OPINION

United Investment Company Limited v Charlie Reid Travel Limited

Introduction

[1] This case is concerned with an application to the Tribunal for discharge of a title condition in exercise of its powers under section 90(1)(a)(i) of the Title Conditions (Scotland) Act 2003. The burdened property is located on the north side of Victoria Road, Kirkcaldy close by its junction with Dunnikier Road. The applicants are the United Investment Company Limited.

[2] The benefited property is a shop at 64A Dunnikier Road, Kirkcaldy owned by the respondents, Charlie Reid Travel Limited. (The shop trades under the address of 2 Victoria Road).

[3] At the request of the parties and after some correspondence the Tribunal consented to disposal of the case on the basis of written submissions, subject to a site inspection. We have proceeded on the basis that the Tribunal would consider the principle, but not the amount of any compensation as part of the current consideration. In the event of compensation being held to be appropriate the parties would then be allowed to address the matter of quantification and failing agreement between them there would be further procedure.

Statutory references

Title Conditions (Scotland) Act 2003

Authorities

Moncrieff v Jamieson 2008 SC (HL) 1

Terms of the Burden

[4] The burden in question is set out in the Property Section of the respondents’ title FFE54137.

“Together with a right of access to and egress from the subjects in this Title by means of the access road tinted brown on the said [Title] Plan”.

The burden is also described in the disposition by Ian Albert Smith Thompson in favour of Lord Bruce recorded GRS (Fife) on 24 October 1963, which disposition comprises entry 2 of the Burdens Section of the applicants’ title FFE106264.

“together with a right of access to and egress from the above subjects by means of the access road edged red on the Title Plan”

The plans in question show the same irregular shaped area of ground that forms the entrance to a number of parts of a divided builder’s yard entered off Victoria Road.

Background

[5] It is pertinent to record that the history of the yard involved the division and selling off of three parcels in 1963. Two became the property of Thomson Brothers (Kirkcaldy) Limited and the third was acquired by Lord Bruce. The street entrance off Victoria Road at that time was immediately adjacent to the benefited property and to the west of the present entrance and is referred to as “the 1963 entrance”; this is the area described in the registered titles mentioned above. The two Thomson Brothers’ areas were contiguous. The areas conveyed to Lord Bruce comprised a small workshop and a strip of ground together with shop property on the corner of Dunnikier Road and Victoria Road.

[6] In 1965, seemingly at the behest of Thomson Brothers, the 1963 entrance was replaced by a new access created to the east a little further away from the junction, “the 1965 entrance.” The 1963 entrance was blocked off with a low wall with fencing above. Over time a telephone pole was erected on that land where it remains. The new entrance continued to give access to the Thomson Brothers’ and Lord Bruce’s property. We were not provided with any material indicating what arose between the various parties at that time.

[7] In 1987 the applicants (under their then name of Vouchkeen Limited) acquired the Thomson Bothers’ interests giving them title to the whole yard except for Lord Bruce’s property and the solum of the 1963 access.

[8] Lord Bruce’s property including the shop property was acquired by the Moloco family in 1973. In 1979 the applicants acquired from Salvatore Maloco the workshop that had been owned by Lord Bruce but not the strip of ground referred to earlier that had by then been incorporated into the shop which was retained by the Maloco family. In 1990 the applicants acquired the remainder of the yard including the 1963 and 1965 entrances from the feudal superiors and in 2014 acquired a further title to the entrance areas from the executor of the original granter of the 1963 dispositions.

[9] The respondents, as Charlie Reid, travel agents, rented the corner shop from Salvatore Maloco in 1985 and purchased it in 2002. This included the strip of ground that had been incorporated into the shop and the right to use the access described in the 1963 disposition to Lord Bruce. The title of this property then transferred to Charlie Reid Travel Limited in 2012.

[10] While the foregoing has been derived in the main from the application, we do not understand that it is disputed.

Physical characteristics of the benefitted and burdened properties

[11] The builder’s yard is currently accessed by the 1965 entrance from Victoria Road up a slope onto the main level where there are a number of somewhat elderly and dilapidated workshops that are let on a short term basis. The ground to the immediate east of the respondent’s shop, which was the 1963 entrance, consist of an overgrown grassy bank atop which sits a derelict lorry which has been there for the last three years or so. This has the effect of largely precluding a vehicle being driven close to the rear access to the respondents’ shop that takes entrance from the bank.

[12] The respondents’ shop is a corner property to which the public gain access from an entrance across the corner between display windows to Victoria Road and Dunnikier Road. The ground floor has the main shop floor laid out with desks with a store room to the north and east. At the east end of the Victoria Road frontage a door leads from the shop into the stairwell to the upper floor which appears to have been built on the strip of ground referred to above. There is a door (“the side access”) from Victoria Road which meets the door from the front shop area followed by the first flight of stairs. On the first landing on the east side is the rear entrance (“the rear access”) leading to the grassy bank. To the north is a door into a store cupboard. The second flight of stairs returns to a further landing followed by the final flight leading to first floor level. This floor has four offices, a toilet and a mess area and is around double the area of the ground floor accommodation.

[13] Both the external doors from the stairwell open inwards. The entrance to the grassy bank opens onto a plinth two feet deep with steps of the same width leading down the slope of the bank. The plinth is about three feet above the (sloping) level of the bank. The concrete is rather rough and shows signs of deterioration. There are clear signs that at one time there was a railing round the plinth and down the stair. The ground on and over which the plinth and steps sit is the property of the applicants.

Use of the rear access/egress

[14] The position of the applicants is that “the servitude right of access has not been used in any way to their knowledge since the applicants acquired the yard in 1987. By then access had been relocated and the original access blocked for twenty years”. The gates to the entrance are locked every night and they have never been asked for a key. The applicants also say that they have no knowledge of the respondents using the access when the gates have been open.

[15] Against this the respondents say that they have used the 1965 access since they first occupied the shop, albeit that they have never had a key to the gates. They have used the right of access and egress, they say, in two distinct respects. The first use is as a fire exit. Although there has been no reason to use it for this purpose it has been maintained and recognised as being one means of evacuating the first floor offices in the event of fire and the only resort should a fire block escape via the side access. The second use is as an access and egress when taking publicity materials into the shop from a vehicle or carrying off waste for specialised shredding. While that use has involved temporary setting down and loading, it is not said to have involved parking.

Development plans

[16] The applicants have obtained planning permission for major redevelopment of their property which includes additional land to the east. The proposed development envisages a substantial convenience store at the west end of the site close by the respondent’s property with car parking to the east of the shop entering off Victoria Road from a new entrance located further to the east, further away, that is, from the junction of Victoria Road and Dunnikier Road, as required by the planning authority. Both the 1963 and 1965 entrances would be extinguished although a pedestrian access to the shop would be created across them. A care home is to be built at the eastmost end of the site and a further plot for future development would be provided to the north of the convenience store.

[17] The rear yard and part of the convenience store would lie over the area of the 1963 and 1965 entrances and the burden is said by the applicants to be a significant barrier to securing the progress of the development. The respondents, in a general way supported the granting of planning permission on the basis that the area would benefit from redevelopment.

Argued for the applicants

[18] The application initially proceeded on the basis that the servitude had been extinguished for want of use for the prescriptive period. In light of submission by the respondents and as clarified by note from the tribunal, as will be explained in our consideration, we proceed on the basis that there is a title condition or purported title condition that is or bears to be enforceable.

[19] The posture of the applicants has changed over time. At one point they simply sought discharge and made no concession to the respondents. However they varied their position and offered to convey to the respondents the ground under the steps and plinth and sufficient ground to allow a fire escape route onto the public pavement adjacent to the side access to the shop. This was on the basis that the respondents would be under an obligation to erect and maintain fencing and a gate of an appropriate standard at their own expense and to bear the cost of conveyancing. The offer was not accepted. In their submissions the applicants argue that we should not make an order in this respect which we take to mean that the offer is withdrawn.

[20] The application now rests on the applicants’ justification for discharge in terms of the factors set out in section 100 of the Act. Their submission in that connection was as follows:

[21] The title condition was created to enable the former builder’s yard to be sub-divided by providing for a shared access to each of three parcels. Those parcels with the exception of the narrow area now forming part of the shop but including the burdened area are all owned by the applicants and have planning permission for redevelopment. (Factors (a), (f) and (g)).

[22] The entrance specified in the land condition has been blocked off and the planning permission granted requires removal of existing accesses. (Factor (a)).

[23] The title condition confers no benefit on the benefited property as the entrance to which it relates no longer exits. Even if the title condition still exists most of the area specified has no relevance to any physical requirement of access to the strip of land now part of the shop having been designed to serve other parcels in the yard. (Factor (b)).

[24] The redevelopment approved by the planning permission requires that a building be located on part of the burdened land and the removal of the related access. The existence of the land condition impedes the redevelopment and thus the applicant’s enjoyment of the burdened property. (Factors (c) and (g)).

[25] The condition was created in 1963 to provide for access to three parts of the yard. The benefits conferred have not been exercised or exercisable since circa 1965 (Factor (e)).

[26] Finally, the applicants, in the whole circumstances are not prepared to pay compensation to the owner of the benefited property. (Factor (h) and (j)).

Argued for the respondents

[27] While the respondents supported the proposed redevelopment of the site from a planning perspective, they were not willing to agree to the discharge of the title condition without suitable recompense. They indicated in their answers that they had reconsidered their position and would consent to a reasonable variation of their servitude right which would allow the exiting of persons from the shop by way of fire escape and the occasional loading and unloading of goods through the rear door. At a later stage, in response to the applicant’s offer of a fire escape route, they rejected the proposal on the ground that they should not be required to bear any cost of effecting the works that would be required. As we understand the position they are not in principle opposed to that solution to the issue apart from matters of cost and compensation.

[28] The respondents have not made any specific reference to the section 100 factors but have focused on the utility of the rear access as a fire escape and as an occasional loading and unloading facility. They observe that the applicants are the party who will gain from redevelopment and submit that it is wrong that the owner of the benefited property should be required to bear any cost of construction, legal expense or expense in the application process. They wish to receive compensation.

Consideration

[29] As indicated earlier we proceed on the basis that we are being asked to discharge a title condition or purported title condition consisting of a right of access. Although the access has been moved and is said to have been extinguished by prescriptive non-use, for present purposes we require to assume that it is valid because it is, at least, a purported title condition. We do not have jurisdiction to determine whether it is in fact valid. This is because the application is made in terms of section 90(1)(a)(i) of the Act. Section 90(1)(a)(ii) which provides for the Tribunal to rule on the validity of real burdens does not apply to servitudes. These matters were covered in the correspondence with the parties and are set out in our Note to them of 30 July 2015.

[30] It follows that we cannot seek to decide a live issue whether the servitude rights may have been extinguished by the loss of the old access or by prescriptive non-use. We simply require to assume the rights come within the purported title condition. Equally it is necessary to consider the character of the purported servitude for the purposes of the assessment. We think it is enough to say that the purported rights included a right of vehicular access. The existence of such a right is certainly arguable from the unrestricted terms of the title condition, and it was maintained there had been vehicular access until fairly recently. It was not argued that the rights carried the right to park vehicles as such, which we think would not be an obvious ancillary right. However, having regard to the speech of Lord Hope at [32] in Moncrieff v Jamieson we think it is fair to infer that the right of access would include a right of turning, setting down and picking up passengers, and loading and unloading. Such rights would be obviously necessary for the servitude.

[31] One additional aspect of the matter that is not mentioned in submissions but is of some moment is that the right of access would appear to be useful for the purpose of carrying out maintenance etc. to the gable of the respondents’ property.

[32] Turning to the section 100 factors that require to be considered, we observe that while the general physical characteristics of the area have not changed greatly for around half a century, the deterioration of the buildings on the redevelopment site is clear. A significant change is evident in the granting of planning permission giving rise to the prospect of regeneration of the area rather than continuing decline.

[33] The purpose of the servitude is clear and it remains pertinent to the operation of the respondents’ business. The passage of time has not altered its character for at least thirty years.

[34] It seems to us that factor (b), the extent of benefit to the benefitted property and factor (c), the extent to which the burden impedes the enjoyment of the burdened property are the critical factors to be considered. They operate in this case on rather different scales but it cannot be supposed that merely because a substantial development project may be prejudiced if the burden is not extinguished that is in any way determinative of the outcome. A benefit that is critical to the operation of a small business need not be set aside simply because a larger enterprise will be thwarted.

[35] The respondents have laid considerable emphasis on the continued availability of the rear access in the event of fire. They say that it is the first escape route for staff who work on the upper floor and the only means of escape if there was a fire at the side access. There is a measure of truth in this in that there would indeed be difficulty if a fire broke out at the bottom of the seven step flight down to the side access or threatened to come through the door to the front shop. However, it is not obvious that the concrete stairs with walls plastered on the hard, if kept clear of publicity materials and other hazards, poses a significant risk of becoming impassable. A fire at the store cupboard on the first landing or in materials stored on the flights above would block escape from the first floor through either exit from the stairwell.

[36] The egress to the bank seems to us to be far from ideal. The two foot wide plinth having no railing seems to us to carry some risk, in flight, of injury and the narrow stairs hard against the external wall of the shop would not be easy to traverse at speed. While we can accept that the existence of an alternative escape route is of some benefit, we are not clear that in these circumstances the advantage is so very great. It should not be omitted that in the event of fire it would not be appropriate to linger close to the building and the remainder of the entrance area covered by the 1963 access would allow an assembly point away from the conflagration. Escape to Victoria Road would not be easy at night as the gates would, seemingly, be locked.

[37] So far as the availability of an access to the rear for non-emergency purposes is concerned, we can see that the ability to take materials in or out to a vehicle could be more convenient than parking in the limited spaces available on the street in the immediate vicinity and carrying the goods through the public or the side access. The character of the stairs and the plinth means, however, that the access is far from ideal. While the current level of use by the respondents, on their own account, is modest, that need not be the case for all potential occupiers of the shop. We are concerned here with the owner’s interest rather than the current occupier’s use for the purposes of their particular trade. We consider that there may be some potential occupiers of the shop who would make greater use of the rear access for loading and unloading.

[38] Against this the applicants argue that their development plans which would enhance the area are effectively blocked by the servitude which should be extinguished. We can readily accept that the area is ripe for redevelopment with definite proposals being approved for planning purposes and that redevelopment is part and parcel of the applicants’ right to enjoyment of their property. The burden appears to be a fatal impediment to the plans as approved which require that the vehicular access be moved to the east and we can well understand that while alternative layouts might be designed leaving the burdened area untouched they would reduce the use of the site in the applicants’ ownership and might not be favoured by the planning authority.

Conclusion

[39] As a matter of overall impression we are of the clear view that the burden outweighs the benefit and that the balance of reasonableness favours the applicants.

[40] The question then arises as to whether the title condition should be varied in a way that preserves the rear access in some form or be discharged and whether compensation is appropriate, and in what form.

[41] As we have indicated, we are of the view that the character of the additional fire escape is less than perfect and we have been provided with no evidence suggesting that there would be any prejudice to the use of the first floor from the perspective of fire and health and safety regulations were it to be terminated. There must be many shops of this general character that have only one fire escape route from the first floor.

[42] We have therefore reached the conclusion that the title condition should be discharged or varied on the basis that the applicants are directed to compensate the respondents in terms of sections 90(6) and 90(7) for any substantial loss or disadvantage suffered. We would envisage that this would include any substantial loss in value to the benefited property, if this can be established, due to the lack of a second fire exit from the upper floor and the loss of the loading/unloading facility, together with any cost of making good for the long term the rear doorway, plinth and steps. It is not our normal practice to allow claims for legal or conveyancing costs of dealing with the mechanics of a discharge or variation following our opinion, since such costs can usually be seen as inherent in land management.

[43] It will still be necessary to establish a permanent arrangement for the respondents to gain access for the purpose of carrying out inspection, maintenance, repair and renewal to their gable. This may be accomplished either by retaining such a right in the course of varying the existing title condition or by discharging it and creating a new title condition with the consent of the applicants under section 90(5) of the Act. It is anticipated that prospective occupiers of the applicants’ development will wish a secure access of their own. It is therefore likely that a preserved access for the respondents for the limited purposes discussed above shall require to be exercised upon the giving of reasonable notice.

[44] Accordingly we shall afford the parties time to reach agreement as to the amount of any compensation and the terms of any new or varied access. In the event of no agreement being reached the Tribunal will require to rule on these matters after further procedure. In that event it would be for the respondents to establish and quantify a claim for an amount of compensation for any substantial loss or disadvantage suffered as owner of the benefited property in terms of section 90(7) and for the applicants to agree to pay whatever sum was decided by the Tribunal after considering both parties’ submissions, all before the discharge or variation is finally approved.

[45] For the avoidance of doubt this Opinion is not an order under section 90 of the Act. We shall make an appropriate order once agreement has been reached on the above matters or once those matters have been determined.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 14 December 2015

Neil M Tainsh – Clerk to the Tribunal