Bryan-Heaney-0005_prvOn March 5, 2013 Professor Adam Tomkins’ article The Emergence of a Devolution Jurisprudence? appeared on the UKSC Blog. This week the Supreme Court heard another devolution case, this time considering whether provisions of the Agricultural Holdings (Scotland) Act 2003 were outside the legislative competence of the Scottish Parliament by reason of incompatibility with the right to peaceful enjoyment of property under Article 1 of Protocol 1 to the European Convention on Human Rights (A1P1).

Under the Scotland Act 1998, s 29, an enactment is “not law” if incompatible with the Convention rights set out the Human Rights Act 1998. A1P1 provides a qualified right that can be interfered with “in the public interest and subject to the conditions provided for by law and by the general principles of international law”. The case law principle is that interference must be justified and proportionate. Before the Inner House it was successfully argued that the legislation was incompatible with A1P1: see Salvesen v Riddel [2012] CSIH 26, 2012 SLT 633. That was not the only ground on which the appellant succeeded. The Inner House also held that the court appealed from, the Scottish Land Court, had erred in the interpretation of the statute and should have held a proof rather than disposing of the case on the pleadings. The Lord Advocate appeared in the Inner House to argue for the compatibility of the legislation.

The Lord Advocate appealed to the Supreme Court on the compatibility issue. The appellant to the Inner House didn’t appeal because he held the judgment on other grounds. The respondent in the Inner House didn’t appeal either.  So, in the Supreme Court, neither of the original litigants was represented and the arguments in support of the Inner House judgment were made by an amicus curiae.

The human rights law is easier to understand than the esoteric property and agricultural law issues but I will try to make it simple. Security of tenure for Scottish tenant farmers was introduced by legislation in the late 1940s. The principles of security of tenure were last re-enacted in the Agricultural Holdings (Scotland) Act 1991. Security meant that the landlord who granted a lease to which the Act applied might not be able to re-let it for generations. Contracting out of the security of tenure provisions was prohibited. An avoidance strategy was soon devised that would allow short lets. The strategy was not to let the subjects to the farmer alone but to a limited partnership in which the farmer was the general partner and the landlord, or his agent, the limited partner. The parties were free to negotiate such partnership terms as they pleased.  Termination of the partnership resulted in termination of the lease. By the end of the 1990s virtually all lets of agricultural land were through the medium of the limited partnership. In 2000 the Scottish Government decided to look again at the system of tenure for farmers. It was decided to introduce legislation to allow fixed-term lets and do away with the use, or as some saw it, abuse of the limited partnership vehicle.

In 1992, Mr Riddell, the farmer, entered a limited partnership with the landowner’s assignee and the partnership took a lease of a farm in East Lothian. The farmer was the general partner, and effective tenant, and the landlord’s assignee was the limited partner. In 1998 Mr Salvesen bought the farm subject to the lease and substituted his nominee as the limited partner. The lease was due to end in 2008.

On September 16, 2002 the Government introduced the Bill that became the Agricultural Holdings (Scotland) Act 2003. The Government’s stated intention was to prohibit new leases with limited partnerships as the tenants but to leave existing arrangements untouched. Once the Bill was introduced the SNP opposition, and the Government, started to murmur about a right to buy for tenant farmers who had security of tenure. This caused a great stir amongst agricultural landlords. In the corridors of power anecdotes circulated about landlords serving notices and dissolving partnerships to regain possession. On February 3, 2003 the government published a proposed amendment to the bill. The amendment was to introduce an anti-avoidance provision which allowed a general partner (effectively the tenant) who was served a notice of dissolution between February 4, 2003 and a date to be appointed, to challenge the notice in the Scottish Land Court. The notice would be set aside by the Land Court unless if it was unreasonable for the tenancy to be terminated and it was reasonable to make the order. The consequence of a successful challenge was not reversion to the status quo but instead to make the general partner a tenant in his own right with security of tenure under the 1991 Act and the, then proposed, right to buy. On February 3, Mr Salvesen’s nominee served a notice of dissolution of partnership on the farmer.

At that time Mr Salvesen might have thought that the danger to his property had been averted. Not so. In March 2003 a further amendment was proposed and accepted. It brought forward the date at which the anti-avoidance provision would bite to include all notices of dissolution served after September 16, 2002, the date on which the bill was introduced. The amendment also moved the onus onto the landlord to demonstrate to the Land Court that the notice should be allowed to stand. In the debate on the amendment the Deputy Minister described the service of notices after the introduction of the bill as “immoral”.

The Act came into force on July 1, 2003. As finally enacted the anti-avoidance provision applied to notices of dissolution served between September 16, 2002 and June 30, 2003. If the tenant challenged the notice, the landlord had to apply to the Land Court and show that the notice was served “otherwise than for the purposes of depriving the tenant (being a general partner) of any right deriving from [the 2003 Act]” and it was reasonable to allow the notice to stand. If the landlord was denied an order by the Land Court the general partner would become a tenant with security of tenure. Strikingly, notices of dissolution served on and after July 1, 2003, were subject to a different regime. The consequence of a notice after that date was to make the general partner a tenant but without security of tenure and subject to having the lease brought to an end by an incontestable notice to quit.

Accordingly, the regime applying to the limited partner (landlord) who served a notice between the introduction of the Bill and its becoming law was subject to a different regime from the limited partner (landlord) who served a notice after the Act came into force. Before the Inner House counsel for the Lord Advocate tried to justify the difference in treatment. The purported justifications were rejected. Lord Gill, then the Lord Justice-Clerk, now the Lord President, described the difference in treatment as “arbitrary”, “retaliatory”, “without intellectual justification”, “penalisation”, and at best “proceeding on a misunderstanding”.

It is difficult to know how the Supreme Court will treat this case. There is no live dispute between the original parties to the action. Nevertheless, the Supreme Court might feel that it has to deal with the case to put an end to any uncertainty. To me, it appears that Lord Gill’s characterisation of the purported justifications was moderate. To my mind, the difference in regime was the result of politicking to demonstrate that the Labour government and SNP opposition were united in punishing rich landlords who, with their expensive lawyers, were doing down poor tenant farmers. This was calculated to play to the SNP’s rural constituents and also to the unreconstructed crypto-Marxist element in the Labour party. But maybe the Supreme Court will see it differently and decide the measure was objectively justified and proportionate.