Agricultural holdings — Family dispute — Arrangement made between a mother, one of two executors and trustees in whom a farm was vested, and a son whereby the son carried on the farming — No formal document setting out the legal nature of the transaction — Son paid his mother an annual sum in respect of his occupation which, although more than nominal, was far below a market rent — After the mother’s death a dispute arose between the son and his sister as to the nature of his interest and the matter came before the court to determine as a preliminary issue whether the son had acquired a protected tenancy of an agricultural holding — Scott J decided that there had been an intention to create legal rights; that the payment made by the son, although small, constituted consideration for an agreement; and that the arrangement was an agreement within the meaning of section 2(1) of the Agricultural Holdings Act 1948, whether it in form created a tenancy or a licence — As, however, the mother had been one of two executors and trustees, the question arose as to whether an arrangement made by her was binding on her co-owner — Held that it was, as the evidence showed that the co-owner had been aware of the arrangement relating to the son’s occupancy and had allowed it to continue without questioning it; by standing by he had adopted the arrangement — The son consequently acquired a tenancy of the farm fully protected under the 1948 Act
The plaintiff
in this action, which concerned a farm called Lodge Farm, at Upper Longdon,
near Rugeley, in Staffordshire, was Mrs Monica Collier, the first defendant was
her uncle, Herbert Hollinshead, and the second defendant was her brother,
Reginald Hollinshead. The present report is of a preliminary issue which the
master directed to be tried.
Paul E C White
(instructed by Tedstone George & Dove, of Wolverhampton) appeared on behalf
of the plaintiff; D A McConville (instructed by Moseley Chapman & Skemp, of
Lichfield) represented the first defendant; P Keenan (instructed by Lickfolds
Wiley & Powles, agents for Thomas Jones, Son & Carden, of Manchester)
represented the second defendant.
Giving
judgment, SCOTT J said: On March 30 1982 Master Dyson directed that there be
tried in this action a preliminary issue, namely, whether the defendant, Mr
Reginald Hollinshead, has a tenancy of Lodge Farm, Upper Longdon, near Rugeley
in the County of Stafford, protected by the Agricultural Holdings Acts and
binding on the estate of Charles Samuel Hollinshead.
Charles Samuel
Hollinshead was a farmer who owned and farmed Lodge Farm, a farm of some 79
acres, and lived with his wife and two children at the farm.
On June 25
1933 he made his will. He appointed his wife, Veronica Betty Hollinshead, and
his brother, Herbert Hollinshead, his executors and gave his whole residuary
estate to them upon the usual administrative trust for sale and upon trust to
divide the net proceeds of sale into two equal shares, one share to be held
upon trust for his wife absolutely, the other share to be held upon trust for
his wife for life and after her death for their two children absolutely. The
will contained an express power for the trustees, if Mrs Hollinshead so wished,
to permit her to carry on the farming business on Lodge Farm.
Mr and Mrs
Hollinshead had, as I have said, two children, Reginald, who was about nine
years old at the date of the will, and Monica, who was some six years younger.
Mr Charles Hollinshead’s brother, Mr Herbert Hollinshead, was also a farmer in
the same neighbourhood. He was described in evidence as an astute farmer. He is
now some 87 years of age.
Mr Charles
Hollinshead died on June 24 1946, leaving his wife and the two children
surviving him. They continued to live at and farm Lodge Farm. Mr Reginald
Hollinshead was at that time 22 years old. He had worked on his father’s farm
since he was 14 years old and, after his father’s death and probably for some
years previous to the death, the burden of farming Lodge Farm was assumed by
him.
In January
1951 Monica was married. She became Mrs Monica Collier. Her husband, too, was a
farmer, working on his father’s farm, also in the neighbourhood. The married
couple made their home at that farm. Later on Mrs Collier’s husband took a
tenancy of a 200-acre farm, Congreve Manor Farm, Pentridge, Staffordshire, and
they moved to live there. Mr Collier died in 1967, but Mrs Collier continued to
farm on her own account and still lives at Congreve Manor Farm.
In April 1951
Mr Reginald Hollinshead married. His mother decided that the married couple
should have Lodge Farm to themselves, so she moved out. A piece of land in
Upper Longdon was purchased, a bungalow was built on it and Mrs Hollinshead
moved into the bungalow. She herself paid for the cost of the land and the
building. She remained in this bungalow until 1967 when, following the death of
Mr Collier, she went to live with her daughter, Mrs Collier, at Congreve Manor
Farm. The bungalow was sold in 1976 for some £13,000. Mrs Hollinshead died on
November 13 1978. By her will dated November 19 1975 she appointed her son and
daughter to be her executors and left her bungalow, or, if it should be sold
before her death, as happened, a sum equal to the proceeds of sale to her
daughter, and, subject thereto, she left her estate to her two children
equally.
As I have
said, Mrs Hollinshead moved out of Lodge Farm following Mr Reginald
Hollinshead’s marriage in April 1951. Prior to that time the farming business
had been carried on by Mr Reginald Hollinshead. He had done so, however, not on
his own account, but on his mother’s account, she having the power under her
husband’s will to continue his farming business.
But when
Reginald Hollinshead married, his mother thought that he should begin farming
on his own account, so she moved out and made arrangements with him under which
he was to take over the farming business for himself. He purchased the
livestock and the farm implements with the aid of a loan from National
Westminster Bank and a loan from his mother. His uncle, Mr Herbert Hollinshead,
guaranteed the bank loan and, I have no doubt, knew the purpose for which the
loan was obtained. It was arranged between Reginald Hollinshead and his mother
that he would pay her an annual sum for his use of the land.
His farm
accounts from 1951 to 1969 are in evidence. They show each year the payment of
a sum described as ‘rent’. His evidence was that these were the sums he paid to
his mother under the arrangement I have referred to.
By a
conveyance dated November 30 1964 the two executors, Mrs Hollinshead and Mr
Herbert Hollinshead, sold to Longdon Stud Ltd 32 acres or thereabouts of Lodge
Farm for the sum of £9,900. These 32 acres and the £9,900 were treated by all
parties as part of the one-half share of the estate to which Mrs Hollinshead
was absolutely entitled. Since Lodge Farm was originally between 78 and 79
acres, the parties regarded that half-share as including a further unspecified
7 acres of the 46-odd acres still unsold. Longdon Stud Ltd was a company in
which Mr Reginald Hollinshead and his wife owned 25% of the shares.
Following that
sale, Mr Reginald Hollinshead continued to pay rent annually to his mother but
at a reduced level to take account of the reduced acreage of Lodge Farm. He
continued to pay such rent up to his mother’s death in 1978. Since then nothing
has been paid, although he has, as I understand it, made an unsuccessful
attempt to pay £500 to his sister, Mrs Collier, in respect of rent.
Reginald
Hollinshead was, as a younger man, a National Hunt jockey. As many National
Hunt jockeys do, he moved gradually into training. Accordingly, from an early
date he effected improvements to Lodge Farm in order to make it suitable for a
training establishment. In his evidence he estimated that, over the years, he
had expended £40,000 to £50,000 on such improvements.
Following the
death of Mrs Hollinshead in 1978 and the cesser of her life interest under her
husband’s will, his estate falls to be wound up and distributed. Anything still
to come in respect of the one-half share to which she was absolutely entitled
will form an asset in her own estate. The other half-share, in which she had a
life interest, must be divided between Mr Reginald Hollinshead and Mrs Collier.
This cannot be done unless the major asset of the estate, Lodge Farm, now some
46 acres, is realised. Unfortunately, however, there is disagreement between Mr
Reginald Hollinshead and Mrs Collier as to the basis on which Lodge Farm should
be realised. Mr Reginald Hollinshead contends that the consequence of the
events I have described and his occupation of Lodge Farm is that he became and
is entitled to a tenancy thereof protected under the Agricultural Holdings Acts
and that the farm can only be realised subject to that tenancy. Mrs Collier
contends that he is not entitled to any such tenancy and that the farm should
be realised on a vacant possession basis. The purpose of the preliminary issue
is to determine which of them is right.
The relevant
law is not in dispute. Section 2(1) of the Agricultural Holdings Act 1948
provides that:
where under
an agreement made on or after the first day of March 1948 any land is let to a
person for use as agricultural land for an interest less than a tenancy from
year to year, or a person is granted a licence to occupy land for use as
agricultural land, and the circumstances are such that if his interest were a
tenancy from year to year he would in respect of that land be the tenant of an
agricultural holding, then, unless the letting or grant was approved by the
minister before the agreement was entered into, the agreement shall take
effect, with the necessary modifications, as if it were an agreement for the
letting of the land for a tenancy from year to year,
and the Act
goes on to provide security of tenure for agricultural tenants under tenancies from
year to year.
In order to
qualify for protection, Mr Reginald Hollinshead must, therefore, establish an
‘agreement’ under which he was granted either a tenancy or a licence to use the
land as agricultural land. It is conceded by Mr White, counsel for Mrs Collier,
that Mr Reginald Hollinshead’s use of the land has been a sufficient
agricultural use. The question is whether he can show an agreement for a
tenancy or an agreement for a licence.
It was held by
the Court of Appeal in Goldsack v Shore [1950] 1 KB 708 that the
requisite agreement must be a contract enforceable at law and supported by
consideration. It was held that, accordingly, a gratuitous licence could not
amount to an ‘agreement’ for the purposes of the subsection. It was accepted by
Cross J in Holder v Holder [1966] 2 All ER 116 that the
subsection did not apply to an arrangement which was not intended to create
legal rights at all. I do not myself think that the point which Cross J
accepted was a different point from that which the Court of Appeal stated in Goldsack
v Shore. Consideration is necessary for an enforceable agreement. A
gratuitous licence is not enough. Consideration which is not enforceable at law
is not consideration at all and leaves the occupation enjoyed under the licence
simply gratuitous. On the other hand, if there is, as part of the licence
arrangements, consideration which is enforceable at law, it is not possible to
regard the arrangement as one which was not intended to create legal rights.
I therefore
approach the arrangement between Mr Reginald Hollinshead and his mother under
which he has since 1951 been farming Lodge Farm with a view to deciding whether
or not it was intended to create legal rights.
From 1951 down
to the date of her death, Mr Reginald Hollinshead paid his mother an annual sum
for the use of the farm, which was described in his farming accounts as ‘rent’.
He accepted that the level of the sums paid was far below the level of a full
market rate and he described the payments as ‘nominal’. But the annual sums
paid between 1951 and 1969 varied between £180 odd and £270 odd. They may have
been far below market rent and, in that sense, nominal, but they were none the
less payments of substance. Mr Reginald Hollinshead said in evidence that he
paid the rent by half-yearly instalments and that from time to time his mother
complained if he were late in making payment.
I ask myself
what would have been the position had he failed to make payment and had his
mother sued him for the outstanding amount. I can only conclude that her action
to recover the outstanding amount would have succeeded. I cannot believe that
any court would accept that, in the face of the arrangement made with his
mother, he could decline to pay her. If that be right, then it follows that his
occupation of the farm was not gratuitous in law or in fact and that the
arrangement was not one intended by the parties to be without legal
consequence.
There is, in
addition, the evidence of the building improvements carried out by Mr Reginald
Hollinshead. On the evidence it is clear that his mother and his uncle knew he
was doing this. Neither of them complained or objected to his doing so. These
building activities seem to me to bear the hallmarks of an occupation intended
to be as of right and the inaction of Mrs Hollinshead and Mr Herbert
Hollinshead represent, in my view, an acceptance that that was so.
Mr White has
pressed upon me that the arrangement between Mr Reginald Hollinshead and his
mother was a family arrangement prima facie not intended to have legal
consequences. He cited Jones v Padavatton [1969] 1 WLR 328 in
support of his argument. He supported it further by stressing the improbability
of Mrs Hollinshead intending to do anything apt to produce inequality between
her two children and pointed out that if it is correct that Mr Reginald
Hollinshead has an agricultural tenancy of Lodge Farm inequality between the
two children is the consequence.
I am not
persuaded by these arguments. While it is true that there was here a family
arrangement personal to Mr Reginald Hollinshead and his mother, it was an
arrangement under which payments akin to (if not constituting) rent properly so
called were regularly paid. The occupancy of Lodge Farm permitted under this
arrangement was obviously intended to permit Mr Reginald Hollinshead to carry
on, on his own account, a farming business. The facts of Jones v
Padavatton bear, in my view, no comparison.
As to Mr
White’s second point, it is true that the statutory consequences of creating an
agricultural tenancy will, in the present case, produce a substantial
inequality between Mr Reginald Hollinshead and Mrs Collier and I can readily
accept that Mrs Hollinshead might have regarded such inequality as unfair to
her daughter and not have wished to bring it about. But this inequality is a
consequence of the security of tenure provisions conferred by Parliament on
agricultural tenants and licensees. Mrs Hollinshead put her son into occupation
of Lodge Farm in order that he should farm it. I am sure that in 1951 she did
not give a thought to the Agricultural Holdings Act 1948. The legal
consequences of the arrangement cannot be assessed by reflecting on what she
might have done had she given thought to the implications of the 1948 Act.
Accordingly, I
conclude that the arrangement between Mrs Hollinshead and Mr Reginald
Hollinshead under which from 1951 he occupied and farmed Lodge Farm was an
‘agreement’ for the purposes of subsection (1) of section 2 of the 1948 Act. I
do not need to decide and do not decide whether a tenancy or merely a licence
was thereby created. The indicia, in particular the fact that Mr Reginald
Hollinshead enjoyed exclusive possession, are those of tenancy rather than of
licence. But the legal consequences are for present purposes the same.
The
arrangement or agreement regarding Lodge Farm was one made between Mrs
Hollinshead and Mr Reginald Hollinshead. Mr Herbert Hollinshead was not a party
thereto. Mrs Hollinshead was only one of the two executors in whom the legal
estate in Lodge Farm was vested. Mr White has taken the point that one co-owner
cannot alone grant a licence or tenancy of the land effective against the other
co-owner. That, as a proposition, may be right. Mr White very properly referred
me to a decision of Brightman J, Fountain Forestry Ltd v Edwards [1975]
Ch 1, in which he expressed the opinion, somewhat tentatively, that one
executor could probably contract so as to bind his co-executor in respect of a
sale or lease of land.
In my view
that decision does not by itself permit the conclusion that Mrs Hollinshead in
coming to the arrangement which I have held she came to with her son thereby
contractually bound Mr Herbert Hollinshead. The arrangement was one under which
the sums payable by Mr Reginald Hollinshead were far below market rent. The
powers of leasing possessed by executors or trustees are powers of leasing at
rack rent, save in special cases such as building leases, and would not include
the power to grant leases or licences at the level at which Mr Reginald
Hollinshead was granted his tenancy or licence by Mrs Hollinshead.
Prima facie, therefore, in my judgment, the proposition expressed by Brightman
J in Fountain Forestry Ltd v Edwards would not suffice to allow
me to conclude that Mr Herbert Hollinshead was bound by the arrangement made by
his co-executor, Mrs Hollinshead. It is, however, pleaded in Mr Reginald
Hollinshead’s reply to Mr Herbert Hollinshead’s defence that he, Mr Herbert
Hollinshead, was at all material times aware that Mr Reginald Hollinshead
became an agricultural tenant of Lodge Farm.
I must,
therefore, examine the facts in order to decide to what extent that allegation
is well founded. I would start with noticing the family relationship between
the parties. This was a farming family. They all farmed in the same
neighbourhood. I have very little doubt that it was always expected by all
parties, including Mr Charles Hollinshead, that in due course of time, his son,
Mr Reginald Hollinshead, would take over his farm. It would have been a part of
that expectation that, after Mrs Hollinshead’s death, Mr Reginald Hollinshead
would have to buy out his sister’s interest in the farm. I do not find it
surprising that these expectations were not spelled out in the will.
Mr Herbert
Hollinshead was a member of this farming family. He was described as an astute
farmer. The relationship between the members of the family was, until the
disagreement between Mr Reginald Hollinshead and Mrs Collier that has led to
these court proceedings, a close one — the parties used regularly to visit one
another. In particular, Mr Herbert Hollinshead used to visit his nephew, Mr
Reginald Hollinshead, at Lodge Farm. These visits ceased about 15 years ago due
to Mr Herbert Hollinshead’s physical infirmity.
It is against
this background that Mr Herbert Hollinshead’s knowledge of the arrangements
between Mrs Hollinshead and Mr Reginald Hollinshead must be assessed.
I have
unfortunately not had the advantage of oral testimony from Mr Herbert
Hollinshead. His age and infirmity have precluded his attendance at court. By
consent, however, his evidence has been admitted in the form of an affidavit
sworn by him on March 14 1982. In para 4 of his affidavit he deposes as
follows:
I desire to
state at the outset that I am 85 years of age and my memory of events
particularly those occurring more than 30 years ago is not good and I have
extreme difficulty in recollecting what I have been able to recollect.
He states in
para 5 that he was aware that after the death of Mr Charles Hollinshead on June
24 1946 Mrs Hollinshead and the two children continued to live at the farm.
He states in
para 6 that he recollects that Mrs Hollinshead
did decide
that it would be better if she moved away from the farm and obtained
alternative accommodation to enable the second defendant
that is Mr
Reginald Hollinshead
and his wife
to have the Farm and that the second defendant and his mother did come to some
financial arrangement between them for him to assist his mother to obtain a
bungalow for her accommodation.
He goes on to say
that he is unable to recollect any details of the financial arrangement, or
whether he ever knew what those details were.
Mr Reginald
Hollinshead gave evidence that his uncle guaranteed repayment of the loan from
National Westminster Bank obtained by Mr Reginald Hollinshead in 1951 in order
to purchase the live and dead stock on the farm and to commence farming on his
own account. I accept this evidence. Mr Herbert Hollinshead in para 7 of his
affidavit deposes that:
It is also
true that at about that time I was asked by the second defendant to act as a
guarantor for some loan or advance he required and that I agreed to act as such
guarantor and did so but I am not able to recollect whether I was informed by
the second defendant of the purpose of the loan or advance or that I was
otherwise aware of it and in particular whether it related to the financial
arrangement made between the second defendant and his mother that I have
referred to.
I am prepared
to find as a matter of probability that Mr Herbert Hollinshead did not know the
purpose of the loan that he was guaranteeing. I find therefore that Mr Herbert
Hollinshead did know that Reginald Hollinshead from 1951 was farming Lodge Farm
on his own account and not simply as agent for his mother. This conclusion is
further supported by the evidence of the improvements effected to the farm by
Reginald Hollinshead in order to enable the conduct of his training
establishment. A large number of loose boxes were built. Gallops were laid out.
Mr Reginald Hollinshead told me that his uncle disapproved of his venture into
the training of racehorses but did not raise any actual objection. Mr Herbert
Hollinshead was thus aware of conduct by Mr Reginald Hollinshead inconsistent
with a status of mere agent for his mother, and consistent only with the status
of someone carrying on business on Lodge Farm on his own account.
It appears
from Mr Herbert Hollinshead’s evidence that he never knew the actual details of
the financial arrangements between Mr Reginald Hollinshead and his mother. This
is consistent also with the evidence of Reginald Hollinshead and I accept it.
But it is expressly stated by Mr Herbert Hollinshead in para 6, which I have
read, that he was aware that there was some financial arrangement between Mr
Reginald Hollinshead and his mother.
Given the
close nature of the family relationship, to which I have already referred, I
find, on a balance of probabilities, that Mr Herbert Hollinshead would have
known that Reginald Hollinshead was making regular payments to Mrs Hollinshead
as part of the financial arrangements between them.
What then is
the legal consequence of these facts?
If one
co-owner grants a tenancy or licence to a third party, and the other co-owner,
knowing of the third party’s occupation of the property and knowing that
consideration for the occupancy is passing from the third party to his co-owner
pursuant to the arrangement between them, stands by and allows that occupancy
to continue, he cannot, in my judgment, subsequently be heard to say that the
occupancy was unauthorised as against himself. In effect, he has, by standing
by, adopted the arrangements made by his co-owner.
The same
conclusion can be arrived at by another route. Under Mr Charles Hollinshead’s will,
Mrs Hollinshead had the right, with the permission of the executors, to carry
on the farming business on Lodge Farm. This she did, with that permission, from
1946 to 1951. Mr Herbert Hollinshead was aware that after 1951 she had ceased
to carry on the farming business and that Reginald Hollinshead was carrying on
that business on his own account. He, Mr Herbert Hollinshead, took no step
between 1951 and Mrs Hollinshead’s death to interfere in the arrangements
regarding Lodge Farm. He left Mr Reginald Hollinshead in possession pursuant to
whatever arrangements had been made between Reginald Hollinshead and Mrs
Hollinshead. In my view, these facts justify the inference that Mr Herbert
Hollinshead had impliedly entrusted to Mrs Hollinshead the authority to manage
the farm and to allow Mr Reginald Hollinshead to farm it on terms agreed
between Mr Reginald Hollinshead and herself. Accordingly, the arrangements made
by Mrs Hollinshead pursuant to that implied authority were, in my judgment,
binding on Mr Herbert Hollinshead.
There are
certain legal complications which have been briefly mentioned but not fully
explored before me. Mrs Hollinshead and Mr Herbert Hollinshead were executors
and trustees for sale and, as such, had the powers bestowed on tenants for life
under the Settled Land Act 1925. These powers include a power to grant leases
at rack rents but do not include power to grant leases or licences at a sub
rack rent level. The rent in the present case was a long way below rack rent
level. The executors and trustees for sale would, however, have power to grant
a sub rack rent lease provided its duration was limited to the life of the life
tenant, Mrs Hollinshead. It may, therefore, be correct in law to limit the
contractual interest acquired by Mr Reginald Hollinshead under the arrangements
to which I have referred to an interest which determined on the death of Mrs
Hollinshead. However, the consequence, so far as protection under the
Agricultural Holdings Acts is concerned, is not altered. A tenancy or licence
terminable on the death of a specified person is protected by the Acts.
Accordingly,
in my judgment, the arrangement which was made between Mr Reginald Hollinshead
and Mrs Hollinshead and under which the former has been farming Lodge Farm
since 1951 bound both Mrs Hollinshead and Mr Herbert Hollinshead, in whom the
land was vested, and entitles Mr Reginald Hollinshead to claim a tenancy
protected under the provisions of the Agricultural Holdings Act 1948.
I answer the
preliminary issue accordingly.
I would end my
judgment by regretting that the issue which I have had to decide should have
created a rift in a previously united farming family and I very much hope that
the resolution of this issue at law will enable that rift to be closed and that
family unity may be restored.
