SUPREME COURT DECISION IN SALVESEN V RIDDELL: Section 72 of the Agricultural Holdings (Scotland) Act 2003 outwith the legislative competence of the Scottish Parliament

We have been awaiting the Supreme Court's appeal decision in Salvesen v Riddell with great interest. Issued on 24 April 2013, it is a landmark decision in many ways, but it is by no means the end of the road for those who find themselves in similar circumstances to Mr Salvesen and Mr Riddell. Those (albeit comparatively few) parties will have to wait for some time yet to find out the final impact of the decision, which is largely now back in the hands of the Scottish Parliament.

Due to the fact it violates Mr Salvesen's right to protection of his property under the European Convention of Human Rights, the Supreme Court decided that Section 72 of the Agricultural Holdings (Scotland) Act 2003 is outside the legislative competence of the Scottish Parliament. Section 72 affects landlords - acting in their capacity as a limited partner - who served limited partnership dissolution notices between 16 September 2002 and 30 June 2003 (being the period when certain amendments to the 2003 Act - then a bill - were being proposed in the Scottish Parliament).

In much over-simplified terms, Section 72 removes a landlord's ability to take steps to prevent the former general partner from becoming a secure 1991 Act tenant following dissolution of the limited partnership. Landlords who serve dissolution notices anytime after 1 July 2003, on the other hand, are entitled to rely upon Section 73 of the Act - which provides an opportunity to prevent the general partner obtaining full security of tenure (provide the landlord follows certain intimation and notice procedures). As a result, the Supreme Court ruled that Section 72 unfairly penalised the landlords who served notices at the earlier stage.

The Supreme Court has suspended the effect of its decision for 12 months in order to give the Scottish Parliament an opportunity to remedy the human rights breach. This will presumably require an amendment to the 2003 Act, so we expect to hear more from the Scottish Parliament on this in due course. As pointed out by the Supreme Court, it is essential that, whatever steps are proposed to remedy the situation, consultation takes place with all involved in the tenanted sector in Scotland. We will be keeping a close eye on how this develops and further updates will follow.