Reading about the Moonzie farm rent case in Fife, details of which I’ll get to later, was another reminder that if at all possible, lawyers and courts should be avoided, even by tenant farmers driven to distraction by a rent review. Many have learned that too late and to their cost, no matter how many warnings are flagged up.
In the old Scottish NFU headquarters in Edinburgh there was a woodcut of three men and a cow – one farmer was hauling at the cow’s head, another its tail, and the lawyer was sitting on a stool in between milking hard.
Another joke comes to mind:a mild dispute between two hill farmers that they thought would be better settled legally. The lawyer for one sent a note to a colleague: “Twa fat hoggs frae the braes o Balquhidder – you shear yin, I’ll shear the ither.”
My own favourite, from America, is the man who spat, was fined two dollars on the spot, wanted to pay, but was urged by his lawyer with him at the time to fight the case. He was dragged off shouting: “Pay the two dollars.”
After losing home, job, family, money, he did eventually win his case. Congratulated by his lawyer, he said: “Won! I’ve lost everything. That’s what I think of the law.” And he spat. As his lawyer shouted “We’ll take it all the way to the Supreme Court!” the man was hauled away, crying: “For God’s sake, pay the two dollars.”
My sentiments exactly. So much so that ever since I saw that story I’ve used “Pay the two dollars” as a catchphrase for anything that threatened to turn something minor into a big issue.
It could be argued that a rent increase is not a minor consideration, but it is compared with the years of litigation and expense that the Moonzie case has turned into.
The most recent development is that the Lord Justice Clerk, Lord Gill, with the agreement of fellow judges at the Court of Session, overturned a decision by the Scottish Land Court that that had effectively been in the Moonzie tenant’s favour.
As I understand his finding, Lord Gill ruled that the fundamental mistake by the Land Court was to base a rent for Moonzie on what he called “the method of last resort”, a farm budget. There are many reasons, he said, why a credible rent offer on the open market would exceed what a profit/loss budget for a farm might suggest.
Hands up anyone who has ever made a tenancy offer who doesn’t agree, reluctantly or otherwise, with that? Think of the optimism, hope, and heart-over-head that goes into some tenancy offers and the connection between an open market offer and a farm budget is tenuous at best.
The case revolved largely around whether the entitlement to the Single Farm Payment – annual subsidy – should be taken into account when agreeing a rent. The Land Court ruled it should not. Lord Gill said it should. It is a subsidy, he said, and the tenant could only unlock it by occupying land (belonging to the landowner.)
In short, Lord Gill ruled that the Land Court’s conclusion that a fair rent for Moonzie of £30 an acre at the time of the original dispute was wrong. Rent for comparable holdings was £60-£65. Rent under a short limited duration tenancy nearby was £90.
I don’t know what size Moonzie is. I don’t know what has led tenant and landowner to such lengths. I do know that the legal fees will by now have dwarfed any rent increase and that if and when this dispute is ever settled, another three-year rent review from 2011 has to be agreed.
Small wonder that demands are being made for a cheaper and simpler method of rent dispute resolution.
Nigel Miller, NFU Scotland president, said: “There are successful landlord-tenant relationships, but the number of breakdowns is increasing. All can lead to lengthy, costly proceedings.”
However, Phil Thomas, chairman of the Tenant Farming Forum which has representatives of tenants, landowners, chartered surveyors and the NFU, said, in effect, that Lord Gill’s ruling was interesting, but not necessarily a watershed change for rent assessments; not everyone agreed with Lord Gill’s “primacy of the open market” as a basis for farm rents.
Hmm. I met Lord Gill when, as Brian Gill, QC, he published the definitive legal guide to farm tenancies in the early 1990s. I’ve spent time with him on a couple of occasions since. Good company, but not a man, I think, likely to change his mind or a ruling. I suspect that any other farm rent case reaching the Court of Session would produce the same result.
But in spite of disputes, demand for tenancies is unabated and recent news of more available from Buccleuch Estates and the Forestry Commission was welcomed. Now the Crown Estates have announced details of four new tenancies in north-east and south-west Scotland “to encourage new entrants with drive and innovation.”
Want to bet that there will be no shortage of applicants, some offering open market rents that bear little relation to a farm budget except in their imaginations?