SHERIFFDOM OF TAYSIDE CENTRAL AND FIFE

A212/07

JUDGMENT OF SHERIFF PRINCIPAL

R A DUNLOP QC

in the cause

WILLIAM WRIGHT

Pursuer and Appellant

against

SHORELINE MANAGEMENT LIMITED

Defenders and Respondents

__________________

Act: Mr Barne, Advocate, instructed by Thorntons, Solicitors, Arbroath

Alt: Mr Brown, Solicitor, Dundee

ARBROATH, 29 June 2009. The Sheriff Principal, having resumed consideration of the cause, allows the appeal in part; recalls the sheriff's interlocutor of 16 October 2008 insofar as it upholds the defenders' sixth plea-in-law; repels the said plea; quoad ultra refuses the appeal and adheres to the said interlocutor; certifies the appeal as suitable for the employment of junior counsel; finds the defenders and respondents liable to the pursuer and appellant in the expenses occasioned by the motions nos. 7/3 and 7/4 of process; finds the pursuer and appellant liable to the defenders and respondents in the expenses of the appeal; allows accounts thereof to be given in and remits the same, when lodged, to the auditor of court to tax and report.

NOTE:

[1] In this action the pursuer seeks declarator that he is a tenant-at-will of a hut at Downs of Barry, by Carnoustie and that he has the right to occupy the land on which the hut is erected "as established by custom and usage". This is one of a number of similar actions and appears to have been provoked by the unwillingness of the defenders as owners of the land in question to accept payment of what is said to be ground rent, coupled with an interference with an alleged right of access. The defenders' position is reflected in their third plea in law to the effect that the pursuer has no right or title to occupy the property and that there is no tenancy-at-will.

[2] After sundry procedure a debate was fixed on the defenders' preliminary pleas firstly as to the jurisdiction of the sheriff court to declare the existence of a tenancy-at-will and secondly as to the relevancy of the pursuer's pleadings. Following the debate the sheriff upheld these preliminary pleas and dismissed the action. The pursuer has now appealed.

[3] The basis upon which it was submitted by the defenders that the action should be dismissed can be stated quite shortly. Firstly it was said that the Lands Tribunal had exclusive jurisdiction to determine the question whether the pursuer was a tenant-at-will and secondly that in any event the pleadings were irrelevant to support the existence of a tenancy-at-will. In this latter respect criticism was made of the specification of custom and usage and also of the fact that, on the pursuer's own averments, the annual ground rent had varied over time, whereas a tenancy-at-will required a ground rent which was fixed.

[4] The sheriff accepted these submissions. After considering the decision of a division of the Land Court in McLean's Executor v Kershaw (unreported 17 November 1993) he held that, on a proper interpretation of the provisions of sections 20 and 21(1) of the Land Registration (Scotland) Act 1979 (hereinafter referred to as "the 1979 Act"), an application to the Lands Tribunal was the only means by which a person could establish a right as a tenant-at-will. So far as concerns the defenders' pleas to the relevancy the sheriff took the view firstly that there was inadequate specification of "custom and usage" or of any factual basis upon which it could be said that the existence of this form of tenure had been recognised by the land owners and, secondly, that the pursuer's position in relation to rent was impossible to reconcile with the requirement that the ground rent should not vary. I will deal with each of these grounds in turn.

Jurisdiction

[5] The question of jurisdiction turns on an interpretation of the provisions of sections 20 and 21(1) of the 1979 Act. Section 20 makes provision for the acquisition by a tenant-at-will of the landlord's interest in the land which is subject to the tenancy-at-will and sets out the procedure to be followed for determining the level of compensation and the effecting of a conveyance. Section 21 makes provisions "supplementary to section 20". Section 21(1) provides as follows:

"Any question arising under section 20 of this Act as to -

a)     whether a person is a tenant-at-will;

b)     the extent or boundaries of any tenancy land;

c)     the value of any tenancy land .....;

d)     whether any expenses are reasonably and properly incurred;

e)     what are the appropriate terms and conditions,

shall be determined, on the application of the tenant-at-will, a person claiming to be the tenant-at-will or the landlord, by the Lands Tribunal for Scotland."

[6] Counsel for the pursuer and appellant pointed out that, in terms of the Lands Tribunal Act 1949, the Lands Tribunal only had jurisdiction in respect of those matters specifically referred to it. It was necessary therefore to examine carefully the jurisdiction conferred by the 1979 Act. He submitted that it was clear that that jurisdiction was confined to a situation in which a tenant-at-will sought to acquire his landlord's interest in the land which was subject to the tenancy-at-will. He founded on McLean's Executor v Kershaw as supporting this view.

[7] The solicitor for the defenders and respondents submitted that section 20 of the 1979 Act was not engaged unless there was a tenancy-at-will. He attached significance to the phrases "on the application of the tenant-at-will" and "shall be determined" in section 21(1) and submitted that these supported the view that the Lands Tribunal had exclusive jurisdiction to determine whether a holding was or was not a tenancy-at-will. He submitted that McLean's Executor v Kershaw was wrongly decided. He also drew attention to the scope for conflicting decisions if there was a concurrent jurisdiction with the sheriff court. He submitted that the proper course was for the pursuer first to make application to the Lands Tribunal.

[8] In my view the appellant's submissions are well founded. The right conferred by section 20 is only available to a tenant-at-will in respect of the land which is subject to the tenancy-at-will. Assuming the section is properly engaged in this regard there are then clear provisions for fixing the compensation payable in respect of the acquisition as well as the expenses incurred by the landlord in conveying his interest in the tenancy. It is plain however that any of these matters might be contested and so section 21 makes provision for the resolution of any dispute in relation to any of them by determination of the Lands Tribunal. The provisions of section 21 can be seen therefore to be ancillary provisions intended to facilitate the effective exercise of the right conferred by section 20, namely the right of a tenant-at-will to acquire his landlord's interest.

[9] The construction of section 21 offered by the respondents seems to me to ignore the opening words of sub-section 1, which make it clear that the questions specified in sub paragraphs a) to e) are all questions which might arise when a person seeks to enforce the rights conferred by section 20. But if section 20 is not engaged then the jurisdiction of the Lands Tribunal under section 21 is not engaged either. Thus, if the pursuer were to make application to the Lands Tribunal for a declarator of his status as a tenant-at-will other than in the context of having served notice on his landlord under section 20(2), in my view the Lands Tribunal would be bound to decline jurisidiction.

[10] The question whether a person is or is not a tenant-at-will may arise in a variety of different contexts which have nothing to do with the exercise of a right to acquire the landlord's interest. The present case and also the case of McLean's Executor v Kershaw are examples of such. In the present case the remedy sought is interdict (a matter in respect of which the sheriff has undoubted jurisdiction) and in the circumstances averred the declaratory crave is a necessary prelude to the granting of that remedy. The question might just as easily have arisen however had the respondents been the pursuers seeking to evict the appellant from the land, to which the appellant could have argued in defence that he was a tenant-at-will. I do not think it can be seriously argued that the appellant in such circumstances would not be entitled to prove that defence.

[11] It follows that in my opinion the jurisdiction of the sheriff to grant the declaratory order sought is not excluded and that the sheriff erred in sustaining the defenders' sixth plea in law.

Relevancy of pursuer's averments

[12] In addressing the relevancy of the pursuer's pleadings, counsel submitted that the sheriff had gone too far too fast and that the pursuer was at least entitled to a proof before answer (Jamieson v Jamieson 1952 SC (HL) 44). He submitted that there were a number of averments describing the nature of the holding which were inconsistent with an ordinary lease and pointed instead to a tenancy-at-will. The huts were built by existing proprietors or purchased from previous proprietors and were viewed as being "owned" by the hutters. They were entitled to do what they liked with them. The title to occupy the land was held on an informal basis and each hutter was entitled to sell or assign the tenancy-at-will without conveyance merely by submitting a receipt to the purchaser followed by intimation to the landlord. On the death of a hutter the tenancy-at-will passed to his next of kin. The ground rent was payable in respect of the ground on which the hut was erected and not in respect of the hut. Increases in ground rent reflected the increasing cost of providing and maintaining the rights effeiring to the tenancy-at-will such as rights to draw water and to gain access to the site. The right of occupancy was without ish. It was submitted therefore that the sheriff had been wrong to conclude that the pursuer's occupation could be explained by reference to a lease from year to year.

[13] So far as concerned the increases in ground rent it was submitted that there was no rule of law that the ground rent of a tenancy-at-will required to be a fixed sum. Reference was made to Allen v McTaggart 2007 SC 482, particularly at paragraph 17, as support for the view that variations in rent might be permitted by custom and usage. This endorsed the view of the Lands Tribunal at first instance (2006 SLT (Lands Tr) 42) that rent increases were not as a matter of law inconsistent with the existence of a tenancy-at-will.

[14] In response the solicitor for the defenders and respondents adopted the sheriff's view that Allen v McTaggart provided authoritative guidance as to the elements necessary to constitute a tenancy-at-will. As a matter of specification it was not enough simply to make reference to "custom and usage" without some indication of how the alleged community came about and that the usage had been accepted from time immemorial. He pointed out that the pursuer accepted that the huts were generally used only recreationally at weekends and for holidays and the occupants came from a varied socio-economic background whose principal residencies were spread throughout Scotland. That could not satisfy the requirement for "community".

[15] So far as concerned increases in rent it was conceded that, if the increases reflected the cost of providing services over and above the rental for the ground, then that might not be destructive of the existence of a tenancy-at-will. It was pointed out however that no averments were made suggesting that that was the case or more particularly stipulating what was the fixed amount of the ground rent.

[16] In my view the sheriff was well founded in finding authoritative guidance on the elements necessary to constitute a tenancy-at-will in the Inner House decision in Allen v McTaggart, a case decided after a debate on relevancy in which the factual circumstances were not dissimilar to the circumstances in the present case. Although the issue in that case arose in the course of an application under section 20 of the 1979 Act and involved a consideration of the definition of tenancy-at-will contained in section 20(8), the court made it clear that that was not an exhaustive definition. The expressions "tenant-at-will" and "tenancies-at-will" were to be understood as terms of art and accordingly it was necessary to consider how lawyers experienced in land tenure would have understood them at the time the 1979 Act was passed. It seems to me therefore that the court's discussion of the understanding of the expression tenancy-at-will is of general application.

[17] At paragraph 14 of the opinion of the court in Allen v McTaggart one is reminded that the word "custom" in the legal sense denotes something which is accorded the force of law in the locality in which it is recognised and practised. It follows therefore that "it must be possible to identify and delineate, with adequate precision, the locality in question, and to describe, in sufficient detail, the nature and terms of the "custom and usage" which the inhabitants of that locality generally recognise as having the force of law in place of the system of land tenure applying elsewhere in Scotland."

[18] When it came to considering whether that requirement was satisfied the court clearly thought that averments which went no further than establishing an arrangement under which the landlords and their predecessors in title had permitted the occupiers of the huts to occupy them in exchange for payment of a ground rent which had varied from time to time were inadequate. This suggests to me that "the inhabitants of the locality" form a broader class of persons than merely the landowners and occupiers of the ground in question and this seems to be borne out by what is said by the Inner House in paragraph 15. The Lands Tribunal expressed it this way: that there must be some clear and consistent local recognition of this form of tenure and the fact that a person (and his predecessors) had occupied a building for a long time under an arrangement recognised by the landowner (or even succeeding landowners) could not of itself establish a custom. The Tribunal rejected the notion that custom could simply be that of one individual occupier and the landowner and that approach seems to have been endorsed by the decision in the Inner House.

[19] When one sets the pleadings in the present case against these requirements I am satisfied that they do not provide the necessary specification of custom and usage in the sense which I have discussed. Accordingly in my view the sheriff was well founded in holding the pleadings irrelevant on this ground.

[20] In Allen v McTaggart the Inner House also makes reference to the need for a "substantial structure erected on ground held on an informal arrangement but nonetheless an arrangement which was intended to be more or less permanent". As counsel put it in the present case, the tenant-at-will has security of tenure so long as the ground rent is paid and he did not demur at the sheriff's characterisation of a tenant-at-will as effectively the de facto owner of the land. Although not necessary for determination of the appeal I think it significant that in article 2 of condescendence the pursuer narrates (at page5) that Mrs Sharp, one of the defenders' predecessors in title, had asked the hutters to agree to her closing the site over the winter months and it seems to me that this exclusion from the site does not sit easily with the notion that the pursuer has a right of occupation tantamount to ownership.

[21] In relation to increases in rent, counsel's primary position is that there is scope for variation in rent if such variation is part of the custom and usage. Supposing that proposition to be sound it nevertheless fails in the present case for want of adequate specification of custom and usage in the sense which I have discussed above. In this regard the sheriff's observations concerning the absence of any fixed mechanism seem pertinent.

[22] Insofar as counsel sought to justify the increases in rent by reference to the provision of services, I think the solicitor for the respondents was well founded in his submission that the pursuer's averments do not specify what proportion of the payments made to the landowner relate to the rent for occupation of the ground and what proportion to the provision of services and absent such averments it is not possible to determine whether this is a fixed ground rent with escalating service charges or simply a variable ground rent. It is clear from Allen v McTaggart (at paragraph 17) that, barring the possibility of local customary variation, the ground rent payable under a tenancy-at-will is fixed for all time and variable ground rent would point to the existence of some other arrangement (for example lease or precarious possession at the will of the landowner) rather than a tenancy-at-will.

[23] For all these reasons I have come to the view that the sheriff was well founded in holding that the pursuer's pleadings were irrelevant and that the defenders' first plea-in-law should be sustained.

[24] So far as concerns the expenses of the appeal, counsel for the appellant submitted that, in the event of my disposing of the appeal in the way that I have now done, there has been divided success and that this should be reflected in an order for no expenses due to or by either party. The solicitor for the respondents submitted that expenses should be determined by reference to whether the decree of dismissal was recalled or not. In my view the respondents' submission is to be preferred.

[25] Counsel also moved for certification of the appeal as suitable for the employment of junior counsel. I did not understand this to be opposed but, while largely academic, I am satisfied that the nature of the case justified the employment of counsel.

[26] Finally, counsel sought the expenses of the two motions nos. 7/3 and 7/4 of process, both relating to the respondent's application for caution for expenses. The solicitor for the respondents submitted that there should be no expenses to or by. The first motion was heard on 16 December 2008 and refused in hoc statu on the ground that the respondents had failed to comply with the provisions of OCR 27.2.2. The second motion was heard on 11 February 2009 and refused in hoc statu on the ground that it had not been shown that the pursuer was impecunious. I see no reason why the expenses occasioned by these motions should not follow success.