THE COURT

(Sheriff MacLeod, Mr J A Smith)

TRUSTEES OF TRAQUAIR HOUSE CHARITABLE TRUST v DOUGLAS

(Application RN 13/05 – Order of 3 February 2011)

AGRICULTURAL HOLDINGS – LIMITED PARTNERSHIP TENANCIES ” SEC 72(3) and (6) OF AGRICULTURAL HOLDINGS (SCOTLAND) ACT 2003 – MEANING OF “PURPORTS ” IN SEC 72(3)(a) – WHETHER INCLUDES A NOTICE OF DISSOLUTION SERVED AGAINST WRONG TERMINATION DATE

Subsecs (3)(a) and (6) of sec 72 of the Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”) provide that the general partner in a limited partnership tenancy of an agricultural holding under the Agricultural Holdings (Scotland) Act 1991 on whom a notice of dissolution of the partnership has been served by the limited partner on or after 16 September 2002 can serve a counter-notice intimating his intention of becoming the tenant under the tenancy in his own right.

The applicants were the landlords of an agricultural holding tenanted by a limited partnership. The partnership and associated lease had been entered into for a period of 12 years from 28 November 1986 and from year to year thereafter. On 3 February 2003, while the partnership and lease were continuing on a year to year basis and while the Agricultural Holdings (Scotland) Bill which became the 2003 Act was going through the Scottish Parliament, the limited partner served notice of dissolution of the partnership to take effect on 28 November 2004. The respondent, who was the general partner, served a counter-notice under sec 72(6) of the 2003 Act. The applicants responded by lodging an application with the Land Court for an order under sec 72(8) of the Act to the effect that subsec (6) did not apply, and had never applied, to the tenancy. In the course of procedure before the Court the applicants realised that an addendum to the partnership agreement which had been signed by the limited partner in May 1998 and sent to the respondent for signature but not returned had in fact been signed by the respondent. The addendum provided that the partnership agreement was to be extended to 28 November 2008. Having discovered this, the applicants amended their pleadings to bring in an alternative case to the effect that said notice of dissolution was invalid because it was served against a date prior to the expiry of the partnership agreement and that, therefore, it could not amount to a purported termination of the tenancy in terms of sec 72(3), with the result that sec 72(6) of the 2003 Act did not apply and the respondent was not entitled to become tenant in his own right. Parties went to debate on the relevancy of this alternative case, the respondent arguing that the matter was entirely one of statutory interpretation of the relevant provisions of sec 72 and nothing to do with the law of partnership and that, viewed in that way, service of the notice of dissolution was a purported termination of the tenancy for the purposes of sec 72 notwithstanding that it had been served against the wrong date. The applicants argued that since said notice could not, in and of itself and without action on the part of the general partner, have the result of dissolving the partnership as at 28 November 2004 it could not amount to a purported termination of the tenancy as at that date.

HELD (1) that the meaning of the word “purports” in subsec (3) could not be conclusively deduced from a consideration of the terms of sec 72 alone and that resort therefore had to be had to other canons of construction; (2) that the purpose of sec 72 was not punitive, in the sense of being intended to punish landlords for any attempt to terminate a limited partnership tenancy for the purposes of depriving the general partner of any right deriving from that section, but that the section was, rather, merely an anti-avoidance provision, intended to prevent landlords and associated limited partners from succeeding in any such attempt; (3) that there was, therefore, no need to invoke its terms where what was done by the limited partner did not have that effect; (4) that there was, therefore, no need to construe subsec (3)(a) as applying to the service of a notice of dissolution which was not, in and of itself, effective to terminate the partnership and, therefore, the tenancy; (5) that a narrow interpretation of subsec (3)(a) best served the interests of justice, given the possible consequences to the landlords of the operation of sec 72 as these had been identified by the Court in the case of Salvesen v Riddell (SLC 29 July 2010) as against any prejudice to the general partner; and (6), following what had been said obiter by a differently constituted Court in Isle of Gigha Heritage Trust v Heard 2007 SLCR 28, that the word “purports” in subsec (3) therefore fell to be understood as referring to the termination of the tenancy but for the provisions of sec 72; and the respondent’s plea repelled and application continued for further procedure.

The Note appended to the Court’s Order was in the following terms:-

[1] On 1 November we heard Mr Kermack, solicitor, for the applicants and Mr Maclean, advocate, for the respondent, in debate on the respondent’s plea to the relevancy of the applicants’ alternative case, recently introduced by amendment.

Authorities

Legislation

Agricultural Holdings (Scotland) Act 2003, sec 72.

It is convenient to set out here the relevant parts of that section:-

“(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).

(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.

Partnership Act 1890, secs 26, 27 and 32

Cases

Dicker v Angerstein (1876) 3 Ch. D.600
Elsden v Pick [1980] 1 WLR 898
Featherstone & Ors v Staples & Ors [1986] 1 W.L.R. 861
Gilmour v Cook 1975 SLCR 10
Inland Revenue v Graham 1971 S.C.(H.L.) 1
Isle of Gigha Heritage Trust v Heard 2007 SLCR 28
Joseph v Joseph & Anr [1967] 1 Ch. 78
Kildrummy (Jersey) Ltd v Calder 1994 S.L.T. 888
Macfarlane v Falfield Investments Ltd 1997 S.C. 14
Millar v Strathclyde R. C. 1988 S.L.T.(Lands Tr). 9
Morrison’s Executors v Rendall 1986 S.C. 69
Moss v Elphick [1910] 1 K.B. 846
Pepper v Hart [1992] 3 W.L.R. 1032
Phonogram Ltd v Lane [1982] 1 Q.B. 938
Salvesen v Riddell SLC 29 July 2010

Textbooks

Concise Oxford English Dictionary (9th ed.)
Gill, The Hon., The Law of Agricultural Holdings in Scotland (3rd ed.)
McBryde, Professor W. W., The Law of Contract in Scotland (3rd ed.)
Miller, Professor J. M., The Law of Partnership in Scotland, (2nd ed. by Gordon Brough; 1994)
Paton & Cameron, The Law of Landlord and Tenant in Scotland (1997)
Shorter Oxford English Dictionary (6th ed.; 2007)
Stair Memorial Encyclopaedia of The Laws of Scotland, (1992) Vol 12, para 1114
Walker, Professor D. M., The Oxford Companion to Law (1982)

Factual background

[2] The application concerns the tenancy of Damhead Farm on the applicants’ Traquair Estate. It is leased to a limited partnership called Messrs Douglas –Damhead. That partnership comprises the respondent, as general partner, and Mrs Flora Mary Carr-Saunders or Maxwell Stuart, as limited partner. The lease was originally between Peter D’Arcy Joseph Constable Maxwell Stuart, as landlord, and a limited partnership comprising said Mr Maxwell Stuart, as limited partner, and the respondent as general partner. The lease and partnership agreements were originally for a period of 12 years, from 28 November 1986 to 28 November 1998 and to continue from year to year thereafter. However, in 1998, by an addendum to the partnership agreement, it was extended to 28 November 2008. There are questions about whether that addendum did in fact have that effect but for the purposes of the debate it has to be accepted that it did.

[3] On 3 February 2003, as the Agricultural Holdings (Scotland) Bill was going through the Scottish Parliament, agents on behalf of Mrs Maxwell Stuart served notice of dissolution of the partnership on the respondent. That notice gave the date of dissolution as 28 November 2004. On 20 December 2004 the respondent served notice on the applicants under sec 72(6) of the Agricultural Holdings (Scotland) Act 2003 (“the Act” or “the 2003 Act”), saying that he intended to become the tenant under the lease in his own right. On 14 January 2005 the applicants lodged the present application, seeking an order under sec 72(8) of the Act to the effect that subsec (6) does not apply and has never applied.

[4] The application as originally lodged proceeded upon the basis that the notice of dissolution had been valid but sought to avoid the application of subsec (6) on other grounds. It was only in the course of 2010 that the applicants found out that the addendum to the partnership agreement, which had been signed by Mrs Maxwell Stuart on 8 May 1998 and sent to the respondent for signature but never returned, had in fact been signed by the respondent. This prompted the applicants to seek to avoid the application of subsec (6) by arguing that the notice of dissolution was invalid, because it had been served against the wrong termination date. A Minute of Amendment to that effect was tendered and we allowed the amendment. The result was to introduce what we shall call the applicants’ alternative case. It is this alternative case which was the subject of the debate.

[5] The significance of all of this is, of course, that if the applicants fail in both their cases, so that subsec (6) is found to apply, the respondent becomes tenant in his own right under what is sometimes called a “full 1991 Act tenancy”: a tenancy to which the Agricultural Holdings (Scotland) Act of that year applies. In Riddell v Salvesen this Court decided that that was the effect of sec 72 in circumstances similar to those of this case. That case is presently under appeal to the Inner House.

Submissions for respondent

[6] Mr Maclean’s formal motion was that the averments introduced in terms of paragraphs 1, 2, 3 and 5 of the applicants’ Minute of Amendment as adjusted should not be admitted to probation. The applicants had no plea-in-law in support of their alternative case but their alternative third crave would fall if the respondent’s plea was successful.

[7] Mr Maclean summarised the applicants’ alternative case. Its essence was that the notice of 3 February 2003 was incompetent and did not have the effect of dissolving the limited partnership. The result of that was that the limited partnership continued as tenant. The applicants argued that there was no purported termination under sec 72(3) of the Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”) and that sec 72(3) did not therefore apply and that the respondent’s sec 72(6) notice was, therefore, of no effect.

[8] For the purposes of this debate the applicants’ averments had to be taken pro veritate and the respondent therefore accepted that the addendum to the partnership agreement had the effect for which the applicants contended although in truth it was so infelicitously expressed that there must be doubts about that and there were issues as to whether delivery was required to make it effective. However we need not concern ourselves with these matters for the purposes of this debate. Similarly, if there was some underlying merit in the applicants’ alternative case, whether they were now personally barred from insisting upon it was not a matter for today: it would need some form of evidential hearing.

[9] The respondent’s answer to the applicants’ alternative case could be stated very shortly. It was that the issue raised was one of statutory construction of sec 72 and not one of partnership. Although in Salvesen v Riddell some time had been spent discussing canons of statutory construction and sundry materials from the Parliamentary process, it was not obvious to Mr Maclean that such material had provided the court with much assistance in construing the statutory position and he was not persuaded that resort to that material would be of assistance for present purposes.

[10] In broad outline the respondent’s case was that estothe addendum did form part of the contract between the limited partner and the respondent and estoit had the effect that the limited partnership was to endure until Martinmas 2008, sec 72(3) nevertheless applied and the respondent’s sec 72(6) notice was valid and effectual. In order for sec 72(6) to apply it was of no relevance whether the notice of dissolution of the partnership agreement could have been challenged by the general partner on intra-contractual grounds.

[11] The whole point of sec 72 was to address a situation in which landlords, themselves or through associates, were serving notices of dissolution of limited partnerships which they would not have served but for the passage of the 2003 Act and concerns about what the effects of the intended legislation would be. Sec 72(3)(a) was engaged in respect of notices of dissolution served after 16 September 2002 and the “whys and wherefores” of the dissolution became relevant only after a sec 72(6) notice had been given and the landlord applied to the court under sec 72(8) for an order to the effect that sec 72(6) did not apply. At that later stage the Land Court was directed by sec 72(9)(a)(i) to consider whether it could be satisfied that the notice of dissolution had been served “otherwise than for the purposes of depriving any general partner of any right deriving from this section”. So, if the limited partner had given notice to dissolve on 3 February 2003 because the respondent had committed some significant breach of the tenancy on the day before, that fact might be prayed in aid for the purposes of sec 72(8) but it would not be relevant to the question whether the general partner was entitled to serve a sec 72(6) notice. Whenever a notice of dissolution was served the general partner was entitled to give notice under sec 72(6) and that had the effect of continuing the tenancy notwithstanding its purported dissolution unless and until the landlord could satisfy the court on an application under sec 72(8). It could fairly be put like this: there was almost a presumption that a dissolution of a limited partnership after 16 September 2002 was not warranted unless the landlord could satisfy the court otherwise. There was nothing in the legislation to prevent the general partner, in response to a purported termination of the tenancy on any of the three grounds set out in sec 72(3), from accepting the position and proceeding to give notice, at the appropriate time, under sec 72(6).

[12] This point was best illustrated by considering the other two sets of circumstances in which sec 72(3) was engaged. Paragraph (b) of the subsection posited a surrender of the tenancy by the limited partner which resulted in a purported termination of the tenancy. Renunciation of a tenancy was not a unilateral act, it required to be accepted by the landlord. Otherwise all one had was an abandonment of the tenancy. Where such a renunciation occurred, sec 72(9)(a)(ii) required the landlord to satisfy the court that it had occurred for a purpose other than deprivation of a right under sec 72. There was a question as to whether a limited partner would be entitled in terms of the limited partnership agreement to unilaterally renounce the tenancy – which would be an odd situation – but there was nothing in the legislation to suggest that any question of entitlement was relevant. There was nothing to suggest that the general partner’s entitlement to serve a sec 72(6) notice was dependant upon the limited partner being contractually entitled to renounce the tenancy. Once again the presumption which arose was that such renunciation was not warranted by the circumstances of the case extraneous to the passage of the legislation through the Scottish Parliament.

[13] Exactly the same point could be made in relation to sec 72(3)(c), which dealt with purported termination of the tenancy as a consequence of a breach of the tenancy by the limited partner. It was the purported termination of the tenancy by the landlord as a consequence of breach of the lease by the limited partner, who was, by definition (in terms of sec 72(1)(b)), an associate of the landlord, that was being dealt with. There was nothing in the legislation which required the breach to be a material one. So in neither of these cases – sec 72(3)(b) or (c) – was the entitlement of the general partner to serve notice subject to the genuineness of the renunciation or of the breach. The whole object of the legislation would be defeated if it were so dependant because what the legislation was dealing with was actions by the landlord intended to bring about the end of the tenancy. If there had to be genuine, legally valid renunciations or breaches it was difficult to see how a general partner could ever be entitled to serve a notice under sec 72(6). So the only requirement for sec 72(3)(a) to be engaged was service of a notice of dissolution by a limited partner associated with the landlord and no question arose, at this preliminary stage, as to whether the notice of dissolution itself was valid as between the limited partner and the general partner.

[14] Mr Maclean then considered the meaning of the words “purports to be terminated”. By way of background he reminded us of the theory behind use of the limited partnership device. In Scots law a partnership was a legal persona, quite distinct from the individual partners. Therefore, unless the lease was a lease to “the house”, the dissolution of the partnership meant that the tenant ceased to exist and that the tenancy came to an end. The device of the limited partnership therefore enabled the landlord to control the continued existence of the partnership and the tenancy; Inland Revenue v Graham (per Lord Reid at pages 19-20), McFarlane v Falfield Investments (per Lord President Rodger at pages 28I-29F), Miller on Partnership (page 628).

[15] The point Mr Maclean sought to draw from all of that was that when a limited partnership was dissolved there was nothing “purported” about the termination of the lease; it terminated ipso facto, automatically and simultaneously. As had been recognised by this court in Isle of Gigha Heritage Trust v Heard, the use of the word “purported” underlined that where the general partner gave notice under sec 72(6) the lease continued, with the general partner occupying as the tenant in his own right. The effect of sec 72(6) was that notwithstanding the purported termination of the tenancy the tenancy continued unless and until the Land Court made an order under sec 72(8), retrospectively validating the termination.

[16] The Court’s Note in the Isla of Gigha Trust case did, however, contain a passage with which Mr Maclean had some difficulty. At page 35 the Court said:-

“At debate, we raised the possibility of there being ambiguity in that expression [“purports to be terminated”] on the view that it might relate in some way to the actings of the landlords. However, we have come to have no doubt that it was intended to mean the point at which the lease would have ended but for the statutory provisions”.

No issue was taken with what the Court had said about how the lease did not terminate where sec 72(6) applied and how the use of “purports” underlines that. But, in Mr Maclean’s submission, “purports” had an additional significance and to the extent that the foregoing passage did not support his view he took issue with it. “Purports” related to the actings of the landlord as well.

[17] Termination or purported termination under paragraphs (b) and (c) of sec 72(3) could only come about as a result of action on the part of the landlord. Under reference to Paton & Cameronat page 238, it was clear that, to be effective, renunciation of a lease must be acquiesced in or agreed to by the landlord. It followed that a landlord could decline to accept a renunciation. That was unlikely to happen in the circumstances contemplated by sec 72(3) but the principle still applied. Likewise breach of the partnership agreement by the limited partner would only bring about termination of the tenancy if the landlord treated it as a material breach justifying rescission. So in both cases the tenancy terminated only if the landlord willed it. So the situations referred to in paragraphs (b) and (c) were very aptly referred to as purported terminations because the merits or demerits of the renunciation or breach were quite irrelevant. They may become relevant at a later stage, were the landlord to apply for an order under sec 72(8). The words “purports to be terminated” applied to paragraph (a) of sec 72(3) as they did to paragraphs (b) and (c).

[18] Where a limited partner either renounced or breached a tenancy there was no doubt that the general partner could challenge the actions of the limited partner or the landlord, as the applicants suggested the respondent could have done here, but it was quite clear from the legislation that in the case of renunciation or breach the general partner was under no obligation to do so. He was entitled to sit back and serve a sec 72(6) notice at the appropriate time. If that was correct in relation to renunciation and breach, there was no reason why it was not also correct in relation to the dissolution of the limited partnership by notice.

[19] There could be no dispute, as a matter of fact, that the limited partner here had served notice and that the applicants had purported to terminate the tenancy as at 28 November 2004. On their own pleadings that was the end the limited partner intended to achieve. Furthermore, not only had the respondent acted upon the purported termination, so too had the applicants themselves. They had done so by applying to the court under sec. 72 (8) and they continued to act upon it, because they still maintained their original case in the present application. So a purported notice of dissolution was sufficient to trigger the general partner’s entitlement to serve notice under sec 72(6).

[20] Mr Maclean then took us to various definitions of "purport" in the Shorter and Concise Oxford English Dictionaries and to how the word had been interpreted in various cases. In particular he referred to the cases of Dicker v Angerstein, Joseph v Joseph and Another and Phonogram Ltd v Lane. Dicker was an example of "purports" being used to mean something which appears ostensibly to be the case but is not. That was the sense in which the word had been understood in the Gigha case. Joseph was a case involving statutory construction in which the meaning of the word had been held to be different from that in Dicker. In Joseph the meaning had been held to be “has the effect of”. Phonogram was also a case involving statutory construction in which the meaning given to the word was the same as that in Dicker. The sense in which "purports" was used in sec 72 must be the same as the sense in which the word had been used in Dicker and Phonogram. It could not have the same sense as in Joseph because there was no termination of the lease where a sec 72(6) notice had been given; therefore the notice of dissolution could not have the effect of terminating the tenancy.

[21] Purported termination, in the sense of something which appeared ostensibly to terminate the tenancy but did not in fact have that effect, was, therefore, sufficient to trigger the general partner's entitlement to give notice under sec 72(6). That conclusion was reinforced by comparing sec 72(3)(a) and sec 72(5)(a). The different wording used in sec 72(5)(a)(ii), which refers to the partnership having been dissolved “in accordance with the notice”, suggested that for the conditions in sec 72(5) to be met there must have been a genuine dissolution of the partnership and genuine termination of the lease. In sec 72(3) there was, almost by definition, a question mark over the genuineness of the actions which had brought about dissolution of the limited partnership and termination of the lease.

[22] So it was tolerably clear, as a matter of construction, that the issue of whether the limited partner was entitled to serve a notice of dissolution was a non-issue so far as the application of sec 72(3) was concerned.

[23] There was, moreover, a further objection to the applicants' position. On the facts of this case there was no dispute that the entitlement of the limited partner to dissolve the partnership on the date provided for in the notice was such as could have given rise to a contractual dispute between the limited and general partners. It may have been open to the general partner, if he wished, to dispute the limited partner’s entitlement to dissolve the partnership on 28 November 2004. But he had opted instead to give notice under sec 72(6) with all the consequences that entailed. That course opened up to the respondent only because the limited partner had opted, voluntarily, to serve notice of dissolution on the respondent. There was no doubt that that had been her intention and it was reasonable to infer that she would have served the notice against 28 November 2008 if she had realised that the addendum to the partnership agreement had taken effect. But having served it against 28 November 2004 she had opened herself up to the possibility of a section 72(6) notice. There was no unfairness because it all stemmed from a course of action she had voluntarily undertaken. Where the general partner had given notice in terms of sec 72(6) that did not mean that the purported termination of the tenancy was any less a consequence of the limited partner serving a notice under sec 72(3)(a).

[24] In all the circumstances the respondent was entitled to give notice under sec 72(6). Furthermore that notice had been acted upon by both parties so it was simply ridiculous now for the applicants to re-write history and treat the last seven years as never having happened. It was a moot point whether the limited partner could have withdrawn her notice before service of the counter-notice but she had not done so and indeed had not sought to do so even yet.

[25] If the applicants were arguing that the notice of dissolution was incompetent in the sense that it was void ab initio that was a flawed analysis. Rather, where one party to a bilateral, consensual contract, such as partnership, gave notice of dissolution, such an act, whether or not it was conform to the parties’ contract, could never be dismissed as an action of no legal consequence or effect. The questions which arose at that stage were not questions of competence but of breach of the agreement. The party on whom a notice which was in breach of the partnership agreement was served was entitled, but not bound, to challenge that breach. He could sue for implement, or for damages for breach or he could just accept the notice. Therefore, in the present case, if the limited partner was not entitled, in terms of the partnership agreement, to serve notice dissolving the partnership on 28 November 2004, her action in so doing was not incompetent in the sense that anything done on the strength of it could not be legally valid. Instead, by so doing, she had given the respondent options which he would not otherwise have had, not least the option to give notice under sec 72(6); McBryde para 20-104.

[26] In the situation with which we were dealing here, if the limited partner was not entitled to dissolve the partnership at 28 November 2004 she was in breach of the partnership contract and that gave the respondent certain options. The question was whether there was anything in the legislation which expressly or by necessary implication dictated that the general partner should not be entitled to take the limited partner at her own word and serve a sec 72(6) notice. When one considered the purposes of the legislation there was nothing which would suggest policy reasons why a respondent should not be able to serve a sec 72(6) notice.

[27] In short, the notice of dissolution was not void ab initio and once it had been acted upon the limited partner was deprived of any argument that it was open to her to withdraw it or treat it as if it never had been; Gill para 16.10. The position regarding a contractual notice was a fortiori of the position regarding notices to quit. Where a partner served notice of dissolution of the limited partnership and the partnership agreement suggested the notice was premature arguments about invalidity or withdrawal of the notice flew off if the notice had been acted upon. The authorities demonstrated that the actings of the parties had to be taken into account as well; Gilmour v Cook at page 11. There was an analogy between the situation in Gilmour and the situation here and it was not a valid ground of distinction that in the present case there was no written notice by the respondent accepting dissolution: his acceptance was implicit in his giving notice under sec 72(6).

[28] The importance of actings was further confirmed in Morrison’s Executors v Rendall, at pages 73-74 where Lord Justice-Clerk Ross said that actings could make a verbal renunciation of a lease effective. The point to be taken from this was that even in statutory processes where parties had proceeded to act they could not go back and rely on the terms of the statute. If that applied in the face of statute, it applied a fortiori to intra-contractual situations.

[29] Essentially the same point was made in the English case of Elsden v Pick, per Shaw L.J. at page 906. In Kildrummy (Jersey) Ltd v Calder Lord Marnoch had approved Elsden v Pick. The point about Elsden v Pick was that the parties’ agreement was not set in stone; it could be subject to variation where parties by their actings demonstrated their intention to depart from the formal terms of the agreement they had entered into. So here it did not matter whether the addendum formed part of the partnership agreement or whether parties had agreed an extension of the partnership until 28 November 2008. Where the limited partner opted to dissolve the partnership on 28 November 2004 it did not matter for the purposes of sec 72(6) whether she was entitled to do that in terms of the partnership agreement or not. The fact was that by doing so she had opened the door to the respondent under sec 72(6) and both he and the applicants had subsequently acted on that.

[30] The applicants’ alternative case was a superficially clever legal argument superimposed ex post facto over facts which simply could not be made to fit that analysis. The alternative case was irrelevant. It set out no basis in statute or at common law for denying effect to the sec 72(6) notice. The respondent’s first plea-in-law should be sustained to the aforementioned extent.

Submissions for applicants

[31] Mr Kermack opened by rehearsing the circumstances leading to the introduction of the applicants’ alternative case by amendment. That ground has already been covered in the various hearings in the course of the amendment procedure and in our Note of 28 October 2010 pursuant thereon. We need not go over it again here. Mr Kermack relied on it as explaining the applicants’ conduct over the past seven years.

[32] Turning to his substantive submissions, Mr Kermack said that Part VI of the 2003 Act had to be considered “in the round”. A starting point was the legislative history. Mr Kermack referred to material he had prepared explaining the consultative process carried out by the Scottish Government as to the role of limited partnerships in the proposed new statutory regime. Part of that material was a Policy Memorandum issued in relation to the Bill as introduced to the Scottish Parliament on 16 September 2002. Paragraph 17 of the Memorandum notes that legislation relating to the operation of limited partnerships is a matter reserved to Westminster. The Scottish Parliament did not, therefore, said Mr Kermack, have any competence to alter the law in relation to partnership. The law of partnership therefore continued to apply and secs 70, 72 and 73 of the 2003 Act had to be understood in that light. All of these sections dealt with the effect of termination of the partnership on the tenancy and they all required that the partnership had come to an end before there was any effect on the tenancy. One could not therefore interfere with a tenancy held by a partnership while the partnership was extant. It was only once the limited partnership was out of the way that the Scottish Parliament had any competence to legislate as to the effects of that on the tenancy. A failure to acknowledge that affected much of Mr Maclean’s submission. If the limited partnership was still in existence the general partner could not step in and claim to be the tenant because to do so would affect the rights of the limited partnership. In any event one could not have two tenants under the same lease.

[33] Looking at the structure of sec 72 the general partner could not give notice in terms of sec 72(6) unless sec 72(3) had been complied with, subject to subsec (4). If sec 72(3) was not engaged, the remainder of sec 72 had no further role to play in matters. In sec 72(3)(a) the expression “dissolution of the partnership by notice” was not defined. In that situation the ordinary meaning of the words had to be applied. The result was that there had to be a notice which dissolved the partnership.

[34] Mr Maclean’s approach could not be fitted into that structure. Treating the notice which had been given by the limited partner here as a material breach of the partnership contract which allowed the general partner to take certain steps under sec 72 was wrong because in that situation the partnership, and, therefore, the tenancy, was not being dissolved by the limited partner’s notice but by the general partner’s response to it. There was, therefore, no “dissolution of the partnership by notice” in terms of sec 72(3)(a).

[35] For his argument to succeed, Mr Maclean had to show that the limited partnership had been dissolved no more than 28 days before the respondent had given his sec 72(6) notice. That simply was not the case here. The notice served by the limited tenant was not a notice of dissolution at all because it did not in fact dissolve the partnership. Reference was made to the definition of “consequence” contained in the Shorter Oxford English Dictionary – as “a thing or circumstance which follows as an effect or result from something preceding” – and to the commentary on the word “consequences” contained in the Oxford Companion to Law, compiled by Professor D. M. Walker – in short “The results which flow from and follow on a particular act or event”. Here there was no such cause and effect as between the service of the limited partner’s notice and dissolution of the partnership.

[36] As to the meaning of “purported”, we already had the benefit of the Chairman of the Court’s comments on that in Isle of Gigha Heritage Trust v Heard and Mr Kermack adopted these as part of his submission. Particular emphasis was laid on the words, from the passage already quoted; “we have come to have no doubt that it was intended to mean the point at which the lease would have ended, but for the statutory provisions” (Mr Kermack’s emphasis).

[37] Reference had been made to the fact that subsec (5) contained the requirement that the partnership had been dissolved “in accordance with the notice”. If that provision had not been included a window would have been created for those who had served notice on or before 3 February 2003 to avoid the effect of sec 72(6) simply by conveying the land to another person.

[38] Mr Maclean had made much of paragraphs (b) and (c) of sec 72(3). Mr Kermack was not sure what could be made of these provisions nor as to why they had been included in the legislation at all. Only a tenant could renounce a lease and it was only in a Featherstone v Staples type of tenancy that an individual could give notice where the tenancy was held by a partnership. Similarly the situation contemplated in paragraph (c) was unlikely to arise: it was hard to see how a limited partner could breach the tenancy. So only paragraph (a) was relevant for present purposes and that required, firstly, that the notice itself dissolved the partnership and, secondly, that the direct cause of the purported termination of the tenancy was the dissolution of the partnership.

[39] It was hard to give “purports” the wider meaning (as compared with that given to it in Isle of Gigha Heritage Trust) contended for by Mr Maclean. Where the meaning of a statutory provision was not clear the courts had a duty to interpret it in a way which avoided injustice; Stair Memorial Encyclopaedia Vol 12, para 1114. We should also look at the mischief at which the legislation was directed; ibid para 1115. It would also be instructive to consider what the Court had said in Salvesen v Riddell (we think Mr Kermack had in mind the approach discussed by the Court at paragraphs [54] and [55] of its judgment).

[40] One had to ask why sec 72 had been introduced into the Act. It had been introduced because, as had been said in Parliament, landlords were instructing their limited partner associates to serve notices of dissolution as late as 3 February 2003. So the purpose of the legislation was to protect general partners whose occupation of their holdings was being threatened by dissolution of their partnerships on prospective dates. That much had been made clear by the Deputy Minister when an earlier version of what was now sec 72 had been introduced to the Bill on 4 February 2003. Mr Maclean had submitted that a questionably valid notice of dissolution was an effective to trigger sec 72(6). That was an absurd interpretation of sec 72 and of what Parliament’s intention had been. That purpose was to keep general partners on their holdings, not to give them the option to say that the partnership was at an end and serve notice under sec 72(6). A general partner faced with an invalid notice of dissolution did not need that protection: his occupancy was not being threatened.

[41] So one had to consider whether the notice of 3 February 2003 had had the effect of dissolving the partnership. In Mr Kermack’s submission it had not. He referred us to secs 26, 27 and 32 of the Partnership Act 1890. In terms of these provisions a dissolution notice could only be given where the partnership had been entered into for an indefinite period, including partnerships which had become partnerships at will under sec 27. Sec 32 set out how a partnership could be dissolved by expiration or notice. It was qualified by its opening words which made it subject to any agreement between the partners. In the present case we had an agreement that the partnership would run until 28 November 2008 and that it could be terminated by notice given at any time until 27 November 2007. On that basis, given the agreement between the parties and the statutory provisions, no notice given by the limited partner specifying 28 November 2004 as the date of termination could have had the effect of dissolving the partnership on that date. The dissolution of the partnership could not therefore have been a consequence of the notice and, no other notice having been given, the partnership had not been terminated. Reference was made to Professor Bennett Miller’s treatment of dissolution of partnerships at pages 451 to 456 of his book. There was no basis upon which the limited partner here could have served notice against 28 November 2004. The notice served was just not capable of terminating the partnership.

[42] Reference was also made to Maillie v Swanney & Ors as authority for the proposition that service of a notice of dissolution which a partner was not entitled to serve did not terminate a partnership. We were also referred to Millar v Strathclyde R. C. and to Moss v Elphick.

[43] In terms of sec 72(3)(a) “dissolution of the limited partnership by notice” must mean that the notice had dissolved the limited partnership. In this case, whether one looked at it from the point of view of the Partnership Act 1890 or contractually, the notice served could not have that effect. If the tenancy had otherwise been terminated by the general partner, as he had purported to do, that did not come within the purpose of the protection offered by sec 72. There was no direct causal nexus between the notice and termination of the tenancy.

[44] Mr Maclean’s argument had relied extensively on what a general partner could have done when he received a notice of dissolution on 3 February 2003. The fact was that this particular general partner had done nothing at all. He had known better than anyone that the limited partnership had been extended because he was “sitting with the signed agreement” without telling the limited partner that he had signed it. So he had known that the notice was incompetent and that it did not come within sec 72(3). Nothing the respondent did, or could do, after that could have the effect of engaging sec 72(3).

[45] With reference to Gilmour v Cook, that was a case in which the tenant had given a notice saying he wanted to go and the landlord had accepted it. It was the agreement of the parties that brought the tenancy to an end, not the notice and here it was not the notice but the general partner’s election to innovate upon it that had the effect of bringing the tenancy to an end.

[46] In Morrison’s Executors v Rendall it had been something done by the tenant which was relied upon, unsuccessfully, as bringing the lease to an end. In Kildrummy (Jersey) Limited v Calder the tenant was not being removed on the basis of the notice to quit alone nor on the basis of the subsequent agreement alone but on the basis of the notice to quit operating through the medium of the subsequent agreement. The tenant had opted to enter into the agreement made while the case was before the Land Court for the Land Court’s consent to the operation of the notice to quit in terms of sec 22(1) of the Agricultural Holdings (Scotland) Act 1991 and that was regarded by the court as having the same effect as taking away her right to insist on the Land Court’s consent (for all of which, see Lord Marnoch’s opinion at page 892E-F).

[47] In the present case, the fact that the respondent, as general partner, had available a variety of things which he could do in response to the notice of 3 February 2003 involved him in making a choice as to his response. That meant that it was not the notice which dissolved the limited partnership but the taking by the general partner of a particular course of action in response to it. Accordingly neither the limited partnership nor the tenancy had been terminated in consequence of the notice. The respondent had not been entitled to take the notice at face value. It was the notice, and the notice alone, which had to terminate the tenancy, not some additional act of the respondent.

Mr Maclean’s reply

[48] Mr Maclean made some brief points in response.

[49] Firstly he queried the status of the Parliamentary material referred to by Mr Kermack. Unlike the material referred to in Pepper v Hart, it did not contain a ministerial statement bearing, directly or indirectly, on the particular issue which arose in this case.

[50] Maillie v Swanney and Ors involved the other partners in a partnership disputing rather than accepting Mr Maillie’s notice of dissolution and the notice had not been acted upon. It turned entirely on the particular provisions of the partnership agreement. Mr Kermack had omitted to refer to a passage at page 469 in which Lord Penrose had referred to the fact that partners could terminate their relationship by common consent as “a truism of partnership law”. If the notice of 3 February 2003 did not express an intention to terminate the partnership as at 28 November 2004 what did it do and what was the respondent to do about it? Mr Kermack had said that the respondent should just have treated it as incompetent and ignored it. Had he done that, come 28 November 2004, the limited partner might be saying that he had acquiesced in the notice. It had not been for the respondent to point out to the limited partner the error of her ways and he had been entirely within his rights to order his affairs to his own best advantage.

[51] So far as the requirement that a statute was to be interpreted in such a way as avoided injustice was concerned, where was the injustice to the applicants in giving effect to the limited partner’s own notice? In Mr Maclean’s submission there was none. He was not submitting that the proper approach to sec 72 was a punitive one. In Salvesen v Riddell the court had made the point (at para [55]) that it was not appropriate to start the interpretation of sec 72 by assuming an intention on the part of Parliament to punish landlords. Mr Maclean agreed but submitted that where a limited partner served a notice of dissolution of a limited partnership it was not a source of injustice for the court to proceed on the basis that the general partner may, in response, give notice in terms of sec 72(6).

[52] As to what a notice of dissolution was, it was simply a notice by which a limited partner notified the general partner of an intention to dissolve the limited partnership on a particular date. Mr Kermack had argued that it was necessary, for the application of sec 72(3), to show that the limited partnership had in fact been dissolved as at 28 November 2004. That read too much into the subsection. The expression “purports to be terminated” was important and when one looked at sec 72(6) one saw that the general partner’s right was to give notice within 28 days of the purported termination of the tenancy rather than 28 days after the actual dissolution of the partnership. These would be the same date but it was significant that the giving of notice by the general partner was expressly linked to the purported termination of the tenancy and not to the dissolution of the partnership by notice.

[53] Mr Maclean was happy to accept Professor Walker’s definition of “consequences”. It was apt to cover the situation here as seen from the respondent’s point of view.

[54] Mr Kermack had made a submission that it was only once the partnership had actually been dissolved that sec 72 came into play. The point was, however, that where one had a limited partnership consisting of one limited partner and one general partner and the limited partner gave notice of dissolution as at a particular date, the only person who had an interest in whether the limited partner had been entitled to do so was the general partner and thus it was only the general partner who had any locus in relation to the issue of whether, consequent upon the service of the notice, the limited partnership continued beyond the date of dissolution. It was perfectly correct to say that the limited partnership had a separate legal persona but where there was only one other partner to say yea or nay in response to a notice it was unrealistic to talk about the partnership having an independent existence which might have an interest in what followed from the general partner’s response.

[55] It was not disputed that the law of partnerships and limited partnerships was not within the legislative competence of the Scottish Parliament but there was nothing in the respondent’s submission which did violence in any way to either the Partnership Act of 1890 or the Limited Partnership Act of 1907. The critical point was that sec 32 of the 1890 Act was “subject to any agreement between the partners”. Where one partner had given notice of dissolution there was no agreement that the partnership should continue and the other partner was given options he would not otherwise have.

[56] Even if the applicants’ alternative case was not remitted to probation, the applicants would still have the opportunity to satisfy the court that the conditions set out in sec 72(9) were met and that an order under sec 72(8) should therefore be pronounced so there was no gross injustice in holding the limited partner to the notice of dissolution which she had voluntarily issued.

Mr Kermack’s response

[57] Mr Maclean had emphasised that the reference in sec 72(6) was to the purported termination of the tenancy rather than to the purported termination of the partnership. The reason for that was that was to encompass the provisions of sec 72(3)(b) and (c).

[58] Mr Maclean had made submissions as to the meaning of the term “notice of dissolution” but a notice of dissolution was one which in fact dissolved the partnership.

[59] With reference to what the court had said at para [55] of its Note in Salvesen v Riddell, the intention of Parliament was to protect general partners on whom notice of dissolution had been served. The provisions of sec 72 were not there to protect the position of a general partner who had innovated on a notice of dissolution. The general partner here needed no protection as the notice of dissolution was incapable of terminating his occupation. What the general partner here had purported to do was to give up occupation in order to keep occupation. That was absurd.

[60] So far as injustice was concerned, one had to remember that we were concerned not only with the interests of the limited partner but also with the interests of the landlords and their interests stood to be dramatically affected if sec 72(6) was engaged.

[61] In conclusion Mr Kermack pointed out that sec 72(3)(a) referred only to dissolution of the partnership by notice, not to dissolution by notice and something else beyond that. Here the partnership had been dissolved not by the notice but by the respondent’s reaction to it and that took the situation outwith sec 72(3)(a). The occupation of a general partner who had received an invalid notice of dissolution was not threatened and such a person was not, therefore, within the ambit of persons whom Parliament had been trying to protect.

Discussion and decision

[62] The issue on which the parties divide in this case is whether sec 72(3)(a) requires a valid notice of dissolution of the partnership in the sense of a notice which in and of itself is effective to dissolve the partnership.

[63] Resolving it is in our view entirely a matter of statutory construction and we have not found parties’ submissions as to the law of partnership and what a partner is entitled to do in response to an invalid notice of dissolution of the partnership to be of any assistance.

[64] Approaching it, then, as a matter of statutory construction, the meaning of the word “purports” and what it relates to is critical. On Mr Maclean’s approach it directs us to have regard to the appearance of things rather than to their legal effect and substance and what his submission comes to is that all that is required for subsec (3) to apply is a purported notice of dissolution or a purported renunciation of the tenancy or a purported breach of the tenancy by the limited partner. On Mr Kermack’s approach, the word’s meaning is restricted to that given to it by the Court in Isle of Gigha Heritage Trust v Heard and subsec (3) is engaged only where there has been an attempt by the landlords to terminate the tenancy in consequence of one of the actions specified in the subsection, which attempt would have been successful but for the provisions of sec 72.

[65] A logical staring point for us is what this Court has already said about the meaning of “purports” in subsec (3) in the Isle of Gigha Heritage Trust case. The Court on that occasion was chaired by Lord McGhie. We have quoted the relevant passage from the judgement of the Court at paragraph [16] above. What the Court was doing there was identifying the point in time at which the scheme of sec 72 began to apply. It decided that that point was “the point at which the lease would have ended, but for the statutory provisions”. The Court therefore had in contemplation a situation in which, but for the statutory provisions, the tenancy would have terminated and it was the fact that the statutory provisions prevented it from ending which made that a purported, rather than actual, termination of the tenancy. The Court considered but excluded the possibility that the expression “purports to be terminated” “might relate in some way to the actings of the landlords”.

[66] Isle of Gigha Heritage Trust was a case about the validity of the general partner’s sec 72(6) notice, not about the validity of anything done by the landlords or the limited partner. The remarks just quoted were therefore obiter. Thecase does show, however, that it is not necessary to give the word “purports” the wider, or additional, meaning contended for by Mr Maclean in order to justify its use in sec 72(3); it has an obvious and sensible meaning without going that far.

[67] Turning to the task of interpreting subsec (3) for ourselves, therefore, the starting point is to note that the word “purports” is used in relation to the termination of the tenancy rather than the dissolution of the partnership. For subsec (3) to apply the tenancy must purport to be terminated as a consequence of one or more of three specified things done by the limited partner, one of which is “the dissolution of the partnership by notice served on or after 16th September 2002 by [the limited partner]”. The reference there is not to the purported dissolution of the partnership but to the dissolution of the partnership.

[68] Mr Maclean submitted that there was no distinction between dissolution of the partnership and termination of the tenancy. That is correct in the sense that dissolution of a limited partnership indubitably leads to the termination of a tenancy in which the limited partnership is tenant; Inland Revenue v Graham’s Trs, McFarlane v Falfield Investments Limited. But Mr Maclean goes further and equiparates service of a purported notice of dissolution with purported termination of the tenancy. In his submission all that is required for a purported termination of the tenancy under sec 72(3)(a) is service of what purports to be a notice of dissolution of the limited partnership. At this point we simply observe that that is not how subsec (3) puts it.

[69] Mr Maclean sought support for that position from the terms of paragraphs (b) and (c) of subsec (3).

[70] As we understood it, there were two aspects to this submission. One was that the fact that paragraph (b) did not specify effective renunciation of the tenancy nor paragraph (c) a material breach of the tenancy, suggested that a valid notice of dissolution was not required for the purposes of paragraph (a). The other was that since termination of a tenancy by renunciation or breach was not a unilateral act on the part of the limited partner (they depend on a certain response by the landlords) it was likewise the case that paragraph (a) was not confined to a notice of dissolution which in and of itself dissolved the partnership: it included a notice of dissolution which was not effective in and of itself but which gave the general partner the option of accepting it on its terms and agreeing the dissolution of the partnership.

[71] The first thing we would say about paragraphs (b) and (c) is that we have found it difficult to rely on them to any great extent because of the difficulty in understanding what situations they have in mind. How can a limited partner, as opposed to the limited partnership tenant, renounce a tenancy? Likewise, how can a limited partner, as opposed to the limited partnership tenant, breach the tenancy? We share Mr Kermack’s puzzlement as to what these provisions have in mind and why they were included.

[72] That having been said, we think that Mr Maclean was correct in saying that the terms of these paragraphs are at least consistent with his position in relation to paragraph (a). But we do not think they go beyond that. We do not see that they necessarily mean that paragraph (a) covers an invalid notice of dissolution. To be fair to Mr Maclean, he did not go that far.

[73] Mr Maclean also relied on the terms of subsec (5).

[74] Subsec (5) creates an exemption to the right of a general partner to exercise or enforce any right of a tenant conferred by virtue of Part 2 of the 2003 Act. The exception requires the notice of dissolution of the partnership to be served before 4th February 2003 and the land to have been transferred or let under missives concluded before 7th March 2003. It spells out that the partnership has to have been dissolved “in accordance with the notice” and it is on that explicit requirement that Mr Maclean relies, distinguishing it from the different terms of subsec (3).

[75] Although the wording in the two subsections is different, that does not seem to us to lead to any difference in meaning. Subsec (3)(a) talks of “the dissolution of the partnership by notice served on or after 16th September 2002”. Subsec (5)(a) talks of notice of dissolution having been served before 4th February 2003 and the partnership having been dissolved in accordance with the notice. Both are talking about the dissolution of the partnership by notice. Accordingly we attach no significance to the different wording of subsec (5)(a).

[76] So far as subsec (6) is concerned, Mr Kermack submitted that it required a purported termination of the tenancy – in the sense of a termination which would be effective except for the provision of the subsection – within the 28 day period before the general partner served notice under the subsection. Thus the service of the subsec (6) notice could not itself be the purported termination of the tenancy. The purported termination of the tenancy is a necessary precondition of service of a subsec (6) notice: the service of the notice cannot be the act which purports to terminate the tenancy.

[77] While this point serves to show that the action of the respondent in serving the subsec (6) notice has no bearing on whether there has been a purported termination of the tenancy it does not assist with the question whether the service of an invalid notice of dissolution amounts to a purported termination of the tenancy

[78] We do not think the wording of any other part of sec 72 is of assistance in construing the meaning of “purports” in subsec (3) but Mr Maclean made something of the structure of the section which, he said, suggested that the merits – what he described as the “whys and wherefores” – of the notice of dissolution came into play only at the stage at which the landlord applies to this court for an order under subsec (8). One did not look behind the face of the notice of dissolution until one got to that stage.

[79] We are not persuaded that subsecs (8) and (9) are of any assistance in construing subsec (3). Subsec (9) sets out the only grounds on which this court can make an order under subsec (8). It is concerned primarily with the purpose for which the notice was served, or the things mentioned in paragraphs (b) and (c) of subsec (3) done, and it seems to us to assume a valid and effective notice of dissolution. There seems little point in considering the purpose for which an invalid notice of dissolution is served unless the purpose of Parliament was to punish landlords for even attempting to terminate the tenancy, a matter to which we shall shortly turn.

[80] That completes our consideration of the parts of sec 72 which were relied upon as shedding light on the meaning of subsec (3) and in particular on whether a purported notice of dissolution is sufficient to engage it. It has not led to a conclusive result. We therefore have to turn to other aids to construction.

[81] One of these is the purpose of subsec (3). In Salvesen v Riddell (at para [55]), noting that subsec (3) was explicit in making sec 72 retrospective, the Court said:

“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.”

Subsec (3) is, therefore, an anti-avoidance provision but it is not necessary to assume that it is also intended to be a punitive one. Mr Maclean in fact agreed that the purpose of the legislation was not punitive. As he himself put it, sec 72 addressed a situation in which landlords were terminating, or attempting to terminate, limited partnership tenancies when they would not have been doing so but for their concerns about the effect of the intended legislation. The purpose of subsecs (3), (6), (8) and (9) of sec 72 can also be expressed, in terms of subsec (9), as being to prevent landlords from terminating limited partnership tenancies “for the purposes of depriving any general partner of any right deriving from [that] section”.

[82] For our own part, we do not consider that what Parliament was doing in passing sec 72(3) was punishing landlords for having the gall to attempt to defeat the expected results of the intended legislation. What it was doing was simply preventing them from succeeding. For that purpose it is not necessary to give subsec (3) the wider scope for which Mr Maclean contends. Where a landlord’s attempt to defeat the purposes of the legislation fails because it is invalid – such as by the service of an invalid notice of dissolution – there is no need to invoke the anti-avoidance provisions of sec 72. Where the attempt at avoidance has failed there is no need to rely on anti-avoidance provisions.

[83] Mr Kermack also relied on the principle that where an enactment is open to two possible constructions and one will do injustice and the other will avoid that injustice it is the duty of the court to adopt the latter; Stair Encyclopaedia para 1114. Mr Maclean argued that there was no injustice in visiting on the limited partner the consequences of what she had done voluntarily at her own hand. Mr Kermack pointed out that the interests of the landlords had to be taken into account as well as, or possibly rather than, those of the limited partner.

[84] We consider that a restrictive rather than expansive interpretation best serves the interests of justice in this case. The result of an expansive interpretation would be to put the applicants at risk of ending up in the same position as the applicant in Salvesen v Riddell, with a tenant enjoying the full security of tenure of an agricultural holdings lease on their hands. If they brought that risk upon themselves they certainly did so unwittingly and it is a result which, paraphrasing the words of the court in Salvesen (at para [71]), is unlikely to have been foreseen even by Parliament in passing the legislation. The respondent on the other hand, although he loses the windfall of full security of tenure on a restrictive approach, suffers no injustice in that he is left with the tenancy for which he originally bargained and with the rights conferred on a general partner by sec 72(2) of the Act. He is no worse off than he would be if the notice of 3 February 2003 had never been served.

[85] In our view these considerations as to (a) the interpretation given to the word “purports” in Isle of Gigha Heritage Trust v Heard, (b) how subsec (3)(a) is worded, with the word “purports” relating to the termination of the tenancy rather than the dissolution of the partnership, (c) thepurpose of the legislative scheme of which subsec (3) is a part, and (d) the interests of justice outweigh the support which consideration of paras (b) and (c) of subsec (3) gives to Mr Maclean’s interpretation. We conclude, therefore, that what sec 72(3)(a) is referring to is a notice of dissolution which is, in and of itself, valid and effective to dissolve the limited partnership and would, therefore, have the effect of terminating the tenancy but for the provisions of sec 72.

[86] As we have said, we have not found parties’ submissions as to the law of partnership of assistance. It was Mr Kermack who approached matters in this way and it was necessary for Mr Maclean to answer. It seems to us that Mr Kermack’s submissions on partnership all begged the question of whether what happened here was a purported termination of the tenancy for the purposes of subsec (3). Thus, although, as Mr Kermack submitted, the consequence of an invalid notice of dissolution, in and of itself, would normally be that the partnership, and therefore the tenancy, continued in existence, that avails the applicants nothing if a purported dissolution of the partnership, in the sense advocated by Mr Maclean, is all that is required to entitle the general partner to serve notice under subsec (6).

[87] We have therefore refused Mr Maclean’s motion. That does not, of course, mean that the applicants’ alternative case succeeds. There are other issues to be disposed of in relation to it and we have invited written submissions as to further procedure.

EXPENSES

[88] Following our usual practice we have reserved the expenses of the debate for written motions and submissions.

For the Applicants: Messrs Turcan Connell, Solicitors, Edinburgh

For the Respondent: Iain Maclean, Advocate; Messrs Anderson Strathern Solicitors, Edinburgh

Note: this decision is currently the subject of an appeal to the Court of Session.