THE COURT

(Lord McGhie, Mr J A Smith)

SALVESEN V RIDDELL

(Application RN SLC 3/09 – Order of 29 July 2010)

AGRICULTURAL HOLDINGS – LIMITED PARTNERSHIP TENANCY – LIMITED PARTNER BEING AGENT OF LANDLORD – NOTICE OF DISSOLUTION OF PARTNERSHIP VALIDLY GIVEN – NOTICE GIVEN ON 3 FEB 2003 – EXPECTED CHANGE OF LEGISLATION ON 4 FEB 2003 – RETROSPECTIVE CHANGE – NOTICE “OTHERWISE THAN FOR PURPOSE” OF DEPRIVING OF RIGHT – “DERIVING FROM THIS SECTION” – TRIGGER OR PURPOSE – CIRCULAR ARGUMENT THAT PURPOSE OF NOTICE COULD HAVE BEEN TO DEFEAT A RIGHT GIVEN BY THE NOTICE – WIDE OR STRICT CONSTRUCTION – GENERAL PARTNER – GENERAL PARTNER’S RIGHT TO CONTINUE IN OCCUPATION – NARROW CONSTRUCTION APPROPRIATE IF POSSIBLE TO AVOID ADVERSE RETROSPECTIVE EFFECTS – MISCHIEF OF SECTION – INFORMED INTERPRETATION – RESULT NOT CONTEMPLATED BY PARLIAMENT – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 2003 SECS 72 AND 73

The applicant who was owner of a farm entered a lease with a limited partnership as tenants. The lease had a conventional ish of 28 November 2008. The limited partnership was also due to come to an end at that date, provided notice was given. The position prior to the Agricultural Holdings (Scotland) Act 2003 was that, when the partnership ended, the tenancy would also cease to exist and the landlord would obtain vacant possession of the farm. The limited partner was an agent of the landlord. Notice of the intended dissolution of the partnership as at the agreed date was duly given on 3 February 2003. It was given on that date because it was expected that the Scottish Government would introduce an amendment to the Bill, relating to that Act, which might give additional rights to general partners. The applicant sought an order that section 72(8) of the Act did not apply to the tenancy. The dispute between the parties concerned the retrospective effects of the provisions of section 72 and 73 of that Act. It was accepted that where notice was given in terms of section 72(3) after 1 July 2003, the effect of section 73 was that the landlord could bring the tenancy to an end within three years of the end of the limited partnership. On the other hand, if the respondents’ contention was correct, where notice had been given between 16 September and 1 July 2003 a landlord would in effect be unable to terminate the tenancy other than under the established provisions of the 1991 Act. This, in effect, meant that the landlord might well be unable ever to end the tenancy. It was agreed that the apparent unfairness of the position of landlords who had given early notice might be explained by assuming that Parliament had not realised that a notice could not be unilaterally withdrawn.

HELD that it was not possible to construe the provisions in a way which avoided the result contended for by the respondents. It was noted that the landlords had expressly declined to invoke the Human Rights Act.

The note appended to the Court’s order is as follows:

Introduction

The respondents were general partners in a limited partnership which was tenant of Peaston Farm under a lease which had a conventional ish of 28 November 2008. The lease was subject to the provisions of the Agricultural Holdings (Scotland) Act 1991 and would, accordingly be expected to continue to run from year to year thereafter. However, the limited partnership was also due to come to an end at that date, provided notice was given. If it ceased to exist, the tenancy would also cease to exist and the landlord would obtain vacant possession of the farm. That was the position prior to the Agricultural Holdings (Scotland) Act 2003.

The applicant sought an Order that section 72(8) of the 2003 Act does not and has never applied to the tenancy. The dispute between the parties concerned the effects of the provisions of section 72 and 73 of that Act when notice of the intended dissolution of the partnership was given on 3 February 2003. We heard debate on 7 June 2010. Mr Lewis Kermack, Solicitor, represented the landlord and Mr Robert Sutherland, Advocate, represented the respondents.

Authorities

Aviemore Highland Resort Ltd v Cairngorms National Park Authority Sheriff Principal Inverness 26 June 2009
Isle of Gigha Heritage Trust v Heard 2007 SLCR 28
MacFarlane v Falfield Investments Ltd 1998 SC 14
Forbes v Fife Council Sheriff William Holligan 28 May 2009
Tuley v Highland Council [2009] CSIH 31

Statutes

Agricultural Holdings (Scotland) Act 1991
Agricultural Holdings (Scotland) Act 2003
Land Reform (Scotland) Act 2003
Limited Partnerships Act 1907

Other written material

Agricultural Holdings Proposals for Legislation May 2000
Bennion on Statutory Interpretation 5th edition
Stair Encyclopaedia, Volume 12

Relevant statutory provisions

The debate turned on the provisions of section 72 and 73 of the Agricultural Holdings (Scotland) Act 2003. These are in the following terms:

72 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 unless the conditions mentioned in subsection (5) are met.

(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 subject to subsection (4).

(4) Subsection (6) does not apply if —

(a) the conditions mentioned in subsection (5) are met; or

(b) the Land Court makes an order under subsection (8).

(5) For the purposes of subsections (2) and (4)(a), the conditions are —

(a) that —

(i) a (or the) notice of dissolution of the partnership has been (or was) served before 4th February 2003 by a limited partner mentioned in subsection (1)(b); and

(ii) the partnership has been dissolved in accordance with the notice; and

(b) that the land comprised in the lease —

(i) has been transferred or let;

(ii) under missives concluded before 7th March 2003, is to be transferred; or

(iii) under a lease entered into before that date, is to be let, to any person.

(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.

(7) Where —

(a) a tenancy continues to have effect by virtue of subsection (6); and

(b) the —

(i) notice mentioned in paragraph (a) of subsection (3) was served before the relevant date; or

(ii) thing mentioned in paragraph (b) or (c) of that subsection occurred before that date,

the landlord may, within the relevant period, apply to the Land Court for an order under subsection (8).

(8) An order under this subsection —

(a) is an order that subsection (6) does not apply; and

(b) has effect as if that subsection never applied.

(9) The Land Court is to make such an order if (but only if) it is satisfied that —

(a) the —

(i) notice mentioned in paragraph (a) of subsection (3) was served otherwise than for the purposes of depriving any general partner of any right deriving from this section; or

(ii) thing mentioned in paragraph (b) or (c) of that subsection occurred otherwise than for that purpose; and

(b) it is reasonable to make the order.

(10) Where —

(a) a tenancy continues to have effect by virtue of subsection (6); and

(b) the —

(i) notice mentioned in paragraph (a) of subsection (3) was served on or after the relevant date; or

(ii) thing mentioned in paragraph (b) or (c) of that subsection occurred on or after that date,

section 73 applies.

(11) For the purposes of —

(a) subsections (7) and (10), the relevant date is such date as the Scottish Ministers may by order specify; and

(b) subsection (7), the relevant period is the period from the relevant date to such date as they may so specify.

(12) In this section, the expressions, “limited partnership”, “limited partner” and “general partner” are to be construed in accordance with the Limited Partnerships Act 1907 (c.24).

73 Termination of tenancy continued under section 72

(1) Where this section applies, subsections (1) to (3) and (5) of section 21 (notice to quit and notice of intention to quit) of the 1991 Act do not apply in relation to the bringing of the tenancy to an end by the landlord.

(2) Subsections (4), (6) and (7) of that section apply in relation to subsections (3) to (5) as they apply in relation to subsections (1) to (3) and (5) of that section.

(3) The tenancy may be brought to an end by the landlord if the landlord gives a notice under this subsection to the tenant.

(4) Subject to subsection (7), a notice under subsection (3) must —

(a) be in writing and state that the tenant shall quit the land on the expiry of the stipulated endurance of the lease constituting the tenancy (or, where the lease has continued in force by tacit relocation, on the expiry of a period of continuation); and

(b) be given not less than one year nor more than two years before the expiry of the stipulated endurance of the lease (or expiry of the period of continuation), provided that not less than 90 days have elapsed from the date on which the intimation mentioned in subsection (5) is given.

(5) Subject to subsection (7), a notice under subsection (3) is of no effect unless the landlord has given written intimation of the landlord’s intention to terminate the tenancy to the tenant not less than two years nor more than three years before the expiry of the stipulated endurance of the lease (or expiry of the period of continuation).

(6) The landlord may apply to the Land Court for an order under subsection (7).

(7) An order under this subsection is an order that, instead of the periods of time mentioned in subsections (4) and (5), such shorter periods as the Land Court may specify are to apply.

(8) The Land Court is to make such an order if (but only if) it is satisfied that —

(a) service of the notice mentioned in paragraph (a) of subsection (3) of section 72, or the thing mentioned in paragraph (b) or (c) of that subsection, occurred otherwise than for the purposes of depriving the tenant (being then a general partner) of any right deriving from section 72; and

(b) it is reasonable to make the order.

Background facts

[1] In 2003, the farm was occupied by a limited partnership as tenants and the limited partner was an agent of the landlord. In terms of the Contract of Partnership, the partnership was to endure until 28 November 2008 “and from year to year thereafter unless Notice of Dissolution of the partnership shall have been given in writing not less than eighteen months prior to the term of Martinmas (Twenty-eighth November) in the year of dissolution”.

[2] Notice was given by the limited partner on 3 February 2003 that “unless previously dissolved on any other ground contained in the said Contract of Partnership” the limited partnership was to be dissolved on 28 November 2008.

[3] By letter of 12 December 2008 the general partners gave notice in terms of section 72(6) that they intended to become the joint tenants in their own right.

[4] It was not disputed that unless the Court made an order under subsection (8), the tenancy would continue to have effect under subsection (6). The substantive issue discussed at debate was whether the Court could be satisfied, in terms of subsection (9), that the notice of 3 February was served otherwise than for the purpose of depriving any general partner of any right deriving from section 72.

[5] The applicants averred that “On 3rd February 2003, the Scottish Parliament published a Marshalled List of Amendments … which included a proposed amendment … to the effect that any notice of dissolution of a limited partnership served on or after 4th February 2003 would not have the effect of terminating the tenancy which was held by such a limited partnership if the former general partner obtained an Order from the Land Court to the effect that it was unreasonable for the tenancy to be terminated. Accordingly, on 3rd February 2003, Anthony Whale, as limited partner of the Firm of John and Andrew Riddell, Farmers, gave notice … that the said firm would be dissolved on 28th November 2008, in accordance with the said Contract of Partnership as had been drawn to the attention of the Respondents on a number of occasions as having always been intended.”

Submission for the applicant

[6] Mr Kermack was asked to start by commenting on certain aspects of the new provisions. He said that it was accepted that where notice was given in terms of section 72(3) after 1 July 2003, the effect of section 73 was that the landlord could bring the tenancy to an end within three years of the end of the limited partnership. He said that if the respondents’ contention was correct, where notice had been given between 16 September 2002 and 1 July 2003, a landlord would be unable to terminate the tenancy other than under the established provisions of the 1991 Act. He agreed that, if the Court reached the stage of considering the issue of reasonableness in terms of section 72(9)(b), this contrast of effects might be a powerful consideration. He thought the apparent unfairness of the position of landlords who had given early notice might be explained by assuming that Parliament had not realised that a notice could not be unilaterally withdrawn. The parties were agreed that this could not be done. He indicated that the limited partner tried to take this course but the general partners had not accepted the withdrawal. But, he pointed out that any unfairness could be avoided by a strict construction.

[7] He accepted that the passage set out at paragraph [5] above, and taken from page 12 of the applicant’s pleadings, set out the reason for the notice being given on 3 February 2003 but stressed that there was a distinction between the “trigger” or “impetus” for an action and the purpose of that action. The impetus for the notice was publication of proposed amendment to the Bill; the purpose was “the landlord’s long held plan which he thought was being thwarted”. He pointed out that the landlord could have given notice at any time.

[8] Mr Kermack provided a written outline of his submission. This set out the background to the new legislation. He opened his substantive submissions by contending that the pleadings for the parties appeared to show a difference as to interpretation of section 72(9)(a)(i) of the 2003 Act and suggested that the difference was between a wide and a strict or narrow interpretation of the subsection. His submission was that a narrow construction was appropriate in the circumstances. He expressly said that he did not seek to invoke the European Convention on Human Rights in any way, but he submitted that, because the enactment had effect to take away common law rights from the applicant and purported to do so retrospectively, the provision in question should be strictly construed. The Court had accepted the need to take a strict view of the language of section 72 in Isle of Gigha Heritage Trust v Heard.

[9] Passages from the parties’ pleadings were cited as indicative of the contrast between a broad and narrow approach. The respondents had averred that: “The service of the Notice of Dissolution more than 5 years before the initial contractual period of the tenancy was as an attempt to deprive the Respondents of any rights under whatever provisions were eventually enacted by Parliament.” However, the applicant contended for a strict construction by which apparently was meant that the notice had to have had in mind the specific rights eventually given to the general partners by the Act. It was averred that the notice was served otherwise than for the purposes of depriving the Respondents of any right which might accrue to them under the section because any such right “could not be anticipated before the Marshalled List of Amendments was published” and because rights only accrued to the Respondents under the section “where a notice of dissolution was served … at any time after 16 September 2002”. It was contended that no other rights which might accrue to the Respondents deriving from section 72 could be identified.

[10] It was submitted that consideration of the position prior to the 2003 Act, demonstrated that it was accepted that a limited partnership tenancy was perfectly proper and not contrary to public policy: MacFarlane v Falfield Investments Ltd. A lease to a limited partnership was a 1991 Act tenancy which was no different from any other tenancy except that the tenant was vulnerable to dissolution.

[11] Mr Kermack took us through a range of materials showing the consultation process and the progression of the Bill relating to the 2003 Act. He produced a helpful bundle of relevant material. It is convenient to summarise the history under a separate heading at this point.

Parliamentary history

[12] The “Draft Agricultural Holdings (Scotland) Bill Consultation Paper” was published by the Scottish Executive in April 2002. Chapter 3 dealt with limited partnerships. It narrated that although there had been a request for limited partnerships to continue as an option, providing an effective and safe route to an agreed term tenancy, Ministers were determined that the limited partnership model should not be capable of enabling the rights and responsibilities introduced for new (our emphasis) tenancies by the Bill to be evaded. For that reason the draft Bill included provisions that would enable any party within a tenant partnership to assume the tenancy if the partnership was dissolved. It was said that it would also introduce “protections to enable that statutory rights for the tenant could be directed so as to benefit the de facto tenant”. Under discussion of “anti-avoidance” the Ministers set out their response as being that limited partners should in future (our emphasis) be debarred as a tenant to an agricultural holding. The draft Bill in section 42 – which was in some respects replicated in section 72 – referred expressly to a partnership tenancy entered after the commencement of this Act. It was not retrospective. The notes to that section stated explicitly that it was to apply to tenancies entered into in future but not to existing secure tenancies (our emphasis).

[13] The Agricultural Holdings (Scotland) Bill introduced on 16 September 2002 included section 42 of the draft Bill in a slightly different form but to the same effect. It was introduced as section 58. The notes at paragraph 148 made it clear that the section applied to tenancies entered into in future but not to existing 1991 Act tenancies.

[14] In proceedings before the Rural Development Committee at Stage 1 of the Bill, Ross Finnie MSP, Minister for Rural Affairs, gave evidence and was asked to clarify certain matters by letter. He wrote to the convenor on 25 November 2002. This letter made various references to anti-avoidance provisions to apply to tenancies entered into in the future although it did indicate that he had an open mind in relation to the provision of a right to buy for existing general partners. In the concluding stages the Rural Development Committee considered various proposals. There was a division on a proposal to give an absolute right to buy to secure tenants but the Committee eventually recommended that the Scottish Executive should undertake detailed re-examination of the extent to which the pre-emptive right to buy should apply to existing limited partnership tenancies.

[15] The Committee sat to consider Stage 2 of the Bill on 7 January 2003. The major outstanding issue concerned whether general partners within limited partnerships should be eligible to exercise the right to buy. This was a matter still under consideration by the Executive at that time.

[16] The Fourth Marshalled List of Amendments was published on the parliamentary website on 3 February 2003. Amongst the proposed amendments was amendment A169 which was the first time in the passage of the Bill that any proposal had been made that existing tenancies in which the tenant was a limited partnership were to receive any form of special treatment. Mr Kermack stressed that until that stage those promoting the Bill had never suggested that existing tenancies were to be struck at as in any way contrary to public policy. The earlier stages had proceeded on the basis of an expectation that, with the introduction of the Limited Duration Tenancy, there would no longer be a need for a limited partnership except in very limited circumstances. The discussions until February 2003 had been over proposals relating to new tenancies and the concern had been in connection with the proposals to give a tenant a right to buy.

[17] The amendment was on similar broad lines to the provisions eventually enacted as section 72, though differing in several respects. The first relevant provision was subsection (5) relating to notice of dissolution of the partnership by notice given by a limited partner during the period from 4 February 2003 to the relevant date. If that happened the general partner could apply to the Land Court for an Order that the tenancy should continue to have affect with the general partner as tenant in his own right. The Land Court was to make such an Order if it was satisfied that it was “(a) unreasonable for the tenancy to be terminated; and (b) reasonable to make the Order”: subsection (7).

[18] In course of the debate, Alan Wilson, the Government spokesman, said: “If the Committee agrees to amendment 169, landlords will be on warning from today that they had better have a good reason for initiating dissolution proceedings against a limited partnership”. He went on to say “the reasonableness test is obviously an important aspect of the new section that amendment 169 will add. We will liaise closely with the industry and the Land Court on how that might be refined. I acknowledge that a landlord might have several legitimate reasons for wanting to dissolve a partnership. It will be our job to work the reasonable test around them.” He went on to deal with a proposed amendment which would change the date of effect of the proposed new section from 4 February 2003 to September 2002 but he asked the members to exercise caution. He said: “We must be careful about taking action on notices that were served before today because landlords did not have forewarning or knowledge of what would happen”.

[19] On 10 March 2003, Ross Finnie wrote to the Chairman of the Land Reform Task Group on the Scottish Landowners Federation. He discussed the available evidence that a large number of dissolution notices had been served in the then recent past and said: “Our understanding is that the principal reason for such action has related to concern among landlords that the shape of the Bill might extend beyond the Executive’s proposals and, for instance, provide for an absolute right to buy or general and permanent extension of tenants rights to general partners in existing limited partnerships”. The letter went on to discuss the proposal that the Land Court would consider what were reasonable grounds. The writer continued: “The provision does not stipulate what would or would not be reasonable. However, a landlord might have reasonable grounds to dissolve the partnership to take land back for a purpose they had planned for some time or if they wanted to offer a new type of tenancy to the general partner. On the other hand, dissolution arising out of fear about the provisions of the legislation would clearly not be a reasonable ground”.

[20] Subsequently the Marshalled List of Amendments Selected for Stage 3 was produced. Among these were amendments 111 and 113. These provisions were eventually enacted in the form now taken by section 72 and 73. The Bill was passed by the Scottish Parliament on 12 March 2003 and received Royal Assent on 22 April 2003.

[21] Mr Kermack said that it was clear from detailed consideration of the parliamentary materials that the centrepiece of the legislation was to be Part 2, which dealt with the agricultural tenants’ pre-emptive right to buy. He said that the only concern relating to existing limited partnership tenancies up to February 2003 was as to how the right to buy could operate when the tenant was a limited partnership and the landlord had involvement. It was against that background that the amendment which was incorporated on 4 February 2003 and the further amendment incorporated into the Bill at Stage 3, immediately prior to enactment, should be seen. The emphasis was on the pre-emptive right to buy provisions. The provisions were adapted for limited partnership tenancies so that the general partners became entitled to register in their own name. He stressed that the landlord had never had any intention of selling and had no purpose relating to such provisions. Prevention of avoidance of the pre-emptive right to buy was an important part of the consideration of the Executive and of Parliament. There had been no parallel concerns expressed regarding any need to introduce wider protection or provisions to allow other statutory rights for the tenant to be applied to the general partners.

[22] Although the written outline did not attempt any direct analysis of the construction of the statutory provisions this matter was elaborated to some extent in Mr Kermack’s submissions. He said that it was clear that the purpose of the legislation as it was introduced was consistent with the narrow interpretation contended for on behalf of the applicant. Section 72 gave two types of right. The one relating to the right to buy had no bearing on the present circumstances. The other was the right given to a general partner to become tenant in his own name. That was the only other right set out in the section. But it was the notice which created the right. If there was no notice the general partners would never become tenants. He submitted that it could not reasonably be said that the purpose of the notice was both to create a right and deprive the general partner of such right. That was a circular proposition. It was absurd to suggest such a purpose. The right in subsection (6) only arose if the general partner gave notice to the landlord. It could not be imagined that the purpose of the landlord in giving notice was to create a new right in the tenant. That right, however, was the only relevant one given by section 72. Accordingly the notice plainly was given otherwise than for the purpose of depriving the limited partner of the only relevant right given by the section. This argument came to be referred to as “the circular argument”, although this was no more than a loose reference to the allegedly circular effect of the notice. It was not a reference to the nature of the argument.

[23] Mr Kermack contended that assistance could be given to the proper approach to section 72 by having regard to the statutory test enacted by the Scottish Parliament at much the same time: namely, section 14 of the Land Reform (Scotland) Act 2003. A strict interpretation had been applied in relation to these provisions and in particular in relation to the question of “purpose”: Aviemore Highland Resort Ltd v Cairngorms National Park Authority; Forbes v Fife Council; and Tuley v Highland Council. Purpose was subjective and he contended that it followed that it would not be possible to determine the limited partner’s purpose without hearing evidence.

[24] It was submitted that consideration had to be given to the structure of section 72 on its own and also to the structure of that section and section 73 as a linked pair of sections. They fitted into the structure of Part 6 as a whole. When properly viewed in this context it became plain that the wider construction contended for by the respondents could not have been intended by Parliament. He made specific reference to section 73(8) where the Court had to apply exactly the same test as section 72(9) but in circumstances where the landlord had the ability at his own hand to terminate the tenancy within three years and where the tenant was in the position of having lost the protection of security of tenure contained in sections 3 and 21 of the 1991 Act. As these provisions could not be thought to relate to depriving the general partner of security, the identical provisions of section 72 could not be taken to have that effect. It was also observed that the time-table provisions of subsections (4) and (5) were based on the time-table initially provided in relation to limited duration tenancies by section 8.

[25] It was important to have regard to the purpose of the legislation. It was suggested that, in considering that purpose, regard should be had to the fact that, in the present case, the tenancy had been running for two years before the tenant became a limited partner and, prior to that time, the tenant had simply been a general partnership. The tenant had volunteered to become a limited partnership during the operation of the tenancy. Mr Kermack made some reference, in this connection, to the terms of the Limited Partnerships Act as it stood prior to amended in 2009. We understood him to accept, however, that this history had no direct bearing on the proper construction of section 72 as applied to the notice of 3 February.

Submissions for respondents

[26] Mr Sutherland started by stressing that the provisions of section 72(a)(i) referred to depriving any general partner “of any right” deriving from the section. It plainly covered not only the right to buy but the rights provided under subsection (3) and (6). He also submitted that the supposed distinction between the “impetus” and the “reasons” for service of the notice was a false one. The Act dealt with a mischief which subsections (3), (6) and (9) struck at. This was clear from the parliamentary material. It was that purpose which was referred to in subsection (9). In short, the mischief was that of the landlord or limited partner serving notice in the hope of avoiding the consequences of the statutory provisions. He submitted that it was clear from the pleadings and also from Mr Kermack’s submissions, that this was exactly what the landlord was seeking to do.

[27] The landlord had had a long term plan for recovery of the farm which he thought would be thwarted and that is why he served the notice. This was particularly clear from the pleadings. It was asserted that on 3 February 2003 the Scottish Parliament published a Marshalled List of Amendments which included an amendment to the effect that any notice of dissolution of a limited partnership served on or after 4 February 2003 would not have the effect of terminating the tenancy. The landlords averments, quoted at paragraph [5] above, showed that the impetus for the notice was the list of amendments. The purpose was to avoid risk of security of tenure. The intention of subsection (9)(a) was to increase security of tenure for a general partner by converting the limited partnership to a 1991 Act tenancy unless the landlord could demonstrate a reason other than his desire to bring the land back in hand.

[28] It was, he said, necessary to look at section 72 as a whole. The scheme of the section was, effectively, to do two things. The first related to the right of the general partner to buy as if he was the tenant. This was subject to an exception where the landlord had contracted to dispose of the land. It was clearly intended to be a retrospective provision. It applied to notices served before 4 February 2003. The effect of subsections (3) and (6) was that any general partner could become a tenant on giving appropriate notice. Where such notice happened after 16 September 2002 it was subject to three exceptions or safeguards. There was the same protection as for subsection (2) and this applied when the landlord had disposed of the subjects in some way before 7 March. Counsel attempted to deal with the reference in the Act to “7 March 2003”. He explained that the Committee had met on 12 March but, although there was a convention that five days notice be given of proposed amendments this had not been happening in practice. However, 7 March was a Friday and it was probably thought that this would make a sensible fixed date prior to the final passage of the Bill. The important point was that the provisions were clearly retrospective because they referred to specific dates. There could, he suggested, be no question of a presumption against retrospective effect. If the notice was given after 1 July 2003 the provisions of section 73 applied. If it fell between 16 September 2002 and 1 July 2003 the tenant could apply under subsection (7) and the protection to the landlord was to satisfy the provisions of subsection (9). It was quite clear that the term “any right deriving from section 72” included rights arising from (3) and (6). Subsection (3) was clearly retrospective.

[29] There was plainly intended to be a differential effect in relation to notices served at different times. The provisions were express and there was no room for ambiguity. As all the various differences were set out explicitly they must have been intended. Mr Sutherland suggested that the intention was to encourage landlords and tenants to act in a cooperative fashion but if landlords did try to circumvent that cooperation, Parliament must have intended to punish them. He accepted that Parliament might have assumed that, faced with the provisions of the Act, a landlord or, strictly, his nominee in the partnership, could and would simply withdraw the notice. Accordingly things done with a view to avoiding the provisions of the Act would simply not be effective. Notice given after the relevant date, 1 July 2003 would have effect in accordance with the various provisions of sections 72 and 73.

[30] Counsel dealt with various rules of construction. If there was an ambiguity it was clearly proper to avoid an unreasonable construction. It was also necessary to construe all provisions in context and part of the context was the background parliamentary material. However, the Court required to apply the plain words where there was no ambiguity. Further, the Court could have regard to the purpose. The mischief which the statutory provisions were intended to deal with was service of notice of dissolution for no good reason.

[31] He accepted that the explicit provision related solely to rights given by “this section”. However, he submitted that if the purpose of the notice was to ensure that the tenancy did not survive the date set out in the agreement, that was struck at unless there was some other reason. He stressed that the averments demonstrated clearly that that was the very purpose. His approach was consistent with the provisions of section 73 and in particular 73(8). The important point was that motives would not generally be relevant if a notice was served after 1 July 2003. They would only become relevant if the landlord was trying to shorten the time period. That was how subsection (8) made sense.

[32] Mr Sutherland made reference to Bennion, part xiv, the “informed interpretation” rule. This allowed courts to have regard to the history of legislation. It was clear that the early proposals for legislation had no particular bearing on the matter. They concerned the right to buy and admittedly were expressed by reference to new limited partnership tenancies. The mischief of the section and the intention to make some provision relating to existing tenancies could be ascertained from the material published on and after 3 February 2003.

[33] He submitted that the Court should avoid any construction which had the effect of rendering any provisions wholly ineffective. It must be assumed that the Act was intended to have a purpose. It was necessary to attempt to find a meaning if any purpose could reasonably be divined. Plainly there had been concern about a rash of dissolution notices and concern about the motivation for these. Parliament had required to consider what had to be done. He made reference to Mr Finnie’s letter of 10 March 2003. This, he said, was not part of the parliamentary material. But it was one of the landlord’s productions and it had some relevance in that it tied into the parliamentary material. It was indicative of what Mr Finnie might regard as a good reason for notice but it pointed clearly to a concern about notices given where the impetus for notice was fear of the provisions of the legislation.

[34] The next development was the tabling of the amendments, sections 111 and 113. These were the amendments which are now enacted in sections 72 and 73. It was clear that the legislation treated a landlord who served notice in the period before 4 March more harshly than if this had been done before September 2002 or after 1 July 2003. This was expressly intended. It could not be argued that the legislature allowed the landlord to serve the notice saying that he was not caught by the provisions simply because he was confirming existing rights and long term plans. Any landlord could say that. That was why most limited partnerships were entered in the first place. It was clear that the notice served on 3 February was simply to avoid the potential consequences of the legislation. If that was the reason it was not acceptable.

[35] Counsel dealt with what Mr Kermack had described as the circular argument: that when the right in subsection (6) only arose if the limited partner had given notice it could not be imagined that the purpose of the notice was to create that very right. Mr Sutherland pointed out that the consequence of the circular argument would deprive the provision of any meaningful content. The Court had to proceed on the assumption that it was intended to have content. It could not simply choose a narrow approach to construction without being satisfied that there was an ambiguity which left such construction open. In any event, he contended that although there might seem to be a circular provision it was the only way the notice could be caught. To the suggestion that Parliament might have proceeded by setting out specific rights and then saying that any notice to defeat such rights would be struck at, Mr Sutherland responded by reference to the introduction of the amendments on 12 March. They had first been proposed on 10 March and introduced very quickly. The need for amendment was to catch this argument. He stressed that there was no need to interpret the legislation particularly strictly. There was a scheme and it had no ambiguity. It was plainly intended to be retrospective and to catch a particular notice. The onus was on the landlord to establish good reason. Questioned as to what the possible reasons might be he suggested that a landlord who wished to enter a new limited duration tenancy might have had that as a reason.

[36] Mr Sutherland was pressed on the reason suggested by Mr Finnie in his letter of 10 March as an example of a good reason. “A landlord might have reasonable grounds to dissolve the partnership to take land back for a purpose they had planned for some time”. He appeared to contend that this would not be a good reason. Pressed for examples of reasons for bringing a limited partnership to an end other than those which might relate to a tenancy, Mr Sutherland first referred to the situation of a tenant with no family who had entered a limited partnership freely agreeing that it should come to an end. It was suggested that it was not easy to find examples which might have been in the mind of Parliament, other than those related to a tenancy. Mr Sutherland said that there might be a limited partner who wished to invest without the risks faced by the general partner or a limited partner who was prepared to put a limited amount of money into the partnership. He accepted that these examples would be unlikely to apply where the partner in question was a representative of the landlord. However, another example was the possibility of concern under the Environmental Protection Act. If it became apparent that a general partner’s activities were going to give rise to a potential liability, the limited partner might have wished to bring the partnership to an end.

[37] Mr Sutherland concluded with comment on some specific aspects of the landlord’s position. The landlord’s pleadings had laid a great deal of stress on the possible risk of an absolute right to buy. But this had no bearing on the construction of section 72. If it had any bearing at all, it was simply to show that Parliament was minded, in general terms, to strengthen the hand of tenants. In relation to Mr Kermack’s submissions under reference to the Land Reform Act, his submission was that these authorities provided no help. The legislative history of that Act was not known. He accepted that any authority bearing on the word “purpose” might have to be considered but suggested that it was used in a wide variety of different situations. In the context of section 72(9) it simply directed the Court to what was the motivation for service of the notice. The question, he said, was: what was the “impetus” for serving this particular notice. He observed that, in the authorities cited, reference had been made to the need to avoid retrospective effect. However, he stressed again that this Act plainly was retrospective.

Discussion

[38] There was no dispute that, in the circumstances of this case, section 72(6) would apply to give the general partners the right to the tenancy unless the Court was satisfied that the Notice of Dissolution of the partnership “was served otherwise than for the purposes of depriving any general partner of any right deriving from this section”: sub section (9)(a)(i). It is accordingly necessary to consider the various elements in that provision. We heard discussion of the purpose of the landlord or limited partner in serving the notice and the nature of the rights which the general partner is given by the section, including the question of whether and to what extent the reference to rights “deriving from this section” meant more than a reference to rights explicitly given by the section.

[39] For the applicant, the debate was presented in terms of the need to take a “strict” as opposed to a “wide” approach to subsection (9). However, it may be misleading to think of the matter in terms of a wide or strict, or a broad or narrow, approach to the subsection as a whole. Construction requires to have regard to context but the scope for considering broad or narrow approaches lies primarily in analysis of the specific words and phrases as used by Parliament. We cannot adopt a construction which is not based on the actual language used.

[40] In considering the language of subsection (9)(a)(i) we look first at the word “otherwise”. A notice might well be served for a number of purposes. A construction favourable to the applicant would be that where there was a mixed purpose the Court could be satisfied that the notice was served “otherwise” than for the purpose of depriving the general partner of his rights. It would not have been served solely for that purpose. Such an argument might have required further consideration had the circumstances been such as to raise the question. As we have seen, however, the argument was not presented in terms of any combined purpose. In any event, we tend to the view that the straightforward construction is that subsection (9)(a)(i) requires us to be satisfied that the purposes for which the notice was served did not include the purpose of depriving the general partner of any right deriving from the section.

[41] In determining the purpose behind service of the notice we are satisfied that there is no need in this case to distinguish between the limited partner and the landlord. There was no attempt at debate to found on any such distinction although there was some reference to the subjective purposes of the limited partner. It was not disputed that the decision to give the notice was triggered by the publication of a proposed amendment on 3 February 2003. A distinction can be drawn between the trigger, or impetus, for a particular action and its purpose. The events which led to a particular thing being done on a particular day may well fall to be distinguished from the purpose of doing it. However the trigger and the purpose are not unrelated. Identification of the trigger may be a very clear pointer to the purpose. Where the trigger is intimation of a risk that a provision may be introduced to give a general partner some security of tenure on dissolution of the partnership, it is a reasonable inference that the purpose of the notice is to avoid this risk. It is beside the point that the landlord may have had good reasons for wishing to avoid the risk.

[42] Mr Kermack did say that he might seek to make further adjustment and also suggested that, as purpose was to be determined subjectively, it would always be necessary to have a proof to hear the limited partner’s own statement of his reasons for giving the notice. However, we are satisfied that we should proceed on the basis of the averments as they stand and on the assertions made in debate. The whole point of pleading is to give notice of the essential basis of the case. It is the landlord who requires to satisfy the Court under subsection (9) and it must be assumed that his assertions as to the reasons for the Notice being given are in line with his expectation of the tenor of evidence to be given by the limited partner.

[43] The reasons for giving the notice were described in different ways in course of the debate but it appears to us that the descriptions were substantially to the same effect. As we have seen, the assertion in the pleadings was that the notice was served because of the proposal that the Act would include a provision that any notice served after 4 February “would not have the effect of terminating the tenancy”. In the circumstances it is an inevitable conclusion that the main purpose of the notice can properly be described as being to avoid the risk that the Act would include a provision which would prevent the landlord from being able to terminate the tenancy at the agreed date.

[44] It may be that the purpose can be described in more basic terms as being to try to ensure that whatever new rights might be given to a general partner after 4 February, they would not affect the landlord’s right to recover possession in 2008. No other purpose was suggested although Mr Kermack expressed the matter in terms of implementing “the landlord’s long held plan which he thought was being thwarted”. If the purpose was to avoid the risk of the new provisions thwarting a plan by the landlord to take occupation of the farm, the aim must have been to try to avoid the effect of any new provision which would allow the general partners to remain in possession.

[45] The notice itself can be looked at more broadly. It was properly served in accordance with the law as it stood on 3 February. The aim was to preserve the rights of parties as they stood. It was not given with a view to defeating the possible effects of the Act by changing any existing understanding or plan. There was nothing unfair or under-hand about it. It might be said that it was not aimed at any rights conferred by, or derived from, the Act because no rights had been conferred at the time. But, however the notice itself is described, we have been unable to find a way of describing the purpose of serving the notice other than by reference to seeking to avoid the risk that the new Act would contain provisions preventing the landlord from exercising his rights to recover actual possession at Martinmas 2008. The limited partner served the notice on 3 February because of a perceived risk of the Act containing provisions adverse to the landlord’s right to recover possession.

[46] It can, of course, be said that section 72(9) does not make reference to the purpose of a notice being to avoid the “risk” of a general partner being given rights, it refers to depriving him of any right deriving from the section. At the date of service, the general partner had no rights under the section. However, we are satisfied that there is no relevant distinction to be drawn between an attempt to avoid risk of a provision being enacted and an attempt to avoid the effects of such enactment. Parliament plainly intended to cover the former and we are satisfied that a construction based on a distinction between risk and eventuality, in this context, would, indeed, deprive the provision of all content. As we see it, the real question is whether the provisions as enacted were outwith the scope of the perceived risk. As presented, that turned on the proposition that the only relevant right was that given by the notice itself.

[47] Before looking at the so-called circular argument, we should deal briefly with an argument which was not made explicitly but seemed implicit in some assertions: that is, an argument that the landlord’s purpose was the positive aim of obtaining possession on the agreed date in implement of his plans and not the negative one of preventing the general partner exercising any right he might be given to continue in possession at that time. We recognise that in ordinary language there are contexts where it would be normal to speak of a purpose of achieving a positive outcome but not to talk about the matter in terms of any purpose of avoiding an apparently matching negative. For example, a man who wants to watch the tennis on the family television set would not normally describe his purpose in terms of preventing his wife from watching the football. Where a landlord seeks to recover possession it can, accurately, be said that his purpose is to obtain the land for his own use rather than to ensure that the tenant does not retain possession. But we are satisfied that, at least in circumstances where there are only two possible outcomes, it is reasonable to see this as equivalent to preventing the unwanted alternative. There is nothing unusual about describing the aim of a landlord, seeking possession at the end of a tenancy, in terms of a purpose of preventing the tenant from continuing in occupation. The purpose of a notice to quit is commonly regarded as being to put the tenant out rather than to let the landlord in. In any event, we are satisfied that the purpose of a landlord in seeking to obtain possession on a specific date from the existing occupier cannot be said to be a purpose otherwise than that of preventing that occupier from continuing in possession.

[48] It may also be said that in analysing the provisions of section 72 in the context of the present case, the references to concern about the possibility of a right to buy appear to us to be misleading or distracting. It was stressed on behalf of the landlord that he was not concerned about the risk of a pre-emptive right to buy because his aim was to use the subjects himself and not to sell. But, the provisions of sub section (2) can simply be ignored for present purposes. We can accept that the notice was served for a purpose otherwise than for the purpose of depriving the general partner of any right under Part 2. There is nothing to suggest that the notice was triggered by any proposal relating to a right to buy. It may be added that we are satisfied that the various exceptions referred to in subsection (5) can also be ignored as having no bearing on the issue before us. Mr Sutherland’s submissions in relation to these provisions simply showed that Parliament had made provision to avoid the full effects of the section in relation to some events or arrangements in place before the Act came into effect. They do not cover the circumstances of the present case.

[49] We have found nothing in the authorities dealing with rights of access under the Land Reform (Scotland) Act 2003 to be of any assistance in relation to the issues now before us. In particular, we think it clear that the decisions in Forbes v Fife Council and Aviemore Highland Resort Limited v Cairngorms National Park Authority deal with quite different issues and are of no relevance. In Tuley v Highland Council the Inner House did have to consider the proper approach to a provision expressed in terms of purpose, namely section 14(1) of that Act. The decision supports the proposition that purpose normally has a subjective meaning but is also authority for the proposition that, in considering the purpose of particular actings, it is appropriate to look beyond the immediate effects. In the context of section 14 that meant, for example, that it was not sufficient to take the simplistic approach that construction of a fence which had the immediate effect of preventing or deterring access was done for the purpose of preventing or deterring persons from exercising access. It was proper to have regard to what the landlord wished to achieve. It was appropriate to consider the underlying purpose. In other words, the court accepted what was described as a “wide flexible approach” to the word “purpose”.

[50] We are not persuaded that acceptance of the need for a wide approach is capable of advancing the landlord’s argument in the present case. If the aim is to identify the real or substantive purpose we come back to our finding that the intention in serving the notice was to avoid the risk that the Act would include a provision which would prevent the landlord from being able to recover possession at the agreed date. Reference to what the landlord wished to achieve does not identify any significantly different purpose. We are satisfied that reference to any wider purpose behind his desire to obtain possession, such as the desire to amalgamate the farm into a bigger unit, is too remote and, in any event, does not get past the aim of preventing the general partner having an adverse right. The decision in Tuley does not appear to advance the landlord’s position because we accept, for other reasons, the broad proposition that if it is possible properly to read the Act in a way which minimises the adverse consequences for the landlord, we should, in the circumstances, read it in that way.

[51] Mr Kermack referred to our decision in Isle of Gigha Heritage Trust v Heard for the proposition that is was appropriate to take a strict approach to section 72. However, it may be noted that the Court was not concerned in that case with a choice between a wide or strict construction of any specific provision. The Court appeared to accept that the apparent broad intention of the legislation as a whole was not reflected in the particular provisions in question but said that the focus of the Court “had to be on the language actually used.” The language was unambiguous and had to achieve effect as there were no overwhelming considerations which might have led to a different result. We find nothing in that case to advance the landlord’s argument.

[52] We consider that the critical issue between the parties is the approach to be taken to identification of the rights which the general partners are given by the section. It seems clear to us that the essential right given to a general partner is the right to continue in occupation. But for section 72, a general partner would lose his right to occupy the farm on termination of the partnership by notice in accordance with the contractual provisions. Although expressed as a right to become tenant, the substantive right given to a general partner under the section is the right to continue in occupation after the end of the partnership. It is a right which arises when the partnership itself comes to an end. The substantive right given by section 72 - leaving aside subsection (2) - is to prevent a general partner from losing possession on the dissolution of the limited partnership. Even if it cannot be said that this is a right expressly given by the statutory provisions, we are in no doubt that this is a right which the general partner “derives” from the provisions of section 72.

[53] That may be described as a “wide” or “broad” approach to the section but it appears to us to reflect the substance of the provisions. It will only merit such description if some colourable alternative narrower construction can be found. As we are satisfied that the purpose of the notice was to preserve the landlord’s right to recover possession, that purpose was indeed to deprive the general partner of the right to continue in possession derived from the section. It accordingly appears to us that unless some narrow construction of the reference to “any right deriving from the section” can reasonably be found, it will not be possible to conclude that the landlord has satisfied us under the provisions of subsection (9)(a)(i).

[54] While urging a narrow approach, Mr Kermack expressly declined to refer to the European Convention on Human Rights and in the circumstances we consider it inappropriate to attempt any independent assessment of the possible implications of section 3 of the Human Rights Act 1998. But in construing any Act, the presumptions against retrospective effects or a presumption against interference with property rights without compensation or proportionate cause might be expected to lead to substantially the same result. We are sympathetic to the view that, in all the circumstances, a narrow approach to construction should be taken, if possible, to limit the adverse effects on the applicant.

[55] We accept Mr Sutherland’s contention that the landlord gets no support from any general presumption against retrospective effect. It is plain that Parliament did intend the provisions to apply retrospectively: subsection 3 is explicit in its terms. However, we accept that if a reasonable narrow construction can be found it would be proper to take such construction as representing the intention of Parliament. The purpose of the retrospective provision can reasonably be assumed to have been to defeat a landlord’s attempts to avoid the consequences of the Act. We do not accept that it is appropriate to start by assuming an intention to punish a landlord for making any such attempt although the possibility of such intention cannot necessarily be excluded. It is important to recognise that the notice was served quite properly in accordance with the law as it stood at the time and was aimed at preservation of the contractual rights which had been agreed between the parties. We have little doubt that the result it sought was what the landlord had always intended and, in any event, it is necessary for present purposes to make that assumption. We accept counsel’s contention that, in construing an Act of Parliament, if the choice is between a construction which is reasonably comprehensible and a narrower construction which would make the statutory provisions wholly ineffective, we must take the former. In other words, while we consider that as narrow as possible a construction should be given, it must be a construction which makes some sort of sense. We think that the real difficulty in the present case is to identify a narrow construction which could reasonably be thought to reflect the intention of Parliament. The Court could not proceed on an assumption that Parliament intended to pass legislation which was pointless or ineffective. Equally, it can be assumed that Parliament did not intend an absurd result. But a result which serves an explicable purpose does not become absurd merely because it may appear to have unexpectedly harsh consequences.

[56] We understood Mr Kermack to rely, essentially, on the proposition that in the circumstances of the present case the general partners had only two categories of right deriving from the section. He did not explicitly address the scope of the word “derived” but he contended that there was the right to buy, which was irrelevant, and the rights under subsection (6). The latter only arose where a notice had been served. It was contended that as it could not have been the purpose of the notice of 3 February simultaneously to create rights and then defeat them, it followed that the Court could be satisfied that the notice was served otherwise than for the purposes of depriving the general partner of the only relevant right deriving from the section. This came to be referred to as “the circular argument”. We mean no criticism of Mr Kermack in saying that it was presented in simple terms. It was plainly seen as something of a self evident proposition which required little elaboration.

[57] However, we have not found the argument persuasive. It seems to us that it does not give weight to the use of the expression “deriving from” in subsection (9). The substantive effect of section 72 was that where a notice relating to the partnership was required to bring a general partner’s occupation to an end, the occupation could continue despite any such notice. The notice did not create the right to occupy. If there was no notice a general partner would simply continue to possess and use the farm. Such notice did have the effect of changing a general partner’s title. Where the general partner gave notice under subsection (6), he would continue in occupation as tenant. But the important right was the right to occupy. The distinction can be drawn between rights which arise when notice is given and rights which are created by that notice. The right to occupy was a right which did not depend on the notice. The purpose of the notice in this case was to bring that right to an end.

[58] The circular argument was said to be based on a strict construction of the section 9. It may be noted that the strict construction for which the applicant contends in his pleadings is expressed in terms of rights “accruing” from the section. The term used in the Act is “deriving”. When considering the meaning of that word, we think it misleading and unhelpful simply to substitute another term. We do not accept that the word “accrue” is a popular equivalent for “derive” and find no warrant for its use as such a substitute. However, the argument for the landlord appears to require the term “deriving from” to be construed as equivalent to something on the lines of “conferred in express terms by”.

[59] The only relevant right conferred in express terms is the right of the general partner to become tenant in his own right on the termination of a tenancy by notice of dissolution served after 16 September 2002. The “circular argument” is based implicitly on such a proposition. We heard no other submission based on a strict construction. But, in any event, we are satisfied that there is no common law approach to construction which would justify us limiting the word “derived” in this way. It seems clear that this term must have been adopted for the very purpose of avoiding a strict approach to specific rights. A right to be tenant carries with it a variety of subsidiary rights. In the present context the most obvious and important one was the right to possession, or occupation, of the farm. That is a right which the general partner derives from the section.

[60] It is plain that Parliament had this right in mind because section 73 goes on to deal explicitly with the means of ending that possession. We noted that Mr Sutherland opened his submission by reference to the mischief which subsections (3), (6) and (9) were said to strike at. He described the mischief as that of the landlord or limited partner serving notice in the hope of avoiding the statutory provisions. However, we do not find it easy to identify the mischief behind the specified provisions. Their aim was not, primarily, to catch such notices. We think it tolerably clear, taking the provisions of the section as a whole – and again leaving aside the right to buy - that the mischief perceived in relation to the use of limited partnerships was that they were a device to allow landlords to recover possession. Prior to the Act most other potential claims by a tenant at termination, such as those related to improvements and way-going claims, could be agreed contractually between the landlord and the occupying party whether or not the tenancy was based on a limited partnership. In other words, the use of limited partnerships was not devised to deprive potential tenants of such rights. It was to ensure the right to recover possession.

[61] Apart from the reference to the “circular argument” discussed above, we have not been able to identify a narrow or strict construction of the statutory provisions which would lead to a finding that the right to continue occupation was not to be described as a right deriving from the section. Accordingly, we are unable to find that the landlord has satisfied the test of subsection (9)(a)(i). We did not hear of any potential strict construction which would have had a comprehensible effect such as might have been intended by Parliament. We have, in short, found no basis which would allow us to find in favour of the landlord under that subsection.

[62] Having considered the terms of subsection (9) against the background of the notice of 3 February it is appropriate to stand back and consider the broader scheme of sections 72 and 73. The former is, of course, a section which applies to all notices terminating a limited partnership. The Act appears to have the effect of creating four different classes of right in relation to a general partner. No attempt was made to identify the policy basis for the various distinctions. The first category is where the parties to a limited partnership tenancy had agreed that the partnership should come to an end on a fixed date without any need for warning or further notice. It was not disputed before us that such an agreement would remain effective. The tenancy would come to an end at the expiry of the agreed partnership. In other words, where the parties agreed that there should be no notice, Parliament accepted that the general partner should be bound by this. The second category is where notice was required but was given before 16 September 2002. The Act makes no attempt to interfere with the parties’ contractual agreement. For present purposes it is the third and fourth classes which are of significance having regard to the important distinction in effect between them. If notice was given in the period when the Act was, broadly speaking, at the Bill stage, and the Court cannot be persuaded that it can make an order under sub section (8), the notice will have the effect of creating the general partner as a fully secure tenant with all the rights of the 1991 Act. That is the third category. The fourth relates to notice given after 1 July 2003 - which is the relevant date in terms of sub section (10). In this category, if the court makes no order under subsection (8) the general partner will not be able to take over the tenancy on a “permanent” basis. His tenancy will be subject to section 73 which, in the normal course, gives no more than an additional three years occupancy beyond that initially agreed.

[63] In short, the substantive change brought about by sections 72 and 73 is that, unless the Court can make an order under subsection (8), the general partner will normally be given three years occupation more than the parties originally agreed except when the notice was given at the Bill stage where he will acquire a fully secure tenancy. On any view it is plain that Parliament intended that a notice dissolving a partnership would not end the tenancy if the court did not make an order under sub- section (8).

[64] Where a limited partner in a pre-Act tenancy now wishes to bring the tenancy to an end he will be able to do so, subject to a delay of three years. This, in other words, will fall into the fourth category. The landlord will be able to arrange for notice to be given terminating the partnership. His purpose will be to exercise the rights which were at the heart of the limited partnership in the first place. It will be to obtain possession of the subjects. The notice will trigger the general partner’s rights under sub section (6). The landlord will proceed in the knowledge that his right to recover possession is qualified by the provisions of sections 72 and 73. He will expect the tenant to give notice under sub section (6). He might well decide simply to accept that the general partner has become tenant. He would then give intimation under section 73(5) and, in due course, give notice under section 73(4). The effect of the rights conferred by section 72 and 73 would, in short, allow the landlord to give notice and give the tenant an extra three years, or so, of occupation. If the general partner exercises the right to give notice under that provision, the tenancy will continue unless the Court makes an order under sub section (8).

[65] The landlord might decide to seek such an order. He would reasonably expect to satisfy the Court in terms of sub section (9)(a) that his intention was to proceed in terms of the section rather than to circumvent it in any way. So there would be no purpose of depriving the general partner of any right. The Court would then require to consider the whole circumstances in order to determine, in substance, whether it was reasonable in terms of subsection (9)(b) that the parties should be limited to their original contractual arrangement or whether the general partner should be given the benefit of a tenancy, subject to section 73.

[66] Such a situation may be thought to contrast with that of the landlord in the present case. The landlord can hardly contend – and did not contend - that his purpose in serving the notice was to allow the tenant to exercise his rights under section 72. Had that been the intention it would have been appropriate, indeed necessary, to wait to see how the Act stood as enacted.

[67] Mr Kermack relied on consideration of the overall effect of the two sections in his submission based on the similarity between the provisions of section 72(9) and section 73(8). We understood it to be argued that as the provisions were essentially the same they required to have the same meaning and as the latter provisions only applied in a context where the tenant had lost the protection of possession given under sections 3 and 21 of the 1991 Act, the provisions of section 72(9) could not have been aimed at this. However, we have been unable to reach a clear view of how the context in which subsection (8) is to apply influences its meaning. Accordingly we cannot rely on any inference drawn from that provision as it appears in section 73 in relation to the proper construction of subsection (9) of section 72. As we have discussed, the principal right conferred by section 72 is the right to continue in occupation. Both provisions apply in that context although section 73 relates only to the duration of that occupation. Parliament has plainly decided that there is to be a difference in effect between notices given before and after 1 July 2003 but the difference in effect does not necessarily have a bearing on issues relating to the purpose of the notice.

[68] It may be appropriate to add a comment about the changes between the proposals intimated on 3 February and the provisions as eventually enacted. As we have seen the original idea was not that the general partner should have an automatic right to become tenant for three extra years subject to the landlord persuading the Court of a reason to the contrary. The proposal was that the general partner should have an opportunity to persuade the Court that it was reasonable that he become tenant. The differences are fundamental but not, we think, relevant to the issues now before us. The broad test of “reasonableness” initially proposed would, no doubt, have required the Court to consider the history of the arrangements between the parties. If the contractual agreement had been clear from the outset, it is not apparent what test of reasonableness we might have been able to apply in order to decide that such agreement should be set aside. On the other hand, the test of reasonableness in the provisions as enacted will normally have to be applied in circumstances where the only substantive issue is whether the general partner should have all or part of a three year extension of occupation. This may be expected to raise quite different considerations.

[69] The changes made also have a bearing on Mr Finnie’s observations in relation to the Government’s intentions as to the reasons for the giving of notice. He apparently contemplated that the Court might accept it as reasonable to terminate if the landlord had a positive long term plan to resume possession. We need say nothing of the reasonableness or otherwise of notice in such circumstances. The new provisions appear to have superseded any perceived need to consult with this Court as to how a test of reasonableness might be formulated. His comments do not appear to have any direct bearing on construction of subsection (9). The original provisions had no equivalent to that provision.

Decision

[70] We conclude that as the landlord’s purpose was to avoid the risk that his right to recover possession in November 2008 would be prevented by the new Act and as the right to prevent this was at the heart of section 72, we cannot be satisfied that the notice was given for a purpose otherwise than to deprive the general partners of a right deriving from that section. We cannot make an order under subsection (8).

[71] The result is unlikely to have been contemplated by the Parliament. The aim of sections 72 and 73 appears to have been to provide a general partner with an extra three years occupation. It may be that, in some circumstances, the general partner will obtain some additional rights as tenant, for example, in relation to claims for improvements. But, the main benefit will be the additional period of occupation. It is suggested in the Explanatory Notes that section 73 operates to provide a reasonable period of notice but, as we have seen, the Act does not attempt to interfere with the situation where the partnership agreement provides that it will come to an end without any notice. In the present case, the notice given was in excess of five years so the aim that tenants should get at least three years notice was met. On 3 February 2003 the landlord had a perfectly good right to give notice to recover possession at the agreed date, 28 November 2008. The retrospective effect of the Act is that as a result of the exercise by the landlord of that right, the general partners now have full security as tenants. By contrast with the notice given after 1 July 2003 that may be regarded as penal. It may be that Parliament assumed that a notice given under the partnership contract could simply be withdrawn, leaving the landlord free to fall in with the new scheme. Be all that as it may, we have had to construe the Act as it stands. We reach our conclusion with regret but we have not been persuaded that there is any reasonable alternative.

For the applicants: Turcan Connell, Solicitors, Edinburgh

For the respondents: Robert Sutherland, Advocate; Stronachs, Solicitors, Aberdeen

Note: this decision has been appealed to the Court of Session