The necessary steps: How to validate a delayed transfer of croft tenancies

What happens if croft tenancies are not transferred by succession within the statutory time limits? It may seem reasonable to assume that such transfers would be invalid. The Scottish Land Court, in a recent decision, contended that transfers completed out with the time limit could be terminated at the Landlord’s discretion. This question has created uncertainty in an area of the law that is already complex. However, a recent Inner House Case sought to definitively answer this question and highlighted that, if certain steps are taken, such a transfer could be valid. Pattinson v Matheson provides valuable insights into what steps an executor must take to ensure the validity of transfers that were not made within statutory time limits. This article will examine the case and what its ramifications might mean in practice going forward.

Time limits and the statutes in question: 24 month period

In situations where the deceased leaves a will, the executor has 12 months to effect a transfer. If the transfer is not carried out within this period, then it falls into intestacy. The time period for intestate transfers is set out by the two pieces of legislation which applied to this case:

Succession (Scotland) Act 1964:

The key provisions here are sections 16(2) and 16(3A) which provide that either the landlord or the executor can terminate the croft tenancy if it is not transferred within 24 months from the death of the crofter.

Crofters (Scotland) Act 1993:

The relevant provisions here are section 11(1)-(4). Under these provisions, the executor of an estate for which there is no will must give notice of any transfer of crofts to the landlord as soon as possible. If no notice is received within 24 months from the death of the crofter, the landlord must notify the Crofting Commission. The Crofting Commission, in turn, notify the landlord, the executor and anyone who may succeed to the estate that the Crofting Commission propose to terminate the tenancy and declare the crofts void.

A timeline of events

14 September 2012 - Mark Matheson, the respondent’s father died intestate. He was the tenant of two crofts in the village of Shieldaig. The only individual entitled to succeed to these crofts was Mark Matheson (the respondent).

8 September 2014 - Mr Matheson sent a letter to the applicant Mr Pattinson together with a partially completed notice requesting the transfer of the crofts to himself.

30 November 2014 - Mr Matheson was confirmed as executor.

3 June 2019 - Mr Matheson (acting as executor) executed a “Form of Docket” nominating himself as the individual entitled to the croft tenancies.

4 June 2019 - Mr Matheson sent a letter to the Crofting Commission advising that:

1. He had confirmed to the estate.
2. He had transferred the tenancies by docket to himself.
3. He had given Mr Pattinson notice of (1) and (2) above.

13 June 2019 - Mr Matheson executed another docket, purporting to transfer the tenancies to himself again.

October 2019 - Mr Pattinson’s agents intimated that he did not consent to an extension of the 24 month time limit under the Crofters (Scotland) Act 1993. Mr Pattinson also intimated his intention to have the crofts declared vacant and made two applications to the Scottish Land Court to challenge the entries in the Register in respect of the two crofts. 

23 September 2021 - The Scottish Land Court determined that Mr Pattinson could terminate the tenancies. The Land Court contended that, since the tenancies were not transferred within the 24 month period, they could be terminated by Mr Pattinson.

Mr Matheson’s argument

Mr Matheson contended that the croft tenancies were transferred validly by virtue of the steps he had taken. These steps were:

1. Signing and intimating the 2014 notice to Mr Pattinson.
2. His confirmation in 2018. This ensured that, even if the 2014 notice was invalid (due to Mr Matheson not being a confirmed executor at the time the notice was made), his confirmation cured the 2014 notice of any potential invalidity.
3. Executing the form of docket, sending a letter to the Crofting Commission and executing another form of docket purporting to transfer the tenancies to himself. Mr Matheson argued that, even if the 2014 notice was defective, his actions in 2019 were sufficient to validly effect the transfer.

Mr Pattinson’s argument

However, Mr Pattinson argued that the tenancies had been terminated. This reasoning was based on section 16 of the Succession (Scotland) Act 1964. The 1964 Act provides that the following must occur within the 24 month period after the death of the crofter:

1. The executor has to confirm to the deceased’s interest in the croft.
2. The executor has to transfer the interest in the croft.
3. The executor has to notify the landlord of their confirmation to and transfer of the interest in the croft. In this case, this was the 2014 notice.

In particular, Mr Pattinson contended that the 2014 notice was invalid because the first and second steps outlined above were not taken. Mr Matheson had not confirmed to the estate or transferred the interest in the crofts within the 24 month period after the crofter’s death. Therefore, Mr Matheson’s notice to Mr Pattinson in 2014 was invalid. This allowed Mr Pattinson to argue that the tenancies had been terminated validly, and he contended that Mr Matheson’s failure to follow steps one and two above resulted in the automatic termination of the croft tenancies.

Decision

The Inner House, whose opinion was delivered by Lord Carloway, ultimately found in favour of Mr Matheson. The court held that:

1. Section 16 of the Succession (Scotland) Act 1964 cannot operate without an executor who has confirmed to the deceased’s interest. Whilst the executor remains unconfirmed the estate is in a “statutory limbo”. In this “statutory limbo” a landlord cannot give notice to terminate as there is no executor, there is simply no one to give notice to. Therefore, Mr Pattinson’s notice to terminate was invalid.
2. Once confirmation is granted it has a retrospective effect to the date of death. This means that transfers effected by the executor prior to their confirmation will be retrospectively validated, making Mr Matheson’s transfers valid.
3. The 24 month period is not a strict time limit by which interest “must” be transferred. The 24 month period is protective in nature, its purpose is to give the executor time to carry out the necessary steps for the transfer of croft interests.
4. The grant of confirmation in 2018 retrospectively validated Mr Matheson’s 2014 notice, meaning that the transfer of the croft tenancies was valid.
5. Even if the 2014 documents were invalid, Mr Matheson’s actions in 2019 after he was confirmed as executor (in completing and intimating further documentation and endorsing a docket) were enough to sufficiently effect the transfer.
6. Mr Matheson was the tenant of the crofts and the Land Court had erred in their determination.

However, this case may not be completely resolved. A dispute has arisen between parties with regard to whether or not Mr Pattinson received the 2014 documentation. The dispute is unlikely to challenge the outcome. The key takeaway is that Mr Matheson took all the necessary steps to transfer the croft tenancies despite not having confirmed to and transferred the interest within 24 months of the crofter’s death.

Wider implications: what does this mean in practice?

While the case has not caused a shift in the law, it is still a useful case as it:

1. Clarifies a complex area of the law
2. Serves as a useful reminder to affected parties

1. Clarifying a complex area of the law

In this case, the Inner House established that the 24 month period is a protective one. Landlords seeking to terminate croft tenancies cannot rely solely on the fact that the transfer was not effected within the 24 month period. If you are an unconfirmed executor, the protective nature of the 24 month period means that you are not being rushed to take the necessary steps.

The Inner House’s judgement has made it clear that the actions taken by an executor may validate the delayed transfer of a croft tenancy. If you are an executor in a similar position to Mr Matheson, you should ensure that you are being proactive in taking the same steps Mr Matheson took. Taking these steps will increase your likelihood of becoming the tenant of such crofts, even if the transfer was delayed.

2. Serving as a useful reminder

This case should remind practitioners that certain pieces of legislation will be interpreted through the purposive approach. When dealing with such legislation, judges will try to ascertain the purpose and nature of the legislation. This should encourage practitioners to not exceedingly rely on the words used in legislation. Practitioners and crofters should be aware that crofting legislation is generally interpreted in this way. In this case, the Inner House considered that Mr Pattinson’s arguments ran contrary to the general purpose of crofting legislation. Crofting legislation is intended to “ensure that a crofter can inherit the family croft “without any expense or process of law” (MacIver v MacIver 1909 SC 639). Even if Mr Matheson could have acted with more urgency, the Inner House found that the purpose of the legislation was not to penalize Mr Matheson, but to ensure he succeeded to the croft tenancies.

Practitioners and executors should also be reminded that, despite the case’s outcome, it is always best practice to ensure that all steps are taken within the 24 month period. If you are an executor in such a position make sure that you confirm to the estate and transfer the interest in the croft within the 24 month period. This will ensure your tenancy of the croft and will help you avoid unnecessary and costly litigation.

Article co-authored by Harry Oliff, Solicitor in the rural property and business team and Alejandro Coghill, Trainee in the property and infrastructure team.