Wed 21 Oct 2020

The Inglorious 12th!

It goes without saying that both the Landlord and the Tenant of any tenancy should agree the extent of the subjects of their Lease.   However the recent Decision of the Scottish Land Court  (issued on 31 July 2020) in the case of Forsby Properties AB and Another against David C A MacQueen (Case reference SLC/45/18) provides a timely and salutary reminder that the passage of time and the lack of attention to changes can create uncertainty.   This can also result in very costly litigation!

This case relates to Dalmagarry grouse moor which was purchased by Forsby Properties AB in 2013.   The Purchaser expended considerable sums (in the words of the Court) with a view to enabling and enhancing the driven grouse shooting. At the time of the purchase it was known that a third party had some form of long standing arrangement over the property involving agricultural activity such as grazing.  The report suggests that the Purchaser was not fully aware of either the extent or the nature of that arrangement.  In itself this was not believed to be a problem, as explained by the Land Court in the following passage from the judgement - Providing that overgrazing is avoided, the presence of sheep can be advantageous to the functioning of grouse moors, and on many grouse moors, landowners have entered into mutually beneficial management agreements with sheep graziers in terms of which the use by the latter of the grazing is regulated in the interests of habitat management.   However in the case of Dalmagarry there was a dispute between the Landlord and the Tenant over the extent of the land held under the tenancy - it having been accepted by the Proprietor (prior to the Court proceedings) that there was a secure agricultural tenancy (in Scotland this is called a 1991 Act tenancy) which provides security of tenure and can be passed from generation to generation.  

The Landlord claimed that the extent of the leased subjects was 400 acres and, in the absence of a written lease or agreed plan, wanted the court to confirm the extent of the subjects and also to confirm the location of those 400 acres within the landlord's estate.   On the other hand the Tenant claimed the extent to be 1700 acres.

The principal decision runs for around 100 pages and the proof (the Court hearing) was heard over six days (five days a village hall in the Highlands of Scotland near Dalmagarry and the final day in Edinburgh) and required the Solicitors and Counsel for the respective parties along with their land agents to carry out extensive research.   A further day was spent by the members of the court walking over Dalmagarry Moor to familiarise themselves with its topography.

In the absence of a written lease, agreement or a signed plan the Land Court had to review evidence going back over 100 years including title deeds, correspondence, plans, land valuation returns, agricultural census returns, moorland management plans, management agreements etc.   This lead the Land Court to use as a heading the memorable phrase - The central mystery in this case.    By that phrase they referred to the irreconcilability of the some of the evidence laid before the court.

One can only imagine the cost involved to each party!   On the issue of expenses the Decision reserved all questions of expenses for future consideration.  

The moral of the tale is clear and I suggest that it be borne in mind in three specific situations:-.  

1.   When creating an agricultural tenancy or grazing arrangement great care must be taken to a) record the full extent of the property being leased and b) clearly identify the type of tenancy being created. 

2.  Throughout the term of that arrangement to fully and clearly document any changes in the arrangement.

3.  When representing a purchaser the degree of due diligence exercised must be commensurate with the complexity of the arrangement.    That may sound glib in the context of a major estate purchase but the Dalmagarry case shows the implications of uncertainty!

There is one aspect of the Decision over which the Scottish Land Court expressed regret.    The Scottish Land Court prides itself on being a practical court.   In this case whilst they declared that the extent of the land leased was 400 acres they were unable to declare the location of the subjects of lease!   Unless the parties to the case can reach agreement perhaps Round Two is waiting in the wings!  

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