Good neighbour agreements - bad law?

The recent reform of Scots planning law has attracted a large degree of attention, both before and after the enactment of the Planning etc (Scotland) Act 2006 (“the 2006 Act”). Almost unnoticed, however, a new device which can be used to control land use by a private individual in their capacity as landowner has slipped into Scots law. These good neighbour agreements (GNAs), as they are to be known, allow landowners to enter agreements with relevant community councils (not to be confused with planning authorities: the s 75 agreement, as amended by s 23 of the 2006 Act, remains their domain) and, in some circumstances, local interest trusts or other bodies.

In the writer’s view, the case for these agreements has not been adequately made. Further, the positioning of this device in a statute which otherwise deals with public regulation of land is questionable. How often these agreements will be used is also questionable, bearing in mind the other tools already available in Scots land law.

The very name “good neighbour agreement” may prove to be the ultimate contradiction in terms should “neighbours” wish to enforce their respective rights from such an agreement against each other. The recent case of Neumann v Hutchinson (2006 GWD 28-628) provides but one example of how neighbour disputes can ultimately develop into full-blown litigation over property rights. The GNA provides yet another means to do this. Perhaps a more neutral name for a GNA would be a s 75D agreement, but to avoid confusion with the neighbouring s 75 agreement the statutory terminology will be followed here.

The framework for GNAs

Section 24 of the 2006 Act introduces four new sections to the Town and Country Planning (Scotland) Act 1997. Many parallels can be drawn with the s 75 agreement, more properly referred to as a planning obligation. Perhaps the most important similarity, by virtue of s 75D(9), is the ability to bind successors in title and, where relevant, tenants, by recording or registering the GNA (assuming that the parties to it include the landowner), but there are a number of potentially important differences.

Section 75D(1) speaks of “governing operations or activities relating to the development or use of land”, while s 75(1) refers to “restricting or regulating the development or use of the land”. Section 75D(6), the equivalent of s 75(2) but also without the reference to “restricting or regulating”, establishes that GNAs may require certain specified activities to be carried out on the land in question, or require the land to be used in a specified manner, subject to the usual caveat that these examples are without prejudice to the generality of what an agreement can actually do.

What makes the GNA profoundly different to the s 75 agreement is who can actually be party to it. Unlike the planning obligation, a GNA cannot be imposed unilaterally by a landowner, nor can it be entered into with a planning authority.

A landowner may only enter a GNA with a “community body”, a term defined by subss (2)-(4).

These subsections limit community bodies to three narrow categories. The first is the community council for an area in which “any part of the land” that the GNA relates to is situated. The other two, being collectives of private individuals, do not exactly belong to the realms of public land control. What makes them “potential” community bodies is that they must be notified by their planning authority that they fall within either s 75D(3) or (4), but after this notification the planning authority has no further role to play unless there is an application to modify or discharge a GNA.

The language of these subsections is slightly clumsy and uses the word “body” in a somewhat circular way (a body is a community body if it is a body that falls within subs (3)). Basically, a body (s 75D(3)) or a trust (s 75D(4)) must satisfy a planning authority that its members or trustees have a “substantial connection” to the land in question, and that its object or function is to “preserve or enhance the amenity of the neighbourhood”.

“Substantial connection” also appears in the Land Reform (Scotland) Act 2003 (“the 2003 Act”). This provides a useful comparator for the 2006 Act (as detailed in the adjacent panel), but “substantial connection” is not defined in either Act. One can only speculate as to how this concept will be interpreted, as its meaning was not a point of contention in the only reported case on the community right to buy (Holmehill v The Scottish Ministers 2006 SLT (Sh Ct) 79).

Real burdens: an alternative means?

As noted above, a GNA can be used to govern operations or activities on land, potentially in perpetuity. Section 75D(7) provides that any obligation constituted by a GNA (i) may be conditional; (ii) may require the provision of information to the community body in relation to use or development of the land; and (iii) shall not require the payment of money (unlike planning obligations). This leaves a wide scope for where a GNA could be used, most of which, it is suggested, can be covered by making use of existing aspects of Scots law. The first such device is the real burden, newly reformed and codified in the Title Conditions (Scotland) Act 2003 following extensive consultation. In contrast, the GNA received very little in the way of consultation at all, a fact which has provoked negative comment: Mark Poustie, “Planning Reforms in Scotland” [2007] JPL 489, 490.

One crucial difference from real burdens is that there need not be identification of a benefited property to constitute a valid GNA, as there must under s 4(2)(c) of the Title Conditions Act. This seems to make a GNA more akin to a personal real burden. In saying that, it seems difficult to envisage how a community body under s 75D(3) or (4) could establish “substantial connection” where its members did not own, or at least occupy, nearby land. Another difference is that the rule that a burden must be praedial, or in the language of the Title Conditions Act, s 3(1), “relate in some way to the burdened property”, does not apply to GNAs. Instead, the content of an obligation is left to s 75D(1). How this will be interpreted in future is unclear. As noted above, its terminology does not match that of s 75(1), which may leave it open for any future interpretation of s 75D(1) to ignore case law relating to s 75(1).

The lack of detailed rules for the content of a GNA also means that there is nothing absolutely prohibited from appearing in a GNA, other than the s 75D(7)(c) stipulation that the obligation “is not to require the payment of money”. One notable omission, in contrast with real burdens, is that there is no absolute bar on a GNA containing an option right or right of reversion. This may be relevant in the following, easy to engineer, situation.

Suppose on subdivision of a property the proprietor of the retained ground seeks to establish a community body (which would, of course, require notification from a planning authority under s 75(2)). This may need the assistance of other local people, but as there is no minimum number of members or trustees, such a body could theoretically be formed by co-owners of the retained property, or by members of the same family. An obligation to use the land in a certain way, perhaps to maintain it as garden ground, could then be caveated with a clawback provision. If registered under s 75D(9) this would bind successors and thus, by the back door, reintroduce a device that was supposedly a relic of our feudal past. Whether a Scots court would uphold such a device on policy grounds is, admittedly, debatable.

There may well be other situations where a GNA can be utilised where the constitution of a new real burden is inappropriate, but as a general statement it seems a real burden may already be capable of doing all that a GNA can do, including binding successors, where both a benefited and burdened tenement can be identified. Another use specifically envisaged by the legislation, being “the provision to the community body of information regarding the development and use of the land” (s 75D(7)(b)), already has a non-statutory precursor in Scotland. This proto-GNA, which related to a recycling plant in Dundee (see SEPA View 14, available at www.sepa.org.uk/publications/sepaview/html/14/neighbour.htm) shows what can currently be achieved when communities and businesses co-operate.

Other potential alternatives

Admittedly, the 2006 Act may provide a useful statutory footing for future agreements in this vein, but it seems rather unnecessary when the law of contract already provides a perfectly acceptable way of creating reciprocal arrangements between two or more parties, and even the Scots doctrine of promise could constitute binding obligations on the landowner. Thus, unless a GNA is to be registered in order to bind successors, it seems that all the prescribed steps for constitution are simply not worth the hassle.

The humble contract can also bind successors when fortified by a standard security. It has always been possible to secure a non-monetary personal obligation with a standard security over land (see Cusine and Rennie, Standard Securities (2nd ed, 2002), 3.05).

By so doing, a “creditor” can then follow the scheme of the Conveyancing and Feudal Reform Act 1970 (perhaps with amended standard conditions) to protect his or her interests in the secured obligation. Crucially, this security will operate as a subordinate real right, and thus bind successors in title to the secured land.

Again, it seems that a functional equivalent to the GNA which binds successors is already available in Scots law. Admittedly it may be difficult to entice a landowner to grant such a security when there would be fairly draconian penalties for failing to fulfil any secured obligation ad factum praestandum, but one advantage of the standard security is the clear and established framework that exists for enforcement on default; this is lacking with the GNA. Breach of a GNA may lead to negative publicity, but no express provision is made for any other sanction.

Further issues?

There are a number of issues with GNAs that have been identified as areas of potential concern (see the online consultation resource at www.scotland.gov.uk/Publications/2005/12/2084221/42444). One is that it is not clear how planning obligations and GNAs will overlap, which may be of particular concern when either instrument is discharged but there is continued reference to it in the other (a concern identified by James Barr Ltd). At a more fundamental level, a number of disparate organisations such as SEPA, planning authorities, community councils, community bodies and, in some circumstances, the Scottish Ministers, may all see themselves as having a role when any new land use is proposed (see the submission of Lafarge Cement UK). Approaching all interested parties would represent a major burden for any landowner or potential transferee.

Comparison with the other devices listed above also shows the GNA in a less than favourable light. For example, no mediation or other form of dispute resolution is prescribed in the event of a breach of a GNA and, as noted above, the statute is silent as to available remedies. This contrasts with s 75, which allows, by virtue of the new s 75(7), a planning authority to enter relevant land to carry out operations where a requirement to do so has not been complied with. It may be that resolution procedures are supposed to be included in the agreement itself (a style appears in the Friends of the Earth report at www.foe-scotland.org.uk/nation/gna_report.pdf), but by not including anything in the statute itself the drafting and negotiation of GNAs could be a highly convoluted process.

One could raise other issues. There is no provision for Lands Tribunal involvement, for example in the variation and discharge of GNAs. Arguably, as GNAs are more akin to real burdens, the Lands Tribunal would have been better suited to dealing with attempts to modify or discharge them than the route in ss 75E and 75F, which potentially involves the planning authority, the Scottish Ministers and, on appeal, the Court of Session.

Further, there are no rules laid down for miscellaneous matters of private law like acquiescence, assignation of a GNA to another community body, or positive or negative prescription. It is far from clear what would be the situation if an a non domino GNA was recorded in the Register of Sasines or somehow found its way onto the Land Register. Community bodies may be less scrupulous than the planning authorities who would ordinarily be involved in registering s 75 agreements, and such bodies may be more willing to “take a punt” to get something on the Registers.

Finally, it is worth noting that the special place of the community council in the scheme of s 75D has not escaped criticism. Professor Poustie has already noted that “there are questions about the extent to which community councils or community trusts are genuinely representative” ([2007] JPL at 509). Whether community councils deserve such a role is not something that this article considers, but if a greater role for them is desired it is debatable whether GNAs are an effective way to confer this.

Just another complication

In the blurb to Jeremy Rowan Robinson and Eric Young’s Planning by Agreement in Scotland (1989), it was noted of s 50 of the Town and Country Planning (Scotland) Act 1972 that “this very short section gives rise to very considerable legal complexity”. This remains the case with the modern equivalent, s 75 of the 1997 Act, and the position has not been simplified by the new ss 75-75C. Arguably yet another level of complexity has been introduced by ss 75D-75G.

GNAs, like much of the 2006 Act, are to be introduced by secondary legislation. Regulations are currently scheduled for April 2009, after a consultation process of a year, which may provide a forum to address some of the issues raised here. The exact content of these regulations is, at this stage, speculation, but what is clear is that once GNAs are introduced there will be yet another trap to catch out an unwary conveyancer. Over and above the traditional check for good and marketable title, eclectic matters such as tree preservation orders, statutory notices, contaminated land and planning law generally must be borne in mind, to name but a few. One can now add the s 75D agreement to this list.

It will be interesting to see what sort of takeup level these agreements will have. From a jurisprudential point of view, it will be more interesting to see whether GNAs find a role that complements the existing land controls that Scots law affords.

Malcolm Combe is a first year trainee solicitor with Tods Murray LLP