The Supreme Court has, this morning, handed down its decision in the case of Salvesen v Riddell and another. The full decision and a Press Summary by the Supreme Court is available here.

The action related to the letting of agricultural land to a limited partnership, a device that was very widely used and accepted by both landlords and tenants in the period up to the passing of the Agricultural Holdings (Scotland) Act 2003. Whilst that Act was passing through the Scottish Parliament, the then Scottish Executive, despite assurances that had previously been given, introduced an amendment to the Bill which could have had profound consequences for the many landowners who had let land to a limited partnership. Because of the timing of the amendment, affected landowners had a single day in which to take action to avoid tenants acquiring indefinite security of tenure and also potentially an absolute right to buy their farms. A number of notices to dissolve limited partnerships (and therefore terminating the tenancies in favour of those partnerships) were therefore served on 3rd February 2003 although in many cases the actual dissolution was some considerable way off.

The actual amendment which was enacted as Section 72 of the Agricultural Holdings (Scotland) Act 2003 was rather different and allowed general partners who had been in receipt of a notice of dissolution served after 16th September 2002 but before 1st July 2003 to become the tenant under the lease. The Inner House of the Court of Session determined that Section 72 breached the human rights of landowners on the grounds of interference with property rights in an unjustifiably discriminatory way against those who served dissolution notices during the relevant period and was therefore illegal under the Scotland Act under which the Scottish Parliament was established. See our Briefing Note on the Inner House decision here.

The Supreme Court has agreed that Section 72(10) (but not the remainder of Section 72) does breach the human rights of those landowners who served notices of dissolution between 16th September 2002 and 1st July 2003.

The Supreme Court has decided that the appropriate"remedy" is to ask the Scottish Parliament, guided by Scottish Ministers, to correct the defect. Both sides of the industry are to be consulted and the consultation period is expected to take some time, at most 12 months (with the Lord Advocate having the ability to apply for extensions). Questions of compensation and how to resolve arrangements entered into as a result of the incompetent Section 72(10) will have to await the outcome of that process.