Agricultural holding — Case D in section 2(3) of the Agricultural Holdings (Notices to Quit) Act 1977 (now Case D in Schedule 3 to the Agricultural Holdings Act 1986) — Non-payment of rent — Notice to quit on failure to comply with a notice requiring payment of rent — Appeal from decision of county court judge granting landlord an order for possession — Agricultural land of a little under 7 acres was the subject of an agreement by which the appellant was to have a tenancy for 10 years, the agreement to be drawn up formally by solicitors (which was in fact never done) — The agreement gave the appellant an option, to be exercised after the expiry of the term, to purchase a minimum of 4 acres at a price to be agreed or determined by arbitration — In due course appellant gave notice to exercise option, but this was not completed by agreement on price or by arbitration — Appellant remained in occupation but henceforth paid no rent — He was served with a preliminary notice requiring the payment of rent due, followed by a notice to quit invoking Case D — In the meantime the then landlord sold the subject land to the present respondent together with an assignment of the right to collect the arrears of rent
respondent commenced proceedings against the appellant on two grounds, arrears
of rent and an allegation that the land was no longer used for agriculture —
The county court judge dealt with the first ground only and decided that, as
the option had not been completed, the appellant remained in occupation as a
tenant until his tenancy was properly determined by the notice to quit — The
appellant’s contention that he was in occupation as a prospective purchaser,
and was under no obligation to pay rent, was rejected
judge’s decision, the Court of Appeal pointed out that the judge’s finding that
the tenancy was agricultural meant that after the expiry of the 10-year term
the appellant remained a tenant from year to year by virtue of section 3(1) of
the Agricultural Holdings Act 1948 — The notice to quit in pursuance of Case D
put an end to his tenancy — As his claim to be in occupation as a potential
purchaser had failed, his continued occupation was unlawful
appellant appeared in person, the court went through each of 11 submissions
made by him — In 10 cases the submission was either misconceived or irrelevant
— The remaining ground, which alleged that the appellant held part of the land
as a prospective purchaser and the other part as a tenant awaiting an
apportionment of rent, raised the main issues which had been decided against
him — Appeal dismissed
The following
case is referred to in this report.
Lower v Sorrell [1963] 1 QB 959; [1963] 2 WLR 1; [1962] 3 All ER
1074; [1963] EGD 418; (1963) 185 EG 299, CA
This was an
appeal by James Fitzpatrick from a decision by Judge Aglionby, at Romford
County Court, granting possession of land, a little less than 7 acres in
extent, at Stapleford Abbots, Essex, occupied by the appellant, to the
respondent (plaintiff below), David Arthur Dockerill. The judge also ordered
the appellant to pay £1,500 arrears of rent.
The appellant
appeared in person; the respondent was represented by D Mendes Da Costa
(instructed by Jennings Son & Ash, of Ilford, Essex).
Giving the
first judgment at the invitation of Fox LJ, GLIDEWELL LJ said: This is an
appeal against an order made by Judge Aglionby in the Romford County Court on
December 4 1987 granting to the plaintiff, Mr Dockerill, an order for
possession of land occupied by the defendant, Mr Fitzpatrick, the present
appellant, such possession to be given on January 1 of this year, together with
an order for the payment of £1,500 arrears of rent.
The land in
question comprises a little under 7 acres. It was formerly part of Lings Farm,
Stapleford Abbots, Essex. In 1971 it was owned by a Mr Binder. In that year he
allowed Mr Fitzpatrick to occupy the land; it was then open grassland, with no
buildings upon it. Mr Fitzpatrick has been in occupation ever since.
On September
18 1973 Mr Binder and Mr Fitzpatrick entered into an agreement, embodied in a
written manuscript document entitled ‘Heads of Agreement between John Bernard
Binder and James Fitzpatrick’. The essential terms of that document are the
first three. Clause 1 reads in cryptic form:
Tenancy of
Field ‘A’ as shown hatched black on attached plan for period from April 1 1971
to April 1 1981 at a rental of £250 per annum. Tenancy agreement to be drawn up
by both solicitors and executed by the parties within eight weeks of today’s
date.
The plan in
question shows the nearly 7-acre field hatched black.
Clause 2
provides:
Mr Binder has
agreed to grant Mr Fitzpatrick an option to purchase a minimum of 4 acres of
the said field to include the existing drive between the road and the land to
be purchased such option to be exercised within a year of April 1 1981 at a
price to be agreed between the parties or in default of agreement to be decided
by arbitration at an open market value as agricultural land not including
buildings.
The rest of the
clause I need not read.
Clause 3
provides:
Mr
Fitzpatrick will surrender his tenancy to Mr Binder of the portion of the said
field to which the said option does not apply upon receiving 3 months written
notice to surrender from Mr Binder provided that such notice is not served
until planning permission for development has been granted to Mr Binder. The
rent shall be abated proportionately. It is agreed that Mr Fitzpatrick be
compensated for the loss of any growing crops on the land surrendered.
The last two
clauses are not relevant for present purposes.
It will be
seen that what was envisaged at that time was that Mr Binder might obtain
planning permission to develop a part of the land, the subject of the agreement
(we are told by Mr Fitzpatrick the part fronting the road), by building houses
on it. Apparently that never came about, certainly within the duration of the
agreement. What was also envisaged was that Mr Fitzpatrick should have the
option, after April 1 1981, to purchase the balance of the land.
It is agreed,
first, that no formal tenancy agreement was ever drawn up by the solicitors to
the parties. So the terms on which Mr Fitzpatrick thereafter occupied the land
are to be found embodied in the document to which I have just referred. Second,
since the land
for the purposes of the Agricultural Holdings Act.
In 1978 Mr
Binder brought proceedings against Mr Fitzpatrick claiming possession on the
ground that the rent was unpaid. The rent that was in arrear was duly paid; the
action was compromised and it is common ground that the rent was paid up to
April 1 1981.
At sometime,
with which we are not concerned — and I refer to this because it has been
referred to by Mr Fitzpatrick although it does not play any direct part in this
appeal — the local authority, the Epping Forest District Council, issued an
enforcement notice which they served on Mr Fitzpatrick alleging unauthorised
change of use of the land to use as a rubbish tip together with other
non-agricultural purposes. The enforcement notice was upheld. On Mr
Fitzpatrick’s failure to comply with it, the district council then issued
proceedings in the Queen’s Bench Division in 1986 and they were granted an
injunction against him.
In 1984, he
was also held to have been in contempt of court. As I have said, Mr Fitzpatrick
has made reference to these matters, but for the reasons which I shall explain,
they have no relevance at all to the present appeal, and I do not propose to
say any more concerning the district council’s proceedings.
After the
terminal date of the 10-year period, the subject of the agreement of September
1973, elapsed on April 1 1981, Mr Fitzpatrick was in a position to exercise his
option to purchase by giving notice. This he duly did by a letter of May 13
1981, addressed to Mr Binder. I need refer only to the second paragraph, which
reads:
The option to
purchase the back 4 1/2 acres as agreed between our surveyors has now
materialised and I wish to take up that option and to continue to rent the
front land as laid down in the Heads of Agreement dated September 18 1973.
Before the
judge there was an issue as to whether that letter constituted a valid exercise
of the option, but he held in Mr Fitzpatrick’s favour that the letter did
indeed validly exercise the option — and there is no cross-appeal in respect of
that conclusion.
However,
nothing thereafter happened in relation to the exercise of the option. There
was no response from Mr Binder; there was no agreement between the parties as
to the price, and in default of such agreement there was no reference to
arbitration of the question: what should the price be for the land?
Mr Fitzpatrick
remained in occupation of the 7-acre site, but he ceased to pay rent, after
bringing the rent up to date on April 1 1981, and he paid none for some six
years.
On September
20 1985, Mr Binder’s solicitors served on Mr Fitzpatrick a notice to pay rent,
which is a precondition to a notice to quit which falls within Case D of
section 2(3) of the Agricultural Holdings (Notices to Quit) Act 1977. I shall
refer later in more detail to the statutory provisions. But at that time, some
four and a half years having elapsed since April 1 1981, the arrears amounted
to £1,000.
On March 20
1986 Mr Binder’s solicitors served on Mr Fitzpatrick a notice to quit in
accordance with the provisions of the 1977 Act, claiming possession on the
ground that the rent was unpaid, there were arrears of rent, they had given the
notice required and they were therefore entitled to claim possession under Case
D of section 2(3). That notice expired on March 31 1987.
Mr Fitzpatrick
continued to pay no rent and by March 31 1987 six years’ rent had accumulated,
amounting to £1,500 in total.
When the
notice to quit expired, Mr Binder did not seek to enforce it; but, on September
10 1987 he sold the freehold of the subject land, and also other land, to the
present plaintiff, Mr Dockerill. On September 30 1987 Mr Binder specifically
assigned to Mr Dockerill the right to recover the arrears of rent owed by Mr
Fitzpatrick. On the same day, notice of that assignment was given to Mr
Fitzpatrick in writing. Six days later, on October 6, Mr Dockerill commenced
the present proceedings for possession.
The amended
particulars of claim based the claim on two grounds; first, the arrears of rent
and, second, the assertion that the land was no longer used as agricultural
land, and thus there was no statutory protection enjoyed by Mr Fitzpatrick, so
that the landlord was entitled to possession.
The matter
came before Judge Aglionby on December 4 1987 and he decided, with the
agreement, or at least concurrence, of the parties, to deal initially only with
the issue relating to the arrears of rent and whether possession should be
granted based upon such arrears. Thus, if this present appeal succeeds, it will
be necessary to send the matter back to the county court to enable it to
continue the hearing into the other allegations made in the amended particulars
of claim.
Before the
judge, Mr Fitzpatrick’s case, in a nutshell, was that when he ceased to be a
tenant on March 31 1987, he remained in occupation as a potential purchaser,
and in that capacity he claimed that he was under no obligation to pay rent
and, indeed, was under no obligation to pay rent from the time he exercised his
option. Thus he alleged there were no arrears of rent and the landlord was not
entitled to claim possession against him based on such arrears.
In his
judgment, of which we have his approved note, Judge Aglionby said:
There is
nothing in the agreement to allow Mr Fitzpatrick in occupation of the land from
April 1 1981 until completion for no payment and it would be wrong to take the
view that the exercise of the option determined the landlord and tenant
relationship. I hold that until the option was completed, Mr Fitzpatrick
remained as a tenant. He never completed. Notices were sent and not objected
to. At the present time Mr Fitzpatrick, remaining the tenant until expiry of
the notice, is in occupation as a trespasser.
Then in the
last paragraph of the judgment, the judge said:
This is a
claim for possession, it does not affect the validity of rights that Mr
Fitzpatrick may have in relation to the option.
With those
passages I agree. The exercise by Mr Fitzpatrick of the option to purchase in
effect created between him and Mr Binder a contract for the purchase and sale
of the land, at a price to be either agreed between them or ascertained by
arbitration. But a tenant who remains in occupation of land pending the
conveyance of the land to him in performance of an agreement to buy it is
entitled to occupy only as tenant not as potential purchaser. Therefore he
remains obliged to pay rent until such time as the contract for the purchase is
completed. That is the major issue in this appeal, in my judgment, as it was before
Judge Aglionby. In my view, the judge was right to reject Mr Fitzpatrick’s
argument on that head.
However,
before us Mr Fitzpatrick has argued some 10 other points. He has argued them
with both courtesy and restraint, although at times I fear he has based his
argument on a misunderstanding of the law. Before I come to deal with these 10
points, I must explain what, in my view, is the relationship between the
parties and the effect in law of the various notices given from April 1 1981
onwards.
I have already
read the relevant terms of the heads of agreement which govern the tenancy. Two
things are to be noticed; first, that the tenancy was for a period of 10 years
from April 1 1971 until April 1 1981; second, that the agreement contained no
provision entitling the landlord (Mr Binder) to forfeit the agreement for any
breach of covenant — certainly not for non-payment of rent.
The next
matter is this: at April 1 1981, if the tenancy were not an agricultural
tenancy, it would have come to an end. There was no payment of rent thereafter,
and therefore it could not be said that there was an implied agreement which
created a new tenancy from year to year.
I have already
said that the exercise of the option gave Mr Fitzpatrick no right of itself to
possession of the land. However, the judge has specifically found in his
judgment that the tenancy was an agricultural tenancy. It follows that after
the determination of the 10-year term on April 1 1981, Mr Fitzpatrick remained
tenant of the land from year to year by virtue of section 3(1) of the
Agricultural Holdings Act 1948. Such a tenancy was terminable by at least 12
months’ notice, and that notice, if it were to result in an order for
possession, took effect only if it fell within one of the Cases in section 2(3)
of the 1977 Act. That is the effect of section 1(1) and section 2(1).
The notices
given in September 1985 and March 1986 by Mr Binder’s solicitors fell within
Case D of section 2(3) of the 1977 Act, and therefore, in my judgment, the
notice to quit (the second of those documents) brought Mr Fitzpatrick’s tenancy
to an end at March 31 1987. Since then, his claim to remain in occupation as a
potential purchaser having failed, he has had no right to occupy the land and
it follows that he has continued in occupation as a trespasser.
I turn now to
consider the other grounds of appeal which Mr Fitzpatrick raised. They are as
follows:
1 The plaintiff is not permitted to rely on a
notice to quit issued by his predecessor in title and before a legal
relationship existed between the plaintiff and the defendant.
For that
proposition, Mr Fitzpatrick relied upon a decision of this court, of which we
have a photostat copy, namely Lower v Sorrell [1962] 3 All ER 1074.
That was a case relating to an agricultural
judgment of Donovan LJ, where at p 1038H he said:
In my
opinion, however, a notice to quit is a notice given by an existing landlord to
an existing tenant; from which it follows, if that view be right, that a person
cannot give a valid notice to quit before he has become a landlord, and the
recipient of the notice his tenant, or before legal relations exist between
them which otherwise permit such a notice.
The
significance of that observation to the facts of that case was that the tenancy
in question was a new tenancy for a year, and the landlord’s argument was that
it was terminated by a notice which he gave before the tenancy started, some
two or three days before, so that the effect of the decision is that a tenancy
cannot be terminated until it has come into existence. But that has nothing to
do with the present case. The fact that the present plaintiff is not a person
who was the owner of the land at the time when the notice to quit was given but
is a successor in title, having purchased the freehold from another person (Mr
Binder), does not disentitle the present owner (Mr Dockerill) from relying on
the notice to quit. The purchaser of land purchases all the rights which go
with it, and the right to serve a notice to quit was part of that which Mr
Dockerill purchased.
Mr
Fitzpatrick’s second ground of appeal I need not read because it relates to
distress of the rent. The point it makes is that for an agricultural holding
there cannot be a distress for more than one year’s rent in arrear. As a
proposition of law, that is accurate, but it has no application to the facts of
this case because there has been no distress for rent. The word ‘distress’ is
somewhat unusual to apply to the process of execution of an order for arrears
of rent, but nevertheless Mr Fitzpatrick, after drafting that particular ground
of appeal, has realised that it does not mean what he thought — it has nothing
to do with the facts of this case, and he frankly told the court that that
ground of appeal was misconceived and he was not pursuing it.
The third
ground of the notice of appeal is:
The defendant
disputes the plaintiff’s claim to the freehold title.
On this ground,
Mr Fitzpatrick has made a number of points. The principal one was in relation
to the fact of his exercising his option to purchase. He submitted that since
he had exercised that option before Mr Binder sold to Mr Dockerill, it was he,
not Mr Dockerill, who was entitled to the freehold of the 4 1/2 acres to which
the option related and thus Mr Dockerill could not take a proper title.
Moreover, he
submitted to the court that he was prevented from taking any steps himself to
ensure that the option to purchase was completed by a conveyance because during
part of the time when he might have done something about it, he was held to
have been in contempt of court and a person who is in contempt of court, and
who has not purged his contempt, is not entitled to make any application to the
court.
With respect,
that seems to me to be nothing to the point, because at least initially what he
had to do was to seek to persuade Mr Binder to agree a purchase price and, if
he failed to do that, to refer the question to arbitration. It was only when a
purchase price had been established that there could be any question of court
proceedings because at that stage, if Mr Binder did not complete the
conveyance, Mr Fitzpatrick might have wished to sue for specific performance. But
that stage was never reached because of the earlier stages to which I have
referred.
Therefore the
fact that Mr Fitzpatrick was in contempt did not prevent him from going through
an exercise of trying to reach agreement on the purchase price or having the
matter decided by arbitration.
Mr Fitzpatrick
also argues that the conveyance to Mr Dockerill is invalid because it purports
to convey the freehold title to the land free of encumbrance; whereas he
submits that it is not free of encumbrance at all; it is subject to his tenancy
and even if that is wrong (as I have held that it is) it was not a tenancy in
existence when the land was sold to Mr Dockerill and it was also subject to
his, Mr Fitzpatrick’s, exercise of his option to purchase.
It may
transpire, as the judge said, that the option to purchase can still properly be
exercised and can crystallise into a conveyance for the 4 1/2 acres of land.
That remains to be seen. If it does, that may or may not create an issue
between Mr Dockerill and Mr Binder arising out of the wording of the
conveyance. But as Fox LJ commented in argument, that in no sense invalidates
the conveyance itself. It does not give Mr Fitzpatrick any right on which he
could rely.
Mr Fitzpatrick
also referred us, under this head, to a passage in Halsbury’s Laws of
England, vol 27, Landlord and Tenant, para 116, subheaded ‘Conditions of
Option’. The first sentence of the paragraph reads:
As the
exercise of the option by the tenant nullifies the covenant to pay rent during
the residue of the term, and may relieve him from liability under repairing
covenants, the requirements of the proviso conferring the option must be
strictly observed.
That I regret
to say is a misreading of the sentence inasmuch as it takes it out of context,
because the paragraph is part of a section of the chapter which is dealing not
with options to purchase but with options to determine leases. So the
proposition set out in that sentence has nothing to do with options to purchase
and it is therefore irrelevant for the purpose of these proceedings.
Ground 4 of
the notice of appeal is:
The rent was
not certain on the portion of front land that the landlord could claim rent
for. Had it been the defendant would have paid it.
What that
means is that once the option to purchase had been exercised and there had been
a conveyance or even a draft conveyance of the land, then it would be necessary
to reach agreement as to what the rent should be for the balance of 2 1/2 acres
or so of the land which would remain in Mr Fitzpatrick’s occupation as tenant
until such time (if it happened) that the landlord succeeded in obtaining
planning permission to develop.
This point of
course depends on the validity of the option — that is to say, it depends on
the validity of the point which I have already ruled against (as did the judge)
that the option entitled Mr Fitzpatrick to remain in occupation of the whole
land. Once that goes, there can be no question of rent being agreed or assessed
for the remainder of the land. Mr Fitzpatrick quite simply is in occupation of
that part of the land as trespasser and whatever happens to the option in the
future, that part of the land is an area to which he can have no future right
of occupation.
Then ground 5
pleads:
The order of
the Romford County Court dated December 4 1987 is depriving the defendant of
his legal rights under section 138 of the County Courts Act 1984.
That section
provides:
(1) This section has effect where a lessor is
proceeding by action in a county court . . . to enforce against a lessee a
right of re-entry or forfeiture in respect of any land for non-payment of rent.
(2) If the lessee pays into court not less than 5
clear days before the return day all the rent in arrear and the costs of the
action, the action shall cease, and the lessee shall hold the land according to
the lease without any new lease.
In this case
the plaint by which the plaintiff commenced proceedings does not, in the space
provided for it, contain a figure relating to the plaintiff’s solicitors’
costs. In common form, the front of the plaint sets out the amount of the
plaintiff’s claim itself for money (namely £1,500), the court fee of £43, then
there is a space for the insertion of solicitors’ costs, and nothing appears
against that. What I think Mr Fitzpatrick is saying is that since he did not
know what costs the plaintiff’s solicitors were claiming, he could not make a
payment in and thus he was disentitled to exercise his right under section 138.
Again, I am not attracted by that submission. First of all, as a matter of
practice, he made no attempt to pay in and there was no suggestion that he did.
On the contrary, he maintained throughout that he was not liable to pay any
rent from April 1981 onwards because he had exercised his option.
But that
apart, since the plaintiff’s solicitors did not fill in the item of costs which
they were claiming on the plaint form, that can only redound to their
disadvantage or to their client. If Mr Fitzpatrick had genuinely wanted to make
a payment in and had paid in more than five days before the return day £1,500
plus £43 court costs, in my view he would have satisfied section 138 and the
court could not have made an order for possession against him. If the
plaintiff’s solicitors had wished to obtain their costs thereafter, that would
have been a problem for them. However, in my view the matter is of no
significance because Mr Fitzpatrick made no attempt at all to make any payment
in, for the reasons I have already explained.
Ground 6 is:
By dividing
his cause into two separate causes on November 23 1987 the plaintiff was acting
unlawfully and in breach of section 35 of the County Courts Act 1984.
That section
provides:
It shall not
be lawful for any plaintiff to divide any cause of action for the purpose of
bringing two or more actions in one or more of the county courts.
That is not
the point, because the plaintiff here has not started two actions — he only
started one. It was Judge Aglionby who, for perfectly sensible and valid
reasons with the agreement of the parties, decided to deal only with part of
the matters raised in the one action, and the other part will be dealt with
only if this appeal succeeds. That the judge was perfectly entitled to do that
hardly needs stating. A judge in a county court has as much discretion as a
judge in the High Court concerning the best way in which to conduct proceedings
in front of him. Judge Aglionby decided to deal with the issue relating to the
arrears of rent first and was perfectly entitled to do so and this does not provide
Mr Fitzpatrick with any ground for complaint.
Ground 7 is:
‘The plaintiff is not entitled to mesne profits’. I do not accept that that is
accurate to begin with, but in any case it is irrelevant. The judgment is not
for mesne profits although it says that it is and to that extent Mr Fitzpatrick
has a point. But when one returns to the effect of the various legal notices
the judgment in the sum of £1,500 is for arrears of rent because that was the
amount due up to the time when the tenancy expired on March 31 1987.
Ground 8
reads:
The
plaintiff’s amended particulars of claim is libellous towards the defendant.
I can deal
with that point shortly; particulars of claim cannot libel a defendant, but in
any case the matter upon which Mr Fitzpatrick relies is the issue relating to
the council’s activities in serving an enforcement notice upon him.
Ground 9
begins with the words:
The plaintiff
never let the land to the defendant so how can he claim that he, David Arthur
Dockerill, would have the right to re-enter and/or forfeit the defendant’s
tenancy upon non-payment of rent . . .
The argument
here, if I understand it correctly, is that there is nothing in the heads of
agreement entitling the landlord to forfeit for non-payment of rent, and that
is correct. Therefore, since Mr Dockerill simply took the rights which Mr
Binder formerly had, he also could not forfeit the non-payment of rent. If this
were properly a forfeiture action there might be some force in that submission,
but I have already explained the statutory process which resulted in the notice
to quit being a perfectly valid one and taking effect on March 31 1987. The
plaintiff here is not seeking to forfeit anything; he is seeking possession of
the land and has been awarded possession of the land because the defendant has
been a trespasser for the last 13 months.
Ground 10
finally comes to the main issue in the appeal:
The defendant
occupies the land as a prospective purchaser holding over on the one part also
as a leaseholder waiting for the plaintiff’s predecessor to determine a rent
proportionately on the other part.
Those are the
main issues; I have already dealt with them and I need say no more because the
submission, with respect, is wrong.
Finally, the
11th ground relates to proceedings brought by the council against Mr
Fitzpatrick which, in relation to the matter upon which the judge gave
judgment, is irrelevant.
Accordingly,
having sought to deal with each in turn, I reject all the submissions made by
Mr Fitzpatrick in relation to his various grounds of appeal. It follows that in
my judgment this appeal should be dismissed.
Fox LJ agreed
and did not add anything.
The appeal
was dismissed with costs. Leave to appeal to the House of Lords was refused.
