OPINION

Michael Joseph Marriott and another (applicants) v Greenbelt Group Limited (respondents)

[1] This is an application for determination of a question as to the validity, applicability or enforceability of a title condition under sec 90(1)(a)(ii) of the Title Conditions (Scotland) Act 2003. The applicants own the dwellinghouse 28 Rowan Crescent, Menstrie. It is a part of a large housing development built by Bett Limited and others. The “open ground” (a term used in the deed of conditions referred to hereinafter) on the development has been conveyed to the respondents in a series of conveyances. The applicants do not have rights in terms of their titles to use the open ground but they are obliged, in terms of a condition in their title, to pay the respondents in perpetuity a share of its maintenance costs. The applicants argue that the title condition, or purported title condition, is invalid or unenforceable. Amongst other things they argue that the effect of the title condition is to create an unlawful monopoly in favour of the respondents, and that the condition is void for uncertainty. The case therefore concerns what has become known as “the land-owning maintenance model” of estate management and raises important questions as to its validity, at least in the form which it takes on this development.

[2] We heard a debate on 18 August 2015 and two successive days. The applicants sought a finding that the title condition was unenforceable, failing which to allow an evidential hearing on such parts of the application as necessary in order to make a determination. The respondents sought dismissal of the application. The applicants were represented by Sir Crispin Agnew QC and Mr Kenneth McGuire, advocate. The respondents were represented by Mr David Thomson, advocate.

Authorities cited

Tailors of Aberdeen v Coutts (1837) 2 Sh & McL 609
Tailors of Aberdeen v Coutts (1840) 1 Robinson 296
M’Arthur v Lawson (1877) 4R 1134
Moir’s Trustees v McEwan (1880) 7 R 1141
Earl of Zetland v Hislop (1882) 9 R (HL) 40
Anderson v Dickie 1915 SC (HL) 79
Brannan v Ross 1937 JC 123
Aberdeen Varieties Ltd v James F Donald (Aberdeen Cinemas) Ltd 1939 SC 788
Kemp v Magistrates of Largs 1939 SC (HL) 6
Chisholm v Lord Lovat and Macdonald 1939 SLCR 77
Nicol’s Trustees v Sutherland 1951 SC (HL) 21
Hynd’s Trustee v Hynd’s Trustees 1955 SC (HL) 1
Motherwell Bridge & Engineering Co v Dempster 1964 SC 308
Hunter v Fox 1964 SC (HL) 95
Hoffmann-La Roche v Commission, C-85/76. [1979] 3 CMLR 211
Rennie v Lothian Regional Council 1991 SC 212
Meriton v Winning 1995 SLT 76
Marfield Properties v Secretary of State for the Environment 1996 SC 362
Heritage Fisheries Ltd v Duke of Roxburghe 2000 SLT 800
Ashworth Frazer Ltd v Gloucester City Council [2001] 1 WLR 2180
PIK Facilities Ltd v Watson’s Ayr Park Ltd 2005 SLT 1041
R (Khatun and Others) v Newham LBC [2005] QB 37
Albion Water v Water Services Regulation Authority [2006] CAT 36
Teague Developments Ltd v City of Edinburgh Council LTS/AFT44/2007/02; LTS/TC/2007/41
Greenbelt Property Limited v Riggens & Another LTS/LR/2008/30
McCreight v West Lothian Council 2009 SC 258
PMP Plus Ltd v Keeper of Registers 2009 SLT (Lands Tr) 2
Perth & Kinross Council v Chapman, LTS/TC/2009/06
Clarke v Grantham 2009 GWD 38-645; LTS/TC/2008/49
Sheltered Housing Management Limited v Bon Accord Co Ltd 2010 SC 516
Snowie v Museum Hall LLP 2010 SLT 971
MacDonald v Pollock 2013 SC 22
Lundin Homes Ltd v Keeper of the Registers 2013 SLT (Lands Tr) 73
Grove Investments Ltd v Cape Building Products Ltd [2014] CSIH 43
Hill of Rubislaw (Q Seven) Ltd v Rubislaw Quarry Aberdeen Ltd 2014 CSIH 105
Miller Homes Ltd v Keeper of the Registers 2014 SLT (Lands Tr) 79

Statutory material

Conveyancing and Feudal Reform (Scotland) Act 1970
Land Registration (Scotland) Act 1979
Town and Country Planning (Scotland) Act 1997
Competition Act 1998
Title Conditions (Scotland) Act 2003
The Unfair Terms in Consumer Contracts Regulations 1999

Other material

European Commission Guidance Note on Article 82 (2009/C 45/02)
Oxford English Dictionary – “Monopoly”
Reid & Gretton, Conveyancing 2009 pages 117-118; 2010 pages 122-126; 2011 pages 90 -91, 117-8; 2013 pages 119-122; 2014 pages 117-125.
Rennie, Land Tenure in Scotland, (2004), paragraphs 5-02; 5-14, 5-19; 5-20; 5-27 to 5-33
Stair Memorial Encyclopaedia; vol 12, paragraph 1126; Vol 18 paragraph 391.
Scottish Law Commission Report No 181 October 2000 on Real Burdens paragraphs 2.9 to 2.18, 2.21 to 2.28, 2.29 to 2.39 and 4.61 to 6.67.

Relevant provisions

The Conveyancing and Feudal Reform (Scotland) Act 1970 (the “1970 Act”) provided:

1.— Variation and discharge of land obligations

… (2) For the purposes of this section…, a land obligation is an obligation relating to land which is enforceable by a proprietor of an interest in land, by virtue of his being such proprietor, and which is binding upon a proprietor of another interest in that land, or of an interest in other land, by virtue of his being such proprietor.

For the purposes mentioned in this subsection, an obligation includes a future or contingent obligation, an obligation to defray or contribute towards some cost, an obligation to refrain from doing something, and an obligation to permit or suffer something to be done or maintained.”

The Land Registration (Scotland) Act 1979 (the “1979 Act”) provided:

4.— Applications for registration

(1)…, an application for registration shall be accepted by the Keeper if it is accompanied by such documents and other evidence as he may require.

(2) An application for registration shall not be accepted by the Keeper if—

(a) it relates to land which is not sufficiently described to enable him to identify it by reference to the Ordnance Map;…

6.— The title sheet

(1) …, the Keeper shall make up and maintain a title sheet of an interest in land in the register by entering therein—

(a) a description of the land which shall consist of or include a description of it based on the Ordnance Map,…

(e) any subsisting real right pertaining to the interest or subsisting real burden or condition affecting the interest and, where the interest is so affected by virtue of …section 4(5)… of the Title Conditions (Scotland) Act 2003 (asp 9), the Keeper shall in the entry identify the benefited property, or as the case may be the dominant tenement, (if any) and any person in whose favour the real burden is constituted;

(ee) any subsisting right to a title condition pertaining to the interest by virtue of section … 4(5)… of that Act of 2003, the Keeper identifying in the entry the burdened property;

17.— Deeds of declaration of conditions

(1) A land obligation specified in a deed executed after the commencement of this Act under section 32 of the Conveyancing (Scotland) Act 1874 (deeds of conditions etc.) shall—

(a) on the recording of such deed in the Register of Sasines;

(b) on the obligation being registered, become a real obligation affecting the land to which it relates, unless it is expressly stated in such deed that the provisions of this section are not to apply to that obligation.

(2) In this section “land obligation” has the meaning assigned to it by section 1(2) of the Conveyancing and Feudal Reform (Scotland) Act 1970…”

The Competition Act 1998 (the “1998 Act”) provides:

18.— Abuse of dominant position

(1) Subject to section 19, any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom.

(2) Conduct may, in particular, constitute such an abuse if it consists in—

(a) directly, or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.

(3) In this section—

“dominant position” means a dominant position within the United Kingdom; and

“the United Kingdom” means the United Kingdom or any part of it.

(4) The prohibition imposed by subsection (1) is referred to in this Act as “the Chapter II prohibition”…”

The Title Conditions (Scotland) Act 2003 (the “2003 Act”) provides:

1 The expression “real burden”

(1) A real burden is an encumbrance on land constituted in favour of the owner of other land in that person's capacity as owner of that other land.

(2) In relation to a real burden–

(a) the encumbered land is known as the “burdened property”; and

(b) the other land is known as the “benefited property”

2 Affirmative, negative and ancillary burdens

(1) Subject to subsection (3) below, a real burden may be created only as–

(a) an obligation to do something (including an obligation to defray, or contribute towards, some cost); or

(b) an obligation to refrain from doing something.

(2) An obligation created as is described in–

(a) paragraph (a) of subsection (1) above is known as an “affirmative burden”; and

(b) paragraph (b) of that subsection is known as a “negative burden”.

(3) A real burden may be created which–

(a) consists of a right to enter, or otherwise make use of, property; or

(b) makes provision for management or administration, but only for a purpose ancillary to those of an affirmative burden or a negative burden.

(4) A real burden created as is described in subsection (3) above is known as an “ancillary burden”.

(5) In determining whether a real burden is created as is described in subsection (1) or (3) above, regard shall be had to the effect of a provision rather than to the way in which the provision is expressed.

3 Other characteristics

(1) A real burden must relate in some way to the burdened property.

(2) The relationship may be direct or indirect but shall not merely be that the obligated person is the owner of the burdened property.

(3) In a case in which there is a benefited property, a real burden must, unless it is a community burden, be for the benefit of that property.

(4) A community burden may be for the benefit of the community to which it relates or of some part of that community…

(6) A real burden must not be contrary to public policy as for example an unreasonable restraint of trade and must not be repugnant with ownership (nor must it be illegal).

(7) Except in so far as expressly permitted by this Act, a real burden must not have the effect of creating a monopoly (as for example, by providing for a particular person to be or to appoint–

(a) the manager of property; or

(b) the supplier of any services in relation to property).

(8) It shall not be competent–

(a) to make in the constitutive deed provision; or

(b) to import under section 6(1) of this Act terms which include provision, to the effect that a person other than a holder of the burden may waive compliance with, or mitigate or otherwise vary, a condition of the burden…

4 Creation

(1) A real burden is created by duly registering the constitutive deed except that, notwithstanding section 3(4) of the 1979 Act (creation of real right or obligation on date of registration etc.), the constitutive deed may provide for the postponement of the effectiveness of the real burden to–

(a) a date specified in that deed (the specification being of a fixed date and not, for example, of a date determinable by reference to the occurrence of an event); or

(b) the date of registration of some other deed so specified.

(2) The reference in subsection (1) above to the constitutive deed is to a deed which–

(a) sets out (employing, unless subsection (3) below is invoked, the expression “real burden”) the terms of the prospective real burden;

(b) is granted by or on behalf of the owner of the land which is to be the burdened property; and

(c) except in the case mentioned in subsection (4) below, nominates and identifies–

(i) that land;

(ii) the land (if any) which is to be the benefited property; and

(iii) any person in whose favour the real burden is to be constituted (if it is to be constituted other than by reference to the person's capacity as owner of any land).

(3) Where the constitutive deed relates, or purports to relate, to the creation of a nameable type of real burden (such as, for example, a community burden), that deed may, instead of employing the expression “real burden”, employ the expression appropriate to that type.

(4) Where the constitutive deed relates to the creation of a community burden, that deed shall nominate and identify the community.

(5) For the purposes of this section, a constitutive deed is duly registered in relation to a real burden only when registered against the land which is to be the burdened property and (except where there will be no benefited property or the land in question is outwith Scotland) the land which is to be the benefited property…

(7) This section … is without prejudice to section 6 of this Act.

5 Further provision as respects constitutive deed

(1) It shall not be an objection to the validity of a real burden (whenever created) that–

(a) an amount payable in respect of an obligation to defray some cost is not specified in the constitutive deed; or

(b) a proportion or share payable in respect of an obligation to contribute towards some cost is not so specified provided that the way in which that proportion or share can be arrived at is so specified.

(2) Without prejudice to the generality of subsection (1) above, such specification may be by making reference to another document the terms of which are not reproduced in the deed; but for reference to be so made the other document must be a public document (that is to say, an enactment or a public register or some record or roll to which the public readily has access).

6 Further provision as respects creation

(1) A real burden is created by registering against the land which is to be the burdened property a deed which–

(a) is granted by or on behalf of the owner of that land; and

(b) imports the terms of the prospective burden.

(2) “Imports” in subsection (1)(b) above means imports into itself from a deed of conditions; …

(4) This section is without prejudice to section 4 of this Act…

14 Construction

Real burdens shall be construed in the same manner as other provisions of deeds which relate to land and are intended for registration…

25 The expression “community burdens”

(1) Subject to subsection (2) below, where–

(a) real burdens are imposed under a common scheme on two or more units; and

(b) each of those units is, in relation to some or all of those burdens, both a benefited property and a burdened property, the burdens shall, in relation to the units, be known as “community burdens”

26 Creation of community burdens: supplementary provision

(1) Without prejudice to section 2 of this Act, community burdens may make provision as respects any of the following–

(a) the appointment by the owners of a manager;…

(2) In this Act “community” means–

(a) the units subject to community burdens;…

53 Common schemes: related properties

(1) Where real burdens are imposed under a common scheme, the deed by which they are imposed on any unit comprised within a group of related properties being a deed registered before the appointed day, then all units comprised within that group and subject to the common scheme (whether or not by virtue of a deed registered before the appointed day) shall be benefited properties in relation to the real burdens.

(2) Whether properties are related properties for the purposed of subsection (1) above is to be inferred from all the circumstances; and without prejudice to the generality of this subsection, circumstances giving rise to such an inference might include –

(a) the convenience of managing the properties together because they share –

(i) some common feature; or

(ii) an obligation for common maintenance of some facility;

(b) there being shared ownership of common property;

(c) their being subject to the common scheme by virtue of the same deed of conditions; or

(d) the properties each being a flat in the same tenement.

(3) This section confers no right of pre-emption, redemption or reversion.

(3A) Section 4 of this Act shall apply in relation to any real burden to which subsection (1) above applies as if –

(a) in subsection (2), paragraph (c)(ii);

(b) subsection (4); and

(c) in subsection (5), the words from “and” to the end, were omitted.

(4) This section is subject to section 57 and 122(2)(ii) of this Act.

56 Facility burdens and service burdens

(1) Where by a deed registered before the appointed day–

(a) a facility burden is imposed on land, then–

(i) any land to which the facility is (and is intended to be) of benefit; and

(ii) the heritable property which constitutes the facility, shall be benefited properties in relation to the facility burden;

(b) a service burden is imposed on land, then any land to which the services are provided shall be a benefited property in relation to the service burden.

(2) Subsection (1) above is subject to section 57 of this Act; and in paragraph (a) of that subsection “facility burden” does not include a manager burden…

90 Powers of Lands Tribunal as respects title conditions

(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)–

(i) discharge it, or vary it, in relation to that property; or

(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;…

119 Savings and transitional provisions etc.

(1) Nothing in this Act shall be taken to impair the validity of creating, varying or discharging a real burden by the registering of a deed before the appointed day…

(3) The repeal by this Act of section 32 of the Conveyancing (Scotland) Act 1874 (c.94) does not affect the construction of the expression “deed of conditions” provided for in section 122(1) of this Act…

(10) Except where the contrary intention appears, this Act applies to all real burdens, whenever created.

122 Interpretation

(1) In this Act, unless the context otherwise requires– …

“constitutive deed” is …the deed which sets out the terms of a title condition (or of a prospective title condition) but the expression includes any document in which the terms of the title condition in question are varied;

“deed of conditions” means a deed mentioned in section 32 of the Conveyancing (Scotland) Act 1874 (c.94) (importation by reference) and registered before the appointed day having been executed in accordance with that section;…

“facility burden” means, subject to subsection (2) below, a real burden which regulates the maintenance, management, reinstatement or use of heritable property which constitutes, and is intended to constitute, a facility of benefit to other land (examples of property which might constitute such a facility being without prejudice to the generality of this definition, set out in subsection (3) below);…

“land” includes–

… heritable property, whether corporeal or incorporeal, held as a separate tenement; …

“manager”, in relation to related properties, means any person (including an owner of one of those properties or a firm) who is authorised (whether by virtue of this Act or otherwise) to act generally, or for such purposes as may be applicable in relation to a particular authorisation, in respect of those properties…

(3) The examples referred to in the definition of “facility burden” in subsection (1) above are–

(b) a common area for recreation;…”

The appointed day for the 2003 Act was 28 November 2004.

The Unfair Terms in Consumer Contracts Regulations 1999 (the “1999 Regulations”) provides:

5.— Unfair Terms

(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.

(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair…

6.— Assessment of unfair terms

(1) Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.

(2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate–

(a) to the definition of the main subject matter of the contract, or

(b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange…

8.— Effect of unfair term

(1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.

(2) The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term…

Schedule 2

INDICATIVE AND NON-EXHAUSTIVE LIST OF TERMS WHICH MAY BE REGARDED AS UNFAIR

1.

Terms which have the object or effect of–

(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;

(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;

(k) enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided;

(l) providing for the price of goods to be determined at the time of delivery or allowing a seller of goods or supplier of services to increase their price without in both cases giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded;

(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract;…”

(o) obliging the consumer to fulfil all his obligations where the seller or supplier does not perform his; …”

Background facts and circumstances

[3] The applicants acquired their property under Title CLK10963 registered on 16 June 2005. Their house is part of the Menstrie Mains Housing Development. It is a large scale housing development, presently comprising seven housing areas together with various open space areas within the overall development site. The applicants’ house was built in the second phase of the development, by which time, we were told, about 70 houses had already been sold.

[4] The burdens section of the applicants title contains as Entry 9 a deed of declaration of conditions (“the deed of conditions”) registered 6 November 2003 by Bett Limited and another. In essence this provides that the “open ground” is to be disponed to the respondents to carry out management operations, and that all proprietors are taken bound to the respondents to contribute to the costs of those operations on a pro rata basis. The entry proceeds to narrate landscape implementation and maintenance specifications in some detail. Given the wide ranging arguments presented to us it is necessary to quote from the burdens entry in some detail.

[5] The description of the applicants’ subjects refers to a particular plot tinted pink on the title plan “together with the rights specified in the deeds of conditions in entries 9 and 10 of the burdens section”. Entry 9 provides as follows:-

“Deed of Declaration of Conditions, registered 6 Nov. 2003, by Bett Limited and Alan Hamilton Muirhead, Proprietor of subjects, of which the subjects in this Title form part, sets forth and declares burdens &c in the following terms:

CONSIDERING that amenity woodlands, landscaped open spaces, play areas and others require to be provided on the Whole Subjects in terms of the Planning Permission and that it has been agreed that GGC will assume responsibility for the management, maintenance and, where necessary, renewal of the said amenity woodlands, landscaped open spaces, play areas and others: WE DO HEREBY SET FORTH AND DECLARE the following

1. Definitions In this Deed…:- "Bett Subjects" means the subjects tinted blue on Supplementary Plan to the Title Plan; "Development" means the development comprising dwellinghouses and others to be erected on the Whole Subjects; "Dwellinghouse" means a dwellinghouse within the Development; "GGC" means The Greenbelt Group of Companies Limited, incorporated under the Companies Acts (Registered Number 192378) and having its Registered Office at 189 St. Vincent Street, Glasgow or its successors in title to the Open Ground; "Management and Maintenance Specification" means the management and maintenance specification annexed and executed as relative to this Deed as the said specification may be amended from time to time; "Management Operations" means all works and other matters comprised from time to time in the management, maintenance and, where necessary, renewal of the Open Ground in accordance with the Management and Maintenance Specification; "Muirhead Subjects" means that area of ground tinted pink on the said Supplementary Plan; "Open Ground" means the areas of amenity woodland, landscaped open spaces, play areas and others to be provided on the Whole Subjects in terms of the Planning Permission; "Planning Permission" means the planning permission issued by the Scottish Ministers under Reference No.00/00129OUT on 7 Mar. 2002 together with any variation thereof or supplementary permission issued in respect thereof; "Plot" means a plot of ground forming part of the Development with the Dwellinghouse and others erected thereon in respect of which plot of ground and Dwellinghouse a Disposition or other conveyance is granted by Bett plc or Alan Hamilton Muirhead or their or his successors as proprietors of the Bett Subjects or the Muirhead Subjects as the case may be; "Proprietor" means a person or persons, body or company who is the owner for the time being of any Plot…; and "Whole Subjects" means the Bett Subjects and the Muirhead Subjects together.

2. Interpretation …

3. Maintenance of Open Ground

3.1 Whereas it is intended that GGC will be taken bound in terms of the Disposition or Dispositions to be granted in their favour in respect of the Open Ground to carry out the Management Operations all Proprietors are hereby taken bound and obliged in all time coming to contribute to the whole costs of the Management Operations together with insurance premiums, reasonable estate management remuneration and charges incurred by GGC on a pro rata basis as aftermentioned and to pay and make over to GGC such annual sums (plus all Value Added Tax exigible thereon) as represent the pro rata share applicable from time to time to the relevant Plot of the total annual costs of effecting the Management Operations, insurance premiums, estate management remuneration and charges as aforesaid for the relevant year which pro rata share shall in the case of each Plot be calculated by reference to the total number of Plots constructed or permitted to be constructed upon the Development with each Plot bearing annually a proportion of the said costs, premiums, remuneration and charges which is equivalent to the numerical proportion or fraction which the relevant Plot bears to the total number of Plots constructed or permitted to be constructed upon the Development (and so that and by way of illustrative example only if the said total number of Plots amounts to one hundred (100), each Plot shall bear a one-hundredth share of the said costs, premiums, remuneration and charges annually) and which pro rata share shall be payable in all time coming annually in advance by all Proprietors to GGC.

3.2 Subject to the proviso aftermentioned the costs of effecting the Management Operations shall not be permitted to increase in any relevant year by a margin or amount which exceeds the relevant increase for that year in the rate of inflation as measured by the UK Index of Basic Materials and fuels as published by the Financial Times London provided always that the limit of increase shall not apply in respect of the increase in the said costs applicable at the end of the fifth year and every fifth year following in perpetuity so as to ensure that at the end of such relevant period of five years the pro rata share applicable to each Plot for the succeeding year reflects any actual increase in the costs of the Management Operations.

3.3 If a majority of the Proprietors agree that they wish any amendment to be made to the said Management and Maintenance Specification then the said Proprietors will require to agree with GGC the appropriate variation in the said costs which is appropriate having regard to the proposed variation in the Management and Maintenance Specification and if the said Proprietors and GGC are unable after a period of three months following intimation of a proposed amendment by the said Proprietors to GGC to agree upon the variation of said costs then the question of the costs of the variation (but not any other matter) may, on the application of either of the parties be referred for determination by an Independent Expert experienced in landscape architecture and management to be appointed failing agreement between GGC and the relevant Proprietors by the Chairman or other senior official of the Royal Institution of Chartered Surveyors in Scotland on the application of GGC or the relevant Proprietors and the decision of such expert in respect of any variation in costs arising out of the proposed variation to the Management and Maintenance Specification but not any other matter affected by this Clause 3 shall (save in the case of manifest error) be conclusive and binding upon GGC and all Proprietors who shall all co-operate in the execution and registration of a Deed of Variation of this Deed of Conditions to effect the agreed or determined variation of the Management and Maintenance Specification and any relevant agreed or determined variation in the said costs.

3.4 All Proprietors are hereby bound and obliged not to deposit refuse upon or otherwise exercise any rights which they may have over the Open Ground in such a manner as to cause nuisance or prejudice to the Open Ground or any part thereof or to prejudice or adversely effect the efficient and economic carrying out by GGC of any part of the Management Operations.

3.5 To the extent, if any, to which it may in law be necessary, for the purposes of enabling GGC validly to enforce the foregoing land obligations there is hereby conferred upon GGC a jus quaesitum tertio for enforcement of the foregoing provisions of these presents in a question with all Proprietors.

3.6 The whole of the foregoing conditions and obligations contained in this Clause 3 are hereby declared to be real reservations, burdens, conditions and land obligations affecting each and every Plot with the intent to confer upon GGC as proprietors of the Open Ground express right, title and interest jus quaesitum tertio to enforce performance of same against all Proprietors or any one or more of them and as such are appointed to be inserted in all Dispositions and other deeds or instruments relating to any Dwellinghouse otherwise the same shall be null and void.

3.7 For the purpose of enabling GGC always to be in a position to carry out its said functions the Proprietors of each Plot shall, if so required on settlement of their purchase transaction, pay at time of settlement, the sum nominated and determined by GGC, acting reasonably, as a contribution towards the initial costs incurred by GGC in carrying out the Management Operations.

3.8 In the event of any Proprietor or Proprietors so liable failing to pay his, her or their proportion of the said maintenance costs and others or such expenses, charges or remunerations within one month of such payment being demanded GGC or other person or persons appointed as aforesaid shall (without prejudice to the other rights and remedies or the other Proprietors) be entitled to sue for and to recover the same in its own name from the Proprietor or Proprietors so failing together with all the expenses incurred by GGC or other person…”.

[6] At the end of clause 3.8 the deed of conditions then sets out the landscape implementation and maintenance specifications which are to apply.

[7] At the end of the specification the entry states the following:-

NOTE: The foregoing Deed of Conditions contains a declaration that Section 17 of the Land Registration (Scotland) Act 1979 is not to apply. The conditions therein have been created as real burdens in respect of the subjects in this title by being imported by reference in a subsequently registered deed in terms of Section 6 of the Title Conditions (Scotland) Act 2003.”

[8] The respondents have had conveyed to them various areas of open ground which have not been sold off for individual dwellinghouses, lying within the whole subjects. On 23 February 2009 the respondents became registered proprietors of title CLK13618. This land comprised various open areas or unbuilt upon strips and others to the centre and west of the development. They became registered proprietors of title CLK 14121 on 30 December 2010. This title comprises three or four strips of land to the east side of the development. Both these titles refer in the respective burdens section to the deed of conditions of 6 November 2003. The respondents are also disponees of open areas to the east of the development in terms of a disposition by Bett Homes Limited dated 18 September 2014. This disposition is undergoing registration with effect from 30 July 2015. It is understood that the intended title number for these subjects is CLK15304. The disposition imports the terms of the title conditions in the deed of conditions.

[9] The whole development site was granted outline planning permission on appeal by a reporter. The decision letter is dated 4 March 2002. The relative plan shows six discreet housing areas, an area for “community retail & potential business” and, to the south-east a large public open space/amenity/recreation area. The latter area includes a route safeguarded for a future road. According to the material before us, there were eight subsequent planning applications – either for reserved matters approval or “full” permission – granted between November 2002 and April 2006. It can be seen that the site as subsequently developed is somewhat different to the proposals inherent in the site which received outline planning permission in 2002. In particular, the 1.87 acre site designated for “community retail & potential business” now appears, to a large extent, to have housing developed upon it. This can be seen from the plan attached to the 2014 disposition in favour of the respondents.

[10] Mr Marriott concluded missives with Bett Limited on 30 November 2004, title subsequently being taken in joint names of the applicants. The missives incorporated a pro forma offer supplied by Bett Limited. The applicants’ solicitors had advised that it would be unlikely they could negotiate variation of any substantial aspects of the contract, and made the point that many builders would not permit any amendment to their standard offer at all. We infer that the applicants did not seek to revise any of the terms and conditions. The pro forma offer included the following terms and conditions:-

“8. It is understood that in exchange for the price there will be granted a valid marketable title in your standard form. … The title will take the form of a Disposition or Feu Disposition or similar writ in your standard form containing or referring to all usual and necessary clauses and all clauses and prohibitions which you in your sole discretion shall deem appropriate for preserving the amenity of the Estate.

9. The title to be granted in favour of me may be granted subject to the terms of a Deed of Conditions appropriate to the Estate may (sic) also contain further rights and obligations, including Factoring conditions, payment of a Factor’s fee and other conditions relating to the subjects and others forming part of the Estate.”

We were referred to various items of correspondence surrounding the purchase transaction. This indicated that the applicants’ solicitors received the title deeds including the deed of conditions on 14 March 2005. It would appear that the transaction settled on 29 April 2005.

Preliminaries

[11] At the outset of the hearing counsel for both parties moved, of consent, the late lodging of various additional productions and authorities, some in response to a note the tribunal had issued requesting to be advised of certain matters. As well as allowing those to be received we granted, unopposed, a motion by Mr Thomson that the respondents’ answers be amended in terms of a minute of amendment responding to the tribunal’s note.

Applicants’ submissions

[12] The applicants initially tabled six arguments contending that burden entry 9 was void or unenforceable. The first argument had been that the burden was a “manager burden” under sec 63 of the 2003 Act which had expired by operation of statute. This argument was deleted during the written pleading process. The applicants’ remaining grounds of challenge were (2) that the burden did not relate to the burdened property in terms of sec 3 of the 2003 Act; (3) that it created an unlawful monopoly contrary to the provisions of sec 3(7) of the 2003 Act and at common law; (4) that it was contrary to the provisions of sec 3(6) as being contrary to public policy, as an unreasonable restraint of trade, repugnant to ownership and illegal; (5) that the burden was unlawful contrary to sec 3(6) of the 2003 Act in that it is in breach of sec 18 of the 1998 Act; and (6) that it was void for uncertainty.

[13] At the outset of the hearing we asked parties as to their positions on the date of creation of the burden and the type thereof. The applicants’ position was that the burden was created in stages at the points when the respondents acquired title to the open areas between 2009 and 2015, or, alternatively, when the applicants acquired their title in June 2005. They did not accept that the burden could be said to have been created on 6 June 2003, being the date of registration of the deed of conditions. That was because sec 17 of the 1979 Act had been disapplied in the deed of conditions itself. Moreover, sec 1(2) of the 1970 Act defined “land obligation” as one which was enforceable by a proprietor of an interest in land, by virtue of his being such a proprietor. In the present case that had to be a reference to the respondents since the original landowners, Bett Limited, did not have any right to enforce in terms of the deed of conditions. The deed of conditions envisaged the respondents acquiring title and accordingly it was at that stage that the burden, if it was otherwise enforceable, in fact became enforceable.

[14] As the applicants’ position was that the burden was invalid or unenforceable, they did not seek to categorise it under any of the specific headings under the 2003 Act. They did not accept it was a facility burden under sec 56 which refers to deeds registered before the appointed day (28 November 2004) whereby a facility burden was “imposed”. Here the deed of conditions was registered before the appointed day, but it could not have “imposed” the burden without the subsequent dispositions to the applicants and respondents. Nor could the burden be part of a “community burden” within the meaning of secs 25 and 26 of the 2003 Act. Community burdens, it was said, envisaged the appointment by the owners of a manager, but the deed of conditions did not do this. It was not apt to speak of the respondents being “managers” of their own land, and in terms of the definition of “manager” in sec 122(1) the respondents were not authorised to act in respect of “related properties”.

[15] Before turning to his individual grounds of challenge, Sir Crispin made submissions as to the correct approach for the constitution and interpretation of real burdens in the light of the 2003 Act. The common law rule was that the burden had to be found within the four corners of the deed. Even reference in the deed to a statute for the terms of a burden was fatal: Aberdeen Varieties Ltd v James F Donald (Aberdeen Cinemas) Ltd pp 794-5. It was not enough, at common law, to call the purchaser’s attention to a burden and send him to seek for it in a known and accessible repository: Tailors of Aberdeen v Coutts p 663 (House of Lords). The four corners rule was reaffirmed in Kemp v Magistrates of Largs.

[16] It was submitted that the four corners rule was unaffected by secs 2(5) and 14 of the 2003 Act, and only modified in cases falling within the provisions of sec 5. If these sections were ambiguous, the Scottish Law Commission report on Real Burdens which preceded the 2003 Act could be looked at to identify the mischief which the legislature had in mind: MacDonald v Pollock (at para [19]). The mischief discussed in the report was that in certain cases burdens had been interpreted too strictly. Neither sec 2(5) nor sec 14 sought to permit burdens being specified in extraneous documents, and sec 14 was clearly about interpretation rather than constitution. If a clear rule of common law was to be overturned, it must be overturned by a clear, definite and positive enactment not an ambiguous one: Stair Encyclopaedia, vol 12, para 1126. The rule had not been so overturned.

[17] Furthermore, the contra proferentem rule and presumption in favour of freedom still applied. Moreover, if a burden purported to leave matters to the discretion of a party, it was void for uncertainty: Rennie v Lothian Regional Council.

[18] We need not detail the applicants’ first ground of challenge. The second argument is that in terms of sec 3 of the 2003 Act, the relationship between the burden (to make the payment to the respondents) did not relate in some way to the burdened property (the applicants’ property). In terms of sub-paragraph (2) the relationship may be direct or indirect but “shall not merely be that the obligated person is the owner of the burdened property”. It was submitted that “relates” means there must be some legally recognised connection and that connection has to appear within the four corners of the deed. Under reference to Reid & Gretton, Conveyancing 2011 pp 117-8 the applicants had no real rights in the open ground belonging to the respondents. It was not, for example, common property. At best the applicants might have had limited statutory access rights along with the rest of the public under the Land Reform (Scotland) Act 2003, secs 1, 6 and 7 which was insufficient for present purposes. At the point of registration of the applicants’ title, the respondents did not own any open ground. There were issues as to the identification of the relevant land, discussed in the sixth ground of challenge. The residential development was clearly large and there were substantial parts of land owned by the respondents outwith any area that might affect the view or amenity of the applicants’ property. The applicants had no right to use the play areas or football areas for the purpose for which they were intended. With reference to the drainage system, at most the respondents maintained the amenity side of it, i.e. maintaining grass at the inlets and outlets, which was not significant. A critical aspect of validity as put by Lord Wark at p 797 of Aberdeen Varieties Limited v Donald (Aberdeen Cinemas) was whetherthe observance or non-observance of the condition as to use of the first party’s property could have any appreciable effect upon the amenity or enjoyment of the property of the second party. Or, as put in Hill of Rubislaw (Q Seven) Limited v Rubislaw Quarry Aberdeen Limited the burden must enhance or protect the value of the respondents’ property. Accordingly there was insufficient relationship between burden and burdened property in terms of sec 3(2) of the 2003 Act.

[19] In terms of sec 1(1) the respondents were obtaining a purely monetary benefit from the title condition; the condition was simply part of an arrangement for works to be carried out for a profit, therefore the condition was not praedial in that the burden was not truly constituted in favour of the respondents in their capacity as owners of the other land. The respondents were not maintaining the property because they owned the land but in order to pass all the charges to the individual proprietors and to make a profit.

[20] An additional point was that in terms of the burden upon the respondents to perform maintenance operations in terms of their title, the benefited proprietors were not the individual proprietors such as the applicants. The benefited proprietors were Bett Homes Limited and their successors as landowners of certain retained property, apparently consisting of the solum of roads. In terms of sec 1(1) of the 2003 Act the reciprocal part of the burden (i.e. the requirement on the respondents to carry out maintenance work) had not been constituted in favour of the applicants in their capacity as owners of their land. Thus there was no legal relationship between the parties.

[21] The applicants’ third argument was that burden entry 9 was unlawful as contrary to sec 3(7) of the 2003 Act and at common law in that it created a monopoly in favour of the respondents. The burden allowed the respondents to charge for the work they did and gave no remedy to the individual proprietors like the applicants to seek an alternative provider or to replace the respondents if their work was unsatisfactory. Clause 3.1 allowed the respondents to charge “reasonable estate management remuneration and charges incurred …”. In other words they were entitled to make a commercial profit. Counsel emphasised the words of sec 3(7); “A real burden must not have the effect of creating a monopoly …” (emphasis added.) It was clear that the burden was allowing a particular person – the respondents – to be managers of property or to be or to appoint the supplier of services in relation to property, these being the very things forbidden by the example contained in the subsection. Moreover Clause 3.1 obliged the proprietors to go on paying the respondents “in all time coming” which meant the respondents could not be dismissed or replaced. Reference was made to the Oxford English Dictionary; “monopoly” meant “the complete possession or control of the supply of a product or service by one person or organisation”.

[22] Reference was also made to the common law rule that a real burden must not be contrary to public policy, for example, by tending to impede the commerce of land, or create a monopoly: Tailors of Aberdeen v Coutts; 306-7, 317-320; Aberdeen Varieties Limited v James F Donald (Aberdeen Cinemas) Limited at 796 and 802, Hill of Rubislaw (Q Seven) Limited v Rubislaw Quarry Aberdeen Limited [20] – [27].

[23] Counsel informed us that the respondents were presently required to pay £150 per annum which was said to be considerably more than a competitive cost. Given the nature of the arrangement, the respondents bore none of the cost of providing services to their own land. Thus the analogy of a servient proprietor seeking a share of the cost of maintenance of an access road from the dominant proprietor was not a good one; the servient proprietor was not a monopolist in the true sense since it was not seeking a profit and would always have to pay its own share of the maintenance. In terms of the statute it was sufficient to show that the arrangement had the “effect” of creating a monopoly in a person who was entitled to make a profit out of charging for the full costs of the maintenance.

[24] The applicants’ fourth argument was that burden entry 9 was invalid under sec 3(6) of the 2003 Act as being contrary to public policy, as an unreasonable restraint of trade, being repugnant to ownership and illegal.

[25] Reference was again made to Hill of Rubislaw (Q Seven) Limited v Rubislaw Quarry Aberdeen Limited [20] – [27] and passages to the effect that when a covenant in restraint of trade is called into question the burden of justifying it is laid on the party seeking to uphold it. A contract which was in restraint of trade could not be enforced unless (a) it was reasonable as between the parties, and (b) was consistent with the interests of the public. In this case the title condition was an unreasonable restraint of trade since it purported to restrict the applicants and their successors in all time coming to using the respondents to carry out the main management operations on the open ground. It was not reasonable in the interests of the applicants. There was no mechanism for determining the charges or for the applicants to be able to challenge the charges. The specifications were vague. Under reference to the Stair Memorial Encyclopaedia (vol 18, para 391) it was submitted that the title condition was repugnant to ownership because the owner of land should be free to negotiate contracts in respect of that land and not bound into a contract. Reference was also made to Tailors of Aberdeen v Coutts, Lord Gilles at 317-320. It was repugnant to ownership for the applicants and others to require to pay the full costs of the upkeep of a neighbour’s property, in a way which prevented them from employing who they wished.

[26] Under this chapter it was also argued that the title condition was struck at by reg 8 of the 1999 Regulations so as not to be binding upon the applicants. It was now accepted that the 1999 Regulations applied to contracts relating to heritage: R (Khatun & Others) v Newham LBC. Reference was made to reg 5 and schedule 2 to indicate that the contractual terms here were unfair. The deed of conditions had already been registered in November 2003 so by the time of the missives in November 2004 could not have been negotiated. This was one of the components of unfairness in terms of reg 5(1) and (2). Similarly the missives themselves were pro forma having been drafted by Bett Limited. It was unrealistic to expect the applicants’ solicitors to have negotiated changes. The result was that the applicants were bound in perpetuity to a monopoly situation which amounted to a breach of reg 5(1). The missives referred to a possible deed of conditions involving a factor, and failed to disclose that the deed of conditions for this development had already been registered and involved the different “Greenbelt model.” The fundamental unlawfulness of the contract between Bett Limited and the applicants carried over to the title condition with the respondents as successors to Bett Limited in the land. The deed of conditions pre-supposed that the respondents would have the right to enforce the title condition (clause 3.6) so the contract effectively promoted the interests of the respondents. The significant imbalance and unfairness, in terms of sec 5(1) arose because the applicants were bound in perpetuity to, in effect, a property manager whom they could not replace and also in respect of the way in which the contract was concluded. Various paragraphs of schedule 2 could illustrate the unfairness in the present case. With regard to 1(i) there had been no real opportunity of becoming acquainted with the conditions before the conclusion of missives. The terms of the contract could be altered unilaterally by, for example, altering the “open ground” if the developers and the respondents varied the planning permission, which was in conflict with sub-paragraph (j). The price could be varied every five years without reference to any machinery giving the applicants the right to cancel, in conflict with the intention of (l). Nor was there any machinery to prevent the respondents, in the first instance, determining whether the services were in conformity with the contract which was in conflict with (m). It was also maintained there were difficulties on account of the fact the charges were payable in advance. The fact that the applicants did not have a heritable enforceable right to use the open ground pointed to the unfairness of the provision and detriment to the applicants in the overall arrangements. Reference was also made to paragraph (o). The contract was said to oblige the applicants, as consumers, to fulfil all their obligations even when the respondents, as suppliers, did not perform theirs.

[27] The applicants’ fifth submission was that the burden entry was unlawful as being in breach of sec 18 of the Competition Act 1998 and, therefore, contrary to sec 3(6) of the 2003 Act on that score. It was submitted that the tribunal, in exercising its jurisdiction to determine whether a title condition was valid or enforceable, had jurisdiction to decide whether the burden was valid under competition law and, in particular, the 1998 Act. It was submitted that where a question is validly before a court or tribunal, that court or tribunal may determine the question even if another court or tribunal has “exclusive” jurisdiction. Reference was made to Brannan v Ross and Chisholm v Lord Lovat where both the Sheriff Court and the Land Court were held to have jurisdiction to determine whether parties were married for the purpose of determining certain other questions, although the Court of Session had exclusive jurisdiction in declarator of marriage. Reference was also made to PIK Facilities Limited v Watson’s Ayr Park Limited where the Court of Session had been able to consider whether the pursuers were in breach of sec 18 of the 1998 Act when raised as a defence by the defenders to an action for interdict. It was also recognised in PMP Plus Limited v The Keeper of the Registers at [36] that the tribunal’s jurisdiction regarding land “registration” law necessarily involved making decisions about property law i.e. “true ownership.”

[28] It was submitted that there was prohibited conduct in terms of sec 18 of the 1998 Act, which sets out the “Chapter II Prohibition”. With reference to PIK Facilities Limited v Watson’s Ayr Park Limited at [28] it was necessary first to define the relevant market, secondly to determine whether the undertaking concerned was dominant in the market so defined, and, if so, finally to determine whether its conduct amounted to an abuse of that dominant position.

[29] The applicants relied upon published Office of Fair Trade (OFT) guidance on the above matters. Section 18 was based in EC Treaty law and an “undertaking” was understood as a legal entity engaging in economic activity. Thus the respondents were an undertaking in terms of sec 18.

[30] With reference to Guideline OFT 403/ 2004, paragraph 2.15 a market definition should normally contain two dimensions, namely a product and geographic area. The geographic market could be national (the United Kingdom), smaller than the United Kingdom (local or regional) or wider than the United Kingdom. With reference to paragraph 4.2 one should look at a relatively narrow area known as the focal area. In this case the geographic market was the Menstrie Mains Housing Development, as the area subject to the deed of conditions. The product market was straightforward, namely the management operations carried out by the respondents. Again by reference to the guidance, one should look to the narrowest potential market definition.

[31] Accordingly it followed that the respondents were in a dominant position within the above market. It was in a monopoly position.

[32] It was submitted that there was an abuse of a dominant position by the respondents. In Hoffman-La Roche v Commission the ECJ (at para [91]) had stated that abuse was:-

“… an objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market, where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transaction of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition.”

[33] It was submitted that burden entry 9 imposed an unfair price and unfair trading conditions upon the applicants. Reference was made to various facts and circumstances, namely (i) the applicants had not been able to negotiate or challenge the price of the respondents’ services or the way the services were to be provided at the date of the purchase of their property, (ii) the respondents could unilaterally set the price to be paid for the services, (iii) the respondents could unilaterally determine the way the services were to be provided, (iv) the applicants were obliged “in all time coming” to contribute to payment for the services, (v) the respondents were able unilaterally to impose an annual increase in the cost of the services, albeit restricted to the rate of inflation, (vi) provision was not made for the appointment of a factor on behalf of residents in order to arrange for the carrying out of maintenance functions whereby a residents’ committee would have had the option of tendering for the factor and/or contractors, (vii) every five years the respondents could unilaterally impose an increase on the cost of services, not restricted to inflation, and (viii) in clause 3.3 of the burden the provision for a variation in the costs of the maintenance functions was of little practical benefit because it only applied if there was an amendment to those functions – i.e. it was not a standalone mechanism for a variation in the costs of “existing” management functions and the variation required the agreement of the respondents, failing which an independent expert.

[34] Reference was made to OFT 402/2004, paragraph 5.2 which provides that the OFT considers that the likely effect of a dominant undertaking’s conduct on customers and on the process of competition is more important to the determination of an abuse than the specific form of the conduct in question. Conduct may be abusive when, through its effects on the competitive process, it adversely affects consumers directly (for example through the prices charged) or indirectly (for example, conduct which reduces the intensity of existing competition or potential competition). A dominant undertaking was under a special responsibility not to allow its conduct to impair undistorted competition.

[35] Here the respondents were sole providers of the services and there was no scope for a competitor. The fact there could be no competition was itself a situation which amounted to abuse of a dominant position.

[36] The applicants’ sixth argument was that burden entry 9 is void for uncertainty. There were various sub-headings to this argument, the first and main one relating to the definition of “open ground”. Section 4(2) of the 2003 Act applied since the burden on the applicants property was created after the appointed day. Under sec 4(2)(c) both the burdened and benefited property required to be “nominated and identified” in the constitutive deed which was the deed of conditions. As discussed below the extent of “open ground” could be varied by variation of the planning permission and could not therefore be identified at the date of registration of the applicants’ title. The position was consistent with the common law rule that there must be found in the title clear expression of a specific burden imposed on a definite piece of land so, for example, the reference to a “lawn” between two properties was insufficiently precise: Anderson v Dickie at p 86. The land had to be capable of being identified on an OS map at the date of registration of the applicants’ title. Reference was made to secs 4(2)(a) and 6(1)(a) of the 1979 Act and PMP Plus Limited v The Keeper of the Registers and Miller Homes Limited v The Keeper of The Registers. These cases made it clear that it was not possible to convey an area of land ascertainable only under reference to an uncertain future event. A conveyance operated de praesenti and the real right was acquired on registration. While these cases referred to the registration of land ownership the same principle applied to the specification of burdens. At the time of registration of the disposition in favour of the applicants the open ground was subject to change and uncertainty. It could not be defined later because the description had to be found in the constitutive deed in terms of sec 4(2).

[37] Turning critically to the definition of “open ground” for whose maintenance there was an obligation to pay, the relevant definition referred to the terms of the “planning permission”. That “planning permission” was said to be the permission issued by Scottish Ministers under reference 00/00129OUT on 7 March 2002 together with any variation or supplementary permission issued in respect thereof. That description was invalid because the extent of the ground could not be determined from the four corners of the deed. It was not nominated and identified in the disposition to the applicants as required by sec 4(2) of the 2003 Act. Moreover it was not clear whether certain of the ensuing planning permissions could be said to be “supplementary permission[s] issued in respect thereof” since some of the permissions were headed “planning permission” and not “reserved matters approval”. It was clearly possible that the “open ground” could vary should there be a variation of the outline planning permission or should supplementary permission to build on the “open ground” be granted. A new “full” permission could extend beyond the boundaries of any previous permission. The extent of the open ground was therefore variable. A small “green” area had been removed from title CLK13618 showing that variation was possible. The “open ground” was not finally known until the present time in terms of the September 2014 disposition to the respondents.

[38] Moreover there was no planning permission dated 7 March 2002. The burdens entry contained a fundamental defect since the true date of the permission was 4 March 2002. Reference was also made to various planning conditions which referred to approval of certain reserved matters covering open ground; it was submitted that a reserved matters approval was not a “variation” or “supplementary permission issued”.

[39] Further arguments were made that the burden was void for uncertainty. The test was whether the provisions could be enforced by an action for specific implement; if not the provisions were too vague to be enforced. Reference was made to M’Arthur v Lawson.

[40] It was submitted under reference to clause 3.1 of the burden that there was no mechanism for determining the “reasonable estate management remuneration … incurred by (the respondents)”. The amount could not be determined within the four corners of the burden and there was no reference to any external document in terms of sec 5(2) from which specification of the sum could be determined. The sums payable were said to be paid “annually in advance” but there was no mechanism in the burden to determine in advance what those sums might be.

[41] In terms of clause 3.2 cost increases apart from every fifth year were capped by the rate of inflation measured by “UK Index of Basic Materials and Fuels as published by the Financial Times of London.” That index no longer existed or was, at any rate, no longer published in the Financial Times. In any event the provision did not give adequate specification as required by sec 5(1)(b) and 5(2). A newspaper was not a “public record or roll” in terms of the statute. Documents produced by the respondents did not bear to be the “UK Index of Basic Materials and Fuels”. Even if the Financial Times qualified as a suitable record, the burdened proprietor could not now be expected to search to find an index now in another “record or roll”.

[42] The applicants made detailed criticisms of the landscape implementation and maintenance specifications set out in the Appendix to this Opinion. These criticisms were of three kinds: provisions were said to be invalid due to uncertainty or because they left too much to the discretion of Greenbelt or because they referred impermissibly to extraneous material, with some provisions being objectionable on more than one count. The criticisms were too numerous to repeat in detail but examples of uncertainty, some of which also left too much to the discretion of the respondents, included the reference to the “regular” monitoring, collection and disposal of litter; the reference to “additional maintenance visits” and the requirements that “the frequency of cuts shall remain flexible in order to accommodate growth rates and weather conditions” and that “from time to time the application of selective herbicides … may be required should deficiency symptoms indicate” in the grass cutting and turf maintenance provision; the requirement that “any dead, dying or diseased plants which are evident” in the shrub beds be removed and others treated with a suitable compound granular fertilizer “where deficiency symptoms indicate”; and the provision that fencing would be inspected “briefly” and that “minor” repairs would be carried out without any definition of “minor” nor any stipulation as to what was to happen where major repairs were required or fencing was beyond repair. Examples of impermissible extraneous references included the references to the Code of Practice on Litter and Refuse issued under Section 89 of the Environment Protection Act 1990; to various “British Standards” and the “Horticultural Trades Association Code of Practice for Plant Handling” in the section to do with the supply and planting of trees and shrubs; to “[the] CIRIA’s Sustainable Urban Drainage Systems Design Manual” in relation to maintenance of wetland areas; and to documents containing manufacturers’ recommendations in the section on the maintenance of play equipment.

Respondents’ submissions

[43] The respondents accepted that the creation of the burden had been postponed to a date after the registration of the deed of conditions, since sec 17 of the 1979 Act had been expressly disapplied. Moreover it was accepted that the burden was created after the appointed day for the 2003 Act and that sec 3(7) of the 2003 Act applied. The respondents characterised the burden as a general amenity burden although that was not a term used in the 2003 Act. It was not a “community burden” since there was no nomination and identification of the “community” in terms of sec 4(4) of the 2003 Act. It was not a facility burden in terms of sec 56 since the burden had not been imposed by a deed registered before the appointed day. Although the deed of conditions was registered before the appointed day the burden was not imposed until the disposition incorporating the terms of the deed of conditions was itself registered after the appointed day.

[44] It was submitted that the burden was valid and enforceable. It was the object of contract law to facilitate the contracts of commercial men and not to present obstacles; Lord Guthrie in Motherwell Bridge. The law should seek to give effect to transactions embodied in title deeds.

[45] In this case we were concerned primarily with the burden in the applicants’ title; we were not directly concerned with the burdens imposed upon the respondents in their title. There was a tension between the applicants’ arguments. Their primary position was that the burden in their title did not relate in any way to their land as a burdened property; that there was no praedial connection. However, almost everything else they said was predicated on a relationship between the burden on them and the burden on the respondents. In Mr Thomson’s submission it was plain that there was a relationship between the applicants’ property and the respondents’ property and that the upkeep of the respondents’ property maintained the value of the applicants’ property. It was not the law that the relationship required to be a legal relationship; rather there was a threshold issue which was a low bar in order for the burden to be a real burden.

[46] Section 14 of the 2003 Act had significantly changed the way burdens were to be interpreted. In construing the language of a deed using ordinary principles, that might involve looking at other documents incorporated by reference. Section 14 simply meant that the burden fell to be construed with ordinary principles in mind. Burdens should continue to be interpreted contra proferentem and in favour of freedom but should still be given a sensible interpretation. For example, under reference to Clarke v Grantham the phrase “setting down temporarily” was not unclear even although the exact time duration of “temporarily” could be disputed. The problem which sec 14 addressed was the “hostile” approach to interpretation. Under reference to Marfield Properties v Secretary of State a long lease, analogous to a sasine deed, was interpreted in accordance with the ordinary rules for interpretation of contracts. Accordingly cases like Grove Investments Ltd v Cape Building Products Ltd were relevant for the proposition that contracts should be interpreted in a way which the reasonable person would have intended them to mean. An example of a sensible, not hostile, construction to burdens could be found in Snowie v Museum Hall which had regard to the nature of the scheme or development to which the conditions related. The approach of the courts requiring the full extent of burdens to be specified in gremio was an example of the hostile approach to interpretation. It was accepted it was possible to look at the Scottish Law Commission Report on Real Burdens in order to identify the mischief which the legislation was intended to address, if the legislation was ambiguous, but not for the meaning of the legislation itself. The only difference between interpretation of real burdens and commercial contracts was that in the former one could not look at surrounding circumstances at the time since these could not be known to singular successors.

[47] Turning to the applicants’ second ground of challenge, it was instructive that sec 3(1) of the 2003 Act required a real burden to relate “in some way” to the burdened property and that the interest may be “direct or indirect”. The applicants’ insistence that this meant there had to be some legally enforceable right was unsound. The respondents were benefited in their “capacity as owner” in terms of sec 1(1) since it was through their ownership of the open ground that they carried out the maintenance for which they were entitled to payment. The leading case on the matter was now Hill of Rubislaw (Q Seven) Limited v Rubislaw Quarry Aberdeen. Under the praedial rule some material connection with the land was required. With reference to paragraph [14] it was sufficient that a real burden benefit the owner, tenant or occupier of the benefited property in such a way that the value of the property itself is enhanced or at least protected. The requirement of an effect on the value of the property is the critical feature that should permit a condition to have effect as a real burden binding and benefiting singular successors as well as the original parties.

[48] In Greenbelt Property Limited v Riggens the tribunal had held that there could be a facility burden where the land in question was amenity land for the purpose of screening, even although the benefited proprietors had no right to use the “facility”. The amenity land was still sufficiently related to provide a benefit to the individual properties. As the tribunal had said the issue depended “on the nature of the property and the benefit”. The applicants accepted that the open ground contained a complex drainage attenuation system and that the applicants’ property could not deal with its own surface water run off without it; thus the respondents’ maintenance operations must benefit the applicants’ property on their own admission.

[49] Turning to the applicants’ third argument, it was submitted that burden entry 9 required the payment of money and no question of monopoly could arise merely in a question of payment of money. The burden on the respondents did not appoint anyone to provide management or services. Rather it burdened the open ground and its proprietors from time to time with a requirement to comply with the burdens affecting the title of the open ground. It is not possible to characterise the imposition of burdens on the owner of heritage, and no one else, as the creation of a monopoly.

[50] The historical examples of monopoly in Tailors of Aberdeen v Coutts related to things like a compulsion upon the burdened proprietor to use certain tradesmen and were such as would greatly diminish the value of the burdened land. On the contrary in the present case the burden enhanced the value of the applicants’ land. The respondents could not be described as monopolists for complying with a burden to carry out work on their own property. The owner of a road over which there was a servitude right of access was not a monopolist for seeking a share of the upkeep from those with servitude rights over it. The right to manage one’s own property was an intrinsic part of ownership. It would be repugnant to ownership to require the respondents to choose another manager to carry out the management operations on their own land.

[51] In response to the applicants’ fourth argument it was submitted that burden entry 9 was not contrary to public policy and the requirements of sec 3(6) of the 2003 Act. The classic situation was where the burdened proprietor was prevented from carrying out some trade or other use of the subjects. It had been held that the real burden had to relate to the law of neighbourhood, the protection of amenity or comfortable enjoyment of land: Aberdeen Varieties Ltd v J F Donald (Aberdeen Cinemas) Ltd. The real purpose of the title condition had to be to restrain some activity. However, that was plainly not the case here where the intention was clearly to set up a maintenance regime. To be struck at a burden in restraint of trade required to be both unreasonable and inconsistent with the public interest. The fact that the applicants were not able to replace the respondents was the essence of a real burden since the obligation ran with land in perpetuity. The respondents were entitled to “reasonable” estate management remuneration. A test of reasonableness was familiar and useful and recognised by law: Ashworth Frazer Ltd v Gloucester City Council, Lord Rodger of Earlsferry at [67]. Reasonableness was an objective concept, and it could hardly be said that the burden was “unreasonable” where it used the expression “reasonable.”

[52] The burden was not repugnant to ownership. Properly understood repugnancy to ownership consisted of restriction on juristic acts such as being able to sell or enter into leases of property: Snowie v Museum Hall LLP. The burden did not interfere with such fundamental rights.

[53] There was no scope to apply the 1999 Regulations. The only contract which the applicants had identified was between them and Bett Limited; the respondents were not a party to that contract. Moreover sec 5 required there to be some significant imbalance in the party’s rights, to the detriment of the consumer; there were no averments about the imbalance in that relationship with Bett Limited. It was not said why the applicants could not negotiate with the seller on the terms on which the purchase was to proceed. The applicants’ solicitor had not apparently asked to see the titles so it could not be said there had been no opportunity to see the deed of conditions prior to concluding missives.

[54] Turning to the applicants’ fifth argument alleging breach of sec 18 of the Competition Act 1998 the respondents did not argue that the Tribunal had no jurisdiction in the matter. However it was submitted that the definition of “market” ventured by the applicants was as narrow as possible. There was no reason why “market” could not be defined by reference to a larger geographical area for the services of a type provided by the respondents. Reference was made European Commission Guidance Note 2009/C-45/02 concerning Article 82 of the EC Treaty from which sec 18 was derived. Article 1 made it clear that it was not in itself illegal for an undertaking to be in a dominant position and that such a dominant undertaking was entitled to compete on the merits. Even if on the applicants’ argument the respondents were in a dominant position, there was no relevant averment of market abuse.

[55] In response to the applicants’ sixth argument, the applicants submitted that burden entry 9 was not void for uncertainty. In the first place there was no difficulty about the burdened land, namely the individual properties. At common law the benefited property did not require to be identified in the constitutive deed. In terms of identifying the land to which the burden applied, the PMP Plus series of cases were dealing with certain sections in the Land Registration Act (Scotland) 1979, not the regime under sec 4 of the 2003 Act.

[56] It was legitimate to identify the “open ground” by reference to the planning permission and the documents produced in the planning process thereafter. In any event the burden was only brought into effect at the point of the dispositions to the respondents themselves, comprising the open ground, which we took counsel to mean that by that stage the ground was self-evidently adequately defined. Given the context, the geographical “extent” of the property subject to the burden was not very significant. It was clear one could not extend beyond the whole subjects specified in the deed of conditions. The law did not demand the precision contended for by the applicants and it would be unworkable to frame a burden of the present type in a way which met the expectations of the applicants. One was not dealing with large sums of money; only approximately £130-£145 per annum per householder. In essence the open ground was “to be provided” on the whole subjects in terms of the planning permission; now those areas had been provided the type of problems of definition mentioned by the applicants fell away.

[57] Although the deed of conditions mentioned the wrong date of the planning permission, it correctly identified the reference number and the erroneous date should be read pro non scripto. That was consistent with the view of Lord Reid in Hunter v Fox.

[58] Turning to the obligation to make payment in clause 3.1, it was submitted that there was nothing unusual in the seeking of payment on a pro rata basis and in advance. The burden should be approached in a realistic and practical way.

[59] The UK Index of Basic Materials and Fuels still existed, albeit that it was not now published by the Financial Times. The reference to the document was valid and enforceable.

[60] With regard to the numerous objections to the landscape specifications, it was submitted that the fundamental obligation on the respondents was to “assume responsibility for the management, maintenance and where necessary renewal” of the “amenity woodlands, landscaped open spaces, play areas and others”. The burdens entry indicated that the obligation was to be performed “in accordance with” the specification. So the basic obligation was itself sufficiently detailed but the specification added considerable more detail. The absence of certain detail did not render burden entry 9 void from uncertainty. Even if, for example, the extraneous documents referred to, such as codes of practice, were inadmissible, that would not mean the rest of the burden was so vague as to be unenforceable. It was pointed out that the specification itself could be amended merely by a majority of the proprietors wishing for an amendment to be made (clause 3.3) and the respondents would require to accept that. Reference was made to Meriton v Winning where it was held that a prohibition against something which the superiors “may deem objectionable” was not so unspecific as to be unenforceable, since a meaning could be obtained from the context of the rest of the deed.

[61] For these reasons the application should be dismissed.

Tribunal’s consideration

[62] Before addressing the individual challenges to the validity of this burden it is appropriate to deal with three matters by way of context-setting.

The date of creation of the burden

[63] In their pleadings as they originally stood the respondents averred that burden 9 was created when the deed of conditions was registered on 6 November 2003. Since that was before the appointed day in terms of the 2003 Act, it was also averred that sec 3(7) (the averment was specific to subsec (7) but the rest of sec 3 would also be disapplied) did not apply. However, these averments were removed by the amendment made at the outset of the debate and both parties now accept that sec 3 of the 2003 Act applies. In our view that was an appropriate change of position on the part of the respondents, since sec 17 of the 1979 Act had been disapplied in the deed of conditions. That had the effect of preventing the land obligations in the deed from becoming “real obligations” affecting the land to which they related when the deed was registered. The earliest point at which the burden could therefore become real was on incorporation into the titles of the individual proprietors which, in the applicants’ case, did not take place until 16 June 2005.

[64] The 2003 Act makes provision for that situation in sec 6 which allows such obligations to become real burdens by their importation into a deed subsequently registered against the burdened land. That provision was relied on when the applicants’ title was registered as appears from the following note appended to burden 9 in their Land Certificate:

“Note: The foregoing Deed of Conditions contains a declaration that section 17 of the Land Registration (Scotland) Act 1979 is not to apply. The conditions therein have been created as real burdens in respect of the subjects in this Title by being imported by reference in a subsequently registered deed in terms of section 6 of the Title Conditions (Scotland) 2003.”

[65] It seems to us, therefore, that, by virtue of sec 6, the burden was created when the applicants took title to their property albeit it did not become effective (in the sense of being enforceable) until the respondents took title to theirs.

[66] Counsel, however, approached the matter differently. They accepted that the burden had been imported into the applicants’ title by virtue of sec 6 but argued that it had not been created as a real burden until the dual registration envisaged by sec 4(5) had been completed. Sections 4 and 6 were both said to apply because each was without prejudice to the other; sec 4(7) and 6(4). The result of this, according to counsel, was that sec 6 required to be read as being subject to the requirements of sec 4.

[67] That seems to us to lead to very real difficulty and we doubt if it was the legislative intention. It seems quite clear to us that sec 6 and sec 4 are dealing with two different things. Section 6 is indubitably dealing with deeds of conditions registered before the appointed day: sec 122 defines “deed of conditions” as “a deed mentioned in sec 32 of the Conveyancing (Scotland) Act 1874 (c. 94) (importation by reference) and registered before the appointed day having been executed in accordance with that section”. Section 4, on the other hand, is dealing with how real burdens are to be created after the appointed day. In that situation the superimposing of sec 4, with its more stringent requirements as to nominating and identifying the burdened and benefited land, on sec 6 can hardly have been intended.

[68] Because we were doubtful as to whether that could have been the legislative intention, we explored with counsel whether sec 53 applied. It might be thought designed for this sort of situation, where burdens under a common scheme are contained in a deed of conditions incorporated into the titles of some of the units within the common scheme before the appointed day. Subsection (1) has the effect of making all the units within the scheme benefited properties in relation to the real burdens, whether title to them is taken before or after the appointed day, and subsec (3A) disapplies the nomination, identification and registration requirements of sec 4 so far as the benefited subjects are concerned. However, counsel were agreed that sec 53 did not apply. That was on the view that although 70 properties had been sold before the appointed day the burdens had not been effectively imposed in relation to any of them. There was also some doubt as to whether this was a common scheme for the purposes of the section notwithstanding the common deed of conditions. The submissions we heard on the matter were not very full because neither Sir Crispin nor Mr Thomson had approached the case as one to which sec 53 might apply. Although their agreement that it does not apply in this case may be correct (on the view that the burdens had not become effective in respect of any of the units before the appointed day), where it does apply sec 53 seems to us to offer a means of avoiding the full rigours of sec 4 being superimposed on sec 6.

[69] The very fact that sec 53 contains disapplication provisions in relation to aspects of sec 4 plainly implies that sec 4 would otherwise apply. That is supportive of counsel’s contention that both secs 4 and 6 apply in this case. However, because we did not hear full submissions on the scope of sec 53 and the contrary was not argued in relation to the mutual “without prejudice” provisions of secs 4 and 6 (they may be capable of more than one interpretation) we are prepared to accept that both secs 4 and 6 apply but with the caveat that we would not wish to be taken to have rejected any counter argument which may arise in a future case.

[70] Proceeding on that basis, sec 4(1) provides that a real burden is created by duly registering “the constitutive deed”. Section 122(1) defines “constitutive deed” as “the deed which sets out the terms of a title condition (or of a prospective title condition)”. Subsection (2) of sec 4 provides that the constitutive deed is a deed which “(a) sets out … the terms of the prospective real burden; (b) is granted by or on behalf of the owner of the land which is to be the burdened property; and (c) except in the case [of a community burden], nominates and identifies (i) that land; (ii) the land … which is to be the benefited property; and (iii) any person in whose favour the real burden is to be constituted (if it is to be constituted other than by reference to the person’s capacity as owner of any land).” Subsection (5) provides that “a constitutive deed is duly registered in relation to a real burden only when registered against the land which is to be the burdened property and … the land which is to be the benefited property”.

[71] If we noted him correctly, Mr Thomson submitted that the constitutive deed in this case was the disposition in favour of the applicants. But that cannot be right because the disposition in favour of the applicants could not be “registered against … the land which is to be the benefited property” (i.e. the respondents’ land). Instead it is the deed of conditions. It is the deed which sets out the terms of the prospective burden.

[72] The burden could not be created until that deed had been registered against both the burdened and the benefited properties; subsec (5). It is very possible to take that as meaning, in the case of a deed imposing burdens within a development, the registration of that deed over the land comprising the whole development rather than its incorporation into the titles of the burdened and benefited proprietors. In the present case that happened before the appointed day. Section 4 is, however, dealing with the creation of real burdens after the appointed day. Its strict application to the present case would mean that the burden was created before the appointed day, because the constitutive deed was registered before the appointed day. That does not seem right. We therefore think that the correct application of the Act is that the burden was created after the appointed day, not by virtue of sec 4 but by virtue of sec 6 as discussed above, but that it did not become effective until the respondents had taken title to their land. As has been narrated, that took place in three tranches, on 23 February 2009, 30 December 2010 and, assuming the registration presently under way is not problematic, 30 July 2015.

The nature of the burden

[73] In a note issued to parties in advance of the debate we asked them for their positions on, inter alia, the nature of burden 9. That was lest it was to be regarded as one of the nominate burdens referred to in the Act; whether a manager burden, a facilities burden or a community burden. The applicants’ first argument had been that it was a manager burden but that had already been abandoned by that time. Although at debate parties disavowed that the burden here fell into any specific named type, it is appropriate to explore their reasons for doing so in some detail in order to satisfy ourselves that they were correct.

[74] There was discussion whether the burdens in issue (i.e. burden 9 and the burden on the respondents’ land) could be community burdens under sec 25 et seq. The feature of community burdens is that there is a common scheme of two or more units and that each of the units is, in relation to some or all of the burdens, both a benefited property and a burdened property. It might be thought that the open ground could be categorised as a “unit” for the purposes of this provision since community burdens involve a degree of reciprocity. One might consider the individual houses to be burdened because the owners have to pay for the share of the maintenance operations but also benefited in the sense (although this was disputed) that the management operations on the open ground would benefit the houses. Equally the open ground is benefited in that the owner collects a charge for the management operations but is also burdened in the sense that the owner is required to carry out the management operations. The latter aspect was contentious in that the obligation to carry out the management operations was owed not to the individual proprietors under the deed of conditions, but to another residual landowner. Nevertheless, in principle, it might be thought that the burdens here could be categorised as a community burdens.

[75] However, the respondents emphasised that the nature of the burden in question was for the payment of money. It was also their position that the burden could not be part of a community burden since under sec 4(4) the “community” had not been nominated and identified. The applicants likewise contended that the burden was not a community burden, in their case because community burdens envisaged the appointment by the owners of a manager authorised to act in respect of related properties, which was not the case here.

[76] As has been said, the respondents’ initial position was that the burden was a facility burden under sec 56. We understand that the purpose of sec 56 (and of certain other sections within Part 4 of the Act) was to keep enforceable certain burdens in existence at the appointed day which would otherwise be rendered unenforceable in terms of sec 49(1), absent a notice of preservation under subsec (2). In terms of subsec (1)(a)(i) and (ii) of sec 56 both the land to which the facility is (and is intended to be) of benefit and the heritable property which constitutes the facility are benefited properties in relation to a facility burden. The sec 122 definition of facility burden requires that the burdened land “is intended to constitute a facility of benefit to other land”. Section 122(3) gives examples of property which might constitute such a facility, including “a common area for recreation”. Thus on the face of it open areas provided for the benefit of the houses in a residential development could be seen to be property constituting a “facility.” However both parties agreed that, in the language of sec 56(1), the burden was not “imposed” “by a deed registered before the appointed day” and so could not be a facility burden.

[77] Section 63 provides for manager burdens. In terms of subsec (1) there have to be “related properties” over which a manager has power to act. We understood parties to accept that the properties here were not related in this sense. Section 66 gives a lengthy definition but expressly excludes in subsec (2)(c) “any facility which benefits two or more properties (examples of such a facility being, without prejudice to the generality of this paragraph, a private road and a common area for recreation).” In terms of sec 56(2) a facility burden does not include a manager burden. We understood that as the open ground was so analogous to such a facility or a “common area for recreation”, (leaving aside arguments as to whether the applicants in fact had any right to use the common areas for recreation), that the burden could not be a manager burden.

[78] All of the nominate burdens having thus been excluded, it follows that we are required to consider parties’ positions regarding validity on the basis of the general principles contained in Part 1 of the 2003 Act. In particular, given the nature of parties’ submissions, we require to consider the issues on the basis that the applicants’ property (the house) is “burdened” and that the respondents property (the open ground) is “benefited”.

Whether the “Four Corners Rule” is still part of our law

[79] Since burden 9 refers to extraneous matters, such as planning permission and the UK Index of Basic Materials and Fuels it is necessary to address this question.

[80] In the course of his submissions Mr Thomson made a striking remark. He said “The formal rules for the constitution of real burdens are set out in the 2003 Act but they do not contain anything recognisable as the four corners rule”. He is right but we think he drew the wrong conclusion from that fact. Although he began more tentatively – “I doubt whether the four corners rule and the rule against being sent to repositories still apply” – as his submission went on his position seemed to harden, so that we have him noted, at a later stage, as saying “I don’t shy away from the fact that my submission goes far and is striking; but if one looks at the language Parliament has used one sees that this is what it has achieved”. So, as we understood him, he drew the conclusion that the 2003 Act had, silently and inferentially, abolished the four corners rule.

[81] That would, in and of itself, be surprising. It offends against the presumption against changes to the common law being made by statute except by clear, definite and positive enactment, at all events where one is dealing with a “deep seated principle of the common law”; Stair Encyclopaedia Vol 12, para 1126. The examples given there, Hynd’s Trustee v Hynd’s Trustees and Nicol’s Trustees v Sutherland, the first of which concerned the rules for subscription of a will and the second a rule of the law of evidence, suggest that the presumption is not confined to deep seated principles of substantive law but extends to procedural and evidential law. So we have no difficulty in applying it to something as well entrenched as the four corners rule had become long before 2003. One would, therefore, expect clear words to dislodge it.

[82] Where in the Act might these be found? Three provisions are potentially relevant; secs 2(5), 5(2) and 14.

[83] Section 2(5) provides that in determining whether a real burden is created as described in subsecs (1) and (3) regard is to be had to the effect of the provision rather than how it is expressed. It seeks to avoid the striking down of what is in fact a real burden simply because of the way in which it is expressed and the erection of something into a real burden which is in fact not one. It says nothing which bears on the four corners rule.

[84] It is convenient to take sec 14 next. It provides that “[r]eal burdens shall be construed in the same manner as other provisions which relate to land and are intended for registration”. That says nothing about the content of real burdens. It deals with interpretation. That the two are distinct but sometimes blurred is a point made at para 4.61 of the Scottish Law Commission’s Report on Real Burdens at para 4.61:

“There is in principle a difference between (i) the identification of the text which is to be interpreted and (ii) the method of interpretation which is then to be applied, although this difference is sometimes blurred in practice. So far as (i) is concerned, the rule is that the full terms of a burden must appear in the constitutive deed, and hence on the register. Thus, for this purpose at least, extrinsic evidence is inadmissible. The reason for the rule is to protect third parties who rely on the register. Earlier we suggested some modifications to this rule, but for the most part it is both unexceptionable and satisfactory.”

[85] The report then goes on to consider how the content of a real burden is to be interpreted and recommends, as recommendation 24,that “Provisions imposing real burdens should be interpreted in the same manner as other provisions in deeds relating to land and intended for registration.” This is the recommendation which became, almost verbatim, sec 14. So far from supporting the notion that sec 14 was intended to abolish the four corners rule, the foregoing quotation endorses it as, for the most part, “unexceptionable and satisfactory”.

[86] The only way in which it was exceptionable and unsatisfactory was in its insistence – if indeed such was the law – on any share of maintenance or service costs being quantified as a specific sum. That is dealt with at paras 3.22 to 3.26 from which it will suffice to quote this (from para 3.24): “As a matter of legal policy, there seems no reason for insisting on specific figures in the deed provided that some basis is provided for calculating liability”.

[87] That thinking led to sec 5, subsec (1)(b) of which provides that a real burden to pay a proportion or share (as distinct from a fixed sum) of some cost is not invalid “provided that the way in which that proportion or share can be arrived at is … specified”. Subsection (2) permits such specification to take the form of “making reference to another document the terms of which are not reproduced in the deed” but restricts the range of such reference to “a public document (that is to say, an enactment or a public register or some record or roll to which the public readily has access)”.

[88] We do not find in any of these provisions the clear wording which would be required to displace the four corners rule. Instead what we find in secs 14 and 5 are provisions to cure (i) a tendency to malign (in the sense of unjustifiably severe) interpretation of real burdens and (ii) the unjustifiable and unworkable insistence of cost burdens being for a fixed sum. So, in our view, the rule that the extent of a real burden must be found within the four corners of the document creating it remains part of our law, subject to the very limited relaxation contained in sec 5(2). That is perfectly consistent with the content of real burdens having to be interpreted, with certain limitations, in the same way as ordinary commercial contracts. The cases relied upon by Mr Thomson – Marfield Properties v Secy of State for the Environment, Hill of Rubislaw (Q Seven) Ltd v Rubislaw Quarry Aberdeen Ltd and Grove Investments Ltd v Cape Building Products Ltd – all concerned interpretation of the terms of the various deeds with which they were concerned, not with the question whether it was permissible to refer to extraneous material for the identification of the scope of a real burden. They are, therefore, beside the point so far as the four corners rule is concerned.

[89] Having dealt with these matters, we come to the applicants’ various grounds of challenge beginning with, since the first has been departed from , the second.

The applicants’ second argument: that the burden is not praedial

[90] The common law requirement that a real burden be praedial is given statutory form in secs 1(1) and 3(1) and (2) of the Act. The word “praedial” is not used. Section 1(1) says that a real burden “… is an encumbrance on land constituted in favour of the owner of other land in that person’s capacity as owner of that other land”. Section 3(1) requires that the burden “must relate in some way to the burdened property” and subsec (2) that the relationship “may be direct or indirect but shall not merely be that the obligated person is the owner of the burdened property”. We will take these provisions in turn.

[91] Burden 9 is a burden to pay money. It does not in any way affect the use of the individual proprietors’ properties. It does not encumber the land in that way. But sec 2(1)(a) makes clear that a real burden may take the form of an obligation to defray, or contribute towards, some cost. So burdens of this kind are covered as were obligations to contribute to common charges at common law.

[92] During the debate we raised the question whether burden 9 was constituted in favour of the respondents “in their capacity as owner of that other land”. It is not because the respondents own the land that the individual proprietors are obligated to pay them anything but because they perform, or arrange to have performed, certain operations on that land in much the same way as a factor or manager might on communally owned land. In other words such an obligation is not dependent, in the abstract at least, upon ownership of the open land. Nevertheless we are persuaded that the way in which the burden has been constituted (the word used in subsec (1)) in this case is such as brings it within the definition. The obligation on the respondents to maintain the open ground is imposed as a burden in their title. It is therefore imposed on them in their capacity as owners of the land. It is towards the cost of carrying out this obligation that the applicants are required to contribute in terms of the burden contained in their title. We therefore accept that this is a burden constituted in favour of the respondents in their capacity as owners of the open land.

[93] Turning to sec 3(1), is the burden related in some way to the burdened property? Sir Crispin says that this requires a legal relationship in the form of some sort of enforceable right in favour of the applicants in respect of the open ground. He relies on the evidence given by Professor Rennie to the Justice Committee of the Scottish Parliament on 19 March 2013. What Professor Rennie said was this:-

“I cannot see how it [a real burden] could have been validly created if the maintenance company own the green area. The burden has to relate to a benefited property. The owners of a benefited property have no connection with the green area; they have no rights over it. They and their children might be allowed to wander over it, but they have no legal relationship with it and, generally speaking, that negates a real burden.”

[94] What Professor Rennie was addressing there was not the enforceability of the burden on the individual proprietors by the company owning the green area but the enforceability of the burden on that company by the individual proprietors. The context in which his words are set suggests he was arguing that for the burden on the proprietors to be enforceable there had to be a reciprocal burden on the owner of the green area in favour of the individual proprietors which was also enforceable: that the first could not be enforceable without the second. In other words that the two burdens and the two properties had to be related in that way.

[95] If that is what was being argued, we respectfully disagree. It is not what sec 3(1) says. There is no requirement in sec 3(1) that the burdened land has to be related to other land in any way whatsoever. All sec 3(1) requires is that the real burden must relate “in some way” to the burdened property. For a burden of this kind there must, of course, be a benefited property and in terms of sec 3(3) the burden must be for the benefit of that property, two requirements which are satisfied here, but there is nothing about sec 3(1) which necessarily infers the need for the burdened property to be the beneficiary under a reciprocal burden.

[96] Instead the only question is whether the real burden is related “in some way” to the burdened property. In our view it is. The payment by the individual proprietors of the cost of upkeep of the open land leads to the open land being maintained, which preserves or enhances the amenity of the whole development and the value of the individual plots. That sort of relationship was recognised by this tribunal in Greenbelt Property Limited v Riggens & Anr. In that case the tribunal was considering an application by the present respondents to have conditions relating to the planting and establishment of amenity woodland and subsequent management thereof, as well as other conditions, declared unenforceable following the coming into effect of the Abolition of Feudal Tenure etc (Scotland) Act 2000. That decision involved another decision: whether the burdens in question were facility burdens in terms of sec 56 of the 2003 Act. The tribunal decided that they were not but, at para 32, the members said this:

“One might well wonder whether a property which the benefited proprietors have no right themselves to use, or even access, could be a ‘facility’ of benefit to them. It seems to us, however, that this depends on the nature of the property and the benefit. Land comprising amenity screening for a housing development, as we think was probably envisaged in these conditions, may well constitute a facility which benefits the houses. One might expect the benefited proprietors to be required to meet the maintenance cost, but this may simply be a question as to the financial structure adopted: the developer may have provided another means of meeting this cost.”

[97] The tribunal there was looking at the individual properties as benefited rather than burdened properties but the connection was made between the amenity screening as a benefit to the individual properties, albeit they had no legal rights in or to it, and the reasonableness of their owners contributing to the maintenance costs. That is the link, or relationship, which exists here. The burden is related to the burdened property in that, taken together with the burden on the respondents to maintain the open land, it benefits the burdened property in terms of preserving its amenity and value.

[98] We have therefore held that burden 9 is related to the burdened property and that the relationship is not merely that the obligated person is owner of the burdened property. In principle, therefore, the burden satisfies the requirements of sec 1(1) and sec 3(1) and does not fall foul of sec 3(2). We say “in principle” because there may be questions as to whether the maintenance of all parts of the open ground bears upon the amenity and value of the applicants’ property. That is a matter which would require evidence but in light of the conclusions we have arrived at on other aspects of the case that course of action does not arise.

The applicants’ third argument: that the burden creates a monopoly, contrary to sec 3(7)

[99] This brings us to the heart of the applicants’ attack on the land-owning maintenance model. The tribunal finds itself divided on the point. Paragraphs [100] to [113] represent the views of the President and Mr Gillespie, paras [114] to [124] those of Mr Smith QC. As a prelude to both it is convenient to repeat the terms of sec 3(7):

“Except in so far as expressly permitted by this Act, a real burden must not have the effect of creating a monopoly (as for example, by providing for a particular person to be or to appoint –

(a) the manager of property; or

(b) the supplier of any services in relation to property).”

The President and Mr Gillespie

[100] The provision raises questions as to the meaning of “monopoly”, what the services are which are being provided and the property in relation to which they are being provided.

[101] We are given no definition of monopoly in the Act, only the foregoing examples. The New Shorter Oxford English Dictionary has two potentially relevant definitions:

“1. Exclusive possession or control of the trade in a commodity, service, etc.; the condition of having no competitor in one’s trade or business.

2. Exclusive possession, control, or exercise of something.”

[102] Sir Crispin focused mainly on the first of these. The online definition which he produced, which appears to be from another version of the Oxford English Dictionary, has it in a slightly different form: “The exclusive possession or control of the supply of or trade in a commodity or service”, the idea of exclusive possession or control of the supply of a service perhaps better expressing the substance of his submission.

[103] The services which are being provided are the management operations. They can be said to be provided to the proprietors as the ultimate beneficiaries of the arrangement in terms of the praedial relationship already discussed. They are being provided “in relation to” their properties in the same sense.

[104] That is a monopoly: the respondents have exclusive control of the supply of a service. But the section, though (stripped of the examples) of seemingly wide compass and limited exception, does not prohibit all monopolies arising in connection with land. It is burdens that have the effect of creating a monopoly that are prohibited. It is not apparent to us that the words “have the effect of” mean anything other than “results in”. So the question here is whether burden 9 creates or results in the creation of a monopoly.

[105] In our opinion it does not. It is merely a burden for the payment of a share of the management operations relating to the open ground. That payment has, of course, to be made to the respondents as the providers of the management operations. It might be said to reflect a monopoly, that monopoly being the respondents’ exclusive right to manage their own land, but it does not create one.

[106] It also seems clear to us that the quasi-reciprocal burden on the respondents to carry out these operations does not create a monopoly: it is only a burden on them to manage their own land. We consider Mr Thomson’s submission on this to be well founded. It can be expressed in this way: that the maintenance of land in the hands of its owner does not give rise to a monopoly in the sense required for sec 3(7), otherwise any maintenance burden could be said to create a monopoly.

[107] It seems to us, therefore, that what brings about the arguably objectionable result in the present case – that the proprietors have no control over who provides the services for which they, and they only, pay – is not the real burden but the ownership model used for the maintenance of the amenity areas of this estate, whereby these areas are owned not by the proprietors in common but by a third party. The ownership of land is inherently monopolistic: owners have exclusive possession and complete control of their property subject only to such restrictions and obligations as are recognised by law, for example those arising from planning restrictions or title conditions. Subject to such constraints, no one can tell them how to manage their land. What a burden requiring maintenance does is to turn the right to maintain land into an obligation and in some cases set down standards for the work which is to be carried out, such as redecoration at certain intervals. It does not change the underlying monopolistic character of the ownership of land or the monopolistic rights that go with it. It might be said to vary the characteristics of the monopoly rather than create them. Usually, when one complains of a monopoly, the argument is that the monopoly should be ended and other suppliers of services given a chance to compete and consumers given a choice of supplier. That simply cannot happen when the monopoly comprises rights which are inherent in and inalienable from the ownership of land.

[108] This invites the question whether sec 3(7) was intended to abolish this model, which would be the result of holding burdens such as we have here to be invalid. Since the matter is not free from doubt, as the division among the members of the tribunal shows, it is legitimate to look at the background material to see if this was the mischief at which sec 3(7) was directed.

[109] The land-owning model is one of two broad types of maintenance model in use in Scotland. The other is the common-ownership model where the plot owners own the amenity areas in common and share the costs of maintenance. Our impression is that both systems were in existence at the time of the Law Commission’s Report on Real Burdens in 2000 (certainly the facts in Riggens date from around that time) but the report contains little discussion of the land-owning maintenance model. In what may be a reference to it, para 3.22 says this:

“Maintenance obligations tend to be framed in one of two ways. Either there is a direct obligation to maintain, or there is an obligation to pay for the cost of maintenance. Both are common. The second presupposes that the maintenance will be carried out by someone else but paid for by the obligant, and is especially useful where the obligant does not own the thing which is to be maintained.”

[110] Nowhere in the report do we detect any intention to eliminate this model, nor, indeed, any hostility to it. Nor were we referred to any material which suggests that such hostility developed in the course of the passage of the ensuing bill through the Parliament. When, ten years after the passing of the Act, the Parliament conducted an “Inquiry into the effectiveness of the provisions of the Title Conditions (Scotland) Act 2003”, although doubts were expressed as to the enforceability of burdens under this model, there was no suggestion from the witnesses to whose evidence we were referred that the 2003 Act had been intended to abolish it. It appears to us, therefore, that it was never the intention of the legislature to outlaw the land-owning maintenance model.

[111] This is not surprising. The model has its advantages in terms of relieving proprietors of all that is involved in discharging these responsibilities themselves, as we explain in more detail in connection with another branch of the applicants’ argument below. Instead, it seems to us, that the focus of attention of sec 3(7) is the common-ownership model and that it is directed against the imposition of managers and service providers on such owners except to the extent permitted elsewhere in the Act, at sec 63 et seq;hence the opening words of the subsection.

[112] We therefore conclude that sec 3(7) was not intended to prohibit arrangements such as we have here and does not in fact have that result.

[113] Accordingly this argument fails.

Mr R A Smith QC

[114] I have found myself in a minority on the issue whether the burden offends section 3(7) by having the effect of creating a monopoly. I agree with the majority that the model has advantages in sparing the house proprietors the necessity of the upkeep of the open areas and all the administration which goes with that. However I am driven to the conclusion that the burden does fail on account of the express language of the Act.

[115] It was accepted by both parties that section 3(7) applied to the burden in question. Before turning to that section it is convenient to consider the position at common law.

[116] In Tailors of Aberdeen v Coutts (1840) 1 Robinson 296 the Inner House said at p 317 that the condition:-

“must not be contrary to public policy. It was an early condition in feudal grants, that all the vassals should grind their corn at the superior’s mill, and pay a certain rate of multure for that service; or where the thirlage was strict, they were bound to pay not only for all the corn ground, but for all the corn ground upon their feu, seed and horse corn excepted. That custom, which was introduced when the erection of machinery was difficult, and therefore for the benefit of the district, has been perpetuated long after the reason ceased, and thirlage still subsists as one of the known and legal servitudes in the law of Scotland. Two centuries ago there were other restrictions of a similar nature. Thus it was often a condition in a feu charter that the vassal should bring all his malt to the superior’s brewery to be made into ale and to have all his ironwork manufactured at the superior’s smithy. These conditions have fallen into disuse, but they have never been declared illegal by statute. The Court, however, at present refuses to enforce them, as being inconsistent with public policy; for it would be a plain injury to the community, if the proprietor of a piece of land could not employ the brewer or the smith most convenient for himself, or whose work he most approved. Such a restriction, while it was of little advantage to the superior; would greatly diminish the value of the lands.”

[117] The court also referred to an earlier case in which a significant minority of the court had expressed doubts in public policy terms as to the validity of a condition requiring all dispositions of lands be prepared by the superior’s own agents. This type of monopoly we understand was abolished by statute in 1874 as the Scottish Law Commission point out at paragraph 2.23 of their report.

[118] I take from the above that where a monopoly has not been abolished by statute, the court has nevertheless exercised a common law jurisdiction not to enforce a monopoly which appears as being inconsistent with public policy. In applying that approach a particular monopoly which was not seen to be contrary to public policy at one stage, could become so over time. Thus it was recognised that the thirlage and ironworks monopolies transgressed from a practical necessity to a great inconvenience when economic conditions became different. The fact that the court has taken a discrete approach at common law is significant in terms of interpreting the statute. Section 3(6) provides that a real burden “must not be contrary to public policy as for example an unreasonable restraint trade …”. Thus according to its terms section 3(6) would be apt as a restatement of common law regarding any other example of what may be found to be contrary to public policy, such as particular monopoly. In contrast, subsection (7) provides: “Except as so far expressly permitted by this Act, a real burden must not have the effect of creating a monopoly …” In other words, subsection (7) does not have the added requirement of subsection (6) for the prohibition that the monopoly should also be contrary to public policy. The subsection appears to strike at any burden whose effect is to create a de facto monopoly. So on this interpretation subsection (7) has a stricter approach to monopoly than common law.

[119] Subsection (7) then provides that a real burden:

“must not have the effect of creating a monopoly (as for example, by providing for a particular person to be or to appoint (a) the manager of property; or (b) the supplier of any services in relation to property).”

Here the respondents are appointed as a particular person. They are specified by name in the burdens clause. The burden requires them to be paid for the carrying out of the management operations. Those operations are maintenance work to the open ground. The burden envisages the respondents to be the supplier of services or to engage others to supply those services. It is likely that the management operations, as the name suggests, will also involve a management role. The services relate to property. The owners of the burdened property are not able to change the service provider. So the words of subsection (7) are apt to cover the burden in question.

[120] The counter-argument is that the burden could not have the effect of creating a monopoly, since one could not be a monopolist merely for maintaining one’s own property. The example was given of the owner of a road seeking reimbursement of maintenance costs from others with a right to use the road. He could not be characterised as exercising a monopoly in such circumstances. The respondents in carrying out maintenance of the open ground, belonging to them, and charging for reasonable remuneration, were not therefore exercising a monopoly. I was not, however, persuaded by this argument for the following reasons.

[121] In the first place, the burden is caught by the plain words of section 3(7). The “example” given by the Act as to what has the “effect” of creating a monopoly fits the present circumstances. That example is provided in unqualified terms. To assist the respondents the words of sub-paragraph (b) “in relation to property” would require to be read as if they also said “except in relation to the particular person’s own property”.

[122] Secondly, I do not think the “supply of services in relation to property”, and the seeking of reimbursement of costs are necessarily the same thing. An obligation to defray, or contribute to some cost is a concept used elsewhere in the Act in the context of affirmative burdens. In the present case paragraph 3.1 of the burden requires contribution to “reasonable estate management remuneration”; in other words the respondents are entitled to make a profit. This is consistent with the creation of a monopoly. It is not consistent with merely the recoupment of a share, and only a share, of some expense which the landowner has incurred in full.

[123] Thirdly we require to consider this issue on the basis that the burden is valid as a real burden under the praedial rule. On this assumption the maintenance of the open ground is to the benefit of the houses on the development. The “relationship” between the burden and the burdened property (the houses) for the purposes of section 3(1) is the fact that the houses benefit from the maintenance to the open ground. It follows that the maintenance is a service being provided to those houses. On the other hand, looking at matters from the perspective of the respondents, it is difficult to assess the nature of the use and enjoyment which they have of the open ground, other than as an ability to perform the services on that land charged to the house proprietors. If they were able to appropriate the open ground to another use, and did so, then the maintenance burden would no longer “benefit” the houses. The burden would not be praedial. But on the praedial hypothesis it is difficult to see the open ground, while it remains open ground for the benefit of the houses, as anything other than land ancillary to the houses. Unless the respondents are being paid to perform the services, it is not clear why as landowners they would have any reason in their own interest to do so. Their ownership of the open ground is the vehicle for the commercial purpose for the supply of services. So the reality of the arrangement is covered by section 3(7).

[124] Fourthly I note also that the subsection (7) prohibition is “Except in so far as expressly permitted by this Act…”. The Act goes on to make provision as to manager burdens in section 63 et seq. One feature of manager burdens is that they are extinguished by operation of section 63 itself. Without reciting this section in detail, those provisions provide for what could be described as a temporary monopoly for a maximum of five years in certain circumstances. Section 63 can therefore be seen as a derogation from the general prohibition contained in section 3(7). This reinforces the view that subsection (7) is a general prohibition. Although section 63 does not apply to facilities deemed not to be “related properties”, namely facilities benefiting two or more properties such as a common area for recreation (section 66(2)(c)), I do not think that can exclude the general effect of section 3(7) from such facilities.

[125] That concludes the Tribunal’s consideration of sec 3(7) and what follows represents the tribunal’s unanimous approach to the applicants’ remaining arguments.

The applicants’ fourth argument: that the burden is contrary to public policy in terms of sec 3(6) and common law

[126] Under this head it is said that the burden is an unreasonable restraint of trade, repugnant to ownership and illegal.

[127] Dealing with those in turn, the trade which it is said to restrain is the applicants’ (and other individual proprietors’) freedom to contract with whomsoever they wish for the maintenance of the open ground. In our view that freedom cannot be described as a trade. Burdens restricting the carrying out of a trade or profession from residential premises are common. Their purpose is well known. It is to preserve the residential character of a housing development and maintain its amenity by the prevention of customers or clients coming and going to any of the houses. The present situation is not remotely comparable with that. There is nothing that can sensibly be described as trade which the applicants are being prevented from carrying out.

[128] In Aberdeen Varieties Ltd v Donald Lord Wark, at page 796, said that a condition could be contrary to public policy “if restraint of trade be its only or principal object”. That leaves scope for elements of restraint of trade in a real burden which are not so inimical to public policy as to justify being struck down, of which typical restraint of trade conditions affecting residential developments are examples. If, contrary to our conclusion above, there is an element of restraint of trade in burden 9 then it certainly falls into that category. Restraint of trade is not its only or principal object. Its principal object is the maintenance of the open ground. This argument therefore fails.

[129] Nor are we persuaded that the restriction is repugnant to ownership. The applicants aver (Statement of Fact 4d) that “the owner of land should be free to negotiate contracts in respect of that land and not bound into a contract”. Mr Thomson argued that this averment was far too abstract to have any meaning and would cut down whole swathes of contracts. What the concept of repugnancy to ownership meant, he said, was restriction on juristic acts by the owner of land, as owner, the classic situation being a restriction on the owner from entering onto the land or granting leases. Here the burden was only to make a payment; no aspect of ownership was being interfered with. The tribunal was being asked to find that an obligation to pay something of the order of £150 a year was repugnant to ownership. That could not be.

[130] An argument on repugnancy was advanced by counsel for the pursuers in Snowie v Museum Hall LLP (at para [10], page 973 H-J). It was directed against an averred prohibition of letting in the real burden in that case. Lord Glennie (at para [16], page 975E) held that the burden did not in fact have that effect but it is instructive to look at the authorities cited by counsel in that case. One was Moir’s Trustees v McEwan which concerned a feu-charter requiring the vassal to erect two detached villas according to plans approved by the superior. When the vassal converted one of the houses into two flats an action was raised for declarator that this was in contravention of the feu-charter and for an order for restoration. It was held that what had been done was not contrary to the feu-charter and the defender was assoilzied. In considering whether a prohibition on letting, restricting the occupancy of a house to one tenant, would be valid Lord Young said this (at p 1145):

“I think that to insert in a proprietary title – a feu-charter conferring a right of property in fee-simple – a prohibition against letting altogether would be bad from repugnancy. You cannot make a man proprietor and yet prohibit him from exercising the rights of proprietorship. There are certain restrictions which may be imposed. These are generally of a well-known character, and illustrated by well-known decisions, but a restriction against alienation, or a restriction against letting – that is, alienating for a term – would, I think as at present advised, be bad from repugnancy.”

[131] Professor Rennie’s Land Tenure in Scotland, at para 5-14 was also referred to. There the learned author, after quoting part of the foregoing passage, says:

“This principle is restated in the 2003 Act. Plainly prohibitions of what might be regarded as ordinary juristic acts such as the granting of leases or dispositions would be struck at but prohibitions of certain types of use or trade especially in residential properties presumably would not even though they are fetters on the rights of ownership.” [Reference is made to Earl of Zetland v Hislop (1882) 9 R (HL) 40 in support of the latter proposition.]

[132] The distinction being described there is a distinction between basic and inalienable rights of ownership and restrictions on the use that can be made of property. In the present case there is no restriction whatsoever on what the applicants can do with their property. Burden 9 does not affect that at all. It merely requires them to make a payment for the upkeep of other property. It is as a burden on their title but has nothing to do with their rights of ownership. It is therefore not repugnant to ownership.

[133] The burden was said to be illegal for the following reasons (Statement of Fact 4 b, c and f):

(i) That it binds the applicants and their successors as owners of their property to the respondents in all time coming with no opportunity to replace them in the event that they fail to perform their obligations or perform them unsatisfactorily.

(ii) That the respondents are entitled to determine the “reasonable estate management remuneration” chargeable with no mechanism whereby that charge can be challenged.

(iii) That the “Landscape Implementation and Maintenance Specifications” are so lacking in specification that they cannot be enforced by action of specific implement, aggravated by the fact that there is no mechanism for dispute resolution.

(iv) That the burden is an “unfair term” under Regulation 5 of the 1999 Regulations.

[134] The first of these arguments raises the same issues as the argument on monopoly under sec 3(7) and there is little we can usefully add to what we have already said. There is obviously something repugnant about being tied to the same supplier of services in perpetuity but the question is whether it is illegal. What is happening is that the individual proprietors have agreed to pay a neighbouring proprietor the cost of keeping his land in good order in the belief that keeping it in good order will maintain or enhance the amenity of their own properties. It will always be in the interests of the individual proprietors that the open ground is well kept. Seen in that way perpetuity is not objectionable. And why should it be of any interest to the individual proprietors how the proprietor of the open ground keeps that ground in good order provided it is done to a satisfactory standard and at reasonable cost?

[135] That, of course, invites the question what is to happen, under this maintenance model, if the open ground is not kept in good order. The question does not arise in this case because we have held the burden to be invalid for a different reason but the question has to be asked as a means of testing the viability of the model generally.

[136] Counsel on both sides were of the opinion that the proprietors could not enforce the respondents’ obligations by action of specific implement. The deed of conditions confers no express jus quaesitum tertio in their favour andsecs 52 and 53 (which deal with the situation in which real burdens under a common scheme have been imposed on any unit to which the scheme applies before the appointed day so as to make all units subject to the common scheme benefited properties in relation to the real burdens) were not thought to apply.

[137] Be that as it may, what the proprietors would be entitled to do is withhold payment of the sums claimed as not being reasonable remuneration, given the standard of the respondents’ performance. It would then be for a court to determine what, if anything, was reasonable remuneration.

[138] Another avenue which may be open to them is to ask this tribunal to vary or discharge the title condition under sec 90(1)(a)(i). Our views on this are, of course, very tentative since we heard no argument on the matter but there may be scope, in reliance on the right conferred on the tribunal to take account of any other factor which it considers to be material (sec 100(j)), for varying a burden of this kind to make it more equitable, as by relating it to satisfactory performance of the respondents’ obligations. Should the owners of the amenity ground persistently fail in the performance of their duties there may be a basis for discharging the burden on the proprietors. What the tribunal could not do is impose anything tantamount to a new burden on the owners of amenity ground without their consent (sec 90(5)). In particular we could not impose a maintenance contractor or manager on parties in the position of the present respondents in respect of their own land.

[139] That there are disadvantages of the land-owning maintenance model is undeniable but they do not make the model unworkable. Nor do they justify a conclusion of illegality. The model has corresponding advantages in the way of relieving the house owners of all the inconvenience of looking after the open ground themselves, including the holding of meetings, the appointment of factors or landscaping contractors, the monitoring of their performance and so on, with the risk of potentially damaging divisions among themselves to which these matters can give rise.

[140] For these reasons, we reject this branch of the applicants’ argument.

[141] The second ground of objection is the lack of a mechanism for challenging the respondents’ determination as to what is “reasonable estate management remuneration”. We deal separately with the question whether burden 9 is a sufficiently specific provision to satisfy the requirements of sec 5(1) when we come to the applicants’ case on uncertainty below. Under the present head we consider only whether the absence of a mechanism for determining reasonable remuneration is contrary to public policy. We have decided it is not. That is because, whilst the deed of conditions does not set out any mechanism for a challenge to the respondents’ assessment of what is reasonable remuneration, “reasonableness” is by definition, as Mr Thomson submitted, an objective concept. As we have already said, were the applicants to refuse to pay the respondents’ figure because they thought it unreasonable, its reasonableness could be determined in the courts in the context of an action for payment by the respondents. In this connection it is relevant to note that in Rennie v Lothian Regional Council it was not any vagueness in the concept of reasonableness per se which made the burden invalid in the view of the majority judges but that the supply of water had to be “to the reasonable satisfaction of us and our successors” (emphasis added) thus making what might have been objective subjective. That is not the case here. We therefore reject this branch of the applicants’ argument.

[142] The third branch of the argument is that the “Landscape Implementation and Maintenance Specifications” are so lacking in specification that they could not be enforced by action of specific implement and that this is aggravated by the fact that there was no mechanism for dispute resolution. This argument was also advanced under the applicants’ sixth ground of attack, that the burden was void from uncertainty. That is, we think, the place for it. We do not see lack, in said specifications, of the sort of fine detail desiderated by the applicants as a matter of public policy. Accordingly, we say no more of it here but return to it below.

[143] That leaves, under this head, the challenge under the 1999 Regulations.

[144] It was not disputed that the 1999 Regulations applied. The contract to which they applied was that between the applicants and Bett Ltd (“Bett”). That contract was based on a pro forma offer for the purchase of plot 214, West Myreton, Menstrie, by the applicants. It was prepared by or on behalf of Bett and forwarded to the applicants’ solicitors under cover of a letter from Bett’s solicitors by fax and mail on 30 November 2004 (production A9). It met with an immediate, same day, response in the form of a single sentence offer by the applicants’ solicitors on their behalf to purchase the subjects on the terms and conditions stated in the pro forma offer (production A8). That in turn was met with an immediate response from Bett’s solicitors accepting the applicants’ offer and holding the contract, “the entire express terms of which is (sic) constituted by the said formal offer and this letter and by no other written or verbal communication”, as concluded (production A10). There is no averment that any attempt was made to negotiate any change to any of the pro forma terms.

[145] That offer contained, at clause 9, the following condition: “The title to be granted in favour of me may be granted subject to the terms of a Deed of Conditions appropriate to the Estate may (sic) also contain further rights and obligations, including Factoring conditions, payment of a Factor’s fee and other conditions relating to the Subjects and other subjects forming part of the Estate”. Again there is no averment that any attempt was made by the applicants’ solicitors to obtain sight of the Deed of Conditions being referred to prior to the conclusion of missives.

[146] Against that background, the applicants’ first complaint is that clause 9 was negotiated in advance without their being able to influence its substance (reg 5(2)). That is plainly so but it becomes an unfair contractual term only “if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”.

[147] The applicants aver matters amounting to bad faith on the part of Bett. These are (a) that clause 9 does not disclose that the particular deed of conditions for this estate had already been registered and was, therefore, available for inspection and (b) that the references to factoring are misleading. There is no mention of the sort of maintenance model which was in fact proposed for this estate. Instead the reference to factoring suggests that it was to be the common ownership model. So a case of bad faith is made. But it is not said what the effect of this was. In particular it is not said how it produced a significant imbalance in the rights of the parties. It is not said what the applicants would have done had the deed been disclosed.

[148] In order to assist the assessment of unfairness, Schedule 2 to the Regulations contains a non-exhaustive list of terms which may be regarded as unfair. Sir Crispin relied on (i), (j), (k), (l), (m) and (o)

[149] Item (i) concerns “Irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract”. In our view that is not the case here. Although we agree that there was no realistic scope for the variation of clause 9 of the pro forma offer, there was nothing to prevent the applicants and their solicitors from insisting on seeing the title deeds to the subjects including the actual or intended deed of conditions (we agree that it was unsatisfactory from a consumer’s point of view that the pro forma did not refer to the deed of conditions actually in place by that time) before concluding missives. Had they done so the applicants could have taken a view as to whether this was a contract to which they wanted to bind themselves.

[150] Item (j) involves terms “enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract”. In our view this does not arise here. The contract contains a provision (clause 7) which allowed Bett to vary the estate layout and to make alterations to the house and garage but it does not contain provisions enabling them to alter the contract itself.

[151] Item (k) involves terms “enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided”. This is where clause 7 is relevant. It allows Bett unilaterally to vary, inter alia, the estate layout, subject, of course, to obtaining planning permission. That would include varyingthe extent of the open ground. The extent of the open ground may, we suppose, be regarded as a “characteristic of the product … to be provided” although the applicants have no rights in it or over it. It is difficult to envisage that any developer would alter the layout of an estate without a valid reason and subsequent events in this case, although involving some change to the extent of the open ground, have not shown that happening. But developers will always want – indeed need – a degree of flexibility so as to be able to respond to events as the development is built. Accordingly there is no merit in the criticism of the contract on this score.

[152] Factor (l), allowing the price of goods to be determined at the time of delivery or allowing a seller or supplier to increase the price without, in both cases, allowing the consumer a right to cancel the contract, was also relied on. This had to do with the uncertain amount the applicants would have to pay under burden 9. A condition of (l) is that the consumer can only cancel if the price is “too high in relation to the price agreed when the contract was concluded”. Although in our view it is close to fanciful to regard the ongoing payments under burden 9 as part of the price agreed by the applicants when they bought their house, at a level of £150 or so, as it has turned out to be, it can hardly be described as too high in relation to that price. This submission is without merit.

[153] Item (m) was also prayed in aid. It concerns “giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract”. It was said that the contract gave the respondents the right to determine whether the services supplied were in conformity with the contract. That question could be determined in court, in the event of dispute, but in the first instance it was to be determined by the respondents. It was submitted that the respondents were a tertius in relation to the contract between the applicants and Bett so it was competent to take this point.

[154] The argument was not advanced under specification of any particular term of the contract or burden 9 and we see nothing in either which purports to confer on the respondents an absolute discretion to determine whether the Landscape Implementation and Maintenance Specifications were being complied with. Instead these specifications set out in some detail what the respondents have to do and provide criteria against which their performance can be assessed. There seems to us to be nothing in the contract or the relevant burdens which puts the respondents in a materially different position from factors or other service providers. In all such situations the service provider will be entitled to take a view as to whether the services being provided are conform to contract. That can be challenged by the consumer, who can refuse to pay and have the issue tested in court. The contract here does not purport to make the respondents final arbiters in relation to their performance of their obligations. The contract does not, therefore, fall foul of factor (m).

[155] Finally, in so far as the list of factors contained in Schedule 2 is concerned, reliance was placed on item (o): obliging the consumer to fulfil all his obligations where the seller or supplier does not perform his. Although the deed of conditions does not expressly make payment of a share of the Management Operations conditional on performance of the respondents’ obligations, there is no doubt that, read as a whole, one is the counterpart of the other and the individual proprietors would be entitled to withhold payment in the event of non-performance, or inadequate performance, of the respondents’ obligations. The contract does not offend against factor (o).

[156] We are therefore of the opinion that insufficient has been pled in relation to any of the foregoing factors to instruct a relevant case based on them.

[157] Sir Crispin also made submissions under each of paras (1) and (2) of reg 6. Para (1) provides that “the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded, by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent”. Here the deed of conditions already existed when the contract was concluded and, it was said, the applicants had been obliged to conclude missives before being provided with the title deeds. All we need say in relation to this submission is that it is not averred that the applicants or their solicitors made any request for sight of the title deeds, or, specifically, the deed of conditions, before concluding missives nor is there any averment that such a request would have been pointless because it would have been refused. Whilst we agree that the chances of being able to vary any of the conditions of the deed would have been negligible (that is within the judicial knowledge of this tribunal and is, in any event, a legitimate conclusion from the fact that the whole point of a deed of conditions is to make all properties subject to the same regime) that would not be the point of asking for sight of the deed. The point would be to reassure the applicants that there was nothing unacceptable in the conditions before committing themselves to the contract. It is not within our judicial knowledge that a developer would refuse to exhibit the titles in advance of conclusion of missives. On the contrary, our expectation would be that a developer keen to secure a sale would be prepared to do so. But, in any event, there are no averments which would justify proof under this head.

[158] The submission under para (2) related to the requirement for “clear intelligible language” in relation to the price or remuneration payable which is implicit in that provision. What the provision says is that “In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate … (b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”. It was said that there was no way in which the applicants could have worked out, when buying their house, what their liability to the respondents would eventually be. Their house was part of Phase 2 and there was no saying how many more houses would be built and, therefore, what the applicants’ share of the maintenance costs was going to be. This provision should be read purposively: although the language itself was intelligible it did not tell the applicants what they needed to know. It was not plain in that sense, so we could adjudicate on its fairness.

[159] In our discussion of sec 5 of the Act, elsewhere in this judgement, we have explained why we have held that the mechanism for calculating the applicants’ share of the maintenance costs does not come within sec 5(2) and the burden therefore fails on that score. That has to do with the four corners rule. But the burden is expressed in perfectly plain language and we are not entitled, therefore, to conduct some other enquiry into its fairness under reg 6(2).

[160] For all of the foregoing reasons the applicants’ challenge under the 1999 Regulations fails.

The applicants’ fifth argument: that the burden is illegal under sec 18 of the 1998 Act

[161] We accept for the reasons given by the applicants that the tribunal has jurisdiction to decide whether the burden is valid under the Competition Act 1998. This is implicit within sec 90(1)(a)(ii) of the 2003 Act, which provides jurisdiction for the tribunal to “determine any question as to (the real burden’s) validity, applicability or enforceability…” The cases cited by the applicants appear to be in point. The contrary was not argued. For completeness we should point out that the tribunal’s explicatory jurisdiction was considered by the Inner House in McCreight v West Lothian Council. The issue was whether a tenant had a right to buy under the Housing (Scotland) Act 1987, which subsumed another issue namely whether the right to the tenancy had been forfeited. The court held that the tribunal could not resolve the forfeiture issue since the existence of the tenancy was an essential precondition of the tribunal’s jurisdiction under the 1987 Act. Part of the reasoning related to the fact that the limited power to modify application of the forfeiture rule could only be exercised by a court; sec 2 of the Forfeiture Act 1982.

[162] McCreight is binding upon us but we do not think it is in point. Here, the jurisdiction under section 90(1)(a)(ii) is wider than under the 1987 Act, and indeed is wider than many of the tribunal’s other remits. The only precondition is that there is a real burden. It was not argued that any other court or tribunal had exclusive jurisdiction in the matter.

[163] Taking the applicants’ case at its highest at this stage, we are prepared to accept that they can make a case for a relatively limited market definition; in other words a geographic market for the Menstrie Mains housing development and a product market for the supply of the particular management operations which the respondents carry out there. We are prepared to accept that, within the meaning of sec 18 of the 1998 Act, the burden provides the respondents with a dominant position for the supply of those services within that market.

[164] Nevertheless we are persuaded by reference to the European Commission Guidance Note (2009/ C 45/02) that it is not in itself illegal or unlawful for an undertaking to be in a dominant position. The Guidance Note concerns Treaty Article 82 (itself part of a series of Treaty Articles) underlying the 1998 Act. We must interpret the Act in its light. It is necessary therefore to consider whether it can be said, in addition to the existence of a dominant position, that the respondents’ conduct amounts to abuse of a dominant position.

[165] In this connection we are not persuaded that the applicants have adequately set out a case. It is not our practice to take a stringent view of written pleadings. However, it seems to us that the averments asserting that there is an “abuse” are really no more than averments as to the rights of the respondents in terms of the deed of conditions. That is not instructing any more than that the respondents may be in a dominant position in the market. Nothing more is said in the pleadings; for example, that the respondents’ charges are excessive or that the work carried out is of poor quality or unnecessary. We cannot imagine that an investigation by the Competition and Markets Authority under the 1998 Act would not look closely into such matters. Some sort of fair notice going beyond an ex parte statement at the bar is required as to allegations of abuse. The failure to give such notice strikes us as being fundamental. Accordingly we would not have allowed this branch of the case to proceed without significant amendment.

The applicants’ sixth argument: that the burden is invalid from uncertainty

[166] The first ground of attack here is on the uncertainty as to what comprises the open ground which is to be the benefited land in terms of sec 4(2)(c)(ii). That requires the benefited land to be nominated and identified in the constitutive deed, in this case the deed of conditions. As we have said, counsel were in agreement that sec 4 applies and what follows should be read in the light of our earlier discussion as to the relationship between secs 4 and 6 and the possible applicability of sec 53.

[167] The constitutive deed narrates that “it is intended that GGC (the respondents) will be taken bound in terms of the Disposition or Dispositions to be granted in their favour in respect of the Open Ground to carry out the (defined) Management Operations”. The “Open Ground” is the benefited property. It is defined as “the areas of amenity woodland, landscaped open spaces, play areas and others to be provided on the Whole Subjects in terms of the Planning Permission” and “Planning Permission” is defined as “the planning permission issued by the Scottish Ministers under Reference No. 00/00129OUT on 7 Mar. 2002 together with any variation thereof or supplementary permission issued in respect thereof”.

[168] We would accept that this description nominates the benefited land, in the sense that it contains a general, non-geographic, description of it. But on no ordinary meaning of the word can it be said to identify the benefited land. Without more, one does not know where, within the whole subjects, it is.

[169] The question then becomes whether it is permissible to look at the planning permission to cure that problem. Having held that the four corners rule still applies, our answer to that has to be no. Although the four corners rule usually arises in relation to the content of the burden, rather than the identity of the benefited land, it nevertheless applies in this case since the extent of the burden is related to the extent of that land.

[170] Accordingly, we have held that the burden is invalid as failing to satisfy the requirements of sec 4(2)(c)(ii), a failure which is not curable by looking at the planning permission.

[171] Sir Crispin also had a submission based on PMP Plus Ltd v Keeper of the Registers and the difficulty, for land registration purposes, about defining common ground by reference to later events which was identified in that case. However, there does not seem to us to be any room for the application of anything arising out of PMP in the present case. That is for two reasons. Firstly, the position is governed by sec 4 and whether its requirements are complied with decides the question of validity one way or the other. Secondly, PMP was concerned with the conveyance of rights of ownership to land and the need, for that purpose, for the land to be ascertainable by reference to the Ordnance Map; see paras [55] to [58] and secs 3(1)(a), 4(2)(a) and 6(1)(a) of the 1979 Act referred to there. In the present case, when the title in favour of the applicants was being registered all that required to be ascertainable by reference to the Ordnance Map was the extent of the property being conveyed, not the extent of other land towards the upkeep of which the applicants were to be required to contribute. In our view senior counsel’s submission confused two quite distinct statutory regimes: the regime governing the creation and registration of interests in land, on the one hand (said sections of the 1979 Act), and the regime for the creation of valid title conditions on the other (sec 4 of the 2003 Act).

[172] Senior counsel also argued that, quite apart from the requirements of sec 4, it was not lawful to fix the applicants, when they registered their title, with an obligation the extent of which would not become known until some years later.

[173] When the applicants registered their title the ultimate extent of the open ground was unknown. It was defined by reference to the planning permission for the development as that permission may be varied or supplemented. Even if resort to the planning permission was permissible, therefore, there was no means of knowing the extent of land for the maintenance of which they might end up having to pay a share. This objection, if valid, poses a real difficulty for developers, who need to have a degree of flexibility in the development of a large estate. We comment further on this at the end of this judgement but our interpretation of the law as it stands is that a burden of this kind is insufficiently specific. We agree, therefore, that the burden is bad for this reason also.

[174] Sir Crispin also challenged the validity of referring to the UK Index of Basic Materials and Fuels as a cap on annual increases in the management operations costs. To the extent to which sec 5(2) permitted reference to extraneous documents, this was not “an enactment or public register or some record or roll to which the public readily has access”. We agree. Plainly neither the Index nor the Financial Times is an enactment or public register. We think, applying the ejusdem generis rule of construction, that the words “record or roll” are to be read as referring to things having the same sort of public, official, objective status, as, for example, the Register of Births, Deaths and Marriages, the Electoral Roll or the Valuation Roll. Two qualities seem to be desiderated: authority and accessibility. It need not be a government record or roll but it should be something carrying the imprimatur of a relevant authority. An example would be the Bank of England’s record of its base lending rate.

[175] One might ask why parties should not be free to agree reference to any sort of document they want, provided it is easily accessible. The answer is that what sec 5(2) is doing is making a limited relaxation to the four corners rule. Clarity and certainty are still being regarded as important. That, along with permanence, is what such registers, records and rolls offer. It is not, evidently, offered by the Index in question in this case, as the doubt as to (a) whether it still exists, and, if so, (b) where it is now published shows. Accordingly we hold that the reference does not satisfy the requirements of sec 5(2). That would not, of course, invalidate the whole burden, only the capping mechanism. The burden could still be workable: the annual charges would simply require to be reasonable in order to be recoverable.

[176] So far as Sir Crispin’s criticisms of the Landscape and Maintenance Specifications and the various references to extraneous material which they contain are concerned, we consider that we cannot pronounce on the validity of these specifications in the context of this application. That is because, firstly, Sir Crispin’s position, disavowing the possible application of sec 53, was that the applicants have no right to enforce the burden of which they form part and, secondly, the proprietors of the benefited, retained, subjects are not parties. The same goes for Sir Crispin’s criticism of the absence of a mechanism for resolving disputes as to the respondents’ performance of their obligations. We would point out, however, that by clause 3.3 of the burden allows a majority of the proprietors to amend the Management and Maintenance Specification without the respondents’ agreement, except as to cost. Thus any deficiency in specification is inherently curable at the instance of the burdened proprietors and should not be fatal to the burden.

Comment

[177] The applicants fought this case on a very wide front but (on the majority view) have been successful only on a relatively narrow and technical issue. As an attack on the land-owning model per se it has failed. The applicants have succeeded not because of any structural flaw in the model but because the benefited land property was not adequately identified in the constitutive deed. The requirement for such identification has the potential to cause difficulty more widely, given developers’ need for flexibility. But it is possible to exaggerate that difficulty. In many small developments the developer will, we imagine, be sufficiently confident that things will go according to plan that the amenity areas can be identified precisely from the outset. In larger developments, involving more uncertainty, there will be, at the very least, an indicative layout plan from the outset which could be incorporated into the constitutive deed, the text of which could be worded to the effect that the area to be maintained will not exceed that shown on the plan. That may be sufficient to solve the problem but we express no concluded view.

[178] How the difficulties caused by the failure of the burden in the present case are to be resolved is another matter and is for the respondents and those who own homes on the estate to take forward.

Expenses

[179] Sir Crispin moved for certification of the case as suitable for the employment of senior counsel in the event that he was successful. He has been successful but we have thought it better to invite written motions and submissions on expenses.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 2 December 2015

Neil M Tainsh – Clerk to the Tribunal