Not my king? - Coronation oaths

 

Ever since the accession of King Charles III in 2022, there have been people exercising themselves about the oaths he did or didn’t swear. So let’s have a look at this subject in detail.

One kingdom

Before talking about the three oaths an incoming British monarch swears, however, we have to talk about what it is he’s the monarch of.

Leaving aside the places he’s still the king of beyond the British Isles, he’s the king of a single kingdom: the one created at the union between England and Scotland in 1707. Originally called Great Britain, that kingdom changed its name to the United Kingdom of Great Britain and Ireland in 1801 when Ireland joined the union. It’s now, since the Republic of Ireland became independent, called the United Kingdom of Great Britain and Northern Ireland. I’m going to call it ‘the UK’ at all times of its existence, i.e. including from 1707 to 1801 when it was called Great Britain. The point here is that the King is not the King of Scotland (or of Scots) or of England. Neither of these kingdoms exist anymore: they both ceased to exist in 1707 when they were replaced by the UK.

Three oaths

An incoming monarch of the UK swears three oaths. Taking them in the order of the time at which they are sworn, these are:-   

1. Oath to uphold the Church of Scotland

This was mandated by an Act of the Scottish Parliament passed in 1706 (1706 c.6: ‘Act for securing of the Protestant religion and presbyterian church government’) This Act made it a condition of any forthcoming union with England that the Church of Scotland in its (then relatively recently) established presbyterian form would be retained post-union and that all incoming monarchs of the UK swear an oath to that effect. It also required that the Act be repeated verbatim in the Act of Union: that was done and the text of 1706 c.6 appears after section XXV of the Scottish Act of Union (here). It also appears after section XXV of the English Act of Union (here).

The Act 1706 c.6 requires the oath to be taken by the monarch “at his or her accession”.

No actual text of this oath is prescribed by 1706 c.6 but in practice monarchs have used a form of words reflecting the wording of the Act. Thus, the present king said:-

I, Charles the Third by the Grace of God of the United Kingdom of Great Britain and of Northern Ireland, and of My other Realms and Territories, King, Defender of the Faith, do faithfully promise and swear that I shall inviolably maintain and preserve the Settlement of the True Protestant Religion as established by the laws of Scotland in prosecution of the Claim of Right and particularly an Act intituled an ‘Act for Securing the Protestant Religion and Presbyterian Church Government’ [i.e. 1706 c.6] and by the Acts passed in both Kingdoms for the Union of the two Kingdoms, together with the Government, Worship, Discipline, Rights and Privileges of the Church of Scotland: so help me God.

You can watch him taking the oath at his Accession Council on 10 September 2022, two days after he became king by the death of his mother, here.

Incidentally, some people (including, apparently, the late Alex Salmond) believe that, by this oath, the King swears to uphold the Claim of Right (CoR). He doesn’t. The CoR is mentioned but that’s not what he’s swearing to uphold. Look at the exact words:-

I shall inviolably maintain and preserve the Settlement of the True Protestant Religion as established by the laws of Scotland in prosecution of the Claim of Right

The oath is to maintain a religion. Specifically, one established by laws made in prosecution of – in pursuit, or in terms of, in other words – the CoR. It’s not to maintain the CoR itself. (I explain the background to the laws establishing the Presbyterian Church of Scotland “in prosecution of” the CoR here.)

 
2. Accession Declaration Oath

This oath was mandated by the Bill of Rights 1688 (BoR). That’s the English equivalent of our Claim of Right: the act deposing King James VII (II of England), replacing him with William & Mary and narrating various abuses of power by James, not to be repeated in future reigns. The relevant wording of the BoR (here) is:

And that every King and Queene of this Realme [i.e. England] who at any time hereafter shall come to and succeede in the Imperiall Crowne of this Kingdome shall on the first day of the meeting of the first Parlyament next after his or her comeing to the Crowne sitting in his or her Throne in the House of Peeres in the presence of the Lords and Commons therein assembled or at his or her Coronation before such person or persons who shall administer the Coronation Oath to him or her at the time of his or her takeing the said Oath (which shall first happen) make subscribe and audibly repeate the Declaration mentioned in the Statute made in the thirtyeth yeare of the Raigne of King Charles the Second Entituled An Act for the more effectuall Preserveing the Kings Person and Government by disableing Papists from sitting in either House of Parlyament  

The requirement to take this oath was repeated in the Act of Settlement 1700 (AoS: here). That was the Act that conferred the throne of England (but not Scotland) on Sophia, Electress of Hanover, and her heirs in the event (then thought very likely) that Queen Anne (although she hadn’t yet become the queen) died without children. The relevant wording of the AoS is in section II:-

every King and Queen of this Realm [i.e. England] who shall come to and succeed in the Imperiall Crown of this Kingdom by vertue of this Act shall … make subscribe and repeat the Declaration in the Act first above recited mentioned or referred to [i.e. the BoR] in the Manner and Form thereby prescribed   

The declaration in the statute made in the 30th year of the reign of King Charles II (here and scroll to page 427), which was originally one to be made by members of the Houses of Lords or Commons or people wishing to attend court rather than the monarch at his/her accession, was in these terms:-

I, A. B., do solemnly and sincerely in the presence of God, profess, testify, and declare, that I do believe that in the Sacrament of the Lord's Supper there is not any Transubstantiation of the elements of bread and wine into the Body and Blood of Christ at or after the consecration thereof by any person whatsoever: and that the invocation or adoration of the Virgin Mary or any other Saint, and the Sacrifice of the Mass, as they are now used in the Church of Rome, are superstitious and idolatrous. And I do solemnly in the presence of God profess, testify, and declare that I do make this declaration, and every part thereof, in the plain and ordinary sense of the words read unto me, as they are commonly understood by English Protestants, without any such dispensation from any person or authority or person whatsoever, or without thinking that I am or can be acquitted before God or man, or absolved of this declaration or any part thereof, although the Pope, or any other person or persons, or power whatsoever, should dispense with or annul the same or declare that it was null and void from the beginning.  

By the 20th century, this was considered highly offensive to Roman Catholics, a significant proportion of the monarch’s subjects (especially in Ireland, all of which at that time was still part of the UK), so the declaration was amended for the accession of King George V and all subsequent monarchs by the Accession Declaration Act 1910 (here) to the following:-

I [here insert the name of the Sovereign] do solemnly and sincerely in the presence of God profess, testify, and declare that I am a faithful Protestant, and that I will, according to the true intent of the enactments which secure the Protestant succession to the Throne of my Realm, uphold and maintain the said enactments to the best of my powers according to law

As you’ll have noted from the quotation from the BoR, this oath has to be taken by the monarch at his/her coronation or first state opening of Parliament, whichever happens first. As it happened, the present king’s coronation happened first. You can see him taking this oath here.  

Now I can hear people protesting that this oath was mandated by the parliament of England for the accession of the monarch of England – what, if any, relevance does it have to the UK? Or to Scotland? I address that point below under the heading ‘Changes to the Coronation Oath’ below.

3. The coronation oath

This one is taken at – clue’s in the name – the monarch’s coronation and its text is also prescribed by statute, this time the Coronation Oath Act 1688 (here). This act proceeds on the recital that:-

Whereas by the Law and Ancient Usage of this Realme [i.e. England] the Kings and Queens thereof have taken a Solemne Oath upon the Evangelists at Their respective Coronations to maintaine the Statutes Laws and Customs of the said Realme and all the People and Inhabitants thereof in their Spirituall and Civill Rights and Properties; But forasmuch as the Oath itselfe on such Occasion Administred hath heretofore beene framed in doubtfull Words and Expressions with relation to ancient Laws and Constitutions at this time unknowne; To the end therefore that One Uniforme Oath may be in all Times to come taken by the Kings and Queens of this Realme and to Them respectively Adminstred at the times of Their and every of Their Coronation.   

The act then goes on to prescribe a question and response type oath to be administered by the Archbishop of Canterbury (or other bishop conducting the coronation) as follows:-

The Arch-Bishop or Bishop shall say “Will You solemnely Promise and Sweare to Governe the People of this Kingdome of England and the Dominions thereto belonging according to the Statutes in Parlyament Agreed on and the Laws and Customs of the same?”

The King and Queene shall say, “I solemnly Promise soe to doe.”

Arch Bishop or Bishop, “Will You to Your power cause Law and Justice in Mercy to be Executed in all Your Judgements.”

King and Queene, “I will.”

Arch Bishop or Bishop. “Will You to the utmost of Your power Maintaine the Laws of God the true Profession of the Gospell and the Protestant Reformed Religion Established by Law? And will You Preserve unto the Bishops and Clergy of this Realme and to the Churches committed to their Charge all such Rights and Priviledges as by Law doe or shall appertaine unto them or any of them.”

King and Queene. “All this I Promise to doe.”

After this the King and Queene laying His and Her Hand upon the Holy Gospells, shall say,

King and Queene “The things which I have here before promised I will performe and Keepe Soe help me God.”

Then the King and Queene shall kisse the Booke.   

Just as the Scottish Parliament had passed the Act 1706 c.6 to preserve the presbyterian Church of Scotland, so had the English Parliament passed an Act – 1706 c.8 – to preserve the episcopal Church of England post Union. Like its Scottish equivalent, this Act was directed to be repeated in the English Act of Union (see here) and required that all future monarchs of the UK:

at His or Her Coronation shall in the presence of all persons who shall be attending assisting or otherwise then and there present take and subscribe an Oath to maintain and preserve inviolably the said Settlement of the Church of England and the Doctrine Worship Discipline and Government thereof as by Law established within the Kingdoms of England and Ireland the Dominion of Wales and Town of Berwick upon Tweed and the Territories thereunto belonging.

Note the slight difference from the equivalent Scottish Act 1706 c.6 providing for the Church of Scotland (CoS) oath: the Church of England (CoE) oath was to be taken, not at the monarch’s accession, but at his/her coronation. But similarly to the Scottish Act, and unlike the coronation oath, no actual text is provided in 1706 c.8 for the CoE oath. It was therefore accommodated at the first post-union coronation, George I’s, by adding another sentence closely following the wording of 1706 c.8 into the third question of the coronation oath so that it read:-

“Will You to the utmost of Your power Maintaine the Laws of God the true Profession of the Gospell and the Protestant Reformed Religion Established by Law? Will you maintain and preserve inviolably the settlement of the Church of England, and the doctrine, worship, discipline, and government thereof, as by law established in within the Kingdoms of England and Ireland the Dominion of Wales and Town of Berwick upon Tweed and the Territories thereunto belonging? And will You Preserve unto the Bishops and Clergy of this Realme and to the Churches committed to their Charge all such Rights and Priviledges as by Law doe or shall appertaine unto them or any of them.”

Changes to the Coronation Oath

Since the Union, the wording of the Coronation Oath (CO) has been altered in a number of other respects. For example, also at the coronation of George I in 1714, the reference to the Kingdom of England in the first question was changed to a reference to the Kingdom of Great Britain.

Now as the wording of the CO was prescribed by an Act of Parliament (the Coronation Oath Act 1688), strictly speaking its wording can only be changed by another Act of Parliament. But the 1688 Act has never been amended by any subsequent legislation. As it happens, most of the changes to the CO can be justified by the doctrine of implied amendment. That is the doctrine that, where a later Act of Parliament does not expressly amend an earlier one, but the provisions of the later Act are inconsistent with those of the earlier, the later by implication amends the earlier so far as is necessary to remove the inconsistency. Thus, the Acts of Union impliedly amended the Coronation Oath Act (COA) to change the reference to England to a reference to the new kingdom of Great Britain.

But there are two changes which have been made to the CO which can’t be justified by implied amendment (these are omission of the reference to “statutes in Parliament agreed on” in the first question and, less serious, introduction of a reference to the UK in the context of maintaining the Protestant Reformed Religion established by law in the third). The implications of this are analysed in detail in this article written in 2017 by barrister Graeme Watt and his conclusion is that the CO taken by Queen Elizabeth II was invalid. That, in turn, led him to conclude that her reign, from her coronation onwards (but not before), was invalid. I have to be honest and say I didn’t find the latter conclusion terribly convincing. The startling notion that a reign is invalidated by the monarch taking an incorrect coronation oath seems to be based on a single sentence in Halsbury’s Laws of England[1] and against this must be set the view of Professor Hazell and Dr Morris of The Constitution Unit of University College London (here at para 3.3):

With the possible exception of the Scottish oath [to maintain the Church of Scotland], the fact that they [i.e. the three oaths] have no direct constitutional effect is manifested in the absence of any penalty if they are not sworn.    

I can’t help thinking Mr Watt wanted to give us a bit of a theatrical legal fright so he could ride to the rescue with his final conclusion, namely, that the invalidity of the Queen’s reign introduced by her failure to take the correct CO was subsequently cured by the length and general success of her reign in what appears to be an English Law manifestation of what we Scots lawyers call personal bar (in essence: ‘if you’d wanted to make an issue of it, you should have done so at the time: having sat around saying nothing about it for so many years, it’s too late now’). I wonder if Mr Watt would reach the same conclusion about the present king’s reign, not yet two years from his coronation where he took a CO in the same unauthorised terms (for the purposes of the present discussion) as his mother?[2] (See him taking it here and text here at page 24.)

Be all that as it may, I can’t help thinking there’s another, less Anglo-centric way of looking at this. We’ve been talking about a coronation oath originally mandated by statute, in 1688, for the kingdom of England. But that kingdom ceased to exist in 1707 when it was replaced by the new kingdom of Great Britain brought into existence by the Acts of Union (AoU). The AoU decreed a number of the features of the new kingdom including its name; its coat of arms; its flag; its coinage; who its monarch was to be and the line of succession to her failing her issue; even the name of its parliament. But, apart from oaths to maintain the Churches of Scotland and England, the AoU didn’t provide for any other coronation (or  accession) oath to be taken by an incoming monarch of the new kingdom, much less specify the wording of any such oath. Now, as it happened, those in charge of the first coronation after the Union, that of George I in 1714, obviously felt that some sort of oath was appropriate and they chose to use the old English one, suitably adapted. But they weren’t obliged to. Or, having chosen to use the English CO, obliged to follow its statutory wording. On this view, there is no need for legislative sanction in order to adapt the CO to changed circumstances since the last coronation. And agonising over whether the king is really the king is misplaced.

That conclusion depends on the correct analysis of what happened at the Union in 1707 being that both the kingdoms of England and Scotland ceased to exist and were replaced by an entirely new kingdom, the one now called the UK. I call this the ‘new state theory’ to contrast it with an alternative analysis in which, while Scotland ceased to exist, England continued with some extra territory and a new name (the ‘England with a new name theory’). The pros and cons of these alternatives are discussed by Professors Crawford & Boyle here (paras. 33-37). The issue has never been determined in a court but it’s fair to say the balance of academic legal opinion favours the new state theory.

And as for the Accession Declaration Oath mandated by the Bill of Rights, similar considerations would apply: it was obligatory in the terms set out in the Act of the reign of Charles II referred to in the BoR in England before the Union but not afterwards (assuming the new state theory is the correct one). But having said that, the Accession Declaration Act 1910 rewording this oath effectively made it obligatory in the UK as well.      

Scottish coronation oath?

The pre-1707 kingdom of Scotland also had a statutory coronation oath. It was originally prescribed by an Act of Parliament in 1567 (1567 c.8) and was re-enacted in almost identical terms in 1689 for the purposes of the coronation of William & Mary. Like the English CO, the Scottish one was a text specified by the Act of Parliament: you can read it here: 1689 c.46.

Shouldn’t the King have sworn this Scottish CO at his coronation? No. Because it was the oath for the kingdom of Scotland. And that kingdom ceased to exist in 1707, whether the new state theory or the England with a new name theory is the correct one (for no-one would seriously attempt to suggest that the UK is in fact Scotland with a huge addition of territory and new name and that it was only England that ceased to exist.)

  

King Charles I Scottish coronation medal

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Footnotes

[1] here: “The descent of the Crown in the present line of succession is subject to certain statutory conditions as follows: …  (2) every person inheriting the Crown must take the coronation oath in the form provided by statute …”. I’m not convinced the author intended by that to convey that, if such person did not take such an oath, s/he forfeited the throne.

[2] There was a difference in the first question of the CO as taken by Elizabeth II and as taken by Charles III in that, in the former case, Canada, Australia, New Zealand, South Africa, Pakistan and Sri Lanka (then called Ceylon) were mentioned (the last three being countries she was still queen of at the time though now republics) whereas, in the latter case, no countries of which he is still the king were mentioned by name except the UK, the others being collectively referred to as “your other Realms”. The addition of the reference to other Commonwealth countries outside the UK was thought to be justified by implied amendment by the Statute of Westminster 1931 and referring to these collectively as “your other Realms” instead of individually by name seems unobjectionable.    

Lease basics: Orr v UK Agricultural Lending Ltd

An Outer House decision in which an agreement calling itself a lease was held not to be one for want of common law cardinal elements of a lease.

Sunwick Farm

In Orr & others v UK Agricultural Lending Ltd [2024] CSOH 93 the pursuers (Scottish word for plaintiffs) were Alexander Orr, his mother and a family company who all occupied (but didn’t own) Sunwick and Houndwood Farms in Berwickshire. They sought an interdict (Scottish word for injunction) to prevent UK Agricultural Lending Ltd, a heritable creditor secured on the farms (mortgagee), from removing (evicting) them in the course of calling up the security (repossessing the farms to sell them with vacant possession). This was on the basis that Alexander Orr claimed to have a lease of the farms from a previous owner of them, a company called Hamilton Orr Ltd (HOL). The defenders (defendants), the heritable creditor on the farms, counterclaimed for reduction of the lease (have it declared null and void) and for decree of removal (eviction) of the Orrs from the farms.

The terms of the lease Alexander Orr claimed to hold may be given in full (subject to some immaterial abbreviations):-

“Lease for 10 years to Duncan Alexander Andrew Orr regarding the whole of Title BER2353 Sunwick Farm and Houndwood Farm […].

I, Martin Frank Frost on behalf of the directors and shareholders of, and as director and Chairman of [HOL, the company which owned the farms at the time], grant Duncan Alexander Andrew Orr in accordance with previous agreements with the shareholders of [HOL], a lease for the occupation of Sunwick Farm and Houndwood Farm. Sunwick Farm in its entirety to include the farmhouse, out buildings, land and machinery and livestock not accredited to any other company without agreement, with the exception of all Sunwick Cottages and land belonging to Janet Orr Frost namely Title BER7040. All land at Houndwood with the exception of the forestry belt.

This lease granted for the term of 10 years starting 20th September 2016 with the view that Duncan Alexander Andrew Orr will have the opportunity and ability to purchase both properties at the earliest. The farms thus after said term be returned to [HOL].

The conditions are:

1. That DAAO undertakes to make the farms profitable and agrees that he shares 50% of his profits with [HOL] within lease timescale.

2. That DAAO undertakes to purchase the farms at the earliest opportunity.

3. That DAAO undertakes to give annual reports of progress to the company secretary or any director of any [HOL] director (sic) or shareholder who wishes an update.

4. That DAAO undertakes to have no hold on Harcarse Hill Farm or its assets through the occupancy of this lease.

5. That DAAO undertakes to absent himself, or refuse to become involved, in any legal action against any director or employee of Avocet companies.”

Cardinal elements of a lease
As is well known, four so-called cardinal elements must be identified and agreed for an agreement to be a lease. These are the parties (identification of landlord and tenant), subjects (the property let), term (duration), and rent. And a further requirement for it to be a lease is that the tenant must have the exclusive possession of the subjects. Only if it is a lease – i.e. all four cardinal elements are agreed and the tenant has exclusive possession – will the tenant get a real right, that is to say he will be able to remain in possession of the subjects for the full term notwithstanding changes of ownership of the subjects or a heritable creditor seeking to repossess them during the term. (If an agreement lacks any of these ingredients, it may nevertheless still be valid as against the original owner of the subjects who entered into it so long as he continues to own them but not against any subsequent owner (or heritable creditor) coming in during the term who will be entitled to evict the tenant notwithstanding that the term still has time to run.) 

 

Rent
As can be seen from the alleged lease quoted above, there was no difficulty about three of the cardinal elements: parties, subjects and term. The issue arose over the rent, agreed at 50% of the profits of the farms. It is perfectly permissible for a rent to be expressed as a share of profits from the subjects (as opposed to a fixed periodical sum) but the problem here was that the agreement contained no mechanism for determining what the profits were in case of dispute between landlord and tenant (for example that they be determined by an independent accountant). Therefore, there was, in effect, no agreement about the rent and so that cardinal element was missing. In the words of Lord Braid (para. [73]):

It is immediately apparent that the lease contains no machinery by which any sum due could be fixed. The gaps are far beyond the power of the court to fill by means of implication of terms: cf Crawford v Bruce 1992 SLT 524 at 532. I therefore conclude that the agreement cannot be a lease enforceable against third parties, in that it does not provide for payment of a rent. (An alternative analysis, leading to the same result, is that the provision for rent is simply void for uncertainty.) This conclusion is reinforced by my finding, above, that no rent was as a matter of fact paid, whether by sharing of profit or otherwise.        

Exclusive possession
There was another problem with the agreement being a lease: the ‘tenant’, Mr Orr, didn’t have exclusive possession of the farms. The facts in this regard established at the proof (trial) were (para. [66]):

Alexander Orr was (or rather, continued to be) employed by one of the [Landlord’s group] companies … as farm foreman and … he worked at the [farms] in that capacity rather than as a tenant … . Whether or not he (or his company) also possessed the [farms] in the pursuit of his own (or his company’s) business, he (or his company) did not have exclusive possession because the [farms were] also possessed by [the Landlord] who installed hydroponics on [them] in connection with its own business and who kept an admittedly small number of cattle on [them]. The evidence that rent was paid by way of deduction from Mr Orr’s wages, which was not vouched, I do not accept, and in any event that was not what the lease provided for by way of rent … . No accounts were ever produced, [nor were the farms] ever made profitable, nor was any rent ever paid. Not only was there no apparent sign to the outside world that Alexander Orr occupied the farm as tenant, nor did he make mention of the existence of the lease on several occasions when it would have been natural that he do so … .

Against that factual background, Lord Braid opined (para. [74]):

The second requirement where the pursuers face a difficulty is the requirement that the tenant have exclusive possession of the subjects: see Millar v McRobbie 1949 SC 1. The need for possession is explained in Rankine [a classic textbook on leases] at page 137 as being the “only means whereby at common law a singular successor or creditor of the landlord...can become acquainted with the existence of a lease and be enabled to learn its stipulations.” Having found as a fact that Alexander Orr did not have exclusive possession - see, again, para [66] - quite simply, the agreement could not be a lease, whatever else it was.

(It's not entirely clear whether Lord Braid is basing his decision on the fact that Alexander Orr didn’t have exclusive possession of the farms (because he shared them with the landlord’s hydroponics and “admittedly small number” of cattle: see para. [66] quoted above) or whether he had no possession of them at all (because his role on the farms was not as tenant but as their owner’s employee). But as the greater (no possession at all) obviously includes the lesser (only non-exclusive possession shared with the landlord) here, the result is the same: the agreement is not a lease.)

Good faith and ‘sham’
Although not the focus of this note, it’s worth noting that the alleged lease was granted after the standard security (mortgage) to the defender. As the ‘lease’ hadn’t been agreed to by the creditor (mortgagee), that meant that, even if it were a true lease, it still wouldn’t have protected the tenant, Alexander Orr, from being evicted by the creditor seeking to repossess the farms unless he had been in good faith – i.e. he hadn’t known of the existence of the standard security. Lord Braid found as a matter of fact that Mr Orr did know about it (or, at the very least, and which amounts to the same thing, should have known about it: paras. [76]-[79]).

The defenders, the heritable creditor seeking eviction of the Orrs so they could repossess and sell the farms with vacant possession, also ran an alternative argument that Alexander Orr’s alleged lease was a ‘sham’ designed for the ulterior motive of frustrating their rights under their security and, as such, a nullity. The possibility of agreements being null and void as ‘shams’ was much talked about in the last quarter of the 20th century in the context of elaborate paper exercises to try and circumvent  agricultural tenants’ security of tenure (limited partnerships if you’re old enough to remember them) but the plea never really gained much traction in Scotland. And Lord Braid had little difficulty dismissing this argument in Orr: “it is likely that the parties did intend that the ‘lease’ should have some contractual effect” (para. [71]).  

The Berwickshire Merse from above

Analysis/takeaway
I can’t help thinking Lord Braid was a bit quick to rule the rent provision in the lease void from uncertainty simply because it didn’t contain a mechanism to resolve any dispute about the amount of the profits the landlord was to receive 50% of by way of rent (for example that the profits be determined by an independent accountant). Was he right to say (para. [73]):

The gaps [i.e. absence of mechanism to fix the amount of profit] are far beyond the power of the court to fill by means of implication of terms

in the context of this short, ‘home made’ lease (as opposed to lengthy document prepared by lawyers who can be assumed to have covered every base)?  I’m retired and don’t have access to a law library to look into this but is the ‘officious bystander’ test not still good law? If it is, if an OB had suggested to Alexander Orr and Martin Frost (the director of the landlord company) as they were about to sign the lease: “shouldn’t there be something in there about an independent accountant fixing the profits if you two can’t agree them?” wouldn’t they have “testily suppressed him with a common ‘Oh, of course!’”? (That last quotation is from MacKinnon LJ in Shirlaw v Southern Foundries (1926) Ltd [1939] 2KB 206 which I found by googling ‘officious bystander’. For any non-lawyers still reading this, it’s one of the tests for when it’s legitimate to imply a term in a contract. An implied term of a contract is one which is taken as read without having to be explicitly written into the contract.) The Orrs were not represented by counsel and I strongly suspect that, if they had been, the legitimacy of implying a term into the lease to provide for a mechanism to determine the profits in the event of disagreement would have been pressed much harder. (It doesn’t look as if Mrs Orr, who conducted their case, took the point at all as is entirely understandable given that she’s not a lawyer.)

As it’s just an Outer House decision (meaning it has little value as a binding judicial precedent), I can’t really see Orr entering the canon on implied terms in contracts. But what I think the real takeaway of the case is that it’s a reminder that, just because an agreement calls itself a lease, that doesn’t necessarily mean it is one. And that, although it can seem like it’s been totally hidden under layers of statutory accretion (Rents Acts, agricultural holdings et al), the basic common law of leases – the need for a rent and exclusive possession by the tenant – can still be the decisive factor in the outcome.

Houndwood

Land Reform Bill #3 - compulsory lotting of sales over 1,000ha

Picture credit: Scottish Borders Council

In essence, this section of the bill requires that, unless the Scottish Ministers (SMs) agree otherwise, sales of land over 1,000ha must be in lots (parts) decided by the SMs. And that no two (or more) of the lots may be bought by the same person or by persons who are “connected” to each other.

The detail of this is inevitably pretty dry and technical so, if you don’t fancy it, you could safely fast forward to paragraph 14. “Comment” below.

1. Structure of the bill
For anyone wanting to ‘follow along’ the detail of the procedures I’m about to describe, the relevant section of the bill is section 4 (pages 15-25) which amends the Land Reform (Scotland) Act 2003 (LRA03) by inserting into it a new Part 2A with 23 new sections (ss.67C-67Y). Except where otherwise noted, references hereafter to sections are to these new sections being inserted into LRA03 rather than to sections of the bill.

2. Sales affected #1: sales over 1,000ha
The new lotting provisions of the bill apply to all sales of land over 1,000ha (s.67G(2)) whether that is the whole or only part of an estate. Thus, imagine a 1,500ha estate: the lotting provisions will not apply if the owner is selling only 800ha but they will if he is selling 1,200ha (or the whole).

3. Sales affected #2: sales over 50ha
Under s.67G(3), the sale of land over 50ha is also subject to compulsory lotting when it forms part of a “large holding of land” (LHL: basically land over 1,000ha but see here for the exact definition) other parts of which of a size such that the >50ha area plus these other parts exceed 1,000ha are already on the market. Thus, imagine an LHL of 1,500ha of which 800ha is already on the market (which wouldn’t have involved lotting) and the owner then decides to sell a further 300ha: the sale of the 300ha will be subject to the lotting provisions.

Although the explanatory notes to the bill don’t say so, I think this is an anti-avoidance measure to prevent the sale of more than 1,000ha to the same person being achieved by two staggered sales to him, each of less than 1,000ha which would not otherwise be caught by the new lotting provisions. Except it doesn’t look to me from the wording of s.67G(3) like the original 800ha in the example would be retrospectively brought into lotting so I wonder how effective it really is as an anti-avoidance provision.

And there’s another issue here, I think. S.67G(3) doesn’t actually mention other land belonging to the same owner already being on the market, it refers (s.67G(3)(c)) to other land in respect of which a “notice of intention to transfer” (NITT) has been given under s.46C of LRA03. An NITT is the notice the owner of an LHL has to give the SMs when he wants to sell part (or the whole) of it – it sets in motion the new community right to buy opportunities in s.2 of the bill which I wrote about here. Now consider the following scenario: Mr A, the owner of a 1,500ha LHL, wants to avoid having to sell it in lots so he gifts 501ha to his wife. That gift doesn’t require an NITT because it’s an exempt transfer (s.46H(2)(b) on page 12 of the bill cross referring to s.40(4) of LRA03). Therefore, s.67G(3) will not apply – no lotting is required, in other words – when Mr A markets his remaining 999ha jointly with his wife’s 501ha with the intention that both parts be bought by the same person. (There would be a similar result if the 1,500ha LHL belonged to A Ltd and 501ha was first transferred to group company B Ltd. That's because transfers between group companies are also exempt under s.40(4)(e) of LRA03.)        

4. Contiguity required?
In my article on the definition of >1,000ha “large holdings of land” (here), I pointed out that it’s not an LHL for the purposes of the new community right to buy (CRTB) opportunities in the bill (discussed here) if it’s composed of discontiguous blocks of less than 1,000ha separated by land (however narrow: could be a railway or motorway) in third party ‘unconnected’ ownership. Does that also apply to the lotting provisions? I don’t think it does. S.67G(2) simply says “land that exceeds 1,000 hectares in area”. Absent any mention of contiguity, I think we must assume it’s not required. Thus, imagine a 1,200ha estate composed of two discontiguous blocks of 800ha and 400ha. It’s not an LHL for the purposes of the new CRTB provisions in the bill but (if I’m right about contiguity) it will be covered by the lotting provisions if the owner is planning to sell the whole.

But then go back to s.67G(3), the >50ha thing discussed above. Discontiguity may not disapply lotting but it may open up a lotting avoidance route. Using the last example again, the seller sells the 800ha block: the estate isn’t an LHL so the CRTB provisions aren’t triggered and thus he doesn’t need to give the “notice of intention to transfer” under s.46C referred to in s.67G(3)(c) & (4) (an NITT under s.48 is only when there’s already a community interest registered; let’s assume there’s not). Therefore, one of the requirements of s.67(3) (the >50ha thing) is not present with the consequence that there would seem to be nothing stopping the seller later selling the 400ha block to the same person who bought the 800ha which might, of course, have been pre-arranged.

I may be wrong about all this but if I were an MSP scrutinising the bill as it passes through Parliament, I’d make a point of quizzing the Scotgov officials about what exactly s.67G(3) is trying to achieve? And if it’s trying to close avoidance loopholes, whether it does that effectively or leaves open the avoidance scenarios I’ve described in this and paragraph 3. above.

From hereon, I’m going to assume the simple case of an owner wishing to sell a single, contiguous block of more than 1,000ha. It doesn’t matter whether that is the whole or just a part of his estate.

5. Transactions not affected: “exempt transfers”
There are some transactions with >1,000ha areas which are not affected by the lotting provisions of the bill.

These are called “exempt transfers” (s.67C(b)) and are defined in s.67J. That in turn cross refers to s.40(4) of LRA03 (which is the list of transactions permitted when there is a community interest registration without triggering the right to buy). The most significant of these are:

5.1 transfers “otherwise than for value”, That includes gifts. But a transaction where no money changes hands may still be affected: for example, exchanges of land (‘excambions’ in Scottish legal parlance) or transfer to a company in exchange for shares. That’s because the land received in exchange or the shares are both “value”. This exemption also includes transfers upon inheritance.

5.2 Sales to statutory undertakers and sales by agreement which could have been achieved by compulsory purchase. These are normally of small areas far less than 1,000ha which wouldn’t engage the lotting provisions anyway such as plots for road widening or other public utilities. But it could be relevant in the >1,000ha stakes. I’m grateful to Andy Wightman’s blog (here) for drawing my attention to the recent purchase by Forestry and Land Scotland (the new name for the Forestry Commission in Scotland) of 6,680ha Glen Prosen Estate in Angus: because it could have been achieved by compulsory purchase (Forestry and Land Management (Scotland) Act s.19), that sale would not have been subject to lotting had it taken place after the bill comes into force.  

5.3 Sales to companies in the same group. These are defined (s.41(1) of LRA03) by reference to s.170 of the Taxation of Chargeable Gains Act 1992 (s.46K(5)(a)(i) & (b)). I think that includes companies where one is a subsidiary of the other and also companies who are both are subsidiaries of a third but I’d need to speak to a corporate tax lawyer to be sure of that: meanwhile people owning land over 1,000ha through the medium of a UK company should be on the alert. 

5.4 Transfers consequent upon changes in partnership or trusteeship.

There are other exemptions of less importance and note that gifts, sales to group companies and partnership/trusteeship changes can’t be used as part of a scheme to avoid the new rules: see the anti-avoidance provision in s.67E. So you couldn’t sidestep lotting by gifting the land to the ‘purchaser’ and selling him a pencil for £5 million. (Note that I don't believe this would prevent either of the two potential avoidance scenarios I described in paragraphs 3. and 4. above. That's because the initial transfer of 501ha to Mrs A (or A Ltd) in the scenario in para. 3 and the sale of the first 800ha block in the scenario in para. 4 are both permissable, not because they're exempt, but because they're both less than 1,000ha.)

6. “Lotting decisions”
Going back to the simple example of an owner wishing to sell an area greater than 1,000ha (whether it’s the whole or a part of his estate), under s.67C, he may not do so without first having obtained a “lotting decision” from the Scottish Ministers (SMs).

These are governed by s.67N and are a decision that the land may be sold as a whole or must be sold in lots and, if the latter, what the lots are to be. Note that, although it tends to suggest the latter, the expression “lotting decision” in the bill applies equally to a decision that the land may be sold as a whole as it does to a decision that it be sold in lots. However, although these are not terms found in the bill, I’m going to refer when desirable for clarity to ‘no lot decisions’ and ‘multi-lot decisions’. But if I just say “lotting decision” (LD), you can take it the point applies to either type.

Miscellaneous points about lotting decisions:-

6.1         the SMs may only make a multi-lot decision (MLD) if

they are satisfied that ownership of the land … would be more likely to lead to its being used (in whole or in part) in ways that might make a community more sustainable than would be the case if all of the land were transferred to the same person. (s.67N(1))

Neither the bill nor – I think – LRA03 (remembering that the bill consists of amendments to it) defines “community” so the implication is that the community the likely greater sustainability of which militates in favour of an MLD need not necessarily live on the land: it could be somewhere else. Note also the considerations in s.67N(5) the SMs must have particular regard to in deciding to make an MLD (frequency of land coming on the market in the community’s vicinity and concentration of landownership there).

6.2         Under s.67N(4), the SMs may not make a lotting decision without first receiving and taking into account a report from the Land and Communities Commissioner (LCC). This is a new member of the Scottish Land Commission being created under s.6 of the bill (page 25) analogous to the existing Tenant Farming Commissioner. His principal function will be to police the new community engagement obligations in section 1 of the bill. These LCC reports are covered in s.67O and, although it doesn’t say so in terms, presumably they will cover issues such as local community sustainability, land turnover and concentration of ownership etc.

6.3         Under s.67U, the owner can appeal to the Court of Session against a multi-lot decision (MLD) on the basis that the SMs have laboured under an error of fact (for example, about local community sustainability, land turnover and concentration etc.), an error of law (can’t think of an example of that) or that the MLD is “unreasonable”. I think an appeal would be allowable here about either it being a multi-lot decision as opposed to a no lot decision or about the lots decided by the SMs in an MLD. If the CoS upholds the appeal, it’s sent back to the SMs to redecide: the court can’t substitute its own alternative decision.  

6.4         A lotting decision lasts for for five years (s.67F(4)(b) & (5)(b)). That’s the owner’s window within which to sell the land failing which he has to apply for a new LD. They also cease to have effect when the land they relate to (or a part of it) is sold within the five years (s.67F(4)(a). Thus, suppose there is a no lot decision (NLD) for 1,200ha and it’s sold as a whole in year one: the purchaser can’t use the original NLD to sell the land as a whole again within the remainder of its five years: he has to apply for a new LD (which involves the possibility that the new one might be a multi-lot decision this time).

6.5         Under s.67M, the SMs may (note, not must) make a no lot decision (NLD) if satisfied that the owner wants to sell the land to avoid or alleviate financial hardship and that having to wait for a lotting decision in normal course under s.67N. would cause or worsen the hardship. In this case a report from the Land and Communities Commissioner is not required. S.67M is headed “Expedited lotting decision where owner facing hardship” and no doubt these NLDs will be produced quicker as there’s no need to wait for the LCC report or ponder over lots etc. But s.67M doesn’t contain any time limit within which the SMs must produce a hardship NLD (nor does s.67N for a standard ‘non-hardship’ lotting decision of either type). An s.67M hardship NLD lasts only one year (s.67F(4)(b) & (5)(a)). In the event of the SMs not agreeing to a hardship NLD, the owner may nevertheless still be entitled to compensation from them under s.67V for losses caused (see paragraph 12. below).          

7.            I have a no lot decision – can I sell in lots anyway?
Yes. That’s because the wording employed in the bill for NLDs is that the land it applies to “need not be lotted” (e.g. s.67F(1)(b)) or “need not be transferred in lots” (e.g. s.67M(1), 67N(3) and 67R(4)(b)). So the owner can sell in lots chosen by him if he wants.

8.            Procedure following multi lot decision
The key section here is s.67D. Unless it’s an “exempt transfer” (see above), the owner can’t sell the land except in the lots specified in the MLD. Nor can he sell a part of a lot (s.67D(1)(i)) unless the SMs otherwise agree (s.67D(2)). Moreover, no two (or more) lots can be sold to the same person or to “connected persons” (no provision for SMs waiver of that).

9.            “Connected persons”
This is defined in s.67I. There are two categories: group companies as defined by s.170 of the Taxation of Chargeable Gains Act 1992 and persons one of whom has a “controlling interest” in another (s.67I(2)(b)) as defined in the The Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Regulations 2021 (RCI Regs). These are the regulations that set up the Register of Persons Holding a Controlled Interest in Land (known as the RCI for short: see here) of people requiring to be disclosed as having a hidden degree of control over the people registered as owners of land in the Land Register. These are the same definitions of “connected persons” as are employed in other parts of the bill which I discussed and critiqued here (scroll down to the heading “The detail: connected persons”). A few points from there which are of particular relevance to lotting are:-

9.1         Spouses and family members are not “connected” solely by virtue of their marriage/relationship. Therefore, it’s tempting to think that a person wanting to buy the whole of an estate lotted in three could buy one lot himself and have his wife and brother buy the other two lots. But if there was any sort of pre-arrangement between them – even if not in writing – that wife and brother were buying solely as his nominees then that would be caught by Part 1 of Schedule 1 of the RCI Regs and thus they would be deemed to be “connected” by their arrangement rather than their relationship.

9.2         If I’ve read the RCI Regs correctly (and they’re not an easy read even for lawyers), the relationship between a UK company and its shareholders and directors is not a “connection”. Therefore, there seems to me to be nothing to prevent lotting of an estate into two being sidestepped by Mr A buying one lot and A Ltd in which he is the sole shareholder and director buying the other. (And the same for an estate lotted into more than two being bought by Mr A and A Ltd, B Ltd, C Ltd etc. in which he is sole shareholder and director.)

10.         Review of lotting decision
Under s.67P, the owner may request the SMs to review a lotting decision after a year (and then, if the owner so wishes, at yearly intervals thereafter: s.67P(3)(c)).

No new report from the Land and Communities Commissioner is required at review but the SMs must seek the advice of “a person who appears to them to be suitably qualified, independent and to have knowledge and experience of the transfer of land of a kind which is similar to the land to which the lotting decision would relate” (s.67R(7))

It’s possible to request review of a no lot decision (NLD) although why an owner in possession of an NLD, which, as we’ve seen, gives him complete freedom of action, would want to do that is not clear. Presumably the most likely scenario for requesting a review is when an owner feels that a multi-lot decision (MLD) is blighting the sale of his property. The SMs could replace it with an NLD or an MLD with different lots (s.67R(4)) but they’re not obliged to do either of these things. Note the potential for the owner to claim compensation from the SMs for loss caused by an MLD in the event of their not budging on one at review (s.67V(1)(c) – see below).   

11.         The SMs’ power to offer for the land at review
Under ss.67P(2)(b), 67S and 67T, the SMs have power at a review to offer to buy at valuation any of the lots if (and only if) they are satisfied that 

it is likely that the fact that the land [to be offered for] has not been transferred since the lotting decision was made is attributable to the land being less commercially attractive than it would have been had the lotting decision not prevented its being transferred along with other land.

However, as there’s nothing in these sections obliging the SMs to buy any blighted lots, I’m not going to dwell on this further.

12.         Compensation
Under s.67V, an owner is entitled to compensation from the SMs for loss and expense:

12.1       incurred in complying with the procedural requirements of lotting (s.67V(1)(a)). I’m not sure if that would include extra loan interest racked up while waiting for a lotting decision;

12.2       attributable to a potential sale of the land being thwarted by the need first to obtain a lotting decision and the delay inherent in so doing (s.67V(1)(b). Presumably that would cover a very attractive offer from someone in a hurry who couldn’t wait; and

12.3       attributable to a multi lot decision (s.67V(1)(c)). This should cover the cases of an estate where the value of the whole is greater than the sum of its parts or, in the case of one likely to have been sold in lots anyway, the lots determined by the SMs are not those which would have maximised value.  

13.         Heritable creditors
Apart from the fact that they can’t apply for a s.67M hardship no lot decision, all of this applies as much to heritable creditors (mortgagees) selling land as it does to the owners. This is a point tending to the marketability of land over 1,000ha which will have to be reported to lenders effective today.

14.         Comment
The following are a number of comments about the lotting provisions of the bill. These are in no particular order of importance and some of them I’ve already touched on:-

14.1       S.67G(3) and lotting of areas over 50ha (as opposed to the usual 1,000ha). See paragraph 3. above. Is this an anti-avoidance measure to prevent the sale of more than 1,000ha to the same person being achieved by two staggered sales to him, each of less than 1,000ha which would not otherwise be caught by the new lotting provisions? And if it is, is it the intention that the first such sale of less than 1,000ha is not retrospectively brought into lotting? And does it prevent the lotting provisions being sidestepped by the owner of >1,000ha first dividing it up into <1,000ha blocks by way of exempt transfer(s) to family member(s) or group company(ies) and then jointly marketing the whole? And see next paragraph.

14.2       Do the more than 1,000 hectares the sale of which triggers lotting have to be contiguous? And if not, does that re-open the staggered <1,000ha sales avoidance route s.67G(3) may be trying to close? (See paragraph 4. above.)

14.3       Although there is a criterion for deciding whether to issue a multi lot decision (MLD) as opposed to a no lot decision (greater likelihood of community sustainability: see 6.1 above), in the event the Scottish Ministers (SMs) have decided an MLD is appropriate, there is no criterion in the bill for what the number and layout of the lots should be. Presumably it’s intended to be that most likely to conduce to greater community sustainability but that really needs to be said explicitly in the bill.

14.4       When deciding upon a community interest registration, the land owner is to be invited to give his views on the application and the SMs are required to take these views into account (s.37(5)(b) & (10) of LRA03). And when land is being valued for the purposes of a community right to buy, the owner and the community body are to be invited to make representations to the valuer who is obliged to consider them (s.60(1) of LRA03). But there's no provision in the bill for the owner or the community to be able to make representations to the SMs or the Land & Communities Commissioner (LCC) in relation to the lotting decision process. So there needs to be, both at the outset of the process and then perhaps for both parties to be able to comment on drafts of the LCC’s report to the SMs and then of a multi lot decision (MLD). The same should apply at review of an MLD (except in that context, for draft LCC report read the independent professional advice the SMs are required to seek: see para. 10 above.)  If for no other reason, the suggested owner/community input might protect the SMs against an appeal by an owner to the Court of Session against an MLD (see para. 6.3 above) based on a simple error of fact on the part of the SMs, LCC or independent professional.

14.5       On the subject of appeals, is it appropriate that the appeal against an MLD is to the Court of Session (CoS) as opposed to, say, the Lands Tribunal? The draftsman’s thinking may have been that s.67U (see para. 6.3 above) is effectively a statutory restatement of the common law right to judicial review (JR) of any ministerial decision so the CoS is the appropriate forum as it's the court which entertains common law JRs; and that the owner’s primary protection against MLDs he doesn’t like is the annual review process. But even so ...       

14.6       Although the SMs have power to agree to a lot in a multi lot decision (MLD) being sold in parts (s.67D(2): see para 8 above), there is no corresponding power to agree to two lots being sold together. Imagine the following scenario: included in an estate is a small 20ha farm with its derelict house. The land of the farm is one lot of an MLD and the house another. Now it could be equally conducive to local community sustainability that these two lots are bought by the same person (a new entrant to agriculture or aspiring small holder etc.) as them being bought by different people but the former course is not possible as the bill is presently drafted. Thus, there needs to be a corresponding provision that the SMs can agree to two (or more) lots of an MLD being sold to the same person. Indeed, I would envisage such agreement(s) being issued at the same time as the MLD itself so that the SMs are saying, in effect, that parts of the estate can be sold separately in the lots specified in the MLD or together where either option would be equally conducive to community sustainability.

14.7       In cases where a sale in lots is required, no two (or more) lots can be bought by the same person or by “connected” persons as defined by reference to the RCI Regs. That definition appears to leave an obvious avoidance loophole: see para. 9 above.

14.8       S.67M headed “Expedited lotting decision where owner facing hardship” (see para. 6.5 above) appears to be a tacit admission that obtaining an LD may be a lengthy process.

There are no time limits in the bill but I understand anecdotally that the SMs routinely overshoot the time limits in LRA03 for processing the community right to buy, for example. Perhaps the thinking behind the absence of time limits in the lotting process is that the owner has the right to apply for (but not to receive) an expedited hardship no lot decision and/or the right to compensation for losses incurred in having to submit to the process (s.67V: see para. 12 above). But perhaps experience shows the SMs need a hard deadline by way of a provision to the effect that, if they haven’t issued a lotting decision, either for the first time or at review, within a set period (3-4 months, shorter at review?), they will be deemed to have issued a no lot decision.                                    

14.9       Finally, a small point, and probably an oversight by the draftsman, but it needs to be stated in s.67R(7) that, before deciding upon a review of a lotting decision, the SMs must not only seek the advice of an independent professional but also take the advice received into account. (See para. 10 above.)