Introduction

In Arbitration Appeal No.3 of 2024 (Court of Session), the Scottish Court of Session addressed critical issues surrounding the enforceability of planning agreements under the Town and Country Planning (Scotland) Act 1997. This case involves the petitioners, Turcan Connell, challenging a partial arbitration award against the City of Edinburgh Council. Central to the dispute are clauses within a Section 75 agreement that regulate the provision of affordable housing on the Development Site. The petitioners argue that the arbitrator erred in interpreting their rights as successors to the original landowner, D, thereby affecting their ability to enforce certain obligations against the planning authority.

Summary of the Judgment

The Court of Session's Outer House, presided over by Lord Braid, examined whether the arbitrator erred in law regarding the enforceability of specific clauses in the Section 75 agreement. The petitioners sought to appeal the arbitrator's decision, asserting that it limited their rights as successors in title to enforce obligations related to affordable housing units and the construction of roads within the Development Site.

The court applied the standards set by the Arbitration (Scotland) Act 2010, particularly focusing on whether the arbitrator's decisions were "obviously wrong" or, in cases of general importance, open to "serious doubt." After a thorough review, the court concluded that the arbitrator had correctly interpreted the agreement's provisions and that the petitioners failed to demonstrate that the decision was either obviously wrong or of general importance. Consequently, the petitioners' appeal was dismissed, and leave to appeal was refused.

Analysis

Precedents Cited

The judgment references several key precedents that influenced the court's decision. Notably:

• JH & W Lamont of Heathfield Farm v Chattisham Ltd 2018 SC 440 - emphasized the reciprocity of obligations in contracts unless explicitly stated otherwise.
• Inveresk plc v Tullis Russell Papermakers Ltd 2010 SC (UKSC) 106 - reinforced the principle that obligations follow the land in Section 75 agreements.
• Jordanhill Community Council v Glasgow City Council [2018] CSOH 11 - established that third parties typically do not have the right to enforce Section 75 agreements.
• Elsick Development Co Ltd v Aberdeen City and Shire Development Planning Authority [2017] UKSC 66 and Windsor and Maidenhead RBC v Brandrose Investments Ltd [1983] 1 WLR 509 - informed the court's interpretation of statutory provisions related to planning obligations.

These cases collectively underscored the importance of strict adherence to the terms of Section 75 agreements and the limitations on successor's enforcement rights, thereby guiding the court in upholding the arbitrator's decision.

Legal Reasoning

The court meticulously dissected the arbitrator's reasoning, focusing on several legal pillars:

• Title to Sue: The arbitrator correctly identified that the petitioners could only enforce obligations related to parcels of land they owned. Since they were not parties to the original agreement nor had they been assigned D's rights, their enforcement capabilities were intrinsically limited.
• Construction of Contractual Clauses: The arbitrator interpreted Clause 2 as imposing a minimum, not maximum, requirement for affordable housing units. This interpretation was supported by the definition of "total affordable housing units" and the overall language of the agreement.
• Section 75(5)(a) of the 1997 Act: The arbitrator rightly held that any clause attempting to restrict the planning authority's statutory powers would be unenforceable, aligning with established statutory interpretations.
• Jus Quaesitum Tertio: The court agreed with the arbitrator's dismissal of the petitioners' claim to third-party enforcement rights, citing authoritative decisions that third parties generally lack such standing.

The court emphasized the importance of adhering to the statutory framework and contractual terms, concluding that the arbitrator's decisions were well-grounded in both law and fact.

Impact

This judgment reinforces the stringent limits on successor's rights to enforce Section 75 agreements. It clarifies that:

• Only parties with direct interests in the land originally bound by the agreement have enforceable rights.
• Successors in title cannot extend enforcement beyond their owned parcels unless explicitly granted.
• Attempts to impose additional obligations that conflict with statutory powers are unenforceable.
• Third parties generally do not possess the standing to enforce Section 75 agreements.

Consequently, developers and planning authorities must be meticulous in structuring Section 75 agreements, ensuring clarity in terms of enforceable obligations and successor rights. This decision may lead to more cautious drafting of such agreements to prevent similar disputes.

Complex Concepts Simplified

Section 75 Agreements

Section 75 of the Town and Country Planning (Scotland) Act 1997 allows planning authorities to enter into legal agreements with landowners to regulate land use, including the provision of affordable housing. These agreements can impose obligations that are enforceable by the planning authority against current and future landowners, provided the agreement is recorded in the Land Register.

Successors in Title

Successors in title are individuals or entities that acquire interests in property from the original owner. In the context of Section 75 agreements, successors might inherit certain obligations attached to the land. However, this case establishes that such successors can only enforce obligations related to the parcels they own, not across the entire development.

Jus Quaesitum Tertio

This Latin term refers to a third-party right to sue or enforce contractual obligations. In Scottish law, establishing jus quaesitum tertio involves demonstrating that the original parties intended to confer enforceable rights on third parties. This case confirms that third parties, not explicitly included in the agreement, do not possess such rights.

Legal Error Appeal

Under the Arbitration (Scotland) Act 2010, a legal error appeal challenges an arbitration award based on alleged errors in the application or interpretation of the law. The appeal must demonstrate that the arbitrator was either obviously wrong or, for points of general importance, that serious doubt exists regarding the decision's correctness.

Serious Doubt and General Importance

For an appeal to be successful, the appellant must show that the arbitrator's decision is subject to serious doubt and that the legal issue at hand is of general importance. "Serious doubt" implies more than a mere possibility of error, requiring substantial uncertainty about the decision's correctness. "General importance" refers to legal principles that have broader implications beyond the immediate case.

Conclusion

The judgment in Arbitration Appeal No.3 of 2024 (Court of Session) [2025] CSOH 7 underscores the necessity for clear and precise drafting of Section 75 agreements. By reaffirming that successors can only enforce obligations related to their owned parcels and rejecting third-party enforcement rights, the court has delineated the boundaries of contractual obligations within the planning framework. This decision serves as a pivotal reference for future disputes concerning the enforceability of planning obligations and the rights of successors, promoting legal certainty and adherence to statutory provisions in land development practices.

Key Takeaways:

• Successors in title have enforceable rights only over their specific land parcels as per Section 75 agreements.
• Third parties typically lack the standing to enforce such agreements unless explicitly granted.
• Any contractual clause attempting to limit the planning authority's statutory powers is unenforceable.
• High standards exist for appealing arbitration decisions, emphasizing the finality and respect for arbitration outcomes.

This judgment not only clarifies existing legal interpretations but also sets a precedent for the strict application of planning obligations, ensuring that developers and authorities operate within well-defined legal parameters.