THE COURT

(Lord Minginish)

THRUMSTER ESTATE LTD v MINDT

(Application SLC166/13 – Order of 4 May 2016)

CROFTING - ALLEGED BREACH OF STATUTORY CONDITIONS - WHETHER APPARENT INSOLVENCY OF CROFTER HAS TO BE EXTANT WHEN MATTER COMES BEFORE THE COURT - WHETHER BREACH OF THAT CONDITION REMEDIABLE SO AS TO AVOID REMOVAL OR LANDLORDS ENTITLED TO DECREE DE PLANO - WHETHER SIGNING A TRUST DEED FOR CREDITORS A PURPORTED ASSIGNATION OF THE CROFT TENANCY AND, THEREFORE, A BREACH OF STATUTORY CONDITION 2 AS WELL AS CONDITION 10

The parties were, respectively, landlords and tenant of the croft of South Yarrows on the Thrumster Estate, Caithness. The applicants applied to the Court for an order for removal of the respondent from the tenancy of the croft for breach of condition 10 of the statutory conditions listed in Schedule 2 to the Crofters (Scotland) Act 1993, which provides that the crofter shall not do any act whereby he becomes insolvent within the meaning of the Bankruptcy (Scotland) Act 1985. The respondent had on two separate occasions signed a trust deed for behoof of creditors. It was not disputed that at least the second of those amounted to an act whereby she had become apparently insolvent with the meaning of the 1985 Act. The applicants also argued that the signing of a trust deed for creditors was a purported assignation of the croft tenancy and, therefore, a breach of statutory condition 2 as well as 10.

The matter came before the Court for debate on parties’ preliminary pleas, the applicants moving for decree de plano and the respondents for dismissal. By that time the respondent had been discharged by her trustee. The applicants argued, under reference to what had been said by the Court in Culfargie Estates Ltd v Leslie (infra), that a breach of condition 10 was a “palpable and irremediable breach” entitling them to decree de plano. The respondent argued that all breaches of the statutory conditions, including this one, were remediable and that where the tenant was no longer apparently insolvent when the case came before the Court for decision an application for removal required to be dismissed.

HELD (1) that what had been said in Culfargie was not capable of sustaining the interpretation for which the applicants contended, the comment (a) having been made in the context of an action in which there were other compelling grounds for the tenant’s removal, (b) not having been the product of detailed consideration by the Court pursuant upon submissions on the point by parties and (c) so interpreted, being inconsistent with what had been said and done in other cases before and since (Department of Agriculture v Muir, Secretary of State for Scotland v Black and Secretary of State for Scotland v Robertson, infra) and that a breach of condition 10 was remediable; (2) that condition 10 dealt with an act which, once done, provided a basis for removal of the tenant, subject to the Court’s discretion, in all the circumstances of the particular case, to refuse such an order, and it was not, therefore, the law that a state of apparent insolvency had to be extant when the matter came before the Court for decision; (3) that signing a trust deed for creditors was not a purported assignation of the tenancy for the purposes of statutory condition 2, the statute recognising a distinction between the two types of breach and providing separately for them, which distinction such not be confused, McDonald’s Trustee v Aberdeen City Council, infra, distinguished; and (4) that both parties’ preliminary pleas therefore fell to be repelled.

The Note which accompanied the Court’s order, so far as relevant, was in the following terms:

[1] In this application the applicants, who are landlords of the croft of South Yarrows, Thrumster, Caithness, seek the removal of the respondent, who is tenant, for a breach of condition 10 of the Statutory Conditions contained in the Schedule to the Crofters (Scotland) Act 1993 (“the 1993 Act”). That condition forbids a crofter to “do any act whereby he becomes apparently insolvent within the meaning of the Bankruptcy (Scotland) Act 1985”. It is not disputed that the respondent has on two occasions in the course of her tenancy granted trust deeds in favour of creditors.

[2] Both parties have preliminary pleas directed at the relevancy of the other’s pleadings and I heard debate on these at Edinburgh on 14th March when the applicants were represented by Mr Ross Anderson, advocate, and the respondent by Mr Brian Inkster, solicitor.

Legislation

Crofters (Scotland) Act 1993

26 Provisions as to removal of crofter

(1) When –

(a) one year’s rent of a croft is unpaid,

(b) a crofter has broken one or more of the statutory conditions (other than the condition as to payment of rent), or

(c) a crofter has breached any duty mentioned in section 5AA, 5B or 5C, the Land Court may, on the application of the landlord and after considering any objections stated by the crofter, make an order –

(i) terminating the tenancy;

(ii) declaring the croft to be vacant; and

(iii) for removal of the tenant from the croft.

Bankruptcy (Scotland) Act 1985

7 Meaning of apparent insolvency

(1) A debtor’s apparent insolvency shall be constituted (or, where he is already apparently insolvent, constituted anew) whenever –

(a) his estate is sequestrated … ,

(b) … he gives written notice to his creditors that he has ceased to pay his debts in the ordinary course of business

(c)(i) he grants a trust deed.

(2) A debtor’s apparent insolvency shall continue, if constituted under –

(b) subsection 1(b), (c) or (d) above, until he becomes able to pay his debts and pays them as they become due.

The Protected Trust Deeds (Scotland) Regulations 2008

Discharge of the debtor

19 (1) Subject to paragraph (2) and regulation 20 below, a debtor will be discharged from all his or her trust deed debts and obligations contracted by that debtor, or for which the debtor was liable at the date the trust deed was granted, if the following conditions are met -

(a) the trustee under the protected trust deed makes a statement that to the best of the trustee’s knowledge the debtor has met the debtor’s obligations under the trust deed; and

(b) any notice of inhibition under paragraph 2 of Schedule 5 to the Act has been recalled or expired.

(3) If the conditions in paragraph (1) above are met, the trustee must send –

(a) to the debtor a written letter of discharge in form of Form 5 set out in Schedule 1 to these Regulations from the trust deed;

(b) to the Accountant a copy of the letter referred to in paragraph (a) above for recording in the register of insolvencies.

(4) On receiving the copy of the letter referred to in paragraph (3)(b), the Accountant must forthwith record the debtor’s discharge in the register of insolvencies and the date of registration will be the date of discharge.

Cases

Brown v Jackson 2010 SLCR 1
Corbett v MacLeod 1990 SLCR 25
Culfargie Estates Ltd v Leslie 1957 SLCR 38
Department of Agriculture v Muir 1932 SLCR 26
Elliot v Mackay 1936 SLCR 3
Guthrie v Bowman (No 2) 1998 SLT (Land Ct) 7
Irvine v Fordyce 1926 SLCR 57
Joint Liquidators of Scottish Coal Co Ltd v SEPA 2014 SC 372
Little v McEwan 1965 SLT (Land Ct) 3
McDonald’s Trustee v Aberdeen City Council 2000 SC 185
Secretary of State for Scotland v Black 1965 SLT (Land Ct) 2
Secretary of State for Scotland v Robertson 1991 SLCR 74

Respondent’s submissions

[3] Mr Inkster made reference to the terms of the 1985 Act. In short, apparent insolvency was constituted by, among other methods, the granting of a trust deed (sec 7(1)(c)(i)) and, if so constituted, continued until the debtor became able to pay his debts and paid them as they become due (sec 7(2)(b)). The trust deed here had been granted on 26 November 2010 (this is the second of the two deeds granted) and the respondent had, therefore, become apparently insolvent at that time. The deed had been discharged by letter from the trustee on 12 February 2014. The present application had been received by the Court on 13 January 2014. The respondent was therefore no longer apparently insolvent and had probably become able to pay her debts as became due before the application had been lodged.

[4] There was a suggestion in the applicants’ pleadings that the granting of a trust deed for creditors also involved a breach of statutory condition 2, which forbids a crofter from executing “any deed purporting to assign his tenancy”. This was not so. In Irvine v Fordyce this court had held (at page 60) that the truster continued to hold the radical right to his estate and was not divested of his whole interest.

[5] Irvine was to be preferred to McDonald’s Trs v Aberdeen City Council, on which the applicants were founding. That was not a crofting case at all but one under the Housing (Scotland) Act 1987. It had decided that the granting of a trust deed for creditors by a council house tenant who had bought her house was a disposal of the property for the purposes of sec 72(1) of that Act, triggering a right to the Council to recover part of the discount granted on the purchase price. Apart from the general nature of the case, a particular point of distinction between McDonald and this case was that in McDonald the recording of the trust deed in the Books of Council and Session had rendered the granting of the deed irrevocable; see the opinion of Lord Sutherland at page 186. That was not the case here.

[6] Joint Liquidators of Scottish Coal Ltd v SEPA could also be distinguished on the basis that it was not a crofting case. It concerned liquidators of a limited company who were positively seeking to abandon heritable property a situation very different from individuals granting trust deeds.

[7] In any event breaches of the statutory conditions could be purged; Elliot v Mackay at p 6, Little v McEwan, MacLaren v MacLaren, Corbett v MacLeod at p 35, Guthrie v Bowman (No 2) at p 19and Brown v Jackson. Even if it could be argued that granting a trust deed amounted to a purported assignation of the croft tenancy, the discharge of the trust deed purged the breach.

[8] Mr Inkster then focused on statutory condition 10. There was authority to the effect that a crofter in breach of it would not necessarily be given an opportunity to remedy the breach; Culfargie Estates Ltd v Leslie, Secretary of State for Scotland v Black. Whereas in Culfargie the Court (at pp 42-43) had referred to the granting of a trust deed by a crofter as “a palpable and irremediable breach” of the relevant statutory condition, it was a case involving multiple breaches of statutory conditions and it was wrong to say, as was to be argued by the applicants, that this dictum had been followed in Guthrie. Guthrie was not concerned with statutory condition 10 and did not refer to Culfargie. It merely said (at p 19):

“It will only be in exceptional circumstances that a breach brings a crofting tenancy to an end. Apart from the special considerations which apply to bankruptcy, we consider that an important consideration is whether the tenant persists in the breach.”

[9] Although Secretary of State for Scotland v Black and Secretary of State for Scotland v Robertson were authority for the proposition that a tenant would require to adduce some very compelling reason before the Court could be expected to exercise its discretion in his favour they were also authority for the proposition that the Court had such a discretion.

[10] All of the cases cited as involving breach of this condition had been cases in which the apparent insolvency of the crofter was still extant at the time of proof. In Secy of State v Black the Court had said (at p 2):

“In terms of section 7 of the Bankruptcy (Scotland) Act 1913, notour bankruptcy continues in the case of sequestration until the debtor obtains his discharge. In the present case the debtor has been sequestrated and has not obtained his discharge and he must, accordingly, be held to be notour bankrupt.”

The inference from that was that the position would have been different had Mr Black been discharged by the time of the proof.

[11] The significance of the crofter being notour bankrupt at the date of the proof was very clear from the case of Department of Agriculture v Muir in which the Court at first instance had said (at p 28):

“It is admitted that the respondent was notour bankrupt at the date of the presentation of this application, and was thereby in breach of one of the statutory conditions contained in sec 1 of the Crofters Holdings (Scotland) Act, 1886. But this, being a legal irritancy, can be purged before extract of the decree by cesser of the status of notour bankruptcy. I gave the respondent an opportunity of proving such cesser, and I have now to consider the evidence led on that question.”

[12] On appeal it had been held that the only reasonable inference to be drawn from the admitted facts was that the appellant was insolvent at the date of the proof and that he was not, therefore, entitled to purge the irritancy (p 30).

[13] The present respondent was not apparently insolvent as at today’s date and had not been so for more than two years. The application therefore fell to be dismissed. The applicants’ averments of continuing insolvency were insufficiently specific to be allowed to go to probation.

[14] Mr Inkster then had an argument about amendments made to sec 26(1) of the 1993 Act by the Crofting Reform (Scotland) Act 2010 which was so manifestly bereft of merit that it scarcely deserves to be narrated. It was to the effect that the removal of the word “or” from the end of para (a) of that subsection meant that in addition to breach of the statutory conditions a landlord wanting to remove a crofter also had to show that one year’s rent was unpaid. Apart from the fact that such an amendment would make no sense (a crofter could breach all of the statutory conditions and still escape removal as long as his rent was up-to-date) it is seen immediately one looks at the amended subsection why the “or” was removed from the end of para (a). In the pre-amendment version there were only two parts to the subsection, (a) and (b). The 2010 Act introduced para (c), referring to breaches of new duties introduced as secs 5AA, 5B and 5C of the 1993 Act. The “or” was therefore moved to the end of para (b). The fact, as Mr Inkster pointed out, that same has not been done in subsec (2) does not change the plain meaning of sec 26(1) as amended. That meaning is that one year’s rent remaining unpaid or one or more of the statutory conditions having been broken or any of the duties mentioned in secs 5AA, 5B or 5C having been breached allows the tenancy to be terminated.

[15] Mr Inkster then made submissions as to averments of the applicants which should not be remitted to probation were a proof allowed but I deal with those – and with the applicants’ corresponding attack on some of the respondent’s averments - after I have dealt with parties’ primary positions.

Applicants’ submissions

[16] Mr Anderson moved the Court to sustain the applicants’ first plea-in-law, to repel the respondent’s first to fourth pleas-in-law and to grant decree de plano. He presented his argument under three heads: (i) the trust deed and apparent insolvency, (ii) whether breach of the standard conditions was purgeable and (iii) the Court’s discretion as to whether to order termination of the tenancy.

(i) The trust deed and apparent insolvency

[17] Mr Anderson submitted that the granting of the trust deed, as well as constituting apparent insolvency, was a purported assignation of the lease and therefore a breach of statutory condition 2 of Schedule 2. It prohibits a crofter from executing “any deed purporting to assign his tenancy” except in accordance with the provisions of the Act.

[18] There could be no assignation of a crofting tenancy except with the consent of the Crofting Commission but there could be a purported assignation and that is what the granting of the trust deed was. He relied on McDonald’s Trs v Aberdeen City Council. Although not technically binding it was, he submitted, highly persuasive. It involved substantially the same question as we faced in this case. Reference was made to passages at 189D-F and 192G-H. It could not be distinguished on the ground that registration in the Books of Council and Session had made the trust deed in McDonald irrevocable. Registration in the Register of Insolvencies, giving the trust deed protected status, had the same effect in the present case. But even the first trust deed granted by the respondent (which did not achieve protected status) would have been a purported assignation.

[19] Reference was made to Joint Liquidators of Scottish Coal v SEPA. There was a distinction between statutory sequestration, in which the whole estate of the bankrupt vest in the trustee in sequestration, and a voluntary trust deed, which simply involved a conveyance by the granter and there was no question of a radical right being retained. There was doubt as to what “radical right” meant. Lord Hamilton had reserved his opinion on it in McDonald at p 197G. It may mean no more than the revisionary right which the granter of a trust deed or a bankrupt had to have any assets not realised for the benefit of his creditors returned to him. In any event the existence of any such right did not prevent the granting of the trust deed operating as a purported assignation.

[20] Mr Anderson then turned to statutory condition 10. It was accepted by the respondent that she had granted a trust deed in 2010, that this had had the effect of rendering her apparently insolvent and that she remained so until her discharge in February 2014. This application had been lodged in January 2014, at which point the respondent was undoubtedly apparently insolvent. Accordingly it was a relevant application. It was not the case that apparent insolvency had to continue until the date on which the Court heard the application. In any event what constituted the breach of condition 10 was not the existence of the status of apparent insolvency but the doing of an act whereby the crofter became apparently insolvent. That act had been the granting of the trust deed. The application was therefore relevant and it would be odd if an application which started off relevant became irrelevant in the course of the court process. Continuing apparent insolvency may be relevant to the exercise of the Court’s discretion as to whether to terminate the tenancy but it was not a condition of the relevancy of the application. Even an action based on the first trust deed would have been relevant, notwithstanding that it had never become protected.

[21] If I was not with him on that, one would have to ask whether the applicants had sufficient averments of continued apparent insolvency. There were such averments relating to debts due to two creditors. If these averments were proved they would provide a basis for showing that the respondent continued to be apparently insolvent. It was not necessary to provide addresses for those creditors nor specify the amounts they were owed. The existence of debts to named creditors was sufficient.

(ii) whether breaches of the statutory conditions can be purged

[22] Whatever might be said about the other statutory conditions, a breach of condition 10 could not be purged. That was because the act which constituted the breach had already been done and could not be undone. In Culfargie Estates Ltd (at p 42) this had been described as a “palpable and irremediable breach”. In so far as what had been said in Muir might be at odds with that, the decision of the Full Court in Culfargie should be preferred. It had been followed in Guthrie. In that case (at p 19) breaches of statutory conditions were said not to be irritancies, with the result that the language of purging was inappropriate. But if, contrary to that, the conditions were to be seen as purgeable irritancies, that was a matter affecting the Court’s discretion, not relevancy. Elliott v Mackay was distinguishable. In that case breaches involving arrears of rent and not managing the common grazings as a club stock (a contractual condition agreed between the parties) were both held to be purgeable. That was not authority for purgeability statutory condition 10.

[23] Reference was made to Little v McEwan and Secretary of State for Scotland v Black, two Divisional Court decisions by Mr C M S Grant. In the former he had said that it was well established that a tenant may purge an irritancy of a statutory condition and that the Court’s invariable practice was to allow a tenant the chance to rectify the position. But the submission by the tenant’s solicitor had been that a tenant may always purge the irritancy “in cases of this type” (see p 3, italics added). That case concerned a breach of a condition prohibiting sub-letting. Black had concerned notour bankruptcy and had been decided a few months prior to Little. In that case the state of notour bankruptcy was continuing when the application came before the Court for decision and Mr Grant had not given an opportunity for the tenant to rectify matters. Accordingly, what he had said in Little had to be read in the light of what he had done in Black.

(iii) the exercise of the Court’s discretion

[24] A very compelling reason was required before the Court could exercise its discretion in favour of a tenant in breach of statutory condition 10; Secretary of State for Scotland v Robertson p 81. In that case the croft had comprised only the site of the crofthouse and garden ground, yet the Court had ordered the crofter’s removal.

[25] In this case it would be open to the Court to exercise its discretion on the basis of the pleadings. I should consider whether the respondent’s pleadings disclosed any compelling reason for the exercise of discretion in her favour. In Mr Anderson’s submission they did not. The situation here was that the tenant had granted not one but two trust deeds, the second rendering her insolvent for over three years of a tenancy which had commenced only in 2008. The respondent’s averments were lacking in candour. There was no substantive response to the applicants’ averment anent the first trust deed. It was wrong to say she resided on the croft. She had not disclosed the stock on the croft as assets to her trustee. Her response to the averments that she still owed money to Mr Brian Sparks and Ms Angela Pope – that the respondent “acknowledges no debt to either of those persons and no claim for payment has been constituted, or attempted to be constituted, against her by them” – was lacking in candour and clarity.

[26] It was, therefore, open to the Court to exercise its discretion at this stage and it should do so, finding that no compelling reason to avoid removal was averred and granting decree de plano.

[27] Like Mr Inkster, Mr Anderson attacked particular averments of the respondent as irrelevant but I deal with these later.

Response on behalf of the respondent

[28] Mr Inkster responded. If Mr Anderson’s submission on purported assignation was correct, and the assignation failed due to lack of Crofting Commission consent, did that make the trust deed itself null and void? If the trust deed was not valid in the first place the whole basis of the applicants’ case fell away.

[29] Mr Inkster himself did not believe that to be the case but it showed that the trust deed simply did not operate as an assignation. The tenancy remained with the tenant, the trustee had not been entered on the Register of Crofts as crofter; nothing had changed from that point of view. Irvine v Fordyce was still relevant; like the applicant in that case, the respondent here had never been divested of her status as tenant (see p 60 of Irvine).

[30] Although the respondent’s pleadings contained no substantive response to averments about the first trust deed, the productions contained a letter dated 8 April 2015 which showed that nothing had become of the first trust deed.

[31] There was nothing unusual about a case becoming irrelevant in the course of going through court. However the examples he gave were of cases which settled after being raised; for example debt actions being settled by payment.

[32] What came out of Little and Black was that if something was in the past it was no longer a concern. If Mr Grant were deciding this case today he would dismiss it on the basis that a discharge had been granted two years ago. Moreover, given the timing of events in this case (with the discharge following very shortly after the lodging of the application in court) and the time which would have been taken with the formalities of the discharge, it was very likely that the respondent had been able to pay her debts as they fell due before the application had been lodged. So it was not the case that the respondent accepted that she had been apparently insolvent when the action was raised. The discharge was good evidence that she was once again able to pay her debts as they fell due but it did not foreclose the possibility that she had achieved that status before the discharge appeared.

[33] The applicants’ averments about continued apparent insolvency were lacking in specification and should not be remitted to probation. Since continuing apparent insolvency was, on the authorities, a requirement of a case of this kind, the excision of these averments would leave the applicants without a relevant case. The application should therefore be dismissed.

[34] As to a compelling reason to refuse decree, such a reason might be that two years had passed since the discharge. Her personal circumstances, including the fact that she in effect lived on the croft (in the former crofthouse, now decrofted), could also amount to compelling reasons. All of these averments were relevant to the exercise of the Court’s discretion and should be admitted to probation. Also, it would be very unusual for the Court not to inspect the croft in a case such as this.

[35] Mr Anderson had said that it was not always necessary to hear evidence in cases such as this but evidence always gave colour which pleadings could not provide. Where a crofter was at risk of losing her tenancy she should be given every opportunity to be heard.

[36] As to existence of a radical right, the applicants had admitted as much on record; Statement of Claim 3, para (iii).

Response for applicants

[37] Mr Anderson made five short points in reply:

(i) Mr Inkster’s suggestion that the respondent was probably no longer apparently insolvent before the discharge was granted was a departure from both what he had said at the outset of his submissions and what was said in his pleadings. We were concerned only with the case as pled.

(ii) The averments relating to the first trust deed were covered by a general denial in the respondent’s pleadings and that was indicative of a lack of candour.

(iii) There was no merit in the criticism of the applicants’ averments about debts owed to Mr Sparks and Ms Pope.

(iv) Criticism of specific averments was also without merit. They were all relevant to the exercise of our discretion. The averments suggesting lack of candour were particularly relevant in a case involving apparent insolvency. A debtor who had not been candid before may not be candid again.

(v) There was no question of the trust deed being void: the whole point was that statutory condition 2 referred to the crofter “purporting” to assign his tenancy. Here there was no dispute that the crofter respondent remained the crofter; she had purported to assign her tenancy but she remained the tenant.

Decision

[38] I begin with the respondent’s attack on the relevancy of the applicants’ pleadings. In my opinion that attack fails. That is because of the terms of statutory condition 10. What it refers to is not a continuing state of apparent insolvency but the doing of “any act whereby [the crofter] becomes apparently insolvent within the meaning of the Bankruptcy (Scotland) Act 1985”. Whatever her position in relation to the first trust deed, the respondent accepts that the granting of the second trust deed brought about a situation of apparent insolvency. The terms of the condition are therefore met and her subsequent return to solvency does not affect that. I do not read the cases of Muir, Black and Robertson as deciding that apparent insolvency has to continue until such time as the matter comes before the Court for decision nor could they for that would be to add to the terms of the statutory requirement. Although the wording of that requirement has changed over the years it has always referred to an act whereby the crofter puts himself into a state of notour bankruptcy or apparent insolvency.

[39] Mr Inkster relied on the following passage from the decision of Mr Grant in Black (at page 2):

“In terms of section 7 of the Bankruptcy (Scotland) Act, 1913, notour bankruptcy continues in the case of sequestration until the debtor obtains his discharge. In the present case the debtor has been sequestrated and has not obtained his discharge and he must, accordingly, be held to be notour bankrupt.”

[40] He said the inference was that the position would have been different had Mr Black been discharged. If, by that, he meant that had Mr Black received his discharge the application would have been dismissed as irrelevant, I cannot agree. But I do not think that is what he meant. He was simply considering the current state of affairs and the only inference which can properly be drawn from the judgment as a whole is that, had a discharge been granted, it may have been relevant to the exercise of the Court’s discretion, a matter which Mr Grant goes on to discuss.

[41] The law therefore appears to me to be (i) that the doing of an act which renders the crofter apparently insolvent within the meaning of the 1985 Act is sufficient to found a relevant case under sec 26 of the 1993 Act, (ii) that a continuing state of apparent insolvency at the point at which the case comes before the Court for decision is not therefore necessary as a matter of relevancy and (iii) that the significance of whether a discharge has by then been granted is its bearing on the Court’s exercise of its discretion in terms of sec 26(1). Accordingly Mr Inkster’s primary submission fails and the respondent’s first and second pleas-in-law fall to be repelled.

[42] I now turn to Mr Anderson’s primary submission. In so far as he argued that breach of condition 10 was not purgeable (notwithstanding what was said by the Full Court in Guthrie the language of purgeability remains a convenient shorthand for giving time for a breach to be remedied) I disagree. What was said in Culfargie about breach of the equivalent condition to condition 10 being “a palpable and irremediable breach” was not the result of having heard argument on the point and detailed consideration of it. The granting of a trust deed was only one of a multiplicity of alleged breaches and most of the decision is taken up with failure to cultivate the croft and allowing the soil to deteriorate. His admission of having granted a trust deed merely sealed the tenant’s fate. I do not consider that the Court was saying that once a trust deed was granted there was no discretion left to the Court and that no opportunity could be given to the crofter to purge the breach.

[43] That is certainly not how such breaches have been treated by the Court either before or after Culfargie. In Department of Agriculture v Muir, decided in 1932, Lord St Vigeans said that breaches of sec 1 of the Crofters Holdings (Scotland) Act 1886, including notour bankruptcy, were legal irritancies which could, therefore, be purged and he gave the tenant an opportunity of bringing his condition of notour bankruptcy to an end. Similarly, cases since Culfargie have not applied what was said in that case literally. Instead they talk of the need for compelling reasons for the Court to exercise its discretion in favour of the crofter; see Black and Robertson. That is compatible with the wording of the 1991 Act, which continues to use the permissive language of its predecessors without distinction as between the different statutory conditions. In other words the wording does not support the notion that the Court has a discretion in relation to some of the statutory conditions but not others. Accordingly this submission fails.

[44] Proceeding on that basis, I have to consider Mr Anderson’s submission that no compelling reason to exercise the Court’s discretion in favour of the croft is pled in this case. In that regard I think there may be a distinction between cases in which the crofter is still apparently insolvent when the matter comes before the Court and cases in which he or she has returned to solvency. In the former I can well understand that the Court would need compelling reasons to exercise discretion in favour of the allowing the crofter to remain, particularly where an opportunity had already been given to allow the crofter to regain solvency. I do not see that there is such need for compelling reasons in cases such as the present one, where the granter of the trust deed has been discharged. I say that because there is no statutory warrant for applying a more stringent test to this condition than to the others. Accordingly, in my view, the matter is at large for the Court’s discretion and I think it right to reserve the exercise of that discretion until proof has been heard rather than attempt to do it on the basis of the pleadings. Accordingly this submission also fails.

[45] I now have to deal with Mr Anderson’s submission on statutory condition 2. I have to confess to puzzlement as to how this argument arises. It is not pled in the applicants’ pleadings but it was not objected to by Mr Inkster who had notice of it from the applicants’ agents’ note of argument.

[46] I think it is misconceived. I do not find the comparison with McDonald’s Trustee v Aberdeen City Council helpful, far less persuasive. I say that because the 1993 Act sets out a particular statutory code which has no equivalent in the Housing (Scotland) Act 1987. That code distinguishes between an attempt to assign the tenancy of a croft except as permitted by the Act and the commission of an act leading to apparent insolvency, in this case the granting of a trust deed. The two are quite distinct. Assignation of the tenancy means assignation to a new tenant. Here the trustee was never going to become the tenant. On the contrary the intention was that the respondent would remain as tenant, occupying and working the croft. The only situation in which assignation would arise would be if it proved necessary to assign the tenancy in order to satisfy the creditors. The applicants’ argument is therefore artificial and contrived. It serves only to confuse what need not and should not be confused. This is squarely a case involving statutory condition 10 and it succeeds or fails by reference to that condition alone.

[47] The consequence of all of the foregoing is that neither party has achieved a knock-out blow and the matter must go to proof. I now need to consider parties’ attacks on particular averments in their opponent’s case.