Decision of the Scottish Land Court

The Trustees of the Gannochy Trust (Applicant)
v
Messrs J & K Steel (Respondents)

Case reference SLC/144/18
before
Lord Minginish, Chairman, and John Smith
30 July 2019

Introduction

[1] By the Chairman’s order of 26 June 2019 the Court called upon the respondents to, in essence, admit or deny the facts underpinning the applicants’ case. In their response they admit that they were in arrears of rent to the tune claimed and that they received the two statutory notices served by the applicants’ agents.

[2] The lease with which we are concerned is a Limited Duration Tenancy, in terms of sec 5 of the Agricultural Holdings (Scotland) Act 2003 (“the Act”), entered into for a period of 15 years from 16 March 2009.

[3] In terms of sec 18(1) of the Act, it is for the landlord and tenant to provide in the lease constituting such a tenancy what grounds there are for irritancy of the lease.

[4] In terms of clause 39 of the lease the proprietors are at liberty to put an end to the lease “on giving not less than two months prior notice in writing to the tenant in terms of Section 18(7) of the 2003 Act” in the event, inter alia, of the tenant “allowing any part of the rent to remain unpaid for 14 days after it has become due for payment in terms of this Lease”.

[5] Notwithstanding the freedom conferred on landlords and tenants to agree what grounds there are for irritancy of a lease such as this by sec 18(1) of the Act, the manner in which irritancy is to be effected is the subject of statutory controls in the form of subsecs (2A) and (7) of sec 18. The former says that where a lease is being irritated on the grounds of unpaid rent, a notice under subsec (7) may not be given unless “(a) the landlord has given the tenant a demand in writing requiring the tenant to pay the rent due before the expiry of the period of 2 months beginning with the date of the demand, and (b) the demand has not been complied with.It is now a matter of admission that such a notice was served on 29 May 2018 calling for payment of arrears of rent of £12,260 by 31 July 2018. Although certain payments were made or attempted during June and July 2018 it is not disputed that the arrears had not been cleared by 31 July.

[6] That being so, on 15 August 2018 the applicants’ agents served a notice under subsec (7) informing the respondents that “the Landlord hereby terminates the Lease in terms of clause 39 thereof as at 18th October 2018 and you are required to remove from the Subjects on that date”. Again it is now admitted that such a notice was served.

[7] In said order of 26 June the respondents were given the opportunity of saying anything else they wished to say by way of defence. Their response complains of a change of attitude on the part of the applicants after the departure of the Chief Executive who had been in place when the lease was granted, the subsequent involvement of bullying land agents who, it is said, exerted improper pressure on them to carry out repairs which should have been the responsibility of the landlords, the condition of the farmhouse and the fixed equipment, the level of the rent and the landlords’ continuing refusal to let them operate a micro-dairy. So far as the landlords’ failure to fulfil their obligations in respect of fixed equipment is concerned, were it the case that the respondents were withholding rent for that reason, they could have applied to the Court for an order requiring the landlords to fulfil their obligations under sec 84(1)(b) of the Act and then, if the landlords continued to default, for the protection offered by sec 12 of the Act (“Right of tenant to withhold rent”) but nothing like that has happened here. Instead we get the clear impression that rent was not being paid simply because the respondents couldn’t afford it. Nothing else said by the respondents comes any closer to constituting a defence to which the Court can give effect. Accordingly we have had no alternative but to grant the orders sought, which we have done.

[8] We have included in that an award of expenses, since that forms part of the crave of the application (in other words it is one of the orders sought in the application) and we can see no basis on which it can be refused. Whether the applicants enforce it is a matter for them but, if they do, (and we say this by way of explanation for the benefit of the respondents) they will have to produce an account of expenses which the respondents can challenge, if they wish, by making representations to the Principal Clerk of the Court, who is also its Auditor. That is what the somewhat formal and convoluted provisions relating to expenses in our order mean.

[9] In a case involving removal of a tenant from an agricultural lease, the practicalities of the removal and welfare of stock is always a consideration. We think a month is a reasonable period to allow for that purpose.