THE COURT

(Lord McGhie, Mr J A Smith)

THE FIRM OF A C STODDART v THE COLSTOUN TRUST

(Application SLC 226/04 – Order of 27 September 2012)

AGRICULTURAL HOLDINGS – RENT REVIEW – LIMITED PARTNERSHIP – PARTNERSHIP ENDING – WHETHER REVIEW PROCESS ENDED WITH PARTNERSHIP – RIGHTS OF GENERAL PARTNER AS TENANT – RIGHTS OF FORMER PARTNER TO DEAL WITH PARTNERSHIP AFFAIRS – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 1991 SEC 13 – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 2003 Sec 72 – PARTNERSHIP ACT 1890 Sec 38.

Until 2010 the tenants of a farm were a limited partnership in which Mr Stoddart was the general partner. That partnership was brought to an end by notice in November 2010. Mr Stoddart sought to take advantage of the provisions of section 72 of the 2003 Act to become tenant under the tenancy in his own right and two applications were before the Court relating to that. The procedural issue before the Court was whether the sist in the present action should be continued pending resolution of matters in another forum. This rubric does not deal with that. During the currency of the tenancy an application had been made to the Court by the tenants for review of the rent due from November 2004. Resolution of this issue had been delayed by other proceedings and by appeals. The landlord eventually contended that as the partnership had ended it was not competent for the Court to consider rent for the period from 2004.

HELD that the general partner had power to continue with the application as part of the process of winding up the partnership.

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

[1] There are currently three actions in this court relating to Colstoun Mains Farm. The owners are the Colstoun Trust and it is not disputed that they are properly described as the landlords. Until 2010 the tenants were a limited partnership in which Mr A A Stoddart was the general partner. That partnership was brought to an end by notice in November 2010. Mr Stoddart sought to take advantage of the provisions of section 72 of the 2003 Act to become tenant under the tenancy in his own right.

[2] One action, SLC 2/11 relates to questions arising under section 72. One disputed issue is whether the general partner validly gave notice. However, an underlying question relates to the validity of the provisions of section 72. It was raised in the Inner House in the case of Salvesen v Riddell. That issue is currently before the Supreme Court. It was agreed that this action remain sisted until that matter has been resolved.

[3] A second action, SLC 52/12 relates to a provision in a post-lease agreement relating to use of the farmhouse. The provision appears to give Mr Stoddart right to occupy the farmhouse if he married. It appears that he did get married and that he has sought to enforce the right. However it is not disputed that he has never had use of the farmhouse. The landlords apparently resist his claim but the action was sisted at an early stage and the precise nature of the disputed issues is not clear. Mr Stoddart has had occupation of a cottage on the farm. It was agreed that the sist now be recalled and that the landlord be given an opportunity to lodge answers. It was expected that procedure by way of debate would ultimately be appropriate. However, this might depend on the final state of the pleadings.

[4] The main question before us was whether the sist in SLC 226/04 should be recalled. We heard discussion at a procedural hearing on 24 September 2012. Mr Kermack appeared for the landlords and Sir Crispin Agnew, QC, appeared on behalf of Mr A A Stoddart. The parties sensibly took advantage of the hearing to debate the substantive issue of the competency of the application.

Authorities cited

McCreight v West Lothian Council 2009 SLT 109
McKay v City of Dundee District Council 1996 SLT (Lands Tr) 9
Ross v City of Dundee Council 2000 SLT (Lands Tr) 2
Salvesen v Riddell
The Mount Stuart Trust v McCulloch [2010] CSIH 21

Statutory material

Agricultural Holdings (Scotland) Act 1991
Agricultural Holdings (Scotland) Act 2003
Partnership Act 1890

Recall of sist

[5] Sir Crispin explained that Mr Stoddart was very anxious to have the issue of rent determined. It was said that although the actual figures would have to be revised in light of the Moonzie decision, he was looking for a substantial reduction of rent. He was anxious to have the matter resolved not only to balance accounts for the period to the end of the partnership but in respect of his continuing obligations. For the landlords it was argued that the sist should not be recalled. There was some overlap between the arguments advanced on that head alone and a substantive challenge to competency based on a challenge to the jurisdiction of the Court. However, recall of the sist was opposed principally by reference to the farmhouse action and the section 72 issue. We can deal with these matters first.

[6] We accept Sir Crispin’s submission that final disposal of the farmhouse issue is not critical to determination of the rent as at November 2004 in terms of section 13 of the 1991 Act, as amended. The provisions of the post lease agreement in relation to the farmhouse might have to be taken into account but a hypothetical incoming tenant on an open market would simply have to take a view as to the value, if any, of the rights apparently conferred. Such tenant would not have had the benefit of a definitive ruling. Accordingly there is no justification for delaying the rent review to obtain a final decision.

[7] It may be added that, on any view of it, the outcome of the farmhouse case would not provide a resolution of the main issues arising in this case. If, at a later stage, it should appear necessary to take a positive view of the nature of the apparent right to the farmhouse, we could defer final consideration of the rent until determination of that case. But, as at present advised we see no justification for this. We are satisfied that, in practical terms, it is important to proceed with resolution of the main issues without further delay.

[8] There was a contention that the case should remain sisted because the challenge to competency would disappear if Mr Stoddart, as former general partner, fell to be regarded as continuing in the tenancy under the provisions of sec 72(6). We note that this would depend, not only on there being a successful outcome to the Salvesen case from his viewpoint, but also on resolution of disputed issues as to proper service of the notice required under these provisions. But, in any event, we heard submissions relating to the challenge to competency on the basis of an assumption that he did not acquire rights under section 72. For reasons discussed below we concluded that the challenge was not well founded. There is, accordingly, no reason for determination of rent to await the outcome of the Salvesen case.

[9] We return to the question of competency. The main argument was based on the proposition that when the limited partnership ended the right to review ended with it. The limited partnership was tenant when the application was made to review the rent. But the tenancy and the tenant had both ceased to exist. Accordingly, it was said, the court no longer had jurisdiction under sec 13.

[10] By way of introduction, Mr Kermack explained that support for this approach was taken from the decision in McCreight v West Lothian Council. The Land Court was a creature of statute. It was not disputed that it was entitled to consider incidental issues necessary to explicate its own jurisdiction. However, it was not entitled to determine disputed issues which were essential pre-conditions of that jurisdiction. Where the facts were clear, the court could lose jurisdiction if a pre-condition was no longer satisfied. It was contended that the cases of McKay v City of Dundee District Council and Ross v City of Dundee Council were relevant examples of a court or tribunal losing jurisdiction on a change of circumstances.

[11] We are satisfied that these latter cases have no bearing on the present. In each, the Tribunal had to make a decision based on the facts as they stood at the time of decision. Although described in terms of loss of jurisdiction, the cases could equally well have been described as decisions on the merits. The applicants did not qualify for the rights they were asking the Tribunal to enforce at the date when the Tribunal had to consider the matter. In the present case, the partnership as tenant validly applied for review of rent at a time when they were tenant. The application relates primarily to the measure of their liability to pay rent for the remainder of their tenancy.

[12] Mr Kermack sought support from the decision in the Mount Stuart Trust v McCulloch decision of the Inner House of 25 March 2010. At paragraph [17] the court said:

“The Land Court can make a determination under section 13 only if either party applies for it. The application has no effect on the current rent. It does not create a liability of any kind. It merely creates the contingency that if it is pursued to a conclusion, the Land Court may vary the rent. The applicant may abandon it. In my view, the current rent continues to apply unless and until it is varied, whether by agreement or by an order of the Land Court. If it is varied by the court, the order will have effect from the review date. There will therefore be a liability on one or other party to make an adjusting payment in light of the rents paid while the application was in dependence”.

[13] However, it does not appear to us that this proposition has any relevant bearing on the present circumstances other than to reinforce the point that if and when the rent is varied by the Court, the order will have effect from the review date. The substantive issue before the court relates to an issue which was live during the tenancy, resolution of which is necessary to determine the balance of rent due at the end of the partnership.

[14] When pressed to define further the precise basis of his plea, Mr Kermack referred to the provisions of section 13. The right to have rent determined was given by the Act to “the tenant”. As the limited partnership had been the tenant and as it no longer existed, the court had no jurisdiction. There was no tenant capable of pressing the action. The right was a statutory right. No other court had power to review the rent. The application was incompetent and the rent could not be changed.

[15] We are satisfied that this is too literal approach to the provision. Statutory construction requires to have regard to the language used in its context. We are satisfied that in appropriate circumstances references to a specific person in a statutory context can be construed as embracing valid successors or representatives. We see no justification for assuming a narrow intention by Parliament in the circumstances of the present case. We consider that the question is simply whether there is a party with title to take forward matters on behalf of the tenant. Under the provisions of section 38 of the Partnership Act 1890, any partner has authority to do what is necessary to wind up the affairs of the partnership. We are satisfied that this provision provides ample standing for the general partner to continue the application as proper representative of the tenant.

[16] It may be noted that we were not referred either to the provisions of section 85 of the 1991 Act or to section 93 of the 2003 Act. These provisions define the word “tenant” as including various specified types of legal representatives. We are satisfied that the continuing role of a partner under the provisions of section 38 falls within the scope of the class or society exemplified by the specified types. We see no reason to treat the inclusion of the explicit examples as implying any intention to exclude a partner acting on behalf of a partnership.

[17] We did hear discussion of the implications of the provisions of sec 60 of the 1991 Act as amended by sec 75 of the 2003 Act. It was pointed out that sec 60(8) did not advance matters for the applicant. The former tenant was the limited partnership. It no longer existed. However, we consider that this submission does not give proper weight to the role of a former partner representing the partnership for the purpose of winding up the affairs of the partnership.

[18] We are satisfied that we have jurisdiction to determine the rent to be paid by the partnership from November 2004. The applicant should have an opportunity to amend to make clear the capacity – or alternative capacities – in which he seeks to continue the application. We are satisfied that there are no compelling reasons for the case to remain sisted. It was agreed that if the sist was to be recalled it would be appropriate to allow time for adjustment.

For the applicant: Sir Crispin Agnew QC; McSherry Halliday, Solicitors, Kilmarnock

For the respondents: Lewis Kermack, Solicitor; Turcan Connell, Solicitors, Edinburgh