GORDON MUNRO AGAINST WALTER FINLAYSON AND CATHERINE FINLAYSON AND GARETH INCE AND EMMA BILSLAND
SHERIFFDOM OF GRAMPIAN, HIGHLAND and ISLANDS AT DINGWALL
A6/12
2015SCDING16
JUDGMENT
by
SHERIFF PRINCIPAL DEREK C W PYLE
in causa
GORDON MUNRO, residing at Smithy Croft, Contin, by Strathpeffer, Ross-shire IV14 9ES
Pursuer and Appellant
against
WALTER FINLAYSON and CATHERINE FINLAYSON, residing at Caladh, Coul Road, Contin, by Strathpeffer, Ross-shire IV14 9ES
First Defenders and Respondents
and
GARETH INCE and EMMA BILSLAND, residing at West Cottage, Contin Mains, Contin, by Strathpeffer, Ross-shire IV14 9ES
Second Defenders
Dingwall, 30th January 2015
The Sheriff Principal, having resumed consideration of the cause, Amends the sheriff’s findings-in-fact by adding a new finding-in-fact as follows: “44. At some point between 1992 and 2002 a new driveway and yard was constituted on the disputed land.” and re-number the remaining findings-in-fact accordingly; Allows the appeal, Recalls the sheriff’s interlocutor of 7 May 2014, Varies the sheriff’s interlocutor of 21 March 2014 by sustaining the pursuer’s third and fifth pleas-in-law and repelling the first defenders’ third plea-in-law; Ordains the first defenders and their tenants or others deriving right from the first defenders within one month to remove from that area or piece of ground at Contin, by Strathpeffer, shown delineated in red and marked “Area 1” on the plan produced as number 5/1/1 of process, which subjects are more particularly described in, disponed by and shown delineated in red and marked Area 1 on the plan annexed and signed as relative to Disposition by Roderick MacLeod Munro in favour of the pursuer dated 11 March 2011 and recorded in the General Register of Sasines for the County of Ross and Cromarty on 22 March 2011; and decerns; Finds the first defenders liable to the pursuer in the expenses of the appeal; Certifies the appeal as suitable for the employment of senior counsel; Varies the sheriff’s interlocutor of 26 May 2014 by finding the first defenders liable to the pursuer in the expenses of the action in so far as not already dealt with, including within that exception for the avoidance of doubt the sheriff’s findings of no expenses due to or by either party in said interlocutor; Allows an Account of Expenses to be given in and Remits same to the Auditor of Court to Tax and to Report.
Introduction
[1] This unfortunate litigation concerns a dispute among neighbours about the title to heritable property. The proof before the sheriff lasted four days; his judgment extends to 160 pages.
[2] The pursuer seeks declarator that he owns a small piece of ground which adjoins both his property and that of the first defenders. He also seeks an order ordaining the defenders and their tenants (see below) or others to remove from the ground and an interdict against the defenders from entering on it. Before the sheriff, the pursuer had mixed success. He was granted the declarator but was granted the order for the removal of the defenders from the ground only to a limited extent, in that the removal was under exception of part of the ground which was necessary for the defenders and their tenants (again, see below) or others to occupy in order to afford them vehicular access to their property using the existing driveway and a reasonable turning circle within their garden. The pursuer appeals against the exception.
[3] The second defenders are the tenants of the first defenders and occupy West Cottage, being one of two properties on the first defenders’ ground. They did not enter appearance in the action. (Accordingly for the purposes of this judgment the first defenders are referred to as the defenders.)
[4] As the sheriff records in his note, at para [9], in essence the dispute centred upon the pursuer’s contention that a narrow wedge of land occupied by the defenders as part of the garden ground and driveway of West Cottage falls within the southern boundary of the pursuer’s land. The sheriff concluded that this wedge of land was indeed part of the pursuer’s property title to which was based upon a particular description in a 1950 Disposition. The defenders were unsuccessful in persuading the sheriff that part of the disputed ground had been exclusively possessed by them and their predecessor in title since 1998 and thereby created a title by way of positive prescription.
[5] The sheriff then went on to consider whether he should exercise what he described as the equitable power of the court to refrain from ordering the defenders to remove from the pursuer’s land to the extent that such removal would deny the defenders vehicular access to West Cottage – under reference to Anderson v Brattisanni’s 1978 SLT (Notes) 42.
The Sheriff’s application of the Anderson v Brattisanni’s principle
[6] The sheriff considered that the principle entitles the court to refrain from ordering an encroaching defender to remove from an area encroached upon where the defender has acted in good faith, where the extent of the encroachment is inconsiderable, where the encroachment does not materially impair the proprietor in the enjoyment of his property and where an order for removal would cause the encroaching party a loss wholly disproportionate to the advantage which it would confer upon the proprietor. Such loss would in normal course be financial but that does not exclude consideration of other forms of negative impact, such as the practical impact of the loss of vehicular access and the likelihood of financial loss in constructing an alternative means of access. The sheriff decided that a number of factors were relevant, including that the defenders had acted in good faith, that at least some of the ground used for access diminishes in practical value to the pursuer, that in the short term the defenders would require to park on the opposite side of a busy trunk road and in the long term significant expense would be incurred in the construction of alternative vehicular access, even assuming that planning permission would be granted for it, and that only some of the ground would be able to be used by the pursuer for purposes connected with his business. In the event, the sheriff concluded that the negative impact upon the defenders and their tenants of being required to remove from the ground would be entirely disproportionate to a very marginal benefit, if any, to the pursuer.
The pursuer’s submissions on appeal
[7] Senior counsel’s primary submission was that the line of authority which ends with Anderson v Brattisanni’s did not apply in the circumstances of this case. That line relates exclusively to the situation where a structure has in good faith been placed on property belonging to another and its removal would cause loss quite out of proportion to any benefit which might thereby be gained. The type of encroachment at issue in the relevant case law is always by things, typically by building works of some nature. The remedy is therefore not to remove the structures erected on the land, rather than not to remove from the land itself (Reid and Blackie, Personal Bar, SULI 2006, para 6-02). Sanderson v Geddes (1874) 1R 1198 was not the genesis of the principle, it being a case about acquiescence. Nevertheless, it did set out a principle which was later employed in Anderson v Brattisanni’s, namely that of public expediency in the “ruinous expense” without adequate ground or reason to take down a mutual gable wall which encroached on another’s ground. (Lord Ordinary at p 1200) The application of the principle in Begg v Jack (1875) 3R 35 was again in the context of the removal of a gable wall (Lord Gifford at p 43) It was, said senior counsel, significant that in a later case, Grahame v Magistrates of Kirkcaldy (1882) 9R (HL) 91, the encroaching party had offered equitable compensation in lieu – a point made by Lord McLaren in Wilson v Pottinger 1908 SC 580 (at p 586). Thus the line of authority did not entitle the sheriff to carry out a balancing exercise based upon equity – an approach which applies in the application of the principle of acquiescence which was inapplicable to the circumstances of this case. (See generally Bell, Principles (Guthrie’s ed. 1899) para 947; Robson v Chalmers Property Investment Company Limited 1965 SLT 381.)
[8] In any event, senior counsel submitted that even if the principle did apply, the sheriff did not apply it properly: 1, the encroachment was not inconsiderable, in that the land is in effect sterilised; nothing can be stored on it or vehicles parked on it without impeding the defenders’ access; 2, the sheriff took into account potential future loss to the defenders, when the line of authority applied only where loss had already been incurred and would result in a waste of resources already spent; 3, the sheriff should not have carried out a balancing exercise between respective gains and losses; and 4, that the defenders would have to park across the public road was a mere inconvenience, not an economic loss.
Defenders’ submissions
[9] The solicitor for the defenders submitted that this was a case about encroachment. That was what the pursuer had averred in Article 7 of Condescendence. That had been done by the building of a driveway and yard at some point between 1993 and December 2002. That this was understood by the parties and the sheriff is proved by the sheriff’s references to the pursuer’s solicitor’s submissions at the end of the proof (para 440 et seq of the sheriff’s note). He invited me to add a finding-in-fact to that effect. The defenders have always understood that they were not entitled to the grant by the court of a servitude right of vehicular access; they had not sought one. While it was true that in the historic cases the removal of the structure would have been a waste of money, in Anderson v Brattisanni’s the loss would have been that the encroaching party would have been unable to operate his business, which was future loss. There was no evidence that the cost of removal of the offending flue would be high; instead, it was the impact of the removal that mattered. The sheriff in the exercise of his discretion had applied the Anderson v Brattisanni’s principle correctly. He had the advantage of hearing the evidence at proof. An appellate court had a right to interfere in only restricted circumstances (McGraddie v McGraddie 2013 UKSC 58). It was no part of the principle that for it to apply compensation had to be offered. The facts in Anderson v Brattisanni’s did not support such a restriction.
Discussion
[10] As one would expect in a mature system of private law, Scots Law has created a law of heritable property which is intended to confer upon the owner the right to possess and use his land as he or she sees fit. Before the abolition of the feudal system of land ownership, these rights were divided into two forms of ownership – the dominium directum and the dominium utile. But the position now is that the heritable proprietor has all of the rights of possession and use as he or she would expect. Such rights, however, are not unqualified. They may, for example, be qualified by rules of public law, such as compulsory acquisition or planning legislation. They may also be subject to conditions of title. Or they may be subject to the rules of personal bar where, for example, a proprietor allows a third party in good faith to interfere with those rights and is held to have acquiesced in that interference. Nevertheless, the fundamental rule is that albeit subject to exceptions the proprietor’s rights are inviolable and, through our system of registration of title, certain. As the law has developed, it has been slow to interfere with such basic rules. That approach is colourfully illustrated by a passage from Lord Watson in Grahame v Magistrates of Kirkcaldy (at p 93) when discussing Begg v Jack:
“The pursuers had, unfortunately for themselves, expressed their willingness in the course of the dispute to compromise it upon the terms ultimately forced upon them by the Court, and that seems to have been one of the leading grounds of the judgment against them, which humbly appears to me to trench upon private rights of property to an extent altogether unwarranted by any previous authority in the law of Scotland. The practical effect of the judgment was that the Court gave the wrongdoer compulsory powers to acquire part of his neighbour’s property, which, in spite of remonstrance, he had illegally appropriated.”
Any suggestion that Lord Watson was doubting the decision of the court in Sanderson v Geddes was scotched by Lord President Dunedin in Wilson v Pottinger (at p 586). Nevertheless, Lord Watson’s words illustrate the point that established heritable rights of property should not be lightly interfered with. That, it seems to me, must therefore mean that I should scrutinise with great care any attempt to extend beyond its scope an exception to those rights.
[11] As senior counsel pointed out, Sanderson v Geddes is not in a strict sense the origin of the principle in Anderson v Brattisanni’s. It is a case about encroachment but in which the defender was held to have acquiesced. Indeed, the interlocutor of the Second Division states that in terms. Nevertheless, it was given as an example of the exercise of an equitable power by Lord Gifford in Jack v Begg. In that case, the Lord Ordinary held after proof that the pursuers, being the proprietors of the ground which had been encroached, had not acquiesced in the defender erecting a mutual gable wall partly on their ground, but in considering whether or not to grant the pursuers’ conclusion for the wall to be removed took into account that they were not anxious that the wall should not be built but that the defender should agree to their terms (at p 38). Moreover, the Lord Ordinary concluded that the acquisition without payment of a mutual right to the new wall was worth all the inconvenience and loss and damage which the pursuers had suffered or could suffer. In other words, he was reaching an equitable decision based upon the competing economic effects of his decision not to insist upon the wall being removed. In reaching that decision, it is clear that the Lord Ordinary, while satisfied that it was fair and equitable in the peculiar circumstances of the case (indeed he states in terms that neither party had proposed what he eventually decided to do (at p 38)), he was in some doubt whether it was strictly in accordance with the law. (He describes it as a “cause of some anxiety”.) In the result the Inner House agreed with him on both equitable and legal grounds. To justify the latter, Lord Gifford said this:
“If I am right in the opinion I have expressed, that the defender Jack had no right to build the gable in question so as to encroach upon the property of the pursuers, and if the defender erected it at his own risk, and notwithstanding the opposition and warning of the pursuers, the logical result is that the Court might order it to be taken down and set back, and there are cases when this course, severe although it be, may be necessary to do justice between the parties; but in all such cases there is an equitable power vested in the Court in virtue of which, when the exact restoration of things to their former condition is either impossible or would be attended with unreasonable loss and expense, quite disproportionate to the advantage which it would give to the successful party, the Court can award an equivalent, - in other words, they can say upon what equitable conditions the building shall be allowed to remain where it is, although it has been placed there without legal right. This equitable power has often been exercised by the Court when slight encroachments have been made by a builder upon his neighbour’s property, it being unreasonable in such cases to insist on the demolition of the whole building. An example of this occurred in the case cited in argument, Sanderson v Geddes…, but there are many other and stronger instances.”
[12] In passing, I would make the following observations about this decision: first, Lord Gifford does not give any examples other than Sanderson v Geddes which, as I have said, was a case decided upon acquiescence and not in exercise of any equitable right; secondly, on one view all that Lord Gifford was seeking to do in citing that case was to show the flexibility of the court to determine a fair and equitable resolution of a case on its peculiar facts; and thirdly, the loss and expense which he describes as unreasonable is in the future, not in the past. But on the main point, whether or not the decision of the Inner House was based upon past precedent (and in due course suffered the criticism of Lord Watson) the passage I have set out forms part of the ratio decidendi of the case. Moreover, it is in the context of a case in which acquiescence was pled but in the event not proved. Two further points should be made: first, the court was clearly swayed by the fact that the pursuers had gained the benefit without payment of a mutual wall, which, as the Lord Justice-Clerk (at p 46) described, was “sufficient indemnification for the use which the defender has taken of the ground”; secondly, the equitable principle is not, strictly speaking, a rule within the law of property given that neither party’s rights in property were affected by it, but is in effect a rule within the law of civil remedies. (See Walker on Civil Remedies, pp 222 and 275) In Grahame v Magistrates of Kirkcaldy, Lord Watson emphasised that point:
“It appears to me that a superior Court, having equitable jurisdiction, must also have a discretion, in certain exceptional circumstances, to withhold from parties applying for it that remedy to which, in ordinary circumstances, they would be entitled as a matter of course. In order to justify the exercise of such a discretionary power there must be some very cogent reason for depriving litigants of the ordinary means of enforcing their legal rights. There are, so far as I know, only three decided cases, in which the Court of Session, there being no facts sufficient to raise a plea in bar of the action, have nevertheless denied to the pursuer the remedy to which, in strict law, he was entitled. These authorities seem to establish, if that were necessary, the proposition that the Court has the power of declining, upon equitable grounds, to enforce an admittedly legal right; but they also shew that the power of the court has rarely been exercised.”
He then goes on to cite Sanderson v Geddes and Begg v Jack. He also refers to an earlier decision, Macnair v Cathcart M 12,832. It is instructive to note that in that case the court did not enforce the property rights of the party upon whose land the encroachment had occurred upon condition that he was paid full compensation. Similarly, the decision by the House of Lords in Grahame v Magistrates of Kirkcaldy was decisively influenced by the statement by the defenders that they would compensate the burghers by making available other land for the purpose for which the encroached upon land should have continued to be used.
[13] Lord Watson, incidentally, appears not to have noticed that the decision in Sanderson v Geddes was based upon acquiescence being proved.
[14] Senior counsel did not seek to argue that the equitable right rested only with the Inner House or the Supreme Court, notwithstanding Lord Watson’s reference to a superior court.
[15] Wilson v Pottinger is not a case in which the equitable principle was applied, the decision of the Inner House being reached either on consent to the encroachment or by means of an implied contractual term. In obiter remarks Lord Maclaren noted (at p 586 et seq):
“Then, on the other branch of the case, I think there is sufficient authority in the region of decision to shew that we have to a certain extent at least adopted the principle of Roman law, that a person who builds in good faith on another man’s property is not necessarily compelled to take down his building. If the value of the building greatly exceeds that of the ground he occupies, the case can be explicated by paying compensation, whatever may be the agreement. I should be sorry if any doubt were thrown upon the doctrine that where there is an inconsiderable encroachment upon neighbour’s land by buildings which are substantially and for all practical purposes upon the builder’s own land, the law of the land will not compel him to take them down.”
[16] In Anderson v Brattisanni’s the First Division summarised the law thus (at p 43):
“The general rule is that a proprietor is entitled to have any structure erected upon his property removed. There is, however, an equitable power in the court, in exceptional circumstances, to refuse enforcement of the proprietor’s right at least in a question of encroachment by a neighbouring proprietor… The existence of this power has been recognised in cases such as Sanderson v Geddes…; Begg v Jack…; Grahame v Mags of Kirkcaldy…; and Wilson v Pottinger… From these cases it is clear that the power may be exercised when the exact restoration of things to their former condition is either impossible or would be attended with unreasonable loss and expense quite disproportionate to the advantage which it would give to the successful party. The power will, however, be exercised sparingly and it may be deduced that because it is exercised the court will have to be satisfied that the encroachment was made in good faith in the belief that it was unobjectionable, that it is inconsiderable and does not materially impair the proprietor in the enjoyment of his property, and that its removal would cause to the encroacher a loss wholly disproportionate to the advantage which it would confer upon the proprietor.”
[17] It seems to me that the following rules usefully summarise the law as it now stands:
1. The principle is part of the law of civil remedies, not the law of property. In its application it creates no new rights; it merely prevents the proprietor from exercising a right;
2. The principle is an exception based on equitable considerations. (Indeed, in Grahame v Magistrates of Kirkcaldy the Lord Chancellor compares it favourably to the law of equity as practised by the English Court of Chancery (at p 96).);
3. The party seeking its application must have acted in good faith, or as in Grahame v Magistrates of Kirkcaldy not done so but thereafter had taken steps to remedy its previous failings;
4. The principle will be applied only sparingly and in exceptional circumstances;
5. It has, to date, been applied only in cases where the encroachment was by a physical thing, such as a gable wall or an extractor flue attached to a wall;
6. The encroachment must be inconsiderable and does not materially impair the proprietor in the enjoyment of his property, by which is meant his property as a whole and not the piece of ground which has been encroached. Indeed, in all the authorities before Anderson v Brattisanni’s the piece of ground upon which the thing was constructed was lost altogether;
7. Its removal would cause to the encroacher a loss wholly disproportionate to the advantage which it would confer upon the proprietor. In calculating that advantage the court will take into account whether or not the encroaching party has offered compensation or, if not, whether it is open to the court on the evidence to fix a value for reasonable compensation;
8. Future as well as past economic loss will be taken into account.
Decision
[18] Applying these rules to the circumstances of the present case, I have come to the conclusion that this appeal must succeed.
[19] In reaching that view, I do not agree with senior counsel that the principle ought not to be considered in the context of this case because it is not a case involving encroachment. As the defenders’ solicitor pointed out, it plainly is a case in which physical encroachment has taken place, namely the building of the driveway and yard. As was implied from the submission made to the sheriff by the pursuer’s solicitor at the end of the proof, the only reason that the pursuer was not seeking their removal was that they would not interfere with any future plans he had for use of the encroached ground. I have therefore acceded to the defenders’ motion to amend the sheriff’s findings-in-fact. It is not easy to find a place within those findings for the amendment to be made given the sheriff’s sub-headings, but I have placed it under the sub-heading of “Encroachment”.
[20] However, I do agree with senior counsel that by applying the principle to the facts of this case the sheriff has fallen into error by innovating on the type of case in which the court will allow the principle to be applied. As I have said, all of the authorities deal with encroachment by buildings. The question has therefore been whether the building should be removed. As I have also said, part of the characteristics of this case is the physical encroachment of the driveway and yard. That overcomes the first hurdle placed in the way of the defenders, but it ignores what this case is truly about, namely the creation in anything other than name of an heritable and irredeemable servitude right of vehicular access over another’s land. That, it seems to me, is a step too far in the context of a principle which should be applied only exceptionally and sparingly. While senior counsel, as I have said, made no point about Lord Watson’s reference to the right resting with a superior court, it seems to me that if the principle is to be expanded to apply to cases like the present one it is not properly the role of inferior courts to do so.
[21] In any event, the encroachment cannot be characterised as inconsiderable. It is obvious that it effectively prevents the pursuer from using the excepted land in any manner at all which would have the effect of impeding the defenders’ right of access. Any right of use would therefore be nugatory. Thus the encroachment has, on any view, materially impaired the pursuer in the enjoyment of his property. I acknowledge that the sheriff has noted that part of the land tapers to the point that the impairment on part of the land is immaterial, but he does not say that it applies to all of it. Instead he records that its practical value for parking or storage “must diminish the closer that land is to the south eastern corner of the new garage” (para [446.4]). By necessary inference, that must mean that the use of the rest of the land for such purposes is both possible and practical. That must also mean that the impairment is not immaterial. Indeed, the sheriff concedes that is so by concluding that “on the basis of the evidence that [the pursuer] would be able to make use of the wider and more accessible parts of the disputed land for purposes connected with his business” (para [446.7]).
[22] The sheriff concludes that the loss of the access would have very significant negative consequences for the defenders. That is undoubtedly so. As he records, there must be a doubt that they will be able to erect an alternative access on their own ground and, if so, without considerable expense. But he goes on to conclude that the requirement to remove would be “entirely disproportionate to what I consider would be the very marginal benefit, if any, to the pursuer of such a result” (para [446.9]) There are, in my opinion, two things wrong with that conclusion. The first is that the suggestion that there might be no benefit at all to the pursuer flies in the face of the sheriff’s own earlier conclusions. But secondly and more significantly, in describing the issue as “marginal benefit” the sheriff has applied the wrong test, the correct test being no material impairment.
[23] I accept that in Anderson v Brattisanni’s there is no mention of any compensatory payment being offered or ordered, unlike the earlier authorities where the court was able to order compensation or to have regard to other benefits which accrued to the proprietor of the encroached upon ground. But that may be because in the particular circumstances of the case there was no loss which was pled or which could reasonably be inferred to the pursuer. That is not the case in the present circumstances. Nor, for the avoidance of doubt, do I regard it as incumbent upon the pursuer to plead such loss. As was the case in some of the authorities, it was always open to the defenders to offer a compensatory payment. They did not do so. Instead they imperilled their case on satisfying the court that the other equitable considerations were sufficient for the principle to be applied. The consequences of that decision must fall upon them, not the pursuer. In fact, on the evidence there is no direct or indirect benefit to the pursuer from the encroachment.
[24] For all those reasons this appeal falls to be granted. It was agreed that expenses would follow success both for the appeal and for the proceedings before the sheriff. The pursuer moved for sanction for the employment of senior counsel. That was opposed on the basis that there was nothing particularly complex in the case. I do not agree. I was greatly assisted by senior counsel’s clear exposition of the law which was not straightforward, particularly in deciding its application to the facts. Sanction is therefore granted. I note that on two previous occasions the defenders have been found liable in the expenses of some of the procedure and on one occasion, namely 20 May 2013, the pursuer was found so liable. I also note that in the last interlocutor the sheriff found certain procedures as appropriate for a finding of no expenses due to or by either party. I reflect those decisions in the interlocutor. After issuing his judgment the sheriff continued the cause to enable the parties either to agree on the boundaries of the excepted ground or to remit to a man of skill to determine them. That proved impossible. I therefore recall the later interlocutor.