Agricultural holdings — Agreement described as a licence granted following ministerial approval — Whether agreement could be rectified because it was expressed to expire one day after period approved — Whether agreement a tenancy agreement protected by the Agricultural Holdings Act 1948
1979 to the end of the 1981 season the defendant, Brian Manners, farmed land at
North Brunton Farm, Gosforth, Newcastle upon Tyne, belonging to the plaintiff,
Ashdale Land & Property Co Ltd, on a share-cropping basis — In 1981 the
plaintiff granted the defendant a Gladstone v Bower agreement for a term
from November 9 1981 to October 20 1983 — Notwithstanding an agreement in
January 1984 that the plaintiff’s agent would apply for consent for a licence
under section 2 of the Agricultural Holdings Act 1948, the defendant remained
in occupation of the land after the expiration of the agreement — On September
17 1984 the plaintiff’s agent applied to the Minister of Agriculture, Fisheries
and Food for consent to grant the defendant a licence for a term from September
29 1984 to August 31 1985 by reason of proposals by the highway authority to
construct a road through the land — The minister gave his approval by a letter
dated September 28 1984 for the grant of a licence ‘For a period of not more
than three years commencing on 29th day of September 1984’
negotiations over its terms, three copies of the licence agreement, granting
the defendant rights of use for a period to September 29 1987, were sent to the
defendant on November 19 1984; two copies were returned and dated October 27
1984 — Land for the road scheme was acquired during 1987 — In July 1987 the
plaintiff’s agent applied to the ministry for consent to the grant of a further
three-year licence — This was approved on August 4 1987 — No further licence
was granted because the defendant claimed he had a tenancy — The plaintiff
issued proceedings seeking rectification of the licence agreement, because it
was expressed to end one day after the period approved by the minister, and the
defendant counterclaimed for a declaration that he had a tenancy protected by
the Agricultural Holdings Act 1986 by reason of being granted exclusive
possession of the land
that indicated by the ministerial approval, namely October 27 1984 — There was
also a common intention that the licence was to be for a period for which
ministerial approval would be given; if the licence would otherwise have
achieved its purpose, an order for rectification would have been granted —
However, the effect of the licence agreement was to grant the defendant a
tenancy agreement which fell within section 3 of the 1948 Act
The following
cases are referred to in this report.
Bahamas
International Trust Co Ltd v Threadgold
[1974] 1 WLR 1514; [1974] 3 All ER 881; [1975] EGD 1; (1974) 233 EG 47, [1975]
1 EGLR 1, HL
Co-operative
Insurance Society Ltd v Centremoor Ltd
[1983] EGD 256; (1983) 283 EG 1027, CA
Essex
Plan Ltd v Broadminster Ltd [1988] 2 EGLR
73; [1988] 43 EG 84
Gladstone v Bower [1960] 2 QB 384; [1960] 3 WLR 575; [1960] 3 All ER
353; 58 LGR 313, CA
Harrison-Broadley v Smith [1964] 1 WLR 456; [1964] 1 All ER 867; [1964] EGD
293; (1964) 189 EG 513, CA
Jervis v Howell & Talke Colliery Co Ltd [1937] Ch 67
McCarthy v Bence [1990] 1 EGLR 1; [1990] 17 EG 78
Street v Mountford [1985] AC 809; [1985] 2 WLR 877; [1985] 2 All ER
289; [1985] 1 EGLR 128; (1985) 274 EG 821, HL
This was an
application by the plaintiff, Ashdale Land & Property Co Ltd, for an order
for the rectification of an agreement dated October 27 1984 and by the
defendant, Brian William Manners, for a declaration that the agreement was a
tenancy within section 3 of the Agricultural Holdings Act 1948.
Benjamin Levy
(instructed by W R Wilson Rakusen & Co, of Leeds) appeared for the
plaintiff; Geoffrey Jaques (instructed by Ward Hadaway, of Darlington)
represented the defendant.
Giving
judgment, MADDOCKS J said: This action concerns an agricultural holding
unit originally of 84.53 acres of land at North Brunton Farm, Gosforth,
Newcastle upon Tyne. The land has, at all material times, been in the ownership
of the plaintiff company (Ashdale Land & Property Co Ltd).
From November
1979 the land has been farmed by the defendant, Mr Manners, who is the owner of
an adjoining farm known as East Brunton Farm. It was convenient for him to farm
the land along with his own.
Over this
period and until 1987, the lands were subject to the threat of compulsory
acquisition by the Department of Transport for the purpose of forming the
Newcastle western bypass. That event finally materialised during 1987 when some
8.27 acres were taken from the land for the construction of the road. There now
remain two blocks of arable land.
Although the
plaintiff was willing to have the land farmed by Mr Manners, it was never
willing to grant to him a tenancy which would fall within the protection of the
Agricultural Holdings Act 1948, which was the Act in force over the period in
question. Initially, the company’s reason may have been simply its
unwillingness to lose for an indefinite period its right to vacant possession.
Latterly, its attitude may have been affected by the compulsory purchase proposals
and the need to protect its rights of compensation.
However that
may be, arrangements were made by the company’s agent to avoid the creation of
a protected tenancy. Mr Manners, for his part, was prepared to take the land on
these terms.
At this point I
should refer to the material sections of the Act. By section 94, the expression
‘contract of tenancy’ is defined as meaning ‘a letting of land, or agreement
for letting land, for a term of years or from year to year’. The term
‘agricultural holding’ is defined in section 1 as meaning ‘the aggregate of the
agricultural land comprised in a contract of tenancy’.
The sections
conferring security are sections 23 and 24. The first provides, shortly, that a
notice to quit an agricultural holding is invalid if it purports to terminate
the tenancy prior to the expiration of 12 months from the end of the then
current year of the tenancy. Section 24 then confers a right on the tenant to
serve a counternotice which, with limited exceptions, provides that the notice to
quit shall not have effect unless the minister consents to its operation.
Thus far, the
Act would not apply to a tenancy for less than a period from year to year as it
would be outside the definition in
or lease for a fixed term which did not require notice to quit for its
termination.
Sections 2 and
3 are directed to these gaps. Section 2 has the heading — ‘Provisions as to
Contract of Tenancy’ with a side note which reads: ‘Restriction on letting
agricultural land for less than from year to year.’ It provides:
where . . .
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:
There follows
a proviso to exclude grazing agreements limited to a specified period of the
year. This section, then, was designed to close the first gap of short
tenancies but, in doing so, it embraced licences of whatever duration, licences
being not otherwise covered by the Act. But in each case the section could be
excluded by prior approval from the minister.
Section 3 was
directed to fixed-term tenancies and operated by providing for their
continuance as tenancies from year to year, unless terminated by a notice to
quit, thereby bringing sections 23 and 24 into operation. The section was,
however, confined to a tenancy for a term of two years or upwards. This still
left a gap in relation to a tenancy for a fixed term of less than two years but
more than one. In Gladstone v Bower [1960] 2 QB 384 such a
tenancy was held to be outside the protection. It was not less than a tenancy
from year to year so as to fall within section 2, nor more than two years so as
to fall within section 3.
This opening
was not closed by the 1986 Act and must now be taken to have been approved, or
at least accepted, by Parliament.
I should
finally note that the minister’s power of approval under section 2 did not
extend to a tenancy under section 3. That situation has since been changed by
section 5 of the 1986 Act, which allows him to grant approval for a tenancy not
exceeding five years. The present case, however, falls to be determined under
the 1948 Act, where the power was not available.
Returning now
to the facts here, initially the farming of the land by Mr Manners was arranged
on a share-cropping basis. Mr Manners would carry out all the work on the land
as contracted to the company, for which he rendered a VAT invoice. When the
crop had been taken he would purchase it from Ashdale. The difference in favour
of the company took the place of rent.
At the end of
the 1981 season the transaction took a new form, that of a Gladstone v Bower
tenancy agreement, ie for a term of more than one year but less than two. The
tenancy agreement was dated November 7 1981 and granted a term commencing on November
9 1981 and ending on October 20 1983, at a yearly rent of two equal instalments
of £4,225 on July 1 1982 and July 1 1983, rent being calculated at £51 per
acre. That took the parties down to October 20 1983, the end of the summer
season.
By this time,
the prospect of the bypass was closer. The agents to the company, who handled
all its dealings with Mr Manners, were Henry Spencer & Sons, a firm of
chartered surveyors. Originally, Mr Richard Green [FRICS] of that firm had
dealt with Mr Manners, but by the end of 1983 he had left and the matter was in
the hands of Mr Timothy Shuldhan [FRICS]. It occurred to Mr Shuldhan that the
next arrangement with Mr Manners might take the form of an approved licence
under section 2. He arranged to visit Mr Manners and a meeting took place at Mr
Manners’ house on or shortly before January 12 1984. Mr Manners was still on
the land and supposed that he was holding over under the Gladstone v Bower
tenancy. He accepted that the company wished to avoid the grant of a protected
tenancy. He was not prepared to revert to the share-cropping arrangement. He
would have been agreeable to a renewal or repeat of the Gladstone v Bower
tenancy, but the proposal of an approved licence was equally acceptable. He was
concerned as to his compensation. He had put a lot of work into improving the
land, which was in poor condition when he took it over.
On this issue,
so far as it is material, I found Mr Manners to be a completely honest witness.
I am satisfied that he, for his part, was looking to some form of compensation
of a capital nature for land taken.
However, I do
not think it registered with Mr Shuldhan, whose understanding is reflected in
the letter he wrote, where compensation is confined to lime and fertiliser and
crops. That letter was dated January 12 1984. Mr Manners accepted that it was a
fair record of the meeting. Item 4 reads:
I will apply
for a Section 2 licence for a period of two years at an annual licence fee of
£55 per acre.
The letter
said Mr Shuldhan would inform Mr Manners of his client’s decision on these
recommendations which he was to make to his client. In fact, nothing further
happened. Mr Manners remained on the land and cultivated it as before. I am
satisfied there were no further meetings.
On September
17 1984 Mr Shuldhan wrote to the minister asking for approval for a licence
under section 2, relying upon the bypass proposals. He sought only a very
limited term, less than even one year, being from September 29 1984 to August
31 1985. His reason, seemingly, was that he thought the bypass was starting
sooner. However, he had a telephone call from the ministry which led him to
understand it would not be starting for three years.
On September
29 he received the approval dated September 28 1984. It reads:
Agricultural
Holdings Act 1948.
Approved by
the Minister of the grant of a licence to occupy land . . .
— I think that
should read ‘approval by the Minister’ —
. . . In
exercise of the powers conferred upon him by Section 2 of the Agricultural
Holdings Act, 1948, the Minister of Agriculture, Fisheries and Food hereby
approves (but only for the purposes of the said section) the grant of a licence
to occupy by an agreement to be entered into after the date hereof the land at
North Brunton Farm situate in the Parish of Hazelrigg and North Gosforth in the
County of Tyne and Wear, comprising 84.53 acres, 34.22 hectares or thereabouts
and shown edged red on the plan annexed hereto, signed by the undersigned for
the use of agricultural land.
Then there is
a (2):
For a period
of not more than three years commencing on 29th day of September 1984.
That is dated
September 28 1984 and was sent under cover of a letter dated September 27 to
Henry Spencer & Sons.
Mr Shuldhan
prepared a form of licence and I will come to the terms shortly. On October 26
1984 he sent three copies to Mr Manners. Mr Manners had one or two points on
the draft and arranged a meeting with Mr Shuldhan on November 16 at the
Catterick Bridge Hotel. This resulted in certain amendments and a new clause
5(20) dealing with compensation; the reference to that subclause is in clause
7(1). Mr Manners recalls that the sum payable on June 1 1987 was at a rate of
£60 an acre in the original draft and that Mr Shuldhan agreed to reduce this to
the same as the other sums. The remaining terms were those of the original
draft. The revised agreement was sent off to Mr Manners in three parts on
November 19 1984, duly signed, and two parts were returned. His copy remained
undated. Mr Shuldhan dated his copies October 27 1984.
Before dealing
with the terms of that licence document, I will refer briefly to the subsequent
events in 1987.
The land for
the road was finally acquired in that year. On July 27 1987, Mr Shuldhan
applied to the ministry for approval of a further three-year licence from
September 29 1987, which approval was granted in similar terms on August 4
1987. He then wrote to inform Mr Manners to arrange a further meeting. Mr
Manners telephoned him. By this time the road contractors were in and digging
up his crops. Mr Manners asked about his compensation and was told, he said,
that, by reason of a change in the powers in control at the company, Mr
Shuldhan could not honour his agreement as to compensation.
Mr Shuldhan
could not recall any conversation on these lines. It may be that there was a
misunderstanding, but it had unfortunate consequences. Mr Manners who, up to
this point, had been fully co-operative and prepared to concur in all the
arrangements, felt aggrieved and he consulted his own agent, Mr Geoffrey Humble
[FRICS]. Mr Humble examined the facts and took the view that Mr Manners had a
tenancy. He served notice to review the rent on September 23 1987. Issue was
joined. An arbitrator (Mr Jones) was appointed. The point was taken by the
company that there was no tenancy. This point was referred to Newcastle County
Court and a case was stated by the arbitrator on November 14 1988.
The writ in
this action seeking rectification was issued on May 11 1989. By the
counterclaim Mr Manners sought a declaration that he had a tenancy protected
now by the Agricultural Holdings Act 1986.
I return,
then, to the licence on which these issues depend. It is
licensee. Recital 2.2 reads:
By notice of
approval dated 28th September 1984, the Minister of Agriculture, Fisheries and
Food has approved the granting of the licence contained in this agreement.
Then recital
3:
The Licensor
has agreed with the Licensee that the Licensee may enter upon the land for the
sole purpose of agriculture, subject to the covenants hereinafter contained.
Then I should
note with reference to recital 2 that a copy of the approval and the covering
letter was annexed to each part of the licence.
Then clause 1
proceeds:
In
consideration of the licence fee described in the First Schedule hereto and the
agreements by the Licensee here and before contained, the Licensor hereby
grants to the Licensee personally licence and permission for the Licensee and
his servants, agents, employees and contractors to enter upon and use all that
parcel of land of 84.53 acres or thereabouts . . .
then the land
is described by reference, also, to a plan, and the clause continues:
. . . which said
user is further restricted by the covenants by the Licensee hereinafter
contained.
Then by clause
2 it is provided:
The licence
and permission shall be for a period commencing on 29th October 1984 and ending
on 29th day of September 1987, subject to determination at any time during such
period by the death of the Licensee.
It is to be
noted that the effect of clause 2 (on its normal construction) is that the
licensee could stay on the land up to midnight on September 29, whereas the
approval period of three years (also on its normal construction) expired at
midnight on September 28 1987. That construction was not challenged.
Clause 5(1)
contains covenants by Mr Manners which are covenants to pay the licence fee and
other covenants such as covenants to cultivate and manage according to the
rules of good husbandry, which may be said to correspond to those of an
agricultural tenancy.
Clause 1: the
first covenant is to pay the licence fee to which I have referred, which is
contained in the First Schedule in these terms.
The licence
fee shall be £4,650.00 payable on 25th October 1984; £4,650.00 payable on 1st
June 1985; £4,650.00 payable on 1st June 1986; £4,650.00 payable on 1st June
1987.
So the company
has picked up, by this licence, the sum of £4,650 for the past year when no
licence or tenancy was in force. The sum is stated to be payable on October 25
1984, that is the day before the first draft licence was sent out, although
liability could have arisen only on completion of the licence in November. However,
no point was taken as to that, of itself, creating a tenancy from a date prior
to the approval.
The remainder
of clause 5, as I have said, contains agreements corresponding to those of an
agricultural tenancy. Of these I note only no 10 which provides:
. . . not to
permit or suffer any person or persons other than the Licensor and all persons
authorised by him and the Licensee’s servants, agents, employees and
contractors to enter upon or use the land or any part or parts thereof.
That might
suggest that the licensor was in a position to enter the land generally.
However, clause 6 of the agreement provides:
The Licensor
agrees with the Licensee to permit the Licensee, on paying the licence fee
hereinbefore referred to and observing and performing the several agreements by
the Licensee herein contained, to enjoy possession of the farmlands without
interruption by the Licensor or any person or persons rightfully claiming under
it.
This clause
really removes any doubt there might have been that Mr Manners was granted the
right to exclusive possession by the agreement and Mr Levy, for the company,
did not seek to argue otherwise.
Mr Manners
accepted that this licence was intended to be an arrangement under which we
would not have security. The details he left to Mr Shuldhan. He was not
familiar with the provisions of the Act but he did read the drafts through and
noted the recitals. Furthermore, a copy of the ministerial approval was, as I
have said, attached to each part of the licence in draft and final form.
The first
point concerns the period of the licence. The approval does not require the
licence to be for the full period stated. The only requirement is that it
should be for no longer than the period stated. I see no reason, therefore, why
it should not commence later than September 29 1984. That is specified as the
starting date for the permitted period; not for the licence itself. There is,
therefore, no objection to the licence starting on October 29 1984.
However, it
was conceded by Mr Levy for the company, first, that the permitted period ended
at midnight on September 28 1987; second, that the licence period continued to
midnight September 29 1987. It was a slip on the part of Mr Shuldhan,
unfortunate in its effect because it took the licence outside the period of the
approval, albeit by no more than one day, with the consequence that, even as a
licence, it was converted by section 2 to a tenancy for a term from year to year,
unless it could be corrected by rectification.
As to this, Mr
Levy’s case was that the parties had a common intention that the licence should
be for a period within the terms of the approval. That was demonstrated, first,
by the letter of January 12 1984, which set up the arrangement and by recital 2
to the licence, in its draft and final forms, coupled with the approval itself.
True, Mr Manners would have preferred a protected tenancy, but he accepted that
the land was offered to him only on this non-protected basis, ie on the basis
of its being within the approval which the agent was to obtain and did obtain.
The true and
common intention, therefore, was that the closing date should be the closing
date in the approval and the date September 29 1987 was meant to achieve that
result.
Mr Jaques for
Mr Manners disputed this. First, he pointed out the discrepancy between the
pleadings and the evidence. There were no discussions in the summer of 1984,
nor did Mr Manners ever agree that he would accept a licence for whatever
period the minister approved. The case must rest on his more general acceptance
of the scheme.
Second, he
said the only terms ever offered to Mr Manners were those contained in the
first draft, which included the closing date September 29 1987. That was the
date chosen by the agents, who had the approval before them. It was no concern
of Mr Manners who, at that stage, had not even seen the approval. He simply
accepted the document as put to him. He did not agree to any other date. He was
not asked to.
Now it is
settled that a claim for rectification will not fail simply because the parties
have not agreed upon the correct form of words. As Dillon LJ put it in Co-operative
Insurance Society Ltd v Centremoor Ltd (1983) 268 EG 1027 at p
1031, [1983] 2 EGLR 52:
. . . the
exact form of words in which the common intention is expressed is immaterial if
in substance and in detail the common intention can be ascertained.
In that he was
following the decision of Clauson J in Jervis v Howell & Talke
Colliery Co Ltd [1937] Ch 67, where he said at p 71:
The
plaintiff’s case is that the rectification for which he asks will bring the
lease into precise conformity with the intention of the parties. I find as a
fact, . . . that when the parties executed the lease they thought that its
effect would be what in fact it would be if the lease were rectified as the
plaintiff asks:
Now, in both
those cases it is right to say that the intention was spelled out very plainly
on both sides. Here, the defendant can be said to have taken no active part in
this aspect of the arrangement. Does that mean that the intention lay on the
plaintiff’s side only?
After some
hesitation, I do not think it does. Mr Manners was perfectly agreeable to Mr
Shuldhan’s scheme for avoiding a protected tenancy. He was not concerned with
how it worked, but it did carry his agreement. Any doubts there might be are
really resolved (as in the Jervis case) by the document itself, which
recites the minister’s approval, thus demonstrating that it was intended to be
made under and within the terms of that approval. The only significance of the
closing date was that it should accord with the closing date in the approval.
The common intention that it should do so is, in my judgment, established.
Accordingly,
if in other respects the licence would achieve its objective, I would be
prepared to make an order that the document be rectified by substituting
September 28 for September 29 1987.
However, the
defendant, by his defence, raises a more substantial point, being that the
licence does in fact create a tenancy falling within section 3 of the 1948 Act,
thus outside the scope of any ministerial approval. I have already referred to
the provisions of the Act. It is to be noticed that for a licence to fall within
section 2, so as to be brought within the Act, it must be a licence to occupy
for use as agricultural land. That requirement has been held to require
exclusive possession for that purpose: see Harrison-Broadley v Smith
[1964] 1 WLR 456* at p 470, where the observations of Davies LJ
Trust Co Ltd v Threadgold [1974] 1 WLR 1514* at p 1527. What Davies
LJ said was:
. . . there
cannot be such a licence without a right of exclusive occupation during the
currency of the licence in the licensee as against the licensor for that
purpose.
*Editor’s
note: Also reported at (1964) 189 EG 513.
*Editor’s
note: Also reported at (1974) 233 EG 47, [1975] 1 EGLR 1.
That is to say
for use as agricultural land. By that test, the licence here was, on the face
of it, brought within section 2 or at least qualified as a licence within
section 2 because it conferred exclusive possession.
If that were
all, then it would also qualify for ministerial approval to take it outside the
section. The defendant’s case is that a licence which satisfies this
requirement of exclusive possession will, in the ordinary course, if there is a
rent or other consideration, be a tenancy. As a tenancy for less than year to
year, it would make no difference, it would still be within section 2 and be
eligible for ministerial approval. But if, apart from the Act, it amounted to a
tenancy from year to year, it would fall within section 1 directly and not be
so eligible. Likewise, if as here, apart from the Act, it amounted to a tenancy
for more than two years, it would fall within section 3 and again be ineligible
for ministerial approval, prior to the 1986 Act.
In support of
the case that the licence would constitute a tenancy, Mr Jaques relied upon the
more recent decision of the House of Lords in Street v Mountford
[1985] AC 809† . It is a nice point. It was adverted to by Dillon LJ in the
case of McCarthy v Bence [1990] 1 EGLR 1, where at p 3L he said:
If exclusive
occupation is, as held in Street v Mountford, the hallmark of a
tenancy and a licence under section 2(2)(b) also requires exclusive
occupation, as held in the Bahamas case, it would seem that the licence
is itself a tenancy and there is nothing for section 2(2)(b) of the 1986
Act to bite on. The explanation of that may be that the wording used in section
2(2)(b) goes back well before Street v Mountford to the
Agricultural Holdings Act 1948 and has not been updated in recognition of Street
v Mountford. Another explanation may be that the wording of section
2(2)(b) is intended to catch licensees to use land for grazing or mowing
(or both) which are not, by being limited to some specified period of the year,
excluded from section 2 by subsection (3) thereof.
† Editor’s
note: Also reported at [1985] 1 EGLR 128.
Now, in this
action I have to resolve the point. There is no doubt as to the basic principle
established by Street v Mountford, the grant of a right to
exclusive possession of land for a term for a consideration, whether in the
form of a premium or periodical payments, is the grant of a lease or tenancy,
whatever the description given to it. As Lord Templeman said at p 819E:
But the
consequences in law of the agreement, once concluded, can only be determined by
consideration of the effect of the agreement. If the agreement satisfied all
the requirements of a tenancy, then the agreement produced a tenancy and the
parties cannot alter the effect of the agreement by insisting that they only
created a licence. The manufacture of a five-pronged implement for manual
digging results in a fork even if the manufacturer, unfamiliar with the English
language, insists that he intended to make and has made a spade.
Mr Levy’s
response was that Street v Mountford recognised that there were
exceptional circumstances where a tenancy did not arise from exclusive
possession. Those are referred to at p 821 which refers, first, to the
situation where the parties did not intend to create legal relations and,
second, to cases where the occupation was ancillary to or referable to some
other relationship, as for example that of vendor and purchaser where the
purchaser was in possession pending completion. A further instance was afforded
by the decision in Essex Plan Ltd v Broadminster Ltd [1988] 2
EGLR 73, where Hoffmann J held that the existence of an option to take a long
lease avoided the creation of a tenancy, as the option holder had, in equity,
an interest in the land.
The present
case could not fall within either of these categories. There was plainly an
intention to create legal relations and there was no other relationship, apart
from the licence itself and perhaps the earlier tenancy which had expired in
November 1983.
In essence,
the case for the plaintiff was that an agricultural licence to occupy under
section 2 was, itself, an exception being recognised by statute. Section 2
expressly refers to a licence to occupy, which has been held to mean a licence
granting the right to exclusive possession. That recognition has been continued
in the 1986 Act, notwithstanding the decision in Street v Mountford.
The section thus invites and authorises the approval of the minister to such a
licence as a means of avoiding the operation of the Act. It would be something
of a trap if it were, by its very nature, to be treated as falling outside
section 2.
The answer, as
urged by Mr Levy, was to regard it as an exception to the general principle
that exclusive possession creates a tenancy. There is force in his submission.
Section 2,
however, is concerned first with bringing within the Act agreements which would
otherwise fall outside it, not agreements which are already covered by the Act.
It may well be that prior to Street v Mountford the scope for a
licence which would otherwise escape was considered to be wider. In the light
of Street v Mountford it still exists, albeit only in a more
restricted class of case. Dillon LJ gave one example — the grazing licence. I
do not see this restriction as sufficient reason for treating the section as
creating an exceptional form of licence. If, apart from the section, a tenancy
is created not being for less than from year to year, it is outside section 2
altogether.
Turning to the
licence of October 27 1984 itself, quite apart from the grant of exclusive
possession, it has all the characteristics of an agricultural tenancy. The
matter does not rest there. The reality of the situation is that Mr Manners has
been a tenant since at least November 9 1981 when he was granted a formal
tenancy. He has remained on the land and farmed it since then, paying a full market
rent for every year. When the licence was granted in October or November 1984
ostensibly as a licence, not as a lease or tenancy, for just under three years,
it picked up an additional year’s rent or licence fee which was, in reality,
being charged to cover the previous year when Mr Manners held over as a tenant.
In the
circumstances, I can see no reason to treat this licence as anything but a
tenancy agreement which, being for a term in excess of two years, fell within
section 3 of the 1948 Act. That being so, it must follow that no purpose would
be served by rectification of the date of termination and the plaintiff’s claim
in the action will, accordingly, be dismissed.
On the
counterclaim I will make a declaration that the agreement dated October 27 1984
granted a tenancy to Mr Manners, now within the protection of the 1986 Act.
With the consent of the parties I will treat the reference to the county court
in the arbitration proceedings no 88/09792 as being before me as judge of
Newcastle County Court and make a like declaration in those proceedings.
It appears to
me that costs should follow the event, but, as counsel appearing in the action
were not required to be present when judgment was delivered, I will direct that
the orders be not drawn up for seven days so that if either side wishes to make
a submission as to costs they can be heard.
Subject to
that, I will simply order that the plaintiff pay the defendant’s costs in the
High Court action and, in its capacity as respondent, the applicant’s costs in
the county court proceedings.
Declarations
accordingly.
