Shepherd and Wedderburn
11 Experts
4 Contributions by Shepherd and Wedderburn
PRACTICE NOTES
Loan market and developments Overview
Broadly, Scotland’s loan market mirrors that of England. Financial services regulation operates on a UK‑wide basis; a substantial body of legislation governing companies and other corporate vehicles (including corporate insolvency) likewise applies across the UK; and all Scottish clearing banks conduct business in every UK jurisdiction, as do their counterparts across the UK. In practical terms, this means English law governed loan documents typically require minimal amendment for UK cross‑border lending transactions. There are, however, some differences in terminology and certain statutory variations that must be allowed for; beyond those matters, an English law loan document and a Scots law loan document are closely aligned. It is commonplace, for example, for English law loan agreements to be deployed in Scottish lending transactions. The principal divergences between the jurisdictions arise in relation to property law and to the law
Banking & Finance
PRACTICE NOTES
STOP PRESS
The Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) obtained Royal Assent on 26 October 2023. Part 1 of ECCTA 2023 comprises a significant suite of measures that bolster the function of Companies House and increase the transparency of UK corporate entities, furthering the openness of UK corporate bodies. The ECCTA 2023’s provisions will be introduced gradually over time, over an extended period. Numerous elements of the statute depend on detailed secondary legislation and guidance, alongside the development of fresh technical systems and tools to deliver the changes.
For further details, see Practice Notes: The Economic Crime and Corporate Transparency Act 2023—what Banking & Finance lawyers need to know and The Economic Crime and Corporate Transparency Act 2023—tracker.
This Practice Note draws out the practical distinctions between legal entities in Scotland and those in England and Wales. It also addresses the legal
Banking & Finance
PRACTICE NOTES
This Practice Note reviews the law on registering security created on or after 6 April 2013 by a company or limited liability partnership (LLP) registered in Scotland. The framework is set out in Part 25 of the Companies Act 2006 (CA 2006), given effect by the Companies Act 2006 (Amendment of Part 25) Regulations 2013, SI 2013/600 (for companies) and the Limited Liability Partnerships (Application of Companies Act 2006) (Amendment) Regulations 2013, SI 2013/618 (for LLPs). It highlights where Scots law departs from the law of England and Wales, namely:
registrable charges under Scots law
forms required to register security at Companies House
the date on which a registrable security is created
deeds of alteration needing registration (such as ranking agreements and intercreditor agreements)
enforcement of
Banking & Finance
PRACTICE NOTES
Types of security
Under Scots law, the range of security interests is narrower than those available in English law. The form of protection depends on the particular class of asset being charged. This Practice Note reviews the securities obtainable over particular asset types before addressing the floating charge, a form of security that may be created by Scottish companies or limited liability partnerships.
Fixed security
Land and buildings
The recognised fixed security over real estate assets in Scotland, available to both individuals and companies, is the standard security. A standard security may be granted over an interest in land that is recorded or registered in the General Register of Sasines or the Land Register of Scotland. Note the General Register of Sasines ceased to accept, among other matters, recording of new standard securities from 1 April 2016. From that day, a borrower granting security over a
Banking & Finance
27 Contributions by Shepherd and Wedderburn Experts
PRACTICE NOTES
For many years, virtually every disagreement about agricultural tenancies was sent to arbitration at the outset. The rationale was that questions concerning agricultural holdings often have a strong practical dimension, so arbitration was thought a more suitable forum than the courts. This reflected the earlier assumption that practical considerations predominated in such cases, making a court reference less apt back then. Over time, however, matters of considerable legal intricacy also came before arbitrators. With the enactment of the Agricultural Holdings (Scotland) Act 2003 (AH(S)A 2003), policy shifted, and the main route for resolving disputes about agricultural tenant issues is now referral to the Scottish Land Court. At the same time, arbitration procedures were streamlined, and alternative processes, eg mediation, were enabled. Although the Agricultural Holdings (Scotland) Act 1991 (AH(S)A 1991) still sets out distinct mechanisms for dispute resolution, AH(S)A 2003 has
Property
PRACTICE NOTES
Diversification at common law
Diversification, i.e. employing the holding for a non-agricultural end not authorised by the lease, would, at common law, amount to a breach of the lease and, in many instances, could additionally trigger a conventional irritancy, in appropriate circumstances and contexts, by the landlord as well. For more detail, see: Diversification: Stair Memorial Encyclopaedia [107K].
Statutory Diversification
Part 3 of the Agricultural Holdings (Scotland) Act 2003 (AH(S)A 2003) confers on agricultural tenants a right to diversify by putting the land to a non-agricultural use. That right extends to 1991 Act Tenancies and to 2003 Act Tenancies, save for short limited duration tenancies (SLDTs). Although diversification may, at common law, constitute an inversion of possession and change the character of the lease from that of an agricultural holding (to which the Agricultural Holdings (Scotland) Acts apply), if—and only if—the statutory process is
Property
PRACTICE NOTES
Agricultural tenants’ right to buy
An agricultural tenant’s entitlement to purchase was established in Scotland by the Agricultural Holdings (Scotland) Act 2003 (AH(S)A 2003). It is a pre-emptive, rather than an absolute, right to buy, because a tenant may exercise it only when the owner proposes to sell the tenanted land concerned. This Practice Note explains the right to buy as it was enacted in AH(S)A 2003. A statutory right to buy under AH(S)A 2003 applies solely to tenants whose agreements are regulated by the Agricultural Holdings (Scotland) Act 1991 (AH(S)A 1991), commonly referred to as 1991 Act tenancies (see Practice Note: Agricultural holdings in Scotland—snapshot—1991 Act Tenancies). The practical background and context behind introducing the right to buy is that:
1991 Act tenancies may continue indefinitely, and
a 1991 Act tenancy markedly depresses the value to the owner of a piece of
Property
PRACTICE NOTES
The rules regarding Scottish electronic documents and their execution are contained in:
Requirements of Writing (Scotland) Act 1995 (RW(S)A 1995)
Assimilated Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market (as amended by the Electronic Identification and Trust Services for Electronic Transactions (Amendment etc) (EU Exit) Regulations 2019) (UK eIDAS)
Land Registration etc (Scotland) Act 2012 (LRE(S)A 2012)
Electronic Documents (Scotland) Regulations 2014, SSI 2014/83
Land Registration etc (Scotland) Act 2012 (Commencement No 2 and Transitional Provisions) Order 2014, No 41 (C 4) (2014 Order)
Land Register of Scotland (Automated Registration) etc Regulations 2014, SSI 2014/347
Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 (LW(CD)(S)A 2015)
The Law Society of Scotland has produced a third edition of its guidance on electronic execution of documents: Law Society of
Commercial
PRACTICE NOTES
The Agricultural Holdings (Scotland) Act 1991 (AH(S)A 1991) requires that every tenancy created under it (1991 Act Tenancies) contains specified maintenance obligations. Similar—though not identical—provisions appear in the Agricultural Holdings (Scotland) Act 2003 (AH(S)A 2003) for short limited duration tenancies (SLDTs) of up to five years, limited duration tenancies (LDTs) of at least ten years, and modern limited duration tenancies (MLDTs) running for ten years or more. These are collectively termed 2003 Act Tenancies. See Practice Note: Agricultural holdings in Scotland—snapshot.
Definition of fixed equipment
Section 85 of AH(S)A 1991 defines ‘fixed equipment’ to include:
all man-made works on the land—such as drains, bridges, fences and tracks—together with buildings and any installed machinery of whatever kind
anything cultivated on the land for a purpose other than use after severance, consumption of what is grown or its produce, or amenity—for example, hedges and shelter belts of
Property
PRACTICE NOTES
Letting farmland is tightly governed by law. In Scotland, ordinary commercial leases are influenced by statute only to a limited extent, whereas for agricultural property the opposite applies...
Types of Agricultural Leases
There are four categories of agricultural lease:
1991 Act Tenancies, often termed ‘traditional’ or ‘secure’ tenancies, regulated by the Agricultural Holdings (Scotland) Act 1991 (AH(S)A 1991)
2003 Act Tenancies, of which there are several forms, regulated by the Agricultural Holdings (Scotland) Act 2003 (AH(S)A 2003)
grazing tenancies
unusual tenancies, principally liferent leases and indefinite tenancies, which are not covered in this Practice Note
Crofting tenancies distinguished from agricultural leases
Although a lease in legal terms, a croft tenancy held by the crofter constitutes the primary interest in the croft land occupied. Landlords of crofts hold very limited rights. While a croft began in its 19th-century origins as a small area of land
Property
PRACTICE NOTES
Contractual and statutory basis of rent review and time intervals Tenants under 1991 Act
Tenants with 1991 Act tenancies enjoy strong security of tenure together with statutory tacit relocation. While parties may set out rent review terms within the lease itself, rent adjustment is, subject to that, governed by the Agricultural Holdings (Scotland) Act 1991, s 13 (AH(S)A 1991), which provides for variations in rent once the contractual ish has passed and at specified intervals thereafter. As the vast majority of 1991 Act leases continue on tacit relocation, rent review is, in almost all instances, determined by AH(S)A 1991, s 13. This statutory scheme cannot be excluded by agreement, although the parties may consensually alter the rent at any time. In Moll v McGregor 1990 SLT (Land Ct) 59 (not reported by LexisNexis®), one lease dated from 1944 and another from an earlier period. In 1977 the
Property
PRACTICE NOTES
2003 Act Tenancies
Most tenancies under the 2003 Act—SLDTs, LDTs, MLDTs and, when commenced, repairing tenancies—are presently continuing on their contractual term rather than by tacit relocation. At the moment SLDTs and LDTs remain in being and, where the lease is silent, rent reviews fall under section 9 of the Agricultural Holdings (Scotland) Act 2003. From 1 December 2017, the creation of new LDTs ceased (subject to the transitory provisions in the Land Reform (Scotland) Act 2016 (Commencement No. 6, Transitory and Saving Provisions) Regulations 2017 (SSI 2017/299)), and MLDTs became available. Repairing tenancies have yet to commence, but the provisions outlined in this Practice Note will also apply to them. The rent review approach assumes the landlord is deemed to let not the farm as it stands, but only the farm benefiting from those items of fixed equipment provided by the
Property
PRACTICE NOTES
A lease of agricultural land will often feature a provision enabling the landlord to take back part of the holding in specified situations. For 1991 Act Tenancies, resumption is mainly controlled by the lease terms, aside from rules on the tenant’s entitlement to compensation. A landlord may only recover land from an agricultural holding under a 1991 Act Tenancy where the lease expressly grants that authority. In Pigott v Robson (1958 SLT 49 (not reported by LexisNexis®)) it was found that the lease terms were not sufficiently wide to permit the landlord to resume in order to farm the ground personally. There are no statutory resumption rights for 1991 Act Tenancies under the Agricultural Holdings (Scotland) Act 1991 (AH(S)A 1991). For 2003 Act Tenancies, the Agricultural Holdings (Scotland) Act 2003 (AH(S)A 2003) permits the landlord to resume in short limited duration
Property
PRACTICE NOTES
Statutory Powers
To assist in resolving disputes, the LTS exercises a range of powers granted by statute in relation to:
modifying or extinguishing title conditions, see: Powers as respects title conditions: Stair Memorial Encyclopaedia [224]
public sector tenants’ rights to buy their homes, see: House sales to public sector tenants: Stair Memorial Encyclopaedia [226]
challenged compensation for compulsory purchase of land, or diminution in land value arising from public works, see, eg: Compulsory purchase of land: Stair Memorial Encyclopaedia [666]
appeals against specified decisions of the Keeper of the Registers of Scotland, see: Questions relating to the accuracy of the Land Register: Stair Memorial Encyclopaedia [225]
appeals concerning valuation of land for pre-emptive purchase by community bodies, see Practice Notes: Rights to buy affecting land in Scotland—snapshot, Part 2 community right to buy and asset transfer requests in
Property Disputes
PRACTICE NOTES
Scots contract law
Although they have separate origins, Scots contract law has, in many respects, drawn closer to the English position. English-law notions such as undue influence and anticipatory breach have been taken into Scots contract law, and some leading authorities coincide across both systems. Nonetheless, there remain important differences that it is sensible to keep in view. The aim of this Practice Note is to point out some of the key differences between Scots and English contract law in these areas...
Commercial
PRACTICE NOTES
The framework for execution of documents under Scots law is set out in the Requirements of Writing (Scotland) Act 1995 (RW(S)A 1995) and the Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 (LW(CD)(S)A 2015). This Practice Note reviews both the traditional approach to execution and execution by counterpart under Scots law.
Contracts or obligations that must be in writing
In Scotland, the default position is that a contract, a unilateral obligation, or a trust can be constituted without writing. Writing is, however, necessary for the following exceptions to that rule:
contracts, or unilateral undertakings, to create, transfer, vary or extinguish a real right in land (excluding tenancies or rights of occupation for less than a year and private residential tenancies)
the creation, transfer, variation or termination of a real right in land
an agreement between neighbouring proprietors regarding the accretion or erosion of their common
Commercial
PRACTICE NOTES
The current administration of the agricultural subsidy schemes in Scotland
The management of Scotland’s farm subsidy programmes is run by the Scottish Government Rural Payments and Inspections Department (RPID), also referred to as the Agriculture Food and Rural Communities Directorate (AFRCD). RPID oversees a range of EU and National subsidy schemes, largely through the Integrated Administration and Control System (IACS)—hence the term ‘IACS Forms’. Despite ongoing computer difficulties, applicants must still complete the necessary forms, in hard copy or online, typically each year and by scheme-specific closing dates, to secure subsidy. Following the UK’s withdrawal from the EU, the Scottish Government has had to establish its own legal framework to adjust the effect of retained EU law related to the Common Agricultural Policy (CAP), and to facilitate the collection and processing of agricultural data. Sections 1–12 of The Agriculture (Retained EU Law and Data)
Property
PRACTICE NOTES
This Practice Note outlines the grounds and scope of irritancy in 1991 Act Tenancies (regulated by the Agricultural Holdings (Scotland) Act 1991 (AH(S)A 1991)) and 2003 Act Tenancies (regulated by the Agricultural Holdings (Scotland) Act 2003 (AH(S)A 2003)), namely the following:
short limited duration tenancies (‘SLDTs’)
limited duration tenancies (‘LDTs’), and
modern limited duration tenancies (‘MLDTs’)
Legal and conventional irritancy in 1991 Act Tenancies
A 1991 Act Tenancy can be terminated prematurely on the ground of legal irritancy or conventional irritancy, where legally relevant.
‘Legal’ or statutory irritancy provisions
AH(S)A 1991, s 20 makes provision for legal (statutory) irritancy in 1991 Act Tenancies. It permits an action to remove the tenant at the next Whitsunday or Martinmas (28 May or 28 November) after the action is duly raised in the sheriff court where six months’ rent of an agricultural holding is owed and unpaid. The
Property
PRACTICE NOTES
Agricultural tenants’ improvements and tenants’ fixtures in agricultural tenancies
There are key distinctions between improvements made by agricultural tenants and tenants’ fixtures in agricultural tenancies. This Practice Note sets out those distinctions and summarises the respective duties and rights of landlord and tenant in clear terms. It expressly excludes the ‘improvements amnesty’ contained in section 34A of the Agricultural Holdings (Scotland) Act 1991 (AH(S)A 1991).
At common law, fixtures and other additions introduced by the tenant revert to the landlord on expiry of the lease.
Because many agricultural leases endure for long periods, and may continue indefinitely by succession, the AH(S)A 1991 permits tenants to enhance the let holding and receive compensation from the landlord for such works when the tenancy ends.
Broadly, in all agricultural tenancies except repairing tenancies and grazing lets (subject to differing rules for the various tenancy types), landlords must supply the fixed
Property
PRACTICE NOTES
When disagreements arise in property transactions, parties typically have a number of avenues for resolving matters, each bringing its own benefits and drawbacks. This Practice Note explores those routes and provides examples of the types of property dispute that may lend themselves to settlement through alternate dispute resolution (ADR).
ADR in property disputes
It is well recognised that ADR can be an effective method of resolving disputes, especially in property disputes and other commercial transactions. ADR is:
efficient
cost-effective
capable of producing settlements that courts may not be able to replicate
more imaginative than judicial awards
tailored to the commercial needs of the parties
At present, ADR is not compulsory in Scotland, so it is not a necessary pre-requisite to legal proceedings; however, practitioners still have obligations to advise on, and consider, ADR...
Property Disputes
PRECEDENTS
Subscribed by
[ insert name of individual ], acting as [ General Partner OR Authorised Signatory ], for and on behalf of [ insert name of limited partnership ] ________________________ [ General Partner OR Authorised Signatory ] (Signature) in________________________(city) dated________________________ (date of signing)...
Commercial
PRECEDENTS
Subscribed for and on behalf of [ Name of Company ]
signed by ________________________ [ Director OR Secretary OR Authorised Signatory ] for and on behalf of [ insert name of corporate director or secretary ], as [ Director OR Secretary ] (Signature) ________________________ Full name of signatory (please print) at______________________ (city) on______________________ (date of signing)...
Commercial
PRECEDENTS
Subscribed for and on behalf of
[ insert name of limited partnership ] by ________________________ [ Director OR Secretary OR Authorised Signatory ] for and on behalf of [ insert name of corporate general partner ], as General Partner (Signature) ________________________ Full name of signatory (please print) at________________________(city) on________________________ (date of signing)...
Commercial
PRECEDENTS
Subscribed for and on behalf of [ insert name of LLP ] by ________________________ [ Director OR Secretary OR Authorised Signatory ], duly representing [ insert name of corporate member ], as Member (Signature) ________________________ Full name (please print) of the signatory at _____________________ (city) on _____________________ (date of signing)...
Commercial
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