LORDS DECISIONSLORDS DECISIONS >>LORDSLORD GOFF OF CHIEVELEYLORD GRIFFITHSLORD MUSTILLLORD STEYNLORD CLYDELORDS OF APPEAL FOR JUDGMENT IN THE CAUSELORD GOFF OF CHIEVELEYLORDS,LORD CLYDE. FOR THE REASONS HE HAS GIVEN, I TOO WOULD ALLOW THIS APPEAL.LORD GRIFFITHSLORDS,LORD CLYDE. FOR THE REASONS HE HAS GIVEN, I TOO WOULD ALLOW THIS APPEAL.LORD MUSTILLLORDS,LORD CLYDE. FOR THE REASONS HE HAS GIVEN, I TOO WOULD ALLOW THIS APPEAL.LORD STEYNLORDS,LORD CLYDE. FOR THE REASONS HE HAS GIVEN, I TOO WOULD ALLOW THIS APPEAL.LORD CLYDELORDS,LORD ADVOCATE TO SECURE A BALANCED PRESENTATION OF THE ARGUMENT. GRATITUDE SHOULD BE EXPRESSED TO MR. BONOMY FOR THE CAREFUL ASSISTANCE WHICH HE GAVE IN PERFORMING THAT FUNCTION.LORD BROUGHAM LONG AGO REFERRED TO AS "THAT MOST BENEFICIAL AND ADMIRABLY CONTRIVED FORM OF PROCEEDING, CALLED A DECLARATORY ACTION" (EARL OF MANSFIELD V. STEWART (1846) 5 BELL 139, 160).LORD'S TITLE OF A CLAUSE OF PRE-EMPTION PREVENTED THE PROCESS OF A STATUTORY SALE OF A SECURE TENANCY UNDER THE PROVISIONS OF THE HOUSING (SCOTLAND) ACT 1987. BUT COUNSEL FOR THE APPELLANTS BEFORE THIS HOUSE SUBMITTED THAT BOTH QUESTIONS WERE EQUALLY OPEN AND HE PRESENTED ARGUMENT ON BOTH OF THEM. WHILE MOST OF THE DISCUSSION WAS TAKEN UP WITH THE MATTER OF THE STATUTORY CONSTRUCTION IT SEEMS TO ME THAT LOGICALLY THE FIRST QUESTION IS WHETHER THE CLAUSE OF PRE-EMPTION APPLIES AND I TURN IMMEDIATELY TO THAT ISSUE.LORD IS OBLIGED TO SELL AND CONVEY IT TO HIM. WHILE THE STATUTE USES THE TERMINOLOGY OF "PURCHASE" AND "SELL" BOTH THE SERVING OF THE RELEVANT NOTICES AND THE CONSTITUTION OF THE CONTRACT OF SALE ARE MATTERS ORDERED IN TERMS OF THE STATUTORY PROVISIONS AND THE STATUTORY PURCHASE WHICH IS ACHIEVED BY THE PROCEDURE IS NOT A CONSENSUAL SALE.LORD WOULD BE OBLIGED TO SELL AND CONVEY THEIR HOUSES TO THEM. FOR THAT REASON ALSO I AM UNABLE TO CONSTRUE THE CLAUSE AS COVERING THE PROCEDURE WHICH HAS OCCURRED IN THE PRESENT CASE. FURTHERMORE THAT THE SALE OR DISPOSITION AT WHICH THE CLAUSE OF PRE-EMPTION STRIKES IS OF A VOLUNTARY CHARACTER IS CONFIRMED TO MY MIND BY THE CONSIDERATION THAT THE CLAUSE IS FENCED WITH AN IRRITANCY. IT CANNOT HAVE BEEN THE INTENTION OF THE PARTIES THAT THE FEUDAL GRANT COULD BE ANNULLED BY A SALE OF THE SUBJECT IN QUESTION WHICH THE LANDLORD WAS BOUND UNDER STATUTE TO CARRY OUT.LORD JUSTICE CLERK IN THE SECOND DIVISION INDICATED WAS ONE WHICH COULD BE SUPPORTED WITH ARGUMENTS OF CONSIDERABLE FORCE HAD THE SUBMISSION STOOD ALONE. HOWEVER ON THE APPROACH TAKEN BY THE APPELLANTS IN THE SECOND DIVISION HE WAS UNABLE TO DECIDE THE CASE ON THIS POINT. IN THE PRESENTATION BEFORE THIS HOUSE THE SUBMISSION WAS MADE AS A DISTINCT ARGUMENT AND IN MY VIEW IT IS SOUND.LORD. IT WAS RECOGNISED BY THE LORD ORDINARY THAT THIS INVOLVES A STARK CHOICE BETWEEN HOLDING ON THE ONE HAND THAT ALL RIGHTS INCONSISTENT WITH THE RIGHT TO PURCHASE ARE SUPERSEDED BY THE LEGISLATION AND ON THE OTHER HAND THAT THE LEGISLATION MAY ONLY OPERATE WHEN NO SUCH RIGHTS EXIST. IT WAS SUGGESTED BY THE AMICUS CURIAE THAT A SOLUTION MIGHT BE FOUND THROUGH THE IMPOSITION OF A CONDITION IN THE STATUTORY SALE REFLECTING THE QUALIFICATION ON THE LANDLORD'S TITLE. HE POINTED OUT THAT UNDER SECTION 81A OF THE ACT OF 1987 THE RIGHT TO BUY MAY BE PRESERVED ON A DISPOSAL TO A PRIVATE SECTOR LANDLORD, SUCH AS THEIR SUPERIOR, AND SUGGESTED THAT THE CONDITION SHOULD REFLECT THE REQUIREMENT OF OBTAINING THE CONSENT OF THE SECRETARY OF STATE IN ACCORDANCE WITH SCHEDULE 6A OF THE ACT. IN HENDERSON V. CITY OF GLASGOW DISTRICT COUNCIL 1994 S.L.T. 263 THE VIEW WAS EXPRESSED THAT A CONDITION COULD BE INSERTED INTO THE OFFER TO SELL REFLECTING THE QUALIFICATIONS ON THE LANDLORD'S TITLE. BUT THAT VIEW WAS CORRECTLY REJECTED IN THE SECOND DIVISION IN THE PRESENT CASE. AS THE LORD JUSTICE CLERK POINTED OUT THE CONDITIONS OF SALE UNDER SECTION 64 OF THE ACT MUST BE CONDITIONS CONSISTENT WITH THE SALE TAKING PLACE. WHILE IT APPEARS THAT SECTION 81A MAY NOT HAVE BEEN DRAWN TO THEIR LORDSHIPS' ATTENTION IT SEEMS TO ME THAT THE KIND OF CONDITION NOW SUGGESTED WOULD STILL FAIL TO MEET THAT TEST. THE NECESSITY TO OBTAIN THE CONSENTS REQUIRED UNDER THE STATUTORY SCHEME IS PART OF THE WHOLE STATUTORY PROCESS AND THE ACQUISITION IS NECESSARILY DEPENDANT UPON SUCH CONSENTS BEING OBTAINED. THE NECESSITY TO OBTAIN THE CONSENT OF A THIRD PARTY OUTWITH THE STATUTORY SCHEME REMAINS OUTSIDE THE SCOPE OF SECTION 64. FURTHERMORE THE VALIDITY OF A CONDITION REFLECTING THE SUPERIOR'S RIGHT OF PRE-EMPTION WOULD REMAIN OPEN TO CHALLENGE; AND THAT IMMEDIATELY RAISES THE BASIC QUESTION WHICH IS AN ISSUE IN THE PRESENT CASE. THE MATTER ACCORDINGLY COMES TO BE ONE OF MAKING THE STARK CHOICE WHICH THE LORD ORDINARY IDENTIFIED. HE DID NOT FIND THE CHOICE AN EASY ONE TO MAKE BUT BOTH HE AND THE MAJORITY OF THE JUDGES IN THE SECOND DIVISION PREFERRED THE VIEW THAT PARLIAMENT COULD NOT HAVE INTENDED TO ABROGATE THE RIGHT OF PRE-EMPTION.LORD. THE LANDLORD MUST BE ONE OF THE BODIES MENTIONED AND REFERRED TO IN SECTION 44(2) OF THE ACT OF 1987. IT IS EVIDENT THAT A SALE TO SOMEONE IN THE PRIVATE SECTOR WOULD IN THE ABSENCE OF ANY EXPRESS PROVISION OTHERWISE EXTINGUISH THE SECURITY OF THE TENURE. A SALE TO A SUPERIOR UNDER A CLAUSE OF PRE-EMPTION WOULD BE LIKELY TO BE SUCH A SALE. BUT SECTION 46 OF THE ACT WHICH LISTS THE ONLY WAYS IN WHICH A SECURE TENANCY MAY BE BROUGHT TO AN END DOES NOT INCLUDE A UNILATERAL DISPOSAL OF THE PROPERTY TO A THIRD PARTY BY THE LANDLORD WITHOUT THE AGREEMENT OF THE TENANT AND THE TENANT WOULD NOT BE EXPECTED TO GIVE SUCH CONSENT SINCE HE IS SEEKING TO ACQUIRE THE HOUSE FOR HIMSELF. UNDER SECTION 81A PROVISION IS MADE FOR THE PRESERVATION OF THE RIGHT TO PURCHASE DESPITE A SALE TO A PRIVATE SECTOR LANDLORD. BUT HERE BY VIRTUE OF PARAGRAPH 5 OF SCHEDULE 6A THE CONSENT NOT ONLY OF THE SECRETARY OF STATE BUT ALSO OF A MAJORITY OF THE TENANTS IS REQUIRED FOR THE DISPOSAL TO PROCEED. THAT A MINORITY MAY LOSE THE BENEFIT OF THE SECURE TENANCY DOES NOT IN MY VIEW DETRACT FROM THE GENERAL PROPOSITION THAT THE LANDLORD CANNOT UNILATERALLY DISPOSE OF THE PROPERTY AND OF COURSE EVEN FOR THE MINORITY THE RIGHT TO PURCHASE IS PRESERVED.LORD MAY THEN SERVE A NOTICE OF REFUSAL UNDER SECTIONS 68-70. UNDER SECTION 68(4) THE TENANT MAY APPLY TO THE LANDS TRIBUNAL FOR A FINDING THAT HE HAS A RIGHT TO PURCHASE. SECTIONS 69 AND 70 ONLY APPLY TO CERTAIN PARTICULAR KINDS OF HOUSES. BEYOND THAT THE LANDLORD IS OBLIGED TO SERVE ON THE TENANT A NOTICE, REFERRED TO AS AN "OFFER TO SELL" ALL AS SET OUT IN SECTION 63(2). THEREAFTER SUBJECT TO THE RESOLUTION OF ANY CONDITIONS OF SALE SOUGHT TO BE IMPOSED BY THE LANDLORD THE TENANT IS REQUIRED TO SERVE ON THE LANDLORD A NOTICE OF ACCEPTANCE UNDER SECTION 66. SECTION 66(2) PROVIDES THAT WHEN AN OFFER OR AN AMENDED OFFER TO SELL HAS BEEN SERVED ON THE TENANT AND A RELATIVE NOTICE OF ACCEPTANCE HAS BEEN DULY SERVED ON THE LANDLORD A CONTRACT OF SALE SHALL BE CONSTITUTED BETWEEN THE LANDLORD AND THE TENANT ON THE TERMS CONTAINED IN THE OFFER OR AMENDED OFFER TO SELL. THERE IS NO ROOM IN ALL OF THIS FOR THE LANDLORD TO SELL TO A THIRD PARTY HOLDING A RIGHT OF PRE-EMPTION. THE CONCLUSION OF THE CONTRACT, SUBJECT ONLY TO THE PROVISIONS OF THE STATUTE, IS A MATTER WHICH IS MANDATORY ON THE LANDLORD. SECTIONS 66A-66C IMPOSE FINANCIAL PENALTIES IF THE LANDLORD FAILS TO CARRY THROUGH THE PROCESS TIMEOUSLY. INDEED AN EXPRESS DUTY IS IMPOSED ON HIM UNDER SECTION 74 "TO MAKE PROVISION FOR THE PROGRESSION OF APPLICATIONS . . . IN SUCH MANNER AS MAY BE NECESSARY TO ENABLE ANY TENANT WHO WISHES TO EXERCISE HIS RIGHTS UNDER THIS PART TO DO SO. . . ."LORD KEITH OF KINKEL OBSERVED (AT PP. 20-21):LORD AND THE TENANT WHO WOULD OTHERWISE HAVE THE RIGHT TO PURCHASE. THE OBJECT IS TO PREVENT LANDLORD AND TENANT CONTRACTING OUT OF THE RIGHT TO PURCHASE."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.LORD 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.LORD 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.