Agricultural holdings — Arbitration — Model clause — Whether action by tenants for breach of repairing obligation should be stayed pending reference to arbitration
The plaintiffs
held a tenancy of an agricultural holding to which the model clauses under
Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations
1973 (SI 1973/No 1473) applied; the defendants are the landlords. The
plaintiffs brought proceedings claiming breaches of the repairing obligations
of the defendants. The defendants, who did not admit any breach of the
repairing obligations, were granted a stay of the proceedings pending a
reference of the matters in issue to arbitration by reason of para 15 to the
Schedule to the 1973 regulations. The plaintiffs appealed.
application for summary judgment to be made by the plaintiffs under Ord 14 of
the RSC.
The following
case is referred to in this report.
Hayter v Nelson [1990] 2 Lloyd’s Rep 265
This was an
appeal by the plaintiffs against the decision of Knox J, who on March 13 1992
affirmed an order of Deputy Master Bowman on September 17 1991 granting a stay
of two actions, one brought by the plaintiffs, Oscar James Tustian and James
Edgar Tustian, against the defendants, James Middlemas Johnston and the
personal representatives of Major E Robb deceased, and the other by the
plaintiff, Mark Andrew Tustian, against the defendants, James Middlemas
Johnston and Anastasia Johnston (the trustees of the Eustace Robb Will Trust).
David
Neuberger QC and Stephen Rubin (instructed by Burges Salmon, of Bristol)
appeared for the appellants; Edward Cole (instructed by Hewitson Becke &
Shaw, of Northampton) represented the defendants.
Giving the
first judgment at the invitation of Russell LJ, EVANS LJ said: This is
an appeal by the plaintiffs in two actions from a judgment given by Knox J on
March 13 1992. It is sufficient to say that the learned judge decided that both
actions should be stayed pursuant to the provisions of an arbitration clause in
terms which are found in para 15 of the Schedule to the Agriculture
(Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973 (SI
1973 No 1473), ie regulations made under the Agricultural Holdings Act 1948,
since replaced by the similarly named 1986 Act. The material words of para 15
are these:
If any claim,
question or difference shall arise between the landlord and the tenant under
the foregoing provisions hereof . . . such claim, question or difference shall
be determined, in default of agreement, by arbitration under the Act.
The claims in
both actions arise from allegations that the defendant landlords are and have
been in breach of their covenants to repair in leases of the plaintiffs’, farm
property. The plaintiffs’ evidence includes a schedule of dilapidations and the
findings of the Agricultural Lands Tribunal (South Eastern Area), Mr Edward
Evans-Lombe QC, chairman, of January 8 1988. It should be emphasised that those
proceedings, as well as being some years ago, were concerned with a different
issue from the question of repairs. However, in the course of the tribunal’s
reasons and findings there was reference to the farm having fallen into ‘a
lamentable state of disrepair’.
The
defendants’ only response to the plaintiffs’ evidence was, in effect, to make
no admission with regard to the allegation that there had been a breach of the
covenant to repair, although they made it quite clear that there is a
substantial issue as to the extent of any such breach or, conversely, as to the
extent to which such repairs are now required. Para 7 of Mr Dixon’s* affidavit
reads as follows:
In this
action the plaintiff alleges that the defendants are in breach of their
obligations to repair and that as a result the plaintiff has suffered loss in
his farming enterprise. The defendants put in issue the allegations of
disrepair, and the losses alleged by the plaintiff. Moreover, the defendants
deny that state of repair of the buildings on the farm has caused or contributed
to any losses alleged by the plaintiff.
*Editor’s
note: Mr Dixon is the defendant’s solicitor.
The judgment
of Knox J distinguishes between what may be called ‘the fact of disrepair’ and
the extent of any such dilapidations. He said:
In both
actions the defendants, who have not, it is accepted, taken a step in the
action and therefore have not served a defence, have put in evidence to show
that they put in issue the disrepair and also the extent of loss that may have
been suffered by the respective plaintiffs in respect of any breach by the
defendants or their predecessors. It is evident that there may be more doubt
about the second, that is to say the loss, than about the existence of a
substantial amount of disrepair in respect of which the findings of the
Agricultural Lands Tribunal need not be repeated.
The primary
issue in the present appeals is whether the issues that arise in the action
must be referred to arbitration. But a preliminary question has arisen in this
way, that it is necessary to identify what those issues are. So far as
liability is concerned as distinct from the amount of any loss, there is merely
the non-admission which I have already quoted. That, it may be assumed, is not
enough to disclose the existence of a triable issue for the purposes of an
application for summary judgment under Ord 14. No such application is before
the court, but recent authorities have shown that the question which arises on
an Ord 14 application (ie whether a triable issue is shown to exist and putting
on one side the related question whether for some other reason a trial might be
ordered) is essentially the same as that which may arise on an application for
a stay pursuant to an arbitration clause (ie whether there is a dispute or
difference as required by the clause which is capable of and is required to be
referred to arbitration). Those authorities have recently been reviewed by
Saville J in Hayter v Nelson [1990] 2 Lloyd’s Rep 265 and I can
refer without quoting to the judgment at pp269-271. There is, as I observed, no
Ord 14 application in the present case nor has there been one. Strictly it is
not necessary for the plaintiffs to make such an application and it might be
said that it was for the defendants on the present application to produce their
evidence showing, if they so contend, that there is a triable issue with regard
to liability as well as amount.
In the course
of the appeal this morning, discussion has shown that this case is not without
its complications so far as liability is concerned, not because of the absence
of anything more than a mere non-admission or denial, but because the nature of
the claims is such that there is considerable scope for discussion as to
whether one, or more than one, cause of action is involved and, if more than
one, how many causes of action upon which the plaintiffs may seek judgment. In
these circumstances, and in the light of the amended notices of appeal for
which leave has been given this afternoon, it seems to me that far the best
course in the interests of both parties is to permit an Ord 14 application to
be made in both these actions and that we should therefore allow this appeal to
the extent of lifting the stay for that purpose only. In the light of the
outcome of the Ord 14 applications, it will then be possible for the parties to
reconsider the position and, if necessary, to restore the appeal for further
hearing or for such order as may seem appropriate in that new situation.
For those reasons
I would allow this appeal to the extent that I have indicated.
HOFFMANN and RUSSELL LJJ agreed and did not add anything.
Appeal
allowed in part; costs reserved.
