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

The Supreme Court allowed the appeal and held that section 72(10) of the Agricultural Holdings (Scotland) Act 2003 was incompatible with the landlord’s rights under article 1 of the First Protocol to the European Convention on Human Rights (A1P1). The incompatibility arose from the retrospective and discriminatory effect of section 72(10)(b)(i) and (ii) in denying landlords whose dissolution notices were served between 16 September 2002 and 30 June 2003 the countervailing benefit of section 73. The court applied the proportionality and fair-balance principles under A1P1, considered the construing obligations under the Human Rights Act 1998 section 3 and the Scotland Act 1998 section 101(2), and concluded that section 72(10) could not be given a compatible reading. The court severed the incompatible subsection, suspended the effect of the declaration of invalidity for twelve months under section 102(2)(b) of the Scotland Act 1998 to permit corrective legislative action and gave the Lord Advocate permission to seek further orders if more time was required.

Background and procedural history:

Alastair Salvesen purchased Peaston Farm in 1998. The farm was let to a limited partnership formed in 1991. The limited partner served notice of dissolution in February 2003; the general partners then sought to become tenants in their own right under section 72(6) of the Agricultural Holdings (Scotland) Act 2003. The landlord applied to the Land Court under section 72(7) for an order under section 72(8) that section 72(6) did not apply. The Land Court refused the application. The landlord appealed to the Court of Session (Second Division) where the appeal raised, among other issues, whether section 72 was compatible with Convention rights. The Second Division allowed the appeal and found a violation of A1P1. Leave to appeal on the devolution/compatibility point to the Supreme Court was granted.

Nature of the application:

• The appellant sought declaratory and consequential relief under section 72(8) to prevent general partners becoming tenants in their own right; before this court the principal contested issue was whether section 72 of the 2003 Act (in particular section 72(10)) was compatible with A1P1 read with article 14.

Issues framed by the court:

• Whether the appeal was premature or the compatibility issue should be decided at this stage.
• Whether section 72 engaged article 1 of Protocol 1 and, if so, whether it struck a fair balance and was a proportionate control of property.
• Whether section 72 could be interpreted compatibly under the Human Rights Act 1998 section 3 and Scotland Act 1998 section 101(2).
• If incompatibility existed, whether severance was possible and what remedy under section 102 of the Scotland Act 1998 was appropriate.

Reasoning and conclusions:

The court accepted that A1P1 was engaged because the legislation could control the use of the landlord’s property by preventing recovery of vacant possession. Applying Strasbourg jurisprudence on proportionality and fair balance (including principles in James v United Kingdom, Sporrong v Sweden, Mellacher v Austria and Hutten-Czapska v Poland), the court found that section 72(10) produced an unjustified and arbitrary difference in treatment. Landlords whose dissolution notices were served before 1 July 2003 were deprived of the compensating benefit of section 73 while those serving notices on or after that date could obtain the benefit, a distinction lacking logical justification and appearing punitive and retrospective. The court considered whether a compatible reading was available under section 3 of the Human Rights Act and the s101(2) duty under the Scotland Act but concluded the wording of section 72(10) was clear and inevitable in producing the incompatible effect and could not be read otherwise.

The court limited the incompatibility to section 72(10), recalled the Court of Session’s finding that section 72 violated A1P1 and substituted a finding that section 72(10) violated A1P1 and was outside the legislative competence of the Scottish Parliament. To avoid unjust disruption to settled rights and transactions, the court exercised its section 102(2)(b) power to suspend the effect of the declaration of invalidity for twelve months (or a shorter period if correction occurred sooner) and permitted the Lord Advocate to apply for further orders if more time was required.

Appeal allowed. The court held that section 72(10) of the Agricultural Holdings (Scotland) Act 2003 infringed the landlord’s rights under article 1 of the First Protocol to the European Convention on Human Rights and was outside the legislative competence of the Scottish Parliament. The incompatibility could not be cured by statutory interpretation under the Human Rights Act 1998 section 3 or the Scotland Act 1998 section 101(2). The court severed the incompatible subsection (72(10)) and suspended the effect of the declaration of invalidity for twelve months under section 102(2)(b) of the Scotland Act 1998 to allow corrective legislation, permitting the Lord Advocate to seek further extensions if required.

Land Court: Land Court refused the landlord’s application (29 July 2010). Appeal to the Court of Session (Second Division) [2012] CSIH 26, 2012 SLT 633 – interlocutor of 15 March 2012 allowing the appeal and finding a Convention violation; leave to appeal to the Supreme Court granted (29 March 2012). Appeal to the Supreme Court [2013] UKSC 22.