McMaster & Others v Scottish Ministers: initial thoughts

Frankie McCarthy cases, land reform, property law, Tenancies, Uncategorized , , , ,

Over the past couple of days, I’ve been trying to get my head around the decision in McMaster v Scottish Ministers – the “son of Salvesen”, as Dan Carr described it to me yesterday – in which the rights of the petitioning tenant farmers under Article 1 of the First Protocol to the ECHR (the property right) were held to have been violated. Without rehearsing the decision in Salvesen v Riddell itself, and ignoring the various petitioners (family members, limited partners) whose claims were dismissed, here’s a rough outline of the facts. A note – if you have no familiarity with Salvesen, or the tenancies-held-by-limited-partners wheeze that the market had devised to get round the security of agricultural tenancies conferred by the Agricultural Holdings (Scotland) Act 1991, this will be hard to follow.

The facts

On the basis of provisions in the Agricultural Holdings (Scotland) Act 2003, the McMaster family and others (the petitioning farmers) believed they could acquire secure tenancies in respect of their farms. The 2003 Act required them to take certain actions to acquire these tenancies, which they did. The tenancies were duly acquired. However, because certain of the Act’s provisions turned out to be “not law” per the Supreme Court decision in Salvesen, the tenancies were not as secure as the farmers had believed they would be. Moreover, the actions taken by the farmers on the basis that they would receive this security had soured the relationship between them and their landlords. The outcome was that the farmers had already or would soon lose the tenancies entirely. Scottish Ministers had not provided any compensation to the farmers in relation to this sequence of events, neither in the 2014 Remedial Order which confirmed the law post-Salvesen, nor in response to subsequent applications by the farmers. It was contended that this amounted to a violation of A1P1, the right to peaceful enjoyment of possessions.

A successful claim under A1P1 requires the claimant to have “a possession”, and for state action to have unjustifiably interfered with the peaceful enjoyment of that possession. The interference will be justified only if it is lawful, pursues a legitimate aim in the public interest and is proportionate. Lord Clarke considered each of these issues in turn, along with a couple of others (chiefly the victim status of the various categories of petitioner) which I will not consider here.

Possession

First, did the farmers have a possession? The court held that they did: the tenancy acquired following their performance of the required actions under the 2003 Act.

In making their case, the farmers had also claimed to have another possession, namely their legitimate expectation of acquiring a secure tenancy provided they took the action required by the 2003 Act. This was held not to be a possession, since their legitimate expectation could not be tied to an existing property right, as the Strasbourg jurisprudence requires.

This conclusion sits a bit uneasily with me. I think there is a case to be made here that the existing property right on which their legitimate expectation was founded was the lease in place between the landlord and the limited partnership prior to the farmers taking the action required under the 2003 Act to acquire their own tenancy.

Making this case requires me to do some violence to the law that I would normally rather avoid. In private law terms, the first lease is a completely separate possession from the second. The parties to the first lease (the landlord and the limited partnership) are different from the parties to the second (the landlord and the farmers). The McMaster petitioners did not “own” the first lease – those property rights were held by an entirely different legal person. Therefore the first lease was a not a possession of theirs on which the legitimate expectation of acquiring a secure lease could be founded.

The impetus for the 2003 Act, though, was the Government’s belief that the farmers, though not a party to the first lease, were nevertheless the “true” tenants under the first lease. They were the de facto tenants, let us say, though not the de jure tenants. The relevant 2003 Act provisions were essentially designed to force the legal relationships in this respect to match up with the lived relationships. Although domestic private law is clear that the rights arising under the first lease were not held by the farmers, I do wonder whether their position as de facto tenants under the first lease should be enough to render it a possession of theirs nevertheless in the context of the ECHR’s notorious “real and effective protection”. The Government’s own conduct prior to drafting the Remedial Order seems to chime with this argument, which might be said to strengthen the case.

Interference

Second, did state action interfere with the farmers’ peaceful enjoyment of their tenancy? Lord Clarke found the introduction of the Remedial Order, which clarified the rights received by the farmers as a result of taking action under the 2003 Act, to be a control of use of their tenancy. That seems, to me, correct.

(If my legitimate expectation argument above is correct, the Remedial Order would also have the effect of interfering with that legitimate expectation, on which more below.)

Justifying the interference

In terms of justification for the interference, parties agreed that the Remedial Order was lawful and pursued a legitimate aim in the public interest, so the only issue outstanding was proportionality. In short, the petitioners argued that the Ministers’ refusal to provide compensation for the interference left them bearing a burden greater than was justified by the aim of the state action. Lord Clark was satisfied the lack of provision for a compensation scheme in the Order was not in itself a violation, since compensation claims could nevertheless be made by the farmers. The problem was that such claims had been refused.

Should compensation have been given?  Lord Clark was satisfied that, if a loss could be proved, then it should.  He reaches the conclusion that:

“in principle, in circumstances such as the present, the State should compensate individuals for loss directly arising from reasonable reliance upon defective legislation passed by it, which was then remedied by further legislation which interfered with the individual’s rights under A1P1.” (para 190)

He later summarises:

“The principles which ought to have been established are that compensation would be paid in respect of specific losses directly caused to [the farmers] as a consequence of reasonable reliance by them upon having a secure 1991 Act tenancy, and for frustration and inconvenience, subject to the counterbalancing effect of setting off the value of the benefits obtained by [the farmers] arising from the extended period of tenancy which was enjoyed.” (para 195)

So compensation should be paid in respect of losses incurred following reasonable reliance on the original, faulty provisions of the 2003 Act. I am having a hard time making this fit together with the answers given earlier in the case as to the possession we are concerned about. The possession in question is the tenancy acquired by the farmers. The Remedial Order controlled the use of that tenancy by clarifying the terms on which the landlord could end it. That might certainly affect the value of the tenancy. However, that is not the loss for which compensation should be granted. Compensation is due in respect of losses resulting from action taken in reasonable reliance on an earlier state action, namely the passing of the faulty legislation. What the farmers should be compensated for is reasonably expecting, based on the state’s action, that a certain situation would obtain, when in fact it did not. What that looks like to me is a loss resulting from – you guessed it – state interference with the farmers’ legitimate expectation of acquiring a secure tenancy. The wheels are off the bus.

I can see why accepting the existence of a legitimate expectation as a possession might be worrying to the court in this case – if you legitimately expect to acquire a secure tenancy, and then you don’t acquire a secure tenancy, should a massive claim for deprivation of a very valuable secure-tenancy-shaped asset not result? But I’m not sure that follows. The farmers received tenancies. They were less secure than anticipated, but they still existed. The legitimate expectations were not fully realised, but partial disappointment seems, if anything, a general interference with the peaceful enjoyment of possessions rather than a deprivation OR a control. Compensation is not a requirement of proportionality for general interferences. In the circumstances, the court might still consider compensation to be necessary to balance out the interference, but the extent of that compensation could be determined with reference to factors like the benefit to farmers of having what appeared to be a secure tenancy for years, and the fact that what the farmers legitimately expected to receive was a windfall benefit in the first place. It does not seem obvious to me that compensation equivalent to full market value of a secure agricultural tenancy would be the necessary result of a finding that legitimate expectations had been disappointed in this context. It might even be the case that a nominal sum, or simply a finding by the court that the state was in the wrong, would be sufficient compensation to render the interference proportionate.

Anyway. I’ve been dipping in and out of the case and this blog post between other commitments since yesterday lunchtime, and had better turn my attention back to the things I am actually supposed to be doing this week. I will post this now, though my thoughts feel unfinished. Discussion would be welcome.

Scotland’s Land Rights & Responsibilities Statement – not a legal document?

Frankie McCarthy consultations, land reform, property law, Uncategorized , , ,

I’ve been mulling over the proposed Land Rights and Responsibilities Statement with a view to responding to the current Scottish Government consultation (responses due by Friday 10th March). I tend to respond to consultations with my legal academic hat on, meaning that I am using my disciplinary training to identify potential legal problems with the topic of the consultation, rather than giving a personal opinion on whether the Government should be trying to do what it’s doing. That approach leaves me with little to say on the LRRS since, as far as I can see, it has almost no legal consequences at all.

To be clear: I don’t think that is a problem in itself. For one thing, a clear statement of the Government’s policy ambitions in relation to land evidently has significant political value. It is a statement of intent, and a yardstick against which future actions can be measured. That is important.

Looking at it purely from my narrow disciplinary perspective, the simple fact that the Statement will exist is valuable too. All countries have property law rules of some kind, but very few make it easy to understand why the rules which have been chosen are in place. This can give the illusion that rules are somehow objective or politically neutral when, where property law is concerned, nothing can be further from the truth. A frequent bugbear of mine in respect of case law on human rights in relation to property is that the values underpinning property law rules are rarely acknowledged by the court. The Statement shines a light on that kind of value-smuggling, which is a very positive step, in my view.

This consultation is not about whether the Statement should exist, though. That question was answered by section 1 of the Land Reform (Scotland) Act 2016. This consultation is about what the Statement says – what those values are.

What is giving me pause about this consultation paper, and the (extremely limited)  discussion I have seen about it online, is that the Statement’s lack of legal significance may not be clear. The paper does make plain in more than one place that the Statement is simply “a set of principles intended to both guide public policy and inform the practices of all those who own, manage and use land” (p 7). It reiterates the evidence given last year in relation to the Land Reform (Scotland) Bill by then-Minister for Environment, Climate Change and Rural Affairs, Aileen McLeod, that, “the Statement should [not] be interpreted as setting measurable objectives for Land Reform. It is not the type of document in relation to which it would be easy or even possible to assess achievement” (p 9). However, the Ministerial Foreword suggests that “when you have rights over land or buildings in Scotland, you also have responsibilities towards the people of our country.” This is arguably true in a moral or political sense, and rights holders in respect of land do have some legal responsibilities towards the general public, most notably in terms of facilitating the exercise of access rights under Part 1 of the Land Reform (Scotland) Act 2003, but the Statement itself does nothing to impose any such responsibilities on rights holders. The paper also tells us that the LRRS, “should inform the practices of all those who own, manage and use land, in order to achieve culture change through the continued realisation of the vision and principles of the Statement” (p16), but…how? There’s nothing in the Statement itself, nor in the 2016 Act, to create legal obligations in that regard.

Even the legal duties that do surround the Statement seem, to me, a bit meaningless. Scottish Ministers are under a duty to promote the principles of the Statement in exercising their functions under section 3 of the 2016 Act, but how could such a duty be enforced? I am no public lawyer and would be happily corrected, but I can’t see how a court action for breach of this statutory duty could be successful. A claim that Ministers had failed in this duty might well form part of a human rights challenge – might bolster a claim that a particular piece of legislation or decision by a  public body was not in the public interest where it ignored or ran counter to the Statement, for example – but the basis for such a challenge lies in human rights law, not in the Statement itself.

As I said above, I don’t think this lack of legal effect is a problem in itself, and I do think the Statement is a valuable document. Perhaps I am the only one who even has this concern about the potential ambiguity of the Statement’s legal import. The conclusion to all this may simply be that  I shouldn’t respond to the consultation because essentially I have nothing to say. If anyone else has been has thoughts about the consultation, or about what I’ve said above, I would be happy to hear them.

Private Housing (Tenancies) (Scotland) Bill – Response to Call for Evidence

Frankie McCarthy consultations, property law, Tenancies , ,

I’ve put together a response to the call for evidence on the Private Housing (Tenancies) (Scotland) Bill, mainly focused on the probable human rights problem with retaining mandatory grounds of possession (in other words, situations where the court has no option but to grant an eviction order without looking at the circumstances in the individual case.) If anyone has any thoughts, comments, criticisms, or feels like sharing their own responses, I’d be happy to see them. Submissions have to made by the end of the day on Thursday.

Written submission from Dr Frankie McCarthy, University of Glasgow

 Private Housing (Tenancies) (Scotland) Bill

My primary concern with the Bill as introduced relates to the human rights compliance of section 41. This section provides that the First-tier Tribunal is obliged to issue an eviction order on application by the landlord if one of the schedule 3 grounds is met, provided the relevant procedural formalities have been fulfilled. In summary, I argue that the obligation on the FTT to issue an eviction order without the opportunity to consider the circumstances of the individual case is likely to be a disproportionate interference with the rights of the tenant under article 8 of the European Convention on Human Rights. To ensure the legislation is Convention compliant, section 41 should be amended to provide that a court need only grant a possession order where it is fair and reasonable to do so.

Possession orders and article 8 ECHR

Article 8 of the European Convention on Human Rights provides the right to respect for private and family life, home and correspondence. This right is held by individual persons against the state. In the situation where an individual person is a tenant of a body which represents the state – such as a local authority or housing association landlord[1] – eviction from their rented home is an obvious interference with the right to respect for home. However, the right is not absolute. It can be compromised where necessary for the reasons listed in the second paragraph of article 8, which include the economic well-being of the country or the protection of the rights and freedoms of others. Amongst other requirements, any such compromise of the right must be proportionate, meaning that it must not impose an individual and excessive burden on the holder of the right.

Following a number of decisions of the UK Supreme Court and the European Court of Human Rights, it has been established that where legislation obliges a court to grant a possession order to a public authority landlord without the opportunity to consider the specific circumstances of the case, this will not comply with article 8. The leading judgment is Manchester City Council v Pinnock,[2] decided by a bench of nine Supreme Court judges and therefore commanding a very high level of legal authority. In Scotland, an example of this type of legislation can be found in the Housing (Scotland) Act 2001, s 36 by which the court is obliged to make an order for recovery of possession provided the landlord has complied with the procedural formalities. In South Lanarkshire Council v McKenna,[3] the Inner House of the Court of Session confirmed that this provision was in breach of the tenant’s article 8 rights. To remedy this problem, the court in McKenna, as in Pinnock, “read” the legislation in question to include a proportionality jurisdiction. In other words, a court faced with an application for a possession order under the 2001 Act, s36 now has the power to consider the circumstances of the individual case to determine the proportionality of granting a possession order, despite the fact the legislation itself does not expressly give the court this power.

Article 8 and private landlords

I pointed out above that article 8 protects individual persons against actions by the state. It is therefore clearly applicable where a landlord is a representative of the state, such as a local authority or housing association. The Private Housing (Tenancies) (Scotland) Bill deals with an alternate situation, where a landlord is a private legal person such as an individual or a company. Does article 8 have any application to this situation?

I would argue that it does. Private leases fall within the ambit of human rights when the court, as a public body representing the state, becomes involved in enforcing the lease terms. Public bodies must not act in a manner incompatible with Convention rights. Accordingly, the court must not enforce a lease in a manner which breaches the human rights of a landlord or tenant. The European Court of Human Rights seems satisfied that human rights apply where a court becomes involved in enforcing a private tenancy agreement.[4] The Appeal Court in England recently found there was not a clear enough line of precedent from the ECtHR to determine the position on this application of human rights in domestic law,[5] but Supreme Court judge Lord Neuberger later indicated that in his view, the jurisprudence is now clear that article 8 must apply to private tenancies in this situation.[6] It seems only a matter of time until this finding is explicitly made by the domestic courts.

The problem with the Bill

If human rights are applicable to litigation between a landlord and a tenant, as I argue above, then legislation that does not allow for account to be taken of the potential human rights implications of an application for a possession order must itself be in breach of human rights. Although it may be possible for the court to “read in” a proportionality jurisdiction as it did in relation to the Housing (Scotland) Act 2001, for the sake of legislative clarity, and to avoid an unnecessary legal challenge to the competence of the legislation, it would be preferable to explicitly include a proportionality jurisdiction in the text of the legislation itself.

Suggested amendment

I would recommend that section 41(1) of the Bill be amended to read as follows:

(1) The First-tier Tribunal is to issue an eviction order against the tenant under a private residential tenancy if, on an application by the landlord, it finds that:-

(a)One of the eviction grounds named in schedule 3 applies; and

(b)It is fair and reasonable to do so

In determining an application under this section, the court could have recourse to the guidance provided in respect of applications for possession orders by public landlords.[7] In such cases, the onus is on the tenant to challenge the proportionality of the order, and the burden of proof lies on her to show that it is disproportionate. Any proportionality defence should initially be dealt with summarily by the court and rejected unless “seriously arguable.” In the private tenancy context, the court would have to take account of the competing right of the landlord to peaceful enjoyment of his possessions under Article 1 of the First Protocol to the ECHR.

Minor points

  • Section 13 of the Bill provides that the First-tier Tribunal may draw up the terms of the tenancy on application by the tenant where the landlord has failed to provide written terms. The Government intends to introduce a model tenancy agreement in forthcoming subordinate legislation. It would be sensible for s 13 to provide that the FTT will draw up the terms of the tenancy based on the model agreement, rather than expecting the FTT to draft an agreement from scratch, as seems to be implied by the current wording of s13.
  • Section 41 and schedule 3 provide for eviction grounds where the landlord intends to sell the let property, carry out significantly disruptive works to the property or use the property for a non-residential purpose. Under the Housing (Scotland) Act 1998, where the landlord’s intentions towards the property form the basis of a ground of eviction, the court has held that the landlord must demonstrate not only a genuine wish to undertake the proposed action, but also that there must be a reasonable prospect of him doing so.[8] For example, if he intends to refurbish the property, he must show that he has adequate finance to do so and has obtained planning permission if appropriate. For legislative clarity, paragraphs 1, 3, and 5 of the schedule should be amended to provide the landlord with a ground for eviction where “reasonably intends” to sell the let property etc, in order that both elements of the intention test (a genuine wish and a reasonable prospect of the action taking place) can be taken into account by the court.

[1] In respect of possession proceedings, housing associations are generally considered a “public authority” under the Human Rights Act 1988, s 6(3): see R (on the application of Weaver) v London & Quadrant Housing Trust [2010] 1 WLR 363.

[2] [2010] UKSC 45.

[3] [2012] CSIH 78.

[4]See most recently Lemo v Croatia (App No 3925/10) (10 July 2014).

[5] McDonald v McDonald [2014] EWCA Civ 1049.

[6] In a speech to the Supreme Court of Victoria, Melbourne – see paragraph 28.

[7] See particularly Manchester City Council v Pinnock [2010] UKSC 45 and Hounslow LBC v Powell [2011] UKSC 8 along with discussion in McCarthy, F (2013) “Human rights and the law of leases” 17(2) Edinburgh Law Review 184-209 .

[8] See Rennie, R. (ed.) Leases (SULI)(Edinburgh: W Green, 2015) para 22-22.

Response to call for evidence on the Land Reform (Scotland) Bill

Frankie McCarthy consultations, land reform, property law , ,

Just in the nick of time (approximately 4.59pm today), I managed to submit my evidence on the Land Reform (Scotland) Bill in response to the call by the Rural Affairs, Climate Change and Environment Committee.

I had discussed the Bill for several very enjoyable hours with @jilljrobbie, @culbokster and @stephen_bogle a couple of weeks ago. Jill very kindly wrote up detailed evidence, which you can read on the University of Glasgow School of Law blog here, and allowed me to refer to it liberally in my own submission. Johnnie took the same approach in his evidence, which you can find here.

All the evidence submitted is gradually being made available here. Interesting reading! Let’s see what comes of it.

General Comments

The structure of the Bill as a whole lacks coherence at present. The Policy Memorandum states one of the objectives of the Bill as being:1

the Scottish Government’s vision…for a stronger relationship between the people of Scotland and the land of Scotland…through a democratically accountable and transparent system of land rights.

Transparency requires the legislation to be accessible and comprehensible to non-specialists. This is especially important in relation to the powers given to community bodies in Part 5. It seems unlikely that these powers will be utilised as frequently or to the maximum effect they could be if community bodies are unable to understand what is required of them without the help (and expense) of a lawyer.

Further, detailed examples of the confusing structure of the Bill and the lack of precision in key terms can be found in the written evidence submitted by my colleague, Dr Jill Robbie.

I would urge the committee to consider significant amendment to the structure and wording of the Bill in order to make it more accessible to the public.

Part 1 – Land Rights and Responsibilities Statement

I support the creation of a Land Rights and Responsibilities Statement to provide a clear and accessible foundation for future legislation and policymaking on land reform. I agree in principle that the Statement should be reviewed every five years. However, given the significance of the Statement, and the desire for transparency and accountability in relation to land ownership and use, I do not consider it appropriate for the Statement simply to be created by Ministers and laid before Parliament. The Statement should be created in legislation, in order to benefit from the full scrutiny of the legislative process.

The Policy Memorandum indicates that the Ministers “would intend to consult”2 the public on the drafting of any LRRS. The Bill should be amended to include a requirement that such consultation take place before the drafting of any LRRS to ensure transparency and accountability in the process.

Part 2 – The Scottish Land Commission

I support the establishment of the Scottish Land Commission (“the Commission”).

I agree with the detailed written evidence submitted by my colleague Dr Robbie under this heading, in particular to the effect that:

  • The Bill should be amended to provide that the Strategic Plan must be based in the principles of the LRRS, and the Plan should be reviewed every five years following on the review of the LRRS;

  • Section 9(1)(a) should be amended to include a subparagraph (vii) land management, and a further subsection 9(1)(c) should be added to the effect that the Ministers must have regard to the desirability of the Commission (taken as a whole) hailing from or having significant connections with diverse areas of Scotland.

  • The list of proposed Commissioners should be submitted to the Rural Affairs, Climate Change and Environment Committee for approval, and that Committee should have a veto in respect of the appointment of any individual Commissioner.

  • Two Tenant Farming Commissioners should be appointed, subject to the jurisdiction of the Land Court to resolve any deadlock between them.

Part 3 – Information about Control of Land

Section 35(1) as drafted is incredibly broad. The section seems to have been inspired in some way by the original proposal from the LRRG to limit ownership of land in Scotland to legal entities registered in the EU. The Policy Memorandum makes clear that this proposal was considered unworkable,3 but does not go on to explain the type of regulation that Ministers may wish to make under this section instead, or how it relates to the priorities and concerns identified by respondents to the earlier consultation.4 I would suggest that the Bill be amended to include greater specification as to the ambit of any regulations to be made under this section.

Part 4 – Engaging Communities in Decisions Relating to Land

I support the proposals in this part. I agree with the comments in the written evidence of Dr Robbie seeking greater specification in the Bill of terms such as “sustainable development”, “persons with control over land” and “community engagement”.

Part 5 – Right to Buy Land to Further Sustainable Development

I support the introduction of a community right to buy land to further sustainable development.

As noted in the written evidence by Dr Robbie, the provisions allowing for nomination of a third party to hold the land undermine the otherwise strict requirements for community bodies specified in section 42. There are no requirements specified for the third party which raises the question of why there are restrictive rules on what qualifies as a community body for the purpose of Part 5.

I also agree with Dr Robbie’s evidence on the following issues:

  • Defining a community by reference to postcode does not take proper account of the range of shared purposes that may in reality define a community wishing to take advantage of these powers. The Bill should be amended to allow for communities to self-define relative to other factors such as culture, language, land use or interest in a particular cause.

  • Section 45(2) should be amended to make clear that the right to buy may be granted to community bodies by Scottish Ministers. As currently drafted, the section implies that all community bodies already hold this right and are merely seeking consent to exercise it, which is legally incoherent.

  • Section 47 should be amended to include a definition of “sustainable development”. In defining the term, recognition should be given to the potential for conflict between the competing policy aims underlying land reform (social justice vs economic development vs environmental protection) and an indication given of the basis on which such conflicts might be resolved.

  • Section 47 should be amended to included the requirement that, when assessing applications under Part 5, Scottish Ministers must additionally consider relevant planning documentation including the local development plan, and the LRRS.

  • In section 47, the terms “public interest” and “community benefit” should be defined. In particular, it should be made clear if and how there is a difference between them.

  • In section 49, there should be guidance on how Ministers are to adjudicate between competing applications for the same piece of land.

Finally, the Bill should contain provision as to enforcement mechanisms should the community fails to fulfil the purposes for which the right to buy application was granted. The enforcement powers conferred on planning authorities in Part VI of the Town & Country Planning (Scotland) Act 1997 as a starting point for legislative provision here.

1Land Reform (Scotland) Bill, Policy Memorandum (SP Bill 76-PM), para 4.

2 Land Reform (Scotland) Bill, Policy Memorandum (SP Bill 76-PM), para 43.

3 Land Reform (Scotland) Bill, Policy Memorandum (SP Bill 76-PM), para 101.

4 Land Reform (Scotland) Bill, Policy Memorandum (SP Bill 76-PM), para 102-106

 

 

Disinheriting your children: Ilott v Mitson, succession policy and Scottish law reform

Frankie McCarthy cases, Succession , , , ,

I thought I might take advantage of the surprising (to me anyway) media interest in the English Court of Appeal decision in Ilott v Mitson to raise a couple of questions about the current Scottish succession consultation. The key question here is: should parents be able to disinherit their children? Your answer could be: (a) Always; (b) Never; or (c) the very lawyerish In Certain Circumstances.

England plumps for option (c). The default position is that a parent can disinherit their child if they so wish. However, the Inheritance (Provision for Family and Dependants) Act 1975, ss1-2 allows a child to ask the court for money from her parent’s estate where “reasonable financial provision” has not been made for her. The Act lists various factors the court should take into account in determining whether “reasonable financial provision” has been made, and if not, how much money the child should receive to make up for it. That list includes the child’s current and future financial needs and resources, and the needs and resources of any competing beneficiary.

In Ilott, the appellant was the adult child of the deceased Mrs Jackson. Mother and daughter had been estranged for 26 years prior to the death, three attempts at reconciliation proving unsuccessful. Mrs Jackson had left her £486, 000 estate almost entirely to three charities with which she had no particular connection in life – the Blue Cross Animal Welfare Charity, the RSPB and the RSPCA. Her daughter, who by this point had raised five children, lived with her husband in a council house, dependent on benefits.

Awards under the 1975 Act tend to be made to a disinherited child where: (i) the child is under the age of majority on her parent’s death; (b) an adult child has remained dependent on her parent as a result of disability, or; (c) a particular moral obligation is deemed to have arisen, for example, where an adult child has taken care of her parent in old age. The fact that none of these circumstances arose in the Ilott case seems to be the source of the consternation about the decision in the media reports, but the legislation does not restrict awards to these circumstances. The court found an award to Mrs Ilott “reasonable” because of her straitened financial situation, which seemed likely only to deteriorate as she grew older, in combination with the fact the competing beneficiaries – the charities – had no needs and resources to be taken into account. The court did not consider it relevant that part of Mrs Jackson’s estate was made up of money inherited from the appellant’s father on his death, and gave little weight to the fact that Mrs Jackson had been (in the finding of the judge at first instance) “unreasonable, capricious and harsh”. According to Arden LJ, the wishes of the deceased, although obviously relevant, are limited by the discretion Parliament chose to give to the court when introducing the 1975 Act.

The interest of all this for Scotland is that the Government is currently consulting on whether to remove the protection from disinheritance that children in Scotland have enjoyed since the 1300s. As I explained in more detail in another post, children’s current non-discretionary entitlement to one third of their deceased parent’s moveable estate could be replaced, either by a non-discretionary “legal share” of 25% of what they would have received on intestacy, or by an entirely discretionary award available only to dependent children under 18 (or under 25 in full-time education or training.)

I recently had a discussion with my Glasgow colleagues @dotreid, @culbokster, @jilljrobbie and @stephen_bogle about responses to the consultation paper. We asked a lot of the same questions that the media have been asking in relation to the Ilott decision. When should children be protected (or not)? Why? What about the wishes of the deceased? What does this mean for our understanding of “family”? What about intergenerational social justice? (I haven’t seen the media ask that last question yet, to be fair.)

The consensus in our discussion was that there are substantial policy issues surrounding reform of the law of succession that have not been addressed or even acknowledged in the consultation paper. Family law policy in Scotland and the UK recently tends towards the idea that law should facilitate the choice to enter or leave intimate adult relationships, but the parent/child bond is for life. Current low wages and high housing costs mean even fully employed adult children will struggle to save the deposit required to buy a house – does intergenerational fairness require that parents who have benefitted share the wealth of the house price bubble? If adult children can always inherit, should they also take responsibility for the care of elderly parents, perhaps relieving some of the financial burden on the state? Should our succession reforms aim towards social justice more broadly in the same way as our land reform policy arguably does, making it more difficult for wealth to be concentrated in the hands of a small number of families? Should our succession policy be more actively pro-business, taking care to ensure that, whatever the rules, family businesses should not have to be dismembered to ensure satisfaction of inheritance claims?

Whatever view you take on questions like these, it’s hard to avoid the fact that succession policy is an acutely political issue. And yet, avoid it the consultation paper does. The reforms are cast as essentially technical, aiming to simplify the law and make it “fair”, that most nebulous of concepts. It seems unlikely that Mrs Jackson would find the Court of Appeal’s decision fair, but in Scotland, Mrs Ilott’s entitlement would have been automatic.

I think my response to the consultation paper is likely to include a preamble raising this broader policy point: what are we even trying to do here? An answer to that question might help us decide whether Mrs Ilott was deserving, or Mrs Jackson (and the RSPB etc) disrespected.

Impact and the REF: notes from #REFManc15

Frankie McCarthy Uncategorized , , , , ,

(Note for readers who don’t work in a UK University: you may or may not know about the Research Excellence Framework, the process by which the Government assesses the quality of research produced by publicly funded Universities in the UK in order to determine how much money each institution should get from central funds. The most recent iteration of this exercise (REF2014) included, for the first time, assessment of the “impact” achieved by each institution’s research – in other words, what use has the research been to users outside of academia? If your research has resulted in the development of a cure for cancer, a significant new piece of legislation, or you are Brian Cox, your impact is 4* (the highest possible). If your impact is published in a journal no-one reads, never to be thought of by anyone outside of academia, your impact is 0*.)

This morning, in my capacity as Glasgow School of Law’s Impact Seneschal (technically Officer, but come on) I attended a conference entitled “Research Impact: Evidencing the REF”, a discussion of the…er, impact of including impact in REF2014 and what might happen re impact on the next go-round, presumably REF2020.

Presentation of the results of HEFCE-commissioned research into the use of impact in REF2014 formed part of the discussion. Catriona Manville at RAND Europe spoke about her evaluation of the impact process at the submissions stage and at the evaluation stage (see the reports here). Jonathan Grant at KCL carried out a “synthesizing” of the submitted impact case studies with the aim of finding out what sort of impacts were being achieved, where and in what disciplines (pilot study reported here, with full report to follow). Steven Hill of HEFCE also gave a presentation, and there was a Q&A session with experts including Michael Pidd, a member of REF Panel C (which is where law is assessed.)

From the discussion, the headline news is roughly as follows:

  • First things first: impact is here to stay. There may be some tinkering changes with the process for the next REF – the impact template may be subsumed within the environment template, for example – but the overall gist will be the same. (Disclaimer: probably. Unless they change their minds.)
  • RAND found that, on average, production of each impact case study cost the submitting University £7,500 and took 30 days. The average cost for production of the impact template was £4,500. Some took the view that this is reasonable given the amount of money being distributed by way of the REF. Others did not.
  • 84% of case studies were rated 3* or 4*. It seems that evaluation panels found the 0* – 4* scale a bit too limited to differentiate properly between different case studies, and it may be that a wider scale (0* – 10*? No one mentioned specifics) is employed next time.
  • Case studies were assessed by the REF panel members together with non-academic users. There wasn’t much support for changing this mechanism next time around. Most of the speakers seemed fairly suspicious of the idea of trying to formulate some kind of metric for impact assessment – neither Panel B nor C had used journal rankings as part of the impact evaluation process, and the KCL research suggests that the range of impacts is so diverse than developing any meaningful metric would be impossible.
  • According to Simon Steven (thanks @_loveresearch!) Hill, the ratio of case studies:FTE staff submitted is unlikely to change (unless the staff selection process as a whole changes, which I gather is likely to be a question in a forthcoming post-REF2014 consultation – staff selection processes cost Universities a lot of money, plus, as some of us may have noticed, they are not great for staff morale.)
  • It is likely that case studies submitted last time will be eligible for resubmission provided that they have had further/ongoing impact since 2014. The general understanding seems to be that impacts can take a long time to develop – longer than one REF cycle in many cases – and that should be reflected in the assessment process.

Some difficult questions and things to think about:

  • There was quite a lot of discussion about whether or when public engagement counts as impact. Some pointers: (a) engagement needs to be about research, not just basic knowledge of the subject matter – giving a talk that could come from a textbook is unlikely to count; (b) it doesn’t need to be your own research, so long as it is research being conducted by someone in your department/school/whatever – the example given here was Brian Cox, who is actually a particle physicist but covers a lot of the astronomy work conducted by others in his department in his media work; (c) numbers of people at your talk/downloading your podcast/visiting your webpage etc is not evidence of impact in itself – you need to capture how it affected their views, by eg having exhibition visitors fill in evaluation forms or recording what was tweeted about your programme.
  • How are you supposed to compare an economic impact with a policy impact with a cultural impact? It seems the panels calibrated by comparing like with like, not comparing across categories, since it’s apples and oranges. (Yes, I know about that paper comparing apples with oranges.)
  • How do you measure negative impacts – research which resulted in something not happening? The KCL research suggests Universities just didn’t attempt this in their case studies, but I think that’s a problem for something like law – excellent legal research might well produce the conclusion that legislation should not be introduced, for example.
  • Luke Georghiou from the University of Manchester pointed out that, for all the political talk about the need of academics to engage with users, there is little mention of the need of users to actually listen to anything we’re saying. So it’s probably worth thinking about ways that we, institutionally or individually, can contribute to a bit of cultural change there.

There conference twitter hashtag #refmanc15 had a few busy users for anyone who wants more detail. Now all I need to do is evaluate the impact of my post about the impact of impact.

Scottish Government Consultation on the Law of Succession – Part 2

Frankie McCarthy cohabitation, Succession , , ,

Earlier this week, I blogged about the proposals on intestacy and protection from disinheritance in the Scottish Government’s Consultation on the Law of Succession. The third major area covered in the consultation is succession rights of cohabitants.

Ten years ago, cohabitants in Scotland had no rights in respect of the estate of their deceased partner (subject to a couple of caveats that we don’t need to be concerned with here.) The Family Law (Scotland) Act 2006, s 29 enables a cohabitant (defined in s 25) to apply to court for a share of an intestate deceased’s estate. The section lists some factors the court should take into account when considering whether to make an award, and specifies that the total amount cannot exceed what a spouse would have received in the same circumstances. What the section does not do is clarify the purpose the court should be trying to achieve when making its decision. Should it be aiming to protecting financially vulnerable bereaved cohabitants? Or making sure contributions to the relationship by the cohabitant are repaid? Should the court be trying to do what the deceased would have wanted? It’s not clear. Sheriff Janys Scott QC pointed out the difficulty here in Windram, applicant, a case where the deceased left behind both a long-term cohabitant and a couple of kids. The greater the award to the cohabitant, the less the children would receive, so while it’s fine to say any award should be “fair”, the question is “fair to whom”?

The Commission propose repealing s 29 and replacing it with an entirely new two-stage process. At stage one, the court will determine whether the claimant was cohabiting with the deceased based on a list of indicative criteria – whether they shared a home, the stability of the relationship, the existence or not of a sexual relationship, whether they raised children together and whether they appeared to others to be a couple. If the claimant passes this test, the court will then determine the share of the estate they should receive as a percentage of what a surviving spouse would have received in the same circumstances. The “appropriate percentage” will be assessed based on three factors – the length of the cohabitation, the nature of the couple’s interdependence during that time and the contribution made by the surviving cohabitant to their life together. Where a couple have cohabited for 25 years, run a business together and raised two children (as in the Windram case), the cohabitant would receive 100% of what a spouse would have received in the same circumstances. In a shorter relationship, where perhaps the couple kept their finances largely separate and did not parent together, the percentage would likely be much less. Some examples are given in the consultation paper, and more in the original Commission report (pages 71-73).

The Commission also suggested that this right should be available whether the deceased left a will or not, which is a significant change from the current position.

I am generally positive about the Commission’s recommendations here, so much so that I have encouraged New Zealand to adopt a similar approach. (They don’t seem to have taken me up on that so far, oddly.) There is certainly space to argue about the particular factors to be taken into account at both stages of the proposed system, but the “appropriate percentage” idea would introduce much greater clarity into the law whilst still allowing for some exercise of discretion, inevitably necessary when dealing with the huge variety of relationships that fall under the banner of “cohabitation”. It is worth bearing in mind that in most situations of this type, the impartial judgment of the court will not be employed. Claims will actually be resolved “in the shadow of the law” by parties or lawyers negotiating a settlement. More defined parameters as to what a cohabitant can expect to receive are especially welcome from that perspective. I am also lucky enough to be supervising a research student, Ellyn Fyvie, who is writing her Masters thesis on succession rights of cohabitants at the moment – her work will be a great help in figuring out my own views on this, although I will be encouraging her to submit a consultation response of her own.

Scottish Government Consultation on the Law of Succession – Part 1

Frankie McCarthy Succession , , ,

The launch of the Scottish Government’s Consultation on the Law of Succession was somewhat overshadowed by the Land Reform (Scotland) Bill appearing earlier last week (on which see discussion here and here). Succession reform has been on the agenda for a long time, however, with the proposals contained in the consultation paper dating back to a Scottish Law Commission Report from 2009. Although some of those proposals found their way into a fairly technical Succession (Scotland) Bill introduced earlier in June, the meat of the Commission report has been held over until now. The reforms suggested by the Commission are in some ways considerably more radical than anything in the current land reform discussion, aiming as they do to sweep away legal rules that have been in place since the 1300s. Laws of that vintage might usually be arcane and unheard of in practice, but for succession rules, nothing could be further from the truth. Unless our parents die penniless, and we do the same ourselves, succession is the one area of law that will inevitably touch all of our lives.

So what is proposed? The consultation paper sets out three main areas of reform, with a gallimaufry of “additional matters” covered in chapter 5. This blog post will focus on the first two (intestate succession and protection from disinheritance), with consideration of the third area (succession rights for cohabitants) to follow in a later post.

First up is potential reform of the law on intestate succession – in other words, what happens to someone’s property when they die without making a will. The headline proposal is that the distinction made between inheritance rights over land/buildings and other types of property should be removed, so that succession would no longer be “property-specific”. This is significant in land reform terms since, under current rules, land/buildings do not form part of the property over which all children have protected inheritance rights: as Lallands Peat Worrier put it, there is nothing to stop a father leaving his country estate to his first son, who leaves it in turn to his first son, and so on forever. Curiously, the consultation paper makes no mention of the land reform agenda in this connection, the proposal being tied rather to the broader policy aims of simplifying succession rules and achieving a “fair” outcome for all family members.

If the Commission’s proposals are accepted, the new rules would be:

  • Where someone dies leaving a spouse (or civil partner, please take that as read for the rest of the post) but no children (or grandchildren, great-grandchildren etc) , the spouse inherits everything;
  • Where someone dies leaving children but no spouse, the children inherit everything;
  • Where someone dies leaving a spouse AND children, the spouse receives a threshold value of property, and anything remaining after that is split in two, with half going to the spouse, and the other half divided between the children.

The value of the “threshold sum” is a matter of some discussion in the paper, with suggested figures ranging from a minimum of £335,000 to a maximum of £650,000, justified by reference to recent Scottish house prices and the current regime of prior rights claimable by a spouse in intestacy. The government support the Law Commission policy objective that a surviving spouse should generally be able to retain the family home (also an objective of current succession law), and some time is spent considering the correct approach where the family home is worth more than the threshold sum. Since 94% of Scottish properties are valued lower than even the minimum proposed threshold sum, however, and many of those worth more than £335,000 will actually be owned in common by spouses, the number of estates where the threshold sum prevents the surviving spouse remaining in the family home is likely to be extremely small.

The second main area of consultation relates to protection from disinheritance. This is relevant where the deceased has left a will, but it contains no provision (or relatively meagre provision) for their spouse and/or children. At present, the spouse of a deceased is always entitled to inherit at least one third of the moveable property (anything that isn’t land and buildings) even where the deceased has specifically excluded the spouse in the will. This proportion rises to one half of the moveable property if there are no surviving children. The same rules apply for children – entitled to share a third of the moveables as the “bairn’s part”, rising to half if there is no surviving spouse, regardless of their exclusion from the will.

Following on from the proposals on intestacy, the Commission again propose that succession rights here should no longer be property-specific. A surviving spouse would instead be entitled to a “legal share”, calculated as 25% of what they would have received on intestacy. So far, so non-controversial, assuming you are on board with removing the property-specific aspect of inheritance claims (a bold assumption.) In respect of children, however, there is more scope for argument. The Commission offer two models, without offering an opinion on which is preferred.

In option one, children, like spouses, would be entitled to a “legal share” of 25% of what they would have received on intestacy. Two potential problems have been raised here. Agricultural stakeholders have pointed out that where the huge majority of a deceased’s estate is made up of one asset, such as a farm, parcels of land may need to be sold off to pay a legal share claim, and this may compromise the viability of the business as a whole. This difficulty arises from the proposed abolition of the property-specific nature of children’s inheritance rights. Specific consideration is given to this issue in chapter 3A of the paper, including consultation on whether agricultural units should be exempted from the legal share regime. The other potential problem is that under the proposed new intestacy rules, where the deceased’s property as a whole is worth less than the threshold sum, the legal share to which children are entitled would amount to zero. Children could effectively be disinherited.

That concern is amplified in relation to the considerably more radical option two. Here, the inheritance rights of adult children would be abolished entirely, with dependent children (those under 18, or under 25 in full-time education or training) given a right to claim a capital sum calculated on the basis of what is required to maintain that child until they are no longer dependent. In other words, the claim would amount to posthumous payment of a parent’s obligation to aliment their children under the Family Law (Scotland) Act 1985. Straightforward disinheritance of adult children as a matter of law is a significant break with Scots legal tradition, and this proposal caused some consternation when the Commission’s report was originally published. The government adopt the Commission’s argument that what is needed here is a balance between protection of the family and respect for the autonomy of a deceased to do what he likes with his property after death. How much respect should be accorded to each of these objectives is primarily a matter of political debate, although it might be worth noting that anecdotally, in my discussions of these proposals with students since 2009, virtually-adult children usually support the right of parents to do what they want with their money – it is the parents I have discussed it with who are horrified by the idea of children being disinherited entirely just because they have “grown up”.

The consultation is open until Friday 18th September, for those of you looking for some way to occupy yourself during the long summer evenings. There is quite a lot of interest in the topic from my colleagues at Glasgow – I imagine we’ll be submitting a response (or maybe several).