Lands Tribunal for Scotland

OPINION

Alasdair MacFadyen & Another
v
Argyll & Bute Council

Summary

The first applicant (“the applicant”) is a ferry operative who is tenant of a house close to the ferry slip. Along with his wife, he claims a right to buy. His landlords, who are also his employers, refused his application and contend that he does not have a secure tenancy. They claim that his contract of employment requires the applicant to occupy the house for the better performance of his duties. The matter turns particularly on the position regarding duties connected with the provision of an out-of-hours service of the ferry in emergencies. On the evidence and submissions, the Tribunal have decided that the applicant does not have a secure tenancy and is not entitled to insist on purchasing the house. The application is therefore refused.

The Law

Tenants under Scottish secure tenancies generally have the right to purchase their homes, under the relevant provisions of the Housing (Scotland) Act 1987 as amended (“the 1987 Act”). Section 11(4) of the Housing (Scotland) Act 2001 (“the 2001 Act”) provides that a tenancy is not a Scottish secure tenancy if it is of a tenancy of a kind mentioned in Schedule 1 of that Act. Para. 1 of Schedule 1 provides as follows-

“1(1) A tenancy is not a Scottish secure tenancy if the tenant (or one of joint tenants) is an employee of the landlord or of any local authority and the contract of employment requires the tenant to occupy the house for the better performance of the tenant’s duties.

“(2) In sub-paragraph (1), ‘contract of employment’ means a contract of service or of apprenticeship, whether express or implied, and (if express) whether oral or in writing.”

Procedure

The applicant is tenant of 1 Ferryman’s House, Cuan Ferry, Isle of Seil, by Oban (“the house”). Following the refusal of an application which was made in April 2005 to the respondents to purchase the house, the applicant applied, along with his wife Mrs Audrey MacFadyen, under section 68(4) of the 1987 Act for a finding of entitlement to purchase. It is not in dispute that she would be entitled to share in the purchase. The application is opposed on the ground that Para. 1 of Schedule 1 of the 2001 Act applies. At the hearing, the respondents, on whom the onus of establishing that the statutory exclusion applied at the time of the application lay, were represented by Mr Dagleish, solicitor, of Argyll and Bute Council Legal Services. He called as witnesses Jennifer Crawford, MRICS, Estates Surveyor; Thomas Kerr, Principal Officer in the Department of Roads and Transportation; Neil Brown, Area Manager of Roads and Amenity Services; and John MacNab, a Finance Officer in the Housing Department. The applicant represented himself and gave evidence. Various productions were lodged. The Tribunal visited the location before the hearing, a visit which enabled the Tribunal to form an impression as to the likely travel time between Oban and Cuan Ferry, a matter which was of some relevance in the dispute. Parties were advised as to the Tribunal’s impression of that and thus had the opportunity to lead their own evidence on it.

Authorities referred to

Fisher v Fife Regional Council 1989 SLT (Lands Tr.) 26
De Fontenay v Strathclyde Regional Council 1990 SLT 605
Smith v Dundee City Council 2001 Hous LR 78
McAuslane v Highland Council, 23.12.2003, LTS/TR/2003/11

Facts

On the basis of the parties’ agreement, the evidence and submissions and our own observations when we viewed the location, we find the following facts material to our decision to have been established:-

1. The applicant has been in the employment of the respondents or their predecessors as an Island Ferry Operative at the Cuan Ferry, a small vehicle ferry which operates between the islands of Seil and Luing, across the Cuan Sound, since around March 1995. At the same time as being offered employment, he was advised that accommodation at No. 1 Ferryman’s House, Cuan Ferry, would be made available to him and he entered into a tenancy agreement.

2. The terms of the tenancy are contained in a missive of let constituted by an offer of lease dated 10 March 1995 and the applicant’s signed acceptance. The offer refers to the ‘service occupancy’ of the dwellinghouse and garden ground. Clause 17 provides:-

“17. You will occupy the house in consequence of and for the better performance of your duties as Island Ferry Operator and you will flit and remove together with your family and any other person remaining in the house within one month of you ceasing to be employed as Island Ferry Operator, Cuan Ferry.”

3. There are four regular ferry operatives for the Cuan Ferry. There is no material difference in their work duties, in particular in relation to stand-by duties connected with an out-of-hours emergency service operated by the respondents. One, Mr Gannon, who is the head ferryman, resides, and always has resided, in his own house on the Island of Luing, some 10 minutes away from the ferry slip. The other two operatives have service tenancies of the other two ferrymen’s houses beside the ferry slip. The respondents consider that they need to retain the houses for the ferry operation, partly because this assists recruitment and partly because they need ferrymen on the spot to deal with out of hours issues. They would be unlikely to appoint a ferryman who did not live locally and proposed not to take up the service tenancy.

4. Operation of the ferry requires two operatives, working to a shift rota pattern. It operates a normal timetable 6 days a week, with longer hours (and also a reduced Sunday service) in the summer. The ferry is moored overnight in a sheltered bay, off the Luing shore, a short distance up the Cuan Sound, southeast of the south ferry slip. A tender, which is a smaller ferry which can take passengers but not vehicles, is moored off the north ferry slip and is used to mobilise the car ferry each day. That process, involving sailing in the smaller ferry to where the main ferry is moored, starting up the ferry, checking oils and carrying out safety checks, leaving the passenger ferry moored on the ferry mooring and returning to the ferry slip ready to start the service, normally takes around 20 to 25 minutes.

5. The respondents also operate an out of hours service responding to medical, etc., emergencies on the Island of Luing, which has about 200 inhabitants. Out of normal operating hours, one of the four ferrymen is always on stand-by, for which he receives a stand-by allowance. In the event of the service being required by one of the emergency services, that person is paged. He returns the call, confirming receipt of the message, and then mobilises a second ferryman to assist. (If receipt of the call is not confirmed, the other operatives can be telephoned.) This process can be expected to take up to about five minutes. On arrival at the slip, unless the weather is too hazardous, they mobilise the tender and bring the car ferry to the slip. That process does not involve the normal checking of oils, etc. and takes around 15 minutes. Any travelling time of either operative adds to the overall time taken to mobilise. The respondents are not officially an emergency service, and do not have an obligation to maintain this service, but offer this assistance to the emergency services in the interests of the residents of Luing. The service is provided on the basis that the ferry will be ready 30 minutes after the initial paged call to transport the emergency vehicle to Luing. The service is on average called out around 4 times per year, normally requiring attendance for less than 2 hours, although one callout had lasted substantially longer. If an out of hours callout rendered an operative unfit safely to operate the ferry in the following normal operating hours, he would not be required to do so. For an actual callout, the stand-by operative and the other operative are paid for the time worked. The ferrymen prefer this system of having only one operative on stand-by although two are required for operation of the service, because it reduces the extent of stand-by duty and thus leaves them freer to leave the neighbourhood. The requirement on the applicant actually to attend an out of hours callout has in recent years averaged once per year. At the stage of recruitment, applicants are normally made aware of the requirements of this service.

6. The applicant’s contract of employment is recorded in a letter of offer of temporary appointment dated 6 March 1995, which the applicant accepted, and an offer of extension of temporary employment dated 29 June 1995, which the applicant again accepted. That extension was to last until 31 March 1996, the date on which Strathclyde Regional Council ceased to exist. The applicant’s employment has continued with the respondents since said date. The only other contract documentation was an offer of appointment and written particulars of terms of employment prepared on 7 June 2000, but there is no record of receipt or acceptance of this offer. These offers made reference to shift working patterns but not to any duties in connection with the out-of-hours service. Nor is there any reference in any employment document to an obligation to reside in the house. The applicant has always undertaken stand-by duties, although when he was initially employed the out-of-hours service involved only the passenger ferry. At least at that time, this could be operated with just one man, i.e. the man on stand-by duty simply operated the service himself with some assistance from (normally) the doctor being carried across. Later in the 1990s, at the behest of the local doctor, the arrangement was changed so that the vehicle ferry was used and two ferrymen were then required.

7. In around 1999, the applicant approached Mr Brown and requested agreement to live in Oban. The applicant was concerned that he could not afford to buy a house at Cuan. After a number of telephone discussions, Mr Brown told the applicant that if he could get to the ferry within half an hour that would be acceptable. The applicant had in fact, for some of the time, sometimes stayed overnight in Oban, although he had never attended an emergency callout from there. He did not in fact buy a house in Oban or take steps to terminate his tenancy of the house at Cuan. Mr Brown subsequently changed his view, considering that he had not given proper consideration to the time required to mobilize the ferry. Mr Brown wrote to the applicant and the other ferrymen on 26 February 2004, in clarification of the requirement. That letter indicated that stand-by ferrymen were expected to be able to mobilise the ferry, subject to weather conditions, within 30 minutes of being paged. The applicant was asked to ensure that when on stand-by he was able to meet this response time.

8. The applicant would be unlikely to purchase or rent any other accommodation on Seil or Luing.

9. In the case of the Lismore ferry, which runs from Port Appin, there is just one house, a bunkhouse, which is normally occupied by whichever ferrymen, in that case two, are on call. One ferryman asked if he could reside in Oban while on stand-by, citing difficult domestic circumstances. This was agreed. That ferry is not a car ferry and can be mobilised very much more quickly. It was thought that medical callouts would come from ‘NHS 24’, with the doctor normally coming from Oban. That permission would not necessarily be granted to any other ferryman there.

10. The Island of Seil is connected to the mainland by a bridge. The distance by road from the centre of Oban to the north ferry slip at Cuan is approximately 16.2 miles, with a reasonable journey time of 25 to 30 minutes. The distance to Port Appin is slightly further, approximately 19.9 miles, with a similar journey time on better roads.

11. The house is not within the respondents’ ordinary Housing Revenue Account and the rent has not been increased annually like that of ordinary council tenants. When the tenancy of the house was entered into in March 1995, the rent was fixed at £34.91 per week. The applicant was advised that the rents of tied houses within (then) Strathclyde Region were under review and there could be an increase in the foreseeable future. There was apparently at that time a policy that tied house rents would be 5% lower than those of ordinary council tenants. It is not clear whether the rent payable by the applicant was in fact fixed on that basis. The review apparently fell into abeyance without a decision. The rent payable by the applicant has stayed at the same figure, which is now substantially below the level of ordinary council house rents. The fixing of rents for other ferrymen’s service tenancies has not apparently followed a consistent pattern.

12. In about 1997 the applicant suffered some uninsured loss in relation to his property at the house during a storm. The insurance position in relation to tenant’s belongings is the same under the applicant’s tenancy as under ordinary Council house tenancies.

Parties’ Submissions

Parties were agreed that the principles set out at page 30 of the Tribunal’s Opinion in Smith v Dundee City Council (2001 Hous LR at page 90) were applicable.

For the respondents, Mr Dagleish accepted that the onus was on the respondents, and also that there was no written contractual term in relation to residing in the house and that he would have to establish an implied term which met the statutory test. He further accepted that this could only arise in relation to out of hours callouts. The applicant had conceded that there was an arrangement whereby he required to undertake stand-by duty, for which he received payment As far as ferrymen not on stand-by duty were concerned, it was submitted that there was a duty to arrange which one would be available and attend if called out. However, the case would still be advanced even if there was only a duty when on stand-by.

Mr Dagleish said that he was not arguing that the applicant had to live in No 1 Ferryman’s House specifically: it could be any one of the ferrymen’s houses. He did require to reside within close proximity for the ‘better performance’ of the stand-by duty. It was a matter of implication from what had been said. There had been no change in relation to this aspect of the contract. It was enough to show that although the job could be done from elsewhere it would not be done as effectively. Although there was limited evidence as to what had been said or intended, the applicant did concede that stand-by was part of his duties. If he had an alternative residence to go to, that would be considered, but he did not. The duty could not be performed without occupying the house. It was therefore basically necessary for him to reside there. Reference was made to McAuslane v Highland Council, at pages 7,8 and 10, and Smith v Dundee City Council at page 30.

In relation to the level of rent for the house, Mr Dagleish suggested that practice had moved away from ‘peppercorn’ rents. He reviewed the evidence about ferrymen’s rents. The applicant had claimed that his rent had been fixed higher than a comparable ordinary council tenancy, but that did not take account of the garage which went with his house. In relation to Mr Brown’s changing position about where the applicant could reside, this was a problem which had not really arisen before and he had made a decision without the benefit of previous experience and then reviewed it. If the applicant had actually ceased living at the house, that would have had to be considered. There was also cause to reconsider the initial decision about the Port Appin ferryman.

The applicant’s oral submissions were quite brief and included a number of comments about problems between him and the respondents in relation to his working conditions. In his application, he had claimed that he had never been issued with a contract of employment. He had also referred to the difference between his rent and that of his neighbour. He had referred to his conversations with Mr Brown on the subject of continuing his employment from Oban. He pointed out that his day-to-day work could be done from a different property. There was a problem with the Marine Coastguard Agency about attending callouts after a working day in excess of 14 hours. This case was different from McAuslane, where the applicant had a managerial role. He referred to the situations of a number of other individuals. He disagreed that the job could not be done by an operator residing elsewhere.

Tribunal’s Consideration

Questions around ‘tied housing’, including situations in which employers are opposed to the employees’ exercise of the right normally enjoyed by public authority tenants to purchase their homes, can attract strong feelings. In the present case, we can understand some of the applicant’s feelings of frustration, but we can also see that the respondents are faced with certain difficulties. One matter in particular seems to us to have no relevance to the decision which we have to give. That is the issue around working hours and rest periods. We say this because this case does not require any consideration of the normal operation of the ferry, only of the out-of-hours service. As far as the out-of-hours service is concerned, this is only actually required on a very small number of occasions each year and it seems clear to us that it should not give rise to any real problem regarding working hours and rest periods and certainly nothing which affects the issue which we have to decide.

We are in no doubt that this is a tied house, in the sense that the tenancy was offered to the applicant as the result of the offer of employment and would not be available to him should he leave the employment. That, however, is not the issue for us, because the statute expresses the test for exclusion from security of tenure and the right to buy in a different and more restricted way. We have to consider whether the respondents have satisfied us that the situation in this case comes within the requirements of Para. 1 of Schedule 1. The wording of this provision can give rise to difficulties, and there have been many cases under it. Parties were, however, agreed that the summary of applicable principles at page 30 of the Tribunal’s decision in Smith v Dundee City Council should be followed. In short, for the exclusion to apply, there must be a contractual obligation, either express or implied, to occupy the house. If (as the respondents accept in this case) it is not express, it must be an obligation which meets the tests for implication of a contractual term by being, broadly speaking, necessary to give effect to the practical result which the parties intended. On a reasonable common sense approach, would it be impracticable to carry out one or more of the duties of the contract without occupation, or could all the contractual duties in practice be performed perfectly well without occupation? The duty or duties in question need not be an important part of the contract taken as a whole, nor need the implied obligation be a material term. We must look at the position at the date of the application to purchase. If a contractual requirement of occupation is established, the Tribunal must go on to consider the test of better performance, and that test is not satisfied merely by a contractual statement that occupation is for the better performance of duties.

The respondents’ case is based only on the out-of-hours service which they maintain for the benefit of the community on the island of Luing. We must first determine whether there is any contractual duty on the applicant in relation to that service. Such letters of offer and acceptance of terms and conditions of employment as exist are silent on this. The respondents contend that he is under duties in two ways: firstly, he is obliged, on a rota basis, to perform stand-by duties; secondly, they claim that when not on stand-by, the applicant is nevertheless obliged, along with the other two operatives not on stand-by, to arrange for one of them to be available. On the basis of our findings, we accept the first of these two contentions but not the second. It is unfortunate that matters were apparently not completely spelt out at the outset of the employment. It seems highly likely that the situation about this out-of-hours service was discussed at the interview stage, but the applicant could not recall that and there was no other specific evidence of it. What seems to us completely clear is that the applicant receives the stand-by allowance as part of his pay and indeed accepts this obligation. He took issue with the suggestion that he is under a duty along with his colleagues to arrange availability when not on stand-by duty. It seems to us on the evidence that while one of the operatives does generally turn out to provide the second man in an emergency (for which both operatives will then get paid for the actual hours worked), there is nothing to compel them to ensure that they or either of their other colleagues who are not on stand-by do so. Indeed, Mr Brown accepted that a request to an operative not on stand-by duty to assist in emergency would not be enforceable. The service, being extremely rarely required, seems to have operated reasonably satisfactorily on the basis that the council avoids paying two operatives to be on stand-by and from the operatives’ standpoint they are therefore on stand-by for less of the time. However, acceptance of the respondents’ first contention, that there is a contractual duty to undertake the stand-by duty, is sufficient for the purposes of their argument.

The more difficult question is whether the applicant is under an obligation to live in the house for the better performance of the stand-by duty. In this connection, there were two areas of uncertainty in the evidence: firstly, as to the time taken to mobilise the ferry out of hours; and secondly, in relation to the respondents’ attitude to operatives, including the applicant, wishing to stay elsewhere.

The evidence was clear enough that the requirement was to mobilise the ferry (i.e. have it available at the north slip ready for the emergency service vehicle) 30 minutes after the initial pager call from the doctor or other emergency service requesting it. The operative on stand-by duty would need to be engaged for a minute or two, perhaps up to five, enlisting the assistance of another operative and readying himself to go out. The applicant had a more optimistic view of the time taken from the operatives arriving at the slip to having the ferry, which would have to be fetched from its moorings using the passenger launch, ready at the slip. He said, and we accept, that it would be done more quickly than at the beginning of the normal service. He said ten minutes. Mr Brown understood 20 to 25 minutes. We accept of course that the applicant had experience (although only very occasionally of the emergency situation, and there was no suggestion that he had ever timed it in that situation), but in our view, having seen the location and the distances involved and considered the competing evidence, a minimum of 15 minutes would be a reasonable estimate. In the event of the stand-by operative not being at one of the ferryman’s houses, the time taken by him to travel to the slip has also to be added. Mr Gannon, the head ferryman, lives some 10 minutes away, on Luing. It seems to us to be a reasonable practical requirement for performance of the stand-by duties to live within not more than 10 minutes of the ferry slip. We have found the travelling time from Oban to be 25 to 30 minutes, which could not, we think, safely be reduced to any significant extent even at what might be expected to be quiet times on the road. The conclusion we draw is that it would be reasonable to require the operatives at least to reside on Seil or Luing, i.e. up to around 10 minutes’ driving time from the north ferry slip.

That of course does not conclude the question whether the operatives, and in particular the applicant, were, as a matter of implication in the contract of employment, so required; and, if so, the crucial question, whether in the applicant’s circumstances a requirement to live in the house at Cuan can be implied. The applicant of course had a tied house, and it was specifically expressed in the minute of let that he would occupy it for the better performance of his duties. Beyond that, there is, again, no written employment contract provision on this. The applicant led evidence, which was not disputed, to the effect that he had asked permission to live in Oban and Mr Brown had initially agreed. Both Mr Brown and the applicant said in evidence that, after a bit of discussion, he had said that it would be acceptable if the applicant could get himself to the ferry within half an hour. That does not meet the reasonable requirement, and Mr Brown’s evidence was that he had realised that it did not take proper consideration of the time taken to mobilise the ferry and in fact had changed his view. We accept that evidence, which is consistent with the fact that in February 2004 Mr Brown confirmed to the applicant by letter that stand-by ferrymen were expected to be able to mobilise the ferry, subject to weather conditions, within 30 minutes of being paged, in order to avoid delays to emergency vehicles. On the evidence, we accept that it was the applicant’s contractual duty, when on stand-by duty, to meet that requirement in normal weather conditions.

Was it an implied contractual requirement for the applicant actually to occupy the house let to him under the service tenancy? It was obviously the respondents’ preference that the applicant, having been given this tied house, would reside there, at least while on stand-by duty. He could have complied with the stand-by duties if he could obtain accommodation on Seil or Luing, as indeed was the case with Mr Gannon. However, there was no indication of that ever being likely in practice in the applicant’s case. He had wanted, for understandable reasons, to think about moving to Oban where he would be able to purchase a house. There was no indication that he would either want or be able to either purchase or rent on Seil or Luing. There would be no point in renting there, and the applicant accepted that he was not in a position to buy in that locality. We are required to look not at the generality but at the applicant’s position, and it seems to us that on the common-sense approach indicated in the Smith case it would be impracticable for the applicant, who had no reasonable prospect of residing elsewhere on Seil or Luing, to carry out this duty without occupying the ferrymen’s house. It cannot be said that the duty could be carried out perfectly well without doing so. Implication of a term requiring the applicant to live in the house of which he was given the tenancy in connection with his employment seems to us appropriate in these particular circumstances.

We can add, although we would not put too much weight on this, that the fact that the applicant felt it necessary to ask permission to stay elsewhere suggests a view that without such permission he was not permitted to do so, i.e. he was required to live in the ferryman’s house. The same might be said in relation to the ferryman at Port Appin. It is true that that particular ferryman was allowed to live in Oban whilst on stand-by, but we accept that there were particular circumstances there, as well as a difference in relation to the time required to mobilise that ferry. If we understood the evidence in relation to that situation correctly, that ferryman did not have a service tenancy at the ferry port. We do not think that that situation helps us to resolve the issue in the case of the applicant.

The cases of Mr Gannon and the Port Appin ferryman do go this far for the applicant, that they negate any general implication of a requirement on all ferry operatives to occupy a tied house beside the ferry. It cannot be said that such an implication arises out of a strong general customary obligation on all ferry operatives. Each individual case must be considered in its own circumstances. The situation of an employee such as the applicant, who has been given the tenancy of one of the ferrymen’s houses, needs to be looked at individually. If Mr Gannon left the employment, different accommodation arrangements would presumably be required for his replacement, and the resulting contractual situation of that new employee would have to be considered in its particular circumstances. On the basis that the applicant was under a duty, when on stand-by, to mobilise the ferry 30 minutes after an emergency call-out, that he was provided with the tenancy on the basis that he would occupy the house for the better performance of his duties, and that in his case it would not be practicable for him to carry out the duty without living in that house, we are prepared to imply a contractual requirement on him to live there.

Two reported cases seem to us to illustrate the approach to a situation in which there is a tied house but the performance of the duties does not require actual physical proximity with the place of employment. In Fisher v Fife Regional Council, there was an out-of-hours callout requirement, on a rota basis, but members of staff, including the applicant, had been permitted to live outside the campus of the residential centre in question. Indeed, an earlier express contractual requirement to live on the campus had been deleted. Clearly there staff could practicably obtain accommodation not too far away to fulfil the duty. By contrast, in De Fontenay v Strathclyde Regional Council, where the applicant was employed as a teacher on the Island of Tiree and accommodation made available to him, the test was satisfied where, in the absence of other available accommodation on that island, residence in the house was necessary to perform the duties. The present case, in which we have found that the applicant could not obtain other accommodation which would enable him to perform the stand-by duty, is similar.

Following the guidance in Smith, we are clear also that this was for the better performance of the applicant’s duties, in particular the stand-by duty. In Smith, some janitors were not required to occupy tied houses and if they did not, they did not have the same duties, in that case to react to situations out of hours. In this case, the stand-by duty did not simply arise out of the occupation: all four regular ferry operatives, including Mr Gannon who did not reside in a ferryman’s house, had the same stand-by duties. Actual callouts may have been comparatively rare, but there was a real requirement to maintain a readiness to run the out-of-hours service. We are satisfied that there was substance in the stand-by duty, which was on a remunerated basis. It follows that the requirement, in the applicant’s case, to occupy the house was for the better performance of his duties.

There was disputed evidence about the comparison between the rent payable by the applicant and the rents of ordinary council houses. The respondents seem unfortunately to have left the policy issue as to the level of rents for tied houses in abeyance for several years and there certainly appeared to be some disparity among the ferry operatives themselves. It is not surprising that the applicant feels aggrieved at that. He set out to prove that the rent charged to him was, at least at one time, no less, and in fact slightly more, than the ordinary rents, but we do not think that the evidence in relation to the criteria used to determine rent levels was specific enough to allow that conclusion to be drawn. We accept that there was, or at least had been, a long-standing policy (possibly not clearly followed through, and certainly under review) for tied house rents to be slightly lower. In fact, by April 2005, the date of the application to purchase, the applicant’s rent was very much lower than ordinary council rents, because they had been subject to annual increases and his had not. However, the respondents did not raise this issue or particularly rely on it and we do not regard it as a factor of any relevance in this case.

For these reasons, we are satisfied that the respondents have made out circumstances in which the statutory exception applies, and we must refuse this application. We appreciate that where we reach such a result in cases such as this, it can bear hardly on employees who (even although their tenancies may be on more favourable rent terms) as a result may have difficulty in purchasing their own homes. That is no doubt why the statutory exceptions to the right to buy are quite restrictively expressed, but public authorities also have legitimate interests in particular kinds of housing stock and it is not difficult to see the problem that might be caused for the respondents if they were required to sell this particular house.