Salvesen v Riddell and another, Lord Advocate intervening (Scotland)

A statutory restriction on a landlord’s ability to terminate a lease controls the use of property for article 1 of the First Protocol. Although economic and social legislation enjoys a broad margin of appreciation, it must pursue a legitimate aim and strike a fair balance. It must not impose a disproportionate and excessive burden.

Legislation retrospectively denying only one group of landlords a statutory counterweight afforded to comparable landlords was arbitrary, unfair and disproportionate. The provision was therefore incompatible with article 1 and outside the Scottish Parliament’s legislative competence.

Convention-compatible interpretation cannot contradict clear statutory language or the legislation’s underlying thrust. An incompatibility finding should extend no further than necessary. Its effect may be suspended under Scotland Act 1998 section 102 to permit legislative correction while protecting affected third parties.

The appellant landlord had expected to recover possession of an agricultural holding when a limited partnership tenancy ended. Section 72 of the Agricultural Holdings (Scotland) Act 2003 instead enabled the general partners to continue as tenants in their own right. Because the dissolution notice preceded 1 July 2003, section 72(10) denied the landlord the termination procedure available under section 73 to landlords whose notices fell on or after that date.

The Scottish Land Court refused the landlord’s application for an order disapplying section 72(6). The Second Division allowed his appeal on statutory construction and held that section 72 violated his Convention rights: [2012] CSIH 26, 2012 SLT 633. Although the private dispute was later settled, the Lord Advocate maintained the appeal because the devolution issue affected other agricultural tenancies.

The central questions were whether section 72 was incompatible with article 1 of the First Protocol, whether it could be read compatibly, and what remedy should follow if it could not.

1. Appeal allowed unanimously. Lord Hope delivered the judgment, with which Lord Kerr, Lord Wilson, Lord Reed and Lord Toulson agreed. A restriction on a landlord’s ability to terminate a tenant’s lease constitutes control of the use of property under article 1 of the First Protocol. The restriction must pursue a legitimate aim and strike a fair balance between the community’s general interest and the protection of individual property rights. There must be a reasonable relationship of proportionality between the means employed and the aim pursued.
2. The legislation legitimately sought to preserve the integrity of agricultural tenancy reform against avoidance during the Bill’s passage. Retrospective legislation is not inherently incompatible with article 1. The decisive question was whether its retrospective effect imposed an unreasonable burden.
3. Section 72(10) of the Agricultural Holdings (Scotland) Act 2003 failed that test. Section 73 supplied a significant counterweight to the continuation of a tenancy under section 72(6), because it enabled a landlord to end the continued tenancy by notice. Yet section 72(10)(b)(i) and (ii) withheld that benefit from landlords whose dissolution notices or other specified events preceded 1 July 2003. The distinction had no logical justification. Its permanent and irrevocable effect was arbitrary, unfair and disproportionate. Had it applied to the appellant, it would have violated his article 1 rights. Article 14 informed that assessment but gave rise to no separate issue.
4. Neither section 3(1) of the Human Rights Act 1998 nor section 101(2) of the Scotland Act 1998 permitted a compatible construction. Such interpretation must go with the grain of the legislation. The clear language of section 72(10) confined section 73 to cases where the relevant event occurred on or after 1 July 2003. Section 72(9), even with the words inserted by the Second Division, did not protect every affected landlord.
5. The incompatibility finding was confined to section 72(10), preserving the remainder of section 72 and accrued rights so far as possible. The court substituted a finding that section 72(10) violated article 1 and was outside the Scottish Parliament’s legislative competence.
6. The court declined under section 102(2)(a) of the Scotland Act 1998 to remove or limit the decision’s retrospective effect. Doing so generally could itself prejudice landlords’ Convention rights. It instead suspended the finding for 12 months, or any shorter period required for legislative correction, under section 102(2)(b). The Lord Advocate could seek further orders from the Court of Session.

1. United Kingdom Supreme Court: Allowed the appeal from [2012] CSIH 26. It confined the incompatibility finding to section 72(10) of the Agricultural Holdings (Scotland) Act 2003 and suspended its effect to permit legislative correction.
2. Court of Session, Second Division: Allowed the landlord’s appeal, held that the Scottish Land Court had construed section 72(9)(a)(i) too narrowly, and found that section 72 violated the landlord’s Convention rights: [2012] CSIH 26, 2012 SLT 633. It granted permission to appeal on the devolution issue.
3. Scottish Land Court: Refused the landlord’s section 72(7) application because his averments did not satisfy section 72(9)(a)(i). The devolution issue had not been raised before it.