R W MORRISON-LOW v THE EXECUTORS OF THE LATE T H PATERSON

(Application SLC 233/08 – Order of Inner House of the Court of Session 9 Feb 2012)

AGRICULTURAL HOLDINGS – RENT – VARIATION OF RENT – OPEN MARKET – SCARCITY – SINGLE FARM PAYMENT – “NAKED ACRES” – CURRENT ECONOMIC CONDITIONS – MARRIAGE VALUE – POTATO LETS – SUB-LETTING – APPROACH TO COMPARABLES – POTENTIAL EARNING CAPACITY – BUDGETS – RETURN ON TENANT’S CAPITAL – NET PROFIT – EXPERT WITNESSES – EXPERT COURT – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 1991, SEC 13

Following the decision of the Land Court in this case on 2 June 2010, the landlord appealed and the tenant cross appealed. The Inner House took the view that the Court had placed too much emphasis on the budget approach and in doing so had lost sight of the hypothetical open market. It was fallacious to assume that a successful open market offer would be no greater than a budget would indicate. The Land Court had taken the wrong approach to the SFP. Although there was no open market in 1991 Act tenancies, there was evidence of comparable limited duration tenancies and of negotiated settlements of rents of sitting tenants under 1991 Act. The case was remitted back to the Land Court to revise its valuation in light of this guidance. The decision of the Inner House can be found on the Scottish Courts website at www.scotcourts.gov.uk