Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2012] CSOH 175
CA130/12	OPINION OF LORD WOOLMAN in the cause RUSSEL PROPERTIES (EUROPE) LTD Pursuer; against DUNDAS HERITABLE LTD First Defender; And TESCO STORES LTD Second Defender: ________________

Pursuer: Lake QC; DLA Piper Scotland LLP

First Defender: Currie QC; HBJ Gateley Wareing

Second Defender: Borland; Semple Fraser

14 November 2012

Introduction

[1] Westwood Neighbourhood Centre in East Kilbride comprises a mix of flats, offices and shops. Russel Properties (Europe) Limited owns much of the non-residential subjects, together with two car parks. The Westwood pub is owned by Dundas Heritable Limited. It is bounded on all sides by property owned by Russel. A betting shop is also located at the Centre. It is owned by a third party. All the titles derive from East Kilbride Development Corporation.

[2] Although the pub trades profitably, it now only uses a small part of the premises. Dundas applied for planning permission for part of the ground and first floors of the pub to be used for retail purposes. Despite opposition by Russel, the planning authority unanimously granted permission in May 2012.

[3] Dundas has concluded missives to grant Tesco a lease of the retail parts of the premises. The missives were subject to various suspensive conditions. They have all now been purified. Tesco intends to open a "Tesco Express" convenience store at the site. Construction works are scheduled to commence early next year.

[4] In late August or early September, Russel learned of Tesco's involvement. Correspondence then followed between the respective solicitors acting for Russel and Dundas. Russel pointed to a burden in the title sheet for the pub, restricting its use to that of a pub or restaurant. It maintained that it had the right to enforce the title condition.

[5] Dundas deny that there is an enforceable restriction. That is the background against which Russel raised the present action for declarator and interdict. It convened Dundas as a defender, but not Tesco.

[6] The matter came before me in a motion before calling. Russel sought interim interdict in terms of the first conclusion. A caveat was triggered and both Dundas and Tesco were represented at the hearing.

Motion by Tesco

[7] Tesco lodged a minute seeking to be sisted as a defender to the action. Dundas did not oppose the motion. Russel, however, argued that Tesco should not be a defender because it had no title to be present. On Mr Lake's analysis, the dispute lay between Russel as the benefited proprietor and Dundas as the burdened proprietor.

[8] I granted the motion and sisted Tesco as the second defender. I was satisfied that it has a "clear and direct", "material" or "true" interest in the matter: Glasgow Shipowners' Association v Clyde Navigation Trs (1885) 12R 695. Tesco, rather than Dundas, is the party that intends to develop and trade from the subjects. I was also persuaded by the utility of such an approach:

"But this is a real action, relating to the possession and use of a heritable subject, and I think that in any such question it is clearly desirable that all the parties interested in the question of real right should be here in order that the decision to be pronounced should be binding on all."

(ibid per Lord McLaren at 698)

The Issue

[9] The dispute centres on the following burden in the title sheet for the pub (LAN50960):

"Subject to the provisions of these presents the feu and the buildings and others erected thereon, or any part thereof, shall not be occupied or used for any trade, business or purpose other than that of a licensed public house and/or public restaurant and purposes ancillary thereto ... without the written consent of the Superiors."

[10] Three points can be noted. First, it is not an absolute prohibition. Until the abolition of the feudal system, the superior had the right to alter, waive or modify the condition. Secondly, as the superior was expressly granted the primary right of enforcement, that excluded any implied enforcement rights by neighbours: Turner v Hamilton (1890) 27 R 494. Thirdly, there is a small degree of latitude regarding use -the premises can be run as a pub or as a restaurant.

[11] Russel claims that it has a right to enforce the burden based on the new regime introduced by the Title Conditions (Scotland) Act 2003. In particular, it founds upon section 53 of the Act:

Common schemes: related properties

(1) Where real burdens are imposed under a common scheme, the deed by which they are imposed on any unit comprised within a group of related properties ... then all units comprised within that group and subject to the common scheme (whether or not by virtue of a deed registered before the appointed day) shall be benefited properties in relation to the real burdens.

(2) Whether properties are related properties for the purposes of subsection (1) above is to be inferred from all the circumstances; and without prejudice to the generality of this subsection, circumstances giving rise to such an inference might include -

(a) the convenience of managing the properties together because they share -

(i) some common feature; or

(ii) an obligation for common maintenance of some facility;

(b) there being shared ownership of common property;

(c) there being subject to the common scheme by virtue of the same deed of conditions; or

(d) the properties each being a flat in the same tenement.

The Other Titles

[12] The burdens contained in the titles of three other subjects at the Centre are relevant. Russel holds two of those titles. In relation to the subjects upon which buildings have been erected (LAN108409), the burden states:

"THIRD The whole of the said shop and office premises and others shall be used for purposes falling within Classes 1, 2, 3, 4 and 15 of the Schedule to the Town and Country Planning (use Classes) (Scotland) Order 1989 or for such other purpose (including a public library and doctor's surgery) as is appropriate to a neighbourhood shopping centre only and not for any other purpose without the written consent of the Superiors which consent shall not be unreasonably withheld or delayed."

[13] In relation to the land held by Russel as car parks (LAN108410), the burden reads as follows:

"(SEVEN) No buildings or erections of any kind whatsoever shall be built or erected on the said area tinted pink on the said Title Plan which shall remain unbuilt upon in all time coming; and our said disponees and their successors shall be bound to maintain the said area tinted pink on said Title Plan for use by the general public, the proprietors of the said shops and offices and the dwellinghouses in the blocks tinted green on said Title Plan and the customers, proprietors and the staff of Redwood Public House, Westwood, East Kilbride and of the Betting shop at 1 Redcliffe Drive, Westwood, East Kilbride in all time coming in good order and repair and in a neat and tidy condition, all to the reasonable satisfaction of the proprietors of the shops and offices and dwellinghouses; and which burden shall be enforceable by such proprietors and by the general public;"

[14] The title in the burdens section for the betting shop (LAN91318) reads:

"FIFTH subject to the provisions of these presents the feu and the buildings and others erected or to be re-erected thereon, or any part thereof, shall not be occupied or used for any trade, business or purpose other than that of a licensed betting office and purposes ancillary thereto, without the written consent of the Superiors which consent shall not be unreasonably withheld or delayed."

Is there a Common Scheme?

[15] Mr Lake referred to these four titles as "the conveyancing jigsaw" at Westwood Neighbourhood Centre. Looked at together, he submitted that they created a defined area, which was subject to a common scheme. On his analysis, the effect of the 2003 Act was therefore to transfer the right of enforcement from the superior to the co-proprietors.

[16] In my view, various facts do point in that direction. The various properties lie in close physical proximity to one another. All the titles derive from East Kilbride Development Corporation. It appears to have conceived Westwood Neighbourhood Centre with a mix of properties within it.

[17] The term "common scheme" is not defined in the 2003 Act. Some assistance about its meaning is, however, provided by the Report which gave rise to the legislation: Scottish Law Commission No. 181 Real Burdens:

"The idea of a common scheme ... is familiar from the rules on implied enforcement rights. Usually, but not always, the burdens will originate from a common author. Well burdens in a common scheme are often identical, this is not a formal requirement. ... but if burdens are not identical, there must at least be a sense of equivalence. An example comes from the deed litigated in Cooperative Wholesale Society v Ushers Brewery [1975 SLT (Lands Tr) 9]. Here three units, feued by a common author, were used as a supermarket, a pub, and a betting office. ... While not identical, these prohibitions were clearly intended as equivalents, designed for the prosperity of the development as a whole."

[18] The test is an objective one, so the actual intention of the common granter is not relevant: Report para. 11.6. Often a common scheme confers reciprocal rights of enforcement: Report para. 11.7. At common law, Lord Watson stated that for a co-feuar to have title to enforce a condition, there had to be a "similarity of conditions or mutuality of interest": Hislop v MacRitchie's Trs 1881 SC (HL) 95, at 102. In my view, the same idea underlies the Commission's approach.

[19] At this stage, I am concerned with the question of whether or not there is a prima facie case. It is formulated in different ways. Is there a case to try, or a case to answer, is there an arguable case? I approach the matter on that basis, having heard full argument. However, I wish to add this point. Although Mr Lake would have preferred to see more documentation regarding the Development Corporation's intentions, he conceded that it was unlikely that any evidence could be led on this matter.

[20] In my view, Russel has failed to establish a prima facie case. The burdens are not identical, or even similar. The rights of enforcement materially differ. In the case of the car parks, title is expressly given to co-proprietors and members of the public. No such provision is made in the other three titles. I conclude that they do not match in a manner that indicates an underlying sense of equivalence.

[21] In the Cooperative case, the Lands Tribunal stated (at p. 10) that

"The feu dispositions of the other two plots contained matching obligations restricting the use of the other feus to the public house and a betting office with corresponding rights of enforcement."

In my view, the present case is clearly distinguishable. The required mutuality is absent. No reciprocal rights of enforcement are conferred.

Are the Properties Related

[22] Counsel agreed that the concepts of 'common scheme' and 'related properties' shade into one another. Although the court has a discretion as to what constitutes related properties, some guidance can be gleaned from the illustrations set out in section 53(2). Russel do not plead that it fits within any of these classes. In my view, having regard to the whole circumstances, it has failed to establish an arguable case that the properties are related. Accordingly, Russel does not satisfy the criteria to become a benefited proprietor.

Balance of Convenience

[23] If I had required to consider balance of convenience, I would have found in favour of Russel. In my view the decisive factor involves the inversion of the status quo if Tesco is allowed to proceed but Russel ultimately succeeds. At that stage, it would be very difficult to put the pub premises back to their original position and there could have been a substantial effect on the financial viability of the subjects owned by Russel. Mr Lake explained that a number of tenants had indicated that they would quit their premises if a Tesco Express opened in the Centre. Both Mr Currie and Mr Borland queried that assertion. They also founded on the fact that the planning authority had voted unanimously to grant the planning application, on the basis that a convenience store in that location was desirable.

[24] There was some discussion about the requirement that Russel had to show that it would suffer "material detriment" in order to qualify to enforce the title condition against Dundas: section 8 of the 2003 Act. It was accepted that this could only be established by means of proof.

[25] There is one other point I wish to record. Mr Currie stated that no material had been placed before the court to show Russel's financial standing. It was a company incorporated under the laws of Cyprus, but his instructing solicitors had found it impossible to find any accounts lodged by the company in Cyprus or in any other jurisdiction. Mr Currie submitted that this was an important factor in assessing whether to grant an order, as it was unknown whether Russel could satisfy any claim for damages. Mr Lake explained that he had asked for accounts to be provided, but none were available by the close of the hearing. This is a matter where I would have asked for vouching to be lodged.

Terms of Interdict

[26] Mr Currie argued that to grant interim interdict would be to breach two fundamental principles. It would involve pronouncing an order with no utility, because Dundas was now obliged to grant a lease to Tesco. As he put it "the bird had flown the coop". Secondly, the first conclusion was not framed with sufficient precision. Dundas could not know what act they were prevented from doing: Burn Murdoch Interdict para. 111. That is a serious matter when a breach could result in contempt of court.

[27] In my view, Russel was correct to seek an order based upon the wording of the burden itself. If, however, I had been minded to grant interim interdict, I would have invited further submissions on the precise form of the order and whether it should also be directed against Tesco.

Decision

[28] For the reasons given above, I refuse the motion for interim interdict.