordingly not required to consider that test, which is a test of whether any particular failure, actual or proposed, to comply with the burden is resulting in, or would result in, ‘material detriment’. That test raises a similar, but not always identical, issue to that raised in factor (b) of Section 100.

[20] The applicants have planning permission for a single storey house, but the burden prevents that, so the condition clearly impedes their enjoyment of their property to a considerable degree.

[21] However, this is a specific, clear burden in favour of neighbouring property and there can be no question but that it was intended to benefit the owners of that property. Further, there is no dispute about its purpose, or at least a significant part of its purpose, which was to protect the interests of the owners of the field in relation to the possibility of a residential development on it. As the hearing developed, it became clear that, although there are certain wider development possibilities for the field, the respondents only wished to rely on the purpose of protection of their interests in relation to the possibility of building one house, described as a possible retirement house for Mr and Mrs Bruce. We are actually not concerned with subjective intentions, but can and should consider on an objective basis the interests of Mr and Mrs Bruce as owners of this land which may, physically at least, have this development potential.

[22] Moreover, the burden was created relatively recently, some 16 years ago, and we think it of at least some relevance that it was (in effect) the present respondents who stipulated for it.

[23] In these circumstances, despite the considerable impediment which the burden causes for the applicants, the question of the extent, if any, of benefit which the burden confers on the benefited property, the respondents’ field, becomes central. If the burden still confers a benefit, in line with the original purpose, it will be difficult for the applicants to satisfy us that it is reasonable to remove that benefit.

[24] We turn then to our assessment of the benefit to the respondents as owners of the field. Unlike what might be thought more straightforward situations in which the benefit is protection of an existing amenity, in this case the suggested benefit is protection of a prospect of development, to which the respondents added consideration of the amenity of the prospective development.

[25] From our site inspection, we consider that, although the planners are presently indicating opposition to residential development on this agricultural field, there would indeed be an apparently attractive site for a substantial house, in effect adding one house at the end of the row of houses of which “The Meadows” is currently the last house. In considering the amenity which such a house would enjoy, we bear in mind that its design could take account of the position of the proposed house in the adjoining back garden. We take the view that a single storey house would not really be any threat to the amenity of a house of the type which might be developed on the benefited property. We were told, and ourselves think it likely, that such a house might be aligned similarly to “The Meadows” and it was clear to us that its primary outlook would be the attractive easterly outlook across the field towards the woodland. We would expect that the applicants’ proposed house would be visible in an approximately north-easterly direction, but so too would other houses and outbuildings in the residential enclave, which is also close and quite densely developed. Further, the view in that direction is towards the present small business park and anyone designing such a house would also take account of possible further southerly development of that business park as currently contemplated in the draft local plan. On any reasonable view, we would expect such a house on the respondents’ plot to be designed in such a way as to avoid any detrimental impact of the single storey house for which the applicants have planning permission. Protection against the erection of such a house does not seem to us to be a significant benefit conferred by the condition.

[26] We would, however, take a different view of a 1½ or two storey house. That, being close to the respondents’ prospective plot, would achieve a prominence which, while it would not by any means destroy the outlook, could have a bit of an impact. Although planning permission for such might presently seem unlikely (indeed, that was the original proposal apparently modified in the light of the neighbours’ objections in order to obtain permission), that position could change. Having regard to the express purpose of the burden and the other factors to which we have referred, the protection conferred by the burden against the erection of such a house is a benefit to which we attach some weight.

[27] The other way in which the burden may provide a benefit to the owners of the field is by protection of their interests in relation to the planning position. As we have noted, the respondents relied on this only in relation to the possible single house beside “The Meadows”.

[28] Generally, the planners appear opposed to residential development at this location. If that is the settled position, the burden confers no benefit at all. However, the materials produced in relation to the draft local plan consultation and the planners’ expression of their position appears to us to be related to more extensive development. In their report produced for the applicants, Graham and Sibbald did offer the view, which appeared to us credible, that “there may still be the opportunity for further modest development to be serviced off Old Port Road”.

[29] As we see it, the question then becomes whether permitting the applicants’ proposed development affects the prospect of obtaining permission for one more house. The situation in which it was suggested that it might do so related to the poor access position. It was suggested that there would because of that be a limit to the number of houses accessed from Old Port Road and therefore that, as it were, the applicants’ proposed new house might be the last to get permission and in that way the protection provided by the burden could preserve the respondents’ development prospect.

[30] We accept that that possibility cannot be altogether ruled out and that it is a factor to be considered. In our view, however, on a consideration of all the material and all that was said, as well as our own look at the location, this is a somewhat unlikely scenario. We say that firstly because there is little if any indication of it in the materials, and also because the applicants’ proposed house involves using an existing access and not adding one. We appreciate that there could be two considerations – the number of accesses and the amount of traffic – but it does not seem to us very likely at all that the fact of having granted permission for a two-bedroomed bungalow using an existing access would be crucial in relation to a proposal to build a substantial house involving the creation of an additional access. It seems to us that while such prospective development of the respondents’ land, involving another access from Old Port Road, might be granted or might be refused, the existence of the house now proposed by the applicants would not be a determining factor.

[31] Before drawing all these considerations together, we should consider factor (a), change of circumstances, on which there were competing submissions. It seems to us that, while there may have been some strengthening of the planners’ opposition to residential development on the respondents’ field, there has been no significant change in the properties or the character of the neighbourhood since the condition was created and this possible slight change in the planning approach does not significantly affect the reasonableness or otherwise of this application.

[32] Our consideration should also take account of the availability of compensation. Benefited proprietors are of course entitled to resist on the basis that the application is unreasonable whether or not there is compensation. Sometimes, however, reasonableness dictates that although discharge or variation would cause some loss or impair enjoyment of the benefited property, that can be addressed by an award of compensation.

[33] Drawing all these considerations together in this case, we are particularly influenced by our assessment of the extent of benefit conferred by the burden. We take the view that while there is one possible situation in which retention of the burden, thus preventing the addition of a house in the back garden of “The Meadows”, might preserve the respondents’ development possibility, that is rather unlikely. We also do not consider that the amenity of any house to be built on the respondents’ site will be affected to any significant degree by the single storey house proposed. Therefore, the benefit, as related to the applicants’ proposal, while not non-existent, is extremely slight. The respondents’ position draws support from the recency of the burden; from the lack, in our view, of any real change in circumstances; and from the purpose of the burden, although we have assessed the extent of benefit from protection of their position in relation to development of another house as slight. Against that, the applicants point to the extent to which this burden impedes their enjoyment of their property (even though they accepted this title and therefore should have known about it), and to their planning consent. Ultimately, we have reached the view that the benefit to the respondents from retaining this burden as it is is so slight that it would be reasonable, not to discharge the burden entirely, but to vary it so as to permit a single storey house as proposed and award such compensation as is justified under the statutory provisions.

Tribunal’s Consideration: Compensation

[34] All of the respondents claim compensation on the basis not of an effect on the benefitted property but rather, under Section 90(7)(b) of the Act, of “a sum to make up for any effect which the title condition produced, at the time when it was created, in reducing the consideration then paid or made payable for the burdened property.” Section 90(6) gives us a discretion to award “such sum as the Lands Tribunal may think it just to award”, and as we are satisfied that this burden was intentionally created for the benefit of the owners of the field we certainly agree that such an award, at a level which can be properly established, is in principle appropriate. The provision does not, however, allow us to adjust for inflation or award any interest. Mr and Mrs Garden assessed compensation at £5,000, i.e. implying a value of £6,500 for the subjects if they had been sold in 1995 without this building prohibition. The applicants accept that claim. Mrs Bruce claims £50,000, i.e. implying a value of £51,500 for the subjects, unburdened, in 1995.

[35] Mr Watt has not challenged the basic figures derived from the documentation provided by Mrs Bruce, and we have made findings in effect accepting the starting figures used. There are some differences between the site at “The Meadows” and “The Gardens” development, but we are prepared to assume that residential land at the two sites would be of similar value, subject of course to the position about planning.

[36] The attempt to put a value of £51,500 on the subjects in 1995 appears to us misconceived. The claim involves putting building plot development values on a strip of ground, part of an agricultural field, which did not have residential planning consent and which was in any event not big enough to take a house.

[37] The added values for the three plots on which houses had been built and were sold in 1994 to 1996 involve developers’ profit, which we do not find at all comparable to the basic land value. We also find ourselves in substantial agreement with the points made by Mr Watt in relation to necessary adjustments which simply have not been made. As he pointed out, on the basis of the valuation of the land at £210,000, £51,500 was the value of around a quarter of that land. The area valued at £210,000 was in fact 18 times larger than the subjects and also had the benefit of planning permission for 10 houses. The pro rata value of the subjects would be £11,524, from which adjustments for planning permission, and for the fact that the subjects could not actually physically accommodate a house, would be required.

[38] At least in the event of planning permission being obtained, the subjects, although not themselves able to take a house, might appropriately be considered as in the nature of a ‘ransom strip’ or ‘golden key’ which might provide a basis for an enhanced value because obtaining them would ‘unlock’ the development value of the garden ground of the existing house – a situation sometimes referred to as a Stokes v Cambridge situation, a standard approximate measure of such value being one third of the value of the development site. Further, we would have thought that servicing costs at the subjects might be rather less than the provision of the full road access which we saw at “The Gardens” and new services, as opposed to extension of existing service provision to “The Meadows”. A very approximate check along these lines in this case might start with an individual plot land value (£21,000), adjusted for restriction to a smaller single storey house (say one third, i.e. deduct £7,000), further adjusted for the risks and cost involved in obtaining planning consent (say one half, i.e. deduct a further £7,000), then adjusted for the lower service costs (add, say, £5,000), producing a plot value of £12,000 and therefore a “Stokes v Cambridge” value of £4,000. Other matters, including some allowance for a reduced value of “The Meadows” (their owners being the only realistic purchasers of the subjects) and economies of scale involved in the service provision costs provided, might arise, some perhaps calling for upwards adjustment.

[39] We would also point out that although the actual price of £1,500 is described by Mrs Bruce as “nominal”, it in fact devalues to £16,666 per acre which we would think well in excess of its agricultural value. The value of £6,500 implied by acceptance of the compensation figure of £5,000 devalues at £72,219 per acre, which might be compared with the valuation of the site with permission for 10 houses at around £130,000 per acre.

[40] The 2011 valuation of one other plot, with planning permission, at £115,000 would of course require adjustment to 1995 values, although in fairness Mrs Bruce was not, we think, suggesting direct comparison.

[41] Such checks as these reinforce our opinion that the valuation of £51,500 is flawed.

[42] Considering that there is (understandably) no evidence of any contemplation of residential development at “The Meadows” in 1995, or of the prospect then of obtaining planning consent at that particular site, £6,500 seems to us to be reasonable and possibly generous. At all events, we are clear that no higher value has been established. We shall accordingly confirm that figure and make awards of compensation totalling £5,000, i.e. £1,250 to each of Mr and Mrs Garden and £2,500 to Mrs Bruce.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 4 November 2011

Neil M Tainsh – Clerk to the Tribunal