Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2016] CSOH 75

A492/13

OPINION OF LORD MCEWAN

In the cause

SCOBIE FARMS

Pursuer;

against

GREENYARDS GARDEN CENTRE LIMITED

Defender:

Pursuer:  Robertson, Balfour + Manson LLP

Defender:  Thomson, Burness Paull LLP

27 May 2016

[1]        In this action the pursuers seek declarator that they have a servitude right of access (specified) over the defender’s lands.  The record refers in detail to the Land Certificate for both properties and they are incorporated in the pleadings.  I refer to this elsewhere.  The servitude was reserved in a disposition in 1997 by the pursuer’s predecessors in title (Norbrit for short) to the defender’s predecessor’s (Gilchrist’s) who in turn granted a further servitude which would only apply if Norbrit were refused planning permission for the construction of a roadway (shown on a plan).  If Norbrit obtained planning permission they were obliged to discharge the servitude.

[2]        In essence the dispute argued before me was that the defenders say no servitude was ever created as Norbrit were never refused planning permission and indeed never applied for one.  The pursuers say that there was a refusal of planning and that the application for it was made on behalf of Norbrit by another company (Watermation) as their agent.

[3]        The pursuers allege in some detail how this agency arose and that is to be found in article 4 of the condescendence.  That plainly raises a number of factual issues which are outwith the knowledge of the defenders.  For present purposes I can summarise them in this way.  A Mr Scobie was the major shareholder and director of both Norbrit and Watermation.  His wife was also a shareholder and director.  The business involved acquiring pipe systems and other components to design and install irrigation systems for golf courses.  The proceedings go on to describe how Scobie operated both companies and made the arrangements with a Mr Mitchell to submit the planning application.  It was deliberately submitted in the name of Watermation and it is averred in terms that: 

“… the actions of Watermation in presenting and progressing the application … were undertaken on behalf of Norbrit …”.

It is also said that the council were aware of Norbrit’s interest in the application.  The pursuers (page 9 C/D) then give their interpretation of the deed of servitude.  In essence the pursuers say that they have averred facts and circumstances from which agency can be inferred, Watermation being the agent and Norbrit the principal.  The defenders say that the averments are irrelevant to instruct a case of agency.  They have a separate discrete point in paragraph 9 of their revised Note of Argument (No 17 of Process) that part of the pleadings should be excluded from probation. 

[4]        A number of authorities were referred to in the course of the debate and I list them here: 

Jamieson v Jamieson 1952 SC (H.L.) 44

McLean v Marwhirn Developments Ltd 1976 SLT (Notes) 47

Eastern Marine Services v Dickson Motors Ltd 1981 SC 355.

Woodchester Equipment Leasing Ltd v Gindha 1993 SLT (Sh. Ct.) 26.

Royal Bank of Scotland v Shanks 1998 SLT 355.

Axis West v Chartwell Land Investments 1999 SLT 1416.

Ben Cleuch v Scottish Enterprise 2008 SC 252.

Assessor for Grampian Valuation Joint Board v Brownlie 2003 SC 245.

Whitbread v Goldapple 2005 SLT 281.

Stirling v Westminster Properties 2007 BLR 537

The undernoted text books were also referred to viz.

Cusine and Paisley Servitudes and and Rights of Way S U L I 1998.

McGregor:  The Law of Agency in Scotland S U L I 2013.

[5]        Counsel for the defenders moved me to dismiss the action.  The whole matter depended on one deed and there were two issues.  Firstly there was the servitude and its interpretation.  The burden was conditional and could only exist if a particular person was refused planning permission.  Secondly there were no relevant averments to prove that Norbrit Pipe Services Ltd (“Norbrit”) had been refused planning consent.  No servitude came into existence when the deed was registered.  It would exist when there was a refusal.  That would not prevent a discharge if there was a later grant.  Mr Thomson referred to Cusine and Paisley at pages 146/7 and 612, and the presumption for freedom from restriction.

[6]        I was referred to the Planning Application (No 6/6 of Process) that showed an application by an agent (Roy Mitchell) for Watermation Scotland Ltd as owners of the land.  In September 2005 the refusal of that is No 7/4 of Process and was addressed to an agent for Watermation.  The pursuers had made averments of agency (Record p 8E onwards) and sought thereby to take the benefit of the refusal to Watermation.  A call made properly to specify the agency (Record 11D) had not been answered.  Agency could not be presumed but was a matter of fact and law.  It could depend on conduct.  He referred me to Eastern Marine Services at page 359, and Woodchester – a case in the sheriff court.  The Royal Bank case at page 360 showed that there had to be specification.  There could be ad hoc agency for one transaction as happened in Whitbread.  Counsel read from pages 284/5, and read also from Stirling at page 543.

[7]        Here it was not the only inference from the facts that Watermation were agents.  There were no averments that Norbrit asked Watermation to apply for planning.  The fact that they worked together and were interrelated did not equate to agency.  The application was not “on behalf of” Norbrit.  Counsel finished by referring me to his Note of Argument.  He asked me at present to disregard paragraphs 1 and 11.  He adopted numbers 2 to 10 and in particular 9 and 10.

[8]        In replying, Mr Robertson moved me to allow a proof before answer.  The case raised questions of mixed fact and law and evidence should be heard as some of the authorities had shown.  He said that the pursuer’s pleadings were adequate and that the test for relevancy was a high one.  Jamieson was referred to.

[9]        Although the condition was accepted to be suspensive of any obligation, it did not say that Norbrit had to apply.  In this commercial contract there had to be a refusal or a grant in relation to the land.  A planning permission ran with the land.  The following matters were clear from the pleadings.  Watermation were applying for a building with shared access to Norbrit and Scobie Farms.  They paid the application fee and were to be the builders.  They were Norbrit’s tenant there as elsewhere.  A permission would benefit Norbrit and Watermation and any refusal would prevent Norbrit from fulfilling its plans.  The defender’s predecessors, the Gilchrists had been notified of the application and had not objected.  Norbrit had been at the heart of what was sought and refused.  They were the dominant proprietor.  Why then had permission been refused?

[10]      Counsel here looked at McLean and at Axis West.  Cusine and Paisley was read at 15.15.  In the context of this application Watermation could only enforce the obligation if Norbrit agreed.  Norbrit’s name appeared on relevant drawings.

[11]      The pleadings would allow the court to find that the suspensive condition was met when in commercial reality Norbrit were refused planning permission.  They had the real interest to enjoy as landlords and Watermation could only benefit with the permission of their landlord.  In reality Mr Scobie dealt with everything and the application only made sense if both were involved.  Agency could be created without writing.  Counsel then took me through the cases of Ben Cleuch, Eastern Marine, Woodchester, Shanks, all of which, he said, showed differing contexts.  Agency can arise from facts and circumstances alone and one party could act for another even in informal circumstances.  The case of Whitbread was a single transaction whereas Stirling showed a series of events.  Nor did agency have to be confined to large companies and it was noteworthy that this case was far removed from the dishonesty cases. 

[12]      Mr Robertson concluded by referring to particular parts of his Note of Argument viz paragraphs 6 to 10.  Even if the pleadings were doubtful the test in Jamieson was met,the pursuer was not bound to fail and the court should not take a narrow approach to the pleadings.

[13]      Let me now look briefly at the jurisprudence cited to me.  Jamieson requires no comment.  It sets a well‑known high test for relevancy.

[14]      In McLean v Marwhirn etc the pursuers, who owned a caravan park, sought a declarator of servitude of drainage, sewerage and water supply as presently used and as so used for over 20 years.  Their predecessor in title had an express grant in a disposition dated 1953.  The defenders contended that a bare declarator was incompetent and the extent of the right could not be discovered from the grant as the disposition was silent as to how the drains and sewers were used in 1953.

[15]      The First Division accepted that a ‘real burden’ had to be precisely defined.  The question raised was whether a servitude created by grant was indistinguishable from a real burden.  The court did not require to decide the point and indicated that in any event the pipes etc were sufficiently identified in the 1953 deed.  That matter was also susceptible of proof.  At page 49 the court pointed out the difference between servitudes and true real burdens.  The latter rested on the record alone.  Adhering to the Lord Ordinary, they allowed a proof before answer.

[16]      Eastern Marine concerned the Hire Purchase of a Mercedes car.  The mileage represented by the dealer was later found to be not accurate.  The purchaser sued, inter alia, the finance company alleging that the dealer was their agent.  There was no specification as to how that agency had been constituted.  The pursuers founded on a presumption said to the part of the law in England in similar transactions.  In holding that it was a pure question of fact, and as no facts were averred, the Lord Ordinary dismissed the action at procedure roll. 

[17]      Woodchester Leasing etc concerned the hire of a photocopier allegedly through an agent of the pursuers.  There was no specification at all of how and when the agency arose.  Although the sheriff had allowed a proof before answer, on appeal the Sheriff Principal dismissed the defences and granted decree de plano.  Agency was not to be presumed.

[18]      In Shanks the bank sought to enforce a joint liability against a husband and wife on the basis of standard security and personal bond.  Only the wife defended the actions.  She alleged that in getting her to sign the documents her husband was the agent of the bank.  There were no averments at all as to how, as a matter of fact, the agency had been created.  The Lord Ordinary on this point found the wife’s averments to be irrelevant.

[19]      Axis West concerned the proper construction of a servitude grant to connect a sewage pipe beyond the boundary of the servient tenement.  It arose in this way.  The servitude was for electricity, gas, water, drains and sewers granted by a Company Atlas to Chartwell.  It was expressed as “… currently serving the Atlas subjects …”.  Atlas disposed part of their land to Axis and part of that was a distributor road.  Chartwell sought to connect services to a roundabout on that road and Axis objected to the pipe connecting to the sewer under their land.  Much depended on the clause creating the servitude and whether it was limited to the retained Atlas subjects.  The way the deed was formed at the time covered the whole of the land held by Atlas at the time and so from the outset the distributor road was not free of the servitude when the land was sub-divided.

[20]      There are two other observations.  McLean was approved and followed.  It was said that evidence could be led to locate the various services and that did not deprive the clause of its certainty.  The servitude ran with the land and later sub‑division did not affect that unless expressly catered for.  The action was dismissed.

[21]      In Ben Cleuch the issue was whether a “break option” in a lease had been validly exercised.  Both landlord and tenant were successors in title.  There was a complex list of holding companies for the property before the pursuers acquired it.  The Lord Ordinary heard a proof as to how this property and others were managed.  The invoices for rent are described from paragraph 20 onwards and the break clause from paragraph 34.  The correspondence showed a degree of confusion as to who was the landlord.  The “break” notice was served on a party not the landlord.  The incorrect notice misled nobody as to what the tenant wanted to do and the true landlord intended to take advantage of the mistake (see paragraphs 91 and 97).  The person who was directing mind of the true landlord could not have been misled by the mistaken reference to the landlord who was in any event an agent for the real landlord (paragraph 106).

[22]      The Lord Ordinary looked closely at the precise terms of the lease and who had to give notice and to whom.  He then looked at the leading English cases and concluded that the notice had not been validly served.  He further concluded that the pursuers were not personally barred in spite of the evidence showing informal agency arrangements (paragraph 143).  In the result the defenders were left as tenants for a further 10 years at a very high rent.

[23]      The case of Brownlie concerned the correct band for the valuation of a dwelling house on a farm which was subject to a planning restriction.  The court held that the restriction could not be ignored as planning permission runs with the land to which it relates.

[24]      Whitbread was a case which inter alia concerned the law of agency.  What happened was that tenants of a bar in Edinburgh were late in paying rent.  The payment was late due to the tenants’ reorganisation of their internal procedures and handing that to another company (Fairbar) who sent a cheque for the full amount some days later.  The cheque was cashed then the money returned.  Thereafter further attempts to pay were made bordering on the farcical (see paragraph 3 and paragraph 16 onwards).  The Lord Ordinary heard a detailed proof and inter alia held that in paying the tenant’s debt Fairbar were agents in an ad hoc transaction.  The case dealt with other matters but in the end the tenants remained in their lease (see also paragraphs 12 to 14).

[25]      Stirling etc v Westminster etc concerned a dispute and adjudication in a construction contract.  Problems arose due to a misdescription of corporate personality in some of the documentation.  The Lord Ordinary decided the case of agreed facts in a joint minute.  He stated that in commercial reality a degree of common sense has to be applied to correspondence where agency is involved.  (Examples can be seen in paragraph 28).  Only with litigation or adjudication is correct formality necessary (paragraph 16).

[26]      The relevant servitude in the present case is described in Title STG58542 on page 7 in these terms inter alia

“… a servitude right of way for pedestrians and vehicle traffic over the strip of land hatched green on the … plan ... maintenance according to user … but said servitude … shall only apply in the event of the said Norbrit … being refused planning permission for the construction of a roadway … “.

The line of the road is shown and there is an obligation to discharge (No 6/2 of Process). 

[27]      What then is to be done.  In my opinion this is a classic case where before being in a position to answer the criticisms made, proof is required and that is the course which I will adopt.  I can give my reasons briefly.

[28]      When Mr Thomson said in his argument that agency was not the only conclusion from the pursuer’s averments, that in my opinion was fatal to any Jamieson argument on relevancy and proof would have to follow.  It is noteworthy that in the cases where averments about agency resulted in dismissal or decree, what was seen on Record was minimal eg Eastern Marine and Woodchester.  Where proof has been allowed a more generous approach to agency has been seen eg Whitbread. 

[29]      I also think it of some importance that where servitudes are involved the court is more inclined to want to know the facts.  That is plain from McLean which was a very strong division.  Also the averments here do not have the need for the very strict interpretation which was seen in Ben Cleuch.  Commerical sense shows that often companies will act informally for one another, the more so when one individual controls many.  I have already mentioned the examples in Stirling and I return again to that case and the commentary on it.  The role of Mr Stirling and the use of two almost identical names was not allowed to create confusion in the real world of business.  As a matter of relevancy, and mutatis mutandis what is described of Mr Scobie is not very different to what was agreed about Mr Stirling even though the company names are different in the present case. 

[30]      In the result I will allow a proof before answer leaving all pleas standing.  I will reserve all questions of expenses to a date to be fixed.