Appeal By Balgray Limited Against William Hodgson
| Jurisdiction | Scotland |
| Judge | Lord Tyre,Lady Clark Of Calton,Lord Brodie |
| Neutral Citation | [2016] CSIH 55 |
| Docket Number | XA85/15 |
| Published date | 15 July 2016 |
| Court | Court of Session |
| Date | 15 July 2016 |
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2016] CSIH 55
XA85/15
Lord Brodie
Lady Clark of Calton
Lord Tyre
OPINION OF THE COURT
delivered by LORD BRODIE
in the appeal
by
BALGRAY LIMITED
Appellant;
against
WILLIAM HODGSON
Respondent:
Appellant: MacColl; Kennedys Scotland (for McJerrow & Stevenson, Lockerbie)
Respondent: DM Thomson; Davidson Chalmers
15 July 2016
Introduction
[1] This is an appeal to the Court of Session on a question of law under section 88 of the Agricultural Holdings (Scotland) Act 2003, against a decision of the Scottish Land Court dated 6 August 2015. The pursuer and appellant is Balgray Limited, a company incorporated under the Companies Acts and having its registered office at 51 Rae Street, Dumfries. The respondent is William Hodgson.
[2] The decision of 6 August 2015 was in respect of an application by the appellant for declarator that a letter of 29 May 2014 sent by Stronachs LLP as agents for the respondent and addressed to “Michael John Jardine Paterson, Balgray, Lockerbie, Dumfrieshire”, was not a valid notice under and in terms of section 72(6) of the 2003 Act (and therefore not effective to continue the tenancy of the farm of Blindhillbush of which the appellant was landlord) and for an order for removal. The decision of the Land Court was to assoilzie the respondent from the craves of the application.
[3] The issue in the appeal is whether a letter addressed to someone who is not the landlord of an agricultural holding may, in the circumstances of the case, nevertheless constitute the giving of “notice to the landlord” for the purposes of section 72(6).
The questions of law for the opinion of the court
[4] The questions of law for the opinion of the court are as follows:
- Did the Scottish Land Court erroneously conclude that the letter should be construed as a notice to the pursuer, on the basis that Michael John Jardine Paterson happened to be the controlling mind of the company?
- Did the Scottish Land Court err in failing to acknowledge that the letter was, as a matter of fact, a notice given to another person and was not a notice to the landlord?
Section 72 of the 2003 Act
[5] Section 72 of the 2003 Act, as amended, provides:
“Rights of certain persons where tenant is a limited partnership
(1) Subsections (2) and (3) apply to a 1991 Act tenancy where the lease constituting the tenancy is entered into before the coming into force of this section and—
(a) the tenant is a limited partnership; and
(b) any limited partner is—
(i) the landlord or an associate of the landlord; or
(ii) a partnership or a company in which the landlord has a relevant interest.
(2) Where this subsection applies, any general partner may exercise or enforce any right of a tenant conferred by virtue of Part 2 of this Act as if the partner were the tenant in the partner’s own right ....
(3) Where this subsection applies and the tenancy purports to be terminated as a consequence of—
(a) the dissolution of the partnership by notice served on or after 16th September 2002 by a limited partner mentioned in subsection (1)(b);
(b) the renunciation of the tenancy on or after that date by such a partner; or
(c) a breach of the tenancy on or after that date by such a partner,
subsection (6) applies
...
(6) Where this subsection applies, notwithstanding the purported termination of the tenancy—
(a) the tenancy continues to have effect; and
(b) any general partner becomes the tenant (or a joint tenant) under the tenancy in the partner’s own right,
if the general partner gives notice to the landlord within 28 days of the purported termination of the tenancy or within 28 days of the coming into force of this section (whichever is the later) stating that the partner intends to become the tenant (or a joint tenant) under the tenancy in the partner’s own right.”
[6] Subject to registration requirements, the Limited Partnership Act 1907 allows for the formation of limited partnerships where a partner may be a general partner who takes part in the management of the partnership business or he may be a limited partner who does not take part in the management of the partnership business. A limited partner does not incur liability for the debts and obligations of the limited partnership but, subject to the terms of partnership agreement, he will be able to dissolve it on notice. Where the limited partnership is tenant under a lease then dissolution of the partnership will terminate the lease. With that eventuality in view a landlord may grant the lease of an agricultural holding to a limited partnership in which he or someone that he is associated with is a limited partner, so giving him the power to the bring the tenancy to an end. As is apparent from its terms, the purpose of section 72(6) is very specifically to afford protection to a general partner of a limited partnership in such circumstances. The nature of that protection is the limited security of tenure conferred by section 73 of the 2003 Act.
The facts
[7] The Land Court heard evidence from three witnesses: Mr Hamish Lean, a partner in Stronachs LLP and an accredited expert in agricultural law who had signed and sent the letter of 29 May 2014 as the respondent’s agent; Mr Michael Jardine Paterson, a director of the appellant, to whom the letter had been addressed and who had received it; and the respondent.
[8] In its note the Land Court provides a very full narrative of the evidence that it heard. It does not make specific findings in fact. While there would have been a convenience in it having done so, the absence of identified findings in fact perhaps does not matter. All three witnesses were found to be both credible and reliable and therefore where the Land Court records their evidence it can be taken to have accepted that evidence as fact. In any event the relevant facts fall within a relatively narrow compass. We would summarise them as follows.
[9] Until 28 May 2014 the respondent was the general partner in a limited partnership called Blindhillbush Farmers (No. 1) (“the partnership”). The partnership was the tenant and the appellant was the landlord of the farm of Blindhillbush, Boreland, Lockerbie, in terms of a lease entered into on 2 July and 12 December 2002 (“the lease”). The lease was governed by the Agricultural Holdings (Scotland) Act 1991. The partnership, which had come into being in 1999, was originally between the respondent as general partner and Michael John Jardine Paterson (“Mr Jardine Paterson”), a director of the appellant, as the limited partner but the appellant was assumed as an additional limited partner contemporaneously with the granting of the lease.
[10] The partnership was also tenant in the lease of a separate agricultural holding, Ravenscleuch (“the Ravenscleuch lease”) which was farmed by the respondent as general partner as one unit with Blindhillbush. The landlord of Ravenscleuch was Mr Jardine Paterson.
[11] The partnership was dissolved with effect from 28 May 2014 by notice served by the appellant and Mr Jardine Paterson on 26 April 2013. In consequence of that the lease terminated, as did the Ravenscleuch lease.
[12] By recorded delivery letter dated 29 May 2014 agents acting for the respondent purported to give notice under section 72(6). The notice was addressed not to Balgray Limited, nor to their registered office, but to “Michael John Jardine Paterson, Balgray, Lockerbie, Dumfriesshire”. It was in the following terms:
“Dear Sir
Notice under Section 72(6) Agricultural Holdings (Scotland) Act 2003
Holding of Blindhillbush Farm, Boreland, Lockerbie
On behalf of and as instructed by our client, William Hodgson, residing formerly at Yewtree Farmhouse, Kirkhampton, Carlisle, and now at Blindhillbush Farmhouse, Blindhillbush, Boreland, Lockerbie, general partner of the limited partnership firm of Blindhillbush Farmers (No 1) constituted by Contract of Limited Partnership between you, Michael John Jardine Paterson as limited partner thereof and the said William Hodgson, as general partner thereof dated 25th January and 8th February as amended by Addendum to Contract of Limited Partnership amongst you the said Michael John Jardine Paterson, Balgray Limited and the said William Hodgson dated 2nd July 2002, 12th December 2002 and 30th December 2002 whereby the said Balgray Limited was assumed as a limited partner under the said Contract of Limited Partnership and considering that the firm has been dissolved as at 28th May 2014 by virtue of Notice of Termination of Limited Partnership dated 26th April 2013 by you as limited partner aforesaid per your agents McJerrow & Stevenson, Solicitors, 55 High Street, Lockerbie, DG11 2JJ, we HEREBY GIVE NOTICE in terms of Section 72(6) of the Agricultural Holdings (Scotland) Act 2003 to you in your capacity as landlord of the tenancy of the holding of ALL and WHOLE the Farm and Lands of Blindhillbush Farm, Blindhillbush, Boreland, Lockerbie in terms of Lease between the said Balgray Limited and the said limited partnership firm of Blindhillbush Farmers (No 1) dated 2nd July and 12th December both months in the year 2002 that the said William Hodgson intends to become a tenant in his own right under the said tenancy, which tenancy was purported to be terminated in consequence of the said Notice of Termination of Limited Partnership.
Yours faithfully
Signed by Hamish Lean
For and on behalf of Stronachs LLP
Agents for William Hodgson”
[13] Mr Jardine Paterson was company secretary as well as director of the appellant. His fellow director was his son, David Jardine Paterson, the sole shareholder of the appellant. Although not its registered office, the appellant operated from Balgray House, which was Mr Jardine Paterson’s home. Mr Jardine Paterson dealt with practical problems which arose in the course of the lease and Smiths Gore, the appellant’s land agents, took their instructions from him. There was no evidence as to what role David...
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