|Judgment - Ross & Cromarty District Council v. Patience continued|
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Particular attention was drawn in the argument to the opening words of section 61(1) "Notwithstanding anything contained in any agreement. . . ." In that connection reference was made in the lower courts to Cooper's Executors v. Edinburgh District Council 1991 S.C. (H.L.) 5. In that case this House held that where a contract of sale had been constituted under section 66(2) of the Act of 1987 and the purchaser had died before settlement of the transaction the right to purchase did not revive in favour of the person who succeeded to the secure tenancy but that the deceased's executors were entitled to enforce the contract. One argument presented for the council was to the effect that the opening words of section 61(1) were wide enough to cover the contract already constituted between the local authority and the deceased tenant. In that connection Lord Keith of Kinkel observed (at pp. 20-21):
It was recognised by the Lord Justice Clerk in the present case that this was not intended as a statement of general principle which could be applied to the present case. The case related to an agreement between the landlord and the late tenant and that context explains why the observation was framed under reference to those parties. But it respectfully seems to me that the significance of the observation lies in the reference to the substance of the agreement rather than the parties to it. The substance of the agreements referred to in section 61(1) is the obviation of the right to purchase. That the parties to the agreements may be others than simply the landlord and the tenant may be seen in the example which his Lordship gives to show the error in the argument presented on behalf of the council where he refers to an agreement to sell to a tenant or to members of his family under section 14(1) of the Act of 1987. Moreover comparison with corresponding phases in other sections of the Act confirms to my mind that while, as his Lordship observed, the substance of the agreement must be one which strikes at the statutory right to purchase, the agreement need not involve both landlord and tenant. In the original form of the relative enactment in section 1(1) of the Tenants' Rights' Etc. (Scotland) Act 1980 the words used were "Notwithstanding anything contained in any tenancy agreement. . . ." The word "tenancy" was subsequently deleted by an amendment made by section 66(2) and Schedule 4 of the Local Government and Planning (Scotland) Act 1982. Moreover while the phrase carried forward into section 61(1) of the Act of 1987 remains unrestricted by reference to "any agreement" as distinct from "any tenancy agreement", sections 46(1) and 54(1), following the wording of sections 12(1) and 17(1) of the Act of 1980, commence "Notwithstanding any provision contained in the tenancy agreement," which plainly restricts attention to the particular contract between the particular landlord and the particular tenant. In my view the scope of the phrase in section 61(1) is certainly wide enough to include an agreement to which either the landlord or the tenant is a party provided the agreement is one which in its substance involves a contracting out of the obligation to sell and the statutory right to purchase. Reference was also made to section 75 of the Act of 1987 which, inter alia, forbids the landlord from making any agreement which purports to restrict a tenant's right to purchase. This provision in its terms is not limited to agreements between the landlord and the tenant but operates only in relation to agreements made after the Act came into force. It gives some support for the adoption of a similar construction of the opening phrase in section 61(1) in the application of that subsection to agreements entered into prior to the legislation. Taken together these provisions seem to me to constitute an effective bar on any contracting out of the statutory right to purchase.
In my view the clear purpose of the legislation which I have already sought to identify can be sufficiently ascertained from the legislation even if the opening words of section 61(1) are simply taken as a further indication of the general intention that the tenant's right is to prevail over any impediment. But given the width of the expressions "anything contained" and "any agreement" it seems to me that the relationship established by the feu charter in favour of the appellants may reasonably be included within the scope of the phrase "any agreement." As Professor Halliday has observed (Conveyancing Law and Practice) vol. II, para 17-19, p. 127:
In a strict sense the feu charter is a grant but the basis of the feudal relationship is one of a continuing contract and it does not seem to me to be an undue straining of the statutory language to include a right of pre-emption as being something contained in an agreement for the purpose of section 61(1). On that approach the section overrides the right of pre-emption as being an impediment to the right to purchase.
Some weight was attached by the majority of the judges in the Second Division to the consideration that the landlord was in terms "the heritable proprietor". The argument then runs that since the statute recognised that the landlord was holding property under a feudal title the statute should be understood as intending that the obligations and conditions in the feu rights should be preserved. Certainly the identification of the heritable proprietor is an element in the qualifications relating to the landlord in section 61(2). But this identification of his status does not in my view operate to import the necessary preservation of a right to pre-emption contained in the feudal title. So also in the later sections 76, 77 and 84A it does not seem that Parliament is concerned with the quality of content of the title but only with the status of the titleholder. A right of pre-emption may be created as a real burden and it is within the definition of a land obligation for the purposes of the Conveyancing and Feudal Reform (Scotland) Act 1970, but it is essentially a contractual right. It is not among the naturalia of a feu and it is not special to the feudal relationship. Certainly as a matter of generality the landlord can only convey the lands subject to the burdens which attach to them. But where a sale is contemplated and the superior fails to accept the offer made to him under a clause of pre-emption then by virtue of section 9 of the Conveyancing Amendment (Scotland) Act 1938 as amended by the Conveyancing and Feudal Reform (Scotland) Act 1970 section 46 the clause is thereafter null and void so that in this respect even the feudal character of the landholding will not perpetuate the clause of the pre-emption. Furthermore section 64(4) of the Act of 1987 prevents the introduction of a condition of pre-emption into the offer to sell.
I find it difficult to believe that Parliament would have intended that the provisions carefully made to secure to the tenant the right to purchase and the restraints of disposal by the public sector landlord could all be overcome by a superior's right of pre-emption. Moreover standing section 81A it is hard to see what is to be gained at least if the sale is made under that section to a private body with the right to purchase preserved. It is not immediately obvious what purpose is served by a sale to the superior which would simply be followed by an involuntary sale to the tenant. On that approach it does not appear that the loss of the right through the operation of the statutory procedure, even if the clause of pre-emption was sufficiently framed to cover that procedure, is of such significance as to provide powerful reason for its preservation.
Reference was made to the English legislation in the same field but while some correspondence obviously exists between the two sets of provisions I do not feel that they are sufficiently close in terminology or substance as to be of real assistance. In my view the appellants are entitled to the declarator which they seek subject to the proposed amendment to recognise that the feu disposition has in fact been granted to the first and second defenders. The appeal should be allowed.
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