How the leopard changed its spots

The Agricultural Holdings (Scotland) Act 2003, having received Royal Assent on 22 April 2003, is a very different animal to the Bill which Ross Finnie introduced on 16 September 2002.

The declared purpose of the Scottish Executive when it set off down the road of agricultural law reform was to bring more land onto the letting market, to allow tenants to diversify into non-agricultural activities and to simplify and reduce the cost of dispute resolution: laudable aims that held no fears for landlords.

However, during the Bill’s passage through Parliament, an influential group of MSP’s, fuelled by The Scottish Tenants Action Group, resurrected the concept of an absolute right for agricultural tenants to buy their land. Landlords thought this long dead and understandably, opposed it.  This apparently, although much of the evidence appears to have been anecdotal, led to landlords taking actions which, at the time were perfectly legitimate, but now seem ill advised, to protect their interests, by for example, serving notices to dissolve Limited Partnerships, in order to give them vacant possession of land which could not, therefore, be purchased over their heads by tenants.  Limited Partnerships are, after all, valid legal arrangements, freely entered into by both parties which, in accordance with a judgement of the Court of Session, fall to be interpreted in accordance with their intentions and which were, in the main, only intended to be for limited, fixed, periods.  They were certainly never intended to confer on tenants extended rights, such as right to buy.

The Scottish Executive seemed to take the view that landlords had abused their power (a power which it considered to be greater than that of the tenant) and that such power had to be curbed.  

The result is that, as a trade-off to its own supporters for dropping an absolute right to buy, the Executive added to the Bill a whole raft of new measures which were not envisaged when it was introduced.  Nor, perhaps more importantly, were they part of “the general principles” of the Bill which Parliament accepted at the end of the Stage 1 debate on 19 December 2002.  For example, the Act now contains provisions allowing tenants to withhold rent while obligations with regard to fixed equipment are carried out by landlords, which strike at Compensation Agreements, which outlaw future (but not previous) Post-Lease Agreements relative to fixed equipment for 1991 Act tenancies, which place stringent duties on landlords regarding fixed equipment in relation to the new forms of tenancy, however short, with no scope for contracting out, which radically alter the criteria for rent review and which, perhaps most controversially, allow tenants of agricultural land (but not, it should be noted, any other form of heritable property in Scotland) to share in the capital value released by their giving up their tenancies, to name but a few.

Finally, in what can only be described as a knee-jerk reaction to panic which the Executive had itself created, where Limited Partnerships were (as noted earlier) legitimately (at the time) dissolved before the passing of the Act, Parliament has given the general partners the right to claim the tenancies as individuals (and, thus, to acquire, for example, the pre-emptive right to buy) unless the landlord can convince the Land Court that the partnership was dissolved for legitimate reasons and that it was reasonable to do so (whatever that means).

This story raises interesting constitutional questions.  First, the Scottish Parliament’s standing orders lay down a strict timescale for the submission of amendments to Bills.  The amendment which gave rise to the right of general partners in Limited Partnerships, which landlords had legitimately dissolved, to claim tenancies in their own right (and which caused the panic) was tabled, by the Executive, after the deadline.  Furthermore, that amendment was, in itself, amended at a later stage, so as to be retrospective.  Second, the standing orders also provide that amendments, introduced at later stages, which are inconsistent with the general principles of a Bill as agreed by Parliament, at Stage 1, are inadmissible.  Others will judge whether the amendments which gave rise to the radical measures, particularly with regard to compensation and Limited Partnerships, mentioned above were, in the first place, admissible.  They certainly seem, on the face of it, to be at odds with the general principles of the original Bill.

The fear is that, having introduced a Bill which contained measures which had been carefully thought out following a long period of consultation and which were, generally, well received by all sectors of the industry, Parliament, having bowed to pressure from one interest group to legislate principally against another (although not, admittedly, to the extent of introducing the absolute right to buy which some had wished) has produced an Act which (at worst) has undermined its own original objectives and may which (at best) leave landlords scared that, if they do not, reluctantly, comply with it, their inherent right to own, occupy and dispose of their property as they wish may be removed from them at some future date by the re-birth of an absolute right to buy.  Parliament will, however, no doubt, argue that the measures concerned were anti-avoidance provisions introduced to deal with a situation which was unforeseeable when the Bill was introduced.

Alasdair Fox, Anderson Strathern