A332/08

 

SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT ABERDEEN

 

 

 

		JUDGMENT   of   SHERIFF DOUGLAS J CUSINE
		in causa
		CHRISTOPHER HUGO NIALL BURGESS-LUMSDEN, residing at Pitcaple Castle, Pitcaple, Aberdeenshire and DAVID PATON, residing at Grandhome, Aberdeen, as Trustees and Executors-Nominate of the late the Right Honourable Michael Canning William John Keith, Thirteenth Earl of Kintore, late of the Stables, Keith Hall, Inverurie, conform to Confirmation in their favour granted by the commissariat of Grampian Highland and Islands at Aberdeen on 4th July 2005 and an Eik to the Confirmation in their favour granted by the Sheriff Principal of Grampian Highland and Islands on 19th January 2007.   PURSUERS
		against
		ABERDEENSHIRE COUNCIL, having its offices at Gordon House, Blackhall Road, Inverurie, AB51 3WA. DEFENDERS

 

 

 

ABERDEEN, 3 April, 2009.

The Sheriff, having resumed consideration of the cause, Sustains the Defenders' first plea-in-law and dismisses the action; Certifies the debate as suitable for the employment of junior counsel; Finds the Pursuers liable in expenses to the Defenders including those of the earlier diet of debate and the amendment procedure; Allows an account thereof to be given in and remits the same when lodged to the auditor of court to tax and to report.

 

 

 

NOTE:

This came before me on 2^nd February 2009 as a debate on the Defenders' first plea-in-law, viz:-that the Pursuers' averments are irrelevant, lacking in specification and accordingly the action should be dismissed. The Pursuers were represented by Mr Holmes, Solicitor and the Defenders by Mr Stuart, QC.

 

In this case, the Pursuers seek payment from the Defenders of £225,000 which they say represents the market value of subjects at Leylodge, Kintore ("the subjects") as at 3^rd April 2003. The subjects were feued in 1855 by the Earl of Kintore to the Kirk Session of the Parish of Kintore under the School Sites Act 1841 ("the 1841 Act.") That was by a Feu Charter recorded 3^rd July 1855 ("the Feu Charter.") The subjects were to be used as a school and the head teacher's residence. The payment sought is under section 86(2)(a) of the Title Conditions (Scotland) Act 2003 ("the 2003 Act.") which deals with rights of reversion under the 1841 Act.

 

The Defenders' statutory predecessors sold and conveyed the subjects to Mr & Mrs Payne by Disposition recorded 21^st May 1979 ("the 1979 Disposition."). That Disposition referred to the Feu Charter for a description and for burdens. The subjects, which are now registered in the Land Register, are a private dwellinghouse.

 

The Pursuers aver that when the subjects ceased to be used for the original purpose, they ought to have reverted to the estate of which they formed part, but it is admitted that for more than 20 years since the cessation of the use of the subjects as a school in the 1970's, no demand was made by the estate to the Defenders or their statutory predecessors for a reconveyance of the subjects. It is also admitted that for the same period, no relevant acknowledgement was made of any obligation by the Defenders to reconvey the subjects, but the Pursuers aver such an acknowledgment was unnecessary.

 

 

Submissions for the Defenders

The Defenders submitted that any right of reversion had prescribed prior to coming into force of section 86 of the 2003 Act on 4 April 2003. Furthermore, and in any event, the purchasers under the 1979 Disposition acquired a real right to the subjects at the latest by 1989 by the operation of positive prescription which therefore defeated any right of reversion.

 

Reference was made to the School Sites Act 1841, section 2, the third proviso thereto which states:-

 

"[U]pon the said Land ... or any Part thereof, ceasing to be used for the Purposes in this Act mentioned, the same shall thereupon immediately revert to and become a Portion of the said Estate held in Fee Simple or otherwise,...as fully to all Interests and Purposes as if this Act had not been passed."

 

It was accepted that that provision had been replaced by an Act in 1945, but that the 1945 Act did not affect any land conveyed prior to its coming into force.

 

Reference was then made to the 2003 Act, section 86(1) of which replaces section 2 of the 1841 Act. Section 86(2)(a) deals with a sale prior to the coming into force of the 2003 Act and provides for open market value at the date of that sale. It was submitted that it is a precondition of section 86(2) that the land would revert or has reverted and that the purchaser has not completed title.

 

It was submitted that a right of reversion is not a real right but a personal one. The right to demand a reconveyance right arose in 1979 but prescribed in 1999. The Defenders' submission was that the right of reversion had prescribed at the latest in May 1999, 20 years after the recording of the 1979 Disposition, by virtue of section 7 of the Prescription and Limitation (Scotland) Act 1973. Accordingly, as at 4 April 2003 when the 2003 Act came into force, there was no right of reversion in existence.

 

Reference was made to Houldsworth v School Board of Cambusnethan (1904) 7F 291. In that case, the Lord Ordinary (Kyllachy), described the cessation of purpose under the 1841 Act as a "statutory irritancy" (p. 296). In the Second Division, Lord Young spoke of a resulting trust (p. 299), but the other judges, Lords Trayner and Moncrieff, simply spoke of a reversion under the Act (pp. 302, 303 - 304). It was submitted by the Defenders that Houldsworth does not assist in determining how in this present case the reversion is to be put into effect. Reference was then made to Hamilton v Grampian Regional Council (First Division, unreported 20 Dec. 1995) in which the pursuer claimed land in terms of a right of reversion under the 1841 Act. His counsel had submitted that "the effect of the statutory reversion was to restore the right of property in the school immediately to the grantor, and that no further steps required be taken by him to be restored to his position as the heritable proprietor." That submission was, however, rejected by both the Lord President and Lord Milligan by reference to the decision of the Inner House in Sharp v Thomson. (1995 SLT 837) The Lord President said of the proviso to the 1841 Act, "Its effect is to enable the grantor, on the basis of the personal right given him by the reversion, to enforce that right against all parties acting in conflict with it...and to obtain a recorded title to the property by the registration of his interest as proprietor on the Register of Sasines." (p. 17)

 

In his book Abolition of Feudal Tenure in Scotland, Professor Reid says of a right of reversion, by reference to Hamilton, "It is thought that a reversion cannot occur automatically but must always involve a reconveyance on the part of the current owners." (para. 1.23).

 

It was submitted that when the subjects ceased to be used as a school, the estate was entitled to demand a reconveyance and in the event that the local authority failed to execute the necessary deed, the remedy available to the Pursuers was a declarator of the right of reversion coupled with an order on the local authority to grant the requisite deed. It was accepted that the local authority was obliged to grant such a deed, but it was submitted that that obligation is governed by the long negative prescription in terms of section 7 of the 1973 Act.

 

Schedule 1 of the 1973 Act deals with obligations which are governed by the five-year prescription and one of these is the right of reversion under the third proviso to the 1841 Act. However, it is stated in para. 2(ee) that the prescription does not apply to, "extinguish, before the expiry of the continuous period of five years which immediately follows the coming into force of Section 88 of the Title Conditions (Scotland) Act 2003, an obligation mentioned in sub-paragraph ab of paragraph 1 of the schedule." It was submitted therefore that while the five-year prescription applies after the Act came into force, that short prescription does not apply in relation to the rights of reversion arising prior to its coming into force.

 

It was submitted therefore that an obligation to grant a reconveyance is covered by section 7 of the 1973 Act and reference was made to Stewart's Executors v Stewart 1993 SLT 440 and Macdonald v Scott 1981 SLT 128.

 

Reference was also made to Article 5 of Condescendence, (line 8) where it is admitted that for a continuous period of 20 years no demand for a reconveyance had been made but that is subject to an explanation that paragraph 3(e(iii) of schedule 3 to the 1973 Act applies. That relates to imprescriptible rights, the argument being that the Defenders "are liable to account."

 

It was submitted that, if it were to be argued that the free proceeds are held in trust, the only basis for a trust is in terms of the Feu Charter and the trust must relate to the local authority as owners of the subjects. The issue then became what were the trust purposes and in terms of the 1841 Act, these are to provide a site etc., for a school, but it was submitted that the Feu Charter does not impose any trust purpose in the event of cessation of use of the subjects as a school. The obligation to make over is a statutory obligation and that right of reversion arises only if the trust purposes fail. It was submitted therefore that it is misleading to look at the matter as one of trust, because once the trust purposes under the Feu Charter have ceased, the statutory reversion applies and accordingly there was no trust. The obligation to hold the subjects for the grantors, i.e. the estate, rested upon the disponees under the Feu Charter. In May 1979, the subjects had been disponed to Mr and Mrs Payne, but they were not obliged by the disposition in their favour to hold the subjects as trustees. It was submitted therefore they could not hold the subjects as trustees and accordingly that paragraph 3 above referred to, had no application.

 

It was submitted that the Defenders are not the heritable proprietors and have not been since 1979 and accordingly, the subjects have not been in their possession since that time. When the 2003 Act refers to "the value of any such property," that cannot relate to any claim under section 86.

 

Reference was then made to section 1 of the 1973 Act and it was noted that the Pursuers accepted that the purchasers from the local authority had had open and peaceable possession for an uninterrupted period of ten years. It was therefore submitted that the disponees had had an unchallengeable right at the latest by 1989 and accordingly their title could not be defeated by the right of reversion. It was submitted that even if the right of reversion was a real right, it would also be defeated by a title followed by prescriptive possession and reference was made to Johnston on Prescription and Limitation, para. 3.02.

 

The Pursuers aver by reference to the Feu Charter that there cannot be adverse possession because the 1979 Disposition was "insufficient for the purposes of section 1(1)(a)" of the 1973 Act. It was accepted that the 1979 Disposition refers to the Feu Charter for a description, but the Feu Charter does not have a right of reversion in it and the reversion is not therefore a real burden. It was submitted that for it to be a real burden, it had to be referred in the four corners of the deed or reference had to be made to some deed recorded or registered. In that connection, reference was made to Aberdeen Varieties Ltd. v Jas. F Donald, (Aberdeen Cinemas) Limited 1939 SC 788. It was submitted that even if the reversion was a real burden, it too would be extinguished by the operation of the long negative prescription. Reference was made to Professor Reid's contribution to the Stair Memorial Encyclopaedia (Vol. 18, para 431), Halliday on Conveyancing, Vol. 2, para 34.62 and Johnston, para 7.14. It was submitted that the Pursuers' averments in relation to prescriptive possession are irrelevant, because any personal right in the Pursuers had been defeated and the Pursuers were therefore not entitled to make a claim. If the Pursuers are saying that the reversionary right is a real burden by virtue of the reference in the 1979 Disposition to the Feu Charter, it was submitted that that is not sufficient to defeat the purposes of section 1(1)(a) of the 1973 Act. No challenge was made during the period and there is no relevant averment regarding section 86(2)(a) of the 2003 Act. It was submitted that the Pursuers' averments regarding an imprescriptible right are irrelevant.

 

I was asked therefore to sustain the Defenders' first plea-in-law and dismiss the action and to repel the Pursuers' second and third pleas-in-law. I was also asked to sanction the debate as suitable for the employment of senior counsel.

 

Submissions for the Pursuers

It was submitted that the argument that section 86 of the 2003 Act does not apply because a disposition had been granted, gives rise to an absurdity, in that the logical extension of that argument would be that one could conclude missives and accordingly defeat the purpose of section 86.

 

Reference was made to Hamilton v Grampian Regional Council, supra, but that case was distinguished on the basis that the reversionary right was still in existence because Hamilton had raised an action 9 years after the disposition by the Defenders to the purchasers.

 

It was submitted that the reversionary right was a trust and in that connection, reference was made to the dicta of Lord Young in Houldsworth and of Lord Johnston at page 23 of his opinion in Hamilton. It was submitted that the right of reversion is not a real right, but is in the nature of a personal right to trust property and reference was made to page 7 of Lord Milligan's opinion in Hamilton.

 

It was further submitted that section 86 of the 2003 Act provides an alternative to the Pursuers where they are unable to enforce the reversionary right. That alternative right is to claim the value from the local authority who it was submitted are trustees in respect of the funds received from the sale to the Mr and Mrs Payne. If the local authority are trustees, then in terms of Schedule 3 to the 1973 Act, they are under an obligation to account to the beneficiaries and such an obligation does not prescribe. It was submitted that that is true whether or not Mr and Mrs. Payne had a real right to the subjects.

 

The Defenders' position that the Pursuers have no real right and that they were entitled to claim a reconveyance on the cessation of use created a trust obligation on the Defenders to account. It was accepted that no demand for a reconveyance had been made, and the trust purposes under the 1841 Act failed on cessation of the use of the subjects as a school. It was accepted that the Defenders are not the heritable proprietors, but they nevertheless held the proceeds of sale and are obliged to account to the Pursuers for them.

 

The five-year prescriptive period in relation to rights of reversion was introduced by the 2003 Act, but it was submitted that the 2003 Act does not impose any limitation on the period during which a claim, in the nature of the Pursuers' claim, can be raised. It was submitted that that strengthens the Pursuers' position.

 

The final submission was that if the Feu Charter creates a trust then the Defenders' position is untenable.

 

I was invited to repel the Defenders' first plea-in-law and allow a proof. Mr Holmes accepted that the case was suitable for the employment of junior counsel, but not that it merited the employment of senior counsel.

 

Defenders' response

It was submitted that any liability on the Defenders to account is not governed by section 86 of the 2003 Act. It was submitted that, at best, they would have been obliged to account for the market value of the subjects in 1979.

 

Whatever trust purposes there were ceased when the school ceased and at that point, the right of reversion arose. It was accepted, however, that if there was a trust at that point, the Defenders had to fail, but it was submitted that the Pursuers have no relevant averments about the effect of positive prescription on the title of Mr and Mrs Payne and it is not averred that their title is defective. If the Paynes' title is valid, it was submitted that the reversionary right is defeated at the very latest at the expiry of the ten-year period.

 

Decision

In my opinion, there is no doubt that a conveyance granted under section 2 of the 1841 Act creates a trust. That is implicit in the opinions of the judges in Houldsworth and that of Lord Johnston in Hamilton (p.23). The trust is also set out in the Feu Charter which gives a description of the subjects and then provides that they are to be held "under and for the use of the said Minister and Kirk Session of Kintore and myself and our respective successors foresaid as trustees for the purposes of the said Acts...." It does not follow that when the trust purposes under the Feu Charter and the 1841 Act ceased, another trust arose by implication, whereby the Defenders' predecessors in title held the reversionary interest, or the free proceeds of the sale thereof, in trust for the Pursuers' predecessors in title.

The third proviso to the 1841 Act creates a right of reversion in favour of the disponer and successors in title in the event that the subjects disponed ceased to be used for the original purpose. The subjects in the present case were a school and a residence for the head teacher, and while the precise date is not averred, it is admitted that the subjects ceased to be a school etc., some time in the 1970's and that in 1979, the subjects were sold by the Defenders to Mr and Mrs Payne as a private dwellinghouse. It follows that at some time in the 1970's, but before 21^st May 1979 (the date of recording of the Disposition by the Defenders in favour of Mr and Mrs Payne), the Pursuers' right of reversion arose.

 

I am not in any doubt that a right of reversion is a personal right, and I am fortified in that view by the decision of Lord Grieve in Macdonald v. Scott (1981 SL:T 128) and of Lord Kirkwood in Stewart's Executors v. Stewart (1993 SLT 441). In Macdonald, Lord Grieve decided that the obligation to grant a disposition of heritable property was governed by the long negative prescription. In Stewart's Executors, Lord Kirkwood opined to the same effect.

 

The fact that the property ceased to be used as a school did not, without more, mean that it automatically reverted to the Pursuers. (see the opinions of the Lord President (p. 23) and Lord Milligan (p 7.) in Hamilton, both of whom cite as authority Sharp v. Thomson 1995 SLT 837; see also Reid on Abolition of Feudal Tenure in Scotland, para. 1.23) Before there could be a real right in the original granter or the successor in title, it would, in my opinion, have been necessary for the 1841 Act to provide that a reconveyance was unnecessary. It would have had to go on to provide for a mechanism whereby the Keeper of the Register of Sasines could be satisfied that the trust purposes had failed and furthermore and importantly, there would have had to be a provision allowing the Keeper to record something which had the effect of divesting the Kirk Session or their successors of, and re-investing the grantor or his successors, in the real right of the subjects, as in the case of a decree of declarator of irritancy, or decree of reduction. No such provision was drawn to my attention and I doubt whether one exists.

 

Once the subjects ceased to be used as a school and the right of reversion arose, the law would allow the disponees a reasonable time within which to grant any reconveyance requested by the persons entitled to the reversionary interest. It would seem logically to follow that if after the lapse of that reasonable period, the disponees had not granted the reconveyance, the persons in right of the reversionary interest would have been entitled to raise an action for declarator of that reversionary interest coupled with a crave ordaining the disponees to execute a reconveyance and failing that, ordaining the sheriff clerk to execute such a conveyance in terms of section 5(A) of the Sheriff Courts (Scotland) Act 1907.

 

Unless the title in favour of the purchaser was challengeable by virtue of section 1 of the 1973 Act, the right to demand such a reconveyance, being a personal right, would cease once the subjects had been sold. (see Johnston para. 3.02) In relation to that section, the pleadings contain only the bald averment quoted above, viz:- that the 1979 was "insufficient" for the purposes of that section.

 

Section 1 of the 1973 Act

In Article 5 of Condescendence, the Pursuers admit that Mr & Mrs Payne and their successors have possessed the subjects openly, peaceably and without judicial interruption for a continuous period of 10 years [and more] since [21^st May] 1979, but the Pursuers aver, "under explanation that both the description and the burdens section in the said Disposition make reference to the [1855] Feu Charter.... There has been no adverse possession. The said Disposition is insufficient for the purposes of Section 1(1)(a) of the [1973 Act]". There is no further averment which says why and accordingly that averment is lacking in specification. I was not addressed on positive prescription within the meaning of the 1973 Act. However, for the sake of completeness, I express a view on section 1.

 

In my opinion, the fact that the 1979 deed refers to the 1855 Feu Charter for a description and also for burdens does not make it ex facie invalid within the meaning of section 1(2)(a) of the 1973 Act and, unless the deed was a forgery, (and that is not averred) it would follow that any latent defect in the Paynes' title would have been cured by 20^th May 1989 by the operation of positive prescription. (There is no averment about why the Payne disposition cannot fulfil the requirements of positive prescription.) That being so, the Pursuers right to demand a reconveyance ceased at the latest on 20^th May 1989. In any event, the reference in the Feu Charter to the 1841 Act for burdens is ineffectual to create that Act as a real condition for the reasons set out by Lord Wark in Aberdeen Varieties Ltd v Jas. F Donald (Aberdeen Cinemas) Limited 1939 SC 788 at 794/795. Although there was an appeal to the House of Lords, it was on a different point (1940 SC(HL) 52.) Even if it were a real burden, such burdens are also the subject of negative prescription. (see 18 Stair Memorial Encyclopaedia, para 431), Halliday on Conveyancing, Vol. 2, para 34.62 and Johnston, para 7.14.)

 

The Pursuers' right to the free proceeds of sale

 

If the right to demand a reconveyance of the subjects was defeated by the operation of prescription on the title in favour of the Paynes, the only right remaining in the Pursuers was to demand payment of the free proceeds. If there had not been a sale, but the subjects had ceased to be used as a school, the right to demand a reconveyance, being a personal right, or ius crediti was governed by the long-negative prescription if it could be regarded as an obligation relating to land. On that basis, the right would have prescribed on 20 May 1999. In either case, the Pursuers would have been entitled to payment of the free proceeds of sale. If the Defenders' obligation to pay is no more than that, the obligation would have prescribed after 5 years, but if it was an obligation relating to my land, and in my view, it was not, it would have prescribed after 20 years. That period would have run from the date on which the Defenders received the free proceeds of the sale to the Paynes. While the precise date is unknown, it would almost certainly have been prior to the date of recording of the disposition in their favour. The 20-year period would therefore have expired prior to 20 May 1999. Each of these propositions is subject to their not being a trust in respect of the free proceeds. The Pursuers do not have any averment that the Defenders' predecessors held the proceeds in trust for the Pursuers; all they aver is that the Defenders are "liable to account." Every trustee is liable to account, but not every person who is liable to account is a trustee. Given that there are no averments of a trust in respect of the free proceeds, I would not be able to consider the matter, but, in my view, while the local authority would have been under an obligation to account to the Pursuers in respect of the free proceeds, that liability has prescribed and being an obligation to account, that would have been at the expiry of 5 years. It was not an obligation to account for trust property.

 

The 2003 Act.

That leaves the Title Conditions (Scotland) Act 2003. Section 86(1) of that Act provides for a situation in which the land has reverted under the 1841 Act, or would revert, but the person in right of the reversionary interest has not completed title to the land. In these circumstances, sub-sections 2 to 9 apply. It is implicit in that section that the land does not automatically revert and that the person in right of the reversionary interest must take steps to complete title. Section 86(2) applies where the local authority has concluded a sale for the land, and it deals with two situations (a) where the contract was concluded prior to 4 April 2003, and (b) where it was concluded after that date. If the contract was concluded before that date, the local authority is obliged to pay to the person in right of the reversionary interest, the market value of the land at 4 April 2003.

 

In my opinion, that is predicated on the assumption that at 4 April 2003, the reversionary interest had not been defeated by the operation of prescription, whether positive or negative, and that the obligation to account for the free proceeds of sale of the property had not been defeated by the operation of prescription, short or long. If that were not so, it would mean that a right to demand a reconveyance and the correlative right to payment of the market value in lieu are imprescriptible obligations. There is nothing in the 1973 Act to that effect, and in my view, it is highly unlikely that the 2003 Act intended to alter the law on prescription on this matter, but by implication only. If, as I have said, the right to demand a reconveyance is a personal right, it prescribed after 20 years, but, in this case, it was defeated when the Paynes' title, even if it was challengeable ab initio, became unchallengeable after 10 years. In that event, the local authority's obligation was to account for the free proceeds of the sale, an obligation which, as I have said, was subject to the 5-year prescription.

 

For these reasons, I am of the opinion that the Pursuers' averments are irrelevant and lacking in specification and that the action should therefore be dismissed. The issue raised in this case is of some complexity and I shall therefore certify the debate as suitable for the employment of junior counsel. I shall make an award of expenses in favour of the Defenders, given their success.