Section 7 — Assignation and subletting of limited duration tenancies

Agricultural Holdings (Scotland) Bill: Stage 3 – in the Scottish Parliament at 10:00 am on 12th March 2003.

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Amendment 8 not moved.

Photo of George Reid George Reid Scottish National Party

Amendment 9 is grouped with amendments 10, 49, 11 and 12. If amendment 10 is agreed to, amendment 49 is pre-empted.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Amendments 9, 10 and 12 serve the same purpose. Section 7 provides for the assignation and subletting of limited duration tenancies and the amendments deal with the issue of the landlord's consent to any proposed assignation. It is important that, under the new vehicle of limited duration tenancies, tenants should have the freedom to assign their interests to another party. That is a freedom that is enjoyed, by and large, by commercial tenants of shops, offices and other commercial premises. The SNP simply believes that what is right for such businesses should also be right for the farming community and that we should not unduly constrain the tenant.

The effect of the amendments would be to ensure that the onus of proof in relation to the vital commercial issue of withholding consent to an assignation should plainly rest on the landlord and that the landlord should be in a position to thwart the assignation of the tenant's interest under a limited duration tenancy only if there is clear evidence for doing so.

Currently, the landlord can withhold consent if they are not satisfied on various issues. That is a subjective test. If the landlord declares that he is not satisfied, it is up to the tenant to demonstrate that the incoming tenant, or assignee, has the ability to pay the rent and maintain the land, and that they have the skills and experience required to maintain the land. I do not believe that the onus of proof should be on the tenant.

Furthermore, such issues can be used as negotiation tools in relation to other matters, and it would be wrong to give landlords that extra power. Equity demands that the tenant should have as wide a degree of freedom as possible in matters relating to the assignation of limited duration tenancies. My three amendments would achieve that.

I move amendment 9.

Photo of Allan Wilson Allan Wilson Labour 10:15 am, 12th March 2003

I note what Fergus Ewing has said about amendments 9, 10 and 12. He is seeking to adjust the basis on which a landlord can withhold consent to a proposed assignation so that the onus is on the landlord to demonstrate that the tenant would not have the ability to pay necessary costs or did not have the necessary skills and experience. However, we cannot support the amendments. Our approach is characterised by a desire to redress what we perceive to be the imbalance in the relationship between the landlord and the tenant in favour of the tenant, but to do so within a wider context of industry agreement.

I do not think that even Fergus Ewing would suggest that a landlord would voluntarily let land to a person whose skills, experience and ability to pay their dues were in doubt. However, his amendments could bring about a situation in which a landlord had to accept as a new tenant an assignee whose qualities could reasonably be questioned. I fail to understand why, in such a situation, a landlord would have to prove that the person to whom the lease is to be assigned has the ability to pay the rent, the ability to pay for adequate maintenance and the skills and experience to manage and maintain the land, when all those facts are within the knowledge of the tenant-to-be. The effect of the amendments would be to ask the landlord to prove a negative, when, all the while, the tenant-to-be would have the answers at his or her fingertips.

The provisions have been the subject of on-going consultation. We have not been aware of any concerns expressed by tenant representatives about the landlords' grounds for withholding consent under section 7(3).

I am not persuaded of the case for including amendment 11. That amendment is unnecessary because it does not affect the 30-day period that section 7(4) already provides for the landlord to withhold consent to a proposed assignation. If the landlord does not respond in that time—either to withholding consent or acquire the tenant's interest—there would appear to be no point in further delaying the tenant's ability to assign. Crucially, I understand that we have received no expressions of concern on this issue or on the bases on which a landlord may withhold consent under section 7(3), other than from the Law Society. If landlords are comfortable with those grounds, I see no reason to extend them further.

Amendment 49 is a drafting amendment that clarifies that the landlord may withhold consent from assignation if not satisfied that the proposed assignee will be unable to pay and so on.

Photo of Murdo Fraser Murdo Fraser Conservative

Fergus Ewing drew a comparison with the commercial lease of a shop or factory premises. Of course, in such leases, it is always the case that the onus is on the tenant to prove the case of an assignation—that was my experience of commercial law, at least.

Amendment 11 would add an additional subsection to section 3, to ensure that the assignee's ability to meet any of the tenant's other obligations under the lease was a further ground on which the landlord could object to the assignee. The reason for that is that the lease might have other clauses, such as a residence clause, to be complied with as well as the requirement to pay the rent due and to maintain the land adequately. The landlord should not have to accept the assignee if he does not believe that the assignee would be capable of fulfilling the terms of the lease. The amendment deals with an important point and would provide clarification.

With regard to the minister's comments, it may well be the case that landowners have not expressed concerns about this matter, but the fact is that the Law Society has. The Law Society represents solicitors who, on a daily basis, are involved in disputes between landlords and tenants and who advise landlords and tenants on aspects of the law. The minister cannot discount the Law Society's opinions out of hand. After all, it represents those who will have to deal with the bill when it is enacted—they will have to seek to interpret it and work with it daily. It is therefore important that the Law Society's views are taken into account, notwithstanding the fact that the landowners may not have picked up on technical points in the bill.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I oppose amendments 9 to 12. It was interesting to hear Fergus Ewing talking about a negotiating chip. He and Murdo Fraser are each, from their own perspectives, trying to unbalance the bill. The provisions that we are debating are about allowing the landlord to

"withhold consent to the proposed assignation if there are reasonable grounds for doing so".

The test of reasonableness is the key.

Murdo Fraser wants to take the provisions even further in the landlords' favour. The curiosity is that the Scottish Landowners Federation is quite content with the provisions.

Fergus Ewing wants to appear as the bastion of the anti-landlordism party in the Parliament—it seems to me that he is trying to carve out that niche for himself. If he does that and amendments 9, 10 and 12 are successful, he will unbalance the whole bill, which is carefully crafted to get the right results to free the tenanted sector in Scotland. I therefore oppose amendments 9 to 12.

Photo of Alex Fergusson Alex Fergusson Conservative

I am stunned by Mike Rumbles's supposition, which seems to be that, just because one body does not approve something, another body is not allowed to bring it up. It seems astonishing that Murdo Fraser is not allowed to lodge perfectly reasonable amendments on another body's behalf just because Mike Rumbles does not agree with them.

It will surprise nobody—certainly not Fergus Ewing—that the Conservatives will not support amendments 9, 10 or 12, because they reverse the onus of responsibility where the assignation of a lease is possible. It is well established—and has been established already in this short debate—that a tenant who wishes to assign a lease should demonstrate that their successor is able and competent to fulfil the lease's terms, not, as Fergus Ewing's amendments 9, 10 and 12 would mean, that the landlord should prove to the contrary. I am not being in any way judgmental, but it makes perfectly practical sense that the onus should be on the outgoing tenant and his successor.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I was interested in Alex Fergusson's comment that I said that Murdo Fraser should not have been allowed to lodge amendment 11. Does he accept that the interest groups and stakeholders have come up with the correct response to the process and that the Executive reflects that in the bill?

Photo of Alex Fergusson Alex Fergusson Conservative

They have come up with an agreed response, but that should not prevent others from challenging it if they feel that there is a challenge to be made. I cannot see any reason for Mike Rumbles's intervention on that point. He is obviously feeling touchy about some of the issues that we are discussing today. No doubt we will see more of that later.

As I said, I am not making a judgmental point, but it makes perfectly practical sense that the onus should be on the outgoing tenant and his successor. After all, the successor will take on responsibility for, and the future good management and husbandry of, the landowner's investment. It is only right that the successor should be competent to do so. As Murdo Fraser pointed out, that applies to a shop tenancy every bit as much as to a farm tenancy.

We will not support amendments 9, 10 or 12.

Photo of Allan Wilson Allan Wilson Labour

I see no reason to intervene in that internecine strife between the landed gentry.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The minister misrepresented the effect of amendments 9, 10 and 12 rather crassly. He said that, if those amendments were agreed to, the landlord would have to accept as an assignee someone whose financial standing he doubts. That would not be so. The landlord would have the right to establish that an assignee is not of the financial standing to be able to pay the rent or does not possess the capacity or the necessary skills and experience to maintain the land adequately. It is not a question of doubting or having to accept; it is a simple reversal of the onus of proof so that it rests on the landlord. I regard that as a step forward for the tenant. We will press amendment 9.

Photo of George Reid George Reid Scottish National Party

The question is, that amendment 9 be agreed to. Are we agreed?

Members:

No.

Division number 5

For: Adam, Brian, Canavan, Dennis, Ewing, Fergus, Fabiani, Linda, Gibson, Mr Kenneth, Grahame, Christine, Hamilton, Mr Duncan, Hyslop, Fiona, Ingram, Mr Adam, Lochhead, Richard, Marwick, Tricia, Matheson, Michael, McLeod, Fiona, Morgan, Alasdair, Neil, Alex, Paterson, Mr Gil, Robison, Shona, Stevenson, Stewart, Ullrich, Kay, White, Ms Sandra
Against: Aitken, Bill, Alexander, Ms Wendy, Baillie, Jackie, Barrie, Scott, Boyack, Sarah, Brankin, Rhona, Brown, Robert, Butler, Bill, Chisholm, Malcolm, Davidson, Mr David, Deacon, Susan, Douglas-Hamilton, Lord James, Eadie, Helen, Ferguson, Patricia, Fergusson, Alex, Finnie, Ross, Fraser, Murdo, Gillon, Karen, Godman, Trish, Goldie, Miss Annabel, Gorrie, Donald, Grant, Rhoda, Henry, Hugh, Home Robertson, Mr John, Hughes, Janis, Jackson, Dr Sylvia, Jackson, Gordon, Jamieson, Cathy, Jamieson, Margaret, Jenkins, Ian, Johnstone, Alex, Lamont, Johann, Livingstone, Marilyn, Lyon, George, Macdonald, Lewis, Macintosh, Mr Kenneth, Maclean, Kate, Martin, Paul, McAllion, Mr John, McAveety, Mr Frank, McCabe, Mr Tom, McIntosh, Mrs Lyndsay, McLeish, Henry, McMahon, Michael, McNeil, Mr Duncan, McNeill, Pauline, McNulty, Des, Monteith, Mr Brian, Morrison, Mr Alasdair, Muldoon, Bristow, Mulligan, Mrs Mary, Mundell, David, Munro, John Farquhar, Murray, Dr Elaine, Oldfather, Irene, Peacock, Peter, Peattie, Cathy, Radcliffe, Nora, Robson, Euan, Rumbles, Mr Mike, Scanlon, Mary, Scott, Tavish, Simpson, Dr Richard, Smith, Elaine, Smith, Iain, Stephen, Nicol, Stone, Mr Jamie, Tosh, Mr Murray, Wallace, Mr Jim, Watson, Mike, Whitefield, Karen, Wilson, Allan

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

The result of the division is: For 20, Against 72, Abstentions 0.

Amendment 9 disagreed to.

Amendment 10 not moved.

Amendment 49 moved—[Allan Wilson]—and agreed to.

Amendment 11 moved—[Murdo Fraser].

Photo of George Reid George Reid Scottish National Party

The question is, that amendment 11 be agreed to. Are we agreed?

Members:

No.

Division number 6

For: Aitken, Bill, Davidson, Mr David, Douglas-Hamilton, Lord James, Fraser, Murdo, Goldie, Miss Annabel, Johnstone, Alex, McIntosh, Mrs Lyndsay, Monteith, Mr Brian, Mundell, David, Scanlon, Mary, Tosh, Mr Murray
Against: Adam, Brian, Alexander, Ms Wendy, Baillie, Jackie, Barrie, Scott, Boyack, Sarah, Brankin, Rhona, Brown, Robert, Butler, Bill, Canavan, Dennis, Chisholm, Malcolm, Deacon, Susan, Eadie, Helen, Ewing, Fergus, Fabiani, Linda, Ferguson, Patricia, Finnie, Ross, Gibson, Mr Kenneth, Gillon, Karen, Godman, Trish, Gorrie, Donald, Grahame, Christine, Grant, Rhoda, Hamilton, Mr Duncan, Henry, Hugh, Home Robertson, Mr John, Hughes, Janis, Hyslop, Fiona, Ingram, Mr Adam, Jackson, Dr Sylvia, Jackson, Gordon, Jamieson, Cathy, Jamieson, Margaret, Jenkins, Ian, Lamont, Johann, Livingstone, Marilyn, Lochhead, Richard, Lyon, George, Macdonald, Lewis, Macintosh, Mr Kenneth, Maclean, Kate, Martin, Paul, Marwick, Tricia, Matheson, Michael, McAllion, Mr John, McAveety, Mr Frank, McCabe, Mr Tom, McLeish, Henry, McLeod, Fiona, McMahon, Michael, McNeil, Mr Duncan, McNeill, Pauline, McNulty, Des, Morgan, Alasdair, Morrison, Mr Alasdair, Muldoon, Bristow, Mulligan, Mrs Mary, Munro, John Farquhar, Murray, Dr Elaine, Neil, Alex, Oldfather, Irene, Paterson, Mr Gil, Peacock, Peter, Peattie, Cathy, Radcliffe, Nora, Raffan, Mr Keith, Robison, Shona, Robson, Euan, Rumbles, Mr Mike, Scott, Tavish, Simpson, Dr Richard, Smith, Elaine, Smith, Iain, Stephen, Nicol, Stevenson, Stewart, Stone, Mr Jamie, Ullrich, Kay, Wallace, Mr Jim, Watson, Mike, White, Ms Sandra, Whitefield, Karen, Wilson, Allan

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

The result of the division is: For 11, Against 81, Abstentions 0.

Amendment 11 disagreed to.

[Amendment 12 not moved.]

Photo of George Reid George Reid Scottish National Party

Amendment 50 is grouped with amendments 51, 52 and 13.

Photo of Ross Finnie Ross Finnie Liberal Democrat

Section 7(5) allows the landlord to acquire the tenant's interest in the tenancy on terms that are

"no less favourable to the tenant than the terms upon which the proposed assignation was to have been made."

Amendment 52 will ensure that, where the landlord acquires the tenant's interest in place of a proposed assignee, the terms under which he or she does so relate to any reasonable terms that a proposed third party might have offered. I note that amendment 13 in Murdo Fraser's name seeks a similar purpose. I hope that the action that we propose in amendment 52 will allow him not to move amendment 13.

Amendments 50 and 51 are drafting amendments to better reflect the standard terminology that is used on interests under leases.

I move amendment 50.

Photo of Murdo Fraser Murdo Fraser Conservative

The purpose of amendment 13 is to ensure that any proposed assignation must have involved a bona fide third party. That is intended to avoid the possibility of collusion between assignor and assignee with a view to inflating the price. However, I listened with interest to what the minister said and, in view of the wording of amendment 52, I will not move amendment 13.

Amendment 50 agreed to.

Amendments 51 and 52 moved—[Ross Finnie]—and agreed to.

Amendment 13 not moved.

Photo of George Reid George Reid Scottish National Party

Amendment 53 is grouped with amendments 68, 69, 107 and 108.

Photo of Allan Wilson Allan Wilson Labour 10:30 am, 12th March 2003

At stage 2, the Rural Development Committee accepted amendments from my colleague John Farquhar Munro that prevent the eviction of a tenant "on grounds of irritancy" for reason of their non-residence on the farm. I undertook at that stage to lodge further amendments to reflect landlords' legitimate interests, and the package of amendments that we have lodged in this group tidies the issue up. Some of the amendments relate to section 17, which applies to limited duration tenancies and to short limited duration tenancies. Other amendments adjust section 57, which applies to tenancies under the Agricultural Holdings (Scotland) Act 1991.

Amendment 53 is a technical adjustment, which adds a definition of "good husbandry" to section 7. Amendments 68, 69, 107 and 108 clarify for the avoidance of doubt that a landlord cannot use the fact that a tenant is undertaking diversified activities—which are of course permitted under the bill—as a ground of bad husbandry, which would enable the landlord to irritate the lease.

I move amendment 53.

Amendment 53 agreed to.