Colin Douglas Richardson Whittle Ws+james Devas (the Trustees Of The Late Sit Denis Mortimer Mountain, Bt)+sir Edward Brian Stanford Mountain, Bt V. William Denis Charles Mountain+rory Patrick William Mountain
| Jurisdiction | Scotland |
| Judge | Lord Osborne,Lord President,Lord Emslie |
| Judgment Date | 28 September 2012 |
| Neutral Citation | [2012] CSIH 73 |
| Court | Court of Session |
| Published date | 28 September 2012 |
| Docket Number | XA1/12 |
| Date | 28 September 2012 |
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lord Emslie Lord Osborne | [2012] CSIH 73 XA1/12 OPINION OF THE LORD PRESIDENT in the Special Case under section 27 of the Court of Session Act 1988 for (1) COLIN DOUGLAS RICHARDSON WHITTLE WS and (2) JAMES DEVAS (the Trustees of the late Sir Denis Mortimer Mountain, Bt) First Parties; SIR EDWARD BRIAN STANFORD MOUNTAIN, Bt Second Party; and (1) WILLIAM DENIS CHARLES MOUNTAIN and (2) RORY PATRICK WILLIAM MOUNTAIN Third Parties: _______ |
For the First Parties: Sir Crispin Agnew of Lochnaw, Bt; Drummond Miller
For the Third Parties: Holmes, Solicitor Advocate; Turcan Connell
(non-participating party - the Second Party)
28 September 2012
Introduction
[1] This is a Special Case concerning the Trust Disposition and Settlement of the late Sir Denis Mortimer Mountain, Bt. The case is stated for our opinion only (Court of Session Act 1988, s 27). The first parties are the settlor's trustees. The second party is his elder son. The third parties are his younger son William and William's son Rory. The second party has signed the Special Case and is therefore bound by the outcome; but in the event has not compeared.
[2] At the date of his death the settlor owned the estate of Delfur, which included the farms of Woodhead and Mains of Cairnty.
The bequest
[3] Clause 3.4 of the Settlement sets out the following bequest:
"All land, forming part of Delfur Estate lying north of the Delfur Lodge woodland policies [which for the avoidance of doubt are excluded] but to include WOODHEAD and MAINS OF CAIRNTY FARMS and the other land running to the north together with the whole sporting rights thereon to my said Son WILLIAM whom failing to his eldest or only Son but both expressly subject to my Son William and his Son agreeing to rent the agricultural land to my Son Edward in his own right or in partnership as my Son Edward shall determine at local market rental values as shall be determined in the first instance by my Trustees, so long as Edward wishes to be involved in the farming thereof, declaring that my trustees shall arrange an agricultural lease arrangement in favour of Edward that will extend for Edward's life only but not thereafter whom also failing to my son EDWARD whom also failing to his eldest or only Son but subject to the provisions for payment and vesting aftermentioned."
The draft contract
[4] The second party and the third parties have agreed on the terms of a contract in intended implement of the condition that is attached to the bequest. It bears to be a lease granted by the first parties qua landlord in favour of the second party qua tenant with the consent of the third parties jointly qua consenters. It relates to all of the land referred to in the bequest, apart from a small area that is not relevant to this case.
[5] The relevant provisions of the draft are as follows.
"The Landlord, in part implement of ... [the Settlement], and with the consent of the Consentor, lets to the Tenant or any general partnership in which the Tenant is a bona fide general partner, but specifically excluding assignees, executors, sub tenants except as aftermentioned and survivors of any kind, for the lifetime of the Tenant only or for such lesser period as the Tenant shall farm as an individual or as a general partner in a bona fide partnership the agricultural land forming and known as Cairnty, near Fochabers, Moray ('the Farm') ... and that on the following terms and conditions:-
1 Non-statutory liferent
1.1 The liferent Lease granted by the Landlord to the Tenant does not fall under the provisions of the Agricultural Holdings (Scotland) Act 1991 ... nor the Agricultural Holdings (Scotland) Act 2003 ...
1.2 The Tenant shall not assign the Lease in whole or part;
1.3 The Tenant may not sublet the Lease in whole of part except for a sub grazing let on a less than 360 day basis, or as a winter let ...
1.4 The tenant may not bequeath this Lease by any instrument including a will of any nature whatsoever or otherwise to any successor inter vivos nor mortis causa.
2 Entry and duration
The Lease ... shall subsist until the earlier of
2.1 the death of the Tenant; or
2.2 the Tenant ceasing for his own part or as a general partner in a bona fide partnership to farm the Farm;
when it shall ipso facto terminate without the necessity for notice."
[6] The annual rent is to be £10,500 per annum with rent reviews every three years. If the first parties and the second party should fail to reach agreement at a rent review, either may refer the question to the Scottish Land Court (cl 3.5.4).
The trustees' concerns
[7] The first parties are concerned as to the effect of the proposed contract. They fear that it may qualify as a lease under the Agricultural Holdings (Scotland) Act 1991 (the 1991 Act) or under the Agricultural Holdings (Scotland) Act 2003 (the 2003 Act). If it will qualify as a lease under the 1991 Act, that is to say if it will confer on the second party a "1991 Act tenancy" as defined in section 1 of the 2003 Act; or if it will confer on the second party either of the limited duration tenancies for which the 2003 Act provides, the tenant's interest will be open to certain possibilities of succession on the death of the second party. The first parties are also concerned by the possibility of there being succession to the tenant's interest if the proposed contract is not governed by the Agricultural Holdings (Scotland) Acts. In any of these events, the granting of the proposed contract by the first parties would be contrary to the terms of the bequest.
The questions
[8] The Special Case sets out the following questions of law:
"1. Do the terms of the draft lease provide for a lease that will extend for the life of Sir Edward Brian Stanford Mountain Bt only and therefore comply with the requirements of Clause 3.4 of the Trust Disposition and Settlement?
2. Is it correct to say in Clause 1.1 of the lease that it is a liferent lease that does not fall under the Agricultural Holdings (Scotland) Act 1991 or under the Agricultural Holdings (Scotland) Act 2003?; and
3. Do the terms of the lease otherwise comply with the requirements of Clause 3.4 of the Trust Disposition and Settlement and that therefore the First Parties are empowered to grant the lease under the terms of the said Clause?"
The statutory provisions
The Leases Act 1449 (c 6 of the Record Edition)
[9] The Leases Act 1449 provides:
"Item it is ordanit and statute that for the saueritie and favor of the pure pupil that laubouris the grunde that thai and al uthiris that has takyn or sal tak landis in tym to cum fra lordis and has termes and yeris tharof, that suppose the lordis sel or analy thai landis, that the takaris sall remayn withe thare takis one to the ische of thare termez quhais handis at evir thai landis cum to for sic lik male as thai tuk thaim of befor."
[10] This is the source of the tenant's real right under a lease of heritable property and of the requirement that such a lease must have a fixed duration (Rankine, Leases, 3rd ed, pp 132, 139; Gloag, Contract, 2nd ed, p 233). I have quoted the text given in the Records of the Parliaments of Scotland to 1707, which contemporary scholarship suggests is more accurate than the Glendook duodecimo text of 1682 that was used by Rankine (loc cit); but nothing turns on that in the present case.
[11] Section 1(1) of the 1991 Act provides inter alia as follows:
"In this Act ... 'agricultural holding' means the aggregate of the agricultural land comprised in a lease, not being a lease under which the land is let to the tenant during his continuance in any office, appointment or employment held under the landlord."
Section 85(1) of the 1991 Act provides inter alia as follows:
"In this Act, unless the context otherwise requires-
... 'lease' means a letting of land for a term of years, or for lives, or for lives and years, or from year to year ... "
Section 11 provides inter alia as follows:
"(1) ... the tenant of an agricultural holding may, by will or other testamentary writing, bequeath his lease of the holding to his son-in-law or daughter-in-law or to any one of the persons who would be, or would in any circumstances have been, entitled to succeed to the estate on intestacy by virtue of the Succession (Scotland) Act 1964."
Section 11 also provides that in certain circumstances the Land Court may declare that the bequest is null and void (s 11(2)-(6)).
The 2003 Act
[12] The 2003 Act introduced two new forms of agricultural tenancy, namely the short limited duration tenancy (SLDT) and the limited duration tenancy (LDT).
[13] Section 4 of the 2003 Act, so far as relevant, provides as follows:
"(1) Where-
(a) agricultural land is let under a lease for a term of not more than five years;
(b) the land comprised in the lease is not let to the tenant during the tenant's continuance in any office, appointment or employment held under the landlord; and
(c) the lease does not constitute-
(i) a 1991 Act tenancy ...
the tenancy under the lease is, by virtue of this subsection, a short limited duration tenancy."
Section 5, as enacted, provided inter alia as follows:
"(1) Where-
(a) agricultural land is let under a lease for a term of not less than fifteen years;
(b) the land comprised in the lease is not let to the tenant during the tenant's continuance in any office, appointment or employment held under the landlord; and
(c) the lease does not constitute a 1991 Act tenancy,
the tenancy under the lease is, by virtue of this subsection, a limited duration tenancy ...
(4) Without prejudice to subsections (2) and (3), where a lease constituting a tenancy of agricultural land, as described in paragraphs (b) and (c) of subsection (1), purports to be for a term of more than five years and less than 15 years, the tenancy has effect as if it were for a term of 15 years; and the tenancy is, by virtue of this subsection, a limited...
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