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|Judgments - Axis West Developments Ltd. v. Chartwell Land Investments Ltd. (Scotland)
HOUSE OF LORDS
Lord Slynn of Hadley Lord Hope of Craighead
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
AXIS WEST DEVELOPMENTS LTD.
CHARTWELL LAND INVESTMENTS LTD.
ON 15 JULY 1999
LORD SLYNN OF HADLEY
I have had the advantage of reading in draft the speeches prepared by my noble and learned friends Lord Hope of Craighead and Lord Clyde. For the reasons they give, I, too, would dismiss the appeal.
LORD HOPE OF CRAIGHEAD
The dispute which has arisen in this case relates to the interpretation of a servitude right created by an express grant. The respondents, Chartwell Land Investments Limited ("Chartwell"), were one of the parties to the deed by which the servitude right was created. The appellants, Axis West Developments Limited ("Axis"), are the singular successors of the other party, Atlas Investments Limited ("Atlas"). They are the owners of part of the land of which Atlas were the heritable proprietors on the date when the deed was entered into. Atlas retained the remainder of that land in its ownership when it disponed that part to Axis. The servitude right which is in question is set out in clause 2.1.1 of the deed. Read together with the relevant part of the preamble to clause 2.1, it is in these terms:
The servitude right which Atlas granted to Chartwell in terms of that clause was one of a number of reciprocal servitude rights of access and other rights which the parties agreed to grant to each other over an area of development land of which they were the neighbouring proprietors. It was a right to make use of and to make connections to various services which were then currently serving a portion of that land, referred to in the deed as "the Atlas Subjects", which was to be developed by Atlas as a superstore and creche. The purposes for which those rights were granted to Chartwell were the carrying out and completion of a scheme for the development on their land of premises for non-food retail warehousing. On the other side of the Atlas Subjects from the land which was to be developed by Chartwell there was a strip of ground which had been set aside for a Distributor Road. Its purpose was to provide vehicular and pedestrian access to the Chartwell development and to a common car parking area. The site of the Distributor Road was the portion of land which Atlas subsequently conveyed to Axis. It is the fact that that strip of land is now in separate ownership which has given rise to the dispute.
The occasion for the dispute was the laying by Chartwell, as part of a drainage scheme to serve their development, of a pipe which led from the Atlas Subjects into the Distributor Road. This pipe was the final leg of a system for the drainage of surface water from the Chartwell Development into a sewer which lay under a section of the Distributor Road to which Chartwell had no direct access. The route for the drainage system ran across the Atlas Subjects to a point close to the perimeter of those subjects which was furthest away from the Chartwell Subjects. The final leg, which provided for the possibility of shared use by Atlas to carry surface water drainage from the Atlas Subjects, led to the connection with the sewer. The connection was positioned underneath a roundabout on the Distributor Road. At the date of the deed this sewer was one of the services currently serving the Atlas subjects. But Axis objected to the laying of the pipe to make a connection with this sewer under their land without their consent. They claim to have suffered loss and damage as a result of the encroachment onto their property. The amount of their claim is measured by the sum to which they say they would have been entitled as consideration for the grant of a servitude or wayleave for the laying of the pipe under their land.
Mr. McNeill Q.C. for Axis submitted that on a proper construction of the clause which created the servitude it was limited in its extent to the Atlas Subjects. The result was that Chartwell were not entitled to make connections to any of the relevant services in or under any part of the Distributor Road of which Axis are now the heritable proprietors without having obtained the consent of Axis. He took as his starting point the well-known proposition that all conditions restricting the use of land must be very clearly expressed, the presumption being always for freedom: Anderson v. Dickie, 1915 S.C. (H.L.) 79, 89 per Lord Dunedin. He then drew attention to various passages in the deed which he said indicated that the servitude rights conferred on Chartwell in regard to the making of connections to services were all confined to the Atlas Subjects. He said that on a proper construction of clause 2.1.1 the servitude did not affect the Distributor Road of which Axis were now the heritable proprietors. In any event the clause did not do so in sufficiently clear terms, so the presumption for freedom should be applied
Three features of the relevant clause lay at the heart of the debate. The first, to which Mr. McNeill attached particular importance, is the fact that it makes no reference to the Distributor Road. It does not say in terms that the rights which are granted by it extend to the Distributor Road or any part or parts of it. The second is a counterpart of the first. The clause does not in terms restrict the extent of the servitude to the Atlas Subjects. The Atlas Subjects are mentioned in the clause for one purpose only. That is to identify the services which Chartwell are to be entitled to make use of and to which they are to be entitled to make connections in the exercise of the right. The third is that the rights comprised in the grant of the servitude include the right to use the services as well as to make connections to them. This point has an important bearing on the extent of the land occupied by these services which was being made subject to the servitude.
The first two points can be taken together, because they both relate to Mr. McNeill's argument that the effect of clause 2.1.1 was to identify the Atlas Subjects, and only those subjects, as the servient tenement. In my opinion the answer to this argument is to be found in the fact that, as this was a servitude created by express grant, questions as to the identity of both the servient tenement and the dominant tenement must be referred to the state of affairs at the date of the deed. Servitudes are limitations on the property of the owner of the servient tenement in favour of the owner of the dominant tenement. The rule is that the servitude must be used in the way which is least burdensome to the servient tenement. The application of this rule may restrict the exercise of the servitude to a part only of the land which is in the ownership of the owner of the servient tenement. In that event, as Esrkine, Institutes II. ix. 34 puts it, "the rest of the servient tenement is free". The restriction may be achieved either expressly, by describing the route which must be taken or the place where the servitude is to be exercised, or in practice by applying the rule that the right must be exercised civiliter. But, whatever the restriction, the "tenements" over which and in favour of which the right is granted are the respective parcels of land of which the parties to the deed were, at the date of the deed, the heritable proprietors.
That is the starting point from which both the parties to the deed and their singular successors must work. The deed which grants the servitude does not need to define the extent of the servient tenement, because the servient tenement is taken to be the whole of the land over which it is granted which was in the ownership of the grantor at the date of the deed. Successors in title of the grantor take that land subject to the servitude. The mere fact that the land is subdivided after the date of the grant so that parts of it are thereafter in separate ownership cannot affect the extent of the land which is subject to the servitude. The servitude has the character of a real burden over the whole of the lands which were in the ownership of the proprietor of the servient tenement at the date of the grant. But if the grantor wishes to limit the extent of his land which is subject to the servitude, he may do so by including a provision to this effect in the deed. In that event, if the land is then subdivided, his successors in title to that part of his land which was made subject to the servitude will be bound by the servitude and his successors in title to the other part will not.
In the present case the various parts of the land in the ownership of Atlas at the date of the deed were separately identified by name in the definition clause. It would have been a simple matter for the parties to declare in clause 2.1.1 that the servitude was to be exercised only in, under or upon the Atlas Subjects. Had they done so, the Distributor Road would have been from the outset free of the servitude. But that is not what they did. The method which they chose to define the extent of the servitude was to limit its exercise, both as to the right to use and the right to make connections, to the cables, wires, pipes, drains and sewers "currently serving" the Atlas Subjects or any part thereof. Thus far there is nothing in the clause to exclude its application to the Distributor Road, which formed part of the servient tenement at the date of the deed. Nor can I find anything in the preamble to the deed, elsewhere in clause 2.1 or in any other clause which has this effect.
This brings me to the third feature of clause 2.1.1 and to the argument that this description failed to make it clear that the Distributor Road was land over which the right to make the connection could be exercised. Where real burdens are being created, the nature and extent of the obligation or restriction sought to be imposed must be clearly defined in the deed. If this is not done, the burden will be void for uncertainty. The general principle is that burdens ought to be strictly interpreted against the dominant proprietor. So ambiguous expressions will be read in a manner most favourable to the servient proprietor. Additional words cannot be implied, and extrinsic evidence will not be admitted, in order to make good deficiencies in the description of the burden of which a purchaser or other third party ought to have fair notice on the face of the title. The question is whether the description of the servitude in clause 2.1.1 fails to achieve this standard in regard to its application to the Distributor Road.
Mr. McNeill made it clear that it was not part of his argument that the clause was ineffective to create a real burden over the Atlas Subjects. He also accepted that the right to use the various services mentioned in the clause would be rendered useless if that right did not extend to the full length of the cables, wires and pipes which provided the services. His argument was directed to the right to make connections. But once it is accepted, as it had to be in order to make sense of it, that the right to use extends to the full length of the cables, wires and pipes in order that Chartwell may obtain the supply of gas, electricity or water or make effective use of the drainage services, the argument that the right to make connections can only be exercised within the Atlas Subjects becomes unsustainable.
That right is given by the clause without any words of limitation other than that the services are to be those "currently serving" the Atlas Subjects at the date of the deed. The location and extent of those services will be a matter for extrinsic evidence, but the need for this does not offend against the rule which requires that the burden which is being created must be clearly identified. In McLean v. Marwhirn Development Ltd. 1976 S.L.T. (Notes) 47 it was held that the proof which was needed in that case to identify on the ground the pipes, connection, drains and sewers and what they were used for at the date of the grant of the servitude was no more than was needed to apply a specific written description to external facts and that this was admissible. The Court was able to reach that decision on the assumption that the strict rule application to the creation of real burdens was applicable to the creation of servitudes by express grant. I agree with that decision, and I would apply it to the present case. I think that it is clear that the degree of precision which is required will vary according to the subject matter and what is practicable. The fact that the location and extent of each of the various services mentioned in the clause will have to be determined by reference to extrinsic evidence such as maps or plans does not deprive the clause of the necessary degree of certainty. It was not suggested that the description which was used in this case has given rise in practice to any difficulty. The parties are agreed that the sewer to which the connection was made was currently serving the Atlas Subjects at the date of the deed. In these circumstances I consider that Chartwell were within their rights in making the connection to the sewer under the roundabout on the Distributor Road in the exercise of the servitude.
For these reasons, and for those given more fully by my noble and learned friend Lord Clyde whose speech I have had the advantage of reading in draft and with which I agree, I would dismiss the appeal.
This appeal relates to the development of an extensive area of ground in Drumchapel in Glasgow. The area was at one time owned by the appellants but by a disposition dated 30 September 1994 and registered in the Land Register on 4 October 1994 they conveyed the lands, subject to certain exceptions which are not material to the case, to Atlas Investments Limited ("Atlas"). On 29 September 1994 Atlas granted a feu disposition of part of the area to the respondents. These subjects are referred to as "the Chartwell Subjects." Atlas also conveyed to the respondents a one-half pro indiviso share along with Atlas in an area known as the Common Car Park. The purpose of the conveyance was to enable the respondents to build non-food retail warehouses together with car parking spaces and landscaping. The Chartwell Subjects and the Common Car Park Area were situated immediately to the west of lands retained by Atlas, known as "the Atlas Subjects." Along the east side of the Atlas subjects, bounding them and curving round to the south side of them was a road referred to as "the distributor road." That road continued westwards along the southern side of the Common Car Park and beyond that along the southern side of an area known as the PFS subjects, being the site of a proposed filling station. The distributor road was in September 1994 part of the lands owned by Atlas. There were certain roundabouts in its course at which branch roads could join it. One of these roundabouts ("the roundabout") was situated on the stretch of the distributor road which ran to the east of the Atlas Subjects.
A main sewer lay under the line of the distributor road to the east of the Atlas subjects. But the respondents had no direct access to it from the Chartwell subjects. On 29 and 30 September 1994 Atlas and the respondents entered into a Deed of Declaration of Mutual Conditions ("the Deed"). The Deed was registered in the Land Register on 4 October 1994. At that time the main sewer was serving the Atlas subjects but it had the capacity in addition to serve the Chartwell subjects. The Deed gave certain rights to the respondents in relation to the drainage of their lands and it is with regard to the extent of those rights that the present case is concerned. Although the feu disposition by Atlas pre-dated their acquisition of the lands it is accepted that the respondents' title was made good by accretion and no question arises as to the title of the respective parties to the Deed to create the rights and burdens set out in it.
The original plan had been to carry a drain from the Chartwell subjects across the Atlas Subjects to the south of the building which Atlas was proposing to develop on the Atlas Subjects and connect with the sewer some distance north of the roundabout. However even before the Deed was signed it was agreed that a change would be made to the route in order to accommodate a change to the original position of the proposed building on the Atlas Subjects. This necessitated a laying of the drain some distance to the south of the line originally proposed. It was still to connect with the sewer which ran under the distributor road but it was eventually agreed that it would do so at a point on the roundabout. Before this was done, and indeed before the formal agreement was executed between Cartwell and Atlas recording the finally agreed route, Atlas conveyed the distributor road to the appellants. By a letter of 22 June 1995 solicitors acting for Atlas informed the respondents that while Atlas would allow the drainage to pass through the Atlas Subjects in accordance with the current draft scheme it was the appellants who now owned the distributor road and they would not permit the extension of the drainage system into the main sewer pending the adoption of the distributor road. The respondents later proceeded to install their drainage system leading a drain across the distributor road at the roundabout to connect with the main sewer underneath the roundabout. The appellants claim that this was an unauthorised encroachment on their property for which they now seek damages.
It should be noted at this stage that the title which the appellants have produced, at least in the form of the copies lodged in the case, is not altogether clear. The Disposition by Atlas in favour of the appellants dated 14 June 1995 indicates that Atlas disponed to the appellants two pieces of ground "comprising the site of a distributor road being the subjects shown coloured yellow on the plan annexed and executed as relative hereto. " The plan which has been produced which purports to be the plan referred to in the Disposition has the roundabout shaded in pink while the rest of the areas of road are shaded in yellow. The plan also bears the words "Distributor Road - Deed of Conditions." The plan annexed to the Deed of Conditions, and defined therein as the "Distributor Road Plan", shows the whole road including the roundabout shaded in yellow. It remains unclear why in the plan annexed to the Disposition the roundabout is excluded from the yellow areas. The appellants aver that they are the heritable proprietors of the road and for the basis of their present claim that must be taken to mean that they have a registered title to the roundabout. However, while the respondents do not admit in their pleadings that the appellants are the heritable proprietors of the roundabout, the point has not been focussed as an issue in the case and both parties were prepared to proceed upon the basis that the appellant had a title as heritable proprietors of the roundabout to pursue their claim. That claim depends critically upon the terms of the Deed and it is necessary to refer to and to quote some of its provisions.
The Deed starts with six preambles. The first states:
The word "presently", which was not used in the title to the Deed where the details of the parties were set out, may reflect the recognition by the parties that parcels of the land might later be conveyed to others. It then narrates the title of the respondents to the Chartwell Subjects and the pro indiviso ownership which Chartwell and Atlas enjoyed to the Common Car Parking Area, and records that the two companies have certain proposals in respect of the development of inter alia the Atlas Subjects and the Chartwell Subjects. It then states:
Finally in paragraph (SIX) the Deed records the purpose of executing the Deed:
It is essentially with the construction of Clause 2.1. that the present case is concerned. Clause 2.1 was in following terms:
As regards the reference to "the entitled parties referred to in Clause 3" that Clause stated that the servitude rights created in terms of Clause 2.1 and 2.2 were created in favour of the Chartwell subjects and the Common Car Parking Area and were to be exercised by Chartwell and all others authorised by them. As regards the reference to Clause 3.4, that Clause provided that the servitude rights created in terms of Clause 2 were to be exercised:
with a requirement to make good any physical damage caused by the exercise of the rights.
Mention should be made finally of the terms of Clause 13. Clause 13.1 declared that the rights and obligations created by the Deed were to be real burdens affecting:
Clause 13.2 provided that the foregoing servitude rights and the other rights and reservations, burdens, conditions, provisions, declarations and others contained in the Deed were declared to:
so that Atlas and Chartwell might enforce the rights against each other.
The appellants accept that the Deed created burdens and conditions which were binding upon the singular successors of the parties to the Deed. In particular it is common ground that Clause 2.1.1. created a servitude in favour of the proprietor of the Chartwell Subjects. What is in issue is the extent of that servitude. The respondents do not seek to found upon Clause 2.1.2. because the rights there given are expressly restricted to the laying, and later using, of inter alia drains and sewers "in, under or upon the Atlas Subjects" and the dispute relates to the drainage into the sewer outwith the Atlas Subjects. The respondents claim that Clause 2.1.1. entitles them to extend their drains not only through the Atlas Subjects but beyond them under the distributor road at the roundabout and then connect them with the sewer where it passes beneath the roundabout. The appellants submit that the rights given in Clause 2.1.1. extend only to the area comprised in the Atlas Subjects and that the respondents are not entitled to extend their drains beyond the limits of that area.
The dispute in the present case is not solved simply by identifying the servient tenement, unless it can be affirmed that the servient tenement extended only to the Atlas Subjects. Such a conclusion might follow from the construction of Clause 2.1. for which the appellant contends, but it is the construction of that Clause which is the critical question in the case. If the question was asked what was the servient tenement at the date of the Deed, it would in my view be correct to reply that it was the whole lands owned by Atlas at that date and stated in Clause 13.1 to be subject to the obligations created by the Deed. That is borne out by the express narrative in paragraph (ONE) of the preamble and the statement of the purpose of the parties in paragraph (SIX). But that does not solve the problem raised in the case. The servient tenement may consist of more land than the particular area over which the right may be exercised. As Erskine stated (Institute II.IX.34.):
In the present case the distributor road can be accepted as falling within the servient tenement as part of the whole lands owned by Atlas, but the issue still remains whether the right in question extends outwith the Atlas Subjects. Whether that part of the lands of the servient tenement which comprised the roundabout was, in Erskine's word, free, or whether it passed to the appellants burdened by the right given in Clause 2.1. depends on the proper construction of that Clause. A like approach can be found in relation to a right of way in the South African case of Nach Investments (Pty.) Limited v. Yaldai Investments (Pty.) Limited  2 S.A. 820 to which we were referred, where Hefer J.A. (at p.831) observed:
It is common ground that in construing a servitude regard is to be had to the presumption for freedom of property and accordingly a construction is to be preferred which is least burdensome to the servient tenement. It was common ground that, as Lord Dunedin put it in Anderson v. Dickie 1915 S.C. (H.L.) 79 at 89: "all conditions restricting the use of land must be very clearly expressed." Reference was also made to the observation of Lord Reid in Hunter v. Fox (1964) S.C.(H.L.) 95 at 99 that:
It was submitted that a greater latitude in construction should be afforded in the case of a servitude as against the case of a real burden and reference was made to the observations of the Court in McLean v. Mawhirn Developments Ltd. 1976 S.L.T. (Notes) 47 at 49 in that regard. Certainly it can be said that the nature of a servitude is such that it may not require the precision demanded for the constitution of a real burden in a formal deed. But in the present case it is agreed that a servitude was created and that it was constituted as a real burden. The problem is not the one of resolving any imprecision in the grant so as to see whether or not a servitude has been granted, not is it a question of ascertaining the nature of the activities permitted by the grant. It is solely a question of discovering from the words used the territorial extent of the grant. The servitude was constituted in a mutual deed relating to the development of the lands respectively owned by the parties. The Deed undoubtedly has to be construed as at the date when it was granted and the critical Clause has to be construed in the context of the whole deed. In seeking a reasonable construction of the Clause it is proper to take into account the purpose which the grant was intended to achieve.
As regards the construction of Clause 2.1.1. I have no doubt that the rights there granted extend to the roundabout. In my view the two principal arguments submitted by the respondents are conclusive. In the first place in sharp distinction to the language of Clause 2.1.2., which contains the express territorial limitation to work in, under or upon the Atlas Subjects, no such limitation is expressed. The extent of the right is defined by reference to the services "currently serving the Atlas Subjects or any part or parts thereof." That is a sufficiently precise formulation of the extent of the right. It refers to the state of affairs as at the date of the Deed. The services serving the Atlas Subjects at that date require to be identified and that may legitimately be done by extrinsic evidence of what those services were. But I find no indication that those services have to be found within the boundaries of the Atlas Subjects. Indeed the language used is not only consistent with, but even points to, the inclusion of services situated outside the Atlas Subjects. The main sewer was evidently serving the Atlas Subjects at the date of the Deed and, taken as a sewer distinct from any drainage connections to it from the Atlas Subjects, was totally outwith those subjects. The appellants seek to restrict the right of drainage in Clause 2.1.1. to a drain which extended within the Atlas Subjects and which was already connected with the sewer. But that is to ignore the reference to sewers as well as to drains. It was also objected that the respondents' construction involved a potential multiplicity of points of connection under the distribution road if the sewer was to be open to access at any point. But any such objection can readily be met by the rule that any servitude is to be exercised with the minimum of inconvenience.
Secondly, the grant was a two-fold one, to make use of the services and to make connections with them. It cannot reasonably be held that the use of the services which was granted to the respondents was limited to the area of the Atlas Subjects. Indeed I did not understand that counsel for the appellants was prepared to support such a proposition. But I find no reason for distinguishing between the scope of the one part of the grant and the other. They should apply equally. Accordingly the grant of the right to make the connections must extend to work done outwith the boundaries of the Atlas Subjects, provided of course that the connection is with a cable, wire or pipe serving those subjects at the date of the Deed.
The alternative construction seems to me to leave little useful content for Clause 2.1.1. If it relates only to the connecting up with and then the using of services within the Atlas Subjects, that seems in effect to duplicate the substance of Clause 2.1.2. That Clause deals with the laying, installing and later using cables, wires and pipes in, under or upon the Atlas Subjects. Moreover, if Clause 2.1.1. was designed to limit the respondents from connecting up to a sewer which lay outside the Atlas Subjects, it has to be supposed that the parties intended to leave for further negotiation the right to pass across the strip of land between the boundary of the Atlas Subjects and the sewer and the connection with the sewer. I find it difficult to reconcile such a construction with the express intention of the parties set out in paragraphs (FIVE) and (SIX) of the preamble and Clause 13.2 in constituting, setting forth and defining the reciprocal rights and burdens which were to be imposed on the various areas of the lands as real burdens and conditions in accordance with a common plan or scheme for the development of the areas in question.
Support for the appellant's construction was sought from the passage which forms the final part of Clause 2.1. This gives rights of access for the works involved in either or both of Clauses 2.1.1. and 2.1.2. and further rights of access for inspection, repair and renewal. But the rights are limited to the Atlas Subjects. I am not persuaded that this warrants the conclusion that the right in Clause 2.1.1. is limited to the Atlas Subjects. There is sufficient reason for the express mention of the Atlas Subjects in this final provision in the fact that it would be particularly those subjects which Atlas would wish to have preserved from undue interference, being the lands on which the building work would be carried out and thereafter some trading enterprise conducted. A like reasoning may lie behind the requirement for approval of the routes within the Atlas Subjects expressed in Clause 2.1.2. Similarly one can see in Clause 3.4, to which Clause 2.1. was made subject, that provision is made to prevent undue inconvenience and disturbance to the Atlas Subjects or the Common Car Park and any trade or business being carried on there. But the physical extent of the rights granted in Clause 2.1.1. is not restrained by such provisions. The rights contained in the final part of Clause 2.1. are additional to those already granted and do not introduce limitations on the scope of the grants already expressed.
In my view the construction adopted by the First Division of the Court of Session was correct and I would dismiss the appeal.
LORD HOBHOUSE OF WOODBOROUGH
I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Hope of Craighead and Lord Clyde. For the reasons they have given, I too would dismiss this appeal.
I have had the advantage of reading in draft the speeches prepared by my noble and learned friends Lord Hope of Craighead and Lord Clyde. I agree with them, and for the reasons they give I too would dismiss the appeal.
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