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The Year of The Crofting Law Sump

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Scottish Legal News Crofting Law Review 2015As 2015 draws to a close I am reproducing here an article I wrote for the Scottish Legal News Annual Review 2015. It looks at Crofting Law in 2014. Now a whole year ago I know. I have been asked to write another such review of 2015 which I will be doing shortly. That will appear in  the Scottish Legal News Annual Review 2016.

The Crofting Law Sump was set up by the Crofting Law Group in 2013. The purpose of ‘the Sump’ was to gather together details of the significant problem areas within existing crofting legislation.

During passage through the Scottish Parliament of the Crofting (Amendment) (Scotland) Act 2013, MSPs were informed by practitioners who had been called to give evidence about the many problems in the existing legislation that were causing difficulties for crofters, landlords and others.

Paul Wheelhouse MSP, who was then Minister for Environment and Climate Change with responsibility for crofting, gave an undertaking that his officials would investigate, in consultation with stakeholders, what the best method might be for dealing with these outstanding issues.

The Sump was set up to assist the Government in this process. Administration was carried out by Derek Flyn, retired crofting lawyer, and Keith Graham, formerly Principal Clerk of the Scottish Land Court. 2014 saw much activity by them both collating the issues and problems that are causing difficulties, prioritising them and indicating how the problems can be resolved.

In May 2014 the Crofting Law Group held workshops in Inverness to look at the problem areas identified in the Collected Sump Report and provide feedback thereon. Following those workshops and a written consultation process the Commented Sump Report was produced. There was then feedback sought on the priority levels attributable to problem areas within that report. Further debate on the Sump took place at the Crofting Law Group Conference in Lochmaddy, North Uist in October. The Final Report of the Crofting Law Sump, highlighting 126 problem issues, was then presented to the Scottish Government on 10 December 2014.

2015 will be the year that we hopefully see what the Scottish Government plan to do to resolve all of the problem areas that have been identified.

Whilst the Sump was being contemplated the Scottish Land Court were making decisions that shaped or clarified the law. During the year Lord McGhie retired as Chairman of the Land Court and was succeeded by Sheriff Roderick John MacLeod QC who became Lord Minginish. Sheriff MacLeod had been the Deputy Chair of the Land Court since 2006.

Whilst there were a few interesting and important decisions of the Land Court in 2014 the crofting law year ended with a bang following  their decision in MacGillivray v Crofting Commission (Application RN SLC/99/13 — decision of 18 December 2014).

That case concerned the Crofting Commission’s policy on decrofting where a croft unit is held in multiple ownership.

On 14 December 2012 Crofting Commissioners agreed to adopt a policy that all decrofting and letting applications in respect of crofts with multiple owners, must be submitted by all the owners, in their capacity collectively as the ‘landlord’ of the croft, even in those cases where the application related to a part of the croft held in title by only one of their number. This decision was based on legal advice obtained by the Commission but never published by them.

For the past two years many people have been affected by this policy decision and have been unable to decroft and thus develop land they own if a neighbour who happens to own part of the original croft unit is not willing to consent to the proposed development taking place. Mr & Mrs MacGillivray were in that very position. Their application to decroft land at North Ballachulish for house building had been rejected by the Crofting Commission because it did not have the consent of the landlord of that part of the original croft unit that remained in tenancy. Mr & Mrs MacGillivray referred the matter to the Scottish Land Court who decided that the Crofting Commission were wrong and it was competent for an owner of part of a croft to seek to decroft without requiring the consent of any other owners of the original croft unit. The Land Court took the view that the reference to a croft in the Crofting Acts applied equally to part of a croft.

The Land Court’s decision will have come as a relief to many who have been affected by the Crofting Commission’s policy. However, any hopes of an early resolution to their own predicaments have been dashed by the Crofting Commission lodging a request that a special case be stated on a question of law for the opinion of the Court of Session. It is now likely to be many months before a ruling is issued that will settle the matter once and for all.

Many crofting lawyers, including myself, have long held the view that the Crofting Commission’s policy was not a correct interpretation of the law. At the outset I called on this matter to be resolved before the Land Court by the Commission or action to be taken by the Scottish Government to do so. It is a pity that one affected party (there are many) has had to take the Crofting Commission to task over this whilst others have been left in limbo for over two years.

The Land Court’s decision was a clear, sensible and fair one. Even if the Court of Session ultimately were to take a different view, affected parties will continue to lobby the Scottish Government to amend crofting legislation to allow those who own croft land to be able to apply to decroft at their own instance. It is a problem that was highlighted in the final Sump Report as a priority one for the Scottish Government to tackle. They may, of course, not have to tackle it if the Court of Session agrees with the Land Court’s interpretation of the law.

N.B. Since this article was first published the Crofting Commission withdrew their request for a special case to be stated on a question of law for the opinion of the Court of Session. Therefore, the Land Court’s decision in MacGillivray v Crofting Commission (Application RN SLC/99/13 — decision of 18 December 2014) stands. See: Crofting Commission make a U-turn on Decrofting Appeal to the benefit of many owner-occupiers.

Download the Scottish Legal News Annual Review 2015 [via Calameo].

Brian Inkster

Croft House Grant Scheme Consultation

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New Croft HouseThe legal requirement for a crofter to live on or near the croft brings with it a requirement for that crofter to have somewhere to live. This has long been recognised by both Westminster and the Scottish Government. Over the past thirty years, support has been available to meet this need but that support now requires rethinking if it is to meet today’s housing needs. To this end, the Scottish Government are currently seeking responses to its consultation on proposed changes to the Croft House Grant Scheme (CHGS). It is a consultation that many would argue is long overdue.

The Scheme aims to attract and retain crofters by enabling them to build (or improve) housing on their croft. That residency requirement has always been enshrined in the Crofting Acts. A crofter must be resident on, or within 32km, of their croft. This is currently a key driver of Crofting Commission policy. The consultation comes at a time when crofting legislation itself is being closely scrutinised by crofting law practitioners and parliamentary committees.

The current levels of support for the construction of a new house from the CHGS is £22,000 for a ‘high geographical priority area’, £17,000 for a standard priority and £11,500 for low priority. This prioritisation is largely based on the view that building on the islands and some of the more remote parts of the mainland is more expensive, therefore grants are increased accordingly.

To be eligible for the grant you must be a tenant crofter, a Kyles crofter or cottar (the meaning of the latter two is for another blog post). Tenants who have purchased and become owner-occupiers in the last seven years were supposed to be eligible, but this is currently uncertain – see my colleague Eilidh Ross Maclellan’s post on that subject.

The proposed changes increase the rates to £28,000 and £23,000 respectively for a High and Standard priority areas, and introduces just two geographical areas – Island and Non-Island. This change in geographical boundaries will mean an increase in support for some areas compared to the previous scheme, which will be good news for some. However, looking back to the CHGS’s predecessor, it is arguable that the proposals put forward in the consultation will still have little impact.

The previous Croft Building Grant and Loan Scheme (CBGLS) was introduced in 1986. Initially, the scheme contained a loan element – paid back to the Government over a period of time (typically 40 years), and a grant element.

It helped many crofters secure a home on their croft. (In fact, the house I grew up in was, largely, paid for by it. In 1986, my parents would have been some of the first people to build their house with assistance from the CBGLS). Back then, if you were frugal, the loan and grant could go a very long way. Nowadays, the amount offered might barely cover the cost of an average house kit.

The Scottish Crofting Federation recently gave their views on the matter, and highlighted some interesting figures. The average cost of building a house in 1986 was £27,860, and the CBGLS, on average, met 82% of building costs. However, over the years the level of support no longer increased with the rising cost of building a home.  The loan element was withdrawn in 2004, and was not replaced with the introduction of the CHGS. The Federation calculated in 2008 that support was around 14% of total build costs.

The Shucksmith Report of 2008 stated that the support levels were too low, in an age where typical build costs exceeded £100,000 – a figure that has only increased. The only way that most crofters could raise the finance to build was to decroft, in order to obtain commercial lending. This remains the case. Currently, decrofted house sites are not eligible for grant support. However, the consultation proposes that decrofted houses linked to the croft would be eligible for support, as would ‘adjoining or adjacent’ land.

Another question the consultation poses is the size requirements of a house. It is currently the case that only houses of three beds or more will be eligible for funding – a  rule that makes outdated assumptions about the size of a crofter’s family and does not give consideration that houses – like families – can grow and evolve over the years when time and finances allow. The current restriction looks short-sighted.

Any increase if of course welcome, however marginal it may be, but without the ability to obtain the support of a lender, the increase will make little difference, meaning decrofting will continue to be the only route for many. Most crofters are not in the fortunate position of being able to finance the building of a house without a mortgage. If one of the key aims of the Crofting Commission is to retain croft land in crofting tenure, and people working that land, then the Scottish Government may need to consider reintroducing a croft house loan, or, as suggested by the Scottish Crofting Federation, exert some pressure on commercial lenders to consider mortgage products for crofters. The latter may require a change in the law to facilitate mortgages over croft land.

The consultation closes on 31 March 2015 and can be found at http://www.scotland.gov.uk/Publications/2015/01/4893/0

Martin Minton

Image Credit: Urban Realm: Highland Croft House completes

Crofting Commission make a U-turn on Decrofting Appeal to the benefit of many owner-occupiers

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Crofting Commission make a U-turn on decrofting appealThe Crofting Commission today confirmed that it has withdrawn its appeal to the Court of Session in connection with the Scottish Land Court’s decision of 18 December 2014 in the case of MacGillivray v Crofting Commission. That case concerned the Crofting Commission’s policy on decrofting where a croft unit is held in multiple ownership.

On 14 December 2012 Crofting Commissioners agreed to adopt a policy that all decrofting and letting applications in respect of crofts with multiple owners, must be submitted by all the owners, in their capacity collectively as the ‘landlord’ of the croft, even in those cases where the application related to a part of the croft held in title by only one of their number. This decision was based on legal advice obtained by the Crofting Commission but never published by them.

This is a sensible decision by the Crofting Commission and puts the position back to what it was before they decided on 14 December 2012 to interpret crofting law in a way that I do not believe was ever intended by the Scottish Government. The Land Court decision was a clear, sensible and fair one and it makes much sense for the Crofting Commission to abide by it.

There will be a huge sense of relief amongst owner-occupiers of croft land who are not classified in law as owner-occupier crofters. They can now apply to decroft land that they own without requiring the consent of neighbours who happen to be owners of part of the original croft unit. The lack of such consent in certain instances was causing huge problems for many who have been in a state of limbo for over two years now.

The Crofting Commission in their official press release have stated:-

Due to the fixed deadline for submitting an appeal, the Crofting Commission submitted a skeleton appeal to provide it with sufficient time to convene the full Commission and allow it to discuss the implications of the decision.

The Commission met last week to review the case and it was decided to withdraw the appeal and accept the ruling of the Land Court which establishes that a single owner, as the landlord of their part of the croft, are entitled to submit a regulatory decrofting application to the Commission.

The Crofting Commission had originally found Mr & Mrs MacGillivray’s application to decroft land at 37 North Ballachulish for house building to have been incompetent, therefore, the Commission could not take a decision on it.  The recent Scottish Land Court ruling found the application to be competent.  No decision has been made yet on the merits of the application which the Commission will now have to reconsider.

The case challenged the Commission’s policy which was adopted at its Board meeting on 14 December 2012.  The policy found that all decrofting and letting applications in respect of crofts with multiple owners, must be submitted by all of the owners, in their capacity collectively as the ‘landlord’ of the croft.

The Land Court has ruled that in a multiple ownership situation one of the owners can apply independently from the other owners where the application solely relates to the land that they own.

Crofting Commission Convener, Susan Walker said “The ruling has implications on part croft owners in relation to the requirement to register the croft prior to submitting certain regulatory applications.  The Commission is working to align our policy to the ruling and will begin to process applications relating to part crofts from single owners.”

Brian Inkster

A pivotal year for Crofting Law

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Scottish Legal News Crofting Review 2014This is an article that Brian Inkster wrote for the Scottish Legal News Annual Review 2014:-

2013 was certainly a year to remember in the world of crofting law. It started in February when the Crofting Commission issued a statement concerning decrofting applications made by owner-occupier crofters who occupy their crofts.

The Commission, having taken legal advice on the question of whether or not an owner-occupier crofter can decroft part or all of their croft, stated that they believed the amendments introduced by the Crofting Reform (Scotland) Act 2010 (“the 2010 Act”) did not make provision for an owner-occupier crofter to decroft if he is occupying his croft.

Furthermore, the Commission stated that they had been advised that they would be acting outwith their statutory authority if they approved any application made to decroft, and that no further applications would be considered until a remedy was found, with applications at that time in process being placed in abeyance.

The implications of this were significant to say the least. The Crofting Commission were not only preventing owner-occupier crofters and connected third parties from building houses or carrying out other developments but they were in effect saying that decrofting directions already granted by them may be invalid. If such directions were invalid then, if title deeds had been granted in reliance of those directions, those title deeds would be null and void. This is because applications to divide an owner-occupied croft will not have been made prior to transfer (such applications not being necessary if the land was decrofted but necessary if the land was not decrofted). Banks who had granted mortgages in reliance of such decrofting directions were also exposed.

I looked at the legislation and simply could not see the problem perceived by the Crofting Commission. I published an opinion setting out why the existing legislation clearly provided for decrofting by owner-occupier crofters. To date that opinion has not been openly challenged and the Crofting Commission refused to publish their legal opinion (so no one knows the actual reasoning behind the Commission’s decision to halt processing decrofting applications).

Faced with differing legal opinion the Scottish Government decided to introduce a Crofting (Amendment) (Scotland) Bill and rush it through Parliament with all due haste. The Bill they drafted was, in my opinion, a sledge hammer to crack a nut with the potential to introduce even more unintended consequences into crofting law. I suggested and drafted a shorter version at 621 words rather than 1,700 words. I and the other crofting lawyers who put forward submissions were ignored. The Bill was enacted as originally drafted without any amendment whatsoever during the three stages that it very quickly passed through the Scottish Parliament. The Crofting (Amendment) (Scotland) Act 2013 become law on 31 July 2013 when it received Royal Assent.

The Scottish Government, during the passage of the Bill, continually sidestepped another fairly significant issue that was causing difficulty for many owner-occupiers who were not classed by the 2010 Act as owner-occupier crofters. Back in February the Crofting Commission had also published a statement on decrofting by owner-occupiers who were not owner-occupier crofters. Their view, having obtained legal advice, was that if an original croft unit had been split into different parts each owned by a separate owner-occupier then no one owner-occupier could decroft part of their own land without the consent and concurrence of the neighbouring owner-occupiers. The end result is that if you fall into this category and don’t want your neighbour developing land that they own you can simply prevent them from so doing.

A Scottish Government Official said that he hoped everybody would be able to work together at some point to recognise the benefits by concurring in decrofting applications. Tavish Scott MSP pointed out that “we do not live in a perfect world”. Time has shown that we don’t with several examples arising of owner-occupiers being prevented from developing their land.

This problem could easily have been cured by a minor provision within the Crofting (Amendment) (Scotland) Act 2013. The Scottish Government by ignoring the issue have allowed the problem to manifest itself as time goes on. They may well be forced to consider a further Crofting Amendment Bill to fix it.

During the passage of the latest Bill it became apparent to MSPs that much was wrong with Crofting Law. Many of these problems stem from the fact that the 2010 Act was the result of a Bill that had 230 amendments all dealt with at Stage 3 in less than 3 hours.

Alex Fergusson MSP said “The whole thing seems to me to be a bit like the Hydra—you cut off one head and two others appear. With crofting, we get rid of one problem and two others appear in its place.”

Paul Wheelhouse MSP, Minister for Environment and Climate Change with responsibility for crofting, gave an undertaking that his officials would investigate, in consultation with stakeholders, what the best method might be for dealing with these outstanding issues. That consultation is now on-going.

The Crofting Law Group set up a ‘Sump’ to assist the Government in this process. It is being administered by Derek Flyn, retired crofting lawyer, and Keith Graham, formerly Principal Clerk of the Scottish Land Court. They are collating the issues and problems that are causing difficulties, prioritising them and indicating how the problem can be resolved. Their Report will be made available to the Scottish Government on completion.

From 30th November compulsory registration in the new Crofting Register, held by Registers of Scotland, was introduced for crofts if certain trigger events occur. The Crofting Register is a product of the 2010 Act and already it is being suggested that there may be unintended consequences arising from the drafting of the legislation. More fodder for the ‘Sump’!

2014 will be a pivotal year for crofting law with the publication of the ‘Sump’ Report and hopefully some indication from the Scottish Government as to what they intend doing to clear up the mess that the 2010 Act created.

Brian Inkster

Decrofting effective after Royal Assent

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Queen gives royal assent to Crofting (Amendment) (Scotland) Act 2013

We shall decroft

The Crofting (Amendment) (Scotland) Act 2013 become law on 31 July 2013 when it received Royal Assent. This will have come as a great relief to many owner-occupier crofters who were in decrofting limbo. What will also have been welcoming to those crofters was the speed at which the Crofting Commission, having halted the decrofting process, actually processed applications post 31 July with some decrofting directions being issued during the first week of August. With a 42 day appeal period that means that this coming week (assuming no appeals) many owner-occupier crofters will have effective decrofting directions for the first time since the Crofting Commission stopped accepting and processing applications on 25 February 2013 (i.e. 7 months later).

So relief for owner-occupier crofters but not yet for many owner-occupiers (who are not owner-occupier crofters) if they cannot get consent to decroft from neighbours who happen to be owners of part of what was the original croft unit. They will unfortunately remain in decrofting limbo. I have blogged previously on this blog about the inequity of this situation and will continue to do so in future blog posts.

Brian Inkster

[Photo Credit: The Queen at her Balmoral Estate in Scotland taken by Julian Calder]

Lochaber Decrofting Application Rejected

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Rejected Decrofting ApplicationThe Scottish Crofting Federation issued this press release today:-

The Scottish Crofting Federation has welcomed the Crofting Commission’s decision to reject as incompetent a controversial decrofting application in Lochaber that would have allowed ten houses to be built on a croft there. The SCF believes the decision is indicative of a strong new line against speculative development on croft land.

The application by Donald and Elizabeth MacGillivray to decroft part of their croft at Oldtown in North Ballachulish followed the couple’s successful planning application for the right to turn the majority of the croft there into a housing development. Their planning application was eventually passed on appeal by a single Scottish Government reporter based in the Lowlands, despite having first been rejected by Highland Council’s planning committee. It had been opposed by local crofters.

The MacGillivrays, who are long-term absentees from the croft, lodged their decrofting application before the new 2010 Crofting Act came into force. The 2010 Act granted new powers to the Commission to oppose speculative development on croft land. Because the MacGillivrays application was to be decided in terms of the pre-2010 legislation fears were raised that the Commission might therefore be forced to approve it.

However, after a hearing in Ballachulish earlier this summer, the Commission have now rejected the MacGillivrays’ decrofting application as incompetent and have returned it to the applicants after concluding from the evidence presented by the applicants’ legal agents that “the occupied extent of the croft and the owned extent do not coincide”.

Iain MacKinnon, who researched the Oldtown case on behalf of SCF, said: “Our understanding is that if the MacGillivrays now resubmit a decrofting proposal for their land at Oldtown they will have to do so under the terms of the 2010 Act, which has much stronger provisions against speculation. The SCF warmly welcomes the Crofting Commission’s decision at Oldtown and the broader policy shift we believe it represents. Although the Commission were not able to use their new powers against speculative development in this case, it seems clear to us that their decision here is indicative of a strong new line against speculation that, in future, will be supported by further powers.

“What is of even greater significance now is that this unwelcome proposal at Oldtown has shown that there is a desire to revitalise crofting in North Ballachulish. With such enthusiasm in the locality the different bodies with responsibility for crofting regulation and development now have the chance to turn a threat for crofting into an opportunity for crofting.”

It is interesting that the application has, in effect, been rejected on a technicality rather than following an exploration of the substantive issues involved. Readers of this blog will know that the Crofting Commission appear to like using technicalities when they can to put off the day that they will actually have to make a real decision on an application to decroft.

It is understood that the rejection of the MacGillivrays’ application as incompetent was in response to an apparently critical issue raised at the application hearing by a lawyer acting on behalf of the local grazings committee. He raised the question “as to whether the whole of the croft owned and/or tenanted is occupied by the applicants”.

In response the Crofting Commission concluded:

In the absence of any evidence that the applicants own the full extent of the land occupied by them as part of their croft (such as another disposition by the landlord) or any adequate explanation by the applicants, the Commission have assumed that part of the croft remains tenanted.

The Commission have returned the application to the applicant’s agent as incompetent on the basis that it is not clear from the plans provided whether part of the occupied croft extent (as shown by the Crofting Commission plan approved by the applicants) still remains in tenancy and how much of the croft is owned.

It is possible then that the MacGillvrays’ could now fall into the ‘alien’ category previously highlighted on this blog and, if so, their status would be presently unknown, in the eyes of the Crofting Commission, for the purposes of decrofting. Thus a fresh application to decroft would not be considered by Crofting Commission until such time as they resolve what that status actually is. More about what the Crofting Commission are doing (or perhaps not doing) with regard to ‘alien’ status will be discussed in my next blog post.

Brian Inkster

Crofting Gobbledygook

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Scottish Land Court

Will the Scottish Land Court have to decipher the Crofting (Amendment) (Scotland) Act 2013?

The Scottish Parliament has voted to pass the Crofting (Amendment) (Scotland) Bill. In due course, it will receive Royal Assent. Owner-occupier crofters will be able to decroft, and the Scottish Government will breathe a sigh of relief that the decrofting debacle has been buried.   However, this bill has been far from the Scottish Government’s finest hour. The bill has added a further layer of complexity to a legislative framework I have previously, publicly, labelled a mess and a shambles. The Act will result in the Crofting Commission processing applications once again, but the decrofting provisions are now so incomprehensible that it can only be a matter of time before they are challenged in the Courts. Then we shall hear accusations that solicitors are getting fat on the ever-diminishing bank accounts of crofters.  The time and effort taken by myself and by other professionals in this field indicate that we have an interest in clarifying legislation to avoid crofters facing high legal costs. Yet the Scottish Government saw fit to ignore all submissions and suggestions, however helpful they may have been. The quality and clarity of the Bill could have been far improved, had the Scottish Government accepted help from those best placed to provide it. Sooner or later, we will all simply stop responding to consultations and will have no heart to contribute to the parliamentary process.

Furthermore, this Bill has given birth to a fresh debate over wider crofting legislation. I have long been of the view that crofting legislation should be left alone for a time, to bed in, and to allow a body of case law to become established. However, in light of the 2013 Bill I have changed my view, and I have called for an overhaul of all crofting legislation. The numerous problems which have become apparent with the Crofting Reform (Scotland) Act 2010, coupled with the prospect of yet more impenetrable sections (when a few simple sections would have achieved the same effect), made me despair that the current framework could ever work. There are simply too many problems to overcome; the decrofting uncertainty was merely the tip of the iceberg. I do not suggest another evidence-gathering committee in the mould of Professor Shucksmith, but it is both possible and desirable to deconstruct the legislation and rebuild it so that it makes sense and is, to use a phrase so beloved of government, ‘fit for purpose’.

Rob Gibson MSP appeared to have taken offence at my labelling of the legislation as a “mess” and a “shambles” but I stand by my remarks, and I refute his comment that crofting law is merely “complex”. Most areas of law are complex, and solicitors are trained to operate in such an environment, but crofting law since the Crofting Reform (Scotland) Act 2010 – which his Government must take responsibility for and cannot be blamed on inheritance – has become incomprehensible, not merely complex. I urge Mr Gibson to listen to the suggestions offered by experienced professionals, rather than taking the defensive stance we saw in the debating chamber yesterday afternoon.

Eilidh I. M. Ross