By J Muir Watt
There have been some cases of interest, both of a general kind and in relation to milk quotas, since the last article, in the issue of December 3 1988 at p 64. One of the milk quota cases in fact raises a question of general importance for administrative law.
Note: The following decisions, briefly reported in Estates Gazette Case Summaries, will be fully reported in Estates Gazette in due course and discussed in a subsequent article:
Milton (Peterborough) Estate Co v Harris [9] EGCS 32 (occupation after notice to quit)
Lord Rous (Earl of Stradbroke) v Mitchell [9] EGCS 113 (Case E)
Bell v McCubbin [9] EGCS 108 (Case B).
Tenant’s option to purchase: liability for rent
Dockerill v Fitzpatrick
In this case, reported at [9] 02 EG 75, the tenant had been duly served with a notice to pay rent and, on failure to pay, with a notice to quit. His defence was that he was not liable for the rent because at all material times he was in occupation not as a tenant but as a potential purchaser. He had in fact some years earlier purported to exercise an option to purchase contained in his tenancy agreement, but the option was never completed by means of an agreement as to the price or by arbitration, as required by the agreement. The county court judge held that until the option was completed he remained a tenant. As it was never completed, the tenancy continued in existence until it was duly determined by the notice to quit. The Court of Appeal agreed with the judge on this point, which was sufficient to dispose of the case. The tenant, however, raised another 10 points before the court, all of which were held to be either irrelevant or misconceived.
It should perhaps be mentioned that the option did not apply to the whole of the land comprised in the tenancy agreement; for simplicity this slight complication has been ignored in the above description. The 10 points dismissed do not deserve a mention except perhaps the suggestion that the landlord could not rely on a notice to quit given by his predecessor in title. This was clearly wrong, but one sometimes hears the question raised.
Severance of leasehold: house still comprised in agricultural holding: right to enfranchisement excluded
Lester v Ridd
This case, reported at [9] 22 EG 101, raised a point which the Court of Appeal found both novel and difficult. The facts briefly were that a house and two acres of surrounding land were comprised in a lease of about 23 acres which was acknowledged to constitute an agricultural holding. By a deed of partition the leasehold interest, not the freehold, was severed; the freeholder was not a party to the deed and became aware of the severance only at a later date. Up to the date of the severance the whole of the 23 acres had been used for agriculture by way of a trade or business; after the severance the house and two acres ceased to be used as agricultural land but the remainder of the 23 acres continued to be used for agriculture as before.
The difficulties inherent in this situation came to the surface when the appellants, in whom the house and two acres had been assigned, sought to enfranchise their leasehold interest and claim entitlement to the freehold under the Leasehold Reform Act 1967. By section 1(3)(b) of that Act the right to enfranchisement was excluded if the house was comprised in an agricultural holding. The issue was therefore quite clear: was the house with its surrounding land still comprised in an agricultural holding despite the severance effected by the deed of partition? This led to an examination of the effect of the severance. We are fairly familiar, since Jelley v Buckman [4] QB 488 with the consequences of a severance of the reversion, but the severance of the leasehold interest posed new questions. These are discussed below, but it may be noted at once that the decision of the Court of Appeal on the main issue, upholding the decision of the assistant recorder, was that the house and surrounding land continued to be comprised in the agricultural holding and enfranchisement was therefore excluded. The following points are worth noting.
Separate tenancies?
Was the effect of the partition of the leasehold interest the creation of separate tenancies of two separate holdings? This was the submission of the appellants and there was some support for it in old authorities. Thus, usual covenants, such as a covenant to repair, would be severed, so that an action would lie on the covenant against each assignee of a part: Stevenson v Lambard (1802) 2 East 575 at p 580. As regards rent, it was established that the landlord could sue an assignee of part only for an apportioned part of the rent: Gammon v Vernon (1678) 2 Lev 231; Hare v Cator (1778) 2 Cowp 766; Stevenson v Lambard supra; and, although with some doubts by Tindal CJ, Curtis v Spitty (1835) 1 Bing NC 756. It appears that an “apportioned part” for this purpose was neither a purely arithmetical fraction nor the amount agreed between the parties, but the product of a value judgment, as to what amount was fairly attributable to the part of the land in question. It is true that the rule as to distress for rent pointed rather in the opposite direction, as it was clear and undoubted law that the landlord could distrain upon any part for the rent due for the whole: Curtis v Spitty supra; Whitham v Bullock [9] 2 KB 81. However, if an assignee of part is thus compelled to pay the whole rent by the ancient right of distress, he can claim contribution from the tenant of the other part on the principle of indemnity.
The old common law cases left the position as to separate tenancies in some doubt and there is no statutory provision dealing with severance of a lease comparable with section 140 of the Law of Property Act 1925 in the case of the severance of the reversion. In Jelley v Buckman [4] QB 488 the Court of Appeal held that section 140 did not have the effect of creating separate tenancies in the case of the severance of the reversion, although it gave each reversioner of a part rights and remedies similar to those which he would have had if separate tenancies had been created. In the present case the court found the views expressed in Jelley v Buckman persuasive by analogy. Just as in Jelley v Buckman the suggested creation of two tenancies by a transaction to which he was not a party would have been unjust to the tenant by imposing on him a non-protected tenancy, so in the present case it would have been unjust to the landlord by imposing on him a tenancy carrying a right of enfranchisement.
Thus in the end the tenant was unable to substantiate a right of enfranchisement.
Notice to quit: date of expiry
Harler v Calder
This case, reported at [9] 25 EG 95, is not an agricultural holdings case, but it illustrates a point which might arise under section 25 of the 1986 Act. The case related to the monthly tenancy of a flat and the agreement provided for termination by either party by “not less than one month’s written notice in accordance with statutory requirements but no other formality will be required”. In due course the landlord gave a month’s notice to quit which included the statutory information required by the Notices to Quit (Prescribed Information) Regulations 1980. The notice, however, although of the required length, did not expire on a rent day. The county court judge held that parties could contract out of the common law rule that a notice to quit should expire on a rent day and that the words “no other formality will be required” effectively contracted out of the rule. The Court of Appeal agreed that parties could contract out of the rule but did not agree that the words in question were sufficient to do so. A more specific contracting out was required.
Section 25(1) of the 1986 Act provides that a notice to quit an agricultural holding will be invalid if it purports to terminate the tenancy before the expiry of 12 months from the end of the current year of the tenancy, subject of course to the exceptions and special provisions in the section.
Subsections (3) and (4) enable notices of less than 12 months to be given in the cases mentioned and subsection (4), although not subsection (3), permits the notice to expire on a date other than the end of a year of the tenancy.
In the exceptional cases mentioned in section 25(2)(a), (b), and (c) the common law rules as to length of notice and expiry date will apply. The parties may agree as to the period of notice and may substitute as the date of expiry a date other than the term day. The case of Harler v Calder is a warning as to the need to state clearly what the date of expiry is to be.
Milk quota cases
R v Dairy Produce Quota Tribunal for England and Wales, ex parte S Dimelow Farms
In this case, reported at [9] 11 EG 87, the tribunal were held to have adopted an unduly rigid and pedantic attitude towards a request to be allowed to amend an application for secondary wholesale quota. This was a special case claim for such quota; there was an alternative exceptional hardship claim.
The applicants had obtained official approval for an increase in milk production from three farms which they farmed in partnership (and which constituted one holding for EEC purposes). On one of the three farms, however, there was no milk production for 1983 as preparatory work had not been completed. Unfortunately, the applicants put in separate applications for each of the three farms instead of a composite application for all three. In doing so they left blank the entry for a specific litreage claim in the case of the farm with no 1983 production instead of inserting an estimated future production figure.
The tribunal, although correctly treating the three farms as a single holding for quota purposes, regarded the total claim as consisting only the claims of the two farms producing milk in 1983. They refused leave to amend the figures to take account of the third farm. Their attitude was that the 1984 quota regulations, under which the claim was made, required the amount of the secondary quota claim to be “specified” in the application; there was no power to amend the claim.
Macpherson J had no doubt that the tribunal were wrong. The blank or nil claim in respect of the third farm was an error capable of amendment. The application for judicial review was granted and orders for certiorari and a declaration made. The alternative claim on the ground of exceptional hardship did not arise, although the judge expressed some doubt about it. The decision on the amendment point is a salutary reminder to tribunals to interpret the quota regulations in a sensible way.
Grounds v Attorney-General of the Ducby of Lancaster
This was an important case on milk quota compensation on the termination of a tenancy. The Court of Appeal’s decision, reported at [9] 21 EG 73, removed what might have been a serious addition to the outgoing valuation. The point, stated briefly, was whether additional milk production attributable to feeding concentrates to cows should be excluded in calculating the standard quota. The answer given by the court was “no”. This simple issue arose in the following, not so simple, way.
Where “allocated” quota exceeds the standard quota the tenant is entitled to the sum due to the excess plus the “tenant’s fraction” of the standard quota. Thus in the present case it was in the landlords’ interest to argue in favour of a larger standard quota (thus reducing the excess) and the tenant’s interest to argue for a smaller. The Court of Appeal, restoring the arbitrator’s award (which the county court judge had remitted), decided in favour of the landlords’ argument.
The chain of reasoning had that complexity which is a feature of milk quota calculations. The arbitrator had decided that in calculating “the reasonable amount” of litres within the meaning of para 6(2) of Schedule 1 to the Agriculture Act 1986 (the quality and climatic conditions provision), in order to arrive at the true standard quota, it was correct to include the effects of concentrates fed to the cows, in accordance with normal livestock husbandry practice, in addition to the grass grown on the relevant hectares. The county court judge, however, decided that the assessment of standard quota within para 6(2) should exclude the additional production generated by the feeding of concentrates. This ruling, if it had been upheld, would have increased, in some cases substantially, milk quota compensation payable to certain outgoing tenants, with a consequential increased burden on incomers. The difference of opinion centred on the meaning of the specific exclusion in para 6(5)(a) of “land used for growing cereal crops for feeding to dairy cows in the form of loose grain”.
This mysterious phrase has called for different interpretations, like the utterances of the oracle at Delphi. It was argued by the tenant in this case that as a matter of law the specific exclusion meant that in calculating the “reasonable amount” in para 6(2) there must be excluded any concentrated feedingstuffs processed from grain grown on the land or brought in from outside. The Court of Appeal rejected this interpretation as illogical and without foundation. There was nothing to justify the view that the arbitrator must disregard the actual practice of skilled and successful farmers in normally feeding concentrated foodstuffs to their animals.
Glidewell LJ’s explanation of the words “feeding to dairy cows in the form of loose grain” should be noted. Dairy cows are not, of course, fed loose grain in the way in which hens are fed, so that the phrase must in the context, and to make reasonable sense, refer to grain grown on the land when it is processed and fed to the animals. Thus land on which barley is grown is not “land used for the feeding of dairy cows kept on the land” and its area must be excluded by para 6(5)(a). But it is an erroneous step to conclude from this that dairy cows on grassland are to be treated as not enjoying a normal provision of concentrates; this would be a wholly illogical inference.
R v Dairy Produce Quota Tribunal for England and Wales, ex parte Caswell
This case, reported at [9] 26 EG 130, is interesting both as a decision on the interpretation of the 1984 regulations governing the exceptional hardship claim and as an addition to the body of administrative law governing the remedy of judicial review. It is an important precedent on the subject of delay in respect of applications for judicial review.
So far as the exceptional hardship claim was concerned, the declaratory judgment given by Popplewell J showed the judicial tendency, demonstrated also in the Dimelow case above, to take a more liberal and flexible view of the quota regulations than tribunals do. The applicants’ dairy farm was purchased in September 1983. As they were not producing milk in April 1984 they were not entitled to primary wholesale quota and they were not entitled to secondary wholesale quota. They applied for relief under the exceptional hardship provision and received an award based on the number of cows they had on their farm at March 31 1985. They contended that para 17(3)(a) and (5) of Schedule 2 to the Dairy Produce Quotas Regulations 1984 did not require the tribunal to have regard to the year between April 1984 and March 1985. The opposing view, which the tribunal adopted, was that the regulations limited the tribunal’s jurisdiction to the quota year April 1984 to March 1985. It was suggested that this interpretation was in accordance with the general scheme of the regulations, including the rules for special claims and development claims, which were geared to a particular year. Popplewell J, however, concluded, in the light of the wide wording of para 17(3)(a) and the general consideration that there was good reason why an exceptional hardship claim should be unlimited, that the tribunal were mistaken in limiting the quantification of the claim.
In a separate judgment Popplewell J decided that, in spite of the merits of their claim, the applicants’ undue delay in applying for judicial review (the application was begun only in November 1987 in respect of the tribunal’s decision given in February 1985) precluded him from granting the relief sought by way of mandamus or certiorari. His earlier judgment, however, constituted a declaration as to the true interpretation of the relevant part of the 1984 regulations (now only of historical interest).
The Court of Appeal, on appeal by the applicants, upheld the view of Popplewell J that to grant orders of mandamus or certiorari would be detrimental to good administration. The court was influenced by evidence from the Ministry of Agriculture, Fisheries and Food that if a number of unsuccessful applicants for quota were now to be allowed to apply for judicial review it would mean reopening each of the years 1984-88. Further, if the Caswells’ application were allowed and others were refused, the Caswells would have an unfair advantage over others in a similar position. Thus Popplewell J’s declaratory judgment remains an interesting academic exercise without executive force. The judgments in the Court of Appeal on the question of delay are, however, of considerable importance for the administration of judicial review. Among other matters they drew attention to the conflict between section 31 of the Supreme Court Act 1981 and RSC Ord 53 in regard to undue delay and the need for the confusion to be remedied by Parliament or the Rules Committee. No doubt action will follow.
Statutory Instrument
Dairy Produce Quotas Regulations 1989 (SI 1989, no 380)
These regulations, which came into force on March 31 1989, revoke and replace with amendments the Dairy Produce Quotas Regulations 1986 (SI 1986 no 470) and amending regulations in 1988 and 1989 (SIs 1988 no 534 and 1989 no 16). Attention is drawn to the following points:
(1) In the interpretation regulation a number of definitions have been altered, mainly to bring them up to date.
(2) Regulation 6 implements Article 12(1) of Commission Regulation (EEC) no 1546/88, which gives member states of the Community a discretionary power to permit certain producers to choose an alternative base year for the purpose of calculating the fat content of their milk for levy purposes.
(3) Regulation 9 provides that the minister may set a date after the end of a quota year by which the person to whom quota is transferred must notify him of the transfer. Anyone who fails to notify the minister by that date may only make use of the transferred quota to offset his levy liability in the following quota year, not the year in which the transfer actually took place. However, such quota is to be treated as being available for reallocation by the minister in the year in which the transfer took place.
(4) Regulations 10 and 11, dealing with the apportionment and prospective apportionment of quota, refer to schedule 4, which now sets out in full the arbitration rules applicable where there is a transfer of part of a holding and the apportionment of quota is to be settled by arbitration. These rules are modelled closely on Schedule 11 to the Agricultural Holdings Act 1986. New statutory time-limits are included.
(5) It should be noted that the provision in regulation 11 of the 1986 regulations, as amended by SI 1988 no 534, which allowed a purchaser and producer to agree a change in the producer’s holding for the purpose of management of wholesale quotas by purchasers, has not been re-enacted.
(6) Regulation 16 extends the provisions inserted in the 1986 regulations as regulation 11a by SI 1988 no 534. It now includes, in addition to the case where a holding is subject to a restriction of movement order, a power for the minister to make a temporary reallocation of quota, in certain circumstances, to producers. This is to deal with the case where the tribunal has made an award of quota, or the minister have allocated quota under schedule 12 to the 1986 regulations, and that award or allocation has been entered incorrectly in the quota register.
(7) Certain provisions which appeared in the 1986 regulations for special cases, eg expropriated land claims, exceptional hardship provisions, development and supplementary development provisions, have been deleted because no longer relevant. But there is an exceptional hardship extension for Northern Ireland in Schedule 9.
