Deeds of conditions: not dead yet

Following Andrew Todd’s article, “The end of deeds of conditions?” (Journal, January 2015, 20), I would like to submit my own views on what I believe to be the main outcomes of the decision of the Lands Tribunal for Scotland in Marriott v Greenbelt Group Ltd (LTS/TC/2014/27, 2 December 2015), published on the Tribunal’s website.

This was an application for determination under s 90(1)(a)(ii) of the Title Conditions (Scotland) Act 2003 of a question as to the validity, applicability or enforceability of a title condition affecting a housing development.

The burden narrated that Greenbelt would be taken bound in terms of the disposition or dispositions to be granted in their favour in respect of the “open ground”, to carry out defined “management operations”, and imposed on all proprietors in the development an obligation to pay Greenbelt in perpetuity a share of its maintenance costs. The applicants argued that the condition, or purported condition, was invalid or unenforceable.

The case concerned what has become known as “the land-owning maintenance model” of estate management (used by Greenbelt), and raised important challenges as to its validity, at least in the form which it takes on one particular Scottish development.

Outcomes to note

The main outcomes of this case are as follows:

• In the Tribunal’s words, “As an attack on the land-owning model per se it has failed.”
• Again in the Tribunal’s words, “The applicants fought this case on a very wide front but (on the majority view) have been successful only on a relatively narrow and technical issue”. This related to the title of their own property.
• No other Greenbelt sites are affected by this decision.
• The Tribunal stated: “The applicants have succeeded not because of any structural flaw in the model but because the benefited land property was not adequately identified in the constitutive deed. The requirement for such identification has the potential to cause difficulty more widely, given developers’ need for flexibility. But it is possible to exaggerate that difficulty.”
• The applicants’ challenges entirely failed on all other points, including claims of unlawful monopoly, the burden not being praedial, being contrary to public policy as an unreasonable restraint of trade, repugnant to ownership and illegal, and being anti-competitive.
• Specifically on the applicants’ claim of unlawful monopoly, the Tribunal concluded there was no illegality of the land-owning maintenance model. It pointed out that the land-owning model is one of two broad types of maintenance model used in Scotland. The other is the common-ownership model, where the plot owners own the amenity areas in common and share the costs of maintenance. Its impression was that both systems were in existence at the time of the Scottish Law Commission’s Report on Real Burdens in 2000. Nowhere in that report, or during the passage of the subsequent bill, did it detect any intention to eliminate this model, or any hostility to it. When, 10 years after the passing of the 2003 Act, the Scottish Parliament’s Justice Committee conducted an inquiry into the effectiveness of its provisions, although doubts were expressed as to the enforceability of burdens under this model, there was no suggestion that the Act had been intended to abolish it. The Tribunal concluded that it was never the intention of the legislature to outlaw the land-owning maintenance model. In fact, it commented on the advantages of the model “in the way of relieving the house owners of all the inconvenience of looking after the open ground themselves, including the holding of meetings, the appointment of factors or landscaping contractors, the monitoring of their performance and so on, with the risk of potentially damaging divisions among themselves to which these matters can give rise”.
• This decision restates the existing law – “the rule that the extent of a real burden must be found within the four corners of the document creating it remains part of our law, subject to the very limited relaxation contained in s 5(2)” of the 2003 Act.

Lacking definition

The relatively narrow ground on which the applicants successfully argued that the burden was invalid from uncertainty related to the definition of the “open ground”, which was the benefited property. It was defined as “the areas of amenity woodland, landscaped open spaces, play areas and others to be provided on the whole subjects in terms of the planning permission”. “Planning permission” was defined as “the planning permission issued by the Scottish Ministers under Reference No 00/00129OUT on 7 March 2002 together with any variation thereof or supplementary permission issued in respect thereof”.

The Tribunal accepted that this description nominated the benefited land, in the sense that it contained a general, non-geographic, description of it. “But on no ordinary meaning of the word can it be said to identify the benefited land. Without more, one does not know where, within the whole subjects, it is.

“The question then becomes whether it is permissible to look at the planning permission to cure that problem. Having held that the four corners rule still applies, our answer to that has to be no. Although the four corners rule usually arises in relation to the content of the burden, rather than the identity of the benefited land, it nevertheless applies in this case since the extent of the burden is related to the extent of that land.

“Accordingly, we have held that the burden is invalid as failing to satisfy the requirements of s 4(2)(c)(ii), a failure which is not curable by looking at the planning permission.”

The Tribunal added: “When the applicants registered their title the ultimate extent of the open ground was unknown. It was defined by reference to the planning permission for the development as that permission may be varied or supplemented. Even if resort to the planning permission was permissible, therefore, there was no means of knowing the extent of land for the maintenance of which they might end up having to pay a share. This objection, if valid, poses a real difficulty for developers, who need to have a degree of flexibility in the development of a large estate.”

The Tribunal’s interpretation of the law as it stands is that a burden of this kind is insufficiently specific.

PMP Plus points

The applicants also had a submission based on PMP Plus Ltd v Keeper of the Registers 2009 SLT (Lands Tr) 2 and the difficulty, for land registration purposes, identified in that case about defining common ground by reference to later events.

“However,” the Tribunal concluded, “there does not seem to us to be any room for the application of anything arising out of PMP in the present case. That is for two reasons. First, the position is governed by s 4 and whether its requirements are complied with decides the question of validity one way or the other. Secondly, PMP was concerned with the conveyance of rights of ownership to land and the need, for that purpose, for the land to be ascertainable by reference to the Ordnance Map; see paras [55] to [58] and ss 3(1)(a), 4(2)(a) and 6(1)(a) of the 1979 Act referred to there. In the present case, when the title in favour of the applicants was being registered all that required to be ascertainable by reference to the Ordnance Map was the extent of the property being conveyed, not the extent of other land towards the upkeep of which the applicants were to be required to contribute.”

In the Tribunal’s view the applicants’ submission confused two quite distinct statutory regimes: the regime governing the creation and registration of interests in land, on the one hand (said sections of the 1979 Act), and the regime for the creation of valid title conditions on the other (s 4 of the 2003 Act).

Practitioner lessons

I believe important lessons can be learnt here by the profession.

(1) As the Tribunal suggested, it is possible to exaggerate the difficulty. We should avoid doing so.

The reality, when you look at the overall picture, is to ask ourselves how many deeds of conditions seek to define the benefited land by reference to a planning permission for a development, as that permission may be varied or supplemented? I certainly cannot recall examining any other single deed of conditions in similar terms.

The Tribunal sought to solve the problem in its opinion: “In many small developments the developer will, we imagine, be sufficiently confident that things will go according to plan that the amenity areas can be identified precisely from the outset. In larger developments, involving more uncertainty, there will be, at the very least, an indicative layout plan from the outset which could be incorporated into the constitutive deed, the text of which could be worded to the effect that the area to be maintained will not exceed that shown on the plan. That may be sufficient to solve the problem but we express no concluded view.”

Accordingly, with this in mind, we can and should continue to use deeds of conditions.

(2) Finally, as the Tribunal stated, we should not confuse the PMP decision, which was concerned with the regime governing the creation and registration of interests in land, with that of the present case, concerning the creation of valid title conditions.