Reflections on “Land Rights and Land Responsibilities: An Audience with the Chair of the new Scottish Land Commission”

This blog post is by Malcolm Rudd, a recent Diploma in Professional Legal Practice graduate of the University of Aberdeen.

On 26 May 2017, the King’s Conference Centre at the University of Aberdeen hosted a lecture and panel discussion about Scotland’s land as part of the May Festival. This event built on a series of events that Malcolm Combe (a Lecturer at the School of Law) and colleagues at the University of Aberdeen have hosted on the topic of land reform, as digested on this blog.

Making More of Scotland's Land
(L-R): Anne-Michelle Slater; Andrew McCornick; Annie McKee; Malcolm Combe; Andrew Thin.

Andrew Thin, Chair of the Scottish Land Commission (Coimisean Fearainn Na H-Alba), provided the keynote presentation. He introduced that new body, which became fully operational on 1 April 2017, and said a few words about the forthcoming Land Rights and Responsibilities Statement, before considering what it and the Land Reform (Scotland) Act 2016 could mean for the management, use and regulation of land in Scotland.

The Scottish Land Commission was established under Part 2 of the new legislation. It is a Non-Parliamentary Departmental Body (or “Quango”), not completely independent of the Scottish Government but somewhat distanced. There are five land commissioners and one tenant farming commissioner with a range of experience and expertise of business, planning, science and public service.

Andrew Thin’s presentation was entitled “Making More of Scotland’s Land”. The principle of “more for more”, it was explained, will underpin the work of the Commission. Not “more” merely in the traditional sense of productivity, but in bringing greater benefits from the land to more of Scotland’s people. The forthcoming Land Rights and Responsibilities Statement, which is provided for in Part 1 of the 2016 Act, is intended to balance rights and responsibilities relating to land using a human rights based approach. The Scottish Government recently consulted on the contents of the Statement, and the Commission’s response (PDF) to that noted anxiety about ambiguity of language and lack of clarity of outcomes. Thin then outlined that the Commission’s role is to encourage flourishing communities, minimise dispute and pursue more diverse and disaggregated land ownership. Its strategic plan for 2018-2021 and some Codes of Practice relating to tenant farming (with agricultural tenancies being an ongoing issue for rural Scotland) will not be released until after the General Election on 8 June 2017.

Following Thin’s address members of an expert panel (reflecting sectoral, geographical and planning expertise) each contributed their perspective on the Statement and land reform policy.

The panel, led by Malcolm Combe, comprised:

Andrew McCornick, President of NFU Scotland
Dr Annie McKee, Social researcher in land management, The James Hutton Institute
Anne-Michelle Slater, Head of School, University of Aberdeen School of Law

Anne-Michelle Slater spoke first, addressing the role which planning law could play in land reform. Andrew McCornick raised his concern as to the perceived unclear trajectory of land reform. He explained that many farmers (both tenants and owners) felt overburdened by bureaucracy and were suspicious of what could be a threat to current land-based activities. Annie McKee focussed on community engagement and transparency in her contribution.

The audience were given an opportunity to ask questions and hear the response of the panel. Wide ranging discussion followed. There were questions about environmental matters, including biodiversity and water quality. Linked to this was land use, in particular forestry and deer management, and there was discussion about tenant farming (and the recent review of it) and the problem of rural community depopulation. One audience member, Professor Roderick Paisley of the School of Law, used the example of a farmer whose ownership allowed him to stay on land earmarked for the Trump International Golf Links to highlight the protective role that property rights can play. The questions were somewhat rural in focus, but it should be borne in mind that land reform policy also affects urban Scotland, that being a point Thin made in his presentation. Thin also stressed the Commission’s intent to engage with communities across Scotland (indeed, only the night before, such an event was held at Thainstone Mart in Inverurie).

The development of land reform in Scotland has been gradual. It will be fascinating to see the effect of the Scottish Land Commission and the Land Rights and Responsibilities Statement on the relationship between Scotland’s people and Scotland’s land. Perhaps this event, and indeed this blog post, might play a small role in highlighting that development.

To follow the event as it happened, relevant tweets from the @RuralLaw account can be found here.

Malcolm Rudd has recently worked as a research assistant at the School of Law, looking at aspects of land law with Malcolm Combe, with the support of the Carnegie Trust for the Universities of Scotland. He presented a paper on land reform and succession (inheritance) at a conference on 26 August 2016, also at the University of Aberdeen.

Comparing Legal Cultures – An Introduction to Scottish Legal Culture

This blog post is by Dr Andrew Simpson.

I was very pleased to be able to contribute to the recently-published Comparing Legal Cultures (Bergen: Fagbokforlaget, 2017), edited by Jørn Sunde, Søren Koch and Knut Skodvin, all of the University of Bergen, Norway.

Comparing Legal Cultures

This book was primarily written to introduce undergraduate students at Bergen to one intriguing way of studying comparative law. It uses a model developed by Professor Sunde to compare and contrast different aspects of legal cultures.

Sunde defines legal culture as “ideas and expectations of the law made operational by institutional (-like) practices”. He treats the “ideas and expectations of the law” as part of the “intellectual structure” of a legal culture. By contrast, the ways in which those “ideas and expectations” are made “operational” are seen as being part of the “institutional structure” of that culture.

To study the “institutional structure” involves an examination of both the systems of conflict resolution – e.g. hierarchies of courts – and also the systems of norm production – e.g. statutes and case-law. To explore the “intellectual structure” involves studying what is termed the “idea of justice” at work, the “legal method” employed, the degree of “professionalisation” present and the influence of “internationalisation”. To explain further, the term “idea of justice” can refer to the extent to which a legal system privileges the establishment of legal certainty over other considerations in the decision-making process. For example, my own article uses the sagas underpinning the decisions in Sharp v Thomson and Burnett’s Trustee v Grainger – which are well-known in Scottish property law circles – to explore the Scottish “idea of justice”. The term “legal method” refers to the ways in which lawyers extract rules from legal sources; “professionalisation” is fairly self-explanatory; and “internationalisation” as a broad category refers in part to the openness of a legal culture to what may be termed “outside” influences.

Thus Sunde’s analysis provides six elements of legal culture for comparison: conflict resolution, norm production, idea of justice, legal method, professionalisation, and internationalisation. He discusses and defends the utility of this model for comparing legal cultures in more detail here (PDF). (The quotes given above can be found in this article.) The model is used as an analytical tool at Bergen to help students to begin to compare and contrast differences between the six elements of legal culture. The aim is that they will then be able to move on to understand and explain them. Yet very little literature existed to facilitate teaching based on this model. Consequently, Sunde assembled a team of academics to use the model in analysing their own legal cultures, with a view to publishing a book presenting the results. My Scottish contribution sits alongside articles written to introduce English, French, German, Austrian, Estonian, Finnish and Chinese legal cultures.

An Introduction to Scottish Legal Culture
Simpson’s chapter in Comparing Legal Cultures

Perceptions of Corruption and Corporate Mobility: Malta as a real-time case study

This blog post is by Justin Borg-Barthet, a lecturer in EU law and Private International Law. Dr Borg-Barthet is the author of The Governing Law of Companies in EU Law (Hart/Bloomsbury 2012) and several other publications on corporate mobility. He recently formed part of a steering committee overseeing an extensive study for the European Commission on the law applicable to companies.

It is fairly well-established that cost is the primary driver for corporate choice of law and the choice of the physical location of a company’s business. Becht et al, for example, note that entry cost is the primary consideration for choice of corporate law. These authors also note that non-price factors in choice of law have been minimised through the intervention of intermediaries. Recent developments in Malta, however, suggest that non-price factors have some bearing on choices of establishment destinations in the internal market, at least insofar as they concern physical location as opposed to mere choice of law.

By way of background, following the publication of the Panama Papers, allegations concerning kickbacks have emerged involving the current Maltese Prime Minister, his chief of staff, a close aide, and a senior minister. I make no comment here on specific allegations. I am concerned, rather, with the effects of perception on inter-jurisdictional competition for incorporation and physical relocation of businesses.

Anecdotal evidence has emerged suggesting the some companies seeking to relocate from the United Kingdom to an EU-27 jurisdiction are influenced in their choices by the reputation of regulators. Hiscox Ltd, in particular, has chosen to situate its EU business in Luxembourg, having weighed up Malta and Luxembourg as its final shortlist. This cannot be explained with reference to entry cost. Operational costs in Malta are significantly lower than those in Luxembourg. Nor can it be explained with reference to familiarity with laws. Relevant Maltese laws are closely modelled on UK acts, whereas Luxembourg is of a civilian tradition. The key, instead, appears to be in Hiscox’s reference to Luxembourg’s “well-respected regulator”. It is not beyond reasonable interpretation to read this statement in its broader context; that is to say that the alternative regulator is no longer as well-respected, and that this affected choice.

Of course, this could be an isolated example. But it is consistent with the notion that choices of law and physical location are motivated by more than cost; or, more accurately, more than direct pricing. As noted by Devrim Dumladag, among others, ‘corruption in the political system is a threat to foreign investment’. It constitutes a risk which cannot be measured accurately, and which therefore cannot be accounted for with any degree of precision. Perception, therefore, is important. In 2017, Malta dropped ten places in the international Corruption Perception Index. Risk, therefore increased.

What is more, further evidence is emerging of a direct correlation between the ability to exploit the internal market and political reputation. It emerged on 14 May 2017 that, as a consequence of money laundering concerns, Commerzbank AG will no longer accept at face values audits conducted by branches of international firms situated in Malta. There have been no legislative changes in Malta which could have informed Commerzbank’s decision. The motivator appears instead to be political and administrative developments. It seems, therefore, that political branding matters.

Indeed, branding could, in principle affect not only physical corporate mobility, but also the legal fiction of mobility in the form of choice of corporate law. Drury argues, albeit in a quite different context, that a choice of corporate law – and with it the national suffix attached to a company name – affects public perception of a company. ‘Such labels give that company a distinctive national flavour in the minds of the public.’ Clearly then, it is not just the price of entry that would affect incorporation decisions, but also the associations arising from the national label which comes with incorporation.

This suggests that further evidence may emerge of downturns in the establishment of legitimate businesses under Maltese law. In other words, it is quite likely that both de facto and de jure mobility in the internal market may be affected by perceptions of corruption. While any evidence will likely be anecdotal in the absence of sustained academic investment, there is certainly some scope to qualify assumptions concerning price as a driver for corporate mobility.

Panama Papers.jpg

High Court orders UK Government to publish air pollution plan by Professor Florian Becker

The High Court ordered the Government to publish its strategy against air pollution on the 9th of  May.   European Union Law obliges the UK to develop and publish a plan to reduce nitrogen dioxide levels in the air to an acceptable level. For quite a while now, the development and the publication of this plan has been a controversial issue between the Government and environmental NGOs.

Such a plan might contain controversial and unpopular measures. Accordingly, the Government was not too keen to have the plan published before the local and general elections. To justify this reluctance it referred to the constitutional convention that there has to be a limit to government (and civil service) announcements with political implications during the pre-election period. One reason for this limitation is quite obvious: it is the parties and their candidates who are battling (re-) election, not the Government. It must not get involved and government (tax payers’) resources or authority must not be used in this battle, because it would be unfair to the opposition that does not have similar resources or departments at its disposal. This explanation, however, only makes sense when popular measures are at stake and the Government tries to raise the image of the supporting parties. Additionally, limiting the ability of Government to initiate potentially controversial policies with long term effects protects the freedom of manoeuvre for a new government (possibly supported by other political parties) and that government might have completely different views on a certain matter.

In this particular case, the Government probably tried to hold back discussion about measures against air pollution, because everyone agrees that pollution has to be tackled, but very few people accept that they have to give something up to reach this objective. Holding back the publication was probably not so much about protecting the fairness of the election and the political scope for potential successors, but more about avoiding a potentially damaging controversy. However, of course, the country cannot come to a standstill during the pre-election period and Government has to keep fulfilling legal obligations.

Image courtesy of pixabay.comairquality

Shell decommissioning of the Brent Platform – haven’t we been here before?

In February 2017 Shell lodged plans to the Department for Business, Energy and Industrial Strategy (DBEIS) to undertake the decommissioning of offshore petroleum installations in the Brent Field, located in the North Sea, north east of the Shetland Islands. The Brent field is an iconic field, having commenced production in 1976, producing a sweet light crude oil that has been used as a benchmark crude, serving as a reference price against which other crudes are measured. However, given the decline of production from the Brent field, the Brent benchmark crude now comprises a mix of crudes from the Brent, Forties, Oseberg and Ekofisk Fields in the North Sea.

The Brent field is a giant field with installations to match: the topside of the 4 platforms being removed range between 16,000 and 31,000 tonnes. Three of the Brent installations (Bravo, Charlie and Delta) comprise concrete legs, known as ‘Gravity Based Structures’ (GBSs) (also known as Condeep Structures), which vary between 290,000 and 340,000 tonnes. In its detailed decommissioning plan that has been lodged with DBEIS, Shell recommends that the three GBSs remain in place, since they cannot be refloated or dismantled in one piece. This is seen as the best option based on technical, safety and cost grounds. Shell proposes to remove the top of the installations and seal the GBSs with concrete caps, and fit navigation aids. The decision to leave the GBSs in place has not been taken lightly. In its Decommissioning Plan, Shell outlines the reasons for leaving these structures in place. In particular, Shell stresses that these supports are made from very thick concrete with steel bars and solid ballast, and were anchored down during installation by flooding the legs with water. The GBSs were not intended to be removed once they had been placed on the seabed, and at the time these platforms were designed and installed, there was no requirement to remove such structures. These GBSs have been extensively used in the North Sea (both in the UK and Norwegian Sectors) as they provide the best stability in the rough North Sea, and have the added advantage of enabling oil to be stored in them if required.

It is Shell’s recommendation to leave the Brent GBSs in place that have united environmental groups to oppose the plan. This is not the first time that Shell, or the decommissioning of Brent Field installations, has come to the international attention. In 1995, after three years of evaluation of options, Shell was authorised by the UK Government and the OSPAR Convention (the Convention for the Protection of the Marine Environment of the North-East Atlantic) to dispose of the Brent Spar, an oil storage and tanker-loading buoy from the Brent Field, on the North Feni ridge, in over 7,000 feet of water. What followed was international outrage, with Greenpeace playing a lead role. At the heart of the opposition was the contention by Greenpeace that over 5,500 tons of oil remained in the Brent Spar, a figure countered by Shell who said only 50-100 tonnes remained. After a series of protests and boycotts in Germany and Northern Europe, Shell withdrew their plan to scuttle the Brent Spar in deepwater, with the Spar instead dismantled by Det Norsk Veritas in a Norwegian fjord. Soon after the withdrawal of the plan to scuttle the Brent Spar, the UK Energy Minister called the Greenpeace campaign ‘completely misleading’, leading to a public apology by Greenpeace for its mistake in the estimation of the amount of oil remaining in the Spar.

In the latest controversy to affect the Brent Field, environmental groups claim that the proposed decommissioning plan may be in breach of international law. The two main international law instruments related to the decommissioning and disposal of disused installations is the United Nations Convention of the Law of the Sea (UNCLOS) and the OSPAR Convention. Under UNCLOS, there are a number of general duties to protect the marine environment, particularly Articles 191 and 192. The primary law relating to the OSPAR convention is the decision of the OSPAR Commission after the Brent Spar incident, known as OSPAR Decision 98/3 on the Disposal of Disused Offshore Installations. Under this decision, the dumping or leaving in place (wholly or partly) of disused offshore petroleum installations is prohibited within the OSPAR maritime area (which covers the Brent Field). There are, however, exceptions to this prohibition, including:

  • steel installations weighing more than ten thousand tonnes in air;
  • gravity based concrete installations;
  • floating concrete installations;
  • any concrete anchor-base which results, or is likely to result, in interference with other legitimate uses of the sea.

Given the weight and nature of the structures, it is well within the OSPAR convention exceptions to leave the structures in place, in line with the ability to remove the GBSs, and whether it is safe to do so.

Indeed, it is important to realize that there are instances where the removal of a structure may well pose a greater threat than leaving it in place. Such a threat can be to the environment itself (such as the debate surrounding the rigs to reef program) and safety to those undertaking the removal of the installation. Indeed, in the 2000s the MCP-01 concrete platform, located in the North Sea, was decommissioned. The MCP-01 was also a GBS, containing 386,000 tonnes of ballast. After a consideration of all possibilities for removal, the decision was made to leave the subsea GBS structure in place, with as much of the equipment and materials as practicable removed from the concrete substructure and reused/recycled. The primary reason for this decision was the risk to workers, particularly those involved in demolition, marine operations and offshore diving operations.

Whatever decision the UK government makes regarding the decommissioning plan for the Brent Field, it is essential that considerations beyond environmental groups’ interest be considered. Such a decision on whether to leave the GBSs in place need to also consider the safety of those undertaking the removal and recycling, and whether more environmental harm will be caused by removing a 300,000 tonne structure that has been in place for over 40 years. Whatever happens, the ensuing debate regarding this issue is sure to be interesting.

Blog by Professor Tina Hunter

 

Small holdings, big complexities

This blog post, by Malcolm Combe, originally appeared as an online article for the Journal of the Law Society of Scotland, available here. It is reproduced here with permission.

The law relating to leases of rural property in Scotland has long been an area replete with special considerations. There is a surfeit of statutory regulation in relation to crofting and agricultural holdings, but rural considerations flow from before that surfeit: for example, a rule about delectus personae to restrict assignation (Bell’s Principles, 1216).

Crofts (governed by the Crofters (Scotland) Act 1993, as copiously amended), and agricultural holdings (whether a “1991 Act” tenancy or one of the more recently introduced fixed-duration tenancies in terms of the Agricultural Holdings (Scotland) Act 1991 or the Agricultural Holdings (Scotland) Act 2003, both as extensively amended) are relatively well known. Those dabbling in rural matters can normally be on guard for these. But for the unwary and perhaps even unlucky solicitor, a small landholding might be chanced upon in a transaction.

Small landholdings are a type of rural lease that can be found outwith the traditional crofting counties (of the Highlands and Islands) that are not quite governed by the agricultural holdings regime. They have not – yet – been much affected by Holyrood legislation, save for s 6 of the Crofting Reform etc Act 2007, which amended the Crofters (Scotland) Act 1993 to allow small landholdings to be converted into crofts in areas outwith the traditional crofting counties but now designated as new crofting areas (namely Moray, the Cumbraes, Arran and Bute, per the Crofting (Designation of Areas) (Scotland) Order 2010, SSI 2010/29), and now part 11 of the Land Reform (Scotland) Act 2016. It is as a result of that more recent amendment that small landholdings will now find themselves subject to a bit more legislative attention.

History and current status

The statutory system of crofting was introduced to parts of Scotland by legislation passed in 1886, but the rest of Scotland had to wait until 1911 before its smallholdings were subjected to similar, and rather powerful, statutory control. The Small Landholders (Scotland) Act 1911 essentially expanded the system introduced by the Crofters Holdings (Scotland) Act 1886 to the whole of Scotland, bringing in control for matters like compensation for improvements (namely what a landlord would have to pay a tenant for any works introduced by the tenant) and security of tenure (meaning the ability of a tenant to hang around on land even at the end of the original term of a lease, provided rent was being paid and other obligations complied with). The Crofters (Scotland) Act 1955 then reintroduced the division between Highland and Lowland Scotland, leaving the 1911 Act and the 1886 Act (and indeed many other Acts) to govern leases of small landholdings outwith the crofting counties.

To this far from simple system, an extra layer of complexity can be introduced. The 1911 Act actually introduced two different regimes, where someone who rented a smallholding could be a “landholder” or a “statutory small tenant” (in terms of s 32 of that Act), depending on whether it was the landlord or the tenant (or indeed a predecessor of either of them) who had built the structures used for that smallholding. Generally speaking, a statutory small tenant has less in the way of statutory rights than a landholder.

For a variety of reasons, there are not that many of these regulated leases still in existence. Notwithstanding that relatively low number – which seems to be settled at 74 (yes, seventy-four) – there has been a perception that these leases have been ignored when other leases have not. In part, any neglect is ably demonstrated by the mass of legislation about crofting and agricultural holdings, but of course the low number of small landholdings also explains that lack of legislative attention. That point notwithstanding, it may be the case that parties to such leases do not have a particularly clear handle on what arrangement they have, not to mention that there are arguments about whether such arrangements are suitable for the present day, and as such it is a worthwhile exercise to have a look at small landholdings.

Modern reform?

To this mix, s 124 of the Land Reform (Scotland) Act 2016 can now be added. This was the result of a Scottish Green Party amendment at stage 3 of the then bill. It committed Scottish ministers to: (a) review the legislation governing small landholdings; and (b) lay a report of that review before the Scottish Parliament no later than 31 March 2017. This the Scottish ministers have done. The report can be found here.

The report is an impressive piece of work. (I declare an interest, in that I had some limited input to it: a couple of drafts were circulated to me and I commented on them. To be clear though, I declare that interest to give the credit to those that deserve it.) A lot of people inputted to this document, and of course those directly affected by the proposals (the landlords and tenants) provided data for the exercise, so any credit is due to them. This post has skimmed over some of the details about small landholdings, whereas the report goes into the background, the current regime, and the potential for the future in detail.

To offer some selected thoughts on the report’s interpretation of the future, it essentially narrows down three options, namely:

  • the status quo;
  • conversion to another type of tenancy; or
  • reform and modernisation.

The report then suggests two of them are not appropriate, as: maintaining the status quo would lead to further diminution of numbers of small landholdings (with unclear effects on rural Scotland); whilst mass conversion of small landholdings into another type of tenancy is just not quite suitable (as, for example, you could end up with crofts outside traditional and even recently expanded crofting areas, not to mention that it could have an uncertain effect on already settled positions between landlord and tenant). In passing, the report also tells us (at para 133) that to date, no small landholder in one of the new designated crofting areas has converted. Such small landholdings would be prime candidates for conversion, so this seems to show either that there is no appetite for conversion or that the existing conversion process is not appealing.

That leaves the reform and modernise option. Much could be said about this, but the two key issues that came up in consultation with respondents related to clarity of legislation (which is a bit of a bùrach across many statutes at present) and a right to buy. As regards the potential for a right to buy of any sort, irrespective of the undeniable politics of such an option it is clear that small landholdings missed out on such rights in 1976 (when an absolute right to buy was conferred on crofters) and 2003 (when a right of first refusal was given to secure 1991 Act tenants of an agricultural holding).

What next?

The Scottish Parliament will get the chance to ponder the report, but para 170 sets a number of future steps. Some of these might involve the Scottish Law Commission, the new Tenant Farming Commissioner, and the Crofting Commission. Other steps could involve researchers looking into historical data and trends relating to small landholdings, and (either related to that historical research or independently) the likely socio-economic impact of them in the present day.

To conclude, despite the relatively low numbers of small landholdings in Scotland, there is a lot of work to be done in relation to them. I will be watching carefully to see what happens next. Meanwhile, anyone who has to deal with the legislative regime will be praying a more user-friendly system emerges at the end of this process, while those directly involved with Scotland’s remaining small landholdings will be watching even more carefully than me to ensure that any new regime is workable both for modern agriculture and as a part of a healthy rural environment in Scotland.

The Fifth Element: Exclusive Possession in the Scottish Law of Leases

This blog post is by Mitchell Skilling, a 2016 LLB (Hons) graduate. It is based on the presentation he gave at the launch of the seventh volume of the Aberdeen Student Law Review, itself based on an article that he wrote for that volume.

At a common law level, the Scottish contract of lease is made up of four elements:

  1. parties acting as landlord and tenant;
  2. a property to be leased;
  3. payment of rent; and
  4. a period over which the contract has effect, which in Scots could be described as a definite ish (or end date).

Combined, these four requirements afford each party a personal contractual right enforceable against the other. A contract lacking one or more of these requirements is instead likely to be a contract of licence. However, there is a fifth element that lurks outside of this four-element paradigm: exclusive possession of the leased subjects by the tenant.

Under the Leases Act 1449, a tenant entering into possession of their leased subjects will, provided that the four elements are present, gain a real right enforceable against their landlord’s singular successor. This cannot be achieved with a licence agreement, which will only ever afford a personal right. Possession here has been clarified to mean exclusive possession (Millar v McRobbie 1949 SC 1, 8). Similarly, the various Housing Acts in the social and private rented sectors as well as the Agricultural Holdings Acts have used exclusive possession as a mechanism for obtaining security of tenure, a powerful right that protects the tenant against eviction without a legal ground, even past the end date of their lease.

From this, it would appear that exclusive possession plays no role in the construction of a common law lease, and that it is rather used only to obtain additional rights once that lease has been established. However, there appears to be a growing school of thought that it is an essential requirement on par with the other four. This was the opinion of Sheriff Gordon in the case of Conway v Glasgow City Council (1999 Hous. LR 20), which related to accommodation in a hostel for homeless people.

In that case, Sheriff Gordon stated that the law had ‘come increasingly to talk of exclusive possession as a necessary condition of a lease.’ To support this proposition, he cited the earlier case of Commercial Components (Int) Ltd v Young (1993 SLT (Sh Ct) 15). That case was an appeal to a Sheriff Principal in which it was said that exclusive possession was ‘one of the badges of a lease.’ In addition, Sheriff Gordon was persuaded by the defender’s arguments relating to the case Brador Properties Ltd v British Telecom Plc (1992 SC 12), which came before the Inner House of the Court of Session. The pursuer in the Conway case had tried to use Brador as authority for exclusive possession not being a feature of a lease, but Sheriff Gordon felt that it was in fact consistent with exclusive possession being a requirement of a lease as it was concerned with the question of what needed to be exclusively possessed.

Whilst Conway proceeded to appeal, it was ultimately decided on the basis of another, more successful, argument made by the pursuer, based on contractual rights unrelated to a tenancy. This meant that no further comments were made about Sheriff Gordon’s opinion on leases. This is a pity, as it is clear that these comments are not wholly consistent with the most likely readings of those two cases.

In the case of Brador, the idea that this case is consistent with exclusive possession as an element of a common law lease is at odds with its treatment of Street v Mountford ([1985] 1 AC 809), a case that is authority for this requirement in England and Wales. The Inner House stated that Street was of no assistance in this case, which suggests that their comments on sufficient possession instead related to an unspoken degree of possession that would rule out a lesser agreement.

Meanwhile, the reading of the term ‘badge of a lease’ from Commercial Components seems stretched in its interpretation. The word ‘badge’ does not suggest an essential element so much as an obvious, but not definitive, outward sign that something is the case, akin to a learner driver plate affixed to a car. Whilst it suggests a highly likely conclusion, it is not an absolute guarantee, and to treat it as such seems to go too far.

Later case law developments also seem to count against Sheriff Gordon’s interpretation of a lease. Denovan v Blue Triangle (Glasgow) Housing Association (1999 Hous LR 97), another hostel case decided later in the same year as Conway, did not use exclusive possession as a requirement of a lease, instead only bringing it in as something to be considered with legislation that first required a tenancy to be established. In the 2005 case of South Lanarkshire Council v Taylor ([2005] CSIH 6), it was held that a lease existed even with a contractual clause forcing the tenant to vacate their property at any time within a short notice period.

A final nail in the coffin for Conway came in the Land Court case of Cameron v Alexander. The landlord’s arguments in this case were strongly based on Sheriff Gordon’s opinion, however the court did not find them a persuasive authority. Instead, it stated that exclusive possession was an ‘important pointer’ in determining the nature of an indeterminate agreement, which seems more consistent with the ‘badge of a lease’ comment from Commercial Components.

Despite these comments, it may still be possible that there is a valid argument for including exclusive possession among the cardinal elements of a lease.

One such argument relates to legal certainty: that is, with a view to clarifying the distinction between leases and licences. Historically, the licence agreement has been rarely used in Scotland compared with its application south of the border, but in recent times the term has appeared more frequently in litigation. As such, a definitive difference between the two may be necessary in order to prevent future disputes. That being said, the introduction of a possessory requirement is not the only way to accomplish this. There is currently no statutory definition of a licence agreement, and while several texts have defined the term, no single one has become definitive. The creation of such a definition, rather than a modification of another type of contract, may serve as a better basis for distinguishing between the two.

Another argument for exclusive possession is that many types of lease now afford access to security of tenure, a right arguably greater than a personal right for its ability to keep a tenant in their property even past their ish date (assuming the landlord has no legal ground on which to evict them, such as non-payment of rent). Access to this right shifts the balance of power firmly in favour of the tenant, so perhaps the balance should be corrected by making those rights harder to access.

That being said, it has been observed by commentators such as Stalker that the various residential tenancy acts seem to have been designed to extend security of tenure to as many people as possible, so the introduction of a possessory requirement may go against the intentions of Parliament. Additionally, the introduction of a fifth element to benefit only one type of lease ignores the diversity present in the Scottish lease, which encompasses a broad variety of rights, some of which are not dependent on possession in order to be exercised.

Exclusive possession, then, is probably not the best means by which to distinguish leases from licences. What is required is a mode of distinction that respects the unique character of the Scottish lease and recognises the exact nature of the difference between the rights conferred by a lease and a licence.

The full article may be found in Volume 7 of the Aberdeen Student Law Review , which is available for free online viewing.