Scottish Court of Session Decisions
You are here:
BAILII >>
Databases >>
Scottish Court of Session Decisions >>
URQUHART Re THE WINDING UP OF WEST LARKIN LTD [2022] ScotCS CSOH_51 (28 July 2022)
URL: http://www.bailii.org/scot/cases/ScotCS/2022/2022_CSOH_51.html
Cite as:
2022 SLT 851,
[2022] CSOH 51,
[2022] ScotCS CSOH_51,
2022 GWD 22-311
[
New search]
[
Printable PDF version]
[
Help]
OUTER HOUSE, COURT OF SESSION
[2022] CSOH 51
P922/21
OPINION OF LORD CLARK
In the Note of
AMANDA URQUHART and DEANNA URQUHART
Noters
for
orders under and in terms of sections 130(2) and 167(3) of the Insolvency Act 1986
in respect of the winding up of WEST LARKIN LIMITED
Noters: Dean of Faculty, Young; Currie Gilmour & Co
First Respondent: no appearance
Second and Third Respondents: O'Brien QC, Ower; TLT LLP
28 July 2022
Introduction
[1]
This case concerns statutory provisions which allow, in certain circumstances, a right
on the part of agricultural tenants to buy the land that was leased to them. The provisions
are set out in Part 2 of the Agricultural Holdings (Scotland) Act 2003 ("the 2003 Act"). The
noters claim that they have such a right. The area of land involved is known as Larkin Brae,
Inverness. It was formerly owned by Vastlands Property Limited ("VPL"). VPL leased the
land to members of the Urquhart family. In due course, the land came to be owned by West
Larkin Limited ("WLL"), a company controlled by members of the Sweeney family. The
Urquhart family (including the two noters in this case) and the Sweeney family (including
2
the second and third respondents) have been engaged in a long-running dispute about
the tenancy and whether there is any right to buy. WLL is now in liquidation. In this
application, the noters seek orders, in particular that missives should be concluded by
the liquidator of WLL for the sale of the land to the noters.
[2]
The noters contend that there is no sound defence and the order for missives to be
concluded should be granted de plano. The first respondent is the present liquidator of WLL.
He takes what is described in the pleadings as a neutral position in relation to the orders
sought. The second and third respondents oppose the granting of the orders. They aver
that the lease has terminated, because it ceased to be an agricultural tenancy, and hence
there is no right to buy. The second and third respondents say: (i) that there is a relevant
defence and that the case should be dealt with by a proof before answer; and (ii) that certain
averments of the noters (about personal bar) are irrelevant and should be excluded from
probation. The case called for a debate on those issues.
Background
[3]
On 29 October 1990, VPL offered to lease the land as an agricultural holding to the
second noter and her husband Mr Hugh Urquhart. They accepted the offer. A lease which
came to be within the Agricultural Holdings (Scotland) Act 1991 ("the 1991 Act") was
entered into, with a term of 25 years. WLL was incorporated in 1993 by members of the
Sweeney family, who lived near to the land. They did not accept that the tenancy had been
created. On or around 23 April 2003, WLL formally acquired the land from the Queen's and
Lord Chancellor's Remembrancer, following the dissolution of VPL. The background to that
acquisition was described by each party as complex. The main point is that the acquisition
related back to an earlier purported disposition by VPL to WLL, but as that was made prior
3
to the incorporation of WLL it was abortive. It is, however, undisputed that WLL became
the owner and the landlord and so it is not necessary to go into any further details about
the background to the acquisition of the land by WLL.
[4]
In about 2000, Mr Urquhart and the second noter commenced an ordinary action
in Inverness Sheriff Court against, among others, Mr Owen Sweeney and WLL seeking
declarator as to the existence of the tenancy, and an interdict against Mr Sweeney from
interfering with their peaceable possession of the land. Those orders were granted.
Notwithstanding that outcome, the parties have remained in dispute. In particular, various
members of the Sweeney family have consistently refused to accept the tenancy or the rights
of the noters to have possession of the land. There have been numerous litigations between
the two families over the years. Mr Urquhart died in 2005 and the first noter, his daughter,
acquired his interest in the tenancy in February 2006.
[5]
On 21 April 2006, in terms of Part 2 of the 2003 Act, the noters registered their notice
of interest in acquiring the land. The notice was registered in the Register of Community
Interests in Land ("the Register") by the Keeper of the Register. Thereafter, the noters
arranged to re-register their interest after every 5 years to avoid the registration ceasing to
have effect. The noters say that they intimated the notices of registration to WLL, but the
second and third respondents say they have no record of receiving the notices. However,
it did not appear to be disputed that the Keeper of the Register intimated them to WLL.
On 20 February 2019, the person then acting as the liquidator of WLL gave written notice
under the 2003 Act to the noters of a proposal to transfer the land. On 7 March 2019, the
noters executed a counter-notice under the Act of their intention to purchase the land.
In 2019, two separate Notes were raised in the Court of Session by Joseph Sweeney and
Donalda Sweeney (the second and third respondents in the present action). One of the
4
points argued in the Note by Joseph Sweeney was that the liquidator should be ordered
to challenge the noters' right to buy the land. That application was refused by the
Lord Ordinary and the decision was affirmed by the Inner House (Joseph Sweeney and
[6]
The second and third respondents contend, in their pleadings, that the noters
(and their family) had ceased to occupy the land, or to carry on any sort of agricultural
activity on it, by at least 2006 and hence have lost the right to buy. The land was said to
have been abandoned, left derelict and also not used for the purposes of a trade or business.
Accordingly, the lease is said to have expired on 29 October 2015 and, in any event, had
ceased to be "a 1991 Act tenancy" by then. The noters say that they have not (either
expressly or impliedly) abandoned the tenancy or any agricultural use of the land. The
tenancy had continued to exist by tacit relocation. No notice to quit had ever been given
by WLL to the noters. As a result of behaviour by the Sweeney family, the noters say that
the livestock eventually had to be removed from the land because it was unsafe to maintain
them. The second and third respondents dispute these allegations.
[7]
The noters accept that they had not, until recently, tendered any payment of ren t to
the present liquidator. The noters say that they had routinely sought to tender rent prior to
liquidation, but WLL and its agents routinely refused to accept it. Ultimately the noters say
that they ceased attempting to do so as it was futile. Following liquidation, the noters duly
tendered the outstanding rent to the former liquidator, who accepted it. Since the Note
raised in this court at the instance of Joseph Sweeney, the noters did not tender rent on the
basis that the whole issue was the subject of litigation. After it had been raised as an issue
by the present liquidator in his pleadings, the noters duly tendered the outstanding rent to
the present liquidator.
5
Relevant provisions of the 2003 Act
[8]
Part 2 of the 2003 Act deals with the tenant's right to buy land. The Keeper has to
keep the Register (section 24(2)). The tenant may apply to register an interest in acquiring
the land comprised in the lease (section 25(1)). Various matters must be specified in the
notice given by the tenant (section 25(3)). The owner must be sent a copy by the tenant
(section 25(4)). On receipt of the notice, the Keeper must register the tenant's interest and
send an extract to the tenant and the owner (section 25(5)) and a creditor who has a standard
security (section 25(6)). If the owner disputes "any matter contained in the extract of
registration" he can challenge the registration on the ground of inaccuracy (section 25(8)).
The Keeper then makes such enquiry as is considered appropriate, and if the inaccuracy is
material must rescind the registration of the tenant's interest (section 25(9)). Either party can
appeal to the Land Court against the Keeper's decision (section 25(11)).
[9]
Sections 25(12), 25(13), 25(15) and 28(1) are of major importance in this case and they
state:
"25
Registration of tenant's interest
...
(12)
A registration of a tenant's interest in acquiring land
(a) continues to have effect only in relation to such land as remains
comprised in the tenancy; and
(b) ceases to have effect
(i)
if the registration is rescinded;
(ii) if the tenancy is terminated; or
(iii) where neither of those things has occurred, at the expiry of
the period of five years from the date of registration.
(13)
Where
(a) the tenancy is terminated during that period; or,
(b) there is a reduction in the land comprised in the tenancy,
the landlord must give notice in writing of that fact to the Keeper.
6
...
(15)
The Keeper must remove from the Register any registration of a
tenant's interest in acquiring land which no longer has effect.
28
Right to buy
(1) Where a tenant's interest in acquiring land is for the time being
registered under section 25 and--
(a) the owner of the land or a creditor in a standard security with a
right to sell the land, gives notice to the tenant under section 26
of a proposal to transfer the land or any part of it; ...
the tenant has the right to buy the land to which the transfer relates
(including any interest or rights comprised in the land) from the owner or,
as the case may be, the creditor."
[10]
If a tenant's interest in acquiring the land is registered, section 26 (referred to in
section 28(1)), requires the owner to give notice to the tenant if the owner proposes to
transfer the land or any part of it to any other person. Within 28 days of receipt of the
owner's notice, the tenant may give notice that the tenant intends to buy the land
(section 29(2)). The procedure for buying is set out in section 32, including that the tenant
makes an offer to buy at a specified price. If the price is not agreed, a valuer is appointed
to set the price (section 33) and the owner or the tenant can appeal to the Lands Tribunal
against that valuation (section 37).
Order sought by the noters
[11]
The debate concerned the first order sought by the noters which is, under
section 167(3) of the Insolvency Act 1986, to direct the present liquidator to conclude
missives on behalf of WLL for the sale of the land to the noters, in accordance with the
provisions of Part 2 of the 2003 Act. The noters argued that this order should be granted
de plano.
7
Submissions
Submissions for the noters
[12]
The averments of the second and third respondents about the validity of the noters'
registration of interest in acquiring the land were irrelevant. The 2003 Act provides a
specific statutory right to buy, flowing from registration, and a statutory remedy for
challenging registration. Registration is a necessary precondition of the tenant's right to buy
the land. It confers a "contingent right to buy the land that will become en forceable if and
when the owner...should propose to transfer the land or any part of it to a third party...":
Gill, Agricultural Tenancies (4th ed), at 29-16. Section 28(1) of the 2003 Act made that clear.
Where Parliament creates a statutory right and a statutory remedy, it is not competent for
the court to ignore it. The Keeper of the Register is supposed to have an opportunity to
consider any challenge to the accuracy of the Register: Serup v McCormack & Others 2012
SLCR 189.
[13]
The 2003 Act confers exclusive jurisdiction for such challenges on the Keeper and
the Land Court. This court could not competently consider such a challenge: Barraclough v
Brown [1897] AC 615, p 620 (Lord Herschell), p 622 (Lord Watson); Grubb and Others v The
Perth Educational Trust 1907 SLT 492, p 493 (Lord Guthrie); Dante v Assessor of Ayr 1922
SC 109, p 121 (Lord Justice Clerk (Dickson)), pp 127-128 (Lord Ormidale); British Railways
Board v Glasgow Corporation 1976 SC 224, p 237-238 (Lord Justice Clerk (Wheatley)).
[14]
As the present liquidator takes a neutral stance and does not oppose the directions
sought, there is no relevant defence to the Note. In any event, the noters have a crystallised
right to buy the land flowing from the undisputed and unreduced exchange of the notice of
proposal to transfer and counter-notice under the terms of the 2003 Act in 2019. The second
8
and third respondents appeared to be inviting the court to just ignore important notices with
important legal effects under the 2003 Act without any relevant party seeking reduction of
them. But short of reduction, there is "no remedy known to our law of setting aside or
refusing to enforce a document": Eastern Motor Company Limited v Grassick 2022 SLT 139,
para [64] (Lord Pentland, delivering the Opinion of the Court).
[15]
In relation to personal bar, there was a relevant case averred by the noters that WLL,
and the present liquidator as its agent, are personally barred from challenging the validity of
the noters' registration and/or the existence of any tenancy. The requirements for a relevant
plea of personal bar, explained in Ben Cleuch Estates Ltd v Scottish Enterprise 2008 SC 252,
at [85]-[87] (Lord Macfadyen, delivering the Opinion of the Court), were met. Personal bar
can operate so as to create an enforceable right where there otherwise would not be one,
or by causing something that is not within particular statutory or contractual provisions to
be treated as if it were within those provisions: cf City Inn Limited v Shepherd Construction
Limited 2011 SC 127, [67]-[75] (Lord Osborne); McMullen Group Holdings Limited v
Harwood [2011] CSOH 132, [69]-[76] (Lord Hodge). Where personal bar prevents a challenge
to someone's right or title being advanced, there is little, if any, functional difference
between the defensive plea of personal bar and the positive creation of an independent and
freestanding right: Reid and Blackie, Personal Bar (2006), at 5-24 - 5-25. Moreover, any title
to challenge the existence or validity of the noters' tenancy or the registration of their
interests in the Register rests with WLL as the owner of the land. To the extent that the
second and third respondents have any title to advance these challenges in the present
process, they can have no better title than WLL and so are equally affected by any plea of
personal bar.
9
Submissions for the second and third respondents
[16]
Section 25 sets out a number of conditions which must be met for a registration of a
tenant's interest to be valid. The noters' argument that the effect of section 25(8)-(11) is to
create an exclusive jurisdiction for the Land Court in this matter was misconceived. Those
provisions create a regime for the correction of inaccuracies in registration. However that
regime is, necessarily, subject to the pre-conditions for validity which are set out in
section 25(12). On a plain reading of section 25, no registration can have effect where
no tenancy exists. That is axiomatic. By creating the procedure in section 25(8)-(11), the
legislature did not bring about the position contended for by the noters, that even where
the tenancy has come to an end or lost its agricultural character, the registration subsists
unless and until it is set aside by the Land Court. The legislature intended the regimes
under section 25(12) and sections 25(8)-(11) to sit alongside each other, and to co-exist. If
a registration has already become ineffective under section 25(12), there can be no need to
challenge its accuracy under section 25(8)-(11). Accordingly, if the noters' registration does
not meet the conditions set out in section 25(12), it is of no effect.
[17]
The circumstances described by Lord Watson in Barraclough v Brown were quite
different, as were those in the other cases relied upon by the noters. Section 25 provided
for a registration to lose effect by operation of law, without the need for proceedings in
any forum. Even if the noters' position was correct and some form of proceedings were
required, it was within the court's powers to find, in supervising the winding-up, that the
conditions for validity of registration set out in section 25(12) not having been met, and the
procedure provided for under sections 25(8)-(11) being superfluous and unnecessary in the
circumstances, the first direction sought by the noters ought to be refused.
10
[18]
If, against those submissions, the court decided that the procedure set out in
section 25(8)-(11) is mandatory in the circumstances, an opportunity should be afforded
to the liquidator to lodge a notice under section 25(8) with the Keeper. No time limit is
provided for the lodging of such notice. However, the result remains the same: the
conditions for validity under section 25(12) are not met.
[19]
If a registration has no effect in terms of section 25, then it cannot be relied upon to
meet the requirement for the tenant's interest to be "registered under section 25". Given
that the pre-conditions for validity of registration in section 25(12) were not met, the notices
exchanged were ineffective. This case was quite different from Eastern Motor Company
Limited v Grassick. The registrations here were already ineffective by operation of the
statute. There was no need for any further step to bring about that result. If the court
considered that the proper approach in the circumstances is for the second and third
respondents to amend to take a plea in law of reduction ope exceptionis, they offer to do so.
[20]
The noters' averments concerning personal bar were irrelevant. Personal bar cannot
operate to validate a registration which is invalid. The noters appeared to be using personal
bar as a sword rather than a shield, which cannot be done: Shaw v James Scott Builders &
Co [2010] CSOH 68, Lord Hodge at [64]; The Advice Centre for Mortgages v Mcnicoll 2006
SLT 591, Lord Drummond Young at [18] and [23]). It is not capable of creating any positive
right, far less one where the pre-conditions of section 25(12) of the 2003 Act are not met. The
acts of the former liquidator could not revive a long-extinguished lease. Personal bar does
not arise merely because a landlord accepts a legally erroneous view that a lease subsists:
Cantors Properties (Scotland) Ltd v Swears & Wells Ltd 1978 SC 310. Nor did the noters aver
any prejudice sustained by them, so as to make it unfair to allow the respondents' argument
to be advanced.
11
Decision and reasons
Issue 1: can the second and third respondents rely upon section 25(12) to challenge the
noters' right to buy?
The nub of the dispute
[21]
The noters' position is that section 25(8)-(11) deals with challenging registration and
that section 25(12) simply deals with events that might occur post-registration. In summary,
the second and third respondents say the intention of the legislature was that the regimes
under section 25(12) and section 25(8)-(11) were to sit alongside each other, and to co-exist.
So, they argue, the regime under section 25(8)-(11) only applies if the pre-conditions for
validity, provided in section 25(12), exist. Section 25(1) refers to the fact that a tenant of "a
1991 Act tenancy" may apply to have registered an interest in acquiring the land comprised
in the lease. As Lord Woolman observed in John Sweeney and Donalda Sweeney, Noters
(at [24]) "...if a lease ceases to be an agricultural tenancy, the lessee loses the right to buy".
However, when this matter was raised with senior counsel for the second and third
respondents, he noted that was said in the particular context of that case and in the present
case the ground of challenge was based on section 25(12), although that challenge was on
the same basis: that a 1991 Act tenancy was no longer in place.
The statutory scheme
[22]
In interpreting the language in a statute, the central point is identifying its purpose
and the general scheme by which the purpose is put into effect: R (Quintavalle) v Secretary
of State for Health [2003] 2 AC 687, Lord Bingham of Cornhill at [8]; Bloomsbury International
Ltd & others v Department for Environment, Food and Rural Affairs (Sea Fish Industry Authority
12
intervening) [2011] 1 WLR 1546, Lord Mance at [10]. The main purpose of the 2003 Act is to
seek to further improve, beyond the protections in the 1991 Act, the rights of farmers
who lease land for agricultural purposes. Putting it very broadly, the 1991 Act created a
long-term arrangement for the tenant farmer, at a rental cost which is economic and with a
right to adequate compensation for improvements made. It provided, among other things,
for a degree of security of tenure for the tenant by restriction of the operation of notices to
quit. The 2003 Act introduced two new types of fixed term tenancies (short limited duration
and limited duration) to create more ways of allowing farming tenancies, and most
importantly for present purposes, in Part 2 it introduced the scheme giving the "right to
buy".
[23]
The tenant's right to buy has been appropriately described as a "contingent and
restricted right of pre-emption" (Gill, Agricultural Tenancies 4th ed., at 29-01). That succinct
description captures the key points in the wording of Part 2. Section 28(1) states that "where
a tenant's interest in acquiring land is for the time being registered under section 25" the
right to buy applies. Registration, for the time being, is therefore a key factor. Registration
can, as explained earlier, be challenged (section 25(8)). It is important to note the wide scope
of the challenge to the accuracy of "any matter contained in the extract of registration". The
Keeper will then decide whether or not to rescind the registration (section 25(9)) and either
side can appeal against that decision (section 25(11)). Further, the owner must inform the
Keeper if the tenancy has terminated (section 25(13)) and the Keeper must remove any
registration that ceases to have effect (section 25(15)). But registration which persists gives
rise to the right to receive notice from the owner (or secured creditor) if he intends to
transfer the land, creating the right to buy (section 28(1)). Thus, the scheme is a discrete
13
set of provisions introducing a right to buy for the benefit of the tenant, subject to certain
contingencies and restrictions. The scheme sets out the process from start to finish.
Interpretation
[24]
In my opinion, it would not make sense to interpret the provisions in Part 2 of
the 2003 Act as giving a free-standing right to challenge under section 25(12) based on the
allegation of the tenancy no longer being a 1991 Act tenancy and having come to an end.
Under the scheme, where there is such an issue it is dealt with by a challenge by the owner
under section 25(8) or (if there is termination after registration) a notice by the landlord to
the Keeper that the lease has terminated, under section 25(13). The proposition that no
such steps are taken and the right to buy process proceeds to its final stages, but that there
remains a right to challenge under section 25(12), is not in my view correct. Among other
things, this approach leaves the registration in place, but asks that it be ignored. It also
proceeds on the basis that section 25(8) and section 25(13) are merely options and that a
broad right to challenge based on section 25(12) subsists, even when the right to buy has
been achieved. This would interfere with, and indeed usurp, the role of the Keeper and
the Land Court set out in Part 2 of the 2003 Act.
[25]
When one has regard to the purpose of the scheme and its context, section 25(12) has
a much more limited purpose. Section 25(12) is dealing with how alterations to the tenancy,
after registration of the tenant's interest to buy, can affect the registration. It is not setting
out pre-conditions for registration, as the second and third respondents argue. The
reference (in section 25(12)(a)) to the registration continuing to have effect only in relation to
such land as remains comprised in the tenancy is dealing with a situation in which there has
been a reduction in that land, after registration. Section 25(12)(b) deals with the registration
14
ceasing to have effect, firstly if the registration is rescinded (which the Keeper could do
under section 25(9)(a)) or secondly "if the tenancy is terminated", again after registration.
It is notable that section 25(13) refers to "if the tenancy is terminated during that period"
which can only be a reference to the period stated in the preceding sub-section: "five years
from the date of registration". The registration gives rise to consequences, but it may not
continue to have effect or may cease to have effect if the circumstances just noted arise after
registration and the Keeper is notified by the landlord and removes th e registration.
[26]
Here, the second and third respondents' challenge is that there was no longer a
1991 Act tenancy from 2006, and the lease terminated in 2015. But in fact registration
occurred thereafter (in 2016 and then in 2021). Put shortly, section 25(12) deals with
the specified forms of challenge to registration occurring within a period of 5 years after
registration by notification to the Keeper. It does not allow the much broader form of
challenge made by the second and third respondents.
[27]
It might be said that this approach to interpretation could result in a person who
wrongfully claims to be a tenant under a 1991 Act tenancy, and registers an interest in
buying the property, succeeding in buying it if the registration is not challenged under
section 25(8) or by notice under section 25(13). However, it is equally clear that the owner
will have notice of the registration (including from the Keeper) and will be fully able to
challenge it, if it is in any way inaccurate or, for example, if the tenancy has terminated
after registration. Further, the owner can readily (and indeed must) draw to the Keeper's
attention any reduction in the land comprised in the tenancy or the termination of the
tenancy. The owner is therefore adequately protected by the scheme, albeit that the owner
must respond and challenge the tenant's position. The owner may also take other steps, to
which I shall now turn.
15
Proceedings outwith the scheme
[28]
The 2003 Act amended the provisions of the 1991 Act in respect of jurisdiction of the
Land Court and significantly extended that jurisdiction, allowing a wide range of remedies,
including declarator. In Fyffe v Esslemont, Scottish Land Court, 28 March 2018, a landlord
sought declarator that there was no longer a 1991 Act tenancy, because agricultural use had
ceased. The Land Court held that it was open to the landlord to seek declarator (as occurred
in England in Wetherall v Smith [1980] 1 WLR 1290), that the protection of the statute is lost if
agricultural activity is wholly or substantially abandoned during the course of the tenancy.
The case did not involve the right to buy provisions in the 2003 Act, but it illustrates that
action can be taken to seek such a declarator.
[29]
In Serup v McCormack & Others, registration of an interest to buy in relation to a
1991 Act tenancy was made by a purported tenant in 2005 and again in 2010. The applicant
sought various orders to the effect that the respondent had no current rights as a tenant in
relation to the farm, including declarator that the agricultural lease had been extinguished.
Those orders were granted, although the tenant was found to have entered into a limited
duration tenancy thereafter. The case was described by the Land Court as an ordinary
application, but in respect of the fourth order, which sought to ordain the Keeper of the
Register to remove the entry in the Register based on the respondent's supposed interest as a
tenant under the 1991 Act, the court said that crave "should properly be viewed as an appeal
in terms of sec 25 of the [2003] Act". The court also noted that it was "not clear from the
pleadings what stage any procedures under sec 25 (8) and (9) had reached before the present
action was raised".
16
[30]
Accordingly, Serup involved a direct application to the Land Court, in which it
was held inter alia that the 1991 Act tenancy had been extinguished in 1993 by virtue of the
respondent's acquisition of a one-half share of the farm, but one crave, for actual removal of
the entry in the Register, was regarded as in effect an appeal under section 25(11) of the
2003 Act. The existence of a 1991 Act tenancy can therefore be challenged in an ordinary
application to the Land Court, and if removal from the Register is also sought t hat can be
viewed as an appeal.
[31]
In the present action, counsel made no submissions about these other means of
challenge, presumably because they differ from the second and third respondents' position
here, which is that section 25(12) allows their defence to the Note. However, the decision
in Serup illustrates that, where registration has occurred, there is a need to apply the court's
finding about extinction of the lease and have the Keeper rescind the registration. It shows
that the scheme and the role of the Keeper must be respected: to bring the process of right to
buy under the scheme to an end, that matter is to be raised with the Keeper. The decision in
Serup also shows that, in a case where the tenancy was held to be extinguished long before
registration, section 25(8) is the method of challenge and not section 25(12), which fits with
the interpretation I have reached. Fyffe v Esslemont is of course different because there is no
reference to registration and so the statutory scheme did not require to be engaged. But if
there had been registration, then no doubt a section 25(8) challenge could have been made.
[32]
Under the 2003 Act, there are restrictions on the use of a notice to quit by the
landlord. However, when such a notice can be served, as was pointed out by Lord Gill in
Trustees of the North Berwick Trust v James B Miller & Co [2009] CSIH 15, registration of the
tenant's interest does not restrict any right the landlord may have to terminate the tenancy
and, following such termination, the landlord may proceed to sell the relevant land with
17
vacant possession. This is an example of a termination of which notice may then be given
by the landlord to the Keeper under section 25(13) so as to have the registration removed.
[33]
It is not necessary to identify all of the means by which the owner or landlord can
seek to challenge the tenant's position, but the short point is that the owner or landlord is
able to bring proceedings about the tenancy being extinguished or no longer being a
1991 Act tenancy. However, as the scheme is the statutory process giving rise to a right to
buy, the steps necessary to stop that right progressing must be taken, by a challenge under
section 25(8) or a notice of termination under section 25(13).
Conclusions on Issue 1
[34]
For these reasons, in my opinion, section 25(12) does not cover an allegation that
in 2006 the land ceased to be a 1991 Act tenancy and the tenancy came to an end in 2015. It
is not in dispute that for at least many years this was a 1991 Act tenancy. Notices of interest
were registered on the dates referred to by the noters. No challenge was made by the owner
under section 25(8) and no notice of termination was given under section 25(13). As
observed earlier, an application to the court by the second and third respondents to have the
court ordain the former liquidator to intimate a challenge under section 25(8) was refused.
No other challenge, outwith the scheme, was made by the owner. In fact, the owner (at that
time, the former liquidator) gave notice under the scheme of his intention to transfer the
land. Accordingly, the registration did not cease to have effect, so that section 28(1) came
into play. The noters responded under the scheme, giving notice of their intention to buy
the land. The second and third respondents have presented no relevant defence to
enforcement of that right.
18
Ancillary issues
[35]
The decision on interpretation resolves this first issue, but it is appropriate also to
deal with four ancillary points that were raised.
(1)
Challenge by persons other than the owner
[36]
Part 2 of the 2003 Act is about the parties to the lease: the landlord (or owner)
and the tenant. The scheme does not allow interested parties, such as the second and third
respondents, to mount a challenge under section 25(8) or to give notice under section 25(13),
and of course they have not sought to do so. These provisions refer to the owner or
landlord. I can see no basis in the statute to suggest that the second and third respondents
can raise arguments under section 25(12) at all, let alone when the owner has not challenged
under section 25(8), has not given notice of termination under section 25(13) or used any
other means of challenge, and indeed the owner's agent (the former liquidator) has issued a
notice under section 26, clearly proceeding on the basis that the registration of interest by
the noters was valid. The second and third respondents' challenge based on section 25(12)
would have failed for this reason alone. The question of whether an interested party could
in a court action seek declarator that the tenancy is no longer a 1991 Act tenancy, and
perhaps also reduction of the notices exchanged, and thereafter have the registration
removed from the Register was not raised in this case. However, to seek to unravel the
tenant's right to buy under the scheme an interested party would need to find some other
form of remedy than those made available to the owner or landlord within the scheme.
19
(2)
Reduction
[37]
The former liquidator's notice of proposal to transfer and the noters' counter -notice
give rise to the right to buy (section 28(1)). If, contrary to my decision, the second and third
respondent's position on interpretation had been correct, it would have been necessary for
them also to have sought reduction of the notices in order to avoid the right to buy. I do not
accept their contention that reduction would be of no relevance and indeed not required.
Without reduction, a purportedly extant statutory right to buy would remain in place.
It would not simply be set aside or refused to be enforced, there being no such remedy:
Eastern Motor Company Limited v Grassick (Lord Pentland, giving the Opinion of the Court,
at [64]). If I had found in favour of the second and third respondents' interpretation, the
suggested amendment to seek reduction ope exceptionis would have been considered.
(3)
Jurisdiction
[38]
Again, if contrary to my decision the interpretation put forward on behalf of the
second and third respondents is correct, on that hypothesis this court would have been able
to determine the matter. It is plain that there are specific provisions about the role of the
Keeper and the Land Court, but the second and third respondents' interpretation would
have given a free-standing right to challenge, unfettered by those provisions. For the
reasons given however, I have rejected that position. Any challenge under section 25(8)
gives exclusive control to the Keeper and jurisdiction for an appeal only to the Land Court.
In light of the express provisions, I do not consider it necessary to embark on a detailed
analysis of the authorities on jurisdiction. In relation to section 25(12), a notice under
section 25(13) about termination of the tenancy or reduction in the land comprised in it falls
within the province of the Keeper, who may make a decision under section 25(15) to remove
20
any registration which no longer has effect. There is no express provision that such a
decision can only be appealed to the Land Court. But as the second and third respondents'
grounds are not the true form of challenge under section 25(12) no further comment is
needed in relation to jurisdiction on that matter.
(4)
The position of the current liquidator
[39]
On behalf of the noters, it was submitted that as the present liquidator has not
challenged the order sought, that suffices to allow it to be granted. The position for the
second and third respondents is that the present liquidator considers that matters are best
resolved between them and the noters, but that did not mean that he was entirely neutral
and in fact he was considering his position. It was submitted that if the court felt that the
current challenge should fail, the case should not be determined now and the liquidator
should be allowed to make a challenge, if so advised. I see no basis for that proposal. Senior
counsel for the liquidator, at the procedural hearing, advised the court that he did not wish
to appear at the debate. The liquidator has had ample time to consider his position and
reach a view on what steps, if any, he wishes to take. His entirely candid pleaded position is
that he neither opposes or supports the first order sought by the noters and that the proper
contradictors are the second and third respondents.
Issue 2: Crystallisation of the right to buy
[40]
There is no time limit for a challenge under section 25(8) and the wording in Part 2
does not expressly require any such challenge to be made before the notices on either hand
have been intimated. However, the legislation is clear that once the notice from the owner
has been intimated the right to buy exists (section 28(1)) and the tenant can take it forward to
21
completion (section 29(1) and (2)). So, if the tenant gives a notice in response that he intends
to buy the land, the right becomes enforceable. There was of course no challenge under
section 25(8) by the landlord or liquidator here. I conclude that the noters' right has
crystallised by virtue of the exchange of notices. The scheme has been followed through
to its final stage by the owner and the tenant. The deal has in effect been done, subject
to valuation. It cannot now be recanted by a challenge under section 25(12). Even if the
interpretation put forward by the second and third respondents in relation to section 25(12)
had been correct, it would come too late to seek to interfere with the crystallised right to
buy. On this ground alone, the noters' claim succeeds. I would, however, observe that this
decision is made on the basis of a purported challenge under section 25(12). No question
was raised about whether another form of challenge seeking positive orders, outwith the
scheme, could succeed in prohibiting the enforcement of the right to buy and I reserve my
position on that matter.
Issue 3: Personal bar
[41]
In light of the decisions I have reached, the issue of the relevancy of the noters'
averments on personal bar does not arise. However, it is appropriate that I express my
views on it. The noters contend that the first respondent (the present liquidator) and,
insofar as relevant, the second and third respondents are personally barred from seeking
to challenge the noters' registration and/or the existence of the tenancy as an agricultural
holding. The conduct relied upon is the former liquidator voluntarily acting in a manner
inconsistent with any intention to challenge the noters' registration and/or the continuing
existence of the tenancy as an agricultural holding, particularly by accepting payment of
rent from the noters and by serving the notice of proposal to transfer. In reliance on those
22
actions, the noters are said to have acted to their prejudice. This argument appears to
proceed on the hypothesis that the second and third respondent are able to mount a
successful challenge under section 25(12). If that is so, and the tenancy ended in 2015,
the personal bar claim is effectively about giving rise to a right that could never have arisen,
just as a result of the former liquidator serving a n otice and accepting a single payment of
rent.
[42]
The cases principally relied upon by the noters (City Inn Limited v Shepherd
Construction Limited 2011 SC 127 and McMullen Group Holdings Limited v Harwood
[2011] CSOH 132) do not assist. These concerned waiver being asserted in an existing contractual
relationship, to cause something which did not come within the terms of a contractual
provision to be treated as if it did. That is quite different from (if the second and third
respondents' case on interpretation had succeeded) the creation of a right which could not
legally have come into existence. One cannot use personal bar to set up a contract which no
longer existed at the time when the alleged actings took place: Cantors Properties (Scotland)
Ltd v Swears & Wells Ltd (Lord Cameron at p 322). If, contrary to my decision, the
registration was ineffective for the reasons argued on behalf of the second and third
respondents, I would have endorsed their position that personal bar could not create a right
that had already been extinguished.
[43]
Further, this is not a case where the noters contend that the words or conduct of
the former liquidator justified them in believing that a certain state of facts existed and
they acted upon such belief to their prejudice, as is required for personal bar: Gatty v
Maclaine 1921 SC (HL) 1, Lord Birkenhead (at p 7). The noters already believed that they
had a right to buy and that the owner would require to give notice. It has not been
suggested that the noters felt they had no such right or that it was only a possibility.
23
They were therefore not induced into that belief by the words or conduct of the former
liquidator (see Cantors Properties (Scotland) Ltd v Swears & Wells Ltd, Lord Johnston, at p 326).
Moreover, no averments are made about conduct on the part of the present respondents
which could give rise to personal bar in relation to them.
[44]
For all of these reasons, had the second and third respondents succeeded in relation
to interpretation, I would have held the noters' averments on personal bar to be irrelevant.
Conclusions
[45]
The noters' application for decree de plano succeeds because (i) the second and third
respondents' interpretation of section 25(12) of the 2003 Act fails and hence they have no
valid defence; and (ii) in any event, the noters now have a crystallised right to buy the land.
Disposal
[46]
I shall therefore repel the pleas-in-law for the second and third respondents and
grant the first order sought by the noters. That order is, under section 167(3) of the
Insolvency Act 1986, to direct the first respondent (the present liquidator) to conclude
missives on behalf of WLL for the sale of the land to the noters, in accordance with the
provisions of Part 2 of the 2003 Act. All questions of expenses are reserved.