McMaster v Scottish Ministers

CourtCourt of Session (Inner House)
JudgeLord Clark
Judgment Date12 June 2018
Neutral Citation[2018] CSIH 40
Date12 June 2018
Docket NumberNo 30

[2018] CSIH 40

First Division

Lord Clark

No 30
Scottish Ministers
Cases referred to:

Artico v Italy (A/37) (1981) 2 EHRR 1

Denimark Ltd v UK (37660/97) (2000) 30 EHRR CD 144

Gordon v Douglas, Heron & Co (1795) 3 Pat App 428

Klibavičienė v Lithuania (34911/06) ECtHR (2nd), 21 October 2014, unreported

Kopecký v Slovakia (44912/98) (2005) 41 EHRR 944

MacFarlane v Falfield Investments Ltd 1998 SC 14; 1998 SLT 145

Papamichalopoulos v Greece (A/330-B) (1996) 21 EHRR 439

Pine Valley Developments Ltd v Ireland (A/222) (1992) 14 EHRR 319

Pressos Compania Naviera SA v Belgium (A/332) (1996) 21 EHRR 301

R (on the application of Greenfield) v Secretary of State for the Home Department [2005] UKHL 14; [2005] 1 WLR 673; [2005] 2 All ER 240; [2005] HRLR 13; [2005] UKHRR 323; 18 BHRC 252; [2005] 2 Prison LR 129; 102 (16) LSG 30; 155 NLJ 298

R (on the application of New London College Ltd) v Secretary of State for the Home Department [2012] EWCA Civ 51; [2012] Imm AR 563; [2012] PTSR D21

R (on the application of Nicholds) v Security Industry Authority [2006] EWHC 1792; [2007] 1 WLR 2067; [2007] ICR 1076; [2006] LLR 775

Salvesen v Riddell [2012] CSIH 26; 2013 SC 69; 2012 SLT 633; 2012 SCLR 403; 2012 Hous LR 30

Salvesen v Riddell [2013] UKSC 22; 2013 SC (UKSC) 236; 2013 SLT 863; 2014 SCLR 44; [2013] HRLR 23

Stretch v UK (44277/98) (2004) 36 EHRR 12; [2004] BLGR 401; [2004] 1 EGLR 11; [2004] 3 EG 100; [2003] 29 EG 118 (CS); [2003] NPC 125

Trgo v Croatia (35298/04) ECtHR (1st), 11 June 2009, unreported

Textbooks etc referred to:

Scottish Executive, Agricultural Holdings: Proposals for legislation (SE/2000/51) (Scottish Executive, Edinburgh, May 2000)

Agricultural law — Lease — Limited partnership tenancy — Repeal by remedial order of statutory provisions held incompatible with Convention rights by the UK Supreme Court — Whether failure to provide for compensation to general partners for rights granted by repealed provisions a breach of Convention rights — European Convention on Human Rights and Fundamental Freedoms, First Protocol, Art 1

RA McMaster and others lodged a petition for judicial review in the Court of Session. Following a first hearing held before the Lord Ordinary (Clark), on 31 May 2017, the Lord Ordinary issued an interlocutor disposing of the matters debated before him and set out in his opinion of 21 March 2017 ([2017] CSOH 46). The petitioners reclaimed against that decision to the Inner House of the Court of Session.

Section 72 of the Agricultural Holdings (Scotland) Act 2003 (asp 11) (‘the 2003 Act’) came into force on 22 May 2003. It concerned those tenancies governed by the Agricultural Holdings (Scotland) Act 1991 (cap 55) (‘the 1991 Act’), in which the tenant was a limited partnership constituted under the Limited Partnerships Act 1907 (7 Edw 7 cap 24), with the limited partner being the landlord (or their associate). Before sec 72 of the 2003 Act came into force, such tenancies could be brought to an end by dissolution of the limited partnership, despite the provisions of the 1991 Act conferring security of tenure. Section 72(6) of the 2003 Act provided that if the limited partner had served a notice on or after 16 September 2002 to dissolve the limited partnership, then the general partner could continue the tenancy as tenant in their own right. Section 73 entitled the landlord to bring such a tenancy to an end by service of an incontestable notice to quit, effectively creating a form of limited duration tenancy. However, the effect of sec 72(10) was that sec 73 did not apply to landlords who served the dissolution notice between 16 September 2002 and 30 June 2003, with the result that they were burdened with a secure tenancy.

The Agricultural Holdings (Scotland) Act 2003 Remedial Order 2014 (SSI 2014/98) (‘the Remedial Order’) introduced a new provision into the 2003 Act, sec 72A, the effect of which was generally to apply sec 73 to tenancies where a dissolution notice was served between 16 September 2002 and 30 June 2003.

Salvesen v Riddell (2013) determined that the difference in treatment between those landlords who served a dissolution notice between 16 September 2002 and 30 June 2003 and those landlords who served notices after that period was contrary to Art 1 of the First Protocol to the European Convention on Human Rights and Fundamental Freedoms (‘A1P1’) and that the sec 72(10) of the 2003 Act was outside the legislative competence of the Scottish Parliament. The effect of the decision was suspended to allow remedial action to be taken, which was done by the Ministers making the Remedial Order.

The petitioners were, inter alia, the general partners of limited partnerships which had been tenants of agricultural land. In each case, notice to dissolve the limited partnership had been given on 3 February 2003. They obtained an entitlement to become tenants in their own right on 22 May 2003, when sec 72 of the 2003 Act came into force, such tenancies being immune from termination under sec 73. The making of the Remedial Order altered this, so that the tenancies effectively became tenancies of limited duration.

The petitioners brought judicial review proceedings against the Scottish Ministers to review their making of the Remedial Order and their decision not to pay compensation for loss they claimed to have sustained as a result. They argued this was incompatible with A1P1.

Following a hearing before the Lord Ordinary, his Lordship issued an interlocutor the effect of which was to restrict the claims to those made by the general partners for losses in consequence of any reliance made in the belief that they were entitled to secure tenancies. Claims seeking to recover the lost value of a secure tenancy were not allowed to proceed. The petitioners reclaimed.

Held that: (1) the Remedial Order did no more than correct the contravention of A1P1, to the extent that it restricted the value of a possession it merely removed a right that should not have been granted and for which no consideration had been given, there was nothing unfair in bringing matters back to the position that would have obtained had the 2003 Act conformed to A1P1, accordingly the alteration in rights brought about by the Remedial Order did not require compensation (paras 35–37); (2) the petitioners' other complaints regarding the Lord Ordinary's decision were unfounded (paras 40, 44, 45, 55, 57, 58, 60); and reclaiming motion refused.

Observed that where persons reasonably acted in reliance upon rights they had apparently been conferred by legislation later held to be invalid, suffering loss in consequence, that in itself amounted to a deprivation of possessions for which compensation was payable (paras 48, 49).

The cause called before the First Division, comprising the Lord President (Carloway), Lord Menzies and Lord Drummond Young for a hearing on the summar roll, on 23 and 24 January 2018.

At advising, on 12 June 2018, the opinion of the Court was delivered by Lord Drummond Young—

Opinion of the Court— [1] The petitioners are six limited partnerships that carry on the business of farming on tenanted land, together with the general partners of those partnerships. They have raised proceedings for judicial review against Scottish Ministers, in which they claim that they have suffered loss in consequence of the making by Scottish Ministers of the Agricultural Holdings (Scotland) Act 2003 Remedial Order 2014 (SSI 2014/98) (‘the Remedial Order’). It is alleged that the making of the Remedial Order without express provision for the assessment and payment of compensation to the petitioners was in breach of the petitioners' rights under Art 1 of the First Protocol to the European Convention on Human Rights and Fundamental Freedoms, and was accordingly outwith the powers of Scottish Ministers or the Scottish Parliament in terms of sec 57(2) of the Scotland Act 1998 (cap 46).

History of the Remedial Order

[2] In general terms, the background to the petitioners' claims is as follows. The Agricultural Holdings (Scotland) Act 1948 (11 & 12 Geo 6 cap 45) conferred statutory security of tenure for an indefinite period on agricultural tenants, and the relevant legislation was re-enacted and consolidated in the Agricultural Holdings (Scotland) Act 1991 (cap 55) (‘the 1991 Act’). Far-reaching security of tenure was perceived as a problem by the owners of agricultural land, and it became common practice for landowners to circumvent security of tenure by granting leases of farms to limited partnerships in which one of the limited partners was an agent of the landlord, the general partner being the individual in charge of the farming operations. The limited partner was able to dissolve the partnership by giving the stipulated period of contractual notice. In this way the statutory security of tenure was rendered ineffective because, following the dissolution of the partnership, there was no tenant and the lease necessarily came to an end. The validity of such arrangements was upheld by the Court of Session in MacFarlane v Falfield Investments Ltd. A detailed account of the history of the legislation and the use of limited partnerships to avoid the effects of security of tenure is found in the opinion of the Lord Justice-Clerk in Salvesen v Riddell ((2012) paras 7 et seq).

[3] In MacFarlane v Falfield Investments Ltd it had been submitted that the use of limited partnerships was contrary to the public interest, and that the statutory security of tenure for agricultural tenants should be protected. While that argument was rejected by the court, it came to be recognised that there was a need for a new statutory structure for leases of agricultural land; in particular it was recognised that what was required was a system that could offer security of tenure to the tenant but which gave the landlord the prospect of recovering vacant possession at the end of a fixed term agreed at the outset of the lease...

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