DIVISIONAL COURT

(Mr D J Houston)

MACDONALD v SOUTH UIST ESTATES LIMITED

(Application SLC 116/11 – Order of 11 June 2012)

CROFTS – RIGHT TO ACQUIRE CROFT LAND – NO ATTEMPT TO NEGOTIATE – NO FAILURE TO AGREE – APPLICATION INCOMPETENT – DISMISSAL – CROFTERS (SCOTLAND) ACT 1993 section 12(1)

A crofter sought an order authorising her to acquire croft land occupied by her. Section 12(1) of the Crofters (Scotland) Act 1993 provides that “A crofter may, failing agreement with the landlord as to the acquisition [of croft land] … apply … for an order authorising … acquisition”.

The landlord respondent took a preliminary plea to the effect that the application was premature and incompetent, on the basis that there had been no attempt made by the crofter to agree terms for purchase and so the requirements of section 12(1) had not been satisfied.

It was not disputed that the application was the first intimation from the tenant to the landlord that she wished to acquire her croft land. The landlord argued that litigation should only be used where there was a dispute and that the words “failing agreement” should be given their ordinary meaning: there had been no attempt at agreement, accordingly there could be no failing.

The Court accepted that the words “failing agreement” must have been intended to have some meaning and effect. In dismissing the application, the Court HELD that a natural interpretation of the wording of section 12(1) of the 1993 Act supported the view that there had to have been some attempt to negotiate, followed by an element of failure, before a crofter could avail himself of the provisions of the section.

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

[1] This is one of two applications in which the crofter seeks to acquire title to the croft land occupied by her. The applications are brought under Section 12 of the Crofters (Scotland) Act 1993 (the 1993 Act).

[2] At the outset, is important to note that the applications were received by the Court on 30 June 2011, the day before section 40 of the Crofting Reform (Scotland) Act 2010 (the 2010 Act) came into force. Section 40 of the 2010 Act inserted a new section (1A) into section 13 of the 1993 Act. The new section 13(1A) provides that only a member of the crofter’s family may be a nominee of the crofter for the purposes of an order made by the Court in respect of an application under section 12. The new section 13(1A) does not apply to any application made to the Court before 1 July 2011. Accordingly, were the present applications to be successful, there would be no limitation on the crofter’s ability to nominate a disponee outside her family. Although it is irrelevant to the issue which we deal with in this Order and Note, it is clear that the applicant seeks to take title to her crofts in the name of nominee companies. Other than by agreement, it would not be possible for her to do so on the basis of an application lodged on or after 1st July 2011. Accordingly, we well understand that success in this application is of importance to her.

[3] But the question of whether the new section 13(1A) of the 1993 Act applies to the application is irrelevant at this stage. The matter before us is whether the application lodged on 30 June 2011 is premature – or more precisely competent – or not. The answer to that question depends, as has been clearly set out in the respondents’ submissions, on our interpretation of section 12(1) of the 1993 Act. That provision has not been changed by the 2010 Act – so our consideration of the issue here is not affected by the date of the application.

[4] The provision in question is as follows:-

12(1) A crofter may, failing agreement with the landlord as to the acquisition by the crofter of croft land tenanted by him, apply to the Land Court for an order authorising him to make such acquisition.

[5] In their answers to the application, the landlords, South Uist Estates Ltd, took – and subsequently insisted upon – a preliminary point to the effect that the application was premature and accordingly not competent. We invited written submissions on the matter and we have now considered these fully.

[6] The primary submission by the respondents was that litigation should be used only where there is a dispute which requires to be resolved. In this case, at the point the application was made, there is no suggestion that any request to buy or negotiations in that regard had been made. The respondents’ submission was therefore that there could not be said to be any failure to agree, which, in their view, was a pre-condition for a competent application under the section.

[7] They also sought to argue that essentially there had to be a dispute which required to be decided by the Court before it was appropriate to put the matter in front of it.

[8] They made reference to the case of Anderson v Houston 1991 SLCR 11. In that regard, we need say little more than that the circumstances there were quite different to the situation here. It seems to have been accepted by both sides, and the Court, that if there was any particular matter on which the landlord and tenant could not agree, then an action seeking authorisation of acquisition was competent, but there was no opinion expressed as to whether an action would be competent where there had been no attempt to reach agreement. That, in our view and as will be seen, is the fundamental issue which we have to deal with in the present case.

[9] The applicant’s submissions do not really address the primary issue here and concentrate on the outcome sought and the reasons for that rather than whether the application is in fact competent. There is no question that the application was received by the Court at a time when the earlier nominee provisions applied. But, as we have indicated above, that fact is irrelevant to the question we require to address, namely how we should interpret the words “failing agreement with the landlord as to the acquisition by the crofter of croft land tenanted by him”. The applicant makes no attempt to argue that there was any approach to the landlord prior to the application being lodged. There is no denial of the landlord’s statement that the application was the first intimation from the tenant that she wished to purchase the croft. Accordingly we must treat that statement as undisputed.

[10] The landlords argue, in essence, that litigation should be used only where there is a dispute which requires to be resolved and that the words “failing agreement” should be given their ordinary meaning – and that since there had been no attempt at an agreement, there could be no “failing”.

[11] Under the first head, we think it plain that courts normally deal only with disputed issues. That is also true of the majority of the Land Court’s jurisdiction, although there are certain elements of our work – such as, for example, authorisation of resumptions – where the matter must come before us, even though there may in fact be no dispute. But, generally, our task is to resolve disputed issues and we must assume that the words “failing agreement” in the statute are intended to have some meaning and effect. If the intention of Parliament had been that there was no requirement to attempt to reach agreement before making application to the Court, why were these words included in the legislation? It would have been perfectly possible for Parliament to have simply legislated to the effect that the crofter could apply to the Court for an order authorising him to acquire the croft tenanted by him.

[12] We are not aware of any case law which directly deals with interpretation of the subsection. However, in their book, Crofting Law, MacCuish & Flyn take the view that an application to the Court is only competent in the event of failure to reach agreement. At 9.03 they comment:

“Only in the event of failure to reach agreement does the 1976 Act [which introduced the right to buy] permit the crofter to make application to the land Court. There is therefore an implied duty on the crofter first to approach his landlord and a similar duty on the landlord to respond.”

[13] Sir Crispin Agnew Q.C. takes a similar view in his annotations to the 1993 Act. At note 2 on p 79 of his book, Crofting Law,he says:

“The right to apply to the Land Court only arises after there has been an attempt to negotiate a sale, which has failed.”

[14] We agree with the view taken by these authors. A crofter may agree to purchase his croft from his landlord without recourse to the Court – albeit in the knowledge that in the event of that approach being unsuccessful then there is the fallback of the provisions of the 1993 Act to deal with matters which cannot be agreed through negotiation. No doubt the very existence of the statute will colour the outcome of such negotiations. We agree, therefore, with the respondents’ view of matters here. A natural interpretation of the wording of section 12(1) in a context of provision for recourse to a court of law supports the respondents’ view that there requires to have been some attempt to negotiate, followed by an element of failure before an application can competently be made to this Court under the section.

[15] Accordingly we dismiss the application.

[16] In answers, the respondents sought expenses of the process to date. The applicant has not been given the opportunity to respond in that regard. Therefore, in the meantime, we reserve the matter of expenses and seek a response and submissions on the respondents’ motion in that regard.