Background
Outer House case in which East Renfrewshire Council sought an order under s75(2) of the Local Government (Scotland) Act 1973. The Council wanted to build a new school (on what it accepted was inalienable common good land) at Cowan Park in Barrhead.

S75(2) allows the Court to authorise a disposal of common good land on such conditions as it may decide to impose. However, the common law prohibition on appropriation of inalienable common good land remains intact meaning that the court has no discretion to allow a sale[1].

The Council’s plan was to finance the construction using a public/private partnership. The site would be leased by the Council to a company which would in turn grant a sublease to the Council. The Company would then grant a security to a private sector funder. The Council argued that this amounted to a disposal of the land meaning the court had discretion to allow it.

Decision
However, Lord Tyre found that the Council’s proposals could not be described as anything other than an appropriation. As such, the court had no power to authorise it.

In coming to this conclusion Lord Tyre took account of the following factors.

1. The Council were, at the time of the decision, the proprietors of the site and would remain so during the construction phase, throughout the duration of the lease and sub-lease, and permanently after the termination of the lease and sub-lease.
2. The Council were also, at the time of the decision, in possession of the site.  Because the lease and sub-lease had the same duration, they would remain in possession of it during the construction phase, throughout the duration of the lease and sub-lease, and permanently after the termination of the lease and sub-lease.  Their occupation would, be subject to the contractual rights of possession, including some exclusive possession during the construction phase, to be granted to the company but those rights were expressly declared not to constitute a lease.
3. The site would cease to be used by the Council for the purposes of the common good with effect from the commencement of the construction phase.
4. The company’s creditor would have the rights conferred upon it by the terms of whatever security was granted by the company in its favour.  It was reasonable to assume that either:

• the creditor, at the time when the security came to be taken, would be aware that a sub-lease in favour of Council had been granted; or
• if the sub-lease had not yet been granted, the Council would insist upon the creditor consenting to it.

As such, the creditor’s remedies would not include a right to enter into possession[2].

Lord Tyre therefore found it difficult to envisage circumstances in which the Council could ever be deprived of possession of the site.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

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[1] See Portobello Park Action Group Association v City of Edinburgh Council, 2013 SC 184

[2] As the “offside goals rule” would apply with the effect that the Banks prior knowledge of the lease would put it in bad faith and prevent it enforcing the security against the Council  (See, for example, Trade Development Bank v Crittall Windows Ltd , 1983 SLT 510.)

Judicial Review of the City of Edinburgh Council’s decision to appropriate part of Portobello Park to build a new Portobello High School.

In the Outer House Lady Dorrian had dismissed a petition for Judicial Review by the Portobello Park Action Group Association. The Action Group argued that it was unlawful for the Council to appropriate the park land which is common good land. Lady Dorrian dismissed the petition on the basis it was barred by mora, taciturnity and acquiescence (i.e. the Action Group had delayed their action, failed to speak out and impliedly accepted the position.) As the petition had been barred, Lady Dorrian did not have to decide on the lawfulness of the Council’s decision, however, she indicated that, if she had been required to do so, she would have found in favour of the Council. Her reasoning was that, whilst the Council’s power to alienate common good land is limited, its power to appropriate such land is unfettered, meaning that its Children and Families Department  could appropriate the park land from its Services for the Community department.

The Inner House has now allowed an appeal of the Outer House decision.

Mora, taciturnity and acquiescence
Lady Dorrian had found that (although it was unclear exactly when the decision to appropriate the park had been reached) “at the very latest” the decision had been made in March 2010. As the Action Group did not bring the case until July 2011 there had been considerable delay which was indicative of taciturnity and acquiescence. On the other hand, the Inner House held that the Action Group was, at the very least, entitled to wait until planning permission had been granted (which occurred in February 2011) before resorting to litigation. It was observed that, if planning permission had been refused, the dispute would have been at best premature and at worst academic and pointless. The Inner House also considered the Action Group’s behaviour, noting:

“The regular statements over the years of the Association’s reasons for their opposition can scarcely be characterised as “taciturnity”. Moreover, bearing in mind the conduct, letters, e-mails, and deputations noted in the chronology in paragraph above, we are unable to accept that there were circumstances entitling the reasonable observer to draw any inference that the Association had at any stage acquiesced in the Council’s proposed intention to construct a new school on Portobello Park. On the contrary …there was a steady and unwavering opposition for the clearly articulated reason that the ground in question was inalienable common good land.”

Appropriation and alienation
After considering the Council’s powers of appropriation and disposal of land contained in sections 73 to 75 of the Local Government (Scotland) Act 1973, the Inner House found:

 “..we are, with great respect, unable to support the Lord Ordinary’s reasoning and conclusions in this area. To our mind there is no question of a local authority’s right to appropriate inalienable common good land (such as the southern section of Portobello Park) being unfettered. On the contrary, the true position would appear to be that, for so long as inalienable common good land remains within the ownership of a local authority, Parliament must be taken to have intended all pre-existing fiduciary obligations, and corresponding community rights, to remain extant and enforceable. It would indeed be an extraordinary situation if, by the mere expedient of appropriating inalienable common good land to some function other than parks and recreation, a local authority could at a stroke free itself from all common law restraints and, having done so, perhaps also facilitate onward disposal without any need to obtain the sanction of the court under section 75(2). In the absence of clear authority requiring us to affirm such an apparently unreasonable state of affairs, we are not persuaded that we should go down that line. We therefore hold that, for present purposes, the Council can lay claim to no statutory power of appropriation under the 1973 Act.”

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.