Agricultural holdings — Agricultural Holdings Act 1986 — Grant of six months’ term — Deemed yearly tenancy — Whether yearly tenancy took effect from date of agreement or expiration of term granted
By an
agreement dated June 11 1993 the appellant tenant was granted a tenancy of
agricultural land for a term of 13 months from November 1992, expiring on
November 30 1993 by W, predecessors in title to the respondent landlords. The
grant failed to comply with the conditions of Gladstone v Bower
[1960] 2 QB 384, because the tenancy only operated from June 11 1993, the date
of execution. The agreement was caught by section 2 of the Agricultural
Holdings Act 1986. On August 21 1997 the landlords gave notice to quit. In the
county court the judge decided that the anniversary of the tenancy was November
30, and, accordingly, the notice to quit will expire on November 30 1998. The
tenant appealed, contending that the anniversary is June 11, so that the notice
will expire on June 11 1999.
1993, the Agricultural Holdings Act 1986 deems the grant of a tenancy from year
to year and, by section 2(1), the agreement is to take effect as if it were an
agreement for a tenancy from year to year. The expression in the subsection
‘with the necessary modifications’ are modifications consequent upon the
tenancy being deemed to be a tenancy from year to year. In the present case the
necessary modifications are as to the dates when the rent is paid. Section 2(1)
causes a substitution for or conversion of the actual agreement.
The following
cases are referred to in this report.
Gladstone
v Bower [1960] 1 QB 170; [1959] 3 WLR 815;
[1959] 3 All ER 475
Gladstone
v Bower [1960] 2 QB 384; [1960] 3 WLR 575;
[1960] 3 All ER 353; 58 LGR 313, CA
Keen v Holland [1984] 1 WLR 251; [1984] 1 All ER 75; (1984) 47
P&CR 639; [1984] 1 EGLR 9; [1984] EGD 9; 269 EG 1043, CA
This was an
appeal by the tenant, Eric Miles Calcott, from a decision of Judge Pugsley in
Burton-on-Trent County Court in proceedings by the tenant against the
landlords, JS Bloor (Measham) Ltd.
John West
(instructed by M&S Solicitors, of Swepstone) appeared for the tenant;
Phillip Hoser (instructed by Shoosmiths & Harrison, of Rugby) represented
the landlords.
Giving the first
judgment at the invitation of Peter Gibson LJ, BENNETT LJ said: This is an appeal by the plaintiff, with
the leave of the Court of Appeal, from part of the decision of Judge Pugsley
given in Burton-on-Trent County Court on October 3 1997. The learned judge made
a declaration, as asked by the defendants; namely that the anniversary of the
plaintiff’s tenancy was on November 30 in any year. The plaintiff is
dissatisfied with that declaration and contends that the anniversary is on June
11.
The facts relevant
to the resolution of this point can be stated shortly. The land in question
comprises about 38 acres at Lutterworth in Leicestershire. In about July 1997
the defendants purchased the land from Wheatcroft & Son Ltd with, so they
believed, vacant possession. Thereafter, the defendants learned that the
plaintiff claimed that he had an agricultural tenancy over the land. The
defendants’ solicitors were sent a copy of an agreement executed by the
plaintiff and Wheatcroft & Son Ltd dated June 11 1993. By clause 1 of that
agreement the landlords, Wheatcroft & Son Ltd, agreed to let and the
tenant, the plaintiff, agreed to take the land that I have described:
for a term of
Thirteen Months commencing on the First day of November, 1992, and expiring on
the Thirty [it should have been Thirtieth] day of November, 1993, the Tenant
paying therefore a rent at the rate of £1,600 per annum the said rent being
payable by equal half yearly instalments in arrears on the 6th April 1993, and
the last payment to be made on the 30th of November, 1993 …
It is common
ground that the plaintiff acquired a valid tenancy by that agreement. Although
the lease was backdated, so that in form it complied with the conditions of Gladstone
v Bower [1960] 2 QB 384, the lease only operated from June 11 1993, the
date of its execution, until its expiry on November 30 1993.
Section 2 of
the Agricultural Holdings Act 1986 provides as follows:
(1) An
agreement to which this section applies shall take effect, with the necessary
modifications, as if it were an agreement for the letting of land for a tenancy
from year to year unless the agreement was approved by the Minister before it
was entered into.
(2) Subject
to subsection (3) below, this section applies to an agreement under which —
(a) any land
is let to a person for use as agricultural land for an interest less than a
tenancy from year to year, or
(b) a person
is granted a licence to occupy land for use as agricultural land,
if 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.
I need not
read subsections 3 and 4. It is common ground that as a grant of land cannot
take effect retrospectively to confer an interest before the execution of a
grant (see Keen v Holland [1984] 1 WLR 251*), a tenancy of just
under six months was created. Thus, the agreement is caught by section 2 of the
Agricultural Holdings Act and is an agreement for the letting of land for a
tenancy from year to year.
*Editor’s
note: Also reported at [1984] 1 EGLR 9
The parties
disagree about the anniversary of the tenancy. The plaintiff contends that the
agreement dated June 11 1993 took effect from that day as a tenancy from year
to year, and is determinable by notice expiring on June 11 in any year. The
defendants contend that the anniversary date is November 30 in any year. The
dispute is not an academic one, because on August 21 1997 the notice to quit
was given by the defendants to the plaintiff, which, subject to arbitration
under the Agricultural Holdings Arbitration Tenants Order 1987, will expire
on November 30 1998 or June 11 1999, depending on which is the correct view.
The learned
judge below in the course of his judgment said as follows (upon the point that
is under consideration):
I have been
invited to make a finding as to the proper interpretation of Section 2 of the
Agricultural Holdings Act 1986 so as to determine the anniversary of the
tenancy.
He then
referred to section 2(1) and continued:
Mr West’s
argument is that the proper construction is that the effect of section 2 is to
substitute a tenancy from year to year with immediate effect with the result
that the lease takes effect until the anniversary of the grant of the tenancy,
namely June 11 1994. He draws sustenance from the provisions of section 3 of
the Act, the material part of which reads:
‘a tenancy of an agricultural holding
for a term of two years or more shall, instead of terminating on the term date,
continue (as from that date) as a tenancy from year to year.’
Mr West
argues that if parliament had intended that the effect of section 2(1) had been
to make the yearly term from the expiry of the lease — in this case from
November 30 — it would have followed the wording of section 3.
Counsel for
the defendant states that this interpretation gives no weight to the words
‘with the necessary modifications.’ He accepts that the statutory modification
has immediate effect, but submits that the proper interpretation is that the
lease runs to its expiry and then from year to year so that the anniversary of
the lease is a year after the purported expiry date, not the year from the
grant of the lease. This he states is a necessary modification — namely a
change in anniversary date.
I am told
that the matter is barren of authority. While I accept that Mr West’s is an
attractive argument I consider there is greater force that the words ‘necessary
modifications’ must be given some meaning. No one has put before me any
ministerial pronouncements that could assist as to the construction.
I consider
that if faced with the alternative of saying the words ‘necessary
modifications’ are mere surplasage seeking an aid to the construction by
looking at another section, the proper construction is to confine myself to the
section itself. I have come to the view, albeit with a certain diffidence, that
inclusion of the words ‘necessary modifications’ means that the anniversary was
November 30 1994 rather than June 1994.
Mr John West,
on behalf of the plaintiff, made the following submissions. Section 2 of the
1986 Act is headed with the words:
Restriction
on letting agricultural land from year to year.
This section
catches two types of agreement: first, an agreement under which land is let for
use as agricultural land for an interest less than a tenancy from year to year;
and, second, an agreement under which a person is granted a licence to occupy
land for use as agricultural land. In both cases the section can only apply if
the circumstances are such that, if his interest were a tenancy from year to
year, he would be the tenant of an agricultural holding in respect of that
land. In both cases the actual agreement, whether it be a tenancy for less than
from year to year or a licence, takes effect as an agreement for the letting of
land for a tenancy from year to year.
The section
catches licences that are to last for as little as a week or indefinitely, and
whether the term is specified or not. In such cases the yearly tenancy deemed
under section 2(1) can only operate as from the date of the actual agreement.
There is no other date it could operate from. Likewise with agreements for a
weekly tenancy. The words of the section, properly construed, mean that the
actual agreement is displaced immediately by the deemed agreement. There is no
justification for the view that where the actual agreement is for a period of
six months, the conversion to a tenancy from year to year occurs after the
expiration of the period of six months. He draws our attention to section 3 of
the Act, which, so far as is germane, provides as follows:
1. Subject to
section 5 below, a tenancy of an agricultural holding for a term of two years
or more shall, instead of terminating on the term date, continue (as from that
date) as a tenancy from year to year, but otherwise on the terms of the
original tenancy so far as applicable, …
I need not
read the rest of that section.
He submits
that, in relation to tenancies caught by section 3, such tenancies, instead of
terminating on the term date, continue as from that date as tenancies from year
to year. It would have been possible for parliament to have made similar
provisions for tenancies for fixed terms of 12 months or less and for licences,
but parliament did not do so.
The learned
judge apparently took the view that the deemed tenancy from year to year had to
be modified, for the purpose of termination by notice to quit, by the
substitution of the agreed term date, November 30, for the anniversary of the agreement
itself, June 11. Mr West asks rhetorically, ‘Why could not the deemed tenancy
operate satisfactorily as a tenancy from 11th June to 11th June in any year?’
Mr West emphasised that section 2(1) is a deeming provision, which immediately
displaces the contract that the parties have made and imposes upon the parties
a contract for a tenancy from year to year.
Mr West drew
our attention to the decision of Diplock J, as he then was, in Gladstone
v Bower [1960] 1 QB 170 and, in particular, to two passages, the first
being at p178, where Diplock J said:
In my view
the expression ‘tenancy from year to year’ in section 2(1) must mean a tenancy
which creates an interest and which has invariable characteristics, namely,
those which I have indicated are common to all tenancies from year to year at
common law.
Those
characteristics Diplock J had set out a little earlier in his judgment,
starting at the bottom of p177:
The
expression ‘an interest less than a tenancy from year to year’ in subsection
(1) of section 2 is quite general. The expression ‘tenancy from year to year’
was used by the draftsman to describe an interest which had certain invariable
characteristics which would enable one to say that other interests are greater
or less than it. A tenancy from year to year at common law is an interest which
does possess certain invariable characteristics without which it is not a
tenancy from year to year and which constitute a standard by which the
magnitude of other interests may be judged; it must last for one year and,
unless determined at the end of the first year by notice (either six months’
notice or whatever other length of notice, if any, is expressly provided for in
the contract of tenancy), will be renewed by operation of law for successive
periods of one year each, until determined at the end of one such yearly period
by such a notice.
The defendants
contend that the effect of section 2(1) is for a tenancy from year to year to
arise from November 30. Mr West argues that that cannot be correct, because if
one were to look at the deemed tenancy with effect from June 11, if the
defendants are correct it could not possibly be said to be a tenancy from year
to year, but rather a tenancy for a fixed period and then from year to year.
The words ‘necessary modifications’ cannot affect the deeming provision of a
tenancy from year to year that section 2(1) creates. Therefore, he submits that
this is a tenancy from year to year with effect from June 11, and that the
necessary modifications are as to the dates when the payments of rent are to be
made, namely not April 6 or November 30, but December 11 and June 11 in each
year, and that that would then comply with the agreement, namely that the rent
was to be paid by equal half-yearly instalments in arrears.
Mr Phillip
Hoser, who appeared for the defendants, adopts the written submissions in the
skeleton argument put in on behalf of the defendants. Clause 1 of the agreement
of June 11 contains a clear expiry date of November 30 1993. The agreement is
by section 2(1) to take effect with ‘necessary modifications’ as if it were an
agreement for a tenancy from year to year. The only necessary underlying
modification to be agreed is a modification to provide an anniversary date for
any year of the tenancy from year to year that might expire after November 30
1993. That would not amount to a substitution for the original agreement of
what has been called ‘a radically different agreement’. The judge made a
modification to the original agreement, which was a modification consistent
with the terms of clause 1. That was all that was required. The important and
sole question was: ‘what is the proper anniversary date?’
So far as
section 3 of the Act is concerned, he submitted that that section contemplated
a tenancy for, say, 26 months and then from year to year. Thus, it was
important for parliament to make clear from what
sort of wording for the tenancies under section 2(1), because all the court has
to consider is: first, when the term has its anniversary date and, second, when
the notice to quit, which is to be served, should coincide with that date.
In my
judgment, the submissions of Mr West are correct. In my judgment, the fallacy
in the defendants’ submissions is that the agreement only becomes a tenancy
from year to year after the expiry of the contractual term. If the question is
posed ‘on June 11 1993, how would the deemed tenancy be described?’, the
defendants would have to answer by saying that the tenancy was for a period
from June 11 1993 to November 30 1993 and thereafter from year to year. In my
judgment, that is not a tenancy from year to year. Furthermore, section 2(1)
provides that the agreement ‘shall take effect’ as if it were an agreement for
a tenancy from year to year, ie from the moment it is entered into. If that is
right, then, with effect from June 11 1993, the date of the agreement, the
tenancy was immediately converted into a tenancy from year to year.
In my
judgment, the words ‘necessary modifications’ are modifications consequent upon
the tenancy being deemed to be a tenancy from year to year. In this case the
necessary modifications that have to be made are as to the dates when the rent
is paid.
For those
reasons I would allow the appeal.
Agreeing, PETER GIBSON
LJ said: This appeal has been argued with commendable economy on both
sides, as befits what is, in truth, a very short point. Although the dispute is
as to the date upon which the tenancy is determinable by notice to quit, that
issue turns on how section 2(1) of the Agricultural Holdings Act 1986 operates.
It is, to my mind, clear that the section causes a substitution for or
conversion of the actual agreement that the parties have entered into or an
agreement conforming with the requirements of section 2. Section 2 refers to
the substitution or conversion taking effect with the ‘necessary
modifications’; in my judgment, the ‘necessary modifications’ are those
consequent on the required substitution or conversion. I therefore cannot
accept the submission made by Mr Hoser, for the respondents, that the only
necessary modification required to be made to the agreement is a modification
to provide an anniversary date for any years of the tenancy from year to year
that might expire after November 30 1993. That, to my mind, is not correct, as
it would leave the tenancy as being one for a fixed term followed by one from
year to year.
It is
noticeable that section 3(1) expressly provides for the continuation of a
tenancy from year to year, in the case of tenancies to which that section
applies, as from the term date. In contrast, section 2(1) contains no such
wording and, to my mind, it is consistent with what seems to me the plain
meaning of section 2(1), that the conversion or substitution operates
immediately with no intervening period such as would have been the case if the
existing agreement were to operate until the expiry of the term.
For these, as
well as the reasons given by my lord, I too would allow this appeal.
Appeal allowed
with costs.
