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OUTER HOUSE, COURT OF SESSION
2021 CSOH 29
CA59/20
OPINION OF LADY WOLFFE
In the cause
GRANTON CENTRAL DEVELOPMENTS LIMITED
Pursuer
against
CITY OF EDINBURGH COUNCIL
Defender
Pursuer: Campbell QC; Turcan Connell
Defender: Burnet QC; CMS Cameron McKenna Nabarro Olswang LLP
19 March 2021
Background
The Parties
The pursuer
[1]
In June 2003 the defender ("the Council") entered into an agreement ("the
Agreement") under section 75 of the Town and Country Planning (Scotland) Act 1997 ("the
1997 Act") with Forth Ports plc ("Forth") in respect of approximately 33 hectares of land
("the Land") forming part of a development site at Granton Harbour in Edinburgh ("the
Development"). The pursuer in the present action was not a party to the Agreement, nor
(on present information) has it succeeded to the rights of Forth under the Agreement by
2
assignation. On 23 June 2004 the Council granted outline planning permission ("the outline
planning permission") for the Development, which included provision for a tram line along
a specified tram line route ("the TLR").
[2]
As after-noted, the pursuer acquired ownership from Forth of part of the Land
(including the TLR) on 11 June 2014. On that same date, the pursuer transferred title to
some of that land (but including the TLR, which is the subject of dispute between the
parties), to its funder ("Alpha"), and became the tenant of that land (including the TLR)
under a long lease ("the long lease") from Alpha.
The Council
[3]
The Council is the planning authority. It was the counterparty to the Agreement
entered into with Forth in June 2003. As noted below, in exercise of its powers under
section 195 of the 1997 Act, it acquired the TLR from Alpha by virtue of a general vesting
declaration ("the GVD") on 6 May 2016.
The core issue in dispute
[4]
The pursuer asserts that it is entitled to a reconveyance of the TLR from the Council.
The Council resists this. It asserts that the pursuer's case is irrelevant, on a variety of bases.
The matter called before me on a 2-day debate on 11 and 12 February 2021. I summarise the
agreed matters of fact and the terms of the Agreement parties referred to, before setting out
the issues to be debated.
3
The Joint Minute
[5]
The parties entered into a joint minute ("the Joint Minute") for the purposes of the
debate. I have summarised this in paras [1] to [3], [6] and [8] to [9] of this Opinion. As brief
reference was made in submissions to the Crichel Down Rules, I set out what parties had
agreed in respect of them, which was as follows:
"16.
The terms of section 30 of the Tram Act require the acquiring authority to
apply the rules set out in Scottish Development Department Circular 38 of
1992 (`Disposal of Surplus Government Land - The Crichel Down Rules') `as
may be amended or superseded from time to time' In the event that the
authorised undertaker compulsorily acquires land as authorised by section
23 (Power to acquire land) and that land is subsequently declared by the
authorised undertaker to be surplus to the authorised undertaker's
requirements. In or around October 2011 the Scottish Government published
Circular 5 of 2011 `Disposal of Surplus Government Land - The Crichel Down
Rules' (`Circular 5/2011'). Circular 5/2011 superseded Circular 38/1992 and
replaced it in terms of Section 30 of the Tram Act. The general principle
underlying the Crichel Down Rules and Circular 5/2011 is that where land
that has been acquired by compulsory purchase or under the threat of
compulsory purchase becomes surplus to the requirements the former
owners will be given a first opportunity to repurchase the land previously
in their ownership, provided that it has not been materially changed in
character since acquisition."
The dealings with the TLR
[6]
There are a number of dealings with the Land, including one or more break-off
dispositions. It suffices to note those concerning the TLR:
1)
11 June 2014: A conveyance by Forth (who was the heritable proprietor of the
Land at the time the Agreement was entered into) in favour of the pursuer on
11 June 2014;
2)
11 June 2014: A conveyance from the pursuer to Alpha (whose title was
registered on 18 June 2014). The pursuer retained some of the land acquired from
Forth, but the land it retained did not include the TLR;
4
3)
11 June 2014: The grant of a long lease by Alpha in favour of the pursuer (whose
title under the long lease was registered on 25 June 2014); and
4)
6 May 2016: The Council's making of a GVD, vesting title to the TLR in it, and
the subsequent registration of the GVD in the Land Register on 26 August 2016.
It will be noted that from 11 June 2014 to 6 May 2016 Alpha was the heritable proprietor of
inter alia the TLR. The pursuer's interest during that same period was as a tenant under the
long lease.
The limited duration of the period for which the pursuer had title as owner to the TLR
[7]
In consequence of the dealings just noted, the pursuer was the heritable proprietor of
the TLR only on 11 June 2014. It was not clear at the debate whether the pursuer ever
registered its title in the Land Register (and thereby obtained a real right to the TLR),
although that is likely to be relevant (if at all) only to the title to sue issue. The pursuer did
not have heritable title to the TLR either at the time the Agreement was entered into or at the
time the Council compulsorily acquired title to the TLR by virtue of the GVD. At most, the
pursuer was only an intermediate successor to Forth as heritable proprietor to the TLR.
The Agreement (and any obligation embodied within it) was not included in schedule 2 to
the GVD
[8]
In each of the titles relating to the dealings referred in para [6(1) to (4)] above, the
Agreement was noted in the burdens section of the title sheet. However, the Agreement was
not recorded as a burden in the title sheet for the GVD which vested the land in the Council.
[9]
Furthermore, in schedule 2 to the GVD the word "none" appears. Section 194(1) of
the 1997 Act provides for the reservation of certain types of obligations set out in
5
subsection 194(1) (a) (including private rights of way, real burdens and servitudes). This is
done by recording them in schedule 2 to a general vesting declaration, with the effect that
they are not extinguished. Accordingly, the significance of "none" in schedule 2 to the GVD
is that no such right or real burden (or similar land obligation) affecting the TLR was
preserved from the extinctive effect of the GVD in respect of those types of rights.
Compensation paid by the Council to the pursuer and Alpha
[10]
Consequent on the GVD, the Council paid £299,000 to Alpha for its interest as the
heritable proprietor of the TLR compulsorily acquired by the GVD, and it paid £99,550 to the
pursuer in respect of its interest as tenant in the land thus taken.
The orders the pursuer seeks in this commercial action
[11]
The pursuer seeks the following orders (collectively "the Orders"):
1)
Declarator that the TLR referred to in cl 5.4 of the Agreement is sufficiently
described by reference to the parcels of land in the GVD;
2)
Declarator that clause 5.4 contains an obligation requiring the Council to
re-convey the TLR to the pursuer ("the second declarator"); and
3)
Implement of the "full terms of clause 5.4 of [the Agreement]...., by means of an
Order of the Court requiring the re-conveyance by [the Council] to the pursuer of
the subjects" comprising the TLR.
6
The Agreement
Clause 5
[12]
As is clear from the terms of the Orders, the dispute between the parties centres on
clause 5.4. I set out the whole of clause 5:
"5
Tram Line Route
5.1
Forth shall retain title so far as within their ownership as at the date of this
Agreement to the tram line route or such other route as Forth and the Council shall
agree together with land reasonably required for any tram stops along the tram line
route. The Council and Forth will together use all reasonable endeavours to procure
that the extent of land to be occupied by and required for the tram line route and
associated trams stops will be minimised so far as practicable. It is accepted by the
Council that no warranty is given as to existing site conditions along the tram line
route.
5.2
In the event that the Council notifies Forth prior to 1 January 2020 that it
requires the tram line route then Forth (or the relevant heritable proprietor of the
affected land as the case may be as Forth shall be bound to use reasonable
endeavours to procure) shall convey the land forming the solum of the tram line
route to the Council at no cost to the Council and that within not more than fourteen
working days after the date of Royal Assent being granted for a Parliamentary Order
for the construction of the Tram Line. Such conveyance will be granted by means of
a duly subscribed conveyance in statutory form in terms of the Lands Clauses
Consolidation (Scotland) Act l845 or the equivalent provision as may be then
applicable and incorporating a taxative plan. Each party shall bear its own costs
associated with the transfer of such land). The Council acknowledges that such land
is in part affected by long leasehold interests and that as between Forth and the
Council it will be for the Council to procure the partial renunciation of such interests
to the extent required by means of Compulsory Purchase powers if necessary. Forth
will fully cooperate with the Council in this regard.
5.3
Forth undertakes save to the extent hereinafter specified not to construct
without the approval in writing of the Council (which consent will not be
unreasonably withheld or a decision thereon unreasonably delayed) any permanent
road crossings nor alter any ground levels or locate any services within the tram line
route until such time as the Council notifies Forth in writing that it does not require
the transfer of the tram line route or 1 January 2020 whichever is the earlier date
SAVE THAT Forth shall be entitled without requiring the further consent of the
Council to construct the principal transport corridor to serve the Site (being Middle
Pier Road or such other route or routes as may be determined in substitution for such
Road), form such other roads, associated services and other works anticipated by and
incorporated by reference in the Planning Permission and to construct such other
services and others as are reasonably required in connection with the development of
the Site provided always that in forming such roads. installing such services and
7
carrying out such other works Forth will have due and proper regard to the need to
ensure that in crossing the tram line route the roads, services and other works are
designed and located in a way which will enable them to be maintained replaced and
investigated or renewed all without disruption to the structure of the tram line route
and the continuous uninterrupted operation of the tram.
5.4
In the event that construction of the tram line has not been commenced on the
tram line route by 1 January 2020 the tram line route (to the extent by that date
conveyed by Forth to the Council) shall be re-conveyed by the Council to Forth at no
cost to Forth within fourteen days whereupon the obligations in Clauses 5.1, 5.2 and
5.3 above will cease to have effect. It is hereby agreed that each party shall bear its
own costs associated with the transfer of the tram line route.
5.5
In the event that on or prior to 1 January 2020 the Council has at any time
notified Forth in writing that it no longer intends to develop the tram line route Forth
will forthwith be entitled to develop the extent of the tram line route within its title
for any other purpose and shall not be bound by clause 5 hereof.
5.6
At such time as the Consent is to be implemented in respect of Phase 3 the
parties will agree upon the building line and tram line adjacent to Phase 3.
5.7
The parties acknowledge that the Photo Images demonstrate the intended
route for the Tram line between the Development Site and the Tram Depot Site as
envisaged at the date of this Agreement." (Emphasis added.)
I have highlighted the passages founded on by the Council in bold and those founded on by
the pursuer are underlined.
Other provisions of the Agreement parties noted
[13]
Parties concentrated their submission on clause 5. The pursuer focused on clause 5.4
(which was said to constitute a free-standing obligation) and the defender focused on
clause 5.2 and 5.4 (which were said to be linked). Otherwise, parties took the remainder of
the Agreement lightly. For his part, Mr Burnet QC, who appeared for the Council, referred
to other parts of the Agreement, namely:
1)
The designations: The designation of the parties, in which there was reference to
the Council and its successors but no provision for "successors" to Forth;
8
2)
The recitals: Recital (iii) which referred to the Council's power to enter into
agreements under section 75 of the 1997 Act for the purpose of regulating or
restricting the development and use of land; and recital (vi), narrating that the
Council had resolved to grant planning permission "subject... to the conclusion
of an agreement under Section 75 of the 1997 Act" (ie the Agreement);
3)
Definitions: The definitions of "the Consent" (being the outline planning
permission) and of "the Development Site" (which included the TLR) and, of
course the definition of the TLR itself. It is not necessary to note the precise terms
of any of these.
4)
Clause headings: Some of the headings of the other clauses (eg Affordable
Housing" in cl 2 were noted en passant). It was noted that in clause 2.11 there
were references to Forth's "successors in title" and to "at least one successor in
title" to Forth;
5)
Clause 3.1: the opening phrase was noted:
"Subject to clauses 3.2 and 3.6 hereof, Forth shall be bound to procure in each
sale of any residential plot...that the housing developer(s) purchasing such
will pay the educational contribution...";
6)
Clause 3.9: This was the last sub-clause in clause 3, and it provided:
"In the event that the Council does not take title to the Primary School Site
prior to the education long-stop date [this was defined as 31 July 2010],
School Site Costs shall be repaid by the Council to the appropriate housing
developer together with any accrued interest and that within twenty one days
of the expiry of [31 July 2010]" (emphasis added); and
7)
Clause 10: This related to land required for construction of a tram depot.
Clauses 10.3 and 10.5 were similar in certain respects to clauses 5.2 and 5.4,
respectively. Clause 10.3 was structured in the same way as clause 5.2,
beginning:
9
"In the event that the Council notifies Forth prior to 1 January 2010 that it
requires the tram depot site then Forth ...shall convey the tram depot site to
the Council at no cost to the Council..."
Clause 10.4 imposed an obligation on the Council for the tram depot site to be
"re-conveyed by the Council to Forth, again "at no cost", in the event construction
had not been commenced by 1 January 2020.
[14]
For his part, Mr Campbell QC, who appeared for the pursuer, confined his references
to parts of clause 5.4 (being those passages underlined above, at para [12]) and to the
reference in clause 2.11 to "successors" to Forth.
Issues set down for debate
The materials considered
[15]
In advance of the debate parties produced adjusted pleadings, notes of arguments,
the Joint Minute, a joint bundle of 17 authorities and their core productions. I have reviewed
all of these materials. I do not propose to rehearse these or set them out ad longam in this
Opinion. Additional materials were lodged on the morning of the second day relating to the
title to sue issue.
The scope of the debate
Title to sue, the relevancy of the pursuer's construction of clause 5.4 and personal bar
[16]
The Council moved for its first, second, third and fifth pleas in law to be sustained
and for the pursuer's action to be dismissed. These pleas corresponded with the Council's
challenge to the pursuer's title to sue (plea in law 1); its challenge to the relevancy of the
pursuer's interpretation of clause 5.4 ("the contract interpretation issue") (pleas in law 2
and 3); and its assertion that the pursuer is personally barred from seeking conveyance of
10
the TLR (plea in law 5). The latter plea was advanced on the basis that, notwithstanding that
this was a debate, there was sufficient agreed factual material before the Court to determine
that issue.
The submission anent registration of the GVD
[17]
The Council also advanced a discrete submission in relation to the effect of
registration of the GVD. In part, this may have been to counter the pursuer's interpretation
of and reliance on section 75(4), as amended, as part of the pursuer's contention that, as a
"planning obligation", the right in clause 5.4 was a right in rem but not a real burden. (If it
were a real burden it would be susceptible to extinction by the GVD.) In short, the Council's
submission was that the GVD extinguished the whole rights and obligations of Clause 5 of
the Agreement and that, otherwise, by virtue of section 75 (as in force at the time the
Agreement was entered into), registration of the Agreement specifically empowered the
Council to enforce the Agreement against Forth's successor in title.
The pursuer's motion seeking leave to amend
[18]
At the close of the first day, Mr Campbell sought leave to lodge a minute of
amendment. That motion was continued overnight, to afford Mr Campbell an opportunity
to take instructions and to frame an amendment. At the start of the second day, the pursuer
lodged a minute of amendment ("the Minute of Amendment"), together with three
documents among the pursuer, its holding company and Alpha ("the additional
documents"). The pursuer's Minute of Amendment sought principally to address the title to
sue point, as did the additional documents. The other parts of the Minute of Amendment
sought either to insert what were essentially legal submissions into the pursuer's pleadings
11
or to make a minor stylistic change. Mr Burnet opposed those parts of the Minute of
Amendment seeking materially to augment the pursuer's averments on title to sue (being
unnumbered paragraphs 4 and 5 of the Minute of Amendment, seeking to insert new articles
of condescendence 8A and 17A). Mr Burnet did not oppose the other parts of the Minute of
Amendment (unnumbered paragraphs 1 to 3 and 6), and the pursuer's pleadings were
amended to include the following passages:
1)
In Cond 4, page 5, line 1 by deleting from "That obligation..." to "...by a fixed
date." in line 8 and substituting
"The obligation to reconvey the land comprising the TLR, as expressed in
cl. 5.4 of the Agreement is a postponed obligation contained in a relevant
instrument, intended at the date of the Agreement as between Forth and its
successors on the one hand, and the defender and its successors on the other,
to provide for a change of ownership of the land comprising the TLR, but
only in the event that the tram works had not commenced by 1 January 2020.
Accordingly, no obligation to reconvey the land comprising the TLR could
have arisen before 1 January 2020, and even then only if the tram works had
not been commenced. The obligation to reconvey arises as a direct result of a
term of the Agreement, contemplated by the parties at the time the
Agreement was concluded".
2)
In Cond 18, by deleting the second sentence, and substituting
"The terms of cl. 5.4 would only be reciprocal to cl. 5.2 if the conveyance of
the TLR by Alpha had taken place at the behest of the defender, and at no
cost. For its own reasons, the defender elected to use the GVD and
compulsory purchase process to secure acquisition of the TLR. That process
did not elide the terms of cl. 5.4, which stands apart from cl 5.2 and depends
on the tram works not having been commenced by the given date. The GVD
process incorporates a statutory conveyance. Properly understood, cl. 5.4
requires the reversal of that conveyance by means of a re-conveyance to the
successor to Forth within 14 days, in the event that tram works had not
commenced by 1 January 2020. Until then, no right to a reconveyance
existed."
The scope of the debate narrowed to the contract interpretation issue
[19]
Mr Burnet moved for consideration of the opposed parts of the Minute of
Amendment to be held over until the end of the debate. In practical terms, this meant that
12
the pursuer would confine his reply to the contract interpretation issue. This was a discrete
issue and this course would mean that the two days of debate would not be wholly lost.
Mr Campbell confirmed he was in a position to continue the debate and to reply on that
issue. Accordingly, the debate, and hence this Opinion is, focused on the contract
interpretation issue. The issue of title to sue was held over for consideration at a
continuation of the debate.
Discussion
The relevance of the Agreement as a section 75 Agreement
[20]
In my view it is highly material that the Agreement is one entered into in terms of
section 75 of the 1997 Act. This is stated in terms in recital (iii) (see para [13(2)], above).
Recitals (iv) and (v) record that the counterparty, Forth, were the heritable proprietors of the
Development Site and in respect of which they made an application for outline planning
permission. Further, and significantly, recital (vi) recorded that the Council had
"resolved to grant planning permission ...for the mixed use development including
residential, commercial, retail and public amenity development, public open space
provision and associated access, service and landscaping arrangement ... subject,
inter alia, to the conclusion of an agreement under Section 75 of the 1997 Act".
(Emphasis added.)
[21]
Several features flow from the character of the Agreement as a section 75 Agreement.
First, the Agreement was entered into to achieve a purpose which is extrinsic to it, namely,
to facilitate the development of the Site and to secure the planning gains in relation to it.
The Council's objective in entering into it was to secure planning gains from the
counterparty, Forth. This is not so much a "commercial" purpose, as one pursued by the
Council in its capacity as the planning authority: see paragraph 56 of Morris Homes Limited
13
because the Agreement has been registered, obligations in the Agreement will be
enforceable as a matter of law (by virtue of section 75(3), in its original form and which was
in force at the time of the Agreement) against any person deriving title to the land from
Forth. This is to be contrasted with the position that contractual obligations impose personal
obligations which are, in the absence of assignation or the application of the doctrine of jus
quaesitum tertio, generally binding only on the contracting parties. The enforceability against
successors arises from section 75(3) and is reinforced by the provision in the Agreement
itself for registration "for preservation and execution" (cl 15.1). (Emphasis added.)
Accordingly, the Agreement falls to be construed consistently with these planning purposes
and in the context that the grant of outline planning permission was predicated on Forth
entering into the Agreement.
The structure and subject matter of the Agreement
[22]
Turning to the structure of the Agreement, it is comprised of a section containing the
definitions used in the Agreement (in section 1), a section dealing with dispute resolution (in
section 13.1, by arbitration, but which neither party has invoked for the purposes of the
subject-matter of this action); and there are the usual clauses about the giving of notices
under the Agreement, registration, jurisdiction, and the expenses of the Agreement
(clauses 14, 15, 17 and 18). Turning to the substance of the Agreement, each of clauses 2
to 11 is framed as imposing certain obligations on Forth to provide the planning gain
specified ("the planning gain clauses"). By language and content, these clauses created
planning gains which formed part of the Council's consideration in granting the outline
planning permission. The particular planning gains are affordable housing (cl 2),
infrastructure contributions for schools (cl 3), infrastructure works for what is described as
14
"Easter & Western Corridors" as well as the realignment of Lower Granton Road (cl 4), the
TLR (cl 5), a cycle route (cl 6), improvements to Granton Square (cl 7), the restriction of the
grant of any new lease for an industrial unit falling vacant on the Granton Industrial Estate,
in contemplation that it was also to be developed for uses compatible with the Development
(cl 8), a Travel Plan (cl 9), a Tram depot (cl 10) and a breakwater (cl 11). Having regard to
the language used, it must be noted these impose obligations on Forth.
The terms of the discharge
[23]
The terms of the discharge (in cl 12) reinforce the character of the Agreement as
being concerned principally to impose obligations on Forth. It is notable that the terms of
the discharge do not contemplate the grant of bilateral discharges (ie by each party to the
other). The discharge only provides for discharge by the Council, which reinforces the
character of the Agreement as an agreement under section 75 of the 1997 Act imposing
obligation on Forth for the benefit of the Council. It reads:
"The Council shall grant a discharge of these presents as soon as reasonably
practicable upon the completion of the obligations in terms of the Consent (and
any variations therefrom from time to time)".
The "Consent" is defined as the planning permission "to be issued by the Council in respect
of the Development Site pursuant to the completion of this Agreement..." (Emphasis
added.) In other words, the Council was the `creditor' in the obligation and the only party
in whose gift it was to grant a discharge. Conversely, the primary obligations brought into
play by clauses 2 to 11 are owed by Forth. While individual clauses might also impose
ancillary or conditional obligations on the Council (eg to act reasonably in agreeing certain
matters (cl 7.2) or to repay the School Site costs if the Council did not take title to the
Primary School Site (cl 3.9)), overwhelmingly, the Agreement imposes obligation on Forth.
15
Clause 5
[24]
I turn to consider clause 5, the full text of which is set out in para [12], above.
The Council's submissions
[25]
Mr Burnet's submission was, essentially, that clause 5.2 and 5.4 should be construed
together. He identified several features as demonstrating that these clauses were linked:
1)
the fact that the provision in both clause 5.2 and 5.4 was for the dealing to be
"at no cost" suggested that they mirrored each other;
2)
that the use of the word "re-convey" in clause 5.4, necessarily pointed back to
an initial conveyance under clause 5.2;
3)
allied to this last point was his submission that the words "under this
Agreement" should be read into clause 5.4 (at the end of the passage in
parentheses); and
4)
the use of the phrase in parentheses ("to the extent by that date conveyed by
Forth to the Council" (emphasis added)) further reinforced the fact that
clause 5.4 could come into play only if there had been a conveyance pursuant
to clause 5.2.
In his submission, clause 5.2 was an option exercisable at the instance of the Council for a
time-limited period. In support of his submission that the Agreement should be "construed
as a whole", he referred to clauses 10.3 and 10.4 which were, in his submission, similarly
interlinked.
16
The pursuer's submissions
[26]
Mr Campbell submitted that the Agreement fell to be construed as a whole.
Although that amounted to no more than taking note of some of the headings of what I have
referred to as the planning gain clauses (clauses 2 to 11). As his submission developed,
Mr Campbell's primary submission was that clause 5.4 was a standalone provision. Indeed,
in the course of his reply on the second day of the debate, Mr Campbell abandoned his
contention that clause 5.4 created rights in rem. His final position (which Mr Burnet fairly
described as a 180-degree about-turn), was that clause 5.4 only created personal rights.
Mr Campbell went so far as to suggest that clause 5.4 was inapposite in a section 75
agreement, because it wasn't concerned with the regulation or use of land, and was
improperly contained within the Agreement (which he attributed to the inept drafting).
[27]
In relation to the word "convey" in clause 5.2, in his submission this should be
construed broadly. Further, in his submission it mattered not how the Council acquired title
to the TLR and which, on his analysis, brought it within the terms of clause 5.4. It was a
matter for the Council that it had not acquired the TLR under clause 5.2 but had chosen to
proceed by way of the GVD, and thereby to incur an obligation to pay compensation. (This
line of argument echoes the Minute of Amendment, set out in para [18(2)], above.)
[28]
In relation to the reference to "Forth" in clause 5.4, but not to "its successors", this
was, he submitted, also inept drafting. There were other instances when the Agreement
extended expressly to Forth and its successors. Those words should be read into clause 5.4.
In support of this reading, he argued that the long duration contemplated in the Agreement,
which was signed in 2003 and had a long-stop date for certain matters of 1 January 2020,
meant that parties must have contemplated changes of parties to the Agreement and, on that
basis, a reference to "Forth" in clause 5.4 should be read as "Forth and its successors in title".
17
(This line of argument, which is reflected in the Minute of Amendment, set out in
para [18(1)], above, is pertinent to the title to sue point and which is outwith the scope of this
Opinion.)
Discussion of clause 5
[29]
In my view, Mr Burnet is correct to characterise clause 5.2 as an option. It is patently
conceived in favour of the Council: "[i]n the event the Council notifies..." (Emphasis
added). If the other criteria were satisfied (notice prior to 1 January 2020 and otherwise
given within 14 days of the Royal Assent for a Parliamentary Order for construction of the
tram line), then Forth came under an obligation to convey (it "shall convey") the solum of
the TLR at "no cost to the Council". Clause 5.2 is also a classic `if-then' conditional sentence:
only if the hypothesis (or protasis) in the first part occurs (the Council gives the requisite
notice within the stipulated time-frame), does the consequence in the second part of the
sentence (the apodosis) result. The second part of clause 5.2 is that Forth comes under an
obligation to convey the TLR land acquired "at no cost".
[30]
As is clear from clause 5.2, the Council had the option to secure the TLR at no cost,
but only if it was "required" to construct the tram line. What was to happen if the Council
exercised the option in clause 5.2, but then failed to commence the TLR within the
anticipated timeframe? In my view, the Agreement anticipated this scenario and provided
for it in clause 5.4. This further demonstrates that clauses 5.2 and 5.4 are interlinked.
[31]
Like clause 5.2, clause 5.4 is also in the form of a conditional sentence. Unlike
clause 5.2, it is not an option at the instance of the Council; rather, it contains a contingent
obligation which was triggered in certain circumstances. These circumstances were if the
Council had not commenced the tram line by 1 January 2020, then it came under an
18
obligation to re-convey "at no cost". The words in parentheses, "to the extent by that date
conveyed by Forth to the Council", define the scope of the contingent obligation in
clause 5.4. Leaving aside for the moment the import of "convey", in terms of the phrase
"...to the extent that" in clause 5.4, the Council was obliged to re-convey only what it had
earlier acquired, but no more than that. In this respect, clauses 5.2 and 5.4 are functionally
interrelated.
[32]
The same drafting technique used in clauses 5.2 and 5.4 is deployed in clauses 10.3
and 10.4, of providing a mechanism (in cl 10.4 ("In the event...the tram depot site "shall be
re-conveyed by the Council....at no cost")) to reverse a transfer of land (for the tram depot,
made under cl 10.3 ("Forth... shall convey ... to the Council at no cost...")) if a certain state
of affairs (commencement of the construction of the tram depot) had not been achieved by a
longstop date. Likewise, clause 3.9 provides for certain sums to be "repaid" by the Council
(described as the "School Site Cost" in cl 3.5 and which was imposed an obligation "to pay"
to the Council under cl 3.6), in the event that the purpose for which it was paid (the Council
taking title to the "Primary School Site") was not brought to fruition. In each case, the
language used ("to repay" or to "re-convey") necessarily requires consideration of the
earlier benefit conferred on the Council which is being reversed (because the purpose for
which the benefit was conferred has not been commenced within the stipulated time-frame).
On this analysis, clauses 10.3 and 10.4 are inextricably linked. This militates against a
similarly structured obligation to reverse a state of affairs, to re-convey the TLR in clause 5.4,
being free-standing from the benefit-conferring clause, clause 5.2.
[33]
Clauses 5.2 and 5.4 also display linguistic congruities. Each clause commences with
the same provisional phrasing, "[i]n the event that ...", and each contingency is tied to the
same longstop date (of 1 January 2020). The use of the word "convey (in clause 5.2) and
19
"re-conveyed" (in clause 5.4) further reinforces the analysis that clause 5.4 is dependent on
the exercise of the option embodied in clause 5.2. There can be no "re-conveyance" if there
has not been an original conveyance. Mr Campbell did not address the usage or implication
of "re-conveyance" in clause 5.4 and it is no answer simply to contend that "convey" should
be widely construed.
[34]
For these reasons, in my view, clauses 5.4 and 5.2 fall to be read together and to be
construed consistently with the purposes for which the Agreement was entered into.
Accordingly, and contrary to what the pursuer argues, properly construed, clause 5.4
applies only in the event that the conveyance in favour of the Council was achieved under
clause 5.2. This is clear from the language used and, in my view, no additional words
require to be read into clause 5.4 (namely the words "under this Agreement", as suggested
by Mr Burnet). That clause 5.4 is dependent on the exercise of the option in clause 5.2 flows
from the drafter's use of the word "convey", which connotes a voluntary disposition of the
land by the owner for the time-being (Forth) to the disponee (here, the Council). That word
is simply not habile to include a compulsory acquisition by the acquiring authority, and in
which the land is "vested". Had clause 5.4 been intended to apply regardless of how the
Council came to hold heritable title to the TLR, different and, in my view clear, language
would have been required.
[35]
In this context, it is important to note that there is nothing in clause 5 to preclude the
Council from using statutory powers of compulsory purchase, if it chose to do so. Indeed, at
the end of clause 5.2 it is noted in terms that the Council might require to use compulsory
purchase powers to secure renunciation of the tenant's interest under the long lease of the
TLR. This is consonant with the very nature of compulsory powers, in which private
property rights yield to the exercise of statutory powers. Accordingly, having regard to the
20
framing of clause 5.2 as an option and the explicit recognition of the availability of the
Council's powers of compulsory purchase, it is clear that the parties understood, or it may
reasonably be inferred to have been within their contemplation as part of the relevant
context, that the Council could choose not to exercise the option in clause 5.2, but to proceed
by using a general vesting declaration (as it in fact did).
[36]
The use of compulsory purchase powers would, of course, require payment of
statutory compensation to those whose interests have been abrogated. On the other hand, if
the TLR land so acquired eventually proved surplus to requirement, the Council would be
obliged in terms of the Crichel Down Rules ("the Rules") first to offer the land back to Forth
at its market value. (This is for the reasons recorded in para 16 of the Joint Minute, quoted at
para [5], above.) In addition to the fairness afforded to the original owner to re-acquire the
compulsorily acquired land which is now surplus (and which was the genesis of the Rules),
there is a degree of financial parity for the acquiring and now-disposing public authority.
The payment made by way of compensation would (in broad terms) be financially recouped
by disposal under the Rules.
[37]
The effect of the pursuer's interpretation of clause 5.4 would be three-fold. First, it
would result in a windfall benefit to Forth, in that it would obtain at no cost the return of the
TLR even though it has already been paid full compensation for it as a consequence of the
GVD. (Mr Campbell acknowledged the force of this point, and suggested that a remedy for
the Council may lie in unjustified enrichment.) Secondly, and conversely, the Council
would in effect have paid something for nothing, in the form of the compensation it has
already paid to Forth to acquire the TLR but (if the pursuer's interpretation of clause 5.4
were correct) followed by return of the TLR at no cost to Forth (or, if the pursuer is correct,
to it). This would defeat the financial parity which is a feature of the Rules and which
21
parties also contracted for in the provisions that any transfer under clauses 5.2 and 5.4 were
both "at no cost". The third effect of the pursuer's interpretation of clause 5.4 is the most
problematic. If the pursuer's interpretation were correct, then this could be seen as
constituting an attempt by the Council to contract out of the Rules which (in terms of
section 30 of the Edinburgh Tram (Line One) Act 2006 (asp 7)) they are obliged to apply. At
the very least, this would cast doubt on the vires of the Council to enter into contractual
provision purporting to do so. It is unlikely that a responsible public authority would
assume a contractual obligation which could prima facie put it in breach of an express and
mandatory statutory obligation. This militates against the interpretation the pursuer
contends for. It is for these reasons that I say clear language would be required in clause 5.4
to impose an obligation on the Council to re-convey the TLR at no cost, where it acquired the
TLR otherwise than under clause 5.2 but decided to do so in the exercise of compulsory
powers (as, indeed was the case). The results of the pursuer's interpretation, just described,
are also, in my view, inimical to the purposes of an agreement entered into by a planning
authority (discussed above, at para [21]), as the Agreement was.
[38]
I turn to Mr Campbell's submission that, because clause 5.4 did not regulate the use
of land but imposed an obligation on the Council, it had no place in a section 75 agreement.
That is, if I may say so, to do a disservice to the drafters of, and signatories to, the
Agreement. There is no such tension between clause 5.4 and its place within a section 75
agreement, if clause 5.4 is understood as being a contingent obligation, the effect of which, if
engaged, was to reverse a conveyance made to the Council for a planning gain which has
not been realised. (It is, as it were, a form of contractual causa data causa non secuta). While
clause 5.4 may impose an obligation on the Council (and whereas section 75 agreements
typically create obligations enforceable by a planning authority), clause 5.4 is ancillary to
22
clause 5.2 (which gave the Council an option to secure a particular planning gain) because,
as explained at para [30], it provides for restoration of the status quo ante if the planning
purpose for which the Council had acquired the TLR under clause 5.2 was not commenced
within the stipulated timeframe. On that analysis, the obligation in clause 5.4 is conditional
on and accessory to the exercise by the Council of the option in its favour in clause 5.2, and
is unobjectionable in a section 75 agreement.
[39]
It follows that I do not accept Mr Campbell's submission that clause 5.4 is
free-standing or that it is inapt for a section 75 agreement. It also follows that I reject any
contention that clause 5.4 was (in some de facto sense) severable from the Agreement
(because not appropriate to it), which was the logical (if extreme) consequence of
Mr Campbell's profoundly a-contextual analysis.
[40]
For completeness, I should record that I also reject the pursuer's assertion that the
words "and their successors" fell to be inserted after the reference to "Forth" in clause 5.4.
Contrary to Mr Campbell's submission that the omission of these words was attributable to
inept drafting, their omission may in fact reflect the fact that terms of clause 5.4 was a
counterpart to clause 5.2. In other words, if there is no right under clause 5.4 capable of
transmission to a third party successor to Forth, then it would be otiose to provide
otherwise.
[41]
For these reasons, I conclude that the pursuer's case, insofar as predicated on
clause 5.4 of the Agreement is irrelevant.
The continued debate
[42]
At the conclusion of the second day of the debate, it was agreed that the Court
should determine the contractual interpretation issue, which I have done in this Opinion. At
23
that time, I allowed the remaining parts of the Minute of Amendment to be received
(seeking to insert new articles 8A and 17A of condescendence) and allowed the Council
seven days to lodge answers. The debate was continued to 4 March 2021, for consideration
of the title to sue issue (on either the original pleadings or the amended pleadings, if
amendment is allowed). In the event that parties wish the continued debate to proceed to
enable the title to sue point to be resolved, I shall refrain meantime from issuing an
interlocutor sustaining the defender's second or third pleas.
The Council's registration point
[43]
I have averted to the Council's registration point (see para [17], above). Lest the
matter go further, it is appropriate that I express my view on that argument.
[44]
The Council argued that the "rights and obligations in terms of Clause 5 of the
Agreement were extinguished by or at the time of the GVD". For its part, and perhaps in
response to this line of argument, the pursuer had averred, and initially argued, that
clause 5.4 of the Agreement was a "planning obligation" within the scope of section 75(4), as
amended, which thereby created rights in rem, but which were not real burdens. (It was
acknowledged that real burdens would have been extinguished by the GVD, if not expressly
saved in schedule 2 to it.) The pursuer faced certain difficulties in advancing this argument,
which was predicated on section 75(4) as amended, because there was no equivalent
provision contained in section 75 in force at the time the Agreement was entered into, and
because the amendment in clause 75(4) was not retrospective: section 23(2) of the Planning
etc (Scotland) Act 2006 (asp 17), a point which I understood Mr Campbell ultimately to
accept.
24
[45]
As noted above, in the course of his reply on the second day, Mr Campbell candidly
abandoned any analysis of clause 5.4 being a real right, a right in rem or some form of
"hybrid right" (as contended for in his submissions); his ultimate position was that the right
in clause 5.4 was, in fact, only a personal right. Given the evolution of the pursuer's
argument, the registration point fell away.
[46]
Had the defender's registration point been a good point, it would have been
conclusive of the outcome of the debate. In my view, however, the contention that the effect
of the GVD was to extinguish "all" rights and obligations in clause 5 of the Agreement is too
broad, even if it were confined to the rights in favour of Forth. (There is no need or logic in
the exercise of a power of compulsory purchase to extinguishing rights in favour of the
acquiring planning authority.) At my request, parties produced an excerpt from one of the
standard texts addressing the effect of a general vesting declaration on personal rights.
However, it did not shed light on the registration point.
[47]
Briefly, my reasons for concluding that the Council's registration point (insofar as it
applies to the kinds of rights in clause 5) is not a good one are as follows. It is trite that the
power of a planning (or other public) authority to acquire land compulsorily for
development (or other public) purposes would lack utility, if real rights or servitudes
subsisted in respect of the land acquired. That explains the character of the rights referred to
in section 194(1) of the 1997 Act (being essentially rights of way and servitudes) and
susceptible to extinction unless expressly preserved in the vesting declaration itself. (The
ability to preserve specified rights from extinction upon vesting is provided for in form 6 to
The Compulsory Purchase of Land (Scotland) Regulations 2003 (SSI 2003 no. 446).) It
respectfully seems to me that there is no need to provide for the extinction of contractual
rights exercisable in respect of land compulsorily purchased or enforceable against the
25
owner. This is because contractual rights are personal, not praedial; they do not run with the
land and so would not be transmissible or enforceable against the acquiring authority. The
effect of the unenforceability of those contractual rights inter se the contracting parties would
be determined by the law on frustration, not planning law or the law of compulsory
purchase. An unusual feature here is that the Council was a party to the Agreement. Be that
as it may, having regard to my resolution of the contractual interpretation issue, that fact, or
my rejection of the Council's registration point, is of no avail to the pursuer.
Decision
[48]
I issued my Opinion to parties on 19 February, a week after the first debate, to enable
parties to take into account the Court's decision on the contract interpretation issue in
advance of the second debate. The second debate proceeded on 4 March on the title to sue
issue and a separate opinion is issued of even date with this one. In light of my decision on
the contract interpretation issue, the defender's second plea in law will be sustained and the
pursuer's action dismissed.
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