Servitudes, developers and flexible rights

Many developers desire “flexibility”. I have often wondered what that means. In some cases, I suspect, the developer simply wishes to be free from any significant obligation and to be able to do largely what he likes regardless of the effect on the ultimate purchaser. In other cases, however, the developer appreciates that the end user – the eventual purchaser of a unit in the development – also requires to know where they stand (and subsequently live or carry out business as the case may be). “Flexibility” must be tempered with certainty if a purchaser is to acquire a good title.

That said, developments are not built in a day and developers wish to retain the ability to redesign parts of their proposed layout to take account of altered circumstances. That is a legitimate commercial concern. In dealing with this concern, developers have found an obstacle in PMP Plus Ltd v Keeper of the Land Register of Scotland 2009 SLT (Lands Tr) 2.

The PMP case has become something of a phenomenon, but it is also something of an oddity. Although a Lands Tribunal case, it has received greater attention than some Court of Session decisions. In a major sense the case says nothing new, yet it was heralded by many conveyancers as if the skies had fallen in.

What PMP does is reconfirm two longstanding principles of Scots common law which had tended to be ignored or overlooked by conveyancers and the Keeper. First, it is not competent to convey property on a suspensively conditional basis. Of course, missives to purchase land may be entered into on such a basis. The rule noticed in the PMP case relates to conveyance, not contract. As a result, a plot of land cannot be conveyed on the basis that the property right will pass only if a certain event occurs. A fortiori a right of ownership in land cannot pass by mere declaration or by abandonment. A right of property (and, as is more usually attempted, a right of common property) cannot be passed to future acquirers by mere declaration in a deed of conditions, albeit a description of a relevant area of land could be validly referred to in a subsequent disposition.

Secondly, as at the date of the conveyance, the property conveyed must be sufficiently described to enable its identification. Failure to comply leads to an ineffective conveyance. Quite separately from this second common law rule there is a statutory requirement relative to land registration requiring land to be capable of being mapped on the Ordnance Survey sheet, failing which the Keeper is obliged to reject any application for registration relating to such land: Land Registration (Scotland) Act 1979, s 4(2)(a). This appears to be a factor in the Keeper’s existing policy of refusing to register generally worded servitudes in the property section of benefited properties, such as “free ish and entry” or “access as at presently enjoyed”. (These are nonetheless still valid for registered land as unregistered pertinents or servitudes in terms of s 3(1)(a).) In applying these rules it matters not whether the right at issue is one of exclusive or common property, albeit the issue of specification arose in the context of the latter in PMP.

Specification and servitudes

One consequence of PMP and the Keeper’s associated guidance, Registers Update 27 (noted at Journal, August 2009, 17) is that, as conveyancing fashions go, flexibility is out and certainty is in. There is some evidence that this enthusiasm for certainty is beginning to spill over from rights of ownership to servitude rights. However, this is not necessarily appropriate in all respects.

Albeit there is a requirement for specification that applies to servitude rights, it does not always apply in the same way as the rule of specification applies to rights of ownership.

First, as there is now only one type of ownership but a number of different types of servitudes, the rule of specification applies to require detail in relation to servitudes that is not required in relation to ownership. The type of servitude granted or reserved must be made clear, otherwise the grant will fail. A grant of a bald “servitude” across a field will probably be regarded as invalid if, after assessing all the evidence, it still could be a servitude of access, a drainage right or a water supply. No servitude of general and unspecific use will be recognised: Moffat v Milne 1993 GWD 8-572. However, the courts do not go out to destroy a servitude if the intention of the parties can be ascertained. A servitude right “to use a road” will be regarded as a servitude of way and not an unspecific right of use of an area that happens to be a road.

Secondly, the rule of specification applies similarly as regards its application to ownership, in that the burdened and benefited properties in a servitude must be capable of identification. If they are not sufficiently identified, the servitude will fail as too vague. (The rule was applied with greater rigour in relation to real burdens: Anderson v Dickie 1915 SC (HL) 79.) In context of servitudes, the principle was first identified by the earliest Scottish institutional writer, Craig, in a comment concerning a servitude of pasturage granted over some part of the superior’s estate outside a feu. He observed: “the grant is inept without specification of the part of the superior’s estate to which the right is to apply” (Ius Feudale, 2,8,34: Clyde’s Translation, vol 1, 538. The reference to the “superior’s estate” clearly denotes the neighbouring property retained by the granter of the feu).

In addition, where “double” registration is required (Title Conditions (Scotland) Act 2003, s 75), to satisfy the statutory rule relative to registration, already mentioned above, the burdened and benefited properties must be capable of being mapped on the Ordnance Survey sheet. The application of these rules to servitudes is mitigated to some extent by the acceptability of extrinsic evidence to supplement the terms of a deed: Axis West Developments v Chartwell Land Investments 1999 SLT 1416 (HL); Maclean v Marwhirn Developments Ltd 1976 SLT (Notes) 47. The Keeper would be entitled to look at such evidence as part of an application for registration.

It is clear that the rule insofar as it applies to the burdened property is satisfied in the following commonly encountered case. Prior to the development site being divided up and sold off, a deed of conditions is imposed on the whole area, which is adequately described and then defined as “the Development Site”. The wording of the deed then declares: “The Development Site will be subject to the following servitudes”.

Conditional grants

However, as regards some other matters, the decision in PMP cannot readily be applied to servitudes. In particular, express conditions attached to servitudes allow them to be much more flexible than ownership.

Consider the suspensively conditional servitude. It is possible to have a servitude of access granted over roads or structures yet to be built. (For a discussion, see Paisley, “Servitudes Extinction by Non Use”, in Palmer and Reid, Mixed Jurisdictions Compared, Edinburgh Studies in Law (2009), 67 especially at 87-89 and 91.) Depending on its wording, the servitude may come into existence only when those roads are built or, alternatively, it may come into immediate existence and be exercisable only when the roads are built. A suspensively conditional servitude, however, is uncommon and clear words would be needed before this would be implied. A servitude of access for the benefit of “the owner for the time being of any dwellinghouse” would not readily be interpreted as suspensively conditional on a house being built. A developer would be entitled to use the access to build the house (Candleberry Ltd v West End Homeowners Association [2006] CSIH 28; 2006 SC 638 at para 18 per Lord Nimmo Smith).

A servitude may also be subject to a resolutive condition such as a forfeiture or irritancy clause. Such a right would need to be expressly stated, because no such clause is implied. For example, a servitude of access may be granted over a certain area but on the basis that it will terminate (in whole or in part) when a house is built on that area or even when a proposal to erect a particular type of building is intimated by the burdened proprietor. The servitude may also be subject to a variation of its route, either at the instance of the benefited or burdened proprietor in certain limited circumstances or as the party seeking variation sees fit. No right of ownership can be so varied as regards its location. Instead, a deed of excambion (or reciprocal dispositions) are needed.

Manner of exercise

All servitudes are subject to conditions as to exercise that are inapplicable to rights of ownership. The legally implied servitude condition requiring civiliter exercise is particularly significant for those who draft deeds of conditions for developers. The reason for this is that it may be replicated, varied, expanded or limited by express drafting. The intent of such variations is usually to create a bespoke rule for a particular development site. In all these cases the servitude condition remains operable by the burdened proprietor to control the exercise of the servitude right.

In this way, a deed of conditions may declare an entire development site to be the burdened property in a servitude of access, and it may also provide that the exact area over which the servitude is to be exercised from time to time is more limited than the burdened property. This is merely an application and extension of the long-established rules (a) that a servitude affects every part of the burdened property, but (b) it must be exercised civiliter.

The balancing of these two rules has long been a feature of Scots law, as was noticed by Sir George MacKenzie, who wrote (Institutions (7th ed), 2,9,33): “When we have a Servitude on any other land, this servitude affects every Foot of that Land, unaquaque gleba servit; but this is to be taken civiliter, & non judaice; so that it must be reasonably used: And thus, if we feu out some Acres, with privilege to the Feuer, to cast Feal and Divot upon our Muir, for maintaining his Houses; though, in strict Law, every Part of the Muir is affected with the Servitude; yet the Lords will allow any Man to Till and Sow his own Muir, leaving such a Proportion, as may maintain these houses.”

The Latin phrase unaquaque gleba servit may be broadly translated as “every clod of earth on the land is subject to the servitude”, or “every single part of the burdened property is subject to the servitude”. However, in some cases, even without express statement, the exercise of the servitude may be limited to a lesser area. This legally implied provision may be emulated and expanded by express provision to apply in a particular way to a particular site. Put another way, the clause may provide in advance how the civiliter requirement is to be applied.

So if the burdened property is adequately described in a deed of conditions, the primary requirement of specification is complied with and the servitude of access (if that is what it is) burdens that entire area. The deed of conditions may then provide for limitations as to when and where the servitude may be exercised. For example, it may state that the servitude is not ever to be exercised through certain houses or gardens. It may go further and provide that the excluded area may expand to houses and gardens yet to be built, even though their location is presently unknown.

This merely reflects what has always been accepted as regards the legally implied requirement of civiliter exercise (Rattray v Tayport Patent Slip Co (1868) 5 SLR 219). As regards the application of that rule to the erection of new buildings on the burdened property Lord Deas indicated: “There is no doubt that a right of servitude does not give the party who holds it a right to prevent all use being made, by the proprietor, of the ground over which the servitude extends. The proprietor may make every use of the ground he pleases if it is not inconsistent with the servitude. So much is this the case, that a servitude may be restricted to a particular portion of the ground if that can fairly be held sufficient for the proper exercise of the servitude. That restriction is very reasonably applicable to the servitude of bleaching.”

Room for manoeuvre

The application of this legally implied servitude condition alters as circumstances on the ground vary. It is this potential to cope with future changes in circumstance that may be used and adapted by the conveyancer.

A person drafting a deed of conditions may simply make it clear that the burdened proprietor is entitled to change the circumstances on the ground and to set out in advance how a particular servitude will then be capable of exercise. If such drafting is employed, the area excluded from exercise of the servitude may grow or shrink or vary in size and location, provided always the mechanism for determining the excluded area is clear. There is no rule applicable to servitudes that material outwith the titles cannot be referred to in order to identify the burdened land tenement, and this appears equally applicable to the area within the burdened subjects over which a servitude may be exercised.

A drafter of a deed of conditions seeking to establish a mechanism to determine the area over which a servitude is to be exercisable may make use of this. For example, they may provide in the mechanism that the exercise of a servitude of access may be limited to the route of roads yet to be built, or to areas yet to be set out as amenity areas. They may even refer to a statutory process to determine the manner of exercise or extent of the servitude. Possibilities include a declaration that access over a certain route will be limited to a certain number of vehicles unless and until the road is adopted by the roads authority, or a statement that the exercise of certain servitudes such as drainage is to be confined to areas later designated as “Scheme Property” in a development management scheme affecting the burdened property: Title Conditions (Scotland) Act 2003 (Development Management Scheme Order) 2009 (SI 2009/729), art 20.

In a deed of conditions, the developer, as owner of burdened property, may retain the right to divert, limit, vary or suspend the exercise of a servitude. Obviously, the party entitled to the servitude may wish to place some limitation on this flexibility, otherwise it could undermine a valid and marketable title. A sensible balance needs to be struck and that requires judgment and experience. However, in all of this it is worth noting that the area over which the servitude is exercisable does not need to be fixed as at the date of the imposition of the servitude.

All this has the beneficial effect that a servitude may be granted or reserved in a manner that can respond to change in development plans. Given the PMP limitations on rights of ownership, this flexible characteristic is likely to come into greater use. However, a final word of warning. Servitudes cannot be used for everything. There is no known servitude of general recreational use, so a right to use an amenity area within a development site (no matter how well described) probably cannot be created by a servitude right (Title Conditions (Scotland) Act 2003, s 76). There remains a valuable role in that regard for common property. In development situations servitudes are best used, in combination with real burdens, to complement the discerning use of grants of exclusive property and common property. The appropriate mix will vary from site to site. Put another way, there is no tick box approach to commercial conveyancing.