SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Mackay of Drumadoon	[2010] CSIH 20 XA155/08 OPINION OF THE LORD JUSTICE CLERK In the Appeal by THE COLSTOUN TRUST Landlord and Appellant against THE FIRM OF A C STODDART & SONS, COLSTOUN (1995) Tenant and Respondent Against an Order of the Scottish Land Court dated 7 August 2008 ______

For the landlord and appellant: Stuart QC; Turcan Connell

For the tenant and respondent: Sir Crispin Agnew of Lochnaw QC; Morton Fraser

23 March 2010

Introduction

[1] This is an appeal from a decision of the Scottish Land Court dated 7 August 2008. The appellant and the respondent are landlord and tenant respectively of the holding of Colstoun Mains, Haddington. The case relates to sections 13 and 31 of the Agricultural Holdings (Scotland) Act 1991 (the 1991 Act).

[2] Section 13, so far as relevant, provides as follows:

"13 (1) Subject to subsection (8) below the landlord or the tenant of an agricultural holding may, whether the tenancy was created before or after the commencement of this Act have determined by the Land Court the question what rent should be payable in respect of the holding as from the next day after the date of the notice on which the tenancy could have been terminated by notice to quit (or notice of intention to quit) given on that date ...

(8) Subject to subsection (9) below, a reference to the Land Court under subsection (1) above shall not be demanded in circumstances which are such that any increase or reduction of rent made in consequence thereof would take effect as from a date earlier than the expiry of three years from the latest in time of the following ...

(b) the date as from which there took effect a previous variation of
rent (under this section or otherwise) ...

(9) There shall be disregarded for the purposes of subsection (8) above ...

(c) a reduction of rent under section 31 of this Act."

Section 31, so far as relevant, provides as follows:

"31 (1) Where ...

(b)              the landlord of an agricultural holding resumes possession of part of the holding in pursuance of a provision in that behalf contained in the lease ...

the tenant shall be entitled to a reduction of rent ... "

The history

[3] The case has a long history. By notice dated 27 November 2003 the general partner of the tenant demanded a reference to the Land Court to determine the rent that should be payable in respect of the holding as from 28 November 2004. On 26 November 2004 the tenant applied to the Land Court under section 13 to make the determination.

[4] In that application the landlord took various preliminary pleas, including the plea that the rent should be fixed on the basis of what was fair and reasonable as between the parties to a continuing lease. By Order dated 12 May 2006 the Land Court sustained that plea. We held that it was groundless and, by interlocutor dated 1 June 2007, recalled the Order and returned the case to the Land Court to review the rent in accordance with section 13. All that remained was for the Land Court to hear the parties' evidence on the point; or so it seemed.

[5] At that time, the holding extended to around 900 acres. There seems to be some doubt about the exact figure. The annual rent was £52,770. Soon after, the Land Court allowed the landlord to adjust its pleadings. There followed a new round of adjustment by the parties. It continued over the next nine months. On 21 May 2008 the landlord's solicitors lodged a Fourth Note of Adjustments in which it was averred that, although the last formal rent review had taken place in 1998, there had been two subsequent reductions of rent; namely, a reduction of £160 pa for a resumption of 2.49 acres at Martinmas 2001 and a reduction of £70 pa for a resumption of 1.09 acres at Martinmas 2002. These averments were the basis of a new plea that, by reason of section 13(8)(b) (supra), the Land Court had no jurisdiction to review the rent, there having been a variation of the rent within the three years preceding the review date. The reference to the first of the rent reductions was irrelevant, as the landlord's solicitors later accepted; so the Court was concerned only with the reduction at Martinmas 2002.

[6] Counsel for the landlord explained to us that the plea was tabled at that late stage because it was only then that the landlord's solicitors had become aware of the rent reductions. In my opinion, that explanation is irrelevant. What mattered was that the reductions had been within the knowledge of the landlord from the outset.

The Order appealed against

[7] The Land Court heard parties on the questions whether the proposed adjustments should be allowed and, if they were to be allowed and proved, whether the Court would be deprived of jurisdiction to entertain the tenant's application. By the Order now appealed against, the Land Court refused to allow what it described as "amendment" of the landlord's pleadings to the effect that I have described.

[8] The Land Court held that the landlord's plea of no jurisdiction was in substance a plea to the competency and could therefore be raised at any time, subject to the discretion of the Court; and that the landlord's delay in raising the point did not amount to personal bar or waiver. However, in the exercise of its discretion it refused to allow the proposed adjustment mainly because (a) it was in character an amendment that introduced a new case; (b) the delay had deprived the tenant of the opportunity to have the issue resolved at an early stage, and (c) if the point had been taken early on, the tenant would have had the opportunity to serve a precautionary demand for a rent review as at Martinmas 2007.

[9] The Land Court then considered what the legal position would have been if the adjustments had been allowed. It expressed tentative views on two points that would then have arisen. I shall refer to these later.

Conclusions

[10] The issues in this appeal are (1) whether the Land Court had power to disallow the proposed adjustments; (2) whether the landlord's right to plead section 13(8)(b) to prevent the Land Court from proceeding with the rent review can be renounced or otherwise lost by the landlord; and (3) if the Land Court had power to disallow the adjustments and if the landlord's right under section 13(8)(b) is one that can be lost, whether the Land Court exercised its discretion correctly.

(1)                          The Land Court's power to disallow the proposed adjustments

[11] Rules 34 to 38 of the Land Court give it considerable discretion in relation to the parties' pleadings. They do not expressly deal with the disallowance of proposed adjustments of the kind in question in this case. In my view, that is not significant. The procedures of the Land Court are flexible and adaptable. Its Rules do not impose the rigidity of adjustment procedure, closing of the record and amendment that apply in this court. The practice of the Land Court is to allow parties a reasonable time to adjust their pleadings with a view to focusing the issues, and then to hold a debate or a proof. Although there is no express provision on the point in its Rules, that does not mean that the Land Court has no power to refuse a proposed adjustment. The Land Court, like any court of law, has an overriding discretion to ensure that litigations before it are conducted efficiently and expeditiously, and with fairness to all parties. If I am right, it undoubtedly has the power to disallow the addition of new averments and pleas where inter alia the consequence of allowing them would to disrupt its business or cause unfairness to any party.

(2)                          Whether the landlord's rights under section 13(8)(b) can be lost

[12] Counsel for the landlord submitted that since there was a public policy element in the determination of rents of agricultural holdings, the landlord was entitled to take the section 13(8)(b) point at any time; and that the Land Court could not exercise its discretion to deprive the landlord of its right to do so.

[13] In my opinion, this submission is misconceived. Certain provisions of the legislation confer on the tenant basic protections that as a matter of public policy he cannot contractually renounce. For example, the tenant cannot by agreement disarm himself of the right to contest a notice to quit (Johnston v Moreton [1980] AC 37). Section 13(8)(b) is not such a provision. Section 13 does not impose a mandatory rent review on the parties or a mandatory criterion by which rent is to be assessed. The parties are free at any time to agree on a new rent at any figure they choose. A review in accordance with section 13 can take place only if either party requires it. In that event, it may be open to the other party to plead that by reason of section 13(8)(b), a review at the proposed review date is not competent. I can think of no consideration of public policy that would suggest that the right of a party to take that plea cannot be renounced or otherwise lost, for example by prolonged delay. Whether the landlord's new plea should be allowed was therefore, in my opinion, a matter for the discretion of the Court.

(3) The Land Court's exercise of its discretion

[14] In exercising its discretion, the Land Court gave three main reasons for disallowing the proposed adjustments (supra), two of which related to the unfairness to the tenant that would result if the adjustments were to be allowed. These were significant and cogent reasons on which the Land Court could properly rely. I can see no basis on which we should interfere with the Land Court's decision.

[15] In my view, the decision was correct. Moreover, there were other considerations that would have justified it. The Land Court has interests of its own in the prompt and efficient conduct of its cases. Undue and avoidable delay is contrary to the interests of justice. In any process in which there will be enquiry into the facts, delay may have an adverse effect on the availability or the quality of relevant evidence. A rent review may have significant consequences for both landlord and tenant affecting their financial planning. It is undesirable that such reviews should remain unresolved long after the review date.

[16] When the proposed adjustments were lodged, the case had been in dependence for nearly four years. The landlord had already prolonged the litigation by taking a groundless preliminary plea. It was then seeking to take a new preliminary plea on a point that could have been taken at the start. If the proposed new plea had been allowed, the landlord would have delayed the conclusion of these proceedings even further. In my opinion, the Land Court would have been justified in refusing the proposed adjustments for these reasons alone.

The Land Court's obiter dicta

[17] In this case, as in North Berwick Trust v James B Miller & Co (2009 SC 305), the Land Court has indicated views, by way of obiter dicta, on unresolved questions of law. There may be occasions when obiter dicta of the Land Court may provide helpful guidance to those advising landlords and tenants. But I think that the Land Court should be cautious in its expression of such dicta on a doubtful point lest it should indicate a view, however tentative, without having heard a full argument or, where appropriate, having held an enquiry into the facts. An important consideration is that landlords and tenants may make important decisions in reliance on such dicta.

[18] In this case the Court has expressed the tentative views that section 13(8)(b) does not apply to a resumption that is "minimal," however that is to be defined; and that a rent reduction associated with an agreed resumption constitutes a reduction under section 31(1)(b) and therefore, by virtue of section 13(9), is to be disregarded for the purposes of section 13(8)(b). These are significant expressions of view. It

may be that these points should be decided only after enquiry. I reserve my opinion on both points.

Disposal

[19] I propose to your Lordships that we should refuse the appeal

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Mackay of Drumadoon	[2010] CSIH 20 XA155/08 OPINION OF LORD CLARKE In the Appeal by THE COLSTOUN TRUST Landlord and Appellant; against THE FIRM OF A C STODDART & SONS, COLSTOUN (1995) Tenant and Respondent: ______

For the landlord and appellant: Stuart QC; Turcan Connell

For the tenant and respondent: Sir Crispin Agnew of Lochnaw QC; Morton Fraser

23 March 2010

[20] For the reasons given by your Lordship in the Chair, I agree that this appeal should be refused.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Clarke Lord Mackay of Drumadoon	[2010] CSIH 20 XA155/08 OPINION OF LORD MACKAY OF DRUMADOON In the Appeal by THE COLSTOUN TRUST Landlord and Appellant; against THE FIRM OF A C STODDART & SONS, COLSTOUN (1995) Tenant and Respondent: ______

For the landlord and appellant: Stuart QC; Turcan Connell

For the tenant and respondent: Sir Crispin Agnew of Lochnaw QC; Morton Fraser

23 March 2010

[21] For the reasons given by your Lordship in the Chair, I agree that this appeal should be refused.