In this case, the Applicants sought the discharge, in terms of Articles 22(1)(c) and 23(1) of the Title Conditions (Scotland) Act 2003 (Development Management Scheme) Order 2009, of various provisions contained in a Development Management Scheme ("DMS").
A DMS is a scheme of rules for the management of land introduced by the Title Conditions (Scotland) Act 2003. These share many of the characteristics of, but can be contrasted with, community burdens created under the 2003 Act.
The Applicants were members of an Owners' Association of the property to which the DMS applied. The Respondent was a developer of that property and, prospectively, of adjoining land. The primary condition which the Applicants sought to discharge was a "golden share" or veto in relation to decisions affecting the development. For so long as the developer retained an interest in the development it had a casting vote over all decisions taken by the Owners' Association.
The Respondent purchased a property known as Kingsmeadows House and the surrounding grounds in 2014. Kingsmeadows House was refurbished and subdivided to form 12 residential flats, which were duly sold. The developer's intention was to form another 10 flats on adjoining land. Prior to selling, the developer had a Deed of Conditions and DMS drawn up intended to regulate both the existing and proposed development.
Difficulties in implementing the proposed scheme led to planning permission being sought to a slightly larger proposal which involved the removal of more trees than originally anticipated. This, in turn, led to the existing members of the Owners' Association seeking the removal of the veto in the DMS to clear the way for the Association voting down new development of the scale proposed.
In response, the Respondents submitted that the golden vote was necessary in order to complete the development unhindered. Once completed, the golden share would fly off leaving the future management of the development in the hands of the Owners' Association who would be free to make decisions based on majority rule.
The Tribunal refused the Application and upheld the Respondent's golden share.
In reaching their decision, the Tribunal commented that the statutory DMS Scheme did not expressly provide for the development phase of a project and assumed instead a completed project. However, it was clear from the Deed of Conditions which applied in this case that the Respondent intended to retain flexibility as to future development. It was held competent for the developer to retain control over the development until its completion. The Tribunal observed the forward-planning of the draftsman who had clearly sought to preserve flexibility and control through the terms of the DMS.
Furthermore, the Tribunal noted that it would have been obvious to any properly informed purchaser of one of the original flats that the golden share arrangement had been built into the DMS. It was for prospective purchasers to decide whether to accept such an arrangement prior to purchase.
The Tribunal observed that if the golden share was discharged prior to the completion of the development, the Owners' Association would have the power to thwart any future development to the substantial prejudice of the developer.
The Decision also contains a helpful discussion of the four-corners rule which largely requires, for the purpose of community burdens and by analogy provisions in Development Management Schemes, that the terms of conditions be discoverable from within the four corners of the deed of creation. Reference to extrinsic evidence is not permitted.
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