THE COURT

(Lord Minginish, Mr A Macdonald)

LANDS IMPROVEMENT HOLDINGS LANDMATCH S.A.R.L. v COLE

(Application RN SLC/39/14 – Order of 17 November, 2014)

SMALLHOLDINGS — RESUMPTION — WHETHER PRACTICE NOTE 1 RELATING TO RESUMPTION OF CROFT LAND SHOULD BE APPLIED TO RESUMPTIONS FROM SMALLHOLDINGS — STATUS OF PRACTICE NOTES — SEC 2 OF CROFTERS HOLDINGS (SCOTLAND) ACT 1886 — WHETHER REASONABLE PURPOSE FOR RESUMPTION AVERRED

Land Court Practice Note (No. 1) deals with resumption of croft land under sec 20 of the Crofters (Scotland) Act 1993 (“the 1993 Act”). It says that in relation to resumption of bare land for sale to the tenant or a third party for any purpose involving development under the Planning Acts the court will require evidence of an agreed sale.

The applicants applied to the Court for an order under sec 2 of the Crofters Holdings (Scotland) Act 1886 (“the 1886 Act”) authorising resumption of an area of 13.58 acres of land from a smallholding at Busbie, Ayrshire, occupied by the respondent, for the purpose of development for housing. Planning permission in principle had been obtained for the development but no sale to a developer had been agreed. The application was opposed on the basis, inter alia, that since no sale of the land had been agreed it failed to meet the requirements of Practice Note No. 1. which, it was said, should be applied to resumptions under sec 2 of the 1886 Act as well as those under sec 20 of the 1993 Act. This was treated as a preliminary point and a debate was fixed. The respondent argued that not to apply the practice note to sec 2 resumptions would be discriminatory and contrary to the respondent’s rights under Article 14 of the European Convention on Human Rights (“ECHR”) where his Article 1 Protocol 1 (“A1P1”) rights were engaged. The court was obliged by rule 1(4) of its Rules (Rules of the Scottish Land Court 2014) to have regard to its practice notes and could depart from them only for good reason. No such reason was averred in this case, there was no evidence of an agreed sale and the application should be dismissed. In moving for a proof before answer, the applicants submitted that all the court required to be satisfied about was that the resumption was for a reasonable purpose and that, on a balance of probabilities, the reasonable purpose would be carried out. The practice note did not apply to the 1886 Act. In any event practice notes were only for guidance. Insofar as a practice note expressed a policy it had to allow for exceptions. The applicants had averred sufficient to show why they should not be required to produce evidence of an agreed sale in this case. They wanted to put in the infrastructure for the development prior to sale and it was unreasonable, in the present economic climate, to expect a sale to be agreed where there was no certainty of vacant possession. The practice note, if it applied, could not introduce a substantive requirement which was absent from sec 2 itself. Whether or not the reasonable purpose would be carried out was a matter for proof.

HELD (i) that practice notes in the Land Court were made under the court’s inherent power to ensure that cases were conducted efficiently and expeditiously and with fairness to all parties (as that power was described by Lord Justice Clerk Gill, as he then was, in Colstoun Trust v The Firm of A C Stoddart & Sons 2010 SC 399 at para [11]), (ii) that they did not, therefore, have the force of law but were for guidance only and could not import, as absolute requirements, conditions which were absent from the legislation under consideration, (iii) that in the present case, therefore, Practice Note (No. 1) could not be read as importing an absolute requirement that terms of sale be agreed ahead of authorisation of resumption; (iv) that the purpose of the present practice note was to give guidance as to what the court looked for as evidence that the purpose for which resumption was sought was realistic, credible and feasible; (v) that, regardless of the merits of the respondent’s ECHR A1P1 argument, it made sense, given the similarities between the respective situations, to apply the practice note to resumptions from smallholdings as well as crofts and the court would do so; (vi) that the court therefore had to have regard to the terms of the practice note; (vii) that insufficient had been pled by the applicants to justify a departure from its requirements in this case, (viii) that, applying the practice note, insufficient had been averred to satisfy the court, on a balance of probabilities, that the reasonable purpose would be carried out, the high-point of what the applicants offered to prove being that their agents had received “expressions of interest from Bellway and Barratt Homes”; and application dismissed. Observed (at para [56]) that the applicants in this case appeared to have things the wrong way round. Rather than do all that was necessary to bring before the court a firm and credible scheme for implementation of the reasonable purpose they were asking the court to grant resumption so that they could then find someone who would purchase the land and implement the reasonable purpose. That was an approach which the court, charged with the responsibility of being satisfied that the reasonable purpose would be carried out, could not countenance.

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

[1] In this application the landlord applicants seek resumption of an area of 13.58 acres (5.50 ha) of a smallholding occupied by the respondent at Busbie, Ayrshire, for the purpose of developing it for housing. Planning permission in principle has been obtained for the development but a sale to developers – which is the applicants’ intention – has not yet been agreed. In these circumstances the respondent seeks dismissal of the application as being contrary to Land Court Practice Note (No. 1) (“the practice note”).

[2] The plea taken by the respondent is as follows:-

“The Respondent, having a legitimate expectation and a right that land will not be resumed without evidence of a sale of the land, in the circumstances condescended upon, the application should be refused.”

Although that plea is not a preliminary plea in its terms, the respondent’s agents moved the Court, in effect, to fix a debate on whether the application was premature. This was consented to by the applicants, who in any event have a plea to the relevancy of the respondent’s averments, and by order of 18 July 2014 Lord McGhie appointed a debate on both matters. We heard that debate at Edinburgh on 24 September 2014 when the applicants were represented by Sir Crispin Agnew of Lochnaw QC and the respondent by Mr Lewis Kermack, solicitor. Given the result we have come to on the prematurity point, it has not been necessary for us to deal with the applicants’ attack on the respondent’s averments.

The Practice Note

[3] The Practice Note divides resumptions into three categories: (i) resumption of an area of ground with an existing building on it for the purposes of conveying it to the tenant or to a third party; (ii) resumption of bare land for sale to the tenant or a third party for any purposes involving development under the Planning Acts; and (iii) resumption of land for the purpose of conveying it to a local authority for public works of one kind or another. In cases (i) and (iii) planning permission is not normally required but evidence of terms of sale having been agreed is: “the Court will wish to have evidence that the landlord and the person acquiring the areas of ground in question have agreed the terms of a sale”. The present situation comes within case (ii). So far as relevant it reads:

“In an application where resumption is sought of a bare land site for sale either to the crofter or to a third party for any purposes involving development under the Planning Acts (including as a site for a dwellinghouse) the Court will require in addition to evidence of an agreed sale as detailed supra at least an indication that outline planning permission has been or will be granted.”

Accordingly evidence of an agreed sale is required in addition to evidence that outline planning permission has been or will be granted.

Legislation

[4] The smallholding in question is one of 16 created by an order of the court under the Small Landholders (Scotland) Acts 1886 to 1931 dated 4 July 1934. As such resumption is governed by sec 2 of the Crofters Holdings (Scotland) Act 1886 (‘the 1886 Act’) rather than sec 20 of the Crofters (Scotland) Act 1993 (‘the 1993 Act’). It is convenient, however, to set out the terms of both sections for comparative purposes. Sec 2, as amended, is as follows:-

“Notwithstanding the provisions contained in the preceding section, the Land Court may, on the application of the landlord, and upon being satisfied that he desires to resume the holding or part thereof, for some reasonable purpose, having relation to the good of the holding or of the estate, including the using, letting, or feuing the land proposed to be resumed, for the building of dwellings, or for small allotments or for harbours, piers, boat shelters, or other buildings or for churches or other places of religious worship, or for schools, or for planting, or for roads practicable for carriages from the croft or crofts to the high road or the sea shore, authorise the resumption thereof by the landlord upon such terms and conditions as the Crofters Commission shall think fit, and may require the crofter to surrender his holding, in whole or in such part, to the landlord, upon the landlord making adequate compensation to the crofter, either by letting to him other land of equivalent value in the neighbourhood, or by reduction of rent, or by compensation in money, or otherwise as the Land Court shall determine.”

Section 20(1) of the 1993 Act is as follows:-

“The Land Court may, on the application of the landlord and on being satisfied that he desires to resume the croft, or part thereof, for some reasonable purpose having relation to the good of the croft or of the estate or to the public interest or the interests of the crofting community in the locality of the croft, authorise the resumption thereof by the landlord upon such terms and conditions as it may think fit, and may require the crofter to surrender his croft, in whole or in part, to the landlord accordingly, upon the landlord making adequate compensation to the crofter either by letting to him other land of equivalent value in the neighbourhood or by compensation in money or by way of an adjustment of rent or in such other manner as the Land Court may determine.”

Reference was also made to the following provisions of the Scottish Land Court Act 1993 and the Rules of the Scottish Land Court Order 2014:-

Scottish Land Court Act 1993, Schedule 1, paras 12(b) and 14:

“12. The Land Court may, by order made by statutory instrument

(b) make rules with reference to proceedings before it;

14. The Land Court may make rules for conducting the business of the Court.”

Scottish Land Court Order 2014, Schedule, para 1(4)(a):-

“The court is to have regard to-

(a) the terms of its own practice notes; and

(b) practice in the sheriff court,

in making any order in relation to a matter not expressly provided for in these rules.”

Finally, reference was made to Articles 1 and 14 and Protocol 1 of the European Charter on Human Rights (ECHR) and to secs 3 and 6 of the Human Rights Act 1998.

Authorities

Beardsell v Baird 1975 SLT (Land Ct) 6
Belgium Linguistic Case (No 2) [1968] 1 EHRR 252
Calderwood v Renfrewshire Council 2004 SC 691
Clift v United Kingdom (7205/07) ECHR 13 July 2010
Dunbeath Estate Ltd v Gunn (No 1) 1988 SLCR 52
Edinburgh University v Craik 1954 SLT 45
Fountain International Ltd v MacDonald 1991 SLCR 84
Glen Spean Estate v MacLachlan & Ors SLC/189/11, 9 November 2012
Hannan v Dalziell 1923 SLCR 15
Harrow London Borough Council v Qazi [2004] 1 AC 983
Ishak v Thowfeek [1968] 1 WLR 1718
Jamieson v Jamieson 1952 SC (HL) 44
Lancashire County Council v Taylor [2004] EWHC 776 (QB)
Libberton Proprietors Ltd v Mackay 1973 SLT (Land Ct) 13
Little v McEwan 1965 SLT (Land Ct) 3
MacCallum v Duke of Hamilton’s Trustees 1933 SLCR 16
McCulloch v McLaughlin 1930 JC 8
MacDonald v Barker 1970 SLT (Land Ct) 2
Mackay’s trustees v Coltart 1959 SLCR 43
Mitchell Construction Co (Scotland) Ltd v Brands Transport & Ors 1975 SLT (Notes) 58
Nevis Estates Ltd & Ors v Cameron SLC/142/99, 1 February 2011
Secretary of State for Scotland v Shareholders of Lealt and
Culnacnock Common Grazings 1982 SLT (Land Ct) 20
Shaw v Cummings 1987 SLCR 157
United Dominions Trust v Stark 1981 SLT (Sh Ct) 58
Walker v McEwan 1946 SLCR 14

Texts

MacPhail, Sheriff Court Practice, 3rd ed, paras 1.41 to 1.46
Rankine, The Law of Leases, 3rd ed, page 607

Submissions

(i) For the respondent

[5] Mr Kermack moved the court to dismiss the application on the ground that there was no evidence of an agreed sale. In that situation no reasonable purpose for resumption, in terms of section 20 of the Crofters (Scotland) Act 1993 existed.

[6] Under reference to the applicants’ averments at condescendence 4 he submitted that the case fell squarely within the practice note. The practice note was peremptory and unambiguous. It reflected practice and previous decisions (Portman’s Trustees v Macrae at pages 7 to 8 and Beardsell v Bell at page 3).

[7] For the policy behind the practice note reference was made to Secretary of State for Scotland v Shareholders of Lealt & Culnacnock Common Grazings at page 13. What those cases showed was that the court should not grant a resumption application where there was only a notional purpose or the situation was only at the stage of intention. It was for the applicant to progress his intention to the point at which a particular and practical scheme could be examined.

[8] The court was obliged by its rules to “have regard to” its practice notes; Rules of the Scottish Land Court 2014 rule 1. The rules had statutory force, having been made under The Rules of the Scottish Land Court Order 2014. Moreover the information published by the court on its website said “in addition to its Rules, the court has also issued a number of Practice Notes giving guidance to parties on how the court deals with some specific types of application, notably resumptions”. The position was, therefore, that the court was statutorily obliged to have regard to its practice notes and that it had a policy of doing so. Where there was a policy there had to be good reason to depart from it. An example of the court having regard to its practice notes was Glen Spean Estate v MacLachlan &c at paragraph 134. What was said there showed that a practice note would be adhered to unless material was presented to the court suggesting that it should be departed from. In the note accompanying the order of 18 July 2014 Lord McGhie had expressed the view that the court had never regarded itself as bound by its practice notes. That was to understate the position. The court had to have regard to its practice notes and had to have good reason from departing from what was said in a practice note; mere inconvenience would not do. The Court had wide powers as to the exercise of its discretion and the procedure it adopted; Edinburgh University v Craik. The position was that the court could bind itself by a strict policy and it had done so in the past. Reference was made to MacPhail’s Sheriff Court Practice paragraphs 1.41 to 1.46. The Land Court had a statutory power to make and enforce rules of practice; Scottish Land Court Act 1993 schedule 1 paragraphs 12 and 14. That was analogous to the powers of a sheriff principal under sections 15(1) and 15(2) of the Sheriff Courts (Scotland) Act 1971, referred to by MacPhail. An Act of Court or practice note issued by a sheriff principal was thought to have the force of law within the sheriffdom. In United Dominions Trust v Stark, although the sheriff had held the practice note to be ultra vires, he had not felt able simply to disregard it and he had not reached his conclusion lightly. Mitchell Construction Company (Scotland) Ltd v Brands Transport & Demolition Ltd was a case in which the sheriff had failed to apply a practice note and that had been held to be a relevant factor in the reduction of his decision in the Outer House where Lord Kincraig had said:

“The rule contained in the practice note is peremptory in its terms and unqualified. The supposed purpose of the rule is not relevant to the construction of its terms where these are unambiguous. I doubt whether the sheriff was empowered to ignore the rule.”

[9] The statutory power to make and enforce rules of practice contained in the Scottish Land Court Act 1993 conferred on the court a wide discretion. It would not be ultra vires for the court to fetter its discretion by stating circumstances in which it would not identify a reasonable purpose for resumption; Glen Spean Estate v MacLachlan &c, where, despite the statutory requirement of section 20 of the 1993 Act, obliging the court to assess the compensation payable under section 20, its practice was to fix that value at nil.

[10] Although the practice note referred to section 20 of the 1993 Act we were obliged to apply the same criteria to section 2 of the 1886 Act as to do otherwise would be disproportionate and discriminatory and contrary to the respondent’s rights under article 14 of ECHR where the respondent’s rights under Article 1 Protocol 1 (“A1P1”) were engaged. Even if that were not the case, given the common history of smallholdings and crofts, there was no reason not to apply the practice note to smallholdings.

[11] In relation to ECHR, in terms of sec 6 of the Human Rights Act 1998, it was unlawful for a court to act in a way incompatible with a convention right. In terms of sec 3, subordinate legislation must be given effect in a way which was compatible with Convention Rights.

[12] The respondent was a person entitled to the peaceful enjoyment of his possessions, which included the statutory security of tenure in his smallholding. The applicants were seeking to deprive him of that, subject to the payment of compensation under sec 2 of the 1886 Act. It was not being said that sec 2 violated a right of the respondent but this application engaged A1P1. But for the geographic location of the smallholding, outwith the area covered with the 1993 Act, the application would be dealt with under sec 20 of that Act. Article 14 of ECHR provided:

“The enjoyment of the rights and freedom set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with national minority, property, birth or other status”.

To fail to apply the practice note here would be to discriminate against the respondent on the ground of his status. Reference was made to the case of Clift v The United Kingdom where the complaint was that the applicant had been discriminated against as a prisoner serving a fixed-term sentence of over 15 years (whose early release was subject to both the recommendation of the Parole Board and the approval of the Secretary of State) as against prisoners serving less than 15 years, or discretionary life sentences, (where early release depended only on the recommendation of the Parole Board). The complaint had been upheld. Reference was also made to a passage from the Belgium Linguistic Case (No. 2) at page 284. The principle of equality of treatment was violated if the distinction made had no objective and reasonable justification. There was no such justification in the present case. Nor would the discrimination involved in failing to apply the practice note pursue a legitimate aim.

[13] The court was a public authority and it was unlawful for public authorities to act in a way which was incompatible with convention rights. Sections 2 of the 1886 Act and 20 of the 1993 Act did not breach A1P1 but the deprivation of possessions which they permitted engaged article 14. Reference was made to the Clift decision at paragraphs 41 to 43. The practice note therefore had to apply to small landholders as it did to crofters. The spirit and intention of sec 2 of the 1886 Act was identical to the spirit and intention of sec 20 of the 1993 Act. The Landholders Acts generally had been framed for the purpose of making changes in the powers and rights of landlords for the benefit of tenants; Rankine at page 607 quoted with approval in MacDonald v Barker at page 5. Although MacDonald v Barker had been distinguished in the case of Secretary of State for Scotland v Shareholders of Lealt & Culnacnock Common Grazings the passage from Rankine remained accurate.

[14] For all of these reasons we should dismiss the application.

(ii) For the applicants

[15] Sir Crispin’s motion was that we should allow a proof before answer on the merits of the resumption, leaving over the question of quantification of compensation for a further hearing.

[16] He began his substantive submissions with some general points about sec 2 of the 1886 Act. A number of points arose. Firstly the Land Court had to be satisfied that resumption was for a reasonable purpose. “Reasonable purpose” included the feuing of land and the building of dwellings. Secondly the court had to be satisfied on a balance of probabilities that the reasonable purpose would be carried out. In this case that would be a matter for proof before answer. Thirdly, the reasonable purpose must be in “relation to the good of the holding or of the estate”. Finally, in exercising its discretion as to whether to authorise resumption, the court had to consider all the circumstances of the case. However, in context, what that meant was all the relevant circumstances; circumstances which were not too remote from the issue before the court. In particular the circumstances should relate to the holding on its own rather than to the aggregate of the holding and some other land. (This last point was made in relation to the applicants’ plea to the relevancy of the respondent’s averments.)

[17] Sir Crispin then turned to the practice note and to the submission made in relation to ECHR.

[18] So far as the practice note was concerned it did not technically apply to resumption under the Crofting Acts as distinct from the Landholders Acts.

[19] In any event a practice note was simply for guidance. Thus its penultimate sentence read “the court have issued the above note for the guidance of petitioners only”.

[20] Insofar as its contents might be described as a policy, such policy must allow for exceptions; Calderwood v Renfrewshire Council. Exceptions to that policy had already been made, for example, in the case of wind farm developments, where the court would grant resumption conditional on sale and/or the grant of planning permission and other consents.

[21] In the present case the applicants had set out circumstances which demonstrated why they should not be required to show an agreed sale. These were (i) that they wanted to put in the infrastructure for the development themselves prior to the sale and (ii) that in the present climate it was not reasonable to seek to agree a sale when there was no certainty of vacant possession. However, the applicants offered to prove that it was likely that there would be a sale. It was planning policy that this site be used for housing and that made a sale for that purpose feasible.

[22] Sir Crispin accepted that the court needed to be satisfied, on a balance of probability, that the reasonable purpose would be carried out. What the practice note did was to give an indication of what would satisfy the court in that regard in normal circumstances. But the court could not bind itself by a practice note because (i) to do so would fetter the court’s discretion and (ii) the statute did not include the requirements which were contained in the practice note. Whether or not the reasonable purpose would be carried out was a matter for proof before answer on the applicants’ pleadings. He agreed wholly with the note issued by Lord McGhie on 18 July.

[23] The averments contained in Statement of Fact 4 were the averments which, if proved, should satisfy the court that the reasonable purpose would be carried out. Portman’s Trustees v Macrae and Beardsell v Baird were certainly to the effect that the court had to be so satisfied but they did not say that evidence of a sale was needed. The Portland case was special because the crofter had already received planning permission for a chalet and caravan site and the landlord was trying to stop that by feuing sites for two houses, a plan which had fallen through, leaving a question as to whether the landlord had a bona fide reason for possession. The case turned on its own facts and was not authority for the proposition that there had to be a sale in place before the court would authorise resumption.

[24] Beardsell was to similar effect; what was really being said there was “what is the evidence as to whether the purpose is likely to be carried out?” The applicants here were offering to prove that the purpose would be carried out.

[25] In the wind farm resumption cases the court often produced orders which were conditional upon consents being obtained and the applications were then continued in a way not unlike what had happened in Edinburgh University v Craik. In the present case the applicants were asking the court to grant resumption so that infrastructure could be carried out because that would improve the prospects of a sale.

[26] The practice note was directed at the context of land being resumed for one or two house sites or some other fairly small development. The present case involved a much larger development in two parts: the infrastructure had to be put in first and then the land sold to developers who would carry out the reasonable purpose. The applicants set out in their pleadings why it was not considered reasonable to conclude missives at this stage but why there was, nevertheless, every reason to believe that there would be a sale and that the housing development would go ahead. In terms of the test for relevancy contained in Jamieson v Jamieson cases should only be dismissed if they were bound to fail. This application was not bound to fail.

[27] Sir Crispin then turned to the respondent’s position.

[28] That position had initially been that the policy stated in the practice note was binding on the court. However Mr Kermack had come to concede that the court was entitled to depart from it on cause shown. What rule 1(4)(a) of the court’s rules said was that it was to “have regard to” the terms of its practice notes. The practice note did not apply to section 2 of the 1886 Act. There was therefore, strictly speaking, nothing to “have regard to”. It would, nevertheless, be open to the court to say that it had had regard to the practice note and that it had applied it to section 2 but that it had been persuaded not to follow it. Reference was made to the case of Ishak v Thowfeek as to the meaning of the phrase “have regard to”.

[29] In the Glen Spean case what the Divisional Court had said was that no material had been presented to it which would suggest a departure from normal practice. That recognised the possibility of departure from normal practice. Were we to hold that the practice note applied in this case we should depart from it for the reasons given in the applicants’ pleadings.

[30] The power contained in the Scottish Land Court Act 1993, schedule 1 paragraphs 12 and 14 was a power to make and enforce rules. That was a reference to rules of court and not to practice notes. That was confirmed by rule 1(4)(a) which required only that the court “have regard to” practice notes.

[31] With reference to Mitchell Construction Company (Scotland) Ltd v Brands Transport & Demolition Ltd the court had not gone as far as to say that the sheriff would not have been entitled to depart from the practice note where there were special circumstances. What had been said there had to be read in context: the pursuers had been unaware of the granting of an interlocutor and had lost the opportunity of appealing against it timeously.

[32] The case of United Dominions Trust v Stark made clear that the court could not change the substantive law. The substantive law in this case was set out in section 2 of the 1886 Act and the Land Court could not competently add to its requirements.

[33] So far as article 14 of ECHR was concerned, it could only come into account if another article was engaged. Here the respondent’s property rights constituted a bundle of rights and obligations under the Landholders Acts and were qualified by the landlord’s right to seek resumption. Exercising that right was not an interference with the respondent’s property rights because his property rights had always envisaged the landlord’s right of resumption. A1P1 was therefore not engaged and issues of discrimination did not arise. In any event the test for resumption in sec 2 of the 1886 Act was the same as in sec 20 of the 1993 Act. There was therefore no discrimination. Reference was made to the case of Lancashire County Council v Taylor at paragraphs 57 to 60, holding that Mr Taylor’s A1P1 rights had not been infringed because his possession was delimited by his tenancy and article 1 of the first protocol conferred on him no greater right than that provided by domestic law. Where a landlord removed a tenant in accordance with statutory provisions which provided a right of appeal to a court that complied with the requirements of the convention; Harrow LBC v Quasi per Lord Hope of Craighead at paras 34 and 83 and Lord Millett at paras 108 and 109. Article 1 was not therefore engaged and, therefore, neither was article 14. Even if article 14 was engaged however, one was not comparing like with like. Parliament had left the law relating to smallholdings as it was in 1886 whereas there had been significant changes to the law relating to crofts, most recently in the Crofting Reform etc Act 2007. The result was that smallholdings and crofts were now so significantly different that it was not necessarily appropriate to apply practice notes which applied to crofting to smallholdings.

(iii) Mr Kermack’s response

[34] The practice note already envisaged that any prospective purchaser of the land to be resumed was purchasing conditional on the land being resumed. That any offeror would not offer until the land had been resumed could not therefore be a cause for departing from the practice note. The practice note was envisaging a situation where the land was being purchased subject to it being resumed.

[35] The present application was so lacking, in terms of what was required by the practice note, that it should not even have been accepted by the court and served, never mind proceed this far. All it did was express an intention. There was nothing in the applicants’ averments which would justify, on the basis of what had been said in Glen Spean, the court departing from normal practice. Nothing in the pleadings justified proceeding to a proof before answer.

[36] As to Ishak v Thowfeek if due weight was not given to a statutory requirement that was a ground of challenge.

[37] Sir Crispin had said that paragraphs 12 and 14 of the schedule to the Land Court Act dealt with rules for administrative functions, not procedural matters. The reference of paragraph 1.41 of MacPhail had been to Sheriffs Principal being empowered to issue orders and directions for administrative and procedural regulations. That is what practice notes covered, not only administrative but procedural regulation. The present practice note met that requirement.

[38] The case of Taylor v Lancashire County Council was entirely distinguishable. Whilst it was unlawful, in terms of sec 6 of the Human Rights Act 1998, for a local authority to behave incompatibly with convention rights that did not arise where, due to other legislation the authority could not have acted differently. The position with the practice note in this case, made under paragraph 14 of schedule 1 to the Land Court Act, was that the court had discretion as to whether or not to authorise resumption whereas in Taylor the court had no such discretion regarding the notice to quit because the matter was governed by a provision of primary legislation.

[39] As to whether article 1 was engaged, Taylor was now nine years old and Human Rights law moved swiftly. A tenant of a smallholding had property which he was entitled to possess peacefully. Were the court to apply different rules to a landholder from those applicable to a crofter that would be discriminatory. The practice note was unqualified, unequivocal and peremptory in its terms and there was no justification for a proof before answer.

Decision

[40] As we understand it, Mr Kermack’s original position was that the practice note was binding on the court: in the absence of agreed terms of sale we had no option but to dismiss or refuse the application. His position, however, came to be that the practice note was not binding in that way but could be departed from on cause shown. Although that concession makes it strictly unnecessary for us to consider the validity of Mr Kermack’s original position it is appropriate to say something about the history and status of practice notes in the Land Court as a precursor to discussion of the effect of this particular practice note.

[41] Practice notes are a relatively recent innovation in the Land Court. This practice note is Practice Note (No. 1) and was issued in February 1992. At that time neither the relevant legislation nor the Rules of the Court made mention of practice notes. The relevant legislation was the Small Landholders (Scotland) Act 1911, section 3(12) of which provided:

“It shall be lawful for the Land Court from time to time to make rules for conducting the business of the court”.

The reference is to making “rules” and rules duly followed. The rules in place at the time of the issue of the present practice note were the Scottish Land Court Rules 1979 (SI 1979/379). These say nothing about practice notes. It seems to us, therefore, that practice notes in this court are to be regarded as having been made in the exercise of the court’s inherent power to regulate its own business. In the case of The Colstoun Trust v The Firm of AC Stoddart & Sons, the Lord Justice Clerk, as Lord Gill then was, dealing with a submission that the Land Court had no power to disallow proposed adjustments in a case because the court’s rules contained no such express power, said this:

“Although there is no express provision on the point in its rules, that does not mean that the Land Court has no power to refuse a proposed adjustment. The Land Court, like any court of law, has an overriding discretion to ensure that litigations before it are conducted efficiently and expeditiously, and with fairness to all parties.”

It seems to us that the issuing of practice notes can be seen as falling within that inherent discretion.

[42] Section 3 of the 1911 Act was repealed by Schedule 2 of the Scottish Land Court Act 1993. It was replaced by paras 12(b) and 14 of the Schedule to the latter Act, quoted above. The reference in both is to “rules”. Para 12(b) authorises the Court to make rules with reference to proceedings before it and para 14 authorises the making of rules for conducting “the business of the Court”. The former seems to have in mind what we recognise as formal Rules of Court, akin to the Sheriff Court Rules and the Rules of the Court of Session. We say that because they are to be rules for the conduct of cases and because a degree of formality is envisaged, as the amendment effected by sec 34 of the Crofting Reform etc. Act 2007, providing that such rules could only be made by statutory instrument, shows. The provision is not habile, in our view, to cover practice notes. Paragraph 14 deals with rules for the business of the Court, which we understand to mean administrative matters such as office opening hours, the wearing of formal court dress and the like, rather than rules for the conduct of cases.

[43] The 1979 rules were superseded as of 1 November 1992 by a new set of rules (SI 1992/2656). The 1992 rules were also silent on the matter of practice notes. These were, in turn, superseded by our current rules, being set out in the schedule to The Rules of the Scottish Land Court Order 2004 (SSI 2014/229). As has been seen, these rules do make mention of practice notes; rule 1(4)(a) obliges the court to “have regard to the terms of its own practice notes”. Rule 2 defines “practice note” as “a formal statement signed by the Chairman, providing for the conduct of the business of the court or giving guidance in dealing with proceedings pending before the court”. That definition does not innovate on what had been the court’s understanding of the status of practice notes before the promulgation of our present rules. That understanding was as expressed by Lord McGhie in the note appended to the order of 18 July in this case. In that note Lord McGhie said:

“We do not comment on the applicant’s plea. However, it may be of assistance to the respondents if we indicate that the court has never regarded itself as bound by its practice notes. They are published for guidance.”

[44] There is, therefore, no statutory basis for according to practice notes in this court the same status as Acts of Court and practice notes in the sheriff court, which are issued in discharge of express duties imposed on Sheriffs Principal by sections 15(1) and (2) of the Sheriff Courts (Scotland) Act 1971. Instead, practice notes in this court are exactly what they bear to be: notes of the practice followed by the court in relation to the particular matter with which the individual practice note is dealing. Practice notes are issued for guidance, as the penultimate sentence of this practice note makes clear:

“The court have issued the above note for the guidance of petitioners only”.

They do not have the force of law.

[45] With specific reference to this practice note, it could not have the force of law in any event because that would result in adding to the statutory requirements of sec 2. It was that sort of consideration which led the sheriff in United Dominions Trust v Stark to hold that the Sheriff Principal’s Act of Court was ultra vires. That case concerned a provision in an Act of Court applying in the Sheriffdom of Lothian and Borders limiting the period for which poinding under the Debtors (Scotland) Act 1838 was to be effective to six months unless an application for extension was made within that period. By inadvertence the application for extension had been made after expiry of that period. The terms of the Act of Court were, as the solicitor for the applicant conceded and the sheriff acknowledged, peremptory. But there was no such time limit in the 1838 Act itself. In that situation the learned sheriff said this (at page 60):

“As I have said, Sheriffs Principal may issue directions on a wide range of matters. I have, however, been unable to find any authority for the proposition that a Sheriff Principal is empowered, by direction, to amend or to create substantive law. Indeed, it would in my opinion be quite remarkable if there were such authority. To a limited extent, of course, every judge can, by the normal process of judicial decisions, extend, or even on occasions make, law. But that is very different from doing so by decree; and even the Court of Session, although it may by Act of Sederunt make rules governing procedure, has no power to issue a direction which creates new substantive law. That is the function of Parliament, not of judges. It follows, accordingly, that, if a Sheriff Principal, by Act of Court or practice note, seeks to alter the existing law, or to create new law, such a direction must be regarded as ultra vires, and of no effect.

What then is the position of article 5(2)(a) of the Act of Court presently under consideration? I am unable to construe the fixing of a prescribed time-limit on a poinding, where no such limit is provided by statute, as anything other than an attempt to create new substantive law. As such the provision in question is, in my opinion, ultra vires, and one which falls to be disregarded.”

[46] Applying that approach to this case, it seems to us that to impose an absolute requirement that planning permission be obtained or terms of sale be agreed ahead of resumption would be to add to the requirements of sec 2. It would be, in Sheriff Nicolson’s words “an attempt to create new substantive law”. For that reason alone a rigid interpretation is inappropriate.

[47] The rigid approach is also inappropriate when one considers the purpose of the note. The second paragraph of the note reads as follows:

“Before authorising resumption, the court require to be satisfied not only that the resumption is for a reasonable purpose in terms of section 20 but also that the purpose for which resumption is sought will actually be carried out.”

The focus of the note is, therefore, on the need for the court to be satisfied that the purpose will be carried out. That requirement is not expressly contained in section 2 of the 1886 Act, nor in section 20 of the 1993 Act, but it is implicit; otherwise the court would be obliged to grant resumptions for purposes which, although apparently reasonable, were never in fact likely to materialise, or, if they materialised, were likely to fail. Hence the comment by the court in Secretary of State for Scotland v Shareholders of Lealt & Culnacnock Common Grazings (at page 30) that it is imperative that resumptions of croft land should not be lightly authorised for purposes which may soon fail.

[48] More generally, it has been recognised in a long series of cases, referred to by Mr Kermack in relation to Sir Crispin’s attack on his pleadings, that resumptions do not merely involve proof of reasonable purpose in the abstract but require proof of a purpose for which it is, in all the circumstances relevant to the interests specified in the successive statutory provisions, reasonable to grant resumption; MacCallum v Duke of Hamilton’s Trs, Walker v MacEwan, Mackay’s Trs v Colthart, Shaw v Cummings, Fountain International Ltd v MacDonald, Dunbeath Estate Ltd v Gunn.

[49] The purpose of the practice note is therefore to give guidance as to what the court looks for as evidence to show that the purpose for which resumption is sought will actually be carried out: that it is realistic, credible and feasible. Clearly the existence of planning permission and agreed terms of sale to a developer lend credibility to an application for resumption for the purposes of selling the land for housing development. But the practice note does not, and could not, exclude the possibility that resumption could properly be granted in the absence of one or both of these. What the practice note imports is that the granting of resumption in such circumstances would be exceptional and requires justification.

[50] With that we come to the question whether we should have regard to the practice note in this case. The question arises because it deals with section 20 of the 1993 Act, not section 2 of the 1886 Act.

[51] On this matter we take a practical approach. We need not take time in discussion of the arguments advanced on ECHR. We are persuaded, rather, that it simply makes sense to apply the practice note to smallholdings as well as to crofts. Section 2 and section 20 are similar and involve the same considerations as to whether resumption should be authorised. These are whether the resumption is for a reasonable purpose and whether that reasonable purpose will be carried out. We see no reason not to apply the practice note. The different development of the law relating to crofts, as opposed to smallholdings, referred to by Sir Crispin, does not justify a different approach. By “applying the practice note” we mean, standing the explanation given of its status, that we must have regard to it.

[52] Having regard to it then, since its terms are not satisfied, the question becomes whether there are circumstances in the present case justifying departure from the requirement to exhibit agreed terms of sale.

[53] The averments on which the applicants rely are to be found in Statements of Fact 3 and 4. The relevant passages are in the following terms:-

“3. 19.79 acres (8.01 ha) of land at Busbie have been allocated for new housing in the adopted East Ayrshire Council Local Plan. Reference is made to Volume 3 of the said Local Plan at pages 24 and 25 ‘Crosshouse’, area ‘258H’. The respondent’s tenancy comprises inter alia 13.58 acres (5.50 ha) of area 258H (‘the relevant area’). The relevant area is shown hatched in blue in plan 1 and outlined in red on plan 2. With reference to the respondent’s averments in answer, not known and not admitted that 7.73 ha (19.10 acres) of 258H is identified on the respondent’s Field Identifier Sheet as being occupied by the respondent…

4. The applicant seeks to resume the relevant area. The applicant intends to develop the allocated area for housing. The applicant intends to develop the infrastructure on the allocated area itself, before selling it because they have found that this increases the opportunity for sale of development sites. The extent of any infrastructure undertaken depends on the market at the time and any on-going discussions with developers. On 4 April 2014 East Ayrshire Council resolved to grant planning permission in principle over the allocated area for the development of up to 140 houses subject to the conclusion of a section 75 Agreement. Said resumption is for a reasonable purpose having regard to the good of the estate, namely for the building of dwellings and associated infrastructure. Reference is made to section 2 of the Crofters Holdings (Scotland) Act 1986. … Admitted that resumption is sought of a bare land site for sale to a third party for a purpose involving development under the Planning Acts, under explanation that the applicant first intends to develop the infrastructure before selling the subjects and that the applicant is not yet in discussions with any prospective purchaser. Explained and averred that in the circumstances where the applicants knew from previous dealings with the respondent, that the respondent would oppose resumption, it was not reasonable to expect the applicants to enter into discussions with prospective purchasers until it was known that resumption would be authorised, particularly as developers are unlikely to enter into meaningful discussions about a prospective purchase without the guarantee of vacant possession. … There has been a general improvement in the housing land market in the area in the last year with builders actively seeking sites with between 50 and 100 units, particularly where there is in place planning permission. It is for this reason that the applicant proposes to sell the site in two parts, because that is more likely to be the size of area for which a builder will offer. Crosshouse village is a desirable area because it is close to East Ayrshire’s main centre of employment and has good transport links and amenities in the area. The applicant’s agents GVA James Barr has already had expressions of interest from Bellway and Barrett Homes. The applicants had been advised that before builders are likely to submit any formal bid, they would require to be assured of vacant possession. In these circumstances the applicant reasonably concludes that [it] will be able to sell the sites for development once resumption is authorised. The applicants also require vacant possession in order to carry out infrastructure works. 25 new build dwellings are currently being built and sold per year in neighbouring Kilmarnock and in other sites in surrounding East Ayrshire. It is likely that the land will be sold in two lots of 70 houses at about the same time. It is likely the lots will take three years to build and sell. The main highway access, utility services and surface water drainage attenuation basin will be installed before the first house completion.”

[54] Much of the forgoing is disputed by the respondent but for present purposes it has to be taken pro veritate . Taken as fact, do these averments disclose a justification for departure from the practice note? Analysing them, the factors on which the applicants rely for such justification seem to be (a) that it is too early to expect terms of sale to have been agreed because (i) they wish to install infrastructure to make the site more attractive to purchasers and (ii) developers will not go to the trouble of submitting a formal offer without a guarantee of vacant possession, and (b) the existence of other facts and circumstances which should satisfy the court that the reasonable purpose will be carried out, notwithstanding that terms of sale have not been agreed. We come to what these factors are in a moment.

[55] So far as the first of these reasons is concerned, neither of its branches justifies departure from the requirement for agreed terms of sale. It is within the judicial knowledge of this court that offers for the purchase of land for development are conditional on many things. The installation of infrastructure by the sellers and the availability of vacant possession (a standard condition of any offer in any event) are easily dealt with in missives or in pre-missive agreements. These do not constitute reasons for not expecting the applicants to agree terms of sale before coming to the court for resumption.

[56] In that regard it seems to us that the applicants here have things the wrong way round. Rather than do all that is necessary to bring before the court a firm and credible scheme for the implementation of the reasonable purpose they ask the court to grant them vacant possession so that they can then find someone who will purchase the land and implement the reasonable purpose. That is an approach the court, charged with the responsibility of being satisfied that the reasonable purpose will be carried out, cannot countenance.

[57] Sir Crispin invited us to grant authority for resumption on the same basis as is sometimes done for windfarm resumptions. That involves an initial finding that the purpose is reasonable and then finalisation of the order once matters of detail are agreed and in place. But there is a world of difference between these cases and the present one. These applications are usually enthusiastically concurred in by the tenants from whom land is being resumed, who stand to gain an income from the development, and there is every reason to suppose they will go ahead. They are brought at the instance of the landowner, of course, but they are not conditional on finding a developer. The developer, finance and the requisite legal documentation (leases, sub-leases, profit-sharing agreements and the like) are already in place. Everything is ready to go ahead subject only to resumption being authorised. These cases do not, therefore, provide any kind of precedent for the granting of authority to resume in the present circumstances. Moreover, we would say that the legal contracts involved in such cases often involve far greater complexity than a typical contract for the sale of land for development.

[58] Accordingly we consider that the first reason adduced for not insisting on agreed terms of sale is without merit. What of the second? The matters on which the applicants rely in that regard are as follows:-

(a) the existence of planning permission in principle;

(b) the desirability of Crosshouse as a residential area;

(c) the expression of interest by Bellway and Barratt Homes; and

(d) the rate at which new homes are being built and sold in neighbouring Kilmarnock.

On the basis of these averments the applicants offer to prove that, on a balance of probability the reasonable purpose will be carried out.

[59] Whether to allow these averments to go to proof depends on their relevancy. The test is whether, if the applicants prove all of the foregoing, the application must, nevertheless, fail; Jamieson v Jamieson.

[60] As we see it the critical thing is whether the applicants are likely to be able to sell the land to a developer who is capable of carrying out the sort of development described. The high water mark of the applicants’ averments in that regard is the averment at Statement of Fact 4 that “the applicants’ agents GVA James Barr [have] already had expressions of interest from Bellway and Barratt Homes”. We understand these expressions of interest to take the form of letters from these two companies which are contained in a report from GVA James Barr, production 30. Although not formally adopted into the applicants’ pleadings they were referred to, without their terms being examined, by Sir Crispin at debate. We have read them. They are in very similar terms, having apparently been written at the invitation of Mr Stephen Robertson, an Associate Director of GVA James Barr, to whom they are addressed. After reference to the site being offered in two lots for 70 units on each both letters conclude with confirmation “that this opportunity is of interest to [Bellway/Barratt]”. The writers look forward to receiving further details in due course. These are very tentative and provisional expressions of interest, containing no statement of intention to enter serious negotiations for the purchase of the land should vacant possession become available.

[61] In that state of the pleadings, therefore, our view is that the applicants’ averments do not to amount to a relevant case. If the foregoing is all that is proved the court would not be satisfied that resumption should be authorised. That is because there would not be before the court a firm proposal for the carrying out of the reasonable purpose. The reasonable purpose might be carried out or it might not. On the basis of expressions of interest in the foregoing terms the court could not conclude, on a balance of probability, that the reasonable purpose would be carried out. The matter is not in the control of the applicants themselves. If all the applicants are offering to prove is some sort of general interest from two developers in the site they are bound to fail.

[62] We may say that this is not a conclusion we have reached lightly. There is a lot at stake for the applicants here, as well as for the respondent. We have considered whether, despite our concerns, it would be proper to allow a proof before answer. We are a practical court and do not insist on pleading points. Also there is the possibility that the evidence would emerge more strongly for the applicants than their pleadings would suggest. However the matter has to be decided on the pleadings as they stand. The purpose of debates on relevancy is to prevent the expense of proof in unmeritorious cases and the court must not evade its responsibilities by simply allowing a proof before answer. Having considered all of these matters very carefully we remain of the view that the applicants have not averred enough for a relevant resumption application and that the respondent should not be put to the expense and trouble of proof on the basis of the pleadings before us.

[63] We have also considered whether it would be appropriate, instead of dismissing the application, to sist or continue it in order to give the applicants an opportunity to amend. However we see no point in that. Faced with the point taken against them, the applicants would no doubt have averred a stronger case had they been in a position to do so. Instead they have chosen to bring the application at a stage at which they are not able to offer to prove that which the court would require to have proved before holding that reasonable purpose had been established. It will of course be open to the applicants to bring a fresh application should they be in a position to offer to prove, to the court’s satisfaction, that the reasonable purpose is likely to be carried out. But the present application is dismissed.

[64] Given the conclusion we have come to on this question it is unnecessary for us to address the objections taken by Sir Crispin to certain passages of the respondent’s pleadings. Should a fresh application be lodged and should it be met with pleadings in the same terms we have, of course, a note of the submissions made by both sides in regard to those passages and their relevancy can be decided at that time.

Expenses

[65] We have allowed 21 days for written motions and submissions on expenses.

For applicants: Sir Crispin Agnew of Lochnaw, Bt, QC; Gillespie Macandrew, Solicitors, Edinburgh

For respondent: Lewis Kermack, Solicitor, Turcan Connell, Edinburgh