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Crofting – Compulsory Registration Press and Journal : 30 March 2013

Legal Requirement for Snaring Article written for Farm North East : March 2013

Tenancies in Favour of Partnerships Article written for STFA : March 2013

Prosecution of Partnerships Press and Journal : 2 February 2013

Rent Review Working Group Article written for Farm North East : January 2013

Rent Reviews after Moonzie Paper delivered at the Law Society Agricultural Law Conference 2012

Fixed Equipment on the Tenanted Farm A talk given to members of the STFA at the Autumn Field Day at Broombarns, Forgandenny

3rd October : Land Managers Training Day, A K Bell Library, Perth :  Moonzie & The Farm Rent Review Process – Hamish Lean and Jonathan Henson give a practitioners guide.       

25th May : Speaker at the Agricultural Law Association/WS Society annual agricultural law conference Edinburgh 

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April 2013 : How do they do things in Denmark?

The Danish Agricultural Law Association visited Scotland last week and spent some time in the north east including a morning at Aberdeen University where they received a number of talks about the legal system in Scotland.  I was asked to give them a talk on agricultural tenancy law.  On speaking to one of my Danish colleagues it was apparent that many of the concerns which we face in Scotland are also shared by Danish farmers and their advisers including the difficulty in obtaining finance, pressure from lenders on existing borrowings and the fact that the value of land far outweighs its productive capacity. 

However, what was most striking was the fact that agricultural tenancies in Denmark have no separate legislation as they do in Scotland and are governed by the ordinary law of leases in the same way as the lease of a shop or an industrial building.  

This is very different to our position in Scotland where Parliament has been enacting laws governing agricultural tenancies since 1883.  It is clear that in this country public policy and food security have driven Government intervention.  It was said that the main objective of the 1883 Act was to encourage the best methods of cultivation so that land might be made most productive to the tenant in his interest and the interest of the community at large.  The introduction of security of tenure after the 2^nd World War was also driven in the main by concerns about food security. 

There is no sign of the Scottish Government slowing the pace of legislation so far as it impacts on tenancies.  I wonder what Scottish agriculture would look like if, as in Denmark, no specific laws related to agricultural tenancies?

March 2013 : Crofting Compulsory Registration

Crofters- act now to cut costs

On 26^th February 2013, the Crofting Commission declared that they would no longer accept de-crofting applications from “owner-occupier” crofters (generally, those crofters who exercised their right to buy and have not had a tenant since that time).  The Commission’s view is that owner-occupied crofts are not “vacant” and since de-crofting is only available to vacant crofts, the right does not apply to owner-occupiers.

It is understood that the Scottish Government are urgently to introduce legislation to fix the problem. The controversy offers a timely reminder to crofters and landlords to review their succession plans and be aware of the new registration regime which will become compulsory on 30^th November 2013.

From that date, crofts will need to be registered in a new Crofting Register, when certain “trigger events” occur.  There will be nearly 20 such triggers and some will only apply after a croft is first registered, but the main triggers will be where:

A croft is enlarged or exchanged;

• A tenancy is transferred;
• Ownership of an owner-occupied croft changes;
• De-crofting is sought; or
• Resumption is sought.

Registration is voluntary until 30^th November 2013.  From that date, if any of these or the other triggers occur it will be necessary for applications to be submitted to the Crofting Commission for approval and thereafter to the Registers of Scotland, who will charge a fee of £90 for entering the croft in the new Register, or £70 if a certain number of crofters in the same township submit voluntary applications prior to 30^th November.  At present, registration in the new register is not required. 

Any crofters who are thinking of giving their croft land or tenancies to their children should therefore consider advancing their plans, thereby making a saving before the new rules become compulsory.

December 2012 : Rent Review Working Group

The Rent Review Working Group completed its review of agricultural rent review procedures earlier this month and recommended that no change is required to the law but there should be a better flow of information between landlord and tenant and a simpler resolution procedure.

That the report has been endorsed by Scottish Land and Estates and criticised by both NFU Scotland and the STFA perhaps tells its own story, although many of the recommendations made by the Group are sensible and practical in nature. However, if open market fixed duration rentals are to be taken into account as comparables when reviewing 1991 Act tenancies, the rents paid on the open market are often beyond the capacity of the single unit and only make sense in the context of a larger enterprise. If that open market rent is then applied to the sitting 1991 Act tenant it may result in a rent which threatens the viability of the business. This is especially so if the sitting tenant rent has to be adjusted upwards against the open market comparable to take account of the advantages which the secure 1991 Act tenant is perceived to have.  This is the real fear which traditional tenants have in respect of the Moonzie decision which prompted the review.

Of course, it is possible to adjust for scarcity and marriage value and to take into account fixed equipment issues, all of which will work in favour of the sitting tenant. However, that adjustment process is subjective and uncertain.  If the open market is the main determinant of rental value the result is likely to be larger and larger units occupied by a reducing number of farmers.  Whether that is in the best interests of agriculture in Scotland is a political, not a legal question. 

November 2012 : Secure Tenancy or Fixed Duration Tenancy

A recent case in the Court of Session has established that in certain circumstances it is possible to enter into a lease of agricultural land which falls outside the various Acts of Parliament regulating agricultural tenancies.  However, the circumstances are quite unique.   The case was an application by the Trustees of the late Sir Denis Mortimer Mountain.  The deceased had provided in his Will for farms in Speyside to be left to one of his sons but strictly on condition that should another son wish to farm them, a Lease for his lifetime was to be granted to him.  

The question for the Court was whether or not that Lease would be a secure tenancy under the Agricultural Holdings (Scotland) Act 1991 or a fixed duration tenancy under the Agricultural Holdings (Scotland) Act 2003.  The leading decision was given by Lord Gill, the Lord President of the Court of Session who also gave the leading opinions in the recent Moonzie rent appeal case and the limited partnership case of Salvesen v Riddell. 

Lord Gill looked at the definition of a lease in the 1991 Act which was “for a term of years, or for lives, or for lives and years, or from year to year” and also at the provisions relating to the duration of fixed duration tenancies of up to five years and for ten years or more. He decided that a lease for the lifetime of the tenant fell outwith these definitions.  The result was that the proposed lease was completely outside the Agricultural Holdings Legislation.  The tenant was secure for his own lifetime but had none of the rights conferred by the legislation.  Given the particular circumstances of the case, it is unlikely to be attractive to landlords as a means of bypassing the Acts! 

October 2012 : Agricultural Leases in Scotland

Letting out agricultural land has been closely regulated by Parliament in the public interest since 1883. The public policy justification has been to ensure that land is farmed efficiently in the interests of national prosperity and food security. The result is that a lease of farm land carries with it many rights and obligations on the part of both the landlord and the tenant. Even a verbal agreement can result in a binding lease by operation of law with unintended and unforeseen consequences.

 In Scotland, two Acts of Parliament, one by Westminster in 1991 and the other by the Scottish Parliament in 2003 govern farm tenancies. Generally speaking, all tenancies entered into before 27^th November 2003, including before 1991, are regulated by the 1991 Act. All tenancies since then, subject to certain very limited exceptions, are governed by the 2003 Act.

The main difference between the two types of tenancy is that a 1991 Act tenancy carries with it security of tenure. This means that a member of the tenant’s family is entitled to inherit the tenancy, subject to certain restrictions. What this means is that a landlord might never expect to see a farm which has been let out come back into possession. In addition, a 1991 Act tenant is able to register a pre-emptive right to buy over the farm which obliges the landlord to make first offer of sale to the tenant if the farm is being sold.

Tenancies governed by the 2003 Act, however, which are entered into after 27^th November 2003  have no security beyond the agreed period, which can be up to five years ( a  short limited duration  tenancy) or 10 years and longer ( a limited duration tenancy.)

This is a complex area of law. Always seek advice!

Disposal of Farm Waste

I’ve had a number of enquiries recently about disposal of farm waste particularly in respect of farm tips and a very brief reminder of the basic rules might be helpful. Breaches can lead to criminal prosecution and cross compliance penalties being applied to future Single Farm Payments.  To prevent problems farmers should have a working knowledge of the rules.  Since the introduction of the Waste (Scotland) Regulations in 2005, it has no longer been lawful to dump waste in a farm tip without a permit. 

 In practice SEPA will not investigate farm tips which stopped being used prior to 2006.   Dumping any sort of waste in farm tips since then, even “ordinary” farm waste, is a breach of the regulations unless a permit has been obtained from SEPA. The Regulations treat farm tips in the same way as land fill sites. Permits are subject to detailed requirements which rule out most farm tips unless a great deal of work was carried out to them.  Burning waste is possible in certain circumstances subject to applying for a permit in advance.  These are available for burning plant tissue e.g. brash or for burning other wastes e.g. cardboard in a drum incinerator.  Uncontrolled burning is a breach of the rules.  Old cars and tractors must be de-polluted i.e. all oils, fluids and dangerous substances must be removed at a suitably authorised treatment facility.  Hazardous wastes including asbestos sheets, pesticides and chemicals have to be disposed of away from the farm under the authority of a standard consignment note issued by SEPA to a specialist waste disposal site. 

 Finally, some waste on the farm is as a result of fly tipping. However, the farmer can become responsible for fly tipped material if it is not reported immediately to the authorities.

August 2012 : Staying on right side of law over transport regulations.

Farmers using lorries or vans more than 3.5 tonnes for the carriage of goods in connection with a business are required to have an operator’s licence. Most farmers are aware of this and also that there are exemptions for agricultural use.  However, the scope of the exemptions so far as they relate to tractors can be confusing.

Take two examples on my desk recently.  Farmer A decided to cart by tractor and trailer scrap metal which had been lying on the farm to the local scrapyard.  Farmer B, also with his tractor and trailer, collected road metal from the local quarry to carry out road repairs on the farm to enable access to fields.  One was in breach of the regulations and the other wasn’t.

The answer lies in understanding the nature of the exemptions.  An agricultural tractor can be driven on a public road without an Operator’s Licence if hauling farm implements or trailed appliances, water or fuel required for the tractor, articles required by the farmer to do agricultural work on the farm, agricultural produce from the farm within 15 miles of the land occupied by the farm and materials to be spread on roads to deal with frost, ice or snow within 15 miles of land occupied by the farmer, or when fitted with a snow plough or similar equipment for the purposes of clearing snow.

Accordingly Farmer B hauling road metal to his own farm for agricultural purposes fell within the regulations whereas Farmer A carting off his scrap metal didn’t and was liable to prosecution. 

The regulations can be complicated to come to grips with but a basic understanding of the exemptions will go a long way to keeping you on the right side of the law!

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