THE COURT

(Lord McGhie, Sheriff R J MacLeod, Mr D J Houston)

THE GOVERNORS OF ROBB’S TRUST V EDWARDS

(Application RN SLC 159/10 – Order of 10 January 2011)

AGRICULTURAL HOLDINGS – ARBITRATION – ASSESSMENT OF RENT – WHETHER COMPETENT TO ASSESS RENT OUTWITH THE RANGE CONTENDED FOR BY PARTIES – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 1991 SECS 13, 60 AND 61 – INTERPRETATION ACT 1978 SEC 16

After various continuations for negotiation an arbiter appointed by Scottish Ministers in 2001 issued a draft award in May 2010. He made an assessment of rent, applying the provisions of section 13 of the 1991 Act, at a figure of £11,377. However, the landlord had argued that it should be £8,700 and the arbiter proposed to restrict his award to that figure. He posed two questions for the Court. The first was whether he had continuing jurisdiction standing the repeal of section 61 and Schedule 7 of the Agricultural Holdings (Scotland) Act 1991 (as amended), without saving provisions similar to those provided expressly in relation to sec 60. The second was whether he was bound to fix the rent within the range proposed by the parties. The Court answered the questions in the affirmative.

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

[1] David Edwards, the tenant of Pitcow Farm, Whiterashes, Aberdeenshire made a formal demand for arbitration to review the rent of the holding as and from the term of Whitsunday 2001. Kenneth Stuart Bowlt, FRICS, was appointed arbiter by Scottish Ministers on 24 May 2001 in terms of section 61 of the Agricultural Holdings (Scotland) Act 1991. A hearing and inspection took place on 13 February 2002 and the parties then made various attempts to reach a settlement. These proved unsuccessful and a further hearing was eventually held on 12 November 2009.

[2] The arbiter issued a draft award in May 2010. He made an assessment of rent, applying the provisions of section 13 of the 1991 Act, at a figure of £11,377. However, he took the view that he was bound to make his award within the range contended for by the parties. The tenant had contended that the rent should be £6,500 and the landlord that it should be £8,700 - which was, in fact, the passing rent prior to 2001. The arbiter proposed to restrict his award to £8,700.

[3] Following the issue of the draft award, the tenant intimated a challenge to the jurisdiction of the arbiter to make any award. The landlords then raised the question of whether the arbiter was obliged to restrict his award to the figure contended for by the landlords. The arbiter accordingly submitted two questions for determination by the Court.

Questions posed by the Arbiter

  1. Is the Arbiter still entitled on the basis of the Arbiter’s appointment dated 24 May 2001 to issue any award determining the rent in respect of the holding in terms of section 61 and Schedule 7 of the Agricultural Holdings (Scotland) Act 1991 (as amended) standing the repeal of those sections and the amendment of section 13 of that said Act without any saving provision of the unamended section 13 provisions applying to existing arbitrations analogous to that for existing section 60 arbitrations?
  2. Given that the question or difference remitted to the Arbiter was to determine the rent to be paid in respect of the holding of Pitcow Farm as from and after the term of Whitsunday 2001 and given that the Arbiter has formed the opinion that the rent properly payable in respect of the holding taking into account the factors referred to in Section 13 of the Agricultural Holdings (Scotland) Act 1991 should be £11,377 per annum is the Arbiter nevertheless bound to fix the rent within the range of £6,500 per annum proposed by the Tenant and £8,700 per annum proposed by the Landlord?

Hearing

[4] We heard parties in debate on 8 November 2010 when the landlords were represented by Mr James T Merson, solicitor, Aberdeen and the tenant by Mr Andrew A Murchison, solicitor, Inverness.

Authorities referred to

Boyd v MacDonald 1958 SLCR 10
Coulston Trust v AC Stoddart 2010 SC 399
County Council of Moray and Others Petitioners 1962 S.L.T. 236
Director of Public Works v Ho Po Sang 1961 A C 901
Frogmore (Scotland) Ltd v Ardler Farms 2005 SLCR 1
Garvies’ Trustees v Still and Ors. 1972 SLT 29
Hamilton Gell v White [1922] K B 422
Heritable Reversionary Co v Millar (1892) 19 R (HL) 43
Miller & Son v Oliver & Boyd 1903 6 F 77
Mount Stuart Trust v McCulloch 2010 SC 404
Telfer v Buccleuch Estates Ltd. 2007 SLCR 1

Text books

MacPhail Sheriff Court Practice Third Edition
Reid and Blackie Personal Bar
Hon Lord Gill The Law of Agricultural Holdings in Scotland Third Edition
RLC Hunter The Law of Arbitration in Scotland

Statutory material

Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act”)
Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”)
The Agricultural Holdings (Scotland) Act 2003 (Commencement No. 3, Transitional and Savings Provisions) Order 2003 ( “the Commencement Order”)
Interpretation Act 1978
Scotland Act 1998 (Transitory and Transitional Provisions) (Publication and Interpretation etc of the Acts of the Scottish Parliament) Order 1999 (1999 No. 1379) (“the Scotland Act Order”)

[5] In this note, references to secs 13, 60 and 61 are to the unamended provisions of the 1991 Act and references to sec 16 are to that section in the Interpretation Act. The relevant parts of these provisions are in the following terms:-

Section 13(1): Subject to subsection (8) below, the landlord or the tenant of an agricultural holding may, whether the tenancy was created before or after the commencement of this Act, by notice in writing served on the other party, demand a reference to arbitration of the question what rent should be payable in respect of the holding as from the next day after the date of the notice on which the tenancy could have been terminated by notice to quit (or notice of intention to quit) given on that date, and the matter shall be referred accordingly.

Section 60(1): Subject to subsection (2) below and except where this Act makes express provision to the contrary, any question or difference between the landlord and the tenant of an agricultural holding arising out of the tenancy or in connection with the holding (not being a question or difference as to liability for rent) shall, whether such question or difference arises during the currency or on the termination of the tenancy, be determined by arbitration.

Section 61(1): Any matter which by or under this Act, or by regulations made thereunder, or under the lease of an agricultural holding is required to be determined by arbitration shall, whether the matter arose before or after the passing of this Act, be determined, notwithstanding any agreement under the lease or otherwise providing for a different method of arbitration, by a single arbiter in accordance with the provisions of Schedule 7 to this Act, and the Arbitration (Scotland) Act 1894 shall not apply to any such arbitration.

Section 16(1): Without prejudice to Section 15, where an Act repeals an enactment the repeal does not, unless a contrary intention appears:-

(a) revive anything not in force or existing at the time at which the repeal takes effect;

(b) affect the previous operation of the enactment repealed or anything duly done or suffered under that enactment;

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under that enactment;

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against that enactment;

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture, or punishment may be imposed, as if the repealing Act had not been passed.

Submissions

[6] The parties provided full written submissions, copies of which are held by the Court. We summarise them briefly.

Submissions for the tenant

The first question

[7] Mr Murchison accepted that, if the arbitration had been an arbitration under sec 60 there would have been no difficulty because the provisions of the Commencement Order expressly covered that case. But he submitted that the arbitration was properly to be seen as having taken place under sec 13 and there were no relevant transitional provisions. The arbiter’s powers had been removed by the changes made by the 2003 Act. He no longer had jurisdiction to make any determination of rent.

[8] The arbitration had been dealt with on the basis that it was an arbitration under and in terms of sec 13 and he pointed out that there was nothing in the written material relating to it to suggest that it was conducted under sec 60. However, we understood him to accept that the question of whether that section applied was, ultimately, one of construction.

[9] He contended that sec 60 was either a “mopping up” provision which did not include areas where specific jurisdiction is conferred under any other section or, possibly, that it was an alternative provision which did not automatically encompass other specific jurisdictions. When a party had a dispute about rent he might be entitled to elect either to seek arbitration under section 13 and 61, or under sec 60. In this case, it was clear that the arbitration took place under secs 13 and 61.

[10] The provisions of sec 13 were not consistent with sec 60 and could be said to fall within the sense of “to the contrary” as it appeared in that section because, while arbitration under sec 60 was unrestricted in its timing, arbitration under Section 13 was limited by various preconditions. Further it was clear that if there had been no sec 60 there would have been no difficulty in regarding the appointment as validly made in terms of sec 13.

[11] The effect of the changes made by sec 63 of the 2003 Act was to remove the jurisdiction of arbiters to act under sec 13 and confer jurisdiction on the Court. It also removed the right to arbitration under sec 60 and conferred a general jurisdiction on the Court. The transitional provisions of the Commencement Order referred only to sec 60. Section 61 had been substituted with provisions which did not give the arbiter any continuing power to make an award. This had the practical result that sch 7 of the Act (the Schedule under which the arbiter operated) has been made ineffective (because sch 7 only had effect insofar as it was supported by sec 61). The 2003 Act was brought into effect by the Commencement Order with the appointed day being 27th November 2003. The arbiter’s powers ended at that date unless saved by the provisions of the Interpretation Act.

[12] Mr Murchison noted that the Interpretation Act applied to Acts of the Scottish Parliament in terms of sec 23A of the Act. He then addressed the terms of sec 16. There were a number of qualifications to be met before sec 16 could apply. He summarised these as follows: the relevant parts of the 2003 Act had to “repeal an enactment”; there had to be a “right, privilege or liability”; the only relevant rights or liabilities were those which were “accrued or incurred”; and these had to be rights, or liabilities, accrued or incurred under the enactment repealed. The provisions of Section 16(1)(e) did not take the matter further because that sub-section referred back to the previous sub-sections.

[13] He submitted that the relevant changes made by the 2003 Act were not properly to be regarded as “repeals”. They were substitutions. The inference to be taken from a substitution, instead of a repeal, was that it was the intention of the legislature that the previous provision be not repealed as such but simply amended and that it would apply with continuing effect in its amended form to all cases (past and present). If sec 16 was intended to apply to every statutory change (and not only repeal) it would have said so in terms.

[14] In any event, any repeal required to relate to a right or liability. It was not clear what the landlords could rely on. He suggested that there were only three possibilities: (i) a right to an increased rent; (ii) a right to a rent review; and (iii) a right to a rent review by arbitration.

[15] He contended that none of these were relevant rights within the meaning of the section. He pointed out that an arbitration process did not give rise to a “right” to an increased rent: Mount Stuart’s Trust v McCulloch para 17. There was no relevant accrued right.

[16] Reference was made to Director of Public Works v Ho Po Sang; Hamilton Gell v White; and County Council of Moray and Others Petitioners. Mr Murchison suggested that from these cases certain principles could be determined : (a) a right acquired (albeit for an indefinite amount), was preserved; (b) taking steps under a statute did not on its own result in an accrued right; (c) there was a requirement of “vesting” of a right to some degree; and (d) the right accrued had to be under the repealed enactment. In the present case, the changes did not relate to the right to rent but to the statutory machinery for determining that rent. He founded on dicta in Director of Public Works, at p 91. Appointment of an arbiter did not give rise to any accrued right. It did not matter how far the process had gone.

[17] As an aspect of the first question, the parties addressed the fact that the tenant had not made any attempt to challenge the competency of the arbitration until after the issue of the proposed award. Mr Murchison contended that Boyd v MacDonald was not secure authority for the proposition that any argument as to competency had to be taken as a preliminary plea and argued at a suitably early stage of the case. He referred to MacPhail para 9.121 and Personal Bar paras 19.03-19.09. He accepted that there were circumstances when a plea to competency would be too late but normally a plea to competency could be taken at any time. A relevant factor to consider was the policy of the law. The clear policy of Parliament was to take jurisdiction from arbiters and give it to the Court. A finding which allowed an arbiter to continue to have jurisdiction would defeat the policy of the law. Reference was made to Garvie’s Trustees v Still p 36, where the Court of Session had pointed out that the Land Court was a creature of statute whose powers depended on statute. The Court could not acquire jurisdiction by agreement. The same principle applied to arbitration.

The second question

[18] In relation to the second question, he contended that the scope of any arbitration required consideration of the question put by parties and their respective submissions. Due to the nature of arbitration, an arbiter had to reach a decision within the parameters set by the parties. In any event, in the particular circumstances of this case, the arbiter could not ignore the unusual fact that the landlords expressly asserted that the rent at which the holding might reasonably be expected to be let in the open market by a willing landlord to a willing tenant and having regard to all the matters specified in Section 13 of the Act, from and after Whitsunday 2001 should be determined at £8700.00. This was best evidence of the position of a willing landlord. The arbiter appeared to have ignored the evidential weight to be given to the landlords’ stated position in the pleadings.

[19] He recognised that in Mount Stuart Trust v McCulloch the Lord Justice Clerk, Lord Gill, had observed that the role of the Land Court in assessing a rental was to fix the same in terms of sec 13(3), and could fix a rent that was outside the parties’ figures. However, he said this was an obiter remark. It need not apply to arbitration which, by its nature, was the submitting of a dispute to the decision of one or more persons rather than resorting to a court of law. Certain parameters were set down by the parties and the arbiter was correct to say that his determination should be within these parameters.

[20] Under sch 7, para 5, of the 1991 Act there was a clear requirement that the parties to arbitration were restricted to their respective statements of case. It would be consistent with the requirements of sch 7, and the nature of arbitration itself if the arbiter were to be restricted in the scope of his award.

[21] Several policy considerations supported this. The general approach in relation to the matter of rent review was to establish as much common ground as possible in each case. This reduced the cost to parties. It would be unsatisfactory if the arbiter was bound to ignore agreements. Pleadings were intended to focus the issues in dispute. The arbiter ought to have regard to them. Mr Murchison adopted the observations of this Court in Telfer v Buccleuch Estates Ltd as correct and as supporting his position. He referred to the decision in Miller & Son v Oliver & Boyd as an example of a case where the question for the arbiter was extended by reason of the parties’ conduct and suggested that it was difficult to see why parties’ conduct could not similarly restrict the matter to be determined.

[22] In any event, what the arbiter had to do was to fix the rent according to the terms of the section. Subsection 13(3) provided how that rent is “normally” fixed. In circumstances such as the present, there was sufficient latitude for the arbiter to give no more than had been asked for by the landlords.

Submissions for Landlords

The first question

[23] The landlords submitted that when interpreting the effect of the 2003 Act, the Court should take into account the rules and principles of statutory interpretation. If an enactment was open to two possible constructions and if it appeared one would do injustice and the other would avoid that injustice it was the duty of the court to adopt the second: Heritable Reversionary Co v Millar.

[24] The tenant’s argument would leave the parties without a means of having the arbitration completed and a finding or order made by the arbiter. This would cause injustice to the parties whose difference would be unresolved. He suggested that they would be unable to recover any expense incurred in conducting the arbitration. A construction which would avoid that injustice should be preferred by the court.

[25] Mr Merson then went on to deal with the provisions of sec 16 but it is convenient to follow the order adopted for the tenant and note first the argument in relation to the Commencement Order. He suggested that secs 13, 60 and 61 and sch 7 of the 1991 Act all had to be read together. They formed the framework under which any question or difference relating to the amount of rent to be paid for a holding fell to be resolved. Section 13 gave the landlord or the tenant a right to demand a reference to arbitration on the question of what rent should be payable in respect of the holding “and the matter shall be referred accordingly”. “Referred accordingly” should be interpreted as meaning “treated as a question or difference between the landlord and the tenant which in terms of section 60 (not being a question or difference as to liability for rent) fell to be determined by arbitration”. Section 61 then provided that any such question or difference requiring to be determined by arbitration was to be decided by a single arbiter in accordance with the provisions of sch 7 of the Act. The schedule then set out the detailed rules under which the arbiter was to proceed. A question or difference between the landlord and tenant as to the amount of rent was therefore one of the matters which required, under sec 60, to be dealt with by arbitration.

[26] Section 60 provided that any question or difference between the landlord and tenant should be determined by arbitration “except where this Act makes express provision to the contrary”. An example of this was sec 61(7) another was sec 39(2). Section 13 contained no express exclusion of the provisions of sec 60. It was, therefore, within the ambit of that section.

[27] Mr Merson relied mainly on the provisions of sec 16. The parties had acquired a clear right under the 1991 Act to have their rent determined by arbitration. However that might be expressed, it was a very specific right and was, therefore, covered by the provisions of subs (1)(e). He made reference to secs 16 and 23A of the Interpretation Act and to para 13(1) of the Scotland Act Order.

[28] In any event, the tenant, by his actions, had waived any right to take the point. He had impliedly accepted the jurisdiction of the arbiter to continue to make a determination. The tenant appeared at the hearing on 12 November 2009. He gave evidence then and made submissions to the arbiter. He had acquiesced in the arbiter continuing in office. The tenant made no submission that the arbiter had no power to continue to act until after the arbiter had issued his draft award. The submission was too late and the tenant was barred from making it. Reference was made to Boyd v MacDonald.

The second question

[29] The landlords submitted that the arbiter was not bound to fix the rent within the range proposed by parties. The arbiter’s duty was to determine “the rent properly payable” and sec 13(3) provided how that was to be determined. The arbiter was entitled and bound to use his own skill, knowledge and experience as well as taking into account the evidence produced at the hearing and at an inspection. He was not bound by any submissions of the parties. It was not the arbiter’s function to make a choice between two competing claims.

[30] It was the tenant who made the demand for arbitration. The landlords’ position, at the time of the reference and at the time of the final hearing, was that they were not themselves seeking to instigate an increase in the rent payable. The landlords wished to avoid a finding that each side should pay its own expenses. The relevant statements and submissions were equivalent to an open offer to the tenant offering to leave the rent as it was. That offer had not been accepted by the tenant. The matter having been allowed to go to the decision of the arbiter it was for him to make his own independent judgment. He accepted that an arbiter was bound by what parties had actually agreed but that was not the same as what they averred. There was no relevant agreement. The offer would be relevant only in relation to expenses. Reference was made to paras 17 and 18 of sch 7 to the 1991 Act .

Discussion

[31] The parties’ submissions proceeded upon an assumption that the changes made by the 2003 Act removed the arbiter’s power to determine rent applicable at Whitsunday 2001, unless that power was preserved by the Commencement Order or the provisions of sec 16 of the Interpretation Act 1978. No attempt was made to address, directly, the question of whether the effect of Mr Murchison’s argument was to bring to an end any right of the parties to have their rent reviewed at Whitsunday 2001. It was not disputed that the old rent would simply continue until a proper review took place. There was a faint reference by Mr Murchison to the Court “stepping in” or taking over from the arbiter, but it is not easy to see any basis upon which the Court could be said to have jurisdiction to do so, and the matter was not pursued.

The first question
Scope of the Commencement Order

[32] In relation to the Commencement Order, we think that the competing arguments turned essentially on the question of whether sec 60 was to be viewed as a “mopping up” provision covering all disputes not otherwise dealt with, or was an overarching provision giving some formal effect to any other provisions relating to arbitration. It was not suggested that the distinction was of any possible significance in relation to the operation of the 1991 Act. The significance arose because the transitional provisions referred expressly to sec 60 alone.

[33] No reason was suggested for any distinction between arbitration under sec 13 and arbitration generally under sec 60 for the purposes of transitional provisions. It can hardly be thought that there was any deliberate intention that on-going rent arbitrations should be affected by the new provisions. The relevant provisions relate to the machinery of dispute resolution and not to issues of substantive right and there would have been no sensible purpose to be served by bringing all existing arbitrations to an end without regard to the stage they were at. It might reasonably be assumed that the draftsmen thought that the provisions of sec 60 were, indeed, wide enough to cover all arbitrations. But, equally, the omission of a reference to sec 13 might simply have been an accident. We were not addressed on the terms of the relevant paragraph in the Commencement Order but it may be said that it is not an entirely straightforward provision. A question or difference would not arise “under sec 60” and the provision probably has to be read as if words such as “requiring to go to arbitration” were included before that phrase. However, there was no attempt to suggest that the provision could be read as if it covered sec 13 and construction of sec 60 is not assisted by the question of whether this was due to accidental omission or a wrong assumption by the draftsman.

[34] We have come to conclude that, on a proper view of the 1991 Act, Mr Murchison’s primary submission is correct. An arbitration in relation to rent is based on sec 13 and not sec 60. We reach this conclusion for several reasons.

[35] In the first place, we think it clear that, in relation to quantum of rent, the provisions of sec 60 cannot be read as providing an alternative procedure. Although sec 13 is expressed in permissive terms - “the landlord or tenant …may…demand a reference to arbitration” - we have no doubt that the effect of the Act is that if either party wishes to have the rent changed it is necessary to proceed under sec 13. It would not have been open to any one party to refer a difference over the amount of rent to be determined by some other form of statutory arbitration under the 1991 Act. In other words, sec 60 is not available as a fall back or alternative to the provisions of sec 13. It is also clear that reference to sec 60 is quite unnecessary in the context of a rent arbitration. If there had been no sec 60, there would have been no reason to doubt that the Act provided sufficient machinery for arbitration in respect of rent. Indeed, it may be noted that schs 7 and 8 make various references to “arbitration under section 13”.

[36] Further, we think it necessary to recognise that sec 60 is not expressed as an enabling provision. Its primary purpose is restrictive. It excludes the jurisdiction of the ordinary courts. It makes no provision governing arbitration. It does not provide for the conduct of arbitrations. An arbitration could not in any meaningful sense be said to proceed under the provisions of sec 60.

[37] We do not accept Mr Merson’s submission that sec 60 is part of a framework under which a difference as to rent would fall to be resolved. Sections 13 and 61 provide the framework and reference to sec 60 is unnecessary. It is significant, in this context, that the role of sec 61 is not limited by any reference to sec 60. On the contrary, it applies to any matter which is required to be determined by arbitration “by or under this Act, by regulations made thereunder, or under the lease of an agricultural holding”. It might also be added that one effect of subsections (7) and (8) is expressly to exclude certain types of arbitration from the ambit of sec 60 while leaving them subject to arbitration under the Act. Clearly, sec 60 is not an essential part of the framework of arbitration under the 1991 Act.

[38] Mr Merson stressed the need to construe legislation in a sensible and just way and relied on the words “express provision to the contrary” as allowing sec 13 to be treated as falling within sec 60. However, we do not accept that this phrase can be used to extend the meaning. Provision “to the contrary” would be provision for a particular dispute to be dealt with other than by arbitration. It does not have any bearing on provisions which do require arbitration.

Section 16

[39] We turn to consider the provisions of sec 16 of the Interpretation Act. We are satisfied that the term “repeal” is wide enough, in the context of the Act, to cover all changes which have the effect of rendering previous legislative provisions inoperable or ineffective. The whole argument, that it was no longer competent for the arbiter to determine the rent at Whitsunday 2001, was implicitly based on the proposition that the power he had to do so under the original provisions had been repealed.

[40] We consider that the circumstances of the present case fall within the scope of sec 16(1)(e). The arbitration was a legal proceeding. It was necessary to determine the amount of rent to be paid at a specific date. Under the existing provisions the tenant had acquired a right to challenge the amount to be paid. The obligation to pay rent was not in issue. Section 13 gave parties an important right to have the amount reviewed by an arbiter. As in the present case the right had the practical effect of allowing a tenant to seek to have his rent reduced. In its essential features, the proceedings were similar to litigation to determine any illiquid claim. The obligation to pay rent was clear, the amount which would be due to be paid was not. Under the existing legislation, the arbiter had no discretion. The parties had a right to a determination of the amount to be paid.

[41] Mr Murchison’s argument turned on a careful analysis of the nature of the right involved and the scope of the rights which might be said to have been “acquired or accrued” under the 1991 Act. Ultimately, it turned on the proposition that a right to have rent determined by arbitration was not a relevant type of right for the purposes of sec 16. We understood him to rely on dicta in Director of Public Works v Ho Po Sang in support of that contention. But we do not think the decision establishes any general proposition to that effect.

[42] It is unnecessary for us to attempt to restate the detail of that complicated case. The critical issue related to the right of a head lessee to acquire possession of subjects let to a sub-tenant. Under the previous legislation this could be achieved by a process which included a need to acquire a “rebuilding certificate”. Grant of such certificate was in the discretion of the Governor in Council. The lessee had applied for a certificate. But, the new legislation had the effect of ending the system for grant of rebuilding certificates by the Governor.

[43] It was contended that the lessee’s application to have the grant of a certificate considered by the Governor in Council was a relevant right for the purpose of provisions similar to those of sec 16. In addressing the question, the court proceeded, not by focusing on the procedural right itself but by analysis of the nature of the substantive right which might come at the end of the procedure. It was held that the procedure which the lessee had followed in applying for a certificate conferred no right to the certificate, merely a hope or expectation. At the stage of the application the lessee was quite unable to know whether he would be given a certificate. That issue was open and unresolved. In these circumstances, the Committee determined that the entitlement of the lessee to have the petition seeking a certificate considered was not a right falling within the relevant Interpretation Ordinance. The Committee did not deal with the matter on the simple basis that a right to have an issue determined in a specified manner could never be a relevant right for the purposes of the Interpretation provisions.

[44] The Committee distinguished the situation in that case from a case where, under some repealed enactment, a right had been given but some legal procedure was necessary in respect of it. Such a right was unaffected by the new legislation. “There is a manifest distinction between an investigation in respect of a right and an investigation to decide whether some right should or should not be given”. It was pointed out that the repeal of the provisions relating to grant of a rebuilding certificate “ended the hope or possibility of being given a rebuilding certificate”. The lessee enjoyed no hope that was kept alive. The procedural steps taken were simply rendered abortive: see generally at p 924.

[45] There is no doubt that the present case falls under the description of an investigation in respect of a right. The parties had a right to have their rent determined for a period prior to the date of the coming into effect of the new Act, by a legal proceeding which was pending at that date. Put in practical terms, they were in dispute about the amount of money one was due to pay the other on a specified date. The current legislation gave them a right to have that determined by an arbiter. It was a right with clear practical consequences. We see nothing in the dicta in Director of Public Works case which would compel us to reach the result contended for on behalf of the tenant in this case.

[46] Mr Murchison’s argument depended essentially on the proposition that a right to have a matter determined by arbitration was not a relevant right for the purposes of sec16. We think that implicit in that contention was the proposition that such a right conferred nothing of substance. But the right was to have the quantum of rent determined by an arbiter. There was no independent substantive right which might be distinguished from the arbitration process. Although the technical provisions regulating the basis upon which the rent was to be assessed were not radically changed by the 2003 Act, they were changed. The parties had a right to have rent assessed under the terms of the whole provisions of sec 13 of the 1991 Act as it stood at Whitsunday 2001.

[47] It may be added that a right to go to arbitration is often regarded by one or other party as a right worth fighting for. There have been many litigations with that as the ostensible point at issue. But, leaving that consideration entirely aside, it is enough to say that we do not accept the decision in the Director of Public Works case as establishing the proposition that a right to have rent for Whitsunday 2001 assessed by an arbiter was not a relevant right in terms of sec 16 and see no sound basis for the proposition that the provisions of that section are not wide enough to cover such a right.

Competency

[48] In any event, we are satisfied that the landlords’ contention, that the tenant should not have been allowed to raise this issue at the late stage he did, is well founded. Both parties approached the matter on the basis that the first question was wide enough to allow us to deal with this point although this is clearly a matter distinct from the question of statutory construction. It was primarily one for the arbiter himself as part of his right to control proceedings before him. The parties’ submissions tended to view the issue in terms of waiver or personal bar but what we are dealing with relates, essentially, to the powers of a court or arbiter to control of the process of litigation. We consider that, while some of the thinking behind the concept of bar may help guide a court or arbiter, the issues are distinct from questions of personal bar.

[49] Mr Murchison suggested that when considering procedural bar in relation to a plea to competency, the main question was whether any fundamental policy of law would be defeated by refusing to accept the plea to competency. It may be noted that an example of this approach may be found in the decision in Colstoun Trust v AC Stoddart & Sons at para [13] although this was not cited to us. We have no doubt that where there are clear issues of policy restricting the jurisdiction of a court or tribunal, a plea to competency may be taken at any time: Garvie v Still. Where such a plea is taken late, the party taking it may expect to be found liable in expenses but lateness will not, itself, suffice to create jurisdiction.

[50] In the present case, we are entirely satisfied that there is no ground of policy to require a late plea to competency to be entertained. It is plain that the policy of the legislation was that rent review as at Whitsunday 2001 should be dealt with by arbitration. It may also be noted that although Parliament has given jurisdiction to the Court to deal with disputes arising since November 2003, it makes express provision for parties to go to arbitration if they agree to do so. There is no new policy against arbitration.

[51] We are satisfied that what was in effect a plea to competency advanced before the arbiter for the first time at a very late stage in the proceedings, should have been rejected as too late. The arbiter would have been free to issue his award without raising the first question in its present form, although he might well have wished to raise a question about acceptance of the late plea, instead.

The second question

[52] This question is not free from difficulty. The provisions of sec 13 might tend to suggest that the arbiter was given a duty, independent of the dispute between parties, to lay down the proper rent. In other words, that Parliament had in mind that the arbiter was to make a wholly independent inquiry and determine the rent for himself under reference to the tests set out in the section. Subsection (2) is expressed in apparently mandatory terms - “the arbiter shall determine” - and subsec (4) might be thought to suggest that, if the arbiter was not satisfied by the “evidence”, he was to rely on his own “information”.

[53] Similar difficulties arise in relation to the role of the Court under the provisions of the section as amended by the 2003 Act. The Court is told to determine the rent in accordance with the various provisions. There is no recognition of the role of the parties in presenting evidence or of any restriction of the Court to evidence properly before it. Although the 2003 Act made various changes to the detailed provisions of the section there is, in the present context, no apparent difference between the terms of the original sec 13 relating to arbiters and the new provisions relating to determination by the Court and we look first at the latter.

[54] We had to consider the implications of the amended section to determine what procedures should be followed by us in relation to our new jurisdiction. In one of the first cases coming before us in terms of sec 13, Frogmore v Ardler Farms, we said: “It is…also clear that it is not the function of the Court to act as investigators hunting for evidence. The task of a court is to resolve disputes between parties. Determination of rent by a Court must be based on the application of the proper tests to the material put before us by parties. Some of the language used in discussion of rental determination might tend to suggest that all was to be left to the Court. But all statutory provisions and other legal dicta must be read in context. The context assumes that there is to be, or has been, a litigation with competing contentions and competing bodies of evidence. Legislators know that this is how courts function and we have no doubt that the statutory provisions must be read in this way.” We went on to say that this meant that a party seeking a determination had to set out their contentions and set out their proposed figure.

[55] These observations were made to guide parties as to how we would approach our new jurisdiction. We had not heard submissions. We did have to consider the same issue more fully in Telfer v Buccleuch Estates. We drew to attention of parties at the start of the debate our decision in that case. Mr Murchison adopted the view we there expressed to the effect that, although the language of sec 13 might suggest that there was an obligation on the Court to reach an independent determination of the proper rent, Parliament had to be taken to assume that the enactment would be read in the context of a litigation. The primary function of the Court was to resolve disputes.

[56] However, although these remarks were made in the context of a dispute as to the role of the Court in relation to sec 13, they did not follow a full arms length debate. There was a measure of agreement as to what should be done and we were dealing essentially with somewhat inchoate doubts expressed by a party litigant. Nevertheless, we are satisfied that the essential point is that Parliament must have assumed that the enactment would be read in the context of litigation. Litigation in Scotland is, for the most part, conducted on an adversarial basis. If Parliament had positively intended to impose on the Court a separate duty above and beyond the duty to resolve a dispute between parties we think it would have been bound to say so. There are examples, particularly in Crofting legislation, of duties imposed on the Court in relation to the status of crofts which require the exercise of an independent discretion by the Court. We find no general principle underlying the Agricultural Holdings legislation which might point to such a duty.

[57] We recognise that the observation of the Lord Justice Clerk in Mount Stuart Trust v McCulloch which was very properly drawn to our attention by Mr Murchison, may be thought to point to a different view. Lord Gill was dealing with the argument that a tenant was not burdened by an immediate liability to pay at the current rent as there was a prospect that the rent would be reduced by the Court when it made its determination. He said this was fallacious. He went on to say that “the duty of the Land Court is to determine the rent that is properly payable by applying the valuation principles and criteria set out in section 13. The Land Court can fix a rent that is outside the parties’ figures. Where the tenant seeks to have the rent reduced, it may even be persuaded to increase it”.

[58] Any observation by Lord Gill is entitled to great respect, particularly in relation to matters of agricultural law where his experience and understanding is unrivalled. However, the comment that the Court could fix a figure which was outside the parties’ figures was not necessary to deal with the submission that a prospect that the rent might be reduced affected the ongoing liability. We read it as an aside. It reflects the plain language of sec 13 but it was made in circumstances where it was not necessary to consider the full implications of that language in its context. Accordingly, while it is an observation which has made us pause and scrutinise matters afresh, we have come to the conclusion that it does not bind us to conclude that the Court would be entitled to ignore the figures presented formally by the parties either in terms of legislation requiring claims to be set out or in response to a positive requirement by the Court.

[59] In reaching a decision under sec 13, there may be occasions where the Land Court would be free to disagree with figures advanced by parties in submissions, pleadings or in evidence and take a higher or lower figure according to the Court’s own view of the effect of the evidence. It is not clear that Lord Gill intended to refer to the figures formally presented as the parties’ claims in response to an order by the Land Court or in terms of sch 7. The justification for going outside the parties’ figures was plainly based on the language of sec 13. But we do not think that Lord Gill could have intended to be understood to mean that in rent assessment cases, the Land Court had a duty which was entirely independent of the positions of parties. It is plainly in the interests of justice and the efficient conduct of litigation that parties should be encouraged to reach agreement on as many matters as possible. But, where a Court relies on agreed figures in relation to parts of the dispute, it cannot be said that the ultimate determination is based on an independent assessment. We do not think it has ever been suggested that the Court is not entitled to rely on agreed material in proceedings under sec 13. It is not clear what principle, if any, would allow the Court to give effect to agreements between parties on matters of detail and yet prevent a formal requirement to set out a claim from having a binding effect.

[60] Mr Merson sought to distinguish between agreements between parties and mere assertion or averment. The Court would be free to go behind assertions of fact but would be bound by agreements. That is a well recognised distinction in determining, for example, what is or is not relevant as evidence. But it is not, in itself, a distinction which could explain why, if the Court is bound to make an independent assessment, it is nevertheless entitled to accept facts agreed by parties instead of making an assessment of its own in relation to all relevant issues.

[61] In any event, we do not consider that averments of fact are in the same category as competing claims. In an adversarial system the competing claims are the focal points of the process. We are not persuaded that the position of an arbiter is, or was, any different. The fundamental feature of an arbiter’s role is to decide between competing claims. Such a view of his role in relation to rent assessment is supported by the provisions of sch 7. Under the heading “Particulars of Claim”, para 5 provides for the parties to state their case with all necessary particulars and provides that they are confined at the hearing to the matters alleged in the statement. The decision of the arbiter is described as an “award”. In dealing with expenses he is to have regard to the reasonableness of the claim. In relation to rent, the “claim” must be the figure proposed.

[62] If Parliament had intended that rents should be assessed in the public interest by the arbiter acting as an independent expert, different provision would surely have been made for this. Having regard to the statutory requirement to set out a claim, it is not clear what public interest there could be in forcing a court or arbiter to ignore such claim. We are satisfied that in making a determination the Court or arbiter is entitled to proceed on the basis of material advanced by parties. There may be circumstances where the Court feels able to look beyond that material but the circumstances in which this can be done are limited. We are also satisfied that we are bound by incidental agreements reached. We have come to conclude that the provisions of sec 13 must be read as limited by their context. Having regard to the well understood roles of courts and arbiters in the Scottish legal system, we are satisfied that the arbiter was not entitled to make an award determining a figure for rent in excess of the figure claimed by the landlords.

[63] Mr Merson contended that the landlords had adopted their figure simply to provide protection in relation to expenses. We understood him to suggest that, on a proper view of his submissions, the arbiter should have realised that the landlords were actually seeking an increase in the rent. However, the pleadings were clear. The formal claim was for a rent of £8700. There was nothing to suggest that they expected the arbiter to go above that figure. If any change of position was being advanced at the hearing it was up to Mr Merson to make this abundantly clear. The arbiter would have had to deal explicitly with it. We are satisfied from the terms of the draft – in particular at p32 – and, indeed, from Mr Merson’s description of what transpired before the arbiter, that he did not make any change of position explicit. In his written submission to us, he did not attempt to suggest that there was any misunderstanding by the arbiter. It was simply argued that the arbiter was not bound by parties’ submissions. It was said if the rent fixed was in excess of their figure, they would rely on this in relation to expenses. It may be added that the well established method of obtaining protection for expenses is by way of tender or confidential offer. Such a course makes it clear that, if the offer is not accepted, the landlords will be seeking a higher sum. That is a straightforward approach. It has the advantage for the landlords of making it clear to the tenant not only that there is a risk in relation to expenses but a risk of having to pay a higher rent than that offered by the landlords.

[64] We do not think there was any substance in the alternative submission for the tenant that the arbiter should have taken the landlords’ claim as evidence of the proper rent. It was not suggested that this argument was advanced on behalf of the tenant in submissions before the arbiter. It would have been surprising if it had been. The landlords had led evidence to show that a higher figure could be justified. We find no reason to doubt the soundness of the arbiter’s approach. He made an assessment of evidence applying the statutory tests. The question he then posed was whether having formed an opinion as to the rent properly payable applying the statutory tests, he was nevertheless bound by the figure proposed by the landlords. If we had answered his question in the negative, it would clearly have been appropriate for him to determine the rent at £11,377 per annum.

Decision

[65] We answer both questions in the affirmative.

For the landlords: Stronachs, Solicitors, Aberdeen

For the tenant: Murchison Law, Solicitors, Inverness