OPINION

Gilfin Property Holdings Limited & Others v Patricia Beech

Introduction and Summary

[1] In this application under Section 91 of the Title Conditions (Scotland) Act 2003 (“the Act”), three commercial ground floor proprietors at a town centre tenement seek variation of the maintenance burdens involving them and the 6 upper floor properties (two of which are occupied together as a dental practice). The apportionment of maintenance liability under the existing title conditions to the applicants totals around 83%. They propose a new scheme reducing that to around 49% (which would incidentally also remove their majority control under voting provisions in the title conditions). At the hearing, only one top flat proprietor remained opposed to the application. During the hearing, however, the Tribunal expressed a degree of concern at the situation in which substantial repairs had been outstanding for a number of years and the main reason why repairs had not been carried out was the applicants’ refusal to agree unless their shares of the liability were reduced. The applicants were given an opportunity, should they wish, of addressing that concern in a further submission. They took the opportunity to offer to undertake to instruct and fund most of the outstanding repairs, on the basis that they would seek reimbursement on the basis of the existing and not the proposed new apportionment. The Tribunal has decided that the application, on the basis of that proposed undertaking (made slightly more specific), is reasonable.

[2] In Patterson & Ors v Drouet, the Tribunal allowed a similar type of application, where the apportionment of liability for common repairs had become frozen as a result of the operation of Section 111 of the Local Government Finance Act 1992, to the disadvantage of ground floor commercial proprietors. The present case, however, while broadly similar, involved the additional circumstance that the application was aimed at securing alteration of the liabilities for repairs which had been outstanding for some years. That seems to the Tribunal to raise an additional consideration. As this case has unfolded, the applicants have offered to meet the point, so we do not require to decide on the reasonableness of the application on the basis originally presented. Nor did we hear full submissions on that, as the one respondent who maintained opposition was not represented and, although obviously concerned by the applicants’ stance, was not really able to present argument on the law. Although each case in any event has ultimately to be decided on its own particular facts and circumstances, there appears to us be a point of principle which may require further consideration in other such cases.

Procedure

[3] The applicants are companies who own respectively the southmost, centre and northmost ground floor shops at 6 St Mirren Street, Paisley. The application was intimated to the proprietors of the 6 flats on three upper floors at 6 St Mirren Street, including AK Watson Dental Practice, proprietors of Flats 1 and 2/southmost and Ms Patricia Beech, proprietor of Flat3/northmost (top floor). Those proprietors made representations opposing the application, but very shortly before the oral hearing, Messrs Watson withdrew their opposition. At the hearing, the applicants were represented by Mr Campbell, Solicitor, of Messrs DWF Biggart Baillie, Edinburgh. Ms Beech (“the respondent”) was unrepresented. At the conclusion of evidence and submissions, the applicants were allowed, if so advised, to lodge further written submissions. The application has been determined following receipt of the applicants’ further submissions and the respondent’s response thereto.

Authority referred to:-

Patterson & Ors v Drouet & Ors, LTS/TC91/2012/1

The Facts

[4] The facts are summarised briefly as follows. 6 St Mirren Street is a town centre tenement property. Common repairs described as requiring urgent attention were identified in 2008. These have been largely unattended to. Over the years, correspondence and meetings have failed to secure agreement among the proprietors to instruct the repairs. This has caused particular difficulty to the respondent Ms Beech, whose top floor flat has become uninhabitable as a result of the extent of leaks. As at November 2012, a very approximate costing of the required common repairs, exclusive of professional fees and VAT, was £88,000.

[5] The title provision, in relation to repairs liabilities, in the form of community burdens, is contained in a Deed of Declaration of Conditions by Whytehouse Estate Company Limited recorded GRS Renfrew 10 September 1986 and a Deed of Variation by the same company registered 22 March 1991, both narrated in, for example, the burdens Section of the first applicants’ registered title REN68336. These provisions specified apportioned liabilities for common repairs, and also votes at proprietors’ meetings, in proportion to a total of 2609, as follows (percentage also shown):-

Shop, GFS84732.46%
Shop, GF Centre60523.19%
Shop, GFN72227.67%
Surgery, 1/R2559.77%
Surgery, 2/R421.61%
Flat, 1/L351.34%
Flat, 2/L351.34%
Flat, 3/L291.11%
Flat, 3/R391.49%

These apportionments reflected rateable values of the properties at the time. There was no express linkage of apportionments to rateable values, but references in the Deed of Conditions to rateable values implies such linkage (the second floor dental surgery premises having presumably been converted from residential occupation since the ‘freezing’ of values following the abolition of domestic rates in 1992). Provisions regarding proprietors’ meetings include provision for a majority vote to vary the apportionments. The applicants have not thought it fit to utilise that mechanism against the wishes of the upper floor proprietors.

Submissions

[6] The applicants seek variation of the apportionments as follows:-

Shop, GFS16.34%
Shop, GF Centre16.33%
Shop, GFN16.33%
Surgery, 1/R9.50%
Surgery, 2/R9.50%
Flat, 1/L8.00%
Flat, 2/L8.00%
Flat, 3/L8.00%
Flat, 3/R8.00%

[7] The applicants submit that it cannot have been envisaged when the Deed of Conditions was entered into that domestic rates would disappear and, as a result, the apportionments become ‘frozen’ so that the weighting against the commercial proprietors looked with time to be increasingly unfair. The purpose of the title condition was to effect and maintain a fair division of maintenance and upkeep costs, but that fair division was no longer achievable under the current title regime. The 3 ground floor proprietors bore 83.32%, the dental surgery (2 flats) 11.38% and the 4 remaining flats just 5.29%. The applicants wished the current outstanding repairs carried out. Their initial position was that they were not, however, instructing repairs on the basis of the existing unfair apportionment. While they could under the title conditions force through the amendment they had concerns as to whether such an arrangement would be binding on successors and there was a potential lack of certainty.

[8] In their further submission, however, the applicants proposed to carry out the works they said were necessary to restore the structural integrity of the tenement, under reference to a specific list of repairs. They would instruct the works immediately and would recover costs from the remaining proprietors by reference to the scheme in the existing Deed of Conditions. The proposed alteration which would then take place to the apportionment would provide the upper floor proprietors with more control and help to avoid difficulty in commissioning repairs in the future.

[9] The respondent said that she would accept some increase in her share of repairs but did not advance any alternative apportionment proposal. She submitted that the proposed apportionment of 8% to her and the other properties, an extra approximately 7%, was unfair, especially as, she said, her flat was uninhabitable. She referred to the history of obstruction by the ground floor proprietors. In her submission in response to the applicants’ proposed undertaking, she appreciated their willingness to proceed with essential repairs on the basis of the specification submitted under the existing apportionment. She submitted, however, that there had been no allowance for work to be carried out in her flat, which was uninhabitable and unsaleable: the applicants should bear those costs as per existing conditions as their constant refusal had led to this damage.

Tribunal’s Consideration

[10] We have set out the facts and submissions in this case briefly because it is clear to us that with 3 of the 4 residential flat owners not objecting, the dental surgery proprietor of 2 flats having withdrawn opposition and the respondent herself agreeing that some alteration was appropriate, there appears to us to be no real dispute about the appropriateness in general of the applicants’ proposal (subject to the issue about outstanding repairs).

[11] We have considered the respondent’s unspecific suggestion that the proposed new apportionment is unfair to the upper flat proprietors. In our view, however, the scheme of apportionment, involving a total of 49% liability to ground floor proprietors and 51% to proprietors of the 3 upper floors, is fair and reasonable. It may be contrasted, for example, with the basic scheme in Rule 4.2 of the Tenement Management Scheme applied under the Tenements (Scotland) Act 2004 in the absence of full title deed provision (equal shares, or according to floor area, without regard for character of occupancy). Particular points might be taken about particular properties but that of course would require upward variation of others’ proportions. Ms Beech did not advance any specific proportion for her own, or any, property, and with the otherwise general agreement we do not think it would be appropriate for us to start adjusting the figures, a course which would, in any event, in this type of application which can involve increases in others’ liabilities, probably require re-intimation of the application to other proprietors.

[12] As regards the issue of outstanding repairs, we now have the applicants’ proposal for themselves immediately to instruct and fund essential repairs. Apart from raising the question of repairs to her own (as opposed to common) property, the respondent did not raise any specific issue about this proposal with which she was, in general, happy.

[13] In relation to repairs to the respondent’s own property, we do not regard the respondent’s submission on this as relevant to our disposal of this application. Appreciating (if her account of past events is accepted, as to which we have made no specific finding) that the respondent has suffered considerably from the delay in carrying out common repairs, we do not regard it as within our competency to require the kind of undertaking which the respondent seeks, which is quite different from deciding on the application on the basis of an undertaking proffered by the applicants). Even if it were competent, we would not regard it as appropriate: the issue of liability for past loss and damage to the respondent’s own property is quite different from the issue of apportionment of liability for common repairs. This is essentially a claim which the respondent would require to pursue in other ways. Indeed, it appears possible that the respondent’s predicament in relation to her own property might have been avoided if she had taken appropriate action to enforce her rights under the title conditions at an earlier stage. Another reason for not entertaining this submission is that it must inevitably cause further delay which is not in the interest of any of the proprietors, including of course the respondent.

[14] Although the respondent made no specific comment on this, we have looked at the specifics of this proposal in relation to common repairs. We do note that it is not an undertaking to carry out all the works listed in the assessment dated November 2012. A few items on that list have been omitted. In particular, the applicants are not offering as part of this process to cut back and renew stone surfaces on the front and rear elevations, or to re-decorate, and there are one or two other minor omissions. In other words, the undertaking is restricted to items considered immediately necessary, so that if the proprietors consider further works appropriate, these will require to be instructed under the revised apportionment of liability. We are in no position to, and nor should we, enter into detailed appraisal of either the condition of the building or the specific proposals, and we also note the advantage in this proposal in that it secures immediate urgent repairs. In our opinion, this proposal is, in the context of the issue under our jurisdiction, sufficient to enable us to be satisfied that it is reasonable to grant the application. This proposal in effect addresses, albeit indirectly, factor (h) in Section 100 of the Act. In a case where there is an outstanding substantial repair obligation, increases in any owners’ apportionment of liability (assuming the liability had not actually been crystallised) produce actual increased cost, whether or not there is any adverse effect on the value of the property. Offering to carry out the work on the existing apportionment is therefore in effect equivalent to offering a form of compensation for the alteration of the apportionment. With that additional factor, we consider that the application overall is reasonable: it takes account of changes in circumstance since the title conditions were created, it is in line with the purpose of the conditions and, in the light of the proposed undertaking, it secures benefits to all the proprietors of immediate works together with alteration to a fairer apportionment.

[15] However, as mentioned, the proposed undertaking should be made slightly more specific, in line with its clear implication, in order to ensure its enforceability if necessary and to remove any room for argument. Accordingly, the applicants will require to confirm in writing the undertaking proposed at (a) and (b) of Messrs Eddison’s letter of 29 January 2013 on a joint and several basis, under reference to the list of works specified on the list appended to that letter, with the cost of scaffolding where required, professional fees and VAT to be included, the work to be instructed not later than 5 April 2013 and carried out to a reasonable standard by experienced and competent tradesmen. The Tribunal will issue its Order varying the title conditions, as sought, as soon as written confirmation on behalf of the applicants of this undertaking in favour of the respondent and the other proprietors is received.

[16] For the avoidance of doubt, we confirm that we have not made any decision, one way or the other, on the application as it stood without the applicants’ proposed undertaking.

Final Observation

[17] We have, as we have said, not had to decide this application on the basis that the applicants wish to avoid their liability for outstanding repairs. It seems to us that one factor which might require to be considered in such an issue is the extent to which any proprietors (whether applicants or respondents) have sought to enforce liabilities under the existing conditions. In this connection, our understanding is that the provisions of the Tenements (Scotland) Act 2004 include provisions to facilitate enforcement of liabilities not only under the statutory duties introduced by the Act and the Tenement Management Scheme where these apply, but also under existing title conditions. We have the impression that this aspect of the legislation may not be widely appreciated. The relevance of this to our jurisdiction might be that where an issue as to outstanding repairs arises, it might be necessary to consider, along with all the other circumstances, what action has been taken, by whom, in an effort to enforce the existing title conditions, including by reference to the provisions of that Act.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 25 March 2013

Neil M Tainsh – Clerk to the Tribunal