Rent (Agriculture) Act 1976 — Possession of cottage — Whether licence to occupy cottage was a term of occupier’s contract of employment or was an arrangement quite independent of the contract of employment — Whether licence to occupy came to an end with ending of employment and protected occupancy was converted into a statutory tenancy within the Rent (Agriculture) Act — Fair rent registered under that Act — County court judge’s grant of possession to owner of cottage in consequence of non-payment of rent upheld by Court of Appeal
appellants in this case (defendants in the county court) had been living since
1960 in a cottage on a farm where the husband had worked as a foreman or
bailiff — They had occupied the cottage rent-free — The husband unfortunately
began to suffer severely from rheumatoid arthritis and from 1977 was unable to
work full time — Eventually he ceased to be able to work and in 1985 his
employment was terminated — The couple continued to live in the cottage
rent-free until, in 1987, the owner of the farm and cottage applied to the rent
officer to have a fair rent registered for the cottage under the provisions in
sections 13 and 14 of the Rent (Agriculture) Act 1976 — The rent officer
determined a fair rent of £27 a week, but the defendants declined to pay it,
asserting that the original licence permitted them, and the survivor of them,
to live in the cottage rent-free for the rest of their lives — The owner, the
present respondent, then instituted proceedings
possession order, suspended on terms that the owner should be paid £1,500
within two months and should also be paid the current rent, together with mesne
profits and arrears of rent by instalments of £10 per week — The defendants
appealed
appellants submitted that the original arrangement relating to the cottage was
in effect a licence wholly independent of the husband’s contract of employment,
not a term of that contract — The respondent argued that the licence to occupy
was an integral part of the husband’s contract of employment and ceased to
exist as such when that employment terminated — The case of Ivory v Palmer was cited
in this connection — Although the licence ceased to exist, section 4 of the
Rent (Agriculture) Act converted what had been a protected occupancy into a
statutory tenancy — As a statutory tenant the husband was liable to have the
rent of the cottage registered under section 13 of that Act — The Court of Appeal
agreed with the respondent’s submission — Under the 1976 Act, section 7, and
Schedule 4, Case III, the judge was entitled to make an order for possession
provided that he considered it reasonable to do so — The court rejected a
suggestion that the judge had not given consideration to the question of
reasonableness — It was true that he had not expressly referred to it, but the
court was satisfied that he had applied his mind to it — Appeal dismissed
The following
case is referred to in this report.
Ivory v Palmer [1975] ICR 340, CA
This was an
appeal by the defendants, Arthur John Griffiths and his wife, Margaret Jane
Griffiths, from the decision of Judge Smyth, at Ludlow County Court, granting
the plaintiff, Marjorie Anne Burgoyne, possession of Middleton House Cottage,
in Middleton Farm, near Ludlow, Shropshire.
John West
(instructed by Lloyds & Cooper, of Leominster) appeared on behalf of the
appellants; Edward B Jones (instructed by Emrys Jones & Co, of Welshpool)
represented the respondent.
Giving the
first judgment at the invitation of Neill LJ, RUSSELL LJ said: Middleton
House Cottage is part of Middleton Farm, Middleton on the Hill near Ludlow,
Shropshire. The farm is now owned by the plaintiff, Marjorie Anne Burgoyne.
This is an appeal against a judgment in her favour, whereby upon terms she was
granted possession of Middleton House Cottage by virtue of a judgment of His
Honour Judge Smyth delivered on September 11 1989.
The plaintiff
acquired the farm by purchase, her predecessor in title being the partnership
carrying on business as W Burgoyne & Son. The partnership was between
Lionel and Michael Burgoyne. In about 1960 the first defendant, Mr Arthur John
Griffiths, commenced employment with the partnership as a working foreman or
bailiff and together with his wife, who ultimately became the second defendant
in these proceedings, he moved into the cottage. The terms of his occupancy
were that he and his wife should live there rent-free during the term of his
employment, the employers paying the rates.
Unhappily, Mr
Griffiths, with the passage of years, became disabled as a result of his
suffering from rheumatoid arthritis. In about 1977 he found himself unable to
continue his duties fulltime and eventually on or about May 31 1985 his
employment came to an end because of his ill-health. By that time there had
come into operation on January 1 1977 the Rent (Agriculture) Act 1976. By
virtue of the provisions of that Act there is no doubt but that the defendant
had become what in the Act is described as ‘a protected occupier’. Section 2 of
the Act, so far as material to this appeal, reads:
Where a person
has, in relation to a dwelling-house, a relevant licence . . . and the
dwelling-house is in qualifying ownership, or has been in qualifying ownership
at any time during the subsistence of the licence . . . he shall be a protected
occupier of the dwelling-house if —
(a) he is a qualifying worker, or
(b) he has been a qualifying worker at any time
during the subsistence of the licence or tenancy . . .
Section 4 of
the Act, so far as is material, reads:
where a
person ceases to be a protected occupier of a dwelling-house on the
termination, whether by notice to quit or by virtue of section 16(3) of this
Act or otherwise, of his licence . . . he shall, if and so long as he occupies
the dwelling-house as his residence, be the statutory tenant of it.
After the
termination of his employment, Mr Griffiths and his wife continued to occupy
the cottage free of all payment until in 1987 the plaintiff, who had acquired
the freehold of the cottage, applied to have a rent registered in respect of
it. On July 3 1987 the rent officer determined a fair rent at £27 a week. The
defendant declined to make any payment in respect of rent, it being his
contention that after the termination of his employment or perhaps before the
termination of his employment — it is not entirely clear — he had been granted
by Lionel Burgoyne a licence permitting him and/or his wife to continue to live
in the cottage rent-free for the rest of his life or alternatively the life
surviving as between the first and second defendants. It was as a result of the
defendant’s refusal to make any payments to the plaintiff that she instituted
proceedings seeking possession, arrears of rent and mesne profits, in
consequence of which the judge, after a hearing which occupied three days, made
on September 11 last, the order, the effect of which I have earlier indicated.
Para 2 of the
particulars of claim reads as follows:
By an
agreement made orally in or around March 1960 the Defendant in consequence of
his employment as an agricultural worker of the Plaintiff’s predecessor in
title was permitted to enter and thereafter live in Middleton House Cottage
aforesaid free of rent and rates if and so long as he remained employed in
agriculture as aforesaid.
A defence was
filed. In para 3 the employment of the first defendant was set out and no
admission was made as to para 2 of the particulars of claim. Para 5 of the
defence alleged that Mr Burgoyne had given the defendants leave to live in the
cottage rent-free so long as both or either remained alive and wished to
remain.
In a sentence,
Mr West, on behalf of the defendants, submits that the original arrangement
made between the partnership and the first defendant was an arrangement quite
independent of the contract of employment to the extent that the licence granted
by the partnership was determinable by the partnership at any time after 1960
upon reasonable notice served upon the defendant by his employers. The contrary
argument advanced on behalf of the plaintiff was and is that the licence to
occupy this cottage formed part and parcel of and was a term of the defendant’s
contract of employment with the partnership and that it was in point of time
coterminous with the contract of employment. Accordingly, so submits the
plaintiff, once the employment came to an end so did the licence to occupy the
cottage. There was no need to serve any notice upon the licensees; the cottage
was part of Middleton Farm upon which the defendant was employed; that fact,
and the fact that no payment of any kind was required, created the plain
inference that the employers were intending to create and did create an
occupancy at the cottage which was an integral part of the contract of
employment. If that be the case, then upon the termination of the employment
the licence to occupy the cottage came to an end and section 4 of the 1976 Act
converted what had been a protected occupancy into a statutory tenancy. When
that happened, the plaintiff, as the owner of the cottage, was entitled to
register a fair rent and, in the event of the defendants not paying that rent,
the plaintiff was entitled to recover possession subject to the limitations
imposed upon the court by other provisions of the 1976 Act, to which I must
later refer.
The court has
available to it not only a very lengthy judgment of the learned judge, which he
reserved, but extensive notes of evidence. During the course of the hearing the
defendant gave evidence on oath to the effect that he believed he had a licence
to occupy the property for the rest of his life. Upon that aspect of the case
he was expressly disbelieved by the learned judge. Furthermore, during the
course of the notes prepared by the judge there is an indication that a
concession was made during the course of the hearing that the original
occupation of the first defendant amounted to a service occupancy. In the
course of the judge’s findings, that concession is referred to again when, at p
26 of the transcript, para 4 of the judgment, the judge said:
In 1960 still
in the same employment he
— that is the
defendant —
and his family
moved to Middleton House Cottage under the same terms. In
Lionel Burgoyne on behalf of W Burgoyne & Sons and Mr Griffiths and his
wife, that they should occupy the cottage for the remainder of their lives free
of rent and rates. This allegation so far as 1960 is concerned is not repeated
in the defence signed by counsel, but it was not made clear to me that it was
abandoned, until halfway through Mr Lionel Burgoyne’s evidence in chief, when
the concession was made that at that time it was a service agreement.
Finally, it is
to be observed that in the course of Mr Burgoyne’s evidence, according to the
judge’s note of it, it was never put to him that when the agreement was made in
1960 he contemplated that he could bring the licence to occupy the cottage to
an end irrespective of the contract of employment and at any time upon
reasonable notice after the licence was created.
Mr West, on
behalf of the defendants, submits that there was no real evidence enabling the
judge to make a finding that the occupation of the cottage created in 1960 was
a term of the contract of employment. In my judgment, that submission is
misconceived. I take the view that the learned judge was clearly at liberty, in
the light of all the circumstances that I have outlined, to come to the
conclusion, as he did, that in 1960 there was what he loosely described as a
‘service occupancy’ by the first defendant, in other words an occupancy of this
cottage which formed a term of the contract of employment. Once the finding was
made that the occupancy was truly a term of the contract of employment, then
plainly, in my view, it follows that it came to an end so soon as the
employment came to an end in May 1985.
We were
referred to a number of authorities, but it is necessary to cite from only one
of them, the case of Ivory v Palmer [1975] ICR 340. The first
part of the headnote reads:
The
plaintiffs employed the defendant, who was aged about 53 years, as a foreman
carpenter. While so employed, he was to occupy a house belonging to the
plaintiffs rent free. At an interview preceding his employment, the plaintiffs’
agent told the defendant that he would have a job for life, security for life
and a home for his widow. Nothing else was said as to the duration of the
employment or circumstances in which it would be terminated. After six months’
service the plaintiffs dismissed the defendant summarily and he took up some
other work but continued to occupy the house. The plaintiffs brought an action
for possession of the house, and Judge Chope, granting the order, held that the
defendant was employed for life subject to his working satisfactorily; that the
defendant’s dismissal was wrongful but, since the licence to occupy the house
was ancillary to the contract of employment, the plaintiffs’ repudiation of the
contract revoked that licence.
At p 352 of
the report, Roskill LJ, who dissented upon one point not material in the
current appeal, said:
Once the
defendant was dismissed, under what was an ordinary service agreement between
employer and employee, he had, as a matter of the ordinary contract law of
master and servant, no alternative but to accept that dismissal as an
accomplished fact, whether it was right or wrong. If it was right, he had no
remedy; if it was wrong, his remedy, as was pointed out in Vine’s case,
lay in damages. But he cannot, in one and the same breath, as I ventured to
point out to Mr Godfrey yesterday, accept that his service agreement is at an
end, and yet assert that his right to the continued occupation of the cottage
remains unaffected. This is not a severable contract. It is a single contract
of employment between employer and employee. Once that contract goes, it goes
as a whole, and that, with the greatest respect to Mr Godfrey’s argument, is
the short answer to this appeal.
Browne LJ, at
p 354 of the report, said:
Mr Godfrey
accepts that if the defendant had himself put an end to his employment, he
would have had no right to go on living in the house, and indeed the defendant
himself agreed that this was so in the course of his evidence. Mr Godfrey also
agreed that the defendant’s right to live in the house would come to an end if
he had been dismissed for good cause. The judge held that the licence came to
an end when the contract of employment was terminated, even though such
termination was wrongful. In my view, this was clearly right. The contract
between the plaintiffs and the defendant was one contract, a single contract to
employ him for life and allow him to live in this cottage as a licensee so long
as the employment continued. The plaintiffs repudiated the contract. In the
case of an ordinary contract, the defendant would, of course, have had an
election whether to accept the repudiation or to hold the plaintiffs to the
contract; but contracts of employment are different. They are the exception to
this general rule. When the plaintiffs repudiated the contract, the defendant
had no choice but to accept the repudiation of the contract, and he himself
accepted that the employment had come to an end. The result was that the
contract between the plaintiffs and the defendant was terminated. This must
mean that the whole contract was terminated, not only the contract of
employment but also the licence to occupy the house, because these were both
one and the same contract. Even though this termination was wrongful, the
defendant’s only remedy is in damages. It would be most extraordinary if the
defendant were entitled to continue to live in this house rent free for the
rest of his life even though the employment had been terminated.
As it seems to
me, it is plain in the instant case that when this defendant’s employment came
to an end, so at that moment did his licence to occupy the cottage come to an
end, and it was not necessary that there should have been at the same time or
thereafter any notice to him, formal or informal, seeking possession of the
cottage. Accordingly, as it appears to me, the plaintiff thereafter was
entitled to regard the defendant as a statutory tenant and there is no dispute
but that thereafter she was entitled to have a fair rent assessed and
registered and to seek payment of it.
The right to
possession of the property in the event of non-payment of rent is set out in
the 1976 Act. Section 7 provides:
(1) This section applies in the Cases in Part 1
of Schedule 4 to this Act
Among those
cases in Part 1 of Schedule 4 to the Act are cases where rent remains unpaid.
Subsection (2)
provides:
In those
Cases the court shall not make an order unless it considers it reasonable to do
so.
The submission
made here is that the learned judge, while he was entitled on his findings to
make the order involving monthly payment, was not entitled, unless he found it
reasonable to do so, to go on and make an order for possession, albeit a
suspended one. That submission is plainly right, for the terms of the Act are
mandatory and require the judge to test the case by standards of reasonableness
before he makes an order for possession. It is pertinent to observe that
nowhere in the judgment does the learned judge expressly apply himself to the
provisions of section 7 and the requirement that an order for possession should
be made only if it is reasonable to do so. But for my part I remind myself that
the judge here had listened to this case over a period of three days, albeit
not consecutive days, had satisfied himself that the defendant had not been as
frank as he ought to have been in relating the factual background and had
satisfied himself that there had been no effort to make any sort of payment to
the plaintiff once the fair rent had been assessed. Accordingly, while it is
justifiable to express the criticism that Mr West has done, that the judgment
is silent as to the question of reasonableness, for my part I am satisfied
that, while unexpressed, the learned judge must have applied his mind in the
circumstances of this case to the test of reasonableness. Accordingly, I would
not interfere with the order that he made that possession of this
dwelling-house should be granted to the plaintiff, suspended on the terms
appearing in the order. Those terms were to the following effect: that the
defendant should pay the plaintiff the sum of £1,500 within two months of the
order and that he should pay the current rent, together with mesne profits and
arrears of rent by instalments of £10 per week in addition to the current rent.
The overall figure found by the judge to be due was £2,808. There is no dispute
as to the arithmetic.
For the
reasons that I have endeavoured to outline in this judgment, I take the view
that the learned judge was entitled to make the findings that he did and that
once he made those findings of fact upon material that was available to him he
was entitled to make the order to which I have referred.
I would, for
my part, therefore dismiss this appeal.
NEILL and
FARQUHARSON LJJ agreed and did not add anything.
The appeal
was dismissed with costs; the order for costs not to be enforced without leave
of the court; liberty for the plaintiff to apply in respect of those costs;
legal aid taxation for the defendants, if necessary; further terms of order to
be agreed between the parties.
