Proprietors sued for payment of property maintenance charge win appeal as real burdens clause ‘void for uncertainty’
Homeowners who were ordered by a court to pay a proportion of the cost of maintaining the amenity grounds in their housing scheme after being sued by an estate and land management company have successfully challenged the decision.
The Sheriff Appeal Court ruled that the proprietors were not required to pay anything because the burdens clause in the title deeds was “void for uncertainty”.
‘Pro rata share’
Sheriff Principal Iain Abercrombie QC, sitting with Sheriff Principal Marysia Lewis and Appeal Sheriff Peter Braid, heard that land services provider Scottish Woodlands Limited had raised a simple procedure claim against Olajide Majekodunmi and Adijat Majekodunmi seeking payment of the balance of their pro rata share of the annual maintenance charge relating to a modern housing development at Wester Cowden in Dalkeith.
At the heart of the dispute was clause 7.2 of the Deed of Servitudes and Conditions, which defined the annual management charge and stated that “the pro rata share shall in the case of each plot be calculated by reference to the total number of plots created or permitted to be created within the entire site with each plot bearing annually a proportion of the said costs, remuneration, premiums and charges”.
The landscape company was seeking payment from the proprietors of the sum of £405.60, which they averred was the balance remaining due in relation to certain invoices issued to the respondents for what they described as the “annual shared maintenance charge” which included “maintenance, insurance, cumulative maintenance fund and administration charges”.
After hearing argument as to the meaning of the phrase “the total number of plots created or to be created”, but without hearing evidence in the factual matters in dispute, the summary sheriff found that the total number of homes permitted was 850 although only 647 had been completed.
Having selected that as the appropriate fraction, he then granted decree for payment of £308.26.
The appellant company appealed against that decision, arguing that on a proper construction of the title deeds, the summary sheriff “erred” in arriving at a pro rata share of 1/850, as opposed to the 1/647 share contended for.
‘Void for uncertainty’
But the respondents cross-appealed on the ground that there was “no valid burden” and that therefore they did not require to pay anything.
The respondents argued that as the benefited property could not be identified from the deed itself, or any plan attached thereto, the burden was “void for uncertainty”.
That was because the definition of “open ground” in the real burdens clauses referred in turn to public open space and landscaped areas, both of which required resorting to planning consents in order to identify the land comprised therein.
Accordingly, the respondents argued that “four corners rule” was breached, as one required to look outwith the four corners of the deed to identify the benefited property, which was not permissible.
In response, the appellant argued that because the maximum extent of the benefited property was known to be the “entire site”, which was a clearly defined area, and the open ground fell within that area, the open ground was therefore “adequately identified’.
The purpose of identifying the benefited property in this case was to identify the extent of the land or proportion which individual proprietors were to pay to maintain.
It was also submitted that the common law did not require the nomination and identification of the benefited property, and that section 4(2)(c)(ii) of the Title Conditions (Scotland) Act 2003, which required the same, should be interpreted in a liberal way, while section 5(1)(b) further provided that it shall not be an objection to the validity of a real burden where a proportion or share payable is not specified “provided that the way in which that proportion or share can be arrived at is so specified”.
‘Four corners rule’
Allowing the cross-appeal and granting decree of absolvitor, the court ruled that the relevant clause was “void for uncertainty”.
Delivering the opinion of the court, Appeal Sheriff Braid said: “The applicable law can be stated as follows. The 2003 Act did not displace the common law ‘four corners’ rule. That rule requires the extent of the burdened property to be defined within the four corners of the deed which constitutes it.
“However, whereas at common law the rule applied only to the description of the burdened property (since only the burdened property had to be identified in the constitutive deed), it now applies equally to the description of the benefited property, by virtue of section 4(2)(c)(ii) of the 2003 Act. It follows that one may not now have regard to extrinsic material in ascertaining the extent either of the burdened property or the benefited property.
“With that principle in mind, when we turn to the description of the benefited property in the present case, we see that it is the Open Ground. That in turn is defined as the Development Common Property which in turn includes both Public Open Space and Landscaped Areas both of which terms are defined by reference to any planning consent.
“So, following the bouncing ball through the complexities of the definition, one arrives at a position where one can only tell what the benefited land is by referring to planning consents. In our view, that plainly contravenes the four corners rule.
“In no way can the description of Open Ground in the present case be said to be a description of a definite piece (or pieces) of land. Consequently, and for all these reasons, the purported burden does fall foul of the four corners rule and is, in our view, void for uncertainty.”
The respondents’ successful cross-appeal rendered the company’s appeal on the construction of the clause irrelevant, but the court considered that the summary sheriff erred in his interpretation of the burden.
“Even if the summary sheriff’s construction were correct, there was no basis on the material before him for selecting the figure of 850 which must be taken as the denominator in perpetuity,” Sheriff Braid said.
He added: “We further consider that the court was not in a position to decide upon the respondents’ proper share of the costs of the Annual Management Charge until hearing evidence as to the number of plots completed and yet to be completed, and on the whole circumstances generally. Even if we are wrong in that conclusion, on any view the summary sheriff was not in a position to decide the appropriate denominator without further enquiry.”
The appeal sheriffs also expressed “considerable sympathy” for the respondents.
The judgment stated: “It is virtually impossible for the respondents, let alone the court, to tell from the information provided whether or not they have been charged the correct amount, and how the figure invoiced has been arrived at. We would observe that the claim as averred is so convoluted and lacking in specification as to be virtually meaningless.
“The appellant is most fortunate that the summary sheriff did not dismiss the claim, which he would have been perfectly entitled to do, or at the very least issue an Unless Order requiring amendment of the averments. We also observe that this case shows the dangers of attempting to reach a final determination based on submissions where critical facts were in dispute.
“We refrain from commenting on the drafting of the deeds themselves save for observing that they illustrate the further danger inherent in preparing documents of wholly unnecessary complexity.”
© Scottish Legal News Ltd 2020