McMaster & Others v Scottish Ministers: initial thoughts

Over the past couple of days, I’ve been trying to get my head around the decision in McMaster v Scottish Ministers – the “son of Salvesen”, as Dan Carr described it to me yesterday – in which the rights of the petitioning tenant farmers under Article 1 of the First Protocol to the ECHR (the property right) were held to have been violated. Without rehearsing the decision in Salvesen v Riddell itself, and ignoring the various petitioners (family members, limited partners) whose claims were dismissed, here’s a rough outline of the facts. A note – if you have no familiarity with Salvesen, or the tenancies-held-by-limited-partners wheeze that the market had devised to get round the security of agricultural tenancies conferred by the Agricultural Holdings (Scotland) Act 1991, this will be hard to follow.

The facts

On the basis of provisions in the Agricultural Holdings (Scotland) Act 2003, the McMaster family and others (the petitioning farmers) believed they could acquire secure tenancies in respect of their farms. The 2003 Act required them to take certain actions to acquire these tenancies, which they did. The tenancies were duly acquired. However, because certain of the Act’s provisions turned out to be “not law” per the Supreme Court decision in Salvesen, the tenancies were not as secure as the farmers had believed they would be. Moreover, the actions taken by the farmers on the basis that they would receive this security had soured the relationship between them and their landlords. The outcome was that the farmers had already or would soon lose the tenancies entirely. Scottish Ministers had not provided any compensation to the farmers in relation to this sequence of events, neither in the 2014 Remedial Order which confirmed the law post-Salvesen, nor in response to subsequent applications by the farmers. It was contended that this amounted to a violation of A1P1, the right to peaceful enjoyment of possessions.

A successful claim under A1P1 requires the claimant to have “a possession”, and for state action to have unjustifiably interfered with the peaceful enjoyment of that possession. The interference will be justified only if it is lawful, pursues a legitimate aim in the public interest and is proportionate. Lord Clarke considered each of these issues in turn, along with a couple of others (chiefly the victim status of the various categories of petitioner) which I will not consider here.

Possession

First, did the farmers have a possession? The court held that they did: the tenancy acquired following their performance of the required actions under the 2003 Act.

In making their case, the farmers had also claimed to have another possession, namely their legitimate expectation of acquiring a secure tenancy provided they took the action required by the 2003 Act. This was held not to be a possession, since their legitimate expectation could not be tied to an existing property right, as the Strasbourg jurisprudence requires.

This conclusion sits a bit uneasily with me. I think there is a case to be made here that the existing property right on which their legitimate expectation was founded was the lease in place between the landlord and the limited partnership prior to the farmers taking the action required under the 2003 Act to acquire their own tenancy.

Making this case requires me to do some violence to the law that I would normally rather avoid. In private law terms, the first lease is a completely separate possession from the second. The parties to the first lease (the landlord and the limited partnership) are different from the parties to the second (the landlord and the farmers). The McMaster petitioners did not “own” the first lease – those property rights were held by an entirely different legal person. Therefore the first lease was a not a possession of theirs on which the legitimate expectation of acquiring a secure lease could be founded.

The impetus for the 2003 Act, though, was the Government’s belief that the farmers, though not a party to the first lease, were nevertheless the “true” tenants under the first lease. They were the de facto tenants, let us say, though not the de jure tenants. The relevant 2003 Act provisions were essentially designed to force the legal relationships in this respect to match up with the lived relationships. Although domestic private law is clear that the rights arising under the first lease were not held by the farmers, I do wonder whether their position as de facto tenants under the first lease should be enough to render it a possession of theirs nevertheless in the context of the ECHR’s notorious “real and effective protection”. The Government’s own conduct prior to drafting the Remedial Order seems to chime with this argument, which might be said to strengthen the case.

Interference

Second, did state action interfere with the farmers’ peaceful enjoyment of their tenancy? Lord Clarke found the introduction of the Remedial Order, which clarified the rights received by the farmers as a result of taking action under the 2003 Act, to be a control of use of their tenancy. That seems, to me, correct.

(If my legitimate expectation argument above is correct, the Remedial Order would also have the effect of interfering with that legitimate expectation, on which more below.)

Justifying the interference

In terms of justification for the interference, parties agreed that the Remedial Order was lawful and pursued a legitimate aim in the public interest, so the only issue outstanding was proportionality. In short, the petitioners argued that the Ministers’ refusal to provide compensation for the interference left them bearing a burden greater than was justified by the aim of the state action. Lord Clark was satisfied the lack of provision for a compensation scheme in the Order was not in itself a violation, since compensation claims could nevertheless be made by the farmers. The problem was that such claims had been refused.

Should compensation have been given?  Lord Clark was satisfied that, if a loss could be proved, then it should.  He reaches the conclusion that:

“in principle, in circumstances such as the present, the State should compensate individuals for loss directly arising from reasonable reliance upon defective legislation passed by it, which was then remedied by further legislation which interfered with the individual’s rights under A1P1.” (para 190)

He later summarises:

“The principles which ought to have been established are that compensation would be paid in respect of specific losses directly caused to [the farmers] as a consequence of reasonable reliance by them upon having a secure 1991 Act tenancy, and for frustration and inconvenience, subject to the counterbalancing effect of setting off the value of the benefits obtained by [the farmers] arising from the extended period of tenancy which was enjoyed.” (para 195)

So compensation should be paid in respect of losses incurred following reasonable reliance on the original, faulty provisions of the 2003 Act. I am having a hard time making this fit together with the answers given earlier in the case as to the possession we are concerned about. The possession in question is the tenancy acquired by the farmers. The Remedial Order controlled the use of that tenancy by clarifying the terms on which the landlord could end it. That might certainly affect the value of the tenancy. However, that is not the loss for which compensation should be granted. Compensation is due in respect of losses resulting from action taken in reasonable reliance on an earlier state action, namely the passing of the faulty legislation. What the farmers should be compensated for is reasonably expecting, based on the state’s action, that a certain situation would obtain, when in fact it did not. What that looks like to me is a loss resulting from – you guessed it – state interference with the farmers’ legitimate expectation of acquiring a secure tenancy. The wheels are off the bus.

I can see why accepting the existence of a legitimate expectation as a possession might be worrying to the court in this case – if you legitimately expect to acquire a secure tenancy, and then you don’t acquire a secure tenancy, should a massive claim for deprivation of a very valuable secure-tenancy-shaped asset not result? But I’m not sure that follows. The farmers received tenancies. They were less secure than anticipated, but they still existed. The legitimate expectations were not fully realised, but partial disappointment seems, if anything, a general interference with the peaceful enjoyment of possessions rather than a deprivation OR a control. Compensation is not a requirement of proportionality for general interferences. In the circumstances, the court might still consider compensation to be necessary to balance out the interference, but the extent of that compensation could be determined with reference to factors like the benefit to farmers of having what appeared to be a secure tenancy for years, and the fact that what the farmers legitimately expected to receive was a windfall benefit in the first place. It does not seem obvious to me that compensation equivalent to full market value of a secure agricultural tenancy would be the necessary result of a finding that legitimate expectations had been disappointed in this context. It might even be the case that a nominal sum, or simply a finding by the court that the state was in the wrong, would be sufficient compensation to render the interference proportionate.

Anyway. I’ve been dipping in and out of the case and this blog post between other commitments since yesterday lunchtime, and had better turn my attention back to the things I am actually supposed to be doing this week. I will post this now, though my thoughts feel unfinished. Discussion would be welcome.

Scotland’s Land Rights & Responsibilities Statement – not a legal document?

I’ve been mulling over the proposed Land Rights and Responsibilities Statement with a view to responding to the current Scottish Government consultation (responses due by Friday 10th March). I tend to respond to consultations with my legal academic hat on, meaning that I am using my disciplinary training to identify potential legal problems with the topic of the consultation, rather than giving a personal opinion on whether the Government should be trying to do what it’s doing. That approach leaves me with little to say on the LRRS since, as far as I can see, it has almost no legal consequences at all.

To be clear: I don’t think that is a problem in itself. For one thing, a clear statement of the Government’s policy ambitions in relation to land evidently has significant political value. It is a statement of intent, and a yardstick against which future actions can be measured. That is important.

Looking at it purely from my narrow disciplinary perspective, the simple fact that the Statement will exist is valuable too. All countries have property law rules of some kind, but very few make it easy to understand why the rules which have been chosen are in place. This can give the illusion that rules are somehow objective or politically neutral when, where property law is concerned, nothing can be further from the truth. A frequent bugbear of mine in respect of case law on human rights in relation to property is that the values underpinning property law rules are rarely acknowledged by the court. The Statement shines a light on that kind of value-smuggling, which is a very positive step, in my view.

This consultation is not about whether the Statement should exist, though. That question was answered by section 1 of the Land Reform (Scotland) Act 2016. This consultation is about what the Statement says – what those values are.

What is giving me pause about this consultation paper, and the (extremely limited)  discussion I have seen about it online, is that the Statement’s lack of legal significance may not be clear. The paper does make plain in more than one place that the Statement is simply “a set of principles intended to both guide public policy and inform the practices of all those who own, manage and use land” (p 7). It reiterates the evidence given last year in relation to the Land Reform (Scotland) Bill by then-Minister for Environment, Climate Change and Rural Affairs, Aileen McLeod, that, “the Statement should [not] be interpreted as setting measurable objectives for Land Reform. It is not the type of document in relation to which it would be easy or even possible to assess achievement” (p 9). However, the Ministerial Foreword suggests that “when you have rights over land or buildings in Scotland, you also have responsibilities towards the people of our country.” This is arguably true in a moral or political sense, and rights holders in respect of land do have some legal responsibilities towards the general public, most notably in terms of facilitating the exercise of access rights under Part 1 of the Land Reform (Scotland) Act 2003, but the Statement itself does nothing to impose any such responsibilities on rights holders. The paper also tells us that the LRRS, “should inform the practices of all those who own, manage and use land, in order to achieve culture change through the continued realisation of the vision and principles of the Statement” (p16), but…how? There’s nothing in the Statement itself, nor in the 2016 Act, to create legal obligations in that regard.

Even the legal duties that do surround the Statement seem, to me, a bit meaningless. Scottish Ministers are under a duty to promote the principles of the Statement in exercising their functions under section 3 of the 2016 Act, but how could such a duty be enforced? I am no public lawyer and would be happily corrected, but I can’t see how a court action for breach of this statutory duty could be successful. A claim that Ministers had failed in this duty might well form part of a human rights challenge – might bolster a claim that a particular piece of legislation or decision by a  public body was not in the public interest where it ignored or ran counter to the Statement, for example – but the basis for such a challenge lies in human rights law, not in the Statement itself.

As I said above, I don’t think this lack of legal effect is a problem in itself, and I do think the Statement is a valuable document. Perhaps I am the only one who even has this concern about the potential ambiguity of the Statement’s legal import. The conclusion to all this may simply be that  I shouldn’t respond to the consultation because essentially I have nothing to say. If anyone else has been has thoughts about the consultation, or about what I’ve said above, I would be happy to hear them.