Scottish Court of Session Decisions

Henry Cowan and others, trustees for the time being of the Committee of the General Assembly of the Church of Scotland for the Endowment of Chapels of Ease, pursuers, brought an action against the Provident Association of London, Limited, and also against David Livingston Dryburgh and William Gray, both of Edinburgh, being the parties interested in certain heritable subjects in Gilmore Place, Edinburgh, to which they acquired rights at a date subsequent to the date of the recording of the deeds hereafter mentioned, defenders, in which the conclusions were for declarator “that under and in terms of (1) contract of ground annual between Peter Simpson, S.S.C., Edinburgh, heritable proprietor as therein mentioned, of the one part, and the said Peter Simpson of the other part, dated 3rd, and recorded in the Division of the General Register of Sasines applicable to the county of Edinburgh 6th, both days of December 1883, and (2) disposition and assignation by the said Peter Simpson in favour of … the said Committee of the General Assembly of the Church of Scotland …, dated 8th, and recorded in said Division of the General Register of Sasines 11th, both days of December 1883, … or otherwise and alternatively under and in terms of the said disposition and assignation, a ground annual of £4, 5s. 11d., to be uplifted and taken furth of and from all and whole that piece of ground on the south side of Gilmore Place, Edinburgh,… being the subjects disponed in the third place in the above-mentioned disposition and assignation, was validly and effectually constituted a real burden on the said subjects, and that the pursuers as trustees foresaid are now in right thereof; or otherwise and alternatively … that under and in virtue of the said disposition and assignation the pursuers and their successors in office as trustees for behoof of said committee are validly and effectually infeft, as from the date of recording the said disposition and assignation, in the said piece of ground, and that in real security for the payment by the said Peter Simpson and his heirs and executors and personal representatives whomsoever to the pursuers and their successors in office as trustees foresaid of the yearly sum of £4 5s. 11d. payable half-yearly in perpetuity, commencing the first term's payment at the term of Whitsunday 1884 for the half-year preceding, and the next term's payment at Martinmas thereafter, and so forth at the said two terms in all time coming.” [The italicised words were added by way of amendment.]

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The pursuers averred, inter alia—“(Cond. 1) By the contract of ground annual referred to in the summons the said Peter Simpson, S.S.C., as heritable proprietor of the areas of ground therein referred to, disponed to himself said areas of ground, and, inter alia, in the third place, ‘all and whole that piece of ground on the south side of Gilmore Place upon which the self-contained dwelling-house forming No. 55 thereof is built, with the plot in front thereof and the garden ground behind,’ and bounded as therein stated. Said disposition was granted under the declaration that the said pieces of ground were disponed under the real and preferable lien and burden of the payment by the said Peter Simpson of the second part, And his heirs and assignees, to the said Peter Simpson of the first part, and his heirs and assignees whomsoever, of the ground annuals therein mentioned, and, inter alia, of a ground annual of £4, 5s. 11d. sterling to be uplifted and taken by the said Peter Simpson of the first part and his foresaids furth of and from the said subjects disponed in the third place. Further, the said Peter Simpson of the second part took himself and his foresaids personally bound for payment of said ground annuals, and for further security to the said Peter Simpson of the first part and his foresaids of the payment of the ground annuals, assigned and disponed to and in favour of the said Peter Simpson of the first part and his foresaids, not only the said ground annuals, but also the said pieces of ground and the buildings erected or to be erected thereon in real security of the payment of the said yearly ground annuals, all as more fully set forth in said contract of ground annual.… (Cond. 2) By the disposition and assignation referred to in the summons, the said Peter Simpson disponed to the predecessors in office of the pursuers, as trustees for behoof of the said Committee of the General Assembly of the Church of Scotland for the Endowment of Chapels of Ease, the said ground annuals created by the foresaid contract of ground annual, and, inter alia, the ground annual of £4, 5s. 11d. over the subjects at 55 Gilmore Place, and thereby assigned to the pursuers' said predecessors all right and interest competent to him under the said contract of ground annual.”

The pursuers pleaded—“In respect that under and by virtue of the deeds libelled, or otherwise and alternatively under the deed second libelled, a ground annual of £4, 5s. 11d. to be uplifted from said subjects at 55 Gilmore Place, Edinburgh, was validly and effectually constituted a real burden on the said subjects, and that the pursuers, as trustees foresaid, are now in right thereof, the pursuers are entitled to decree of declarator as craved.”

The disposition and assignation was as follows:—“I, Peter Simpson, Solicitor before the Supreme Courts, Edinburgh, in consideration of the sum of £702, 3s. 1d. sterling, now paid to me by the General Assembly of the Church of Scotland's Committee for the endowment of Chapels of Ease, by the hands of George Baillie Wilson, their treasurer, of which sum I hereby acknowledge the receipt, and discharge the said committee, do hereby, sell, assign, and dispone to and in favour of Thomas Graham Murray, Writer to the Signet, convener, the Reverend Henry Cowan, minister of New Greyfriars, Edinburgh, vice-convener, and the said George Baillie Wilson, treasurer of the said committee, and to their respective successors in office, any two of them being a quorum, as trustee for behoof of said committee, and to their assignees whomsoever, heritably and irredeemably, not only the yearly ground annuals following, videlicet, of £4, 5s. 11d. sterling, to be uplifted and taken by the said Thomas Graham Murray, the Reverend Henry Cowan, and George Bailie Wilson, and their respective successors in office, as trustees foresaid, and their assignees and disponees, in virtue of a contract of ground annual entered into between me, the said Peter Simpson, on the one part, and me, the said Peter Simpson, on the other part, dated the 3rd, and recorded in the Division of the General Register of Sasines applicable to the county of Edinburgh the 6th, both days of December 1883, furth of and from each of the pieces of ground after disponed in the first, second, third, and fourth places, and whole houses and buildings erected or to be erected thereon, or furth of any part or portion thereof, and readiest rents, maills, and duties of the same; … commencing the first term's uplifting of said respective ground annuals at the term of Whitsunday 1884 for the half-year preceding, and the next term's uplifting at Martinmas thereafter, and so forth at the said two terms in all time coming, and with penalty, interest and consequents, all as specified in the said contract of ground annual, and herein held as repeated brevitatis causa, with the said contract itself and whole clauses and obligations therein contained, and all action, diligence, and execution competent; but also … In the third place, all and whole that piece of ground on the south side of Gilmore Place upon which the self-contained dwelling-house forming No. 55 thereof is built, with the plot in front thereof and the garden ground behind.… which subjects above disponed lie within the parish of St Cuthberts and county of Edinburgh, and form part of all and whole the lands and others specified and contained in [ Here followed an enumeration of certain deeds recorded in the General Register of Sasines], with the pertinents of the said several pieces of ground hereby disponed, and my whole right, title, and interest, present and future, therein; but always with and under the real liens, burdens, declarations, conditions, obligations, provisions, and limitations specified in the said contract of ground annual dated and recorded as aforesaid; and that in real security to the said Thomas Graham Murray, the Reverend Henry Cowan, and George Baillie Wilson, as trustees foresaid, and their foresaids, of the payment of the said yearly ground annuals, half-yearly payments thereof, interest and penalties before specified or referred to, and of the performance of the obligations and prestations incumbent on the

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said second party to the said contract of ground annual: With entry as at the term of Martinmas 1883 notwithstanding the date hereof: And I have herewith delivered to my said disponees an extract of the said contract of ground annual: And I bind and oblige myself, and my heirs, executors, and representatives whomsoever, and the party or parties to whom I may ultimately deliver the same, to make the prior writs of the said piece of ground forthcoming to my said disponees and their foresaids on all necessary occasions upon a receipt and obligation for redelivery of the same within a reasonable time. In witness whereof.” …

On 12th November the Lord Ordinary ( Skerrington) pronounced an interlocutor in which he allowed the pursuers to amend the summons ut supra, and having considered the cause, found and declared in terms of the second alternative conclusions of the summons, and quoad ultra dismissed the conclusions of the summons.

Opinion.—“The pursuers ask for declarator that a ground annual of £4, 5s. 11d. has been validly and effectually constituted a real burden over certain heritable subjects now belonging to the defenders, and that the pursuers are now in right thereof. They found primarily upon a so-called contract of ground annual, dated 3rd, and duly recorded in the Register of Sasines 6th, December 1883. This deed professes to create a number of ground annuals affecting various properties, but the present action is concerned only with one ground annual, which was intended to form a burden upon the subjects disponed in the third place. The so-called contract is in the elaborate and artificial form usually adopted in transactions of this kind. The owner of the heritable subjects sells them to a purchaser in consideration of the ground annual and other prestations undertaken by the purchaser, and he dispones the subjects to the purchaser under the real burden of the payment of a yearly ground annual and also of the maintenance and insurance of the buildings, &c. On his part the purchaser binds himself personally to pay the ground annual and to perform the other prestations. In security for these personal obligations he dispones to the seller not only a yearly ground annual of the same amount as that already reserved, but also the heritable subjects themselves. In the present case, however, it is apparent upon the face of the deed that the transaction which it professes to record was imaginary and non-existent, because the so-called seller and the so-called purchaser were one and the same person, viz., ‘Peter Simpson, S.S.C., Edinburgh, heritable proprietor of the areas of ground hereinafter disponed, of the first part, and the said Peter Simpson of the second part.’ It follows that the so-called contract is null and void in all its clauses. In particular, the new infeftment in favour of Mr Simpson and the qualification of that infeftment by the real burden of a ground annual in his own favour are nullities. Even if the deed had not taken the form of a meaningless contract, the practical result so far as regards the present question would have been the same. Mr Simpson could competently dispone his property to himself as institute, and he could, I assume, qualify this new infeftment by reserving what Mr Duff calls a ‘real lien’ in favour of a third party—Feudal Rights, sec. 136 (2)—but he could not effectually create a real burden in his own favour either by reservation or by constitution so as to affect a heritable subject of which he was absolute owner, any more than he could create a servitude in his own favour. It is, of course, a different question whether a ground annual which has once been effectually created is extinguished, or, on the other hand, is only suspended in the event of the person vested in the minor right or burden acquiring the higher right of property. See Murray v. Parlane's Trustee, December 18, 1890, 18 R. 287, 28 S.L.R. 223; King v. Johnston, 1908 S.C. 684, 45 S.L.R. 533.

For the foregoing reasons, I am of opinion that the so-called contract of ground annual did not effectually create any real burden over the subjects now belonging to the defenders. Accordingly Mr Simpson remained absolute owner of the heritable subjects under his original title until his death in 1906.

It now remains to consider the effect of the disposition and assignation, dated 8th, and recorded in the General Register of Sasines 11th December 1883, which he granted in favour of the pursuers in consideration of the payment of £702, 3s. 1d. It is obvious that when this deed was granted and accepted both parties had in view nothing more than a transfer to the pursuers of the rights which they assumed to be vested in Mr Simpson as the first party to the contract of ground annual already referred to. It does not, however, follow that a disposition of heritage may not operate in a manner different from that which the parties had in view provided it contains words habile to effect some other operation. Thus a bond and disposition in security which was granted by a person who was believed to have a feudal title to the subjects, and which was intended to create an ordinary heritable security, was held to operate as an assignation of a jus crediti, which was all that the granter had to convey, and the recording of the bond was held to operate as intimation of the assignation.— Edmond v. Gordon, November 16, 1885, 18 D. 47; aff. February 26, 1858, 20 D. (H.L.) 5, 3 Macq. 116.

By the disposition and assignation in the present case Mr Simpson sold, assigned, and disponed to the pursuers, ‘heritably and irredeemably, not only the yearly ground annuals following, videlicet, of £4, 5s. 11d. sterling, to be uplifted and taken by the said Thomas Graham Murray, the Reverend Henry Cowan, and George Baillie Wilson and their respective successors in office, as trustees foresaid, and their assignees and disponees, in virtue of a contract of ground annual entered into between me the said Peter Simpson on the one part and me the said Peter Simpson on the other

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part, dated the 3rd, and recorded in the Division of the General Register of Sasines applicable to the county of Edinburgh the 6th, both days of December 1883, furth of and from each of the pieces of ground after disponed in the first, second, third, and fourth places, and whole houses and buildings erected or to be erected thereon or furth of any part or portion thereof, and readiest rents, maills, and duties of the same.… Commencing the first term's uplifting of said respective ground annuals at the term of Whitsunday 1884 for the half year preceding, and the next term's uplifting at Martinmas thereafter, and so forth at the said two terms in all time coming, and with penalty, interest, and consequents, all as specified in the said contract of ground annual, and herein held as repeated brevitatis causa with the said contract itself, and whole clauses and obligations therein contained, and all action, diligence, and execution competent, but also.… In the Third Place, All and whole’ the subjects now belonging to the defenders … ‘with the pertinents of the said several pieces of ground hereby disponed, and my whole right, title, and interest, present and future, therein, but always with and under the real liens, burdens, declarations, conditions, obligations, provisions, and limitations specified in the said contract of ground annual, dated and recorded as aforesaid: And that in real security to the said Thomas Graham Murray, the Reverend Henry Cowan, and George Baillie Wilson, as trustees foresaid, and their foresaids, of the payment of the said yearly ground annuals, half-yearly payments thereof, interest and penalties before specified or referred to, and of the performance of the obligations and prestations incumbent on the said second party to the said contract of ground annual: With entry as at the term of Martinmas 1883 notwithstanding the date hereof.’

I do not think that it is possible to construe the foregoing conveyance of a ground annual as constituting and creating a new ground annual, or as anything more than an assignation to the pursuers of the ground annual (by reservation) which Mr Simpson had attempted to create by the contract of 3rd December 1883, and of the relative personal obligations, and of the ground annual which he had attempted to constitute by way of security. These supposed rights being non-existent, the disposition and assignation was to that extent inoperative. I am, however, of opinion that the disposition and assignation, being an onerous deed, contained not expressly but by implication an unqualified acknowledgment on the part of Mr Simpson to the effect that he stood from its date debtor to the pursuers for payment of the ground annuals and performance of the various prestations undertaken by him as the second party to the so-called contract in his own favour as the first party. Mr Simpson could not, in my opinion, have successfully disputed his personal liability for the ground annual and prestations in a question with the pursuers. It is true that he did not of new bind and oblige himself to pay the ground annuals and to perform the prestations, but an acknowledgment of indebtedness is sufficient to constitute a debt and to give validity to a conveyance of heritable subjects in security thereof. If the true construction of the disposition and assignation is what I have stated, then it is immaterial that the present question arises with singular successors, because the deed was duly recorded in the Register of Sasines, and it was their duty to make up their minds as to its meaning and effect. The granter had the full and unrestricted right of property in the subjects now belonging to the defenders, and he conveyed them to the pursuers in security for certain pecuniary and other obligations incumbent on him as ‘the second party to the said contract of ground annual.’ The disposition and assignation itself sets forth plainly and fully the amount of the ground annuals for which Mr Simpson acknowledged liability, the terms of payment, and the lands affected. It is, however, doubtful whether apart from statute the intended security is not ineffectual so far as regards the interest and penalties, and the various obligations ad factum præstandum, as regards all of which the disposition and assignation is insufficient in detail when taken by itself, and in regard to which it must be supplemented by a reference to the recorded contract of ground annual. Probably the defect (if any) is cured by section 32 of the Conveyancing (Scotland) Act 1874, but the question was not fully argued, and it hardly arises under the conclusions as framed.

I am prepared to affirm that the ground annual mentioned in the summons is in a certain sense a real burden over the defenders' property, but I prefer to pronounce a decree declaring that under and in virtue of the disposition and assignation mentioned in the summons the pursuers, as trustees, and their successors in office and their assignees whomsoever, hold a valid and effectual conveyance of the heritable subjects described in the summons in real security for the payment by the late Peter Simpson, S.S.C., Edinburgh, of the yearly ground annual of £4, 5s. 11d., payable half-yearly, commencing the first term's payment at the term of Whitsunday 1884 for the half year preceding, and the next term's payment at Martinmas thereafter, and so forth at the said two terms in all time coming.”

The defenders reclaimed, and argued—The first deed was admittedly inept to constitute a ground annual, because the so-called seller and the so-called purchaser were one and the same person. Accordingly the second deed could not operate an assignation of a ground annual, because it assigned something which had never been constituted, and the disposition in security was a disposition of something which did not exist. Nor did the second deed itself constitute a ground annual. It did not purport to do so, and it contained no personal obligation, and a personal obligation could not be implied— Magistrates of Arbroath v. Dickson,

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March 19, 1872, 10 Macph. 630; Ballachullish Slate Quarries v. Menzies and Others, May 14, 1908, 45 S.L.R. 667; Magistrates of Perth v. Stewart, December 18, 1830, 9 S. 225; Magistrates of Perth v. Stewart, July 11, 1835, 13 S. 1100. Edmond v. Gordon, November 16, 1855, 13 D. 47, February 26, 1858, 20 D. (H.L.) 5, 3 Macq. 116, and the Scots cases founded thereon, were different, because in them the transactions dealt with were real transactions. Glasgow Feuing Company, Limited v. Watson's Trustees, March 11, 1887, 14 R. 610, 24 S.L.R. 429, was also different, because in that case the Court did not constitute a real burden by setting up a defective deed; it merely corrected an error which had slipped into a plan. The English cases cited infra by the respondents only went to show that as between parties the Court would give effect to what was substantially the contract between them. When the respondents took the disposition and assignation they knew that the first deed was void. Accordingly so far as regards equity they could not claim to be in a more favoured position than the reclaimers.

Argued for the respondents—The respondents had paid a full price for the ground annual. Accordingly on grounds of equity the Court would be slow to hold the ground annual to be invalid. Moreover, even if the constitution of the ground annual were defective, the reclaimers’ previous knowledge barred them from founding on their title to the effect of repudiating the ground annual— Stodart v. Dalzell, December 16, 1876, 4 R. 236, 14 S.L.R. 164. The intention of the parties appearing on the face of the deed was that a valid right should be created to uplift a ground annual which should be constituted a real burden on the land, and the deed should be so construed as to give effect to the intention of the parties as nearly as the circumstances permitted—Norton on Deeds, p. 46; Edmond v. Gordon ( cit. sup.); M'Cutcheon v. M'William, March 8, 1876, 3 R. 565, 13 S.L.R. 358; Glen v. Scales’ Trustee, December 15, 1881, 9 R. 317, 19 S.L.R. 201; Cattanach's Trustee v. Jamieson, June 25, 1884, 11 R. 972, 21 S.L.R. 661; Glasgow Feuing and Building Company, Limited, v. Watson's Trustees ( cit. sup.); Glen's Trustees v. Lancashire and Yorkshire Accident Insurance Company, Limited, June 14, 1906, 8 F. 915, 43 S.L.R. 684; Good-title v. Bailey, May 2, 1777, 2 Cowper 597, per Lord Mansfield at 600; Monypenny v. Monypenny, January 31, 1859, 3 De G. & J. 572, per L. Ch. Chelmsford at 589; Gwyn v. Neath Canal Navigation Company, May 23, 1868, L.R., 3 Ex. 209; Johnston Foreign Patents Company, Limited, in re J. P. Trust, Limited v. The Same, [1904] 2 Ch 234, per Vaughan Williams, L.J., at 246. Magistrates of Arbroath v. Dickson ( cit. sup.) was different, because in that case there were no words clearly implying that the payments were real burdens. (1) The disposition and assignation of itself validly constituted a ground annual by a direct grant. A ground annual could be so constituted. The normal method of constituting a bond of annual rent used to be by a disposition—Jur. Styles (3rd ed.), vol. i, 216 and 218. Later on, after the old form of infeftment had disappeared, the method of constituting a ground annual continued to be by a direct disposition—Jur. Styles (4th ed.), vol. i, pp. 631, 634, and 660. Duff's Feudal Conveyancing, pp. 262 and 273, was also referred to. It was not essential to the valid constitution of a ground annual that it should contain a personal obligation. Originally ground annuals did not contain personal obligations—Mont. Bell's Convey ancing (3rd ed.), vol. ii, p. 1155. The fact that the disposition and assignation referred back to a deed which was void did not prevent the disposition and assignation from being itself a good deed. (2) By the latter part of the second deed there was a good conveyance of a debt acknowledged by the second deed to be due, and it was competent to refer back to the first deed to ascertain the details of the burdens constituted by the disposition and assignation—the Conveyancing (Scotland) Act 1874 (37 and 38 Vict. cap. 94), sec. 32. The words “to be uplifted and taken … in virtue of a contract of ground annual,” occurring in the disposition and assignation, were merely a falsa demonstratio and did not affect its validity. An assignation implied a warrandice that the debt assigned was properly constituted—Bell's Prin., sec. 1469; Bell's Comm., vol. i, p. 689. Accordingly the assignation adopted the original contract contained in the first deed. (3) In any event the disposition and assignation contained a conveyance in security of a debt stated by the document itself to be a ground annual due furth of the lands. The document contained, apart altogether from the first deed, the essential elements of a ground annual, viz., ( a) a statement as to the amount, ( b) a statement as to the party to whom the sum should be paid, ( c) words clearly implying that the lands were to be affected by the real burden, ( d) a full description of the lands, and ( e) the due entering of these particulars in the records. No other elements were required—Bell's Prin., sec. 861.

At advising—