Minutes of the Tenant Farming Forum
held at Bidwells, 5 Atholl Place, Perth
19th October 2012
Chairman:Phil Thomas
Secretariat:Scott Walker (NFUS) and Ailsa Anderson (SL&E)
STFA:Angus McCall and Christopher Nicholson
NFUS:Nigel Miller and Tom Johnston
SL&E:Robert Balfour, Andrew Howard and Richard Blake
RICS:Andrew Wood
SG:Gordon Jackson, Alan Barclay and Fiona Leslie
Law Society:Colin Clark
- Apologies and welcome
The Chairman welcomed everyone to the meeting and thanked Andrew Wood for the use of the meeting room at Bidwells.
Apologies were received from Martin Hall.
- Minutes of the previous meeting – 7th August 2012
Robert Balfour suggested better English was required in the paragraph relating to the website minutes of 25th June 2012. It was agreed that this section should only read, ‘approved’ and the second sentence would be deleted.
Action 1 – Secretariat to redraft and re-circulate.
- Matters arising/ action points
Action points
Matters Arising/ Action points – 25th June
Action 1 – List of Members and Addresses – any amendments to be emailed to Scott Walker – All members.
Complete.
Model Arbitration for disputes
Action 2 – SAAVA to produce a list of guidance notes for TFF website. (Carried forward from meeting of 24th February 2012).
In progress but see below.
Nigel Miller stressed the urgency to see this action to an end. Andrew Howard supported this view and asked the Chairman if SAAVA could explain why there has been a lengthy delay. The Chairman agreed and said he would follow this up with SAAVA directly. (Action 3). The Chairman thought that consideration of the Arbitration (Scotland) Act 2010 may be a contributing factor.
Andrew Howard suggested that the TFF should not forget about the route of mediation and he believed that many lawyers may support this method. Colin Clark agreed, indicating that arbitration is only one alternative to the Land Court. Angus McCall said that it was important to look at the problem first to know which route to go down to resolve a dispute.
Scott Walker raised concern about the likelihood of mediation and arbitration being used as an alternative to the Land Court and suggested that the December meeting should focus on the issue of dispute resolution. The Chairman referred to a conversation with Lord McGhie. A provisional meeting on10th December had been arranged for Lord McGhie and David Houstoun to meet with the TFF. It would be useful to have the SAAVA paper and the RRWG report to help inform the questions to be put to Lord McGhie.
Tom Johnston stressed that tenants want a fast, robust process that they can afford. Robert Balfour replied by stating that landlords wanted the same thing.
Wildlife and Natural Environment (Scotland) Act –vicarious liability
Action 3 – Scott Walker to circulate paper prepared by Scottish Land & Estates. To be discussed at next meeting.
(Action 4-Scott Walker to circulate paper). [Post meeting note – Action completed].
Action 4 – Fiona Leslie to speak to colleagues within the Scottish Government. (Carried forward from meeting of 28th May 2012).
Fiona Leslie provided update. She said that she had spoken to the branch responsible and that they would want to see the TFF paper before making comment.
It was agreed that the issue of vicarious liability remain on the agenda.
At this point the Chairman said that the other actions would be discussed during the main agenda.
Matters arising
The Chairman said that he had received a letter from the clerk to the RACCE Committee stating that the Committee would be monitoring the progress of the TFF as part of their own work programme looking at agricultural tenancies. The Chairman was also invited to report to the Committee at various stages as TFF work streams conclude.
It was agreed that the positive side of the Committee’s interest is that they anticipate the findings of TFF work streams. A negative may also be seen in the continued line of interest and level of involvement the Committee wish to have.
It was agreed that the Chairman would suggest that he reports to the Committee in one sitting rather than piecemeal.
- Route Map Work Plan – Existing work streams
Investment
Members were referred to the paper prepared by Colin Clark on holdings investment dated June 2012.
Colin Clark provided a brief overview of the paper and stressed that the biggest issue for all parties was to understand from the outset what happens at the end of a tenancy.
The Chairman thought the process to be complicated and asked members if a change in the law was required. Andrew Howard responded by suggesting that problems arise when the process has not been followed and there was also a sticking point in the valuation of assets when there is a difference of opinion.
Christopher Nicolson believed that tenants have difficultly with landlords who refuse permission and that they feel the only option is to go to the Land Court. Andrew Howard suggested this would be a prime case for short form arbitration.
Robert Balfour agreed with the issue of valuation and also raised a question over disputes because there is a lack of, or no robust, paper trail. Angus McCall referred to discussion from 2002 relating to the definition of ‘core equipment’ which was subsequently not dealt with in the legislation.
Christopher Nicolson said that there was a grey area relating to write down agreements. Fiona Leslie responded by stating that it is not possible to legislate for particular scenarios. The Scottish Parliament would require the financial and the ECHR implications due to the risk of affecting landlord’s private property rights.
There would also be the possibility of affecting people who would otherwise by unaffected. Andrew Wood explained that, where major infrastructure is being constructed, there is often some sort of deal between landlord and tenant. Any changes to the law could result in the tenant being liable to pay for rent previously foregone.
Nigel Miller referred to the Chairman’s early question on the issue of the need to change the law. He believed that there was no issue with the law as it stands. Andrew Howard agreed, but suggested that it may be appropriate to make provision for tenants to challenge landlord’s refusal to compensate for improvements. Angus McCall supported this..
Fiona Leslie said that consideration could be given to addressing occasions where an agreement is made verbally in good faith but without written agreement.
The Chairman provided a summary, reaffirming that the TFF view was that it was not a question of the law requiring to be changed but clear guidance should be produced by TFF. Whilst there are grey areas, he believed that TFF agreed that these cannot be resolved by further legislation. The need for a paper trail is essential if either party is to have a valid claim for compensation over investments made on a holding.
Scott Walker asked members if the TFF guide could include a list of essential records that must be kept. Fiona Leslie agreed that problems should be identified and resolved long before waygo. Angus McCall stressed the importance that an on going record of condition be kept.
Andrew Howard believed it would be useful for parties to understand who is responsible for other aspects of the holding such as asbestos, electricity and fire assessment.
Richard Blake informed members that if the concern is that paperwork may go missing then there is always the option to register documents and correspondents in the Books of Council and Session.
It was agreed that:
- for post 2003 investments the TFF should promote guidance and good practice, and
- for pre 2003 investment the TFF should promote evaluation of the holding by the landlord and tenant to establish if there is any difference of opinion.
Angus McCall suggested that short form arbitration could be used to sort out the facts.
Andrew Wood reminded members that either party has a statutory right to have a Record of Condition carried out. However this is seen as an expensive route and it is certainly beneficial if parties can agree to its completion at commencement. Members were referred to section 61 of the 2003 Act and section 8 of the 1991 Act.
Discussion took place on write down agreements. Colin Clark referred to the Telfer case in which expired write down agreements were disregarded. However this is not a general rule that can be applied to all cases.
Christopher Nicolson stated that write down agreements were common pre 2003.
Andrew Wood reminded members that a frequent Record of Condition would flush out disputes. Andrew Howard said that there are more disputes relating to value rather than ownership and that this would be a classic case for arbitration.
Angus McCall reminded members that politicians would be watching what progress the TFF makes. Andrew Wood suggested that there was support around the table to make recommendations and take necessary action.
Nigel Miller said there was a need to unlock issues surrounding aging tenants who do not retire from holdings due to a fear that they will not get what they feel they are entitled to by way of compensation for improvements they have made during the lifetime of the tenancy. Andrew Wood believed that this was a cash flow problem and that there needed to be a mechanism to deal with this. Tom Johnston suggested that, in the future, tenants would be investing more than their landlord and there was a risk that if the landlord cannot pay compensation then neither would the incoming tenant. Andrew Wood said that, in this instance, the parties would have to revert to the law and the force the landlord to meet statutory obligations.
Colin Clark stated that, in his opinion, the law was pretty clear but suggested that problems arise in its interpretation.
Robert Balfour thought that it was reasonable that a grain store on an arable farm would be considered as ‘core equipment’. Christopher Nicolson believed the TFF should publish its interpretation of what it considers to be ‘core equipment’. The Chairman said that, while TFF could do that, there may still be disputes between parties on specific circumstances. Andrew Howard said that the sector was at a point where the legislation in this area was not going to get much better. If changes were to be made there might be a marginal gain with the potential for high unintended consequences.
Richard Blake referred members to the Land Registration (Scotland) Act 2012 which will affect agricultural leases of over 20 years duration. All documents associated with such a tenancy must be registered. Angus McCall suggested that if progress was to be made with a Register of Lease/ Rents then a similar mechanism may be possible. Christopher Nicolson welcomed the idea of registration of appropriate paperwork.
In summary, it was agreed that there was no need for a change to the legislation on improvements, but TFF should make a recommendation for post and pre 2003 leases as above. In particular there should be active encouragement of the use of a regular Record of Condition to agree on ownership of improvements long before waygo.
It was also agreed that TFF would explore further the registration of documents and that representative organisations should investigate and encourage registration of important paperwork in the Books of Council and Session to ensure that such paperwork is preserved.
Action 5 – Chairman to respond to RACCE Committee suggesting that TFF report to them at the end of all work streams rather than on a topic basis.
Action 6 – TFF, though Bidwells, to produce Record of Condition template.
- Update on Route Map Work Plan – Future work streams
Assignation
It was agreed that this would be discussed at the next meeting.
- Rent Review Working Group
Members were informed that the RRWG received over 100 responses to their call for views. The RRWG had also met with all relevant organisations. The final report is on schedule.
Andrew Wood informed members that the RICS is currently in discussion on its guidance on marriage value and scarcity.
Nigel Miller enquired if the RRWG were to present their final view to TFF. Alan Barclay stated that the RRWG are to meet on Monday 22 October to brainstorm and Colin Clark is to attend this meeting. Thereafter the recommendations would be submitted to TFF and the Scottish Government.
It was agreed that it would be useful for the RRWG to present their findings to TFF in advance of the next TFF meeting.
- TFF membership fees
Members were informed that an invoice for fees would be sent out shortly.
- Any other business
New Entrants Panel
Gordon Jackson stated that the NEP had expressed interest in the work steam and was asking how to engage with the TFF.
It was agreed that a representative of the NEP would be invited to attend a future TFF meeting. (Action 7).
It was agreed that Peter Cook’s report and the SAC report on barriers to entry be circulated to the NEP. (Action 8-Scott Walker).
SDLT/ LBTT
Gordon Jackson explained that the Land and Buildings Transactions tax would apply to agricultural leases from 2015. The TFF would be invited to nominate a person to sit on the Law Society group.
It was agreed that Fiona Leslie report on the make up of the group before the TFF puts forward its nominee. (Action 9).
Richard Blake suggested that the TFF may wish to consider a tax lawyer from a broad based law firm. Andrew Wood endorsed this.
It was also noted that changes may be made to SDLT in relation to complex leases in 2013. It is possible that these will impact on agricultural leases. Scottish Government was encouraged to discuss this with Her Majesty’s Treasury. Concern was expressed that the industry may have to deal with two changes to an already complex area in a short period.
Land Reform review
Members were provided with a verbal summary of the expert panel appointed to look at land reform and their call for views.
Andrew Howard said that he found it strange that ARTB has popped up when the Scottish Government publically had ruled out ARTB. The Chairman enquired if the expert panel was working to their remit?
Angus McCall noted Jeff Maxwell’s appointment to the review panel.
It was agreed that the TFF should engage at an early stage .There was a need for the TFF to submit a response to the call for views which closes on 11th January 2013. (Action 10). It was also agreed that the TFF should meet week commencing 7th January2013 to agree on the TFF response.
Data work stream
It was expected that work on the survey would commence early 2013. However clarity was required on individual questions. The data work stream working group is to meet to discuss the survey questions.
- Future meeting dates
Date: Monday 3rd December
Time: TBC
Location: Edinburgh
Agenda: RRWG and dispute resolution
Date: Monday 10th December
Time: 3pm
Location: Edinburgh
Agenda: Meeting with Lord McGhie
Date: Week commencing 7th January – dates to be circulated. (Action 11)
Time: TBC
Location: TBC
Agenda: Response to Land Reform review group
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