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Cite as: [2002] ScotCS 258
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Sheltered Housing Management v. Cairns & Ors [2002] ScotCS 258 (11 September 2002)
- This is a petition for rectification of a Deed of Conditions granted by Barratt (Falkirk) Limited ("Barratt") dated 27 June and recorded in the Division of the General Register of Sasines for the County of Stirling on 7 August, both in the year 1985 ("the recorded Deed"). The recorded Deed relates to a sheltered housing complex erected by Barratt on subjects then owned by them and now known as Springbank Gardens, Thornhill Road, Falkirk ("the complex"). There are fifty three individual privately-owned dwellings in the complex, in relation to each of which Barratt granted a Feu Disposition in favour of the original purchaser or purchasers. Each Feu Disposition was granted with and under the burdens, reservations, conditions, restrictions, obligations, provisions, declarations and others specified in three deeds, one of which was the recorded Deed. The petitioners, Sheltered Housing Management Limited ("SHM"), have from the outset administered and managed the complex. They have also, in circumstances which I shall describe, succeeded Barratt as superiors of each of the dwellings. The respondents are the owners of some of these dwellings. They oppose the rectification of the recorded Deed sought by SHM. A number of other owners on whom the petition was originally served as respondents have since sold their dwellings or have died. The petition and answers came before me for a proof before answer.
- A sheltered housing complex provides facilities which are intended to meet the needs of people who have reached a time in their lives when they wish to be provided with a certain amount of help with their living arrangements but do not yet need the facilities of a residential home or a nursing home. The complex appears to be typical of sheltered housing complexes in the facilities which are provided. There is a minimum age limit of 50 for female and 55 for male residents (the reason for the difference in age was not explained to me). Of the fifty three dwellings, thirty five are flats in a tenement and eighteen are terraced or semi-detached bungalows. There are also a flat and an office for the resident manager (previously called "resident warden"), two lounges and three guest rooms for the use of the residents, parking areas and areas of communal gardens. In addition, each of the bungalows has its own garden ground. The flats are served by a lift, stairs and corridors. Each dwelling has an alarm system which can be operated by a resident in an emergency in order to attract the attention of the manager.
- The current management scheme, under which SHM provide services, was notified to the residents on 13 April 1992. In terms thereof, SHM appoint a resident manager, who lives in the warden's flat, and a relief manager who stands in for the resident manager during days off. These individuals provide the day to day management of the complex during the normal working week. The duties of the resident manager and relief manager, as described in the scheme, are "generally to look after the well being and safety of the residents in a caring but unobtrusive manner". They include responding to any emergency call and summoning such assistance as may be necessary, maintaining a register of occupants with particulars of next of kin or other persons to be contacted in an emergency, maintaining a register of doctors and other professional persons, being available during normal hours to assist and welcome newcomers with help and advice, assisting the residents in organising communal activities, supervising works of maintenance, repair and renewal for which SHM are responsible, and having a good knowledge of local facilities such as shops. SHM are responsible for the insurance of all buildings within the development, the maintenance of all buildings externally including redecoration when necessary, the maintenance of all fences, hedges and boundaries within the complex, the maintenance of footpaths and roadways not the responsibility of the highways authority, management of the communal parking areas and the maintenance of all common garden ground and landscaped areas. The owner of each dwelling is responsible for the insurance of its contents and the maintenance of the dwelling internally, including decorating and window cleaning internally and externally. There is also provision in the scheme for payment of a monthly charge, a topic to which I shall return.
- All sheltered housing complexes in Scotland have management companies, but there is no uniform practice in relation to the process by which decisions about the provision of services are taken and service charges are fixed. Evidence about the way in which SHM operate was given by their managing director, Bruce Miller. SHM manage nine sheltered housing complexes, all in Scotland, under management schemes similar to that summarised above. The main feature of such schemes which is significant for present purposes is that in each case SHM fix the amount of the monthly service charge. The service charge is calculated in such a way as to cover SHM's outlays and overheads and provide an element of profit. The residents are not, however, provided with a budget or accounts, and Mr Miller has steadfastly refused to disclose, in relation to any of the complexes managed by SHM, how the service charges are calculated or what the element of profit is. This is perceived by some residents as resulting in a lack of accountability, but it appears that the vast majority of the residents in complexes managed by SHM are content with the services provided and to pay the service charges.
- Evidence about another type of system was given by Colin Campbell, an expert witness for the respondents, who is a director of Heritage Homes Limited and Lifetime (Scotland) Limited, and for some years was a director of Peverel Management Services Limited. He described the schemes operated in a number of sheltered housing complexes in Scotland under what seems to be generally described as a system of factoring, a word which Mr Campbell preferred not to use himself. Under this system, residents in a complex are provided with budgets and accounts, so that they are aware of the amount of individual items of expenditure and of the fee charged by the management company. Decisions, such as whether to approve a budget, may be taken by a majority of the residents. In some instances, the residents may be able to decide to change the management company; in others, the management company cannot be changed.
- I do not find it possible on the evidence to hold that either the system operated by SHM or the factoring system is preferable to the other. There may be a lack of accountability in the SHM system, but the residents in the nine complexes managed by them appear generally to be contented with the level of the services provided by SHM and the amount of their charges. Residents in these complexes can of course compare the charges with those payable in similar complexes elsewhere, and SHM recognise that it is in their interests that their charges should not differ greatly from those of other management companies. The factoring system provides greater accountability, but it does oblige the residents to contribute to a reserve fund to provide for unforeseen items of expenditure, which is not necessary under the system operated by SHM. There is scope under both systems for dissent among the residents.
- When Barratt decided to develop the complex it was contemplated from the outset that SHM would be the management company and that in due course the superiority would be conveyed to them. Barratt appointed a firm of solicitors in Falkirk, Messrs Blackadder and McMonagle, to act for them. This was the first sheltered housing complex in relation to which this firm provided services. I heard evidence about how this transaction was conducted from Mr Miller of SHM, Iain Mitchell, the company secretary of Barratt at the material time, and Manus McMonagle, the partner in Blackadder and McMonagle who acted for Barratt. In the course of the transaction Barratt and SHM entered into a Minute of Agreement. It was executed by SHM on 29 and by Barratt on 30 April 1985. It was registered in the Books of Council and Session on 8 January 1990: why this was done at that time was not explained to me. The Minute of Agreement provided inter alia as follows:
- Rather than being executed at the same time as the Minute of Agreement, the Deed of Conditions was extended separately by the solicitors and sent by them for execution by Barratt after the Minute of Agreement had been executed. As I have said, it was executed by Barratt on 27 June and recorded on 7 August 1985. As a result of what Mr McMonagle described as "human error" in his firm's office, the whole of Clause (FOURTH) (Four), i.e. the passage I have marked [A] to [B], as set out in Appendix 1 to the Minute of Agreement, was omitted from the recorded Deed. Further discussion of how this error arose and how it might have been prevented will serve no useful purpose in the context of this opinion. The effect of the omission was that the recorded Deed contained no provision relating to an enforceable management scheme, and in particular no provision relating to the payment of a service charge.
- Several years passed before the omission was noticed by anybody. Barratt sold each of the dwellings within the complex to individual purchasers. Standard form missives were used by Barratt in connection with each sale and were personally signed by the purchaser or purchasers. Paragraph 9 thereof provided, in each case:
- In due course, after the granting of the Feu Dispositions in favour of the individual purchasers, by Disposition dated 10 and recorded on 24 February 1992 Barratt conveyed to SHM inter alia the dominium directum, i.e. the superiority, of the complex. Once SHM had become superiors, it was thought appropriate to introduce the new scheme of management in March 1992. Shortly after that, on reading through a copy of the recorded Deed which he had received, Mr Millar noticed that Clause (FOURTH) (Four) was missing from it. Thereafter this omission became general knowledge.
- For some time before anyone was aware of the omission, there was organised resistance by residents in complexes managed by SHM to their system of management. An association was formed, called Sheltered Housing Owners' Confederation (SHOC) to represent the interests of these residents. The principal points of concern which emerge from the correspondence were that, in each complex, SHM had become superiors as well as being the management company, and their system of management meant that there was no accountability either to separate superiors or to the owners, individually or collectively. From a letter written by SHOC on 23 September 1991, which had various excerpts attached to it, it may be taken that it was understood by the association that the recorded Deed was in the terms set out in Appendix 1 to the Minute of Agreement. The discovery that Clause (FOURTH) (Four) had been omitted from the recorded Deed has added strength to the campaign in respect of the complex. A number of residents in the complex have ceased to pay monthly service charges; I shall refer to them as "the non-payers". The number of non-payers (not all of whom are or have been members of SHOC) has varied from time to time, but they have always been a minority of the residents. At present there are about fifteen non-payers. A substantial majority ("the payers") have paid the service charges demanded from time to time by SHM. SHM have over the years tried various methods of obliging the non-payers to pay their service charges, including the raising of an action in the sheriff court against one of the residents (Mrs Mary More, now deceased), but they have now decided that the appropriate course is the making of this application, in terms of which they seek rectification of the recorded Deed by adding the omitted Clause (FOURTH) (Four).
- The relevant statutory provisions are contained in sections 8 and 9 of the Law Reform (Miscellaneous Provisions)(Scotland) Act 1985 ("the 1985 Act"). Section 8(1) provides that, subject to section 9, where the court is satisfied, on an application made to it, that inter alia (a) a document intended to express or to give effect to an agreement fails to express accurately the common intention of the parties to the agreement at the date when it was made, it may order the document to be rectified in any manner that it may specify in order to give effect to that intention. By sub-section (2), for the purposes of sub-section (1), the court is entitled to have regard to all relevant evidence, whether written or oral. By sub-section (4), subject to section 9(4), a document ordered to be rectified under section 8 is to have effect as if it had always been so rectified. Sub-section (5) provides that, subject to section 9(5), where a document recorded in the Register of Sasines is ordered to be rectified under section 8 and the order is likewise recorded, the document is to be treated as having been always so recorded as rectified. Section 9 provides inter alia:
- It was not in dispute that the recorded Deed, being a document intended to give effect to the agreement contained in the Minute of Agreement, failed to express accurately the common intention of Barratt and SHM as the parties to the agreement at the date when it was made, so that it is open to me to order rectification of the recorded Deed in terms of section 8(1) of the 1985 Act. It was also not in dispute that the intention was that the recorded Deed should include the omitted Clause (FOURTH) (Four), as set out in Appendix 1 to the Minute of Agreement, and that if I am to order rectification it is to be by the addition of the omitted Clause (FOURTH) (Four). It was accordingly agreed that it is not open to me to order rectification by the addition or substitution of any other provisions, even if I thought them better than those of the omitted Clause (FOURTH) (Four).
- The first question which I have to consider is whether any of the respondents is a person to whom section 9 of the 1985 Act applies. Counsel were not agreed on the proper construction of section 9(2). Counsel for the respondents submitted that all that is required for section 9 to apply is that the respondent in question should have relied on there being a recorded Deed, while counsel for the petitioners submitted that section 9 does not apply unless the respondent in question was aware of the terms of the recorded Deed and, specifically, that it contained no provision for payment of a service charge. I prefer the latter construction. I do not see how somebody could be said to have relied on the terms of the document if all he knew was that the document existed and did not know what its terms were. His position could not be said to have been affected to a material extent unless he knew about, and relied upon, the terms in respect of which rectification is sought. In my opinion therefore section 9 only applies to any respondent who has relied in particular on the absence in the recorded Deed of any provision for payment of a service charge, with the result that his or her position has been affected to a material extent.
- The approach of both counsel was to examine the evidence bearing on the question of reliance as at the date of each respondent's purchase. I heard evidence from the respondents Isobel Cairns, Jane Paxton, Raeburn M Smith, Ronald Thomson and Ronald R Smith. Evidence was also led, despite objection from counsel for the petitioners, from June Bain, whose motion to be sisted as a respondent was refused on 23 April 2002. In addition, in terms of Rule 36.8 of the Rules of Court, written statements by Marjorie Turnbull, Bessie Gibson and Mrs E Horton were lodged without objection. All the respondents, with the exception of Mrs Gibson who has paid the service charge throughout, are non-payers, but all of them paid the service charge for various periods after first becoming owners. In most cases this was for several years, but Mr R M Smith only paid for about nine months, during which there was an increase in the charge. Mrs Turnbull, Mrs Gibson, Mrs Paxton and Mr Thomson bought their properties directly from Barratt, and the other respondents bought their properties from the original purchasers or the estates of deceased purchasers. All the respondents, except Mrs Gibson, have become non-payers principally because of their concerns about the lack of accountability of SHM as the management company. Obviously, they feel fortified by the absence of any provision in the recorded Deed for payment of a service charge. I am not satisfied, however, that any of them knew about the absence of this provision at the time of purchase and accordingly relied upon it. On the contrary, they all expected that a service charge would be payable. If any of them had known at the time of purchase that there was no provision in the recorded Deed for payment of a service charge, this knowledge would have been shared by their solicitors and it might well have been taken up by them with Barratt and SHM that the recorded Deed was not in the same terms as Appendix 1 to the Minute of Agreement. It appears to me to be a reasonable inference from the fact that no solicitors ever raised the point that the assumption was made at the time of each purchase, whether from Barratt or subsequently, that the recorded Deed was in same terms as in Appendix 1 to the Minute of Agreement. The only respondent who claimed to have been aware of the terms of the recorded Deed at the time of purchase was Mr R R Smith. His evidence was that he did not see a copy of the Minute of Agreement and its appendices until some time later. This does not, however, appear to me to be consistent with evidence which he gave in a proof in Falkirk Sheriff Court on 4 June 1998, in the action by SHM against Mrs Mary More. On that occasion he appeared to say that what he was aware of at the time of purchase was the Minute of Agreement. I do not accept that he was aware of the terms of the recorded Deed at the outset. His recollection appears to me to have been affected by hindsight. It would, I think, be fair to describe him as an obstinate man - that was certainly the impression I formed while he was giving his evidence - and I feel sure that if he had known at the outset, when he and his wife bought their flat from the original purchaser, that there was no provision in the recorded Deed for payment of a service charge, then he would not have paid it at all. Indeed, I would have expected any of the respondents who claimed to have relied to the necessary material extent on the terms of the recorded Deed to have refused to pay the service charge from the outset, rather than after a significant period of time. The only basis upon which they could have regarded themselves as being under an obligation to pay a service charge was that there was a provision to that effect in the recorded Deed, there being no provision for such an obligation elsewhere, and they (and their solicitors) would not, in my view, have acted as they did unless they believed that the recorded Deed was in the same terms as in Appendix 1 to the Minute of Agreement.
- For these reasons, in my opinion, none of the respondents is a person to whom section 9 of the 1985 Act applies as provided by sub-section (2) thereof. Counsel for SHM did not seek to rely on the provisions of section 9(3). There has been lodged on behalf of SHM an undertaking, contained in a letter by their solicitors dated 24 April 2002, that in the event that the court decides that any of the respondents is a person to whom section 9 of the 1985 Act applies, SHM bind and oblige themselves that if the recorded Deed is rectified in the manner sought by them, they shall not enforce against any such respondent any right arising as a result of rectification to payment of a monthly service charge, due or to become due by such a respondent in respect of the property personally owned by him and/or her at Springbank Gardens, Falkirk; but SHM reserve the right to seek payment of a reasonable charge from any of the respondents in respect of the services provided to them in terms of SHM's obligations as superiors. In the circumstances this undertaking does not take effect. Nor, in the circumstances, is there scope for exercise of the discretion conferred on me by sub-sections (4) and (5) of section 9. Before leaving section 9, however, I would add that, even if I had held that any of the respondents was a person to whom that section applied, I would have been satisfied that the interests of this person would not be adversely affected to a material extent by the rectification, for the reasons which I give for the exercise of my discretion under section 8, to which I now turn.
- It was accepted, under reference to Norwich Union Life Insurance Society v Tanap Investments VK Ltd (in liquidation) 2000 SC 515, that, notwithstanding that I have held that none of the respondents is a person to whom section 9 applies, the respondents nevertheless have title and interest to oppose the application on its merits under section 8(1). I therefore require to consider their evidence and the submissions made on their behalf in considering the exercise of my discretion under this sub-section. I have already referred to the principal reasons given by the non-payers for their having ceased to pay a service charge. One point which it is appropriate to dispose of at this stage arises from the fact that SHM are now the superiors as well as the management company. It is true that, if Barratt had remained superiors, they might have intervened in any subsequent dispute between SHM and any of the owners. But Barratt had no expertise in the management of a sheltered housing complex, and, as I have said, it was their intention from the outset that the superiority should be transferred to SHM once all the Feu Dispositions had been granted. Counsel for the respondents sought to rely on Clause (THREE) of the Minute of Agreement, which provided that Barratt should retain the superiority of the subjects. But this Clause needs to be read with Clause (FIVE), which in effect allowed Barratt to require SHM at any time to accept ownership of the superiority. My construction of Clause (THREE) is that it was intended to prevent Barratt from conveying the superiority of any dwelling to the owner of that dwelling or to any person other than SHM. I do not think that any purchaser with access to legal advice would have had reason to believe that Barratt would retain the superiority forever. So the only true issue, as I see it, between SHM and the respondents is that of accountability.
- I have already referred to the evidence for the respondents. Evidence for the petitioners, in addition to that of the witnesses to whom I have already referred, was given by Helen Laird, Margaret Bell and Elizabeth Dougal, who are residents in the complex, and Isobel Lumb, who became the resident manager in 2001, having previously worked for the petitioners and for a local authority in other sheltered housing complexes. The differences between the two bodies of evidence are more to do with perceptions that with facts. I have already referred to the activities of SHOC. These were countered some years ago by a petition signed by about twenty five residents who are in favour of SHM and by a secret ballot, organised by SHM, which resulted in a clear majority in their favour. SHM themselves have bought dwellings in the complex which they have then let to tenants. The number of dwellings owned by them has varied from time to time but has never, I understand, been more than ten. Leaving aside these tenants, there have always been a substantial majority of payers who favour SHM. Mrs Bell described the complex as "a lovely place", and this seemed to be a view shared by the other payers who gave evidence. Mrs Lumb appeared to me to be a thoroughly competent resident manager, and the payers who gave evidence shared that view. Some of the respondents have from time to time complained about maintenance problems, but these appear to me to be relatively minor niggles and at the date of the proof there was no significant unremedied defect in any of the buildings.
- The main defect is in the relationship between the payers and the non-payers, who have divided into two distinct camps. It is usual for the residents in a sheltered housing complex to meet together at a coffee morning once a week, but in the complex the payers and the non-payers meet in different lounges on different days of the week. They otherwise have little contact with each other. The non-payers do not go on social outings with the payers. There is a perception on the part of the payers that the non-payers are getting something for nothing, and that the payers are subsidising the non-payers. SHM are in fact bearing the costs attributable to the non-payers, so that they are not being subsidised by the payers. But all the non-payers are getting something for nothing. This varies from non-payer to non-payer. For example, residents in the flats benefit from the maintenance of the common parts, the use of the lift and the heating and lighting of stairs and corridors, which does not apply to residents in bungalows. The alarm system and the services of the resident manager, at least in an emergency, are available for all residents, payers and non-payers. Even Mr R M Smith, who claimed in the course of his evidence to have "opted out", benefits from the premiums paid by SHM for buildings insurance for the whole complex, including his bungalow.
- The lack of harmony has become notorious, and there was some evidence, which I accept, that it has had an adverse effect on the value of properties within the complex when they come on the market. This is of particular concern to any resident who might wish to sell his or her property to pay for care in a residential home or a nursing home. I do not accept, as suggested by Mr R M Smith, that the market value of properties has been driven down by the amount of SHM's service charge and the lack of accountability, which gives SHM the opportunity to buy properties cheaply. The evidence which I heard from Mr Miller and Mr Campbell leads me to conclude that SHM's service charge at the complex is of much the same order as that payable in similar complexes, where properties fetch higher prices when they come on the market. I am satisfied, on the evidence, that the amount of the service charge claimed by SHM from time to time is reasonable. It is currently £95.75 per month. The respondents, in general, seem prepared to pay a reasonable charge, provided that there is accountability. Yet none of them, apart from Mrs Gibson, has paid anything for a considerable time, even to cover the cost of those services from which they benefit. The non-payers are able to exploit the present situation because there is no obligation in the recorded Deed to pay a service charge.
- It appears to me, from the evidence, that a cardinal feature of any sheltered housing complex is the community of interest of the residents in the facilities provided at it. They have all reached a time in their lives when they have decided that they would benefit from such facilities and they have a mutual interest in their provision and in the payment of a service charge to secure it. The extent to which residents rely on these facilities no doubt varies from person to person and from time to time - the evidence in the present case tended to show that residents come to rely more on them as they grow older - but the monthly service charge payable at the same rate by each resident may be regarded as a form of insurance premium to secure the provision of the facilities. It appears to me to be contrary to the whole ethos of a sheltered housing complex that any of the residents should feel free to "opt out". This is so whether the system is that operated by SHM or the type of system described by Mr Campbell. Even in the latter, decisions taken by a majority are binding on the minority of residents. The non-payers do not accept in the present case that the views of the majority should prevail. Their approach appears to me to be essentially negative: no constructive proposal was put forward on their behalf as to how the present situation might be resolved. In my view this is a situation which should only be allowed to persist if there are strong reasons for refusing rectification.
- It must be borne in mind that the discretion I have to exercise under section 8(1) of the 1985 Act is whether to grant or to refuse rectification by the addition of the omitted Clause (FOURTH) (Four). One criticism that may be made of the provisions relating to the service charge is that there is no mechanism, particularly now that Barratt have ceased to be superiors, to prevent the imposition of an excessive service charge by SHM. I have, however, already held that, even after increases from time to time, the present service charge is reasonable. Mr Miller accepted in the course of his evidence that the recorded Deed, if rectified, would be subject to the implied condition that any increase in the service charge must be reasonable. There would therefore be scope for any resident who claimed that a proposed increase was unreasonable to resist payment on that ground. Another point taken by the respondents is that once section 17 of the Abolition of Feudal Tenure etc. (Scotland) Act 2000 is brought into force the rights of SHM as superiors will in any event be extinguished. I do not think that this is a good point, partly because I have to deal with the situation as I find it to be now, rather than when section 17 is brought into force, and in any event, as counsel for SHM pointed out, section 18 of the 2000 Act makes provision for the re-allotment of a real burden by the nomination of a new dominant tenement, so there is no need to suppose that the provision for payment of a service charge will cease to be enforceable. The same observations apply in relation to proposals for reform of the law relating to tenements. Counsel for the respondents also submitted, under reference to Tailors of Aberdeen v Coutts (1837) 2 Sh. & Macl. 609, that a real burden for payment of a service charge of an indefinite amount is invalid; reference was also made to Grampian Joint Police Board v Pearson 2001 S.C. 772. Counsel for SHM referred to Tennant v Napier Smith's Trs. (1888) 15 R. 671. Reference may also be made to David Watson Property Management v Woolwich Equitable Building Society 1992 S.C. (H.L.) 21. Consideration of these authorities does not persuade me that provision for payment of a service charge of unspecified amount would be unenforceable as a real burden. In Tailors of Aberdeen v Coutts Lord Brougham, having held that an obligation to pay an unascertained sum of money cannot be imposed, went on to say that the obligation to pay the expense or any proportion of the expense of repairing, immediately connected with the subject granted, "would clearly stand in a different predicament". The provision of services by a management company in a sheltered housing complex appears to me to be immediately connected with the properties within that complex, and the payment of a service charge, albeit of an amount only ascertainable by reference to the concept of reasonableness, as the counterpart to provision of those services appears to me also to stand in the "different predicament" contemplated by Lord Brougham. In any event, if there is any force to this or any other point, it can be relied upon by any of the non-payers who continues to resist payment even after rectification. None of the points taken on behalf of the respondents accordingly appears to me to constitute a sound reason for refusing rectification.
- It is a striking feature of the present case that, with the possible exception of Mr R M Smith, all the witnesses were agreed that the present situation cannot be allowed to continue and that a solution must be found to the impasse. It is certainly not in the interests of SHM or the majority of residents who support them to allow the present situation to continue, and indeed I cannot see that it is in the interests of any of the respondents either. Given that the options available to me are to rectify the recorded Deed by the addition of the omitted Clause (FOURTH) (Four), or to refuse rectification, and given that the respondents refuse to be bound by the views of the majority, I have decided, taking account of all the considerations I have discussed, that it is better to grant rectification in the terms sought than to refuse it. Whether this solution leads to harmonious relations among all the residents depends on a degree of goodwill all round which I cannot impose; but I can, by granting rectification, impose a provision the omission of which has materially contributed to the present situation.
- I shall, accordingly, repel the pleas-in-law for the respondents and grant the prayer of the petition.
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OUTER HOUSE, COURT OF SESSION |
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P262/01
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OPINION OF LORD NIMMO SMITH in Petition of SHELTERED HOUSING MANAGEMENT LIMITED Petitioners; against MISS ISOBEL CAIRNS AND OTHERS Respondents: for Rectification of a document ________________ |
Petitioners: Clark; Brodies, W.S.
Respondents: Joughlin; Balfour & Manson
11 September 2002
"(ONE) The First Party [Barratt] shall be entitled to sell to such persons as they deem fit all and any of the said houses, provided always that the prospective purchaser of said house shall, in the case of a female, have attained the age of fifty, or in the case of a male person, attained the age of fifty five, subject to the first party being able to sell all or any such houses to such deserving persons as they shall, in their sole discretion, see fit.
(TWO) The First Party shall grant title of each individual Sheltered Housing Dwelling to such purchasers by way of Feu Disposition subject to conditions contained in a Deed of Conditions to be recorded by the first party in terms of appendix 1 to this agreement.
(THREE) The First Party shall retain the Superiority of the said subjects.
(FOUR) The First Party shall grant a Disposition without any consideration to the Second Party [SHM] of the Wardens flat, Wardens office and three guest bedrooms. The Second Party shall be bound to reconvey without any consideration therefore Wardens flat, Wardens office, three guest bedrooms and all rights associated therewith, to the First Party or such person as shall be nominated by the First Party in the event of termination of this agreement. Further Feu Disposition to be granted to Second Party shall contain a right of pre-emption in favour of the First Party and that for no consideration or price. Each party to be responsible for their own legal and other expenses in connection herewith.
(FIVE) The First Party may require the Second Party at any time to accept ownership of the dominium directum of the whole development and the dominium plenum of all such parts of said scheme as may from time to time be in the ownership of the First Party excluding therefrom any flat or house and garden area effeiring thereto.
(SIX) The Second Party shall provide a full warden service as and from Fifteenth May, Nineteen hundred and eighty five, said warden service to comprise as follows:-
(a) The Second Party shall employ a husband and wife or such other suitable persons as joint wardens upon the terms and conditions inter alia set out in appendices 1 and 2 to this Minute of Amendment. The Second Party shall ensure that said wardens provide all services provided for in said Deed of Conditions.
(b) The Second Party shall, on or before Fifteenth June, Nineteen hundred and eighty five employ a relief warden who shall live within a two mile radius of said houses. Said relief warden shall provide at all times the services of the wardens when either or both wardens are not available. The Second Party shall ensure that the residence of the relief warden is at all times connected to the alarm system installed by the first parties in said houses. The Second Party reserves the right to alter the management and staffing of the scheme provided a comparable service is maintained all in forms of appendix 2 hereto.
(SEVEN) The Second Party shall fully insure the whole of the development as and from Fifteenth May, Nineteen hundred and eighty five for all common calamities and purposes with a reputable Insurance Company and shall comply with all the terms of said Deed of Conditions.
(EIGHT) As and from Fifteenth May, Nineteen hundred and eighty five the Second Party shall fully maintain and repair the whole buildings, fences, common areas and other development of said area except in so far as the occupiers of said houses are to be responsible in terms of said Deed of Conditions and the Second Party shall satisfy the First Party that adequate provision is made in respect of these obligations.
(NINE) The Second Party shall undertake to maintain any private garden ground allocated to any sheltered house upon being requested by the occupier thereof provided always that the second party shall be entitled to charge said occupiers such rate or rates as shall be agreed in respect of this service which shall not form part of the administration charges hereinafter specified.
(TEN) The Second Party shall effectually and effectively maintain and keep in good order and repair the emergency systems as installed by the first party in said development.
(ELEVEN) The Second Party shall fully maintain and repair all lifts and other communal equipment all to the sight and satisfaction of the first party.
(TWELVE) The Second Party shall institute a Scheme of Management not later than Fifteenth May, Nineteen hundred and eighty five in terms of appendix 2 hereto. The Second Party shall be entitled to alter, vary, revoke or modify the same but the First Party shall be entitled to call upon the Second Party to institute a similar or suitable scheme of management which will require the approval of the First Party for the efficient effective and satisfactory management of the development.
(THIRTEEN) The Second Party shall be entitled to levy a charge of £41.23 per month to the purchasers and their successors in title, all in terms of said Deed of Feuing Conditions, and the Second Party shall if called upon to do so furnish estimates of cost when any review of the said charge is required."
The terms of the Deed of Conditions, as set out in Appendix 1 to the Minute of Agreement, contained various provisions relating to the complex and the individual privately-owned dwellings within it. It is necessary for present purposes to quote the whole of Clause (FOURTH), as follows (the text is exactly as in the original):
"(FOURTH) The Superiors shall be responsible for the management maintenance and administration of the complex (other than the interiors of the sheltered houses and flats (excluding common areas) which shall be the sole responsibility of the occupants thereof) and this responsibility shall include but shall not be limited to the following:- (One) maintenance, repair and renewal of: (a) the structure and external parts of all erections within the complex; (b) all garden ground (i) effeiring to the sheltered houses and flats in so far as separately agreed with the proprietors thereof and subject to such payment as may from time to time be agreed; and (ii) within the complex; (c) all amenity open spaces within the complex; (d) all roads, footpaths, slabbed areas, communal parking areas and other communal areas within the complex in so far as these are not taken over by the Local Authority; (e) all fences, walls, hedges, trees, shrubs, flowers and plants within the complex; (f) where the sheltered house forms part of tenemental flats, all staircases, landings, closes and other communal parts within the said block or tenement, including the lighting and cleaning thereof; all common rooms, guest accommodation and premises occupied by employees of the Superiors; (Two) Insurance of the complex including without prejudice to the generality of the foregoing, the sheltered houses and flats, warden's house, guest bedrooms, communal facilities, fences, walls and other external structures in the complex and where the sheltered house forms part of a tenement of flats Insurance of the whole tenement, such Insurances to be taken out by the Superiors with a reputable Insurance Company and to be equal at least to the reinstatement value of the subjects covered and for normal insurable perils, but excluding moveables in the possession of occupiers; (Three) appointment of wardens to superintend the management and administration of the complex and of such relief or assistant warden as may be required from time to time and the payment of the salary of the wardens and of any relief or assistant warden and of all other costs incurred in the employment of the wardens or their relief or assistant including without prejudice to the generality of the foregoing the payment of rates and heating costs relating to the wardens' house, warden's office, guest bedrooms and communal facilities; [A] (Four) A Management Scheme comprising regulations shall be drawn up by the Superiors and these shall be enforceable against the feuars. These Management Regulations shall contain rules governing the management and administration of the complex and the payment of Charges by the feuars for such management and administration. The Management Scheme shall contain, but shall not be limited to, the following rules:- (a) payment by the feuar of a monthly service charge in respect of all services provided by the Superiors, such charge being payable monthly in advance on such date as is directed by the Superiors. The service charge for the first twelve months shall be Forty One Pounds twenty three pence (£41.23), but shall be reviewable in an upwards direction by the Management Company at anytime on the Management Company giving to the feuar three months prior written notice; (b) a site to be laid out within the complex as a communal parking area which will be used by the feuars and their visitors for parking of private cars only and for no other purpose whatsoever; (c) the feuars right to form an Association for the purpose of making representations to the Superiors or the warden; (d) the duties of the warden which shall be generally to look after the wellbeing and safety of the feuars and to supervise the whole of the complex and the warden shall without prejudice to the foregoing be responsible inter alia for the following: (i) respond to any emergency call and summon such assistance as may be necessary; (ii) maintain a register of occupants with particulars of next of kin or the names of such other person or persons to be contacted in emergency; (iii) maintain a register of Doctors, Dentists, Ministers, Priests et cetera with relative phone numbers; (iv) being available to assist and welcome newcomers with help and advice and assisting the feuars in organising communal activities; (v) supervision of and assistance with maintenance of gardens, amenity areas, fencing, external parts of sheltered houses and other parts of the complex; (vi) supervision of and assistance with all other works of common maintenance and repair; and (vii) such other duties as shall be specified from time to time by the supervisor; (e) supervision and administration of the use of the guest bedroom which shall be at the sole discretion of the Management Company.[B]"
The Scheme of Management set out in Appendix 2 contained provisions similar to those of the scheme which has been in operation since 1992 and which I have already summarised. Each page of the Minute of Agreement and the two appendices was executed by both Barratt and SHM. The solicitors added a testing clause in the usual way at the end of the Minute of Agreement. Confusingly, they also added a testing clause at the end of Appendix 1. As a result, it is easy to take the contents of Appendix 1 to be the executed Deed of Conditions, rather than the agreed terms thereof.
"It is understood that you have arranged for administration of the whole estate as a sheltered housing managed scheme, such scheme to provide for a full time warden and relief warden employment, common insurance for standard perils of the whole estate, an emergency alarm system, maintenance and repair of the Estate (other than maintenance and repair of a type exclusive to the interior of the dwellinghouse) accommodation provision for the full time warden and for guests of owners, and maintenance of all common areas, all as to be provided by Sheltered Housing Management Limited, having its registered office at 13, Ward Road, Dundee in terms of Minute of Agreement between you and said Company and as further governed by Deed of Feuing Conditions by you in respect of the Estate and Scheme of Management. I/we undertake to adhere to the terms and conditions required and as applied in these aforementioned deeds for the administration of the whole estate as a Sheltered Housing Management Scheme, and to pay such charges as shall from time to time be required from and levied against me/us. I/we warrant that I/we have read and understood the Minute of Agreement and Scheme of Management referred to prior to signing this offer."
Paragraph 10 of the missives provided inter alia that the title would take the form of a Feu Disposition or similar writ containing certain clauses, including a clause:
"(f) Providing for the Management Maintenance and Administration of the Estate as a Sheltered Housing Managed Scheme, and the charges payable by me/us therefor."
Copies of the Minute of Agreement and the two appendices thereto were attached to the missives. No solicitor who acted for any of the purchasers was called as a witness, so it cannot be said with confidence what documents were available for examination before a Feu Disposition was granted in favour of a purchaser. It might be expected that a copy of the recorded Deed, along with copies of the other deeds referred to for burdens, would have been available for examination. But it may have been assumed, wrongly, that a copy of Appendix 1 to the Minute of Agreement, which had all the appearance of an executed deed, was a copy of the recorded Deed. At all events, even if a copy of the recorded Deed was available, as well as a copy of the Minute of Agreement and appendices, no solicitor acting for any purchaser noticed that Clause (FOURTH) (Four) had been omitted from the recorded Deed.
"(1) The court shall order a document to be rectified under section 8 of this Act only where it is satisfied -
(a) that the interests of a person to whom this section applies would not be adversely affected to a material extent by the rectification; or
(b) that that person has consented to the proposed rectification.
(2) Subject to sub-section (3) below, this section applies to a person.... who has acted or refrained from acting in reliance on the terms of the document or on the title sheet of an interest in land registered in the Land Register of Scotland being an interest to which the document relates, with the result that his position has been affected to a material extent.
(3) This section does not apply to a person -
(a) who, at the time when he acted or refrained from acting as mentioned in sub-section (2) above, knew, or ought in the circumstances known to him at that time to have been aware, that the document or (as the case may be) the title sheet failed accurately to express the common intention of the parties to the agreement...; or
(b) whose reliance on the terms of the document or on the title sheet was otherwise unreasonable."
Sub-sections (4) and (5) of section 9 allow the court, for the purpose of protecting the interests of a person to whom section 9 applies, to order that the rectification of a document shall have effect at a later date than that at which it would have effect by virtue of section 8(4), and to order that a document as rectified shall be treated as having being recorded as mentioned in section 8(5) at a later date than that at which it would be treated by virtue of that sub-section as having been so recorded.