1. This is an application under Section 91 of the Title Conditions (Scotland) Act 2003 (“the Act”) by three out of eight proprietors in a property community in a restored historic building. The proprietors of 7 flats and a ground floor office (together, “the subjects”) are each subject to the provisions of a deed of conditions. This was executed in 1989 when the development involving refurbishment of the building and creation of what were described as sheltered flats took place. The applicants, three of the flat proprietors, seek complete discharge of all the title conditions set out in the deed. This is opposed by the ground floor office proprietor and two other flat proprietors. The respondents have made submissions about the competency, relevancy and specification of the application, as well as on its merits.
2. Having considered parties’ written submissions and also heard views at an informal meeting at the property at the time of the site inspection, the Tribunal does not uphold the respondents’ preliminary legal arguments but has decided that it is not reasonable to grant this application and has refused it. Although there have clearly been some uncertainties around the management of the properties, the Tribunal could not accept that it was reasonable simply to discharge all the title conditions in anticipation of preparing new provisions. We also did not consider that a suggestion by the applicants to continue the application to enable such provisions to be prepared was in the circumstances appropriate.
3. The Deed of Conditions (“the Deed”) by The National Trust for Scotland for Places of Historic Interest or Natural Beauty (“the Trust”), recorded in the General Register of Sasines for the County of Perth on 8 February 1989 (and narrated to in the Burdens Section of individual Land Registration certificates), contains provisions (Primo) in relation to ownership of common parts, and (Secundo) in relation to title conditions, 22 in number, and also a Declaration reserving the right of the Trust, with the consent of a majority of the proprietors, “to amend the foregoing burdens and others and to add new burdens and others by Supplementary Deed.”
4. It was not in dispute that the title conditions set out in the Deed are “community burdens” within the meaning of the Act. Section 98(a) of the Act provides that an application for the discharge of a title condition shall only be granted if the Tribunal are satisfied, having regard to the factors set out in section 100, that it is reasonable to grant the application. Section 100 lists factors (a) to (j) to which the Tribunal are to have regard.
5. The respondents submitted that the application was incompetent, and also lacking in relevancy and specification.
6. David Fenwick, Flat 4, Eric Scott Petrie, Flat 3/2, and Mrs Margaret Lye, Flat 3/1, all at The Old Granary, West Mill Street, Perth, applied under Section 91 of the Act, “to discharge the Deed of Conditions”. The application was opposed by the Trust, which owns the office, by Margaret Stefani, Flat 1/1, and by Janet Elizabeth Blackie, Flat 2/2. A process of adjustment of the application and answers took place. As there was uncertainty about the extent of the application, the Tribunal made an order requiring the applicants to give further particulars. The applicants made clear that although they had referred to various particular issues, their application was for discharge of the Deed as a whole. The Tribunal took this to refer to all the title conditions set out in the Deed. Parties all consented to the application being disposed of without a formal oral hearing. A site inspection, along with an informal meeting to give the parties (several of whom were very elderly) an opportunity to explain their views further, took place. This was attended by the three applicants, two representatives of the Trust (although not their solicitors acting on their behalf in the application), by Miss Stefani, two representatives of Mrs Blackie, and also (with the Tribunal’s permission and the agreement of those present) an attorney for one other proprietor who had not formally made representations. The Tribunal is grateful to those who attended this meeting which, while it was not a way of establishing disputed facts, the Tribunal found helpful.
Ord v Mashford 2006 SLT (Lands Tr) 15
Daly v Bryce LTS/TC/2005/15, 28.4.2006
Smith v Prior LTS/TC/2006/06, 17.12.2006
7. As indicated, the Tribunal have not attempted to resolve disputed issues of fact, particularly in relation to the history of disagreements about the quality of management at the subjects. The material circumstances are as follows.
8. The subjects form part of historic mill buildings in the centre of Perth, the larger part having been developed as a hotel. The subjects were refurbished and developed as a separate building, with an office, including a meeting room, on the ground floor, two flats on each of the first, second and third floors and one larger top floor or attic flat, in around 1989, by the Trust, apparently with financial assistance from various sources. The office was to be occupied by the Trust, although it is now in fact let out. The flats were described as sheltered flats. As well as the Deed, there were individual conservation agreements between each flat proprietor and the Trust. These were not the subject of this application, although there might be some overlapping provisions, and were not produced.
9. As well as provisions in relation to common ownership, the Deed set out, in the form of 22 title conditions, a scheme of management of the subjects. The conditions in the Deed may be summarized as standard allocations of liabilities and repair, insurance and use obligations, etc., for a flatted development, with liabilities in relation to the building and ground floor being allocated in 8 equal shares and in relation to the staircases and lifts, etc. and upper floors in 7 equal shares; together with conditions arising out of the character of the flats as “sheltered dwellinghouses”, including a stated requirement for a community alarm system and “other ancillary services”. Clause 2.9 provides:-
“NINTH The said dwellinghouses shall each be used solely as specialist housing for persons of advanced ages who because of age or infirmity have need of specialist housing in a sheltered environment, and all other uses are expressly prohibited.”
The clause goes on to specify age restrictions: in the case of a one person household – 60 or over; two person household – at least one 60 or over; three or more persons – at least two 60 or over.
10. Clause 2.2 provides:-
“SECOND Insofar as the dwellinghouses comprised in the scheme are sheltered dwellinghouses which therefore require the provision of community alarm call system and other ancillary services, THEREFORE the Trust shall be responsible for the administration of and provision of management services to the Scheme as a housing scheme providing specialist housing for persons of advanced age who because of age or infirmity have need of specialist housing in a sheltered environment. The Trust shall have power at their sole discretion either:- (i) to undertake the management of the Scheme; or (ii) to appoint a Housing Association or other suitable body to undertake the management of the Scheme on their behalf.”
11. Separately from the management role, the Trust retained, in the Deed, a number of functions. These included: determination of the services to be provided by the manager (2.3); maintenance of a Capital Repairs Fund (2.6); oversight of internal maintenance of the properties, and of insurance, including determining the level of indemnity (2.13,14,15); a casting vote on issues for decision by a majority of proprietors (2.16); deciding, in the event of failures to agree, in relation to necessary repairs (2.17); approval of sales or other disposals subject to being satisfied that flats would be used and occupied in accordance with the conditions (particularly, the age restrictions) (2.19); and, with the consent of a majority of the proprietors, amending and adding to the burdens and other provisions in the Deed.
12. The Trust themselves acted as managers until around 2000, when they indicated that they would give up that role after questions had been raised about the quality of their accounting procedures. The flat proprietors appear at that time to have taken the lead in the appointment, apparently with general agreement, of a firm of solicitors in Perth, as managers. The Trust then handed over to that firm the sum at credit of the Capital Repairs Fund. That firm acted as managers until around 2004, when it intimated its resignation, following the death of one of its partners. Since then, management of the subjects has, again apparently without any objection, been in the hands of two flat proprietors, initially Mrs Lye and more recently, and currently, Mr Fenwick. The Capital Repairs Fund is held in a separate account with three flat proprietors as signatories. Annual meetings of the proprietors, sometimes but not always attended by a Trust representative, have taken place. Insurance was initially arranged by the Trust but is currently arranged on a basis agreed among the flat proprietors or a majority of them. The Trust maintains property insurance cover in relation to all its properties but was unable to indicate whether this, as well as the insurance arranged by the proprietors, covered the flats as well as the Trust’s ground floor property. The proprietors, or a majority of them, have decided no longer to maintain public liability insurance.
13. The subjects presently appear well maintained. The flats show few if any obvious features of “sheltered” housing in the sense defined in the Deed. The community alarm system, which has become an outdated form of personal alarm for the very elderly, has been discontinued. Fire alarms are communally maintained. The flats on the first, second and third floors are attractive, if compact, two bedroom properties. In the three flats which we viewed internally, there was one obvious extra bathroom handrail but little or no other indication of special design or adaptation for the elderly infirm. The lift serves only the first, second and third floors. The top floor flat extends across the roof space and accordingly has a bigger floor area and more rooms, but also has coombed ceilings.
14. From their written submissions and Mrs Lye’s presentation on their behalf at the meeting, the Tribunal understood the applicants’ position to be as follows. Although they made clear that they did not wish in this application to get involved in complicated variation of the Deed, they sought its discharge in anticipation of an alternative set of conditions being prepared and agreed. They argued that the existing document was so unrepresentative of the actual situation, in particular in relation to appointment of managers, description of the flats as ‘sheltered housing’, the community alarm system, the Common repairs Fund, insurance and the age restriction, as to be of no effect and unenforceable. Its provisions had prescribed under Section 18 of the Act. Sales of flats were seriously compromised. They were not trying to change anything, except the age restriction, which they did not wish to remove but to vary to age 55. They did wish to exclude the Trust from any involvement in the operation of the flats, leaving them simply as ground floor proprietors bearing their one-eighth share of liabilities in respect of the building. The Trust’s right to involvement had prescribed. In relation to the Section 100 factors which had any application, the purpose of the title conditions was residential occupation by the over-60s (factor (f)); the Trust had failed to offer management (factor (a)); the conditions were not bringing any benefit (factor (b)); it was unsettling to live in such a state of non-compliance with the conditions (factor (c)); the applicants wished to maintain proper management, and the subjects were not ‘sheltered housing’ (factor (j)). The effect of discharging the conditions would be to leave matters governed by the Tenement Management Scheme under the Tenements (Scotland) Act 2004 and “people’s good sense”.
15. Generally, the other respondents adopted the written submissions on behalf of the Trust, supplemented by their own relatively brief written submissions and some observations at the meeting.
16. Competency. It was submitted that the applicants, having at different times asked for different things, and not having proposed any alternative deed, it was not clear that their application was for variation, discharge, renewal or preservation of a title condition. If they wished to vary or discharge the Deed, they should have done so in terms of Section 33 of the Act (subject, in relation to sheltered housing, to Section 54). Further, it would not be competent to allow discharge of the Deed, as applied for, because it continued provisions as to common property, i.e. property rights which it was not competent for the Tribunal to remove.
17. Relevancy. Further, the applicants did not specify the title conditions which it was sought to vary, discharge, renew or preserve with sufficient precision. In addition, the applicants had averred historical complaints against the respondents which had no relevance.
18. Merits. The Trust’s written submission also made detailed arguments, under reference to the Section 100 factors, on each of the matters referred to by the applicants, under reference to Ord v Mashford, Smith v Prior and Daly v Bryce. We have taken account of these submissions but in the interests of brevity do not reproduce them here. Summarising, it was submitted that each condition referred to by the applicants had a continuing purpose; there had been no material change of circumstances; the conditions conferred considerable benefit on the proprietors, and also public benefit through provision of housing particularly suitable for elderly or vulnerable persons, and did not impede enjoyment of the Old Granary; the Deed was relatively modern; and there were no other material factors.
19. At the meeting, only Mrs Blackie’s representatives, in particular her son, Mr Blackie, himself an experienced solicitor, supplemented the written submissions to any substantial extent. Mr Blackie suggested that the application for complete discharge was “a remedy too far”. The residents had taken back the management of the subjects with the tacit consent of the Trust. Mr Fenwick was certainly the current manager, effectively under the Trust’s authority, although the Trust could remove that authority and appoint a factor: it was a fiction to argue that the subjects were not being managed legally. Mrs Blackie had purchased because her flat was in a sheltered environment in a purpose-built renovation, with the benefit of the conditions, albeit that there had been some changes. The Deed might not be perfect but it was workable. Experience suggested that any attempt to make changes in such deeds, even minor changes, could be protracted and difficult. Mrs Blackie did not wish to see the age restriction changed. Mrs Blackie’s son-in-law, Mr Mowatt, added some more personal feelings on Mrs Blackie’s behalf: she was not as critical of the Trust’s management as the applicants, who had failed to involve her in their proposals to the extent of not even intimating any proposal before submitting the present application (a fact which Mrs Lye admitted).
20. We reject the respondents’ preliminary legal objections to this application.
21. It is certainly the case that during the course of the procedure the applicants have appeared to say different things and their ‘pleadings’ are not a model of clarity. They are, however, unrepresented and some latitude is appropriate in this Tribunal provided that fair notice is given. The Tribunal made an Order under our rules, to try and fix the applicants’ position, and in our view they ultimately made their position clear, to the effect that, while they had in mind that fresh conditions should be drafted, they sought complete discharge, rather than partial discharge or variation, of the conditions in the Deed.
22. Because it would leave a void (although subject to the application of default rules of law, in particular the Tenement Management Scheme in the 2004 Act), this was a difficult position for the applicants to take. However, it was not in our view an incompetent one and, further, having advanced a number of particular considerations in support of it, it was also in our view not irrelevant for lack of specification. It is not impossible that a deed of conditions may be so completely ineffective or perhaps outdated as to make it reasonable to discharge it.
23. There is no requirement for proprietors seeking a discharge or variation of community burdens applicable to more than just their own property to proceed under Section 33 of the Act. The scheme is that Section 33 (and also Section 35) provides mechanisms for variation or discharge of community burdens by executing agreements, with no requirement to come to the Tribunal unless there is opposition. Section 91 is the mechanism provided by the Act for seeking such variation, to affect more than one unit in the community, not by agreement but by application (by at least one quarter of the owners) to the Tribunal. There is a choice which route to use, although if those seeking change are in the minority and section 35 does not apply, only Section 91 may be available. It is a matter for legitimate comment that Section 33 could not be used to achieve discharge, or even variation, of the age restriction, in the case of ‘sheltered housing’ as defined by Section 54(3), but that begs the question as to whether the subjects meet that definition. It may well be that the subjects – currently at least – would not fall within the definition of a ‘sheltered or retirement housing development’ for the purpose of applying Section 54 if that section were in issue.
24. Further, while we certainly agree that we do not have any power to remove or alter provisions which relate to ownership rather than title conditions, and accordingly could not pronounce an order affecting the first main clause (Primo) of the Deed, we see no difficulty in treating this application as an application for discharge of all the community burdens in the Deed. There might possibly be an issue as to whether all of the other provisions of the Deed fall within the definition of ‘community burdens’, but we do not find it necessary in the circumstances to explore that.
25. An overriding feature of this application is that, while the applicants have highlighted some matters and indeed at one stage (their letter of 25 May 2009) indicated the sort of changes which they have in mind, they have not proposed any specific variations, or indeed new provisions, and they have not limited the extent of the discharge which they seek. They seek complete discharge, applicable to all eight properties, of all the community burdens in the Deed. We have accepted that this is competent, but it is a difficult idea because it would leave this development without agreed title conditions. (Mr Blackie helpfully pointed out that there are individual conservation agreements which would not be affected by any discharge order which we could make in this application, but we have not been provided with any detail as to their contents.)
26. The applicants’ reasons for proceeding this way appear to be that variation of the Deed would be too complicated and it could reasonably be contemplated that a new agreement could be drafted. We see serious difficulties in that. Firstly, even with a basis of agreement among the owners, agreement on the detail of such new provisions could be expected to take some considerable time, effort and expense. Leaving matters under the default scheme provided by the Tenements Act does not seem at all satisfactory. To require the other owners to go through that, when the applicants could have proposed specific new provisions with a view to reaching agreement before doing away with the existing provisions, is not in our view reasonable. Secondly, and even more seriously, as it seems to us, we have a very clear picture that there is not such a basis of agreement. Reduction of the age restriction might not seem too difficult a step, but not all the flat owners agree about it. Exclusion of the Trust from legal involvement in relation to the flats is opposed by at least two of the flat owners, as well as by the Trust itself. The order which the applicants seek would in our clear view simply lead to protracted further dispute and unhappiness.
27. Having inspected some of the flats, we might agree with the applicants that the flats do not at present match up to the definition of “sheltered or retirement housing development” in section 54(3) of the Act, notwithstanding their description in the Deed as sheltered housing. That, however, is not actually in issue in this application, because neither Section 28 nor Section 33 is relied on. The provisions in the Deed in relation to, specifically, a community alarm call system, and, more generally, “other ancillary services”, may not be, or may no longer be, particularly relevant, but the age restriction provision is a central feature of the subjects. All the owners have signed up to it. Some wish the age reduced, but no-one wishes to remove it altogether. The effect of granting the application would be to remove it altogether, with uncertainty as to when it might reappear in some new provisions. It would not be preserved under the Tenements Act provisions. We have no doubt at all that the applicants are genuine in their intentions and are not seeking to take advantage of the (possible) wider market for property without such restriction, but the respondents’ apprehension as to what might happen appears entirely reasonable.
26. As regards the position of the Trust, without resolving disputes about the past, it seems possible to say, and we do not think the Trust would on reflection disagree, that there have been some shortcomings in their involvement. For what it is worth, we have the impression that the Trust, with its understandable focus on the fabric and state of this conservation building, may not have kept their eye particularly on the slightly wider issues which arise in dealing with owners and residents in a community of this kind. They may well have fallen down on the provision of information. Such considerations, however, do not in our view make it reasonable to remove the entire legal structure established, particularly where only a minority of the proprietors, indeed only a minority of the flat owners, propose such radical change.
27. We are not persuaded that the provisions in the Deed are “completely ineffective”. Even as regards the present position about management, and accepting that the more recent managers may not have been appointed precisely as stipulated in the Deed, it appears to us difficult to suggest that their authority does not come from the Deed. There may have been imperfections in the past. There may be difficulties about the present arrangements. The Deed’s provisions, however, enable the appointment of appropriate managers who, along with the Trust and also taking account of the views of either all or the majority of the flat owners, as set out in the Deed, should be able to attend to the interests of all the proprietors.
28. Nor are we persuaded that the provisions in the Deed have become legally unenforceable. Mrs Lye referred at the meeting to Section 18 of the Act, which provides, to a limited extent, for negative prescription. The applicants’ previous submissions had made no specific reference to this provision, so that the Trust, in particular, have not had the opportunity of answering the submission. Exactly how it assisted the applicants’ position was not spelt out. In these circumstances, we do not feel able to give any considered opinion on this submission. However, we fail to see how it supports the argument that provisions in the Deed have become unenforceable. Section 18(1) applies to breaches of real burdens and, importantly, provides for extinction of burdens only to the extent of the breach. Section 18(7) would appear to add another problem in the way of this argument: unless the breach occurred more than 20 years ago, five years commencing on the commencement date of the Act, 28 November 2004, require to have elapsed.
29. Our assessment of the factors listed in Section 100 of the Act is as follows. Firstly, factors (b)(ii), (d), (e), (g), (h) and (i) do not appear to have any, or any significant, bearing on the issues in this case.
30. Secondly, the purpose of the title conditions (factor (f)) is clearly to regulate the management of a property community which, to use a neutral expression, includes housing for elderly persons, although it should not be forgotten that it also includes a substantial office which, while it includes a meeting room which can apparently be made available to the flat residents, is not simply ancillary accommodation such as a warden’s office or flat.
31. Thirdly, there has been some change of circumstances (factor (a)), insofar as there is no longer a need for a community alarm call system because individual elderly or infirm persons can these days obtain appropriate individual systems; and also, as it seems to us, because there has been a degree of change in the actual management arrangements. Neither of these, however, appears to us to provide any significant support for the reasonableness of the application to discharge all the burdens.
32. Fourthly, as it seems to us, the burdens in the Deed provide very significant benefit to the benefited properties, including the respondents’ properties. Compared with an absence of agreed title provisions, they provide an appropriate framework for management of the building including these properties. We can appreciate that the difficulties encountered, as the respondents see them, could possibly have an effect on saleability, but in our view an absence of agreed provisions would have an effect many times more serious.
33. Fifthly, again recognising that the applicants may have experienced some difficulty in their relationship with the Trust, in our view the Deed’s provisions, including not only the allocation of liabilities for repair and maintenance, etc., and regulation of occupation, but also the overseeing role conferred on the Trust, do not to a serious degree impede enjoyment of the burdened properties including the applicants’ properties.
34. Sixthly, we consider it to be another material and significant factor (factor (j)) that the applicants are only a minority, even among the flat owners, and that there is active opposition from other flat owners. The Trust of course has a legitimate interest to oppose, but considering the predominant use of the subjects as housing for the elderly we would have thought it significant if there had been unanimity, or at least no substantial opposition, amongst the flat owners. Two of the seven, however, opposed the application. (Another, Mr Emslie, had written to the Tribunal indicating that although he was opposed, he would not take any formal part in the proceedings.)
35. Drawing these considerations together, we cannot be satisfied that it is reasonable to discharge these title conditions. The benefit to the respondents of having this Deed in place, in accordance with a purpose which seems still substantially appropriate, seems to us to outweigh the considerations pointed to by the applicants. Nor do we see any scope, on the application as presented, for allowing the application in part. Theoretically, no doubt, we could discharge, or partially discharge, individual burdens, but we have not been provided with any specific variations or alternative provisions and it would not be appropriate for us to consider that without the respondents having had notice. In the absence of such proposals, we cannot identify any part of the Deed which could reasonably, in the circumstances which we have considered, be deleted.
36. We were asked by the applicants to consider deferring consideration of the application in order to give parties an opportunity of preparing an alternative deed. One of the respondents had in fact made a similar suggestion earlier in the procedure. At the meeting, however, each of the respondents was opposed to this course. Having had the clear impression at the meeting that agreement among all the proprietors on some, at least, of the issues was unlikely, we see no basis for such deferment, which would only serve to increase uncertainty and, for some parties, expense.
37. We wish to add some brief final comments. It is unfortunate that the applicants apparently failed to understand that there was a real problem about discharging the provisions in the Deed without proposing anything in its place. They certainly could have applied on the basis of deleting the existing provisions and proposing effectively a new deed. Section 91 of the Act, unlike ‘ordinary’ applications for discharge or variation, allows for the imposition of new burdens even if this is not agreed. However, the problems in the way of the applicants’ attempt to change the management regime at the subjects, to the exclusion of the Trust, appear to us to be more than merely formal. The level of opposition to an application under Section 91, which requires only a quarter of the owners to have joined in making the application, is significant but not necessarily fatal. What is clear is that there is a body of proprietors who do not share the view that the titles should leave management and oversight of the subjects in the hands of only a majority of the flat owners. At least in the case of housing for the elderly, it is not necessarily a good idea to leave matters entirely to such majority rule.
38. The Trust, however, may also wish to reflect on the best way forward in relation to the subjects. There was a suggestion that they might wish to take management of the subjects back, but there might be a question as to whether they have the appropriate resources to take this step in the case of accommodation for the elderly. They might also wish to consider, in consultation with the owners, the possibility of appointing experienced managers who could remove much of the responsibility from both the Trust and the other owners. That would leave the Trust’s other, overseeing, role which gives them power to make certain decisions, for example in relation to insurance, in addition to the power of appointing a manager. From all that we heard, it does not appear to us that that should cause any significant problems, provided that the flat owners are kept appropriately informed and consulted on important questions.
39. For all these reasons, we have decided to refuse this application.
40. The Trust’s written submission included an application for an award of expenses. We shall reserve this question meantime, in order to allow the applicants an opportunity to make a written submission in response. Reference should be made to Section 103(1) of the Act. The overriding principle is that ‘expenses follow success’, subject to our discretion in the circumstances of the particular case.
Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 19 August 2009
Neil M Tainsh – Clerk to the Tribunal