Tenant's right to buy can outlive tenant's occupation

A recent decision of the Court of Session could have much wider implications for both landlords and tenants of agricultural holdings.

The Urquharts and the Sweeneys had been in dispute about whether or not certain land was tenanted and if the Urquharts right, as tenants, to buy the land was still in play. The dispute reached the Inner House of the Court of Session which was asked to consider the proper application of the statutory provisions concerning an agricultural tenant’s right to buy the land subject to the lease as set out in Part 2 of the Agricultural Holdings (Scotland) Act 2003.

The agricultural land in dispute is situated at Leachkin Brae, Inverness and the parties, the Sweeney family and the Urquhart family, had long been in dispute about it. The land was owned by the Sweeneys through a company, West Larkin Ltd, and the Urquharts were tenants. The Urquharts had registered and kept up to date a notice of interest in acquiring the land under the 2003 Act.

West Larkin Ltd went into liquidation and the Liquidators served a notice on the Urquharts that they intended to sell the land, thereby on the face of it, triggering the Urquharts' right to buy under the legislation, likely at a price significantly lower than open market value. The Urquharts served a timeous counter-notice intimating their intention to buy the land. The Sweeneys, who were creditors in the liquidation, joined the court proceedings seeking to prevent the sale to the Urquharts at a discounted price.

The Sweeneys argued that the Urquharts' right to buy was invalid because they had, since 2006, abandoned the land and were carrying out no agricultural activity, meaning no agricultural tenancy existed, a fact disputed by the Urquharts.

The Lord Ordinary (in the Outer House of the Court of Session) held that Part 2 of the 2003 Act was a distinct, coherent and stand-alone statutory regime that, when followed properly, crystallised a right to buy, regardless of the status of the original underlying tenancy. The appropriate time for the Sweeneys to challenge the existence of the underlying tenancy would have been at the time of the registration of the notice of intention to acquire the land by the Urquharts, or any renewal thereof. Here, since all the procedures under Part 2 of the 2003 Act had been followed correctly it was too late to argue about the tenancy and the Lord Ordinary ordered the Liquidator to sell the land to the Urquhart family. The Sweeneys appealed to the Inner House of the Court of Session.

The Inner House considered the Sweeneys' grounds of appeal, which it summarised as largely variations on the same theme – that the invalid nature of the right to buy, by virtue of the lack of a tenancy, was something that could be founded upon at any time during proceedings. Therefore, the Lord Ordinary had erred in ruling the way he did.

The Inner House unanimously agreed with the decision of the Lord Ordinary and dismissed the appeal. In dismissing they hoped, optimistically, the decision might mark the end of litigation between the parties.

It remains to be seen how this decision is relied upon or applied but it's clear that an agricultural tenant's statutory right to buy land can outlive the tenant's occupation and use of the holding, so long as the provisions of Part 2 of the 2003 are complied with and no attempt is made to challenge or remove a notice.