This is a decision by the Lands Tribunal for Scotland arising from a challenge to the charges imposed by companies carrying out the maintenance of landscaped areas in residential developments within a specific ownership model.
Background: Mr & Mrs Marriott (The Marriotts), who raised the claim, own a house within a large residential estate. The ‘open ground’ (the grassland within the development that is not exclusive to any particular property) is owned and maintained by Greenbelt Group Limited. Greenbelt’s title contains an obligation on them to maintain the open ground.
The Marriotts do not have rights to use the open ground, but are bound, along with the other proprietors in the development, to pay a share of the maintenance costs. They argued that this obligation is invalid or unenforceable. A number of technical arguments were put forward relying on a broad range of legislation including those dealing with unfair contract terms; title conditions and competition issues.
1. The burden does not relate to land or property
To be valid, in terms of the legislation, a burden imposed on one piece of land must be made in favour of the owner of other land in their capacity as owner e.g. the right of one owner to take access over the land of a neighbouring owner. The Marriotts had argued that that an obligation to make payment to Greenbelt for maintenance did not relate to the relevant burdened property and therefore was not a valid burden.
The Tribunal held that there is no requirement that the burdened land needs to be related to the benefitted land in the manner argued by the Marriotts, simply that the burden must simply relate ‘in some way’ to the burdened property. Greenbelt’s title to the land imposed an obligation on them to maintain it. Payment by the proprietors of the cost of upkeep leads to the land being maintained, which in turn preserves/enhances the amenity of the whole development.
2. The burden creates a monopoly
The Marriotts’ principal argument was that the burden was unlawful as it created a monopoly in favour of Greenbelt in that the house owners could not choose who should provide the maintenance services. This argument also failed on the basis that the obligation arose from the ownership of the land not from the burden itself. “The individual proprietors had agreed to pay a neighbouring proprietor for the cost of keeping his land in good order in the belief that keeping it in good order will enhance the amenity of their own properties.”
The overriding view expressed was that maintenance of land in the hands of its owner does not give rise to a monopoly in the sense required in the legislation, otherwise it could be considered that any maintenance burden would create a monopoly.
3. The burden is contrary to public policy
A further argument was that the burden created an unreasonable restraint of trade.
This argument was dismissed. The decision of the Lands Tribunal was that the freedom to contract with someone to maintain open spaces cannot be described as trade. Restrictions of trade in residential premises are common, with the purpose of preserving the residential character of a development.
4. The burden is an illegal abuse of a dominant position
It was also argued that the burden amounted to an illegal abuse of a dominant position in a market, which is prohibited if it may affect trade in the UK under competition laws.
This argument was dismissed as it was deemed not to be illegal or unlawful for an undertaking simply to be in a dominant position. In addition to its existence of a dominant position, there must also be abuse of it.
This case focused on the rights in terms of the deed of conditions, and was not considered to be an abuse.
5. The burden is invalid from uncertainty
The final argument, which was successful, was that the burden was invalid because there was uncertainty as to what comprised the open ground. In the Deed of Conditions in question, the Open Ground is defined by reference to a planning permission, which incorporates any variation or supplementary permission of that application but was not readily identifiable from the Deed of Conditions itself.
A rule known as the “Four Corners Rule” was held to apply. This, in effect meant in this case, that the identity of the property in question must be found within the four corners of the deed and not by way of reference to any secondary document.
The Marriotts advanced a wide range of arguments some of which went to the root of the particular model favoured by residential developers and maintenance companies. Ultimately the Marriotts were successful on a relatively narrow point namely the failure to identify the property within the deed itself. However this is an area on which there has been increasing activity so we await the next development.