Lord Ordinary orders liquidator to recognise right to buy in dispute over leased Inverness farmland

About this case:

• Citation:
  [2022] CSOH 51
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Clark

Amanda and Deanna Urquhart argued that they had a right under the Agricultural Holdings (Scotland) Act 2003 to purchase the land from its present owner, West Larkin Ltd, which had entered into liquidation. Their action was opposed by Joseph and Donalda Sweeney, members of the family which controlled WLL prior to its liquidation.

The case was heard by Lord Clark in the Outer House of the Court of Session. The Dean of Faculty, Dunlop QC, and Young, advocate, appeared for the noters and O’Brien QC and Ower, advocate, for the second and third respondents with the first respondent, the liquidator for WLL, making no appearance.

Crystallised right

The second noter and her husband leased Larkin Brae, Inverness, from a company called Vastlands Property Ltd in 1990. The lease came to be within the Agricultural Holdings (Scotland) Act 1991 with a duration of 25 years. In due course VPL’s interest in the land came to be owned by West Larkin Ltd, a company controlled by members of the Sweeney family. The Sweeneys did not accept that the tenancy had been created, leading to a declarator as to the existence of the tenancy being granted in 2000.

Mr Urquhart’s interest in the tenancy was acquired by his daughter, the first noter, in February 2006. In April of that year the noters registered their notice of interest in acquiring the land and arranged to have it re-registered every five years. Two separate notes by the Sweeneys were raised in 2019 seeking to order the liquidator of WLL to challenge the noters’ right to buy but both were refused with the decision affirmed by the Inner House in 2020.

It was the respondents’ position that the noters had ceased to occupy the land or carry out any agricultural activity on it since 2006 and thus had lost the right to buy. Accordingly, the lease had expired in October 2015 and on a plain reading of section 25(12) of the 2003 Act no registration could have effect where no tenancy existed. The noters maintained that the tenancy had continued to exist by tacit relocation, and that they had to remove their livestock from the land as a result of behaviour by the Sweeneys.

Counsel for the noters submitted that they had a crystallised right to buy the land flowing from the undisputed and unreduced exchange of the notice of proposal to transfer in 2019. Under the relevant provisions of the Agricultural Holdings (Scotland) Act 2003, a specific statutory right had been provided to them which the courts could not ignore and to which the liquidator did not lodge a relevant defence.

Deal has been done

In his decision, Lord Clark said of the interpretation of the 2003 Act contended for by the respondents: “It would not make sense to interpret the provisions in Part 2 of the 2003 Act as giving a free-standing right to challenge under section 25(12) based on the allegation of the tenancy no longer being a 1991 Act tenancy and having come to an end. Under the scheme, where there is such an issue it is dealt with by a challenge by the owner under section 25(8) or (if there is termination after registration) a notice by the landlord to the Keeper that the lease has terminated, under section 25(13).”

He explained further: “The second and third respondents’ challenge is that there was no longer a 1991 Act tenancy from 2006, and the lease terminated in 2015. But in fact registration occurred thereafter (in 2016 and then in 2021). Put shortly, section 25(12) deals with the specified forms of challenge to registration occurring within a period of 5 years after registration by notification to the Keeper. It does not allow the much broader form of challenge made by the second and third respondents.”

Turning to the rights held by the noters, Lord Clark said: “The legislation is clear that once the notice from the owner has been intimated the right to buy exists and the tenant can take it forward to completion. So, if the tenant gives a notice in response that he intends to buy the land, the right becomes enforceable. There was of course no challenge under section 25(8) [of the 2003 Act] by the landlord or liquidator here. I conclude that the noters’ right has crystallised by virtue of the exchange of notices. The scheme has been followed through to its final stage by the owner and the tenant.”

He continued: “The deal has in effect been done, subject to valuation. It cannot now be recanted by a challenge under section 25(12). Even if the interpretation put forward by the second and third respondents in relation to section 25(12) had been correct, it would come too late to seek to interfere with the crystallised right to buy. On this ground alone, the noters’ claim succeeds.”

Lord Clark therefore granted the order sought by the noters to direct the liquidator, to conclude missives for the sale of the land.