8 August 1997

Challenge to land leasing partnership fails in Scots court

By Allan Wright

LIMITED partnerships have been accepted by three Scottish law lords as a legitimate way of leasing land.

The device has been in operation in Scotland since 1970 and is the basis for most new leases.

But, Aberdeenshire farmer, Andrew Macfarlane, who entered two such five-year arrangements in 1987, had challenged their legality, claiming full agricultural tenancy rights when the terms expired in 1992.

Mr Macfarlane argued that the partnership contracts were a pretence and asked the court to nullify them and grant him continuing tenancy.

But Lord Roger said he could find no basis to suggest that the parties were not bound by the the terms of the partnership contracts. And Lords Kirkwood and Murray agreed.

Scottish NFU legal adviser Ian Melrose welcomed confirmation that limited partnerships were a valid means of setting up an agricultural tenancy. The union had favoured limited partnerships to the farm business tenancies adopted in England.

The Scottish Landowners Federation has also welcomed the legal clarification. "Unless there is a further appeal, properly constituted limited partnership agreements will continue to provide a vehicle for letting agricultural land without creating security of tenure under the 1991 Act," said vice-convener Robert Balfour.

But he also called for a new form of lease, without security of tenure beyond an agreed period, which would be simpler and cheaper to operate.