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.


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.


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.

Private Housing (Tenancies) (Scotland) Bill – Response to Call for Evidence

I’ve put together a response to the call for evidence on the Private Housing (Tenancies) (Scotland) Bill, mainly focused on the probable human rights problem with retaining mandatory grounds of possession (in other words, situations where the court has no option but to grant an eviction order without looking at the circumstances in the individual case.) If anyone has any thoughts, comments, criticisms, or feels like sharing their own responses, I’d be happy to see them. Submissions have to made by the end of the day on Thursday.

Written submission from Dr Frankie McCarthy, University of Glasgow

 Private Housing (Tenancies) (Scotland) Bill

My primary concern with the Bill as introduced relates to the human rights compliance of section 41. This section provides that the First-tier Tribunal is obliged to issue an eviction order on application by the landlord if one of the schedule 3 grounds is met, provided the relevant procedural formalities have been fulfilled. In summary, I argue that the obligation on the FTT to issue an eviction order without the opportunity to consider the circumstances of the individual case is likely to be a disproportionate interference with the rights of the tenant under article 8 of the European Convention on Human Rights. To ensure the legislation is Convention compliant, section 41 should be amended to provide that a court need only grant a possession order where it is fair and reasonable to do so.

Possession orders and article 8 ECHR

Article 8 of the European Convention on Human Rights provides the right to respect for private and family life, home and correspondence. This right is held by individual persons against the state. In the situation where an individual person is a tenant of a body which represents the state – such as a local authority or housing association landlord[1] – eviction from their rented home is an obvious interference with the right to respect for home. However, the right is not absolute. It can be compromised where necessary for the reasons listed in the second paragraph of article 8, which include the economic well-being of the country or the protection of the rights and freedoms of others. Amongst other requirements, any such compromise of the right must be proportionate, meaning that it must not impose an individual and excessive burden on the holder of the right.

Following a number of decisions of the UK Supreme Court and the European Court of Human Rights, it has been established that where legislation obliges a court to grant a possession order to a public authority landlord without the opportunity to consider the specific circumstances of the case, this will not comply with article 8. The leading judgment is Manchester City Council v Pinnock,[2] decided by a bench of nine Supreme Court judges and therefore commanding a very high level of legal authority. In Scotland, an example of this type of legislation can be found in the Housing (Scotland) Act 2001, s 36 by which the court is obliged to make an order for recovery of possession provided the landlord has complied with the procedural formalities. In South Lanarkshire Council v McKenna,[3] the Inner House of the Court of Session confirmed that this provision was in breach of the tenant’s article 8 rights. To remedy this problem, the court in McKenna, as in Pinnock, “read” the legislation in question to include a proportionality jurisdiction. In other words, a court faced with an application for a possession order under the 2001 Act, s36 now has the power to consider the circumstances of the individual case to determine the proportionality of granting a possession order, despite the fact the legislation itself does not expressly give the court this power.

Article 8 and private landlords

I pointed out above that article 8 protects individual persons against actions by the state. It is therefore clearly applicable where a landlord is a representative of the state, such as a local authority or housing association. The Private Housing (Tenancies) (Scotland) Bill deals with an alternate situation, where a landlord is a private legal person such as an individual or a company. Does article 8 have any application to this situation?

I would argue that it does. Private leases fall within the ambit of human rights when the court, as a public body representing the state, becomes involved in enforcing the lease terms. Public bodies must not act in a manner incompatible with Convention rights. Accordingly, the court must not enforce a lease in a manner which breaches the human rights of a landlord or tenant. The European Court of Human Rights seems satisfied that human rights apply where a court becomes involved in enforcing a private tenancy agreement.[4] The Appeal Court in England recently found there was not a clear enough line of precedent from the ECtHR to determine the position on this application of human rights in domestic law,[5] but Supreme Court judge Lord Neuberger later indicated that in his view, the jurisprudence is now clear that article 8 must apply to private tenancies in this situation.[6] It seems only a matter of time until this finding is explicitly made by the domestic courts.

The problem with the Bill

If human rights are applicable to litigation between a landlord and a tenant, as I argue above, then legislation that does not allow for account to be taken of the potential human rights implications of an application for a possession order must itself be in breach of human rights. Although it may be possible for the court to “read in” a proportionality jurisdiction as it did in relation to the Housing (Scotland) Act 2001, for the sake of legislative clarity, and to avoid an unnecessary legal challenge to the competence of the legislation, it would be preferable to explicitly include a proportionality jurisdiction in the text of the legislation itself.

Suggested amendment

I would recommend that section 41(1) of the Bill be amended to read as follows:

(1) The First-tier Tribunal is to issue an eviction order against the tenant under a private residential tenancy if, on an application by the landlord, it finds that:-

(a)One of the eviction grounds named in schedule 3 applies; and

(b)It is fair and reasonable to do so

In determining an application under this section, the court could have recourse to the guidance provided in respect of applications for possession orders by public landlords.[7] In such cases, the onus is on the tenant to challenge the proportionality of the order, and the burden of proof lies on her to show that it is disproportionate. Any proportionality defence should initially be dealt with summarily by the court and rejected unless “seriously arguable.” In the private tenancy context, the court would have to take account of the competing right of the landlord to peaceful enjoyment of his possessions under Article 1 of the First Protocol to the ECHR.

Minor points

  • Section 13 of the Bill provides that the First-tier Tribunal may draw up the terms of the tenancy on application by the tenant where the landlord has failed to provide written terms. The Government intends to introduce a model tenancy agreement in forthcoming subordinate legislation. It would be sensible for s 13 to provide that the FTT will draw up the terms of the tenancy based on the model agreement, rather than expecting the FTT to draft an agreement from scratch, as seems to be implied by the current wording of s13.
  • Section 41 and schedule 3 provide for eviction grounds where the landlord intends to sell the let property, carry out significantly disruptive works to the property or use the property for a non-residential purpose. Under the Housing (Scotland) Act 1998, where the landlord’s intentions towards the property form the basis of a ground of eviction, the court has held that the landlord must demonstrate not only a genuine wish to undertake the proposed action, but also that there must be a reasonable prospect of him doing so.[8] For example, if he intends to refurbish the property, he must show that he has adequate finance to do so and has obtained planning permission if appropriate. For legislative clarity, paragraphs 1, 3, and 5 of the schedule should be amended to provide the landlord with a ground for eviction where “reasonably intends” to sell the let property etc, in order that both elements of the intention test (a genuine wish and a reasonable prospect of the action taking place) can be taken into account by the court.

[1] In respect of possession proceedings, housing associations are generally considered a “public authority” under the Human Rights Act 1988, s 6(3): see R (on the application of Weaver) v London & Quadrant Housing Trust [2010] 1 WLR 363.

[2] [2010] UKSC 45.

[3] [2012] CSIH 78.

[4]See most recently Lemo v Croatia (App No 3925/10) (10 July 2014).

[5] McDonald v McDonald [2014] EWCA Civ 1049.

[6] In a speech to the Supreme Court of Victoria, Melbourne – see paragraph 28.

[7] See particularly Manchester City Council v Pinnock [2010] UKSC 45 and Hounslow LBC v Powell [2011] UKSC 8 along with discussion in McCarthy, F (2013) “Human rights and the law of leases” 17(2) Edinburgh Law Review 184-209 .

[8] See Rennie, R. (ed.) Leases (SULI)(Edinburgh: W Green, 2015) para 22-22.