Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2010] CSOH 107
CA48/09	OPINION OF LORD GLENNIE in the cause MALCOLM SNOWIE Pursuer; against MUSEUM HALL LLP Defender: ­­­­­­­­­­­­­­­­­________________

Pursuer: J Campbell QC, Carruthers; Andersons Solicitors LLP

Defender: D Davidson; Harper Macleod LLP

6 August 2010

[1] Museum Hall is a flatted development containing 15 apartments. In 2007/2008, members of the Snowie family, each contracting as an individual, entered into missives for the purchase from Museum Hall LLP ("Museum Hall") of six apartments. Euan and Gordon Snowie each purchased two apartments, and Malcolm and Amanda each purchased one.

[2] So far as material, the missives are in virtually identical terms. This action is concerned with the proper construction of clause 8 thereof, and the conditions contained in the Deed of Conditions referred to therein. In the case of all but one of the missives, clause 8 provides as follows:

"The title to be granted to the Subjects will take the form of a Disposition by the Sellers which shall contain such conditions as the Sellers think appropriate for the Development and the preservation thereof and which shall incorporate the prior conditions of title and the conditions contained in any Deed of Conditions relating to the Development which shall contain no unduly onerous or unusual conditions. The Deed of Conditions shall contain the allowance for the occupation of at least one dog, one cat and fish. The Deed of Conditions shall contain no prohibition to the right to lease the Subjects provided it is not to more than one family unit." (Emphasis added)

In the case of the missives pertaining to the purchase of an apartment known as Plot 11, clause 8 was slightly different, in that immediately after the words in italics and there was inserted the following sentence:

"The Purchaser shall be entitled to see the said Deed of Conditions prior to registration."

It is not suggested that, in the circumstances of this case, that additional sentence makes any difference to the result.

[3] The Deed of Conditions for the apartments was registered on 7 December 2009. It is not in dispute that it was not shown to any of the Snowies prior to registration.

[4] Clause 2 of the Deed of Conditions contains a number of Rules. Of particular importance in this case are Rules 2.4.2 and 2.4.9, which provide as follows:

Rule 2.4.2

"No trade, business or profession may be carried out in the apartment (including the sale, making or manufacture of any beer, wine or liquors)."

Rule 2.4.9

"Each apartment must be used as a private house only, and may not be used, even in an ancillary capacity, for any trade, business or profession."

In terms of Rule 2.1.1, the Rules are imposed on the Development as (a) "community burdens", in which the Development is the community, which are enforceable by the owners of the units within the Development, and (b) "real burdens" in favour of any unit of which the Developer (Museum Hall) is the owner.

[5] Sections 25 and 54(1) of the Title Conditions (Scotland) Act 2003 makes it clear that burdens of the type contained in Clause 2 of the Deed of Conditions are "community burdens" within the meaning of the Act. Section 27 of the Act provides that such community burdens are mutual and reciprocal between the owners of the various units within the property and may be enforced by the owner of one unit as against the owner of another.

[6] The Snowies contend that Rules 2.4.2 and 2.4.9 of the Deed of Conditions are unduly onerous and unusual conditions, entitling them, as purchasers, to resile from the missives. They have commenced six actions in the commercial court in which, in respect of each of the six apartments, they seek declarator to that effect and claim repayment of the deposit paid by them. The relevant actions by the Snowies are as follows:

CA 44/10 Euan Snowie v Museum Hall

CA 45/10 Euan Snowie v Museum Hall

CA 46/10 Gordon Snowie v Museum Hall

CA 47/10 Gordon Snowie v Museum Hall

CA 48/10 Malcolm Snowie v Museum Hall

CA 49/10 Amanda Snowie v Museum Hall

The Snowies' position is disputed by Museum Hall, though they accept that if those Rules did constitute unduly onerous and unusual conditions then the Snowies are entitled to resile and recover their deposits. For their part, Museum Hall have commenced four actions against the individual members of the Snowie family for implement of the missives and payment of the balance of the purchase price in respect of each of the six apartments, together with interest thereon. The actions by Museum Hall (which were all transferred into the commercial court at the time of the hearing so that they could be considered at the same time as the Snowie actions) are as follows:

A 201/10 Museum Hall v Amanda Snowie

A 202/10 Museum Hall v Malcolm Snowie

A 203/10 Museum Hall v Gordon Snowie

A 204/10 Museum Hall v Euan Snowie

The Snowies accept that if their argument that the Rules constitute unduly onerous and unusual conditions is unsuccessful, then they are liable to pay the balance of the purchase price for each apartment. There is no real dispute about the sums due on this basis.

[7] All the actions therefore turn on the same point of construction. Parties were agreed that the matter could be disposed of at Debate. It happened that the Debate was conducted by reference to the pleadings and productions in Action CA 48/10, in which this Opinion is issued, but this Opinion in effect deals with all ten actions.

[8] Although the Debate was opened by Mr Davidson for Museum Hall, it is convenient to refer first to the basis upon which it was contended, for the Snowies, that the restrictions were unduly onerous and unusual.

[9] In developing the argument for the Snowies, Mr Campbell QC submitted that, on their proper construction, Rules 2.4.2 and 2.4.9 were highly restrictive. Rule 2.4.2 struck at any trade, business or profession being carried out in the apartment in any manner. Rule 2.4.9 provided that each apartment must be used only as a private house and could not be used for any trade, business or profession, even in an ancillary capacity. Those restrictions were very widely drawn. Despite the last sentence of clause 8, they contained a prohibition on the right to lease the Subjects, since a commercial letting of the apartment, or even the letting of a room within the apartment, would constitute a trade or business and therefore fall foul of the Rules. In any event, such a prohibition would be repugnant to the concept of ownership (see per Lord Young in Earl of Zetland v Hislop (1881) 8 R 675, 681 and also in Moir's Trustees v M'Ewan (1880) 7 R 1141, 1145), and therefore, ex hypothesi, unduly onerous and unusual. So also, an artist who painted within the apartment would be carrying on his business there, especially if his agent called from time to time to discuss his rates, or a would-be purchaser came to look at his portfolio. A professional man or woman working substantially from home, or even occasionally taking work home from the office, would also contravene these restrictions. Even if a court might ultimately construe the Rules more restrictively, the mischief was that, as drawn, they gave rise to a risk that the owner of another apartment might try to enforce them to the letter, and might seek (and possibly obtain) interdict or other relief, putting the Snowies to undue worry and expense. The restrictions had to be viewed in their proper context. The apartments were on the market at a relatively high price. They were clearly aimed at a market which included professional and business people. In that context, a restriction on working from home was unduly onerous and oppressive. There was no justification for it where the activity itself caused no harm to others or detriment to the value of the Development or the other apartments within it. In this regard, Mr Campbell referred to s.8 of the Title Conditions (Scotland) Act 2003 ("in the Act"), in terms of which it was made clear that an owner of a benefited property had no interest to enforce a real burden unless the failure to comply with it resulted, or would result, in material detriment to the value or enjoyment of his ownership of the benefited property. He submitted that this assisted in identifying what restrictions were permissible and what were unduly onerous and oppressive.

[10] For Museum Hall, Mr Davidson submitted that the two Rules complained of, far from being unusual or unduly onerous, in fact conformed to a standard and commonly used style. He referred to Greens Practice Styles, Division C, Commercial Conveyancing, in the versions issued in July 2001 and March 2008. The July 2001 document contained a style for a Deed of Conditions relating to "Flats and houses mixed - Superiority reserved". Condition (FOURTH) in that style provided that

"The house or flat is to be used and occupied as a private dwellinghouse and shall not be sub-divided or occupied by more than one family at a time; no part of any Feu, including any house or flat shall be used for the carrying on therein of any trade, business or profession ..., whether or not such use may be deemed incidental or natural to the ordinary residential use of the house or flat or whether any person occupying the same may have a contractual right to use the same for or in connection with or arising out of any trade, business or profession notwithstanding any rule of law to the contrary; ..."

In the March 2008 style, which is a Deed of Tenement Burdens, clause 7 sets out "Restrictions on Use etc". Clause 7.1 provides that

"Each Unit shall be used exclusively as [e.g. a private dwellinghouse] and for no other purpose whatever, ..."

Clause 7.3 provides as follows:

"No Owner or occupier of any Unit may: (A) carry on upon the Unit, or garden or other ground or Garage pertaining to such Unit or in any part of the Tenement, [any trade, business, manufacture or profession ...], ... whether or not such trade, business, manufacture or profession, or selling of goods, is incidental to the ordinary [residential] use of the relevant property ..."

The square brackets are used to show that the style is adaptable to different circumstances, but it clearly envisages that it may be used to import restrictions on the use of a private dwellinghouse and, in that context, to prohibit the carrying on in or around the house any trade, business or profession, even if that trade business or profession is incidental to the ordinary residential use of the property. Although the wording used in these provisions taken from Greens Practice Styles clearly differs from that in the missives which are presently before the court, their effect would appear to be broadly similar; and the fact that they appear in a standard reference work suggests that they are not regarded as unusual or unduly onerous. In any event, Mr Davidson submitted that there was no specific prohibition of letting in the Deed of Conditions, since, in a commercial letting business, the business of letting is not typically carried on from the property which is let. But even if that were wrong, and there were a specific prohibition on letting, that could not be a real burden. Such a prohibition would be repugnant to the Snowies' rights of ownership and therefore unenforceable as a real burden: Moir's Trustees v M'Ewan, and see also Rennie, Land Tenure in Scotland, at para.5-14 and Reid, The Law of Property in Scotland, at para.391. Accordingly, insofar as the Rules might, on a strict interpretation, be construed as prohibiting letting, they would be unenforceable to that extent, and could not justify the Snowie's purported resiling from the missives. As to the argument that the restrictions in the Rules might be held to prevent a businessman or a professional man working from home, such a construction was untenable on the ordinary reading of the Deed of Conditions. As illustrative of this part of his submissions, I was referred to a 1985 decision of Sheriff J. F. Wheatley QC, as he then was, in Wimpey Homes Holdings Ltd. v Chris Macari and Mrs Greta Macari, noted in Unreported Property Cases from the Sheriff Courts, edited by Prof. Roderick R. M. Paisley and Sheriff Douglas J. Cusine.

[11] I begin by considering whether, as a matter of construction, the conditions imposed by Rules 2.4.2 and 2.4.9 are unduly onerous or unusual within the meaning of clause 8 of the missives. Rule 2.4.2 prohibits the carrying out within the apartment of any trade, business or profession. It is, as Mr Campbell submitted, concerned with what happens inside the apartment. Rule 2.4.9 restricts the use of the apartment to use as a private house and prohibits its use, "even in an ancillary capacity" for any trade, business or profession. It is not clear whether the word "ancillary" means ancillary to the use of the house as a private house or ancillary to the trade, business or profession being exercised elsewhere. It probably does not matter. As Mr Campbell submitted, Rule 2.4.9 is concerned with the use made of the apartment rather than what happens within it, although the two might overlap. Taking the two Rules together, and applying the widest possible interpretation of the restriction imposed by those Rules, it is, I suppose, just arguable that they would catch any commercial letting of the apartments, and even the occasional use made of the apartment by a businessman or professional working from home in the evenings or weekends. But I am unable to accept that this is the proper construction of those Rules.

[12] In Wimpey Homes Holdings Ltd. v Macari, the pursuers sought to interdict the defenders, the owners of the property, from contravening a Deed of Conditions applying to all the proprietors of houses within the particular estate. The conditions, so far as relevant to the dispute, provided that each house was to be used "only as a private dwellinghouse" and was "not to be used for any trade, business or profession". The defenders operated an ice-cream van. For a while they used their house for the purposes of their trade by taking deliveries there of crisps and lemonade in bulk, but this stopped when complaints were made by a neighbour and the defenders found alternative storage facilities for their business. Thereafter, each evening on his return from work, the first defender parked his ice-cream van under a car port erected next to the house; and each night he took into the house for security purposes some 2,000 cigarettes and the day's takings from the ice-cream van. Relying upon the restrictions in the Deed of Conditions, the pursuers sought to interdict these activities. They contended that by taking the 2,000 or so cigarettes into the house each night for security purposes, the defenders were trading, or carrying out part of their business from their own home. No similar complaint was made about the removal into the house each night of the day's takings. In respect of that matter, Sheriff Wheatley said this:

"I find it impossible to hold that the defenders could be described as trading or carrying on business from their home mainly because some cigarettes were removed from the van into the house for safekeeping. The defenders do not sell goods from their home, nor do they, since April 1985, receive stock there. The removal of cigarettes is merely a prudent measure, of minimal significance, which on the evidence I found to be not in any real sense connected with the defenders' business. Such a situation can best be likened to taking a brief-case of papers home from work, something which on the evidence ... is not uncommon. I concluded that it would be entirely unreasonable to interdict the defenders from removing the cigarettes as aforesaid."

The second contention by the pursuers was that the defenders were in violation of the Deed of Conditions by parking the ice-cream van under their car port each night, but the pursuers did not argue that they were engaging in their business by so doing. I do not therefore need to touch on this aspect.

[13] Although the precise clause and the facts are different from those with which I am concerned, Sheriff Wheatley's comments on the first complaint are nonetheless of some interest. The restriction was against the use of the home for any trade, business or profession. Sheriff Wheatley drew a distinction between, on the one hand, the removal of the cigarettes into the house, which was made a prudent measure, of minimal significance, and "not in any real sense connected with the defenders' business" and, on the other, selling goods from the house or receiving stock there. Further, he equated the use of the house in this way with someone taking a briefcase home from work. Clearly he regarded this occasional use of the home for work purposes as something which would not infringe the restriction in the Deed of Conditions. I share that view.

[14] It is, I think, also of importance to note that restrictions or prohibitions against the carrying on of a trade, profession or business, even if only incidental to the use of the house as a dwelling home, are clearly not uncommon, otherwise they would not have featured for 10 years (and possibly much longer) in a standard volume of styles. Mr Campbell objected that there might well be other styles showing that such restrictions were by no means common; but the extracts from Greens Practice Styles were referred to in Mr Davidson's Note of Arguments lodged more than a week before the Debate and had themselves been lodged in process, and there had been plenty of time before the Debate to have unearthed and put forward alternative styles which did not contain such restrictions if such existed. It was not seriously contended that there should be a proof on this question, and in the absence of any alternative style or text having been shown to me to suggest otherwise, I am prepared to accept that restrictions of this kind are, even if not common, at least not uncommon. The restriction in Wimpey Homes Holdings Ltd. v Macari was to a similar effect and is further evidence that such restrictions are not unusual. It seems to me that this goes some way to showing that they are also not regarded as being unduly onerous.

[15] These considerations lead me to the conclusion that the restrictions in the Rules contained in clause 2 of the Deed of Conditions, and indeed similar restrictions in other Deeds, must be given a sensible construction having regard to the nature of the scheme or Development to which they relate and the purpose for which they must be taken to have been included. As Mr Campbell himself pointed out, the nature of this particular Development is such that it must be contemplated that some of the apartments will be owned by business or professional people working for some of the time from home. As his own arguments demonstrated, it would be remarkable if the provisions of Rules 2.4.2 and 2.4.9 were intended preclude this. By the same token, so it seems to me, it would be remarkable if they were to be so construed. In the note of Wimpey Homes Holdings Ltd. v Macari, it is said that the deed of conditions is designed to maintain the amenity of the housing scheme. It is not clear whether this is based on anything said by Sheriff Wheatley or is a comment made by the editors. But even if it is the latter, it is a comment which is entitled to respect having regard to the experience of the editors in this field. Further, it makes obvious sense. The purpose of restrictions of this sort is to prevent the residential amenity of the Development being spoiled. The residential amenity of a Development is not spoiled by the fact that one or more of the owners of the apartments within it brings work home from the office. It may ultimately be a matter of degree. I do not need to decide whether it would be permissible, standing the terms of Rules 2.4.2 and 2.4.9, for an owner of one of the apartments to carry on his business substantially or entirely from home, provided that he did not display any advertising and did not receive either deliveries or customers or clients. It is difficult to conceive that the artist who paints from home would be acting in breach of the Deed of Conditions, even if from time to time he was visited by his agent, a gallery owner or a potential buyer. So too, an advocate or solicitor who worked from home for most of the time, travelling only to attend court or meet clients, would not, in my opinion, be acting in breach of the restrictions. In both these cases, their activities would have no impact on the amenity of the residential Development. On the other hand, an estate agent who set up business in his own apartment, displaying advertising from the windows and perhaps from outside the main entrance door, and receiving prospective purchasers or tenants on a regular basis throughout the day, would very likely be found to be in breach. Numerous examples can be given falling either side of the line, and as the Debate continued the examples offered became more varied, colourful and far-fetched. It is not easy to define were the line is to be drawn, but I suspect that in most cases, like the elephant of which lawyers are so fond, it will be easy to recognise cases falling either side of it. In respect of the prohibition on the carrying on of a trade, business or profession, therefore, the restrictions, interpreted in a manner which I have sought to indicate, are, in my view, neither unusual nor unduly onerous.

[16] Nor am I persuaded by Mr Campbell's separate argument that the terms of Rule 2.4.9 would prevent the apartments being let. The letting of an apartment to an individual, or to a family for use as a family unit, is expressly permitted by Clause 8 of the missives. Rule 2.4.9, which stipulates that each apartment "must be used as a private house only", is not inconsistent with this. The latter part of that Rule, which goes on to state "and may not be used, even in an ancillary capacity, for any trade, business or profession" must be read as supplemental to the requirement that the apartment be used only as a private house. There is nothing in this to prevent the apartment being let. In so far as reliance was also placed on Rule 2.4.2, it seems to me that Mr Davidson is correct in his analysis that the letting of the apartment does not involve the carrying out of any trade, business or profession within it. So this Rule does not prevent the letting of the apartments either.

[17] Mr Campbell argued that, whatever might be the true construction of Rules 2.4.2 and 2.4.9, they were drafted in such a way as to be likely to give rise to disputes, with complaints being made by anxious or meddlesome neighbours in reliance upon a literal interpretation of the prohibition. That may be so, though I have seen no evidence to support it. But even if it is so, it does not assist the Snowies. Their complaint is that the Rules in the Deed of Conditions import "unduly onerous or unusual conditions". Whether that complaint is good or bad requires an investigation into whether the restrictions imposed by the Rules are indeed unduly onerous or unusual. I have found that they are not. There is therefore no breach of Clause 8 of the missives. It matters not for this purpose whether, at some future time, an anxious or meddlesome neighbour may wrongly construed the Rules in a way which encourages him to complain about some use of the apartments by one or more of the Snowies. If the Snowies had wished to gain the benefit of a covenant against being harassed by an anxious or meddlesome neighbour relying upon an over literal and wrong interpretation of the Rules, they could have tried (though probably in vain) to have such a covenant included in the missives.

[18] For these reasons I am satisfied that the complaints put forward by the Snowies are irrelevant and that their averments in support thereof are irrelevant.

[19] I have reached this conclusion as a matter of construction of the relevant provisions both in the missives and in the Deed of Conditions. In those circumstances, I do not need to consider fully the argument put forward by Mr Davidson that, to the extent that the restrictions in the Rules went further than was reasonable, they were repugnant to the Snowies' rights of ownership and could not found a real burden or a community burden capable of enforcement. I am not persuaded that a restriction on carrying on a trade, business or profession from the apartments, even if construed in a broader sense than that which I have adopted, would be repugnant to their rights of ownership. Accordingly, if the Snowies were to have succeeded on this point, this argument would not have assisted Museum House. I am, however, persuaded that, if the Rules in the Deed of Conditions could properly be construed as prohibiting the letting of the apartments, they would to that extent be repugnant to the Snowies' rights of ownership. There did not appear to be any dispute between counsel on this point. That would mean that the prohibition on letting could not be a real or community burden and could not be enforced by the owners of other apartments in the Development. But as at present advised, I do not see why the fact that the prohibition on letting could not operate as a real burden would affect the right of Museum House themselves to enforce it, if they were so minded, since their right is a direct contractual right founded on the missives and the Deed of Covenants to be registered thereafter, to which clause 8 of the missives gives effect. Of course, if Museum House were to seek to enforce it, they might be met by the argument, based upon the terms of clause 8 itself, but they were not entitled to prohibit the lease of the Subjects. I do not need to get into these arguments since I have decided the case on a different basis.

[20] For the reasons given above, therefore, I propose to dismiss each of the Snowie actions as irrelevant and grant decree in favour of Museum House in each of their actions. I would assume that, in these circumstances, the expenses of each action should be borne by the Snowies and, subject to any representation made to me, I would propose to include an order for expenses to that effect in each interlocutor. Before pronouncing dispositive interlocutors, however, I should give the parties an opportunity to agree an updated version of the figures shown to me at the Debate for inclusion in the relevant interlocutors; and to address me, should they so wish, on the question of expenses. I shall therefore put the case out to call By Order on Wednesday, 11 August 2010 for these matters to be finalised. If, in the meantime, parties notify my clerk that they have reached agreement on these two matters of quantification and expenses, there will be no need for any appearance on that day.