Outer House rejects attempt by family farmers to prevent removal from property due to be repossessed by secured creditor

About this case:

• Citation:
  [2024] CSOH 93
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Braid

Duncan Alexander Orr and Aileen Orr maintained that the decree sought by UK Agricultural Lending Ltd was part of an allegedly fraudulent scheme by another individual aimed at “stealing” the family farm from them. The defender counter-claimed for declarator that the pursuers had no title to occupy any part of the farm, maintaining that their lease was a sham intended to delay their removal.

The case was heard by Lord Braid in the Outer House of the Court of Session, with the first and second pursuers appearing as party litigants and the defender represented by Brown, advocate.

Falling out

In 2012, the wider Orr family were introduced to a Martin Frost, who offered to help them after becoming aware of litigation they were involved in and later married into the family. In 2015 a company operated by the Orrs purchased a small farm for Mr Frost’s use and residence and in so doing granted a standard security over their own farm, Sunwick Farm, which was refinanced by the defender the following year, in whose favour a new standard security was granted. Sunwick Farm was disponed to Mr Frost’s company Avocet Agriculture Ltd in September 2016 without the knowledge or consent of the defender.

By 2019, the Orrs and Mr Frost had fallen out. After this, the secured loan fell into default. The defender issued calling up notices that were not complied with, leading to enforcement proceedings against Mr Frost’s company, by then called Orrdone Farms Ltd, resulting in a decree requiring Orrdone, its sub-tenants, and any other party deriving a right of occupation from them, to remove from Sunwick Farm. The defender sought to enforce that decree by proposing to remove the pursuers from the farm.

It was averred by the pursuers that the first pursuer was the lawful tenant of the farm by virtue of a lease granted to him in September 2016, with the other pursuers deriving their right to occupy the farm from the same lease. That lease was granted by Hamilton Orr Ltd, not by Orrdone, and therefore none of them could be lawfully evicted.

The defender averred that the pursuers had no right or title to occupy Sunwick Farm, thus rendering redundant any argument that the sheriff court decree did not authorise their removal. The purported lease was fabricated so as to delay the pursuers’ removal or, at any rate, was never intended to have any legal effect. Moreover, said purported lease was entered into in bad faith and fell to be reduced ope exceptionis.

Inevitable result

In his decision, Lord Braid noted deficiencies in the pursuer’s case, saying: “For all that the pursuers complain that they have been the victims of a fraud resulting in ‘their’ farm being stolen, they do not aver that the defender was implicated in the fraud, nor, critically, do they seek reduction of the standard security over the farm on which the decree was founded. It follows that the remedies sought in this action, even if granted, would not give the pursuers that which they ultimately seek, which is restoration of the farm to them.”

He continued: “For all her undoubted skill in conducting the proof, at times Mrs Orr overlooked this essential deficit in the pursuers’ action, with the inevitable result that much - indeed, most – of the evidence which she elicited was irrelevant and, as a result, inadmissible.”

Assessing whether it would be just and equitable to reduce the purported lease, Lord Braid said: “It is immediately apparent that the lease contains no machinery by which any sum due [in rent] could be fixed. The gaps are far beyond the power of the court to fill by means of implication of terms. I therefore conclude that the agreement cannot be a lease enforceable against third parties, in that it does not provide for payment of a rent. An alternative analysis, leading to the same result, is that the provision for rent is simply void for uncertainty.”

He added: “Having found as a fact that Alexander Orr did not have exclusive possession, quite simply, the agreement could not be a lease, whatever else it was. Accordingly, the agreement was not a lease but conferred no more than a personal right on Mr Orr, exercisable only against HOL. He has no right not to be removed from the farm by the defender.”

Lord Braid concluded on bad faith: “[The first pursuer] was aware both of the proposed standard security and of the need to disclose any lease over the subjects, yet did not do so (even though the loan transaction did not complete until 22 September 2016, giving ample time for the lease to be disclosed before he (on the hypothesis that there was a lease) entered into possession of the farm as tenant on 20 September 2016. The subsequent secrecy about the lease simply adds to the whiff of bad faith surrounding the lease transaction.”

For these reasons, the pursuers’ pleas were repelled, the defender assoilzied from the conclusions of the summons, and the lease reduced ope exceptionis.