Thursday, 13 February 2020

Common good - Guild v Angus Council



Guild v Angus Council, 2020 CSOH 16, appears to be the first judicial consideration of Section 104 of the Community Empowerment (Scotland) Act 2015 which changed - or perhaps more accurately added to - the law of common good. (I explain what common good is in this post.)

Section 104
The section provides that, where a local authority is considering disposing or changing the use of common good property, it must do three things:-

1. publish details of the proposal (s.104(2) & (3));

2. notify the community council and any community body known to have an interest in the property and invite them to make representations (s.104(4) and (5)); and

3. in deciding whether or not to dispose or change the use of the property, have regard to any representations made the community council/body or members of the public in response to publication of the proposal (s104(6)).

Lochside Leisure Centre
In Guild v Angus Council, Lochside Leisure Centre (pictured above), which stands in a public park in Forfar, had become redundant and the Council had decided to demolish it and restore its solum (footprint) by returning it to grass and re-amalgamating it into the surrounding park.

Mr Guild (and an un-named other) objected to this decision and petitioned by way of judicial review for it to be quashed. Amongst various grounds of attack was that the solum of the leisure centre (and the surrounding park) was admitted by the Council to be common good but it hadn't complied with s.104 in that there had been no publication of the proposal to demolish or notification to the community council. Both parties were agreed that the leisure centre itself - i.e. the building as opposed to the ground it stood on - was not common good and was held on the Council's general account.

As there was no intention to dispose of the solum, the issue boiled down to whether demolition of the leisure centre standing on it and its reincorporation into the surrounding park amounted to "changing the use" of the solum. The Council argued that it didn't considering that the use before demolition was leisure and recreation (using the gym etc. facilities in the centre) and the use after would be the same (strolling in the park). It would be different, the Council conceded, if the proposal were to build a school or housing on the site.

The Lord Ordinary (Lady Carmichael) agreed, commenting:-

"[49] Whether a particular decision as to the use to which property is put amounts to a change of use which will engage section 104 is a mixed question of fact and law which will require to be considered on the basis of the facts and circumstances arising in any particular case. [...]

[50] Changing the use of common good land in a park from a leisure use in order to build a school on the land would seem likely to engage the provision. It seems likely that what would under other legislation amount to an appropriation for a different function would engage the provision. It must be doubtful whether Parliament intended that every type of change of use - for example the substitution of a tennis court in a park with a basketball court - would engage section 104. I accept the analysis proffered by the [Council]. The common good land is presently used for leisure purposes, and that will remain the case after the building has been demolished."

Takeaway from the case
Councils will be reassured that not every minor change to the use or management of a common good assets engages the enhanced layers of public participation mandated by s.104 of the Community Empowerment Act. On the other hand, there's a strong hint that, if a change of use would necessitate a formal appropriation (change of function for which land is held by a local authority), then s.104 is likely to be engaged.


Comment
I was intrigued by the concept of a building on common good land not being itself common good (CG). I would just have assumed - without ever having thought about it before - that a building would acquire the same status as the land it stands on on the basis of principles like aedificatio solo, cedit solo (what is built on the land becomes part of the land) etc. And that, if a Council's general fund pays for a building on CG land, the building becomes CG as well but the general fund has a claim on the CG fund for recompense. Or something like that - I don't know - these are just off the cuff thoughts out loud. The Lochside Leisure Centre building not being CG despite its solum so being was just a concession by the Petioners' counsel rather than a decision by the Court that such a thing is possible, of course, and Lady Carmichael didn't comment on this aspect, one way or another. But considering how much CG property is, in practice, funded by the general account, it's an ingenious argument which may be capable of being deployed in a future case to extricate a Council from a common good trap it has fallen into.

Thursday, 8 August 2019

Stornoway Windfarm 2 - the Section 50B appeals


Wind turbine on Lewis - picture credit Tim Riches
Refer back to my previous post for the general background to efforts to develop windfarms on the island of Lewis in the Western Isles and in particular the conflict which has arisen between the scheme being promoted by the Stornoway Trust (SYT) in partnership [1] with Lewis Windpower (LWP: a joint venture between EDF and the Wood Group) and the proposals by four crofting townships [2] to develop community windfarms on part of the same site.

The townships had applied to the Crofting Commission (CC) under section 50B of the Crofters (Scotland) Act 1993 for permission to diversify the use of their respective common grazings west of Stornoway into renewable energy generation by wind turbines. These applications were all refused by the CC. That refusal was appealed to the Land Court (LC) which rejected the appeals on 17 July 2019 - you can read the full LC judgement here. This post is about why the CC refused the s50B applications and why the LC refused the appeals. Beware that this is dust dry legal stuff - there was no stirring oratory by impassioned advocates warning of the threat of new Highland Clearances or the like to report. So in that vein, let’s first look at what s50B says:-
50B Use of common grazing for other purposes
(1) A crofter who holds a right in a common grazing may propose to the grazings committee ... that a part of the common grazing be used other than for—
(a) grazings ...; or
(b) woodlands.
(2) The use proposed must not be such as would be detrimental to—
(a) the use being made, as at the time of application, of the other parts of the common grazing; or
(b) the interests of the owner.
[Sub-sections (3) to (5) contain provisions requiring the grazings committee to call a meeting of the crofters sharing the affected grazing to hold a vote on the proposal and for the proposal to be intimated to the owner who has the right give views which must be made known to the meeting: all of this was duly complied with by the four townships.]    
(6) If the vote is in favour of the proposal the [grazings] committee ... shall apply to the [Crofting] Commission seeking their approval for its implementation.      

The criteria the CC are to apply in deciding whether to approve a s50B proposal are contained in a different section, s58A(7). This section also applies to all other applications to the CC under the crofting legislation (including, for example, for consent to assign a crofting tenancy). The relevant wording is:-
(7) In considering their decision on [an] application, the [Crofting] Commission must have regard to the following—
(a) [not applicable to s50B applications]
(b) the interests of the estate which comprises the land to which the application relates;
(c) the interests of the crofting community in the locality of that land;
(d) the sustainable development of that crofting community;
(e) the interests of the public at large;
(f) any objections received under subsection (4) or (5A) [= objections from the landlord/owner of common grazings, local crofters or the wider public received within 28 days of advertisement of the application in the local press or longer period with good reason for the delay];
(g) any plan of the Commission approved and published under section 2C [= the CC’s Policy Plan];
(h) any other matter which the Commission consider relevant.

Why did the Crofting Commission refuse the townships’ s50B proposals?
Section 58A(7) in effect requires the CC when deciding upon a s50B proposal to balance the competing interests of the estate, the crofters and the wider public interest before deciding which is/are to prevail and, consequently, whether to approve or reject the proposal. However, s50B(2) says that any s50B proposal “must not be such as would be detrimental to ... the interests of the owner.” In other words, if it would be detrimental to the owner of the affected common grazing, it is not a valid proposal under s50B and, therefore, cannot go forward to be evaluated on its merits in light of other interests under the s58A(7) balancing exercise. The Stornoway Trust as owner of the grazings involved naturally objected that the townships’ proposals would be detrimental to its deal with LWP given that these proposals involved, in effect, pinching more than half of LWP’s turbines. [3] The CC agreed and this is why the s50Bs were refused.

Turbines on Arnish Moor, Lewis - picture credit Mike Shailes

The townships’ appeals to the Land Court
First, it’s crucial to understand the nature of an appeal to the Land Court. It’s not simply a case of hoping that the LC will reach a different decision from the CC on the merits – or in other words saying to the LC: “The CC turned us down so will you let us have our community windfarm, please?” Rather, an appeal from the CC to the LC is, in essence, to identify and correct a failure of due process in the proceedings before the CC. In other contexts, this is known as “judicial review”. The consequence of a successful appeal from the CC to the LC can be that the LC quashes the CC decision complained of but remits back to the CC to decide the matter afresh. And the CC could come to the same decision again although this time in full compliance with due process such that the second decision is invulnerable to challenge. [4] Thus, an appeal to the LC must be brought under one (or more) of six grounds in s52A(3) of the Crofters Act. These are that the CC:-

(a) erred on a point of law;
(b) made a finding as to a fact material to the decision ... but did not have sufficient evidence on which to base that finding;
(c) acted contrary to natural justice;
(d) took into account ... irrelevant or immaterial considerations;
(e) failed to take into account ... relevant or material considerations; or
(f) exercised their discretion in an unreasonable manner.
There’s no suggestion of the CC having acted contrary to natural justice (ground (c)) but the townships’ lawyers had appeal points under each of the other five grounds so let’s look at these in turn.
Ground (a) – the CC erred on a point of law
Under this ground, the townships’ counsel argued that the CC had erred in law by misinterpreting the Crofting Act to mean that a finding that the s50B proposal would be to the owner’s (i.e. SYT’s) detriment meant that the proposal was bound to be refused without proceeding to the s58A(7) balancing exercise in which the owner’s interests were just one of the considerations to be weighed in the balance: in other words, that, in s50B, owner detriment trumps all other considerations.
Perhaps because he didn’t have much confidence in that argument, counsel weaved in a subtly different argument to the effect that, even if it is the case that landowner detriment trumps all other considerations, the wording of s50B is such that it is for the grazing committee (GC) to decide whether there is owner detriment and, if, as happened here, the GCs decided there was no detriment, then there was nothing in the Crofting Act conferring a jurisdiction upon the CC to overrule the GC’s decision and the CC was obliged to proceed to the s58A(7) balancing exercise irrespective of its (the CC’s) views on owner detriment.
The Land Court had little difficulty in dismissing both of these arguments. The wording of s50B is unambiguous that there is no valid s50B proposal if it involves detriment to the owner: in s50B owner detriment does trump all other considerations. Even if s50B had been ambiguous in this regard, Pepper v Hart reference to Ministerial statements to Parliament during the passage of the bill which enacted s50B made it plain that it was intended that landowner detriment trump all other considerations. [5] And even though there’s nothing in the Crofting Act explicitly giving the CC power to rule on landowner detriment, the LC noted:-
[52] ... Part of the approval process must surely be that the Commission satisfy themselves that what they have before them is a valid proposal which they can competently approve. In this respect sec 50B applications are in no different position from any of the other matters which come to the Commission for their consent or approval under the 1993 Act: if the Commission are aware of facts and circumstances which would make the application incompetent they are entitled, indeed obliged, to refuse it. ... [55] In our view, therefore, nothing in sec 50B takes away from the Commission the power they have in any other application for approval or consent, to refuse an application as incompetent. It is true that nothing in sec 58A expressly confers such a power on the Commission, in relation to any application, but it is surely a given that the Commission are entitled to investigate any issue as to validity and are not entitled to approve applications which they believe to be invalid.
One of the four townships - Melbost & Branahuie. Picture credit Guido

Ground (b) – the CC made a finding as to a fact but did not have sufficient evidence on which to base that finding;
Here the townships’ argument was that, even if owner detriment does trump all other considerations, the CC didn’t have sufficient evidence of the detriment the Stornoway Trust (SYT) alleged it would suffer if the townships’ proposals were permitted to go ahead.

Much has been made in the public reaction to the Land Court’s rejection of the townships’ appeals, thereby effectively killing off their community windfarm projects, of the fact that there has never been any kind of hearing or enquiry to thrash out the respective merits and demerits of the SYT/LWP’s and the townships’ plans. [5A] But the townships’ own counsel conceded during the course of the appeal that he was not seeking a hearing by the CC (or anyone else) and that a decision could be reached on the basis of the written submissions of parties. [6]

That concession made, this ground of appeal resolved itself into a discussion about whether the SYT could be said to suffer detriment from the loss of something (the LWP deal) which was so speculative considering the many hurdles it still has to cross (section 19A approval, Contract for Difference and interconnector – see my previous post). But on this, the LC concluded:
[69] ... if the sec 50B schemes go ahead the Stornoway Wind Farm [i.e. the LWP scheme], as presently planned, cannot. So the sec 50B schemes are not just potentially detrimental to the Trust’s plans, they are potentially fatal. [70] The [townships] say that because of all of the current uncertainties the Trust does not have a present legal interest to defend. They will, say the [townships], only acquire such an interest once all the consents and infrastructure required are in place. We do not accept that argument. The Trust has an interest to defend and protect the progress and investment already made from further challenges to the viability of the Stornoway Wind Farm. Certainly any of these other uncertainties could kill off the Stornoway Wind Farm but so too would the use proposed in the sec 50B applications, at least so far as a wind farm on the presently envisaged scale is concerned. In that situation approval of that use would undoubtedly constitute what [SYT’s counsel] called “an immediate, present detriment” to the landowners’ interests. 
Ground (c) – the CC took into account irrelevant or immaterial considerations
Another aspect of the case that hit the headlines was that the SYT’s objections to the townships’ s50B proposals as being detrimental to its interests as owner of the affected land had been submitted to the CC late – about 16 months after the 50B aplications were made which is obviously well outside the 28 days for lodging of objections mentioned in s58A(4) of the Crofting Act (the section which deals with the procedure about how applications to the CC are to be handled). So the townships’ argument here was that, the SYT’s objections being time barred, they were “irrelevant or immaterial considerations” which the CC should have ignored.
In actual fact, there was more to the delay in the SYT lodging its objections than meets the eye. This stemmed from the fact that, in terms of the Crofting Act [7], all applications to the CC must be made on a pro forma application form provided by the CC. The problem was that the CC didn’t have an application form for s50B so it was faced with having to devise one. This set off a sequence of bureaucratic faffing around which led in turn to uncertainty about the exact date on which valid s50B applications had been made and publicly advertised. The SYT said that the CC had told them they would be informed when all this had been resolved and when their 28 days for lodging objections would begin to run except it appeared the CC forgot to do this. But when the CC did finally fire the gun (after it and SYT had, in the LC’s words, spent “a year or more in a fog of uncertainty”), the SYT duly lodged its objections within 28 days thereafter. S58A(5A) allows objections to be received late if the CC “consider there is a good reason why the objection is late”. The LC therefore had no difficulty in taking the view that this saga represented a good reason why the SYT’s objection was late. [8] 
Ground (e) – the CC failed to take into account relevant or material considerations     
The considerations the townships claimed the CC had failed to take into account here were the benefits which would accrue to the SYT from the townships’ s50B proposals. What the LC said about this was:-
[85] ... the Commission were not required to carry out a comparison of the two sets of schemes. Nor was it for the Commission to decide what was in the landowners’ best interests: that was for Stornoway Trust themselves. As long as the Trust were able to demonstrate to the Commission that the sec 50B schemes involved detriment to their lawful interests that was all that was required to justify the Commission in refusing the applications as invalid.
I struggle a bit with the first two sentences of that. Surely the second sentence can’t mean that the CC couldn’t question an assertion by a landowner that a s50B proposal would be to its detriment and require that to be proved to its (the CC’s) satisfaction. Surely, too, the detriment alleged must be something objective which the average person acting reasonably would consider to be detrimental as opposed to something which happened to offend a mere caprice of the landowner. [9] And as regards the first sentence, I should have thought that the CC was required to compare the two schemes to see whether it might not be the case that the s50B proposal was objectively more beneficial to the landowner than what he stood to lose with the consequence that there was no detriment. Be that as it may, I think the LC’s conclusion on this, though somewhat obliquely expressed, was that the CC had taken into account the benefits to the SYT of the townships’ proposals but had nevertheless concluded (as the CC was entitled to do) that, comparing LWP’s proposed 180MW scheme with the townships’ 105MW and the risk that LWP might not proceed with the remaining 75MW, there would still be a net detriment to the SYT if the townships’ s50Bs were approved. [10] 

Sandwick - Picture credit Chris Murray

Ground (f) – the CC exercised their discretion in an unreasonable manner
Finally, the townships attempted an argument that, in refusing their s50Bs, the CC had exercised their discretion in an unreasonable manner in the sense that, by not proceding to the s58A(7) balancing exercise, the CC had not exercised any discretion at all. But this argument was really superseded by the fact that the LC had already decided that, by reason of the s50Bs involving detriment to the landowner, the CC was not required to proceed to the balancing exercise. That’s not exercising a discretion, it’s applying the law. [11]
Aignish
All of these appeal points applied equally to all four townships but Aignish had a couple of extra points of their own.
The only one of these worth mentioning stemmed from the fact that, in May 2019, LWP had submitted a new planning application to vary the layout of their proposed windfarm such that there will be a smaller number of more powerful turbines but still (as I understand it) with the same aggregate of 180MW. Aignish’s proposed two turbines would, it was said, present less, or even no, conflict with this revised layout. That would therefore lessen, or even remove altogether, the landowner detriment which blocked their s50B proposal. Though not articulated as such in the LC’s judgement, this was presumably a ground (e) appeal point, a relevant or material consideration the CC had failed to take into account. However, this variation of the plans was all something which happened after the CC had made its decision on Aignish’s s50B. Therefore, it was not a valid appeal point (which would have to found on something which had happened before the CC made its decision). None of this, however, prevents Aignish from making a new s50B proposal in light of new circumstances in the future if a revised, non-conflicting layout of the LWP scheme comes to pass. [12]
Comment - time to repeal section 50B?
“A terrible decision by the Land Court” was how one (non legal) commentator described the appeal judgement.[13] That, with respect, is to misunderstand the nature of the appeal – that it was not to revisit the s50B proposals on their merits – and shoot the messenger. And in so far as the loudest criticism is that the LC did not order a wide ranging hearing into the respective merits of the rival schemes (“Land Court shocker as evidence not required” said the same commentator [14]), it appears to overlook that the townships’ own counsel conceded that a hearing was not necessary. In fact, there's nothing in the LC's judgement that's very controversial from a legal point of view and, reading it, you can almost sense that the townships' counsel knew he was fighting something of a rearguard action. But if this appeal has shown something up to be less than satisfactory, it’s not the Land Court (or the Crofting Commission) but section 50B of the Crofting Act.
Considering that crofters are due 50% of the capital value of land released from crofting for development [15], it’s understandable why many have come to believe that croft land is, in a practical if not strictly legal sense, jointly owned by the landlord and crofter(s). But while landlords have the power to realise their 50% by the process called “resumption”, there’s no mechanism for crofters to take the same initiative: crofters can’t resume from their landlord. It’s tempting – and I confess I fell into this error when I wrote my previous post on this topic – to see s50B, introduced into the crofting legislation by the Crofting Reform etc. Act 2007 [16], as the redress to this imbalance: the mirror image of resumption (and s19A) and the mechanism by which crofters can take the initiative to develop croft land for alternative uses. But the Aignish et al appeal has thrown into very sharp relief that it’s not: a relatively small amount of detriment to the landowner is sufficient to block a s50B proposal no matter how beneficial it might be to the local crofting community and wider public. Nor is this a result of some sort of drafting error in the legislation – it was intended to be thus as remarks quoted by the LC in its judgement (para [57]) made by the Minister in Parliament when the 2007 Act was going through make clear:-
There has been considerable misunderstanding of the purpose and implications of [s50B]. In the light of some of the more inaccurate comments, it is not surprising that some owners are concerned. This is not a backdoor route to crofting community control of the owner’s interests in common grazings. … No one will use the provisions to build houses or wind farms on grazings, as the owner’s rights – including the right to resume – will persist. This is about facilitating new uses that would not be detrimental to existing uses by the graziers or the owner. [Emphasis added]
Consequently, s50B is, in the words of the LC (para [61]), no more than:-
a vehicle whereby crofters with shares in the grazings can propose additional uses beyond the traditional rights of grazing, peat-cutting and thatch-taking. But (a) the express provision protecting the interests of the landowner and (b) the absence of the powers which would be required to compel a landowner to do whatever was necessary (such as grant a lease of land) to facilitate the proposed development show that what was envisaged was consensual development or, if not always that, at least development which made no great inroads on the landowner’s rights and interests. [Emphasis added]               

This, of course, is entirely consistent with the fact that puzzled me a bit when I wrote my previous post – that s50B contains no provision for compensation to, or value sharing with, the landowner.
Perhaps, then, the lesson from the experience of the four Stornoway townships as illuminated by the recent Land Court judgement is that it’s time to take another legislative step forward and give crofters the same rights as landlords to develop crofters common grazings for alternative uses. That could involve tweaking s19A [17] to make it equally available to crofters. And repealing s50B altogether.

Aignish - picture credit Google Streetview
Footnotes
[1] I use the word “partnership” in a loose, non-technical sense here because the relationship between SYT and LWP will be as landlord and tenant. There is no partnership between them in the strict legal sense of that word.
[2] The four townships are (1) Aignish; (2) Sandwick & Sandwick East; (3) Sandwick North Street; and (4) Melbost & Branahuie.
[3] Between them, the townships proposed a total of twenty one 5MW turbines on more or less the same sites as twenty one of LWP’s twenty four consented turbines south of the old A858 road from Stornoway to Achmore. This would leave LWP with just three turbines south of that road plus the twelve turbines it has consent for to the north of the road.
[4] The LC also has power to substitute its own decision without remitting back to the CC (strictly, by directing the CC to make a certain decision). See s52A(4) of the Crofting Act. I don’t know if there’s any case law giving guidance as to the circumstances in which the LC would, absent consent of the parties, be likely to substitute its own decision as opposed to remitting back to the CC. In particular, if the LC quashed a decision of the CC on one of the grounds in s52A(3), would it (the LC) ever (absent consent) proceed to determine the case on its merits? I don’t know the answer to that.
[5] Pepper v Hart is a 1992 decision by the House of Lords (sitting as the UK’s then supreme appellate court) to the effect that, to assist the interpretation of ambiguous legislation, it's permissible to consult parliamentary materials (Hansard etc.) from when the relevant bill was going through Parliament. But such parliamentary materials can't be used to contradict unambiguous legislation. You can read the judgement here.
[5A] – see here for example.
[6] See para. [71] of the Land Court judgement.
[7] s58A(2)
[8] The full story of the “year or more in a fog of uncertainty” over the formalities of the townships’ s50B applications is contained in paras [74] to [79] of the LC’s judgement. In fact, the LC treated this aspect of the case as being an appeal point under ground (f), namely, that the CC had exercised its discretion in an unreasonable manner by receiving the SYT’s objections late in these circumstances. And the LC concluded that it had not. The LC was also moved by the fact that nothing had changed during the delay so as to give the SYT any advantage in its objections being late, nor did the delay put the townships at any disadvantage in that regard.
[9] At paragraph [83] of its judgement, the Land Court said this on the subject of how much detriment was required for the purposes of s50B(2):
Will any detriment do? Section 50B does not say it has to be substantial or significant or more than de minimis. Obviously it has to be real, not spurious. Beyond that, ... there may be minimal levels of detriment best left to be part of the balancing exercise of sec 58A(7); in other words room for at least a de minimis exception. However, we do not need to express a concluded view in these appeals since the level of detriment found by the Commission was significant, indeed substantial.
[10] The townships also ran an argument under ground (e) that the CC had also failed to take into account: (i) the other matters apart from the interests of the estate it is required to have regard to when carrying out the s58A(7) balancing exercise, principally, the interests of the local crofting community and the sustainable development of that community; and (ii) the possibility of attaching conditions to a s50B approval to mitigate any detriment to the SYT. Point (i) is simply the ground (a) argument about whether landowner detriment trumps all other considerations in s50B in a different form and as to which the LC had already ruled (see para. [84] of the judgement). The LC disposed of point (ii) by observing that, while the CC didn’t appear to have considered the possibility of attaching conditions, that didn’t undermine their decision to refuse the s50Bs because it was hard to imagine what sort of condition might have worked, given that the rival schemes can’t co-exist, and, anyway, mitigated detriment is still detriment which (assuming it to be more than de minimis – see footnote [9] above) falls foul of s50B(2) (see para. [86] of the judgement which mistakenly refers to s50B(1) instead of s50B(2)).
[11] See paras. [15] (first three sentences) and [87] of the judgement.
[12] See paras. [19] & [89] of the judgement.
[13] See here
[14] See here
[15] Sections 21 and 19A(2)(c) of the Crofters (Scotland) Act 1993.  
[16] Section 50B was inserted into the 1993 Act by s26(2) of the Crofting Reform etc. Act 2007.
[17] Section 19A of the Crofters (Scotland) Act 1993 gives landlords an alternative route to using croft land for development short of full resumption. The Stornoway Trust are using s19A as the vehicle for delivering the LWP scheme although that case has not yet been heard on its merits.                                                                                                                                                                                                             

Tuesday, 30 July 2019

Crofting and the repairing standard


Seven keystrokes (" to (e)") in a recent statutory instrument consulted upon under the headline of Energy Efficiency will radically alter the law in relation to some crofts in 2027. The change could cause major financial headaches for community landowners such as Storas Uibhist and Stornoway Trust. It could also lead to significant rent increases for the affected crofters (a minority) but with the potential upside for them of 6-figure windfall gains.

Croft house at Kilchoan - picture credit A Kilchoan Diary
    
There have for a long time been obligations upon landlords of private sector residential tenancies to maintain let houses to certain standards. The most recent iteration of these is Chapter 4 of the Housing (Scotland) Act 2006. Section 14(1) of this requires the landlord to ensure that a house meets the “repairing standard” set out in section 13. This includes (amongst other things) that the house is “wind and water tight and in all other respects reasonably fit for human habitation”. Since 1 March 2019, it also requires that the house meets “the tolerable standard”. That is defined in section 86 of the Housing (Scotland) Act 1987 and includes that the house is “substantially free from rising or penetrating damp”. And from 1 March 2024, the repairing standard includes that houses must have “fixed” (i.e. central) heating systems. [1]
 
The repairing standard (and previous iterations of residential landlords’ maintenance responsibilities) has never applied to farm tenancies – farm houses and cottages on let farms. That’s because farm tenancies have always had their own distinct statutory maintenance regime. Without going in to the detail of that, it’s fair to say it’s less rigorous on landlords of farms than the repairing standard (RS). But in 2018 the Scottish Government decided the RS should be applied to houses on farm tenancies as well. In legislative terms, this was effected by regulation 2(2) of The Housing (Scotland) Act 2006 (Modification of the Repairing Standard) Regulations 2019 repealing s.12(1)(c) of the 2006 Act (the paragraph which had excluded farm tenancies from the repairing standard). However, this doesn’t take effect until 2027 in order to give farm landlords a reasonable lead in time to their more exacting responsibilities.

Farmhouse at Gairloch

Before I continue, the inevitable terminological point: I use the expression “farm tenancy” to refer to a tenancy of an “ordinary” farm which is not subject to the crofting legislation. For any agricultural lawyers reading, a farm tenancy could be a 1991 Act Tenancy or a Limited Duration Tenancy or any of the other more recent types. Though not a legal term of art, I’ve made up “farm tenancy” to distinguish them from “crofting tenancies” which are self explanatory. By “agricultural tenancies”, I mean farm and crofting tenancies.  

Houses on crofting tenancies have never been subject to any obligation upon the landlord to maintain them. That’s because the historical facts of crofting are that, unlike with farm (and urban residential) tenancies, it was almost invariably the tenant who built the house on his croft. Thus, it was his to maintain. Croft houses do not in any meaningful sense “belong” to the landlord like other rented houses, urban or rural, do. For any lawyers old enough to appreciate the analogy, the relationship of a crofting landlord to a croft house is, in practical (if not strictly legal) terms, much closer to that of feudal superior of the house than landlord. Thus, crofting tenancies were also excluded from the repairing standard by s.12(1)(d) of the 2006 Act.

But the recent extension of the repairing standard has also brought houses on crofting tenancies under its ambit from 2027. (2019 regulation 2(2) also repeals s.12(1)(d).) Thus, crofting landlords could for the first time be faced with claims from crofters to upgrade houses for which only a pittance of rent is paid (£10-20 a year is typical for a croft – c.f. feuduties).

There are about 15,000 crofting tenancies in Scotland but only a smallish minority have houses on them. That’s because, since 1976, crofting tenants have had the right to take a freehold title to their croft houses for a nominal sum (£25-50 is typical) [2]. Most crofters have exercised this right in order to be able to mortgage the house to fund improvements to it. But there are probably as many as four figures of croft houses still in tenancy. Moreover, these are likely to be the ones most in need of being brought up to the repairing standard. A typical scenario would be the croft where the last active resident tenant died 20-30 years ago, not having exercised his right to buy due to never having seen the need during his life to improve his 75 year old house. The tenancy is now held by family members who live elsewhere, rent the land informally to neighbours and visit the house only for occasional holidays with the consequence that it’s deteriorated for want of being lived in and regularly maintained. A crofting estate could have several, if not dozens, of houses in that situation and, in 2027, the crofters could ask their landlords to do them up for them by invoking the repairing standard. Then, after the landlord has spent a five figure sum doing that, the crofter could invoke the right to buy at the nominal £25-50 and sell the newly renovated house on for six figures!

Few are likely to shed tears over the travails of crofting landlords until it’s remembered that a substantial number of crofts – possibly around a third of them – are on estates belonging to community bodies (Stornoway Trust, North Harris, South Uist, North Assynt et al). So let’s pick this apart in more detail and see if the repairing standard really is as much of a threat to the fragile finances of these third sector landlords as it appears on the surface. (Note that, from hereon, when I refer to croft houses, I’m referring only to those – a minority – which are still in tenancy, not those which have been bought and will remain wholly the responsibility of their owners. And by “crofter” I mean only those whose houses are still in tenancy.)

Crofts on South Uist belonging to community landlord Storas Uibhist - picture credit Allan Macdonald

First, the repairing standard doesn’t require landlords to carry out work “for which the tenant is liable by virtue of the tenant's duty to use the house in a proper manner” (2006 Act, s.16(1)(b)). So the argument would be that, by allowing a croft house to have deteriorated, the tenant has not “used it in a proper manner” and therefore the landlord is not liable to carry out work to bring it back up to the repairing standard. But are crofters under a duty to “use their houses in a proper manner” prior to 2027 when the 2006 Act will start to apply to them? Amongst the statutory conditions of crofting tenancies is that the tenant “shall not, to the prejudice of the interest of the landlord ... injure the croft ... by allowing the dilapidation of buildings” (Cond. 5). But is that the same thing as “using buildings (including houses) in a proper manner”? There has been no attempt to synchronise the Housing Act with the Crofting Act consequent upon the repairing standard being applied to crofting tenancies so as to remove such doubts and questions. Consequently, I would be hesitant about advising a crofting landlord that s.16(1)(b) of the 2006 Act (benefit of repairing standard conditional upon tenant having used the house in a proper manner) could be relied upon as a defence to a claim by a crofter to do substantial work to upgrade his house in virtue of the repairing standard. But on the other hand, I would warn a tenant that s.16(1)(b) could represent a significant obstacle to his claim. I suspect that, if the matter came to be tested in court, the answer might depend on how sympathetic the court was to the whole policy of applying the repairing standard to crofting tenancies and whether the court wanted to support it or neuter it.

Be that as it may, it’s possible to imagine a slightly different scenario in which a crofting tenant has scrupulously maintained his house such that there’s no question of him having not “used it in a proper manner” (Housing Act) or “allowed its dilapidation” (Crofting Act). But it’s an old house which no amount of continued maintenance, however meticulous, is going to bring near the modern repairing standard (think old wooden sash and case windows). Indeed, the house may not have reached the repairing standard even when it was brand new in the 1930s. In this scenario, the landlord doesn’t even have the possibility of a defence under s.16(1)(b) to a claim by the tenant to bring it up to the repairing standard. And aside from these more dramatic scenarios of total refurbishment of an old sub-standard house, there are the more everyday cases of something needing fixed like the central heating boiler or just a broken window or loose slate: up until now that has been the crofter’s responsibility but from 2027 it will be the landlord’s to do free of charge to the crofter!

There’s another very commonly occurring crofting scenario worth looking at here. On many crofts, the crofters have built a new house on a different site from the old house which was left standing. They take title to the new house and the old one is left in tenancy. Could the crofter invoke the repairing standard (RS) to require the landlord to do up the old house? I think that’s much more doubtful. The reason is that the RS only applies to the tenancy of “a house let for human habitation” (2006 Act, s.12(1)). Now, considering that there is also amongst the statutory conditions of crofting tenancies a prohibition on there being more than one inhabited house on a croft at a time (Cond. 8), the old house is surely no longer “let for human habitation”. There are counter arguments to that, though. If title is taken to the new house, then the tenanted remainder of the croft is back in the situation of having only one house on it, the old one. Perhaps even more compelling is the argument that a landlord is entitled to waive compliance with the statutory condition and allow two inhabited houses on a croft. I personally know of one where the old house was lived in by adult unmarried children of the crofter who lived in the new house. This sort of scenario will not be unique.

An example
Below is an advert I found for the sale (assignation) of a crofting tenancy where the house is still in tenancy: click it to enlarge. I've anonymised it. It's one of those crofts where there's an old house and a new house but note that even the "new" house, built in the 1950s, is "requiring complete renovation". It's a fair guess that house comes nowhere near the repairing standard. So should the purchaser (assignee) resist the suggestion in the brochure to purchase (take a freehold title to) it and instead leave the house in tenancy and wait until 2027 and get the landlord to carry out the required renovation at his expense?

      

Let’s move on and imagine a crofter has been successful in invoking the repairing standard and compelled the landlord to do substantial work to improve his house. It may not be a total “freebie” for the crofter because the landlord could increase the rent to compensate him (the landlord) for his expenditure. The rent for a croft can, on the application of the landlord or the tenant to the Land Court, be revised (up or down) to whatever is the “fair rent” [3]. This is not the place to go into the case law about what a “fair rent” for a croft actually means because croft rents are seldom reviewed in practice because they are usually so low that it’s not worth either party’s while tinkering with them. But the application of the repairing standard to croft houses puts a new complexion on this from 2027. It must surely be “fair” that a croft rent be considerably increased to reflect money a landlord has spent on a croft house. Indeed, it may also be “fair” to increase a croft rent to reflect the fact that the landlord could, for the first time, be called upon to spend money on a croft house (whether a complete refurbishment or just fixing the broken boiler or loose slate) even though he hasn’t done it yet. So an unintended consequence of applying the repairing standard to crofting tenancies could be that crofters could face a significant increase in rent for something they didn’t ask for.

Photos from another advert for an assignation of a croft tenancy where the house is still in tenancy. This time, the house looks as if it does meet the repairing standard but from 2027 keeping it that way will become the landlord's responsibility - will that result in an increase in the rent (currently £114pa)?

Could these crofters avoid the rent increase by electing to buy the freehold of their houses for a nominal price? As with croft rents, the statutory provisions relating to the calculation of that price are seldom paid much attention because the figures are so low. Time to look again now with renewed interest. Imagine the scenario where the crofter has sucessfully managed to get his landlord to spend a five figure sum bringing his house up to the repairing standard. Section 15(2)(a) of the Crofters (Scotland) Act 1993 says that the price is the open market value with vacant possession and free of crofting restrictions but – crucially – assuming there were no buildings on the site and no potential for getting planning permission to build anything (whether a house or anything else) on the bare site. This is why the prices paid by crofters for the freehold of their houses are so negligible. It reflects the fact that the overwhelming majority of croft houses were built at the expense of the tenants so it’s not fair that the landlord should get anything for them apart from the value of the bare land they’re built on. But s.15(2) of the Crofters Act covers the rare situation of the landlord having built the house by adding that:-

and in addition [to the OMV of the bare site], in a case where the landlord has provided [i.e. paid for] fixed equipment on the site [the crofter shall pay] an amount equal to one half of the proportion attributable to that fixed equipment, as determined by the Land Court, of the value of the site ...             

“Fixed equipment” is a term of art of Scottish agricultural tenancy law meaning the infrastructure of a farm or croft aside from the actual land itself, typically fences, roads, drains, fanks etc. It’s defined for the purposes of both crofting and farm tenancies in s.85(1) of the Agricultural Holdings (Scotland) Act 1991. The definition specifically includes houses. So could it be argued that, by carrying out work which transforms a sub-standard croft house liable to be condemned by the Council into a desirable one up to modern standards, the landlord has, in effect, “provided” the house so as to be entitled to half its value and thereby perhaps recover some or even all of his outlay? It’s not an entirely ridiculous argument but pretty doubtful nevertheless, I think. The case is much stronger where the landlord has added something to the house (a central heating boiler, for example), as opposed to work on the existing fabric – in that case I’d be a bit more confident in saying the landlord could claim half of the uplift in value of the house attributable to the addition (which may not necessarily be the same as half of the cost, of course).

Finally on this, a landlord can’t force a crofter to buy his house – the crofter who’s had his house improved by his landlord could choose to sit it out and pay incrementally through an increased rent. But the opportunity to buy a newly refurbished house at half its value (at most, possibly less for the reasons canvassed) is one many crofters will find hard to pass! Note as well that the 50% clawback a crofter who has bought his land must pay his landlord if he sells on at a profit within 10 years doesn’t apply to croft houses, only croft land. [4]

How did we get here? - the legislative process
The idea of extending the application of the repairing standard appears first to have emerged in 2015 at Stage 1 of the bill which was to become the Land Reform (Scotland) Act 2016. This proposed a range of changes to farm tenancies and, during their evidence gathering at Stage 1, the Scottish Parliament’s lead committee on the bill, the Rural Affairs, Climate Change and Environment (RACCE) Committee, learnt of the poor state of repair of some houses on farm tenancies. They accordingly recommended in their Stage 1 Report (paras. 555-558, pp. 118-119) that the Scottish Government bring forward amendments at Stage 2 of the bill to address this. The SG’s response (para. 281, page 72) to that was that, while it acknowledged the issue and was sympathetic to it:

As tenant farming houses interface with a range of legislation and policy areas, amendments to this Bill would not be the appropriate means to address this issue, given the amount of preparatory work needed to deliver robust and sustainable solutions.
  
Then, at Stage 2, an opposition MSP, Claudia Beamish (Labour), attempted to force the issue by tabling her own amendment (No. 152 on page 29) to the bill to apply the repairing standard (RS) to farm – but not crofting – tenancies. In the end, however, she withdrew it in exchange for an undertaking from the Minister (Richard Lochead) to give the matter higher priority. In the course of his remarks to the Committee the Minister remarked that the Beamish amendment would discriminate against crofters and also said: “We need qualitative and quantitative research to enable the Scottish Government to assess the range of issues, including costs, that must be addressed”. And in a reference to the “interface” mentioned in the SG response to the Stage 1 Report quoted earlier he alluded to the question of “what legislation will have to be amended or created to deal with the issue”. [5]


 
Thereafter, progress towards applying the repairing standard to agricultural (farm and croft) tenancies was subsumed in work to broaden the scope of the RS (i.e. include new requirements for all affected properties, not just agricultural tenancies) and require all rented houses to be brought up to Energy Performance Certificate Standard D by 2025 [6]. In April 2017, the Scottish Government launched a consultation on all of these issues. It would be fair to say, though, that the issue of applying the RS to agricultural tenancies was somewhat buried in this, occupying just two paragraphs (Nos. 189 & 190) out of a total of 205. The treatment of farm tenancies was sketchy enough (nothing about the “interface” with other legislation and policy areas the SG had given as its justification for not legislating in the Land Reform Bill and opposing the Beamish amendment) and there was nothing about the specialities of crofting tenancies: although they were mentioned as included in the proposal, it was plain from the wording that no thought had been given to them as distinct from farm tenancies at all. [7]

I have not read all the responses to the consultation. I only looked at a few of those which were not anonymous and which I thought might be likely to comment on specifically on crofting. There were no responses from crofting landlords that I spotted and only one response that I looked at in this small and unscientific sample – that from Scottish Land and Estates, the landowners’ “trade union” – raised the crofting implications. [8] The analysis of the responses to the consultation noted that 45% of respondees were against applying the RS to agricultural tenancies, 40% for and 16% don’t know. It also recorded that the interface with agricultural tenancy legislation issue had been flagged up in many responses (“complex and unworkable”) but didn’t mention SLE’s specific warning about crofting.

The Consultation did, however, say (para 190) in relation to agricultural tenancies (farm and crofting): “Clearly there are a range of issues which need to be explored further prior to considering a minimum standard for condition. Ministers are, however, mindful of potential condition issues and are committed to undertake research.” That was footnoted with a reference back to the Official Report (transcript) of the discussion in the RACCE Committee of the Beamish amendment and the Minister’s warnings about the need for research and the “interface” with other legislation. The results of the research subsequently undertaken by Rural & Environmental Science and Analytical Services (RESAS) are here. It’s a survey of the physical condition of farm houses and cottages as revealed by a questionnaire sent to farm tenants but not crofting tenants. It was also sent to some landlords, though they are not identified, and returns from them reported on 930 “tenant farm houses”. I’d guess that did not include any croft houses.  

Thereafter, the Ministers for Rural Affairs (Fergus Ewing) and Housing (Kevin Stewart) announced their intention to legislate to apply the repairing standard to “rented agricultural housing” at an Agricultural Housing Summit on 1 October 2018. I haven’t been able to find any more detail about that except for this press release.

Housing Minister Kevin Stewart at the Scottish Parliament

The statutory instrument to amend the Housing (Scotland) Act 2006 [9] to add additional requirements to the repairing standard (RS) for all residential tenancies and apply it, as so extended, to agricultural tenancies from 2027 was subject to the so-called “affirmative procedure”. This requires a draft of it to be approved by the Scottish Parliament before it’s made by Ministers so it came before the Local Government & Communities (LGC) Committee of the SP on 30 January 2019 for them to take evidence prior to making a report to the full Parliament recommending whether or not the draft instrument should be approved. [10] The LGC Committee contained nobody who’d been on the RACCE Committee which considered the Land Reform Bill in 2016 when the application of the RS to agricultural tenancies was first raised so it’s possible the LGC members had little, if any, prior acquaintance with the issue.  They were, however, provided with a “policy note” (scroll to Annexe B, page 15) but, apart from stating that farm and crofting tenancies were to be brought under the RS and linking to the Consultation and analysis of responses thereto, it contained no discussion. The Committee was attended by the Housing Minister, Kevin Stewart, and two of his civil servants but, again, apart from the Minister stating that the draft instrument brought the “various types of housing under agricultural tenancies” under the RS in implement of the commitment made at the Agricultural Housing Summit last year, and one MSP querying the length of the lead in time to 2027, there was no discussion in the Committee of the implications for crofting or farm tenancies: the discussion – which lasted only 17 minutes – focussed instead on the additions to the RS and its application to holiday lets. The Committee agreed unanimously to recommend approval of the draft instrument and reported in these terms to the full Parliament which approved it on 6 February 2019. The instrument was made and signed by Kevin Stewart on 20 February and it came into force on 1 March 2019.

It’s very hard to avoid the conclusion that crofting tenancies were just tacked on to farm tenancies on the assumption they were the same thing and that not a moment’s thought about whether it was correct or appropriate to apply the repairing standard to them was ever given by anyone in authority – except possibly Claudia Beamish MSP (who’s amendment to the Land Reform Bill didn’t include crofts) and RESAS (who’s questionnaire was not sent to crofters). In particular, there doesn’t appear to have been any of the “qualitative and quantitative research” or consideration of the “interface with a range of legislation and policy areas” as regards the implications for crofting which the Scottish Government said would be necessary before extending the application of the repairing standard. [11]  

I shouldn’t be in the slightest bit surprised if the SG doesn’t even realise that, as one of Scotland’s biggest crofting landlords (Barra and large chunks of Skye), it has exposed itself to the potential for considerable liabilities. [12]

Crofts on Barra - picture credit Ian Watson
 
Footnotes
[1] That’s what the Housing Minister, Kevin Stewart, told the Scottish Parliament’s Local Government & Communities Committee on 30 January 2019 when explaining regulations he was introducing to amend the repairing standard: “The changes will require private rented housing to have ... a fixed heating system, which means that there will have to be a system or installation in houses for heating space and water.” (Official Report (transcript) of the meeting here, see Col. 27, 3rd para.) However, what s.13(1)(c) of the Housing (Scotland) Act 2006 as so amended now says (although note that the version linked to there doesn't have the reference to fixed heating because it's not in force yet) is: “the installations in the house for the supply of ... space heating by a fixed heating system and heating water are in a reasonable state of repair and in proper working order”. That doesn’t say there has to be a fixed heating system, merely that if one exists, it has to be in good condition. The same amending regulations added a new sub-section (7) to s.13 saying “In determining whether a house meets the standards of repair mentioned in subsection (1)(c) [heating system to be in good condition] ... regard is to be had to any guidance issued by the Scottish Ministers in relation to— ... installation of a fixed heating system.” As far as I can discover, no such guidance has yet been issued. Perhaps the Ministers intend to include in it a requirement to have a fixed heating system. But I’m not at all sure a positive obligation like that can be introduced by mere “guidance” one is only required to “have regard to”.
[3] Crofters (Scotland) Act 1993, s.6(3).
[4] Crofters (Scotland) Act, s.14(3) referring to the definition of “croft land” in s.12(3) which excludes the house.
[5] Official Report (transcript) of the Stage 2 RACCE Committee meeting here – see columns 45 (from “After section 97”) to 51
[6] In a parallel move to amending the repairing standard (RS) and applying it, as so amended, to agricultural tenancies, the Scottish Government intends to require all houses which are subject to the RS also to be brought up to at least Energy Performance Certificate Standard D ("EPC D") by 2025. Being EPC D won't be part of the RS, it's a separate standalone requirement which applies to houses which are subject to the RS and which will be enforced by local authorities with the sanction of civil penalties (as opposed to being enforced by the tenant as a matter of contract as a condition of his tenancy as is the case with the RS itself). 

Whether landlords of croft houses will be subject to the EPC D requirement from 2027 will depend on the devil in the detail of regulations to introduce it (being made under Chapter 3 of the Energy Act 2011, a UK Act) which haven't been published yet. For now, all I have to go on for the detail of the scheme is this guidance. The reason for hesitancy is that, as well as being subject to the RS, there is an another pre-condition for the EPC D requirement which is that the house has an Energy Performance Certificate (EPC) - see paras. 2.1.1 and 2.2.1 of the linked guidance. Aside from specialities such as participation Green Deals and Feed In Tariffs, a house generally only has to have an EPC if it has been sold or had a new tenancy of it granted since 2009 - see para. 2.6.1. Tenanted croft houses are never sold - if they change hands, what happens is that the tenancy is assigned (transferred) to a new tenant who continues with the same tenancy which will date back to long before 2009. Due to crofting security of tenure and the ability to assign and bequeath them, tenancies of croft houses very seldom come to an end such that the landlord is in a position to grant a new tenancy to trigger the requirement for an EPC. (I shouldn't be in the least surprised to be told this has never happened since 2009.) Thus, very few tenanted croft houses require to have an EPC nor will they in the future. That said, when I searched for assignations of crofting tenancies with houses on them for sale, out of the four I found, two of them advertised EPC ratings (one D, the other F). I'm guessing the estate agents advised the sellers, for the sake of £100, to get an EPC to avoid any argument with an over zealous Council enforcement officer that the assignation of a tenancy of a croft house is a "sale" of it for the purposes of the EPC Regs if not strict property law.

It will, therefore, depend very much on the exact wording of the forthcoming regulations for the EPC D upgrade by 2025 and whether they say it applies to houses covered by the repairing standard which require to have an EPC (which will exclude the overwhelming majority of tenanted croft houses) or to houses which happen to have one even though not required. The wording of the linked guidance rather suggests the latter which would be an odd way to legislate because it, in effect, gives tenants the right to opt in by paying £100 to get an EPC. Why not just say it applies to all tenancies covered by the RS?  

[7] The internal evidence in paras. 189 & 190 of the Consultation that crofts were not being discussed is that they state that “the landlord is responsible for replacing worn fittings” (which is true of many farm tenancies but not crofts) and “There are over 6000 agricultural tenancies in Scotland” (that is the number of farm tenancies: it does not include crofts).
[8] The Scottish Land & Estates response is here but to see their remarks about crofting, you have to access their original full response (a Word doc) linked to at the bottom of that page – see 2nd para. on page 37.
[9] The 2006 Act was amended by The Housing (Scotland) Act 2014, s.24 to add a new s.20A to the 2006 Act to allow the scope and application of the repairing standard to be varied by statutory instrument.
[10] Official Report (transcript) of the LGC Committee meeting here – start at column 26. Video here (after a few seconds it should snap to the start of the relevant discussion at about 11.03). Also under discussion at the same time was another draft SI, The Housing (Scotland) Act 2006 (Supplemental Provision) Order 2019, which is not relevant to the present discussion.
[11] The same legislation as applied the repairing standard to crofts has also applied it to Small Landholders Holdings (SLHs). That's because Reg. 2(2) of The Housing (Scotland) Act 2006 (Modification of the Repairing Standard) Regulations 2019 has also repealed s.12(1)(e) of the 2006 Act which excepted SLHs from the RS. SLHs are similar to crofts in the rest of Scotland outside the Crofting Counties although there are thought to be only about 60-70 SLHs left in existence – more information about them here. I've not discussed the implications of applying the RS to SLHs in this paper. Many of the points made in relation to crofting may apply equally to SLHs although I haven't refreshed my memory of the law of SLHs in order to be more definite: one big difference between crofts and SLHs is that tenants of SLHs have no statutory right to buy their houses or holdings like crofters do. The conclusion that the Scotgov gave crofts no thought in the legislative process definitely applies equally to SLHs, though.  
[12] The Housing (Scotland) Act 2006 binds the Crown (s.193) which includes the Scottish Ministers (s.193(5)(c)). Another public sector crofting landlord which will be affected by the application of the repairing standard to crofts is Shetland Islands Council which is the landlord of about 250 crofts. More information here. I didn't spot SIC amongst the Consultation responses.