Agriculture: A question for the Land Court?

One of the functions of the Tenant Farming Commissioner (“TFC”) is the right, by s 38 of the Land Reform (Scotland) Act 2016, to refer to the Land Court for its determination any question of law which may competently be determined by that court. An attempt to exercise this function resulted in the recent decision, Reference by the Tenant Farming Commissioner SLC/44/22 (12 January 2023). In 2022 agents acting for the TFC enquired whether the court would be willing to consider a reference on the question whether the statutory power to resume land out of the “limited” forms of agricultural tenancy under s 17 of the Agricultural Holdings (Scotland) Act 2003 excludes the operation of conventional contractual resumption provision. 

The agents explained that the TFC was aware “of there being some doubt” about this provision – one view being that a resumption in conformity with s 17 is the only means by which resumption from such a tenancy could take place, and the other being that a party might include a different and effectual resumption clause in the lease. The writer has heard the latter case being put, but is unaware of the extent to which private agreement is relied on. It was suggested that the TFC could instruct a suitably experienced advocate to provide an amicus curiae opinion canvassing the relevant law to assist the court’s consideration of the matter. 

At a procedural hearing counsel for the TFC set out the preferred formulation of the questions for determination. It was explained that the TFC had become aware from more than one source that “parties were in doubt as to how to proceed” in relation to the questions of law sought to be referred. The TFC was not always at liberty to disclose names or circumstances of parties concerned, and did not wish to share this information because an apprehension of publicity might undermine parties’ readiness to invoke his offices. The practical need for an answer might arise before a lease was even granted, at the stage of negotiation.

Beyond remit

The court took the view that it was explicitly being asked to operate as an advisory bureau guiding prospective lessors and lessees to a policy which they should adopt in relation to the inclusion of contractual resumption clauses, and concluded that such a role was not within its remit. It went on to say that a merely prospective landlord and tenant of any of the limited duration tenancies could not even jointly make an application asking it to determine whether s 17 excluded the operation of a non-statutory contractual clause. The court, in such circumstances, would be being asked to provide advice or guidance for the future rather than determine live and practical issues (its proper role). There was a lack of underlying jurisdiction and the court had to decline to accept the questions. In the court’s view, the mere fact that agricultural law specialists and others within the industry might be debating an as yet unsettled question of law at conferences or other forums did not render that question live and practical in the required sense, rather than merely hypothetical, premature or academic. If it did, every conference and every new agricultural law article in legal journals would throw up a new crop of questions of law that the TFC in theory might ask the court to determine.

Sometimes significant issues remain unlitigated – the risk of losing is perceived to outweigh the potential benefits of success.

A landlord with a lease containing a non-statutory contractual resumption may simply decide to wait out the tenancy, or possibly reach agreement with the tenant which might be less beneficial than the contractual resumption but more palatable from the landlord’s point of view than the statutory resumption, and probably more palatable from everyone’s point of view than seeking to litigate. However the court disagreed with the suggestion that one of the obvious purposes of s 38 is to prevent private litigants from having to litigate the question privately. 

It commented that while it might be suggested that the uncertainty as to the validity of non-statutory contractual resumption clauses operated as a disincentive to tenants to take a limited duration tenancy, such disincentive may be more theoretical than real. Anecdotally the court has heard that some landlords are insisting that any new limited duration tenancies include such a clause, so the choice for the tenant is either to accept the lease in these terms or be passed over for the tenancy. It would not be to the tenant’s benefit if the court were to uphold the efficacy of such clauses; on the other hand, if the decision were to go the other way it might create a further disincentive for landlords to grant such tenancies at all. 

There was no formal application by the TFC under s 38: the court simply declined to accept such a referral as it considered the application would be incompetent.