Agricultural holdings — Application by tenant to High Court for order directing agricultural land tribunal to refer questions of law to the court for decision — Notice to quit holding alleging failure by tenant to comply with notice to do work — Fifty-eight different items listed — Counternotice by tenant invoking sections 2 and 4 of Agricultural Holdings (Notices to Quit) Act 1977 — Consent to notice to quit given by tribunal — Refusal by tribunal of tenant’s request under section 6(1) of Agriculture (Miscellaneous Provisions) Act 1954 to refer questions to High Court — Hence tenant’s application under section 6(2) for a direction — Tribunal is required under section 4(4) of 1977 Act to consent to operation of the notice to quit unless in all the circumstances it appeared to them that a fair and reasonable landlord would not insist on possession — Landlord’s case included allegations of failure to carry out proper maintenance, a submission that the farm was not viable economically as farmed by the tenant, and a claim that amalgamation with another holding was desirable — Tenant’s main reason for resisting the application for consent was that the holding was the only source of livelihood for himself and son and provided their only accommodation — It was submitted on behalf of tenant to the court that a tribunal exercising its jurisdiction under section 4 of the 1977 Act could not take into account any of the specific matters mentioned in section 3(3)(a) to (e) of that Act (good husbandry, sound management, hardship etc) — Submission rejected — Tribunal under section 4 can take into account anything relevant to the decision which a fair and reasonable landlord has to make, whether or not mentioned specifically in section 3(3) — Other criticisms of tribunal’s decision rejected — No ground for directing tribunal to state questions for the court — Tenant’s application refused
This was an
application by James Hargreaves Clegg, tenant of an agricultural holding known
as Flash House Farm, Cawthorne,
Agricultural Land Tribunal to refer certain questions of law to the court. The
landlord, the respondent to the present application, was Simon Walter Fraser.
Jeffrey P
Burke (instructed by E G Vickers & Co, of Sheffield) appeared on behalf of
the applicant; Douglas Hogg (instructed by Newstead & Walker, of Otley)
represented the respondent.
Giving
judgment, McCULLOUGH J said: This is an application by Mr James Hargreaves
Clegg, the tenant of an agricultural holding known as Flash House Farm,
Cawthorne, Barnsley, South Yorkshire. On January 2 1980 the landlord, Mr Simon
Walter Fraser, served on the tenant a notice to quit alleging a failure to
comply with a notice in writing dated December 15 1978 requiring the tenant to
remedy breaches of a repairing covenant to which his tenancy was subject.
On January 29
1980 the tenant served a counternotice requiring sections 2 and 4 of the
Agricultural Holdings (Notices to Quit) Act 1977 to apply to the notice to
quit. This made the notice to quit ineffective unless the agricultural land
tribunal consented to its operation. On February 5 1980 the landlord applied
for this consent.
After a
detailed inspection of the holding on June 12 1980, and an oral hearing on
September 25 1980 the tribunal gave its consent on November 4 1980.
Under section
6(1) of the Agricultural (Miscellaneous Provisions) Act 1954 the tribunal, at
the request of a party to proceedings before it, may refer to the High Court
for decision any question of law which arose in the course of the proceedings.
The tenant made such a request on November 20 1980, but the tribunal refused it
six days later. The tenant now applies to the High Court under section 6(2) of
the 1954 Act for an order directing the tribunal to refer to this court for
decision certain questions of law which arose in the course of the proceedings
before it.
The holding is
just under 70 acres in size. The tenant has farmed it since March 14 1941. He
was aged 67 when he appeared before the tribunal, and his son, who helped him
on the farm, was aged 39. It is a mixed farm; it is not intensively farmed, it
is farmed by traditional methods. It has provided Mr Clegg, his son and his
son’s family with living accommodation and all the usual benefits which result
from living on a farm, including being able to charge a good many of the
expenses of normal living to the farm accounts. Mr Clegg’s drawings and his
son’s wages have been very modest. Each averages about £18 a week, or about
£900 a year. Ninety per cent of the land is very close to Jowett House Farm,
the freehold of which is also owned by the landlord. Ten per cent of it is at
Gadding Moor, which is a little distance away; this comprises two or three
fields of seven or eight acres.
The holding is
part of the Canon Hall Estate, which passed to the landlord by inheritance in
1956. The estate consists of about 2,500 acres of tenanted farms. Since about
1962 there has been a long-term plan, formulated by those who are responsible
for the management of the estate, to reduce the number of holdings by
amalgamation. It is intended that the 22 holdings which existed in 1962 will be
reduced to about 10; the average size would then be increased from 120 to 250
acres.
This plan
contemplates the eventual amalgamation of most of the present holding with
Jowett House Farm and later with another farm, Clough Green Farm. It is
proposed that the land at Gadding Moor will be amalgamated with nearby Kidfield
Farm.
Clause 12 of
the tenancy agreement obliged the tenant
to put
maintain and keep in good and sufficient repair order and condition at all
times during his tenancy (using only the best and most suitable materials for
such repairs) the said messuage and buildings (main walls and main timbers only
excepted) and all fixtures fittings gates stiles ridges hedges ditches fences
walls drains ponds dams and roads in and upon the said farm.
In November
1977 the landlord wrote to the tenant, drawing attention to certain repairs
which were required, mainly to gates, fences and walls. So little was done in
response to this letter that on December 15 1978 a notice was given to the
tenant in these terms:
We hereby
give you notice that we require you to remedy within 12 months from the date of
service of this notice the breaches, whereof particulars are given below, of
the terms or conditions of your tenancy, being breaches which are capable of
being remedied or terms or conditions which are not inconsistent with the
fulfilment of your responsibilities to farm the holding in accordance with the
rules of good husbandry.
Fifty-eight
different matters which required attention were then listed.
Little, if
anything, was done to comply with this notice. So, on January 2 1980, the
notice to quit was served, requiring the tenant to deliver up to the landlord
the farm on January 10 1981 or ‘at the expiration of the year of your tenancy
which shall expire next after the end of 12 months from the date of service of
this notice’. In effect this required the delivery up of the farm in January
1981 and of the buildings in May 1981.
In his
application for consent to the operation of the notice to quit the landlord
said (at paragraph 6):
The main
facts on which I base my case are: the tenant has not complied with a notice
served on December 15 1978
and (at
paragraph 7)
If I obtain
possession of the land I intend to let it to another tenant. When Flash House
Farm becomes vacant it is to be largely amalgamated with a neighbouring farm
known as Jowett House Farm and it is intended that the whole unit will be
relet. The new tenant has not yet been selected. The land at Gadding Moor will
be amalgamated with the adjoining holding, Kidfield Farm, Hoylandswaine.
In his
submissions to the tribunal in reply the tenant said that his main reasons for
resisting the application were that the holding was the only source of
livelihood for himself and his son and provided their only accommodation. He
continued:
There are no
other occupations which I could follow in the event of eviction, having farmed
this land for forty years; and my son is not trained in any other occupation or
profession having farmed with me for 22 years.
My landlord
is not acting fairly and reasonably because the particulars of breaches and
work required to remedy them has been and will be completed prior to the tribunal
hearing. The breaches do not in any way prejudice the landlord’s freehold
interest. The farm is a sound economic unit farmed in accordance with the rules
of good husbandry.
Upon my death
my son James Robert Clegg intends to succeed to the tenancy. During the forty
years of my tenancy I have not received notices of breaches or covenants or
complaints of any other nature. Neighbouring tenants have not received similar
notices so far as I am aware.
By the time of
the hearing the necessary work had not all been completed, but the tenant
assured the tribunal that it would be completed within three weeks. He said
that, if need be, he would pay contractors to do it.
The tenant put
his farm accounts before the tribunal. These showed that the annual expenditure
on repairs varied from a maximum of £127 in one year to a minimum of £34 in
1978-79, the last complete year for which accounts were available. The tribunal
commented that the accounts revealed an almost permanent state of borrowing.
Counsel for the tenant, Mr Burke, criticises that remark, because in some of
the annual balance sheets there was a credit balance at the bank. However, if
one looks back through the balance sheets from 1979 for some three or four
years and takes the figures for sundry creditors, sundry debtors and cash at
the bank or bank overdraft, one finds that there was a deficit in every year.
One also notices that in some years the tenant was only able to draw as much as
he did, modest though the amount was, because he was introducing capital;
sometimes this capital amounted to a very substantial proportion of the
drawings.
The tribunal
reached its decision in the light of the circumstances existing, not at the
date of service of the notice to quit, but at the date of the hearing, in
September 1980. Its decision turned upon whether a fair and reasonable
landlord, in the position of this landlord in these particular circumstances,
would or would not insist on possession.
The
conclusions of the tribunal were:
It was the
unanimous decision of the tribunal that the tenant had failed to discharge the
onus of establishing that in all the circumstances a fair and reasonable
landlord would not insist on possession. Indeed, it appeared to us that in the
circumstances such a landlord would insist on possession.
In the view
of the tribunal the following circumstances in particular would have led any
fair and reasonable landlord to insist on possession.
There are then
set out four subparagraphs, all but the first of which are criticised by Mr
Burke on behalf of the tenant.
(1) It is clear that, over a substantial period
of time, the tenant allowed many of the gates, hedges, fences and walls on the
holding to get into a serious state of disrepair. He was warned of the
seriousness of the position as long ago as November 1977, and since then has
had more than enough time to carry out all the necessary remedial work; but
even by the date of the hearing, nearly three years after the initial warning,
some 25% of this work was still uncompleted.
(2) In our view, the holding is no longer an
economically viable unit — unless, possibly, it were to be farmed in an
intensive manner which would be totally beyond the capabilities and resources
of the tenant and his son. It appears from the accounts presented to us that, for
a number of years now, the holding has produced — at best — a minimal profit
for that tenant; it would have produced no profit at all if the tenant had paid
his son a proper agricultural wage. He has also maintained a very low level of
capital investment in the holding and spent very little on repairs.
(3) In our view it is desirable, in the interests
of sound estate management, that the holding should be amalgamated with Jowett
House Farm and Clough Green Farm. Such an amalgamation has formed part of the
landlord’s long-term proposals for many years now; and we consider that it is
desirable that it should be carried into effect as soon as practicable.
(4) Although we are very conscious of the
personal consequences for the tenant and his son of the loss of the holding, we
feel that these consequences will be alleviated to a significant extent by the
landlord’s offer of alternative accommodation.
Mr Burke
submits that in reaching these conclusions the tribunal made errors of law. His
basic assertion is that they took into account against the tenant matters
which, on a proper construction of the 1977 Act, ought not to have been
considered. To understand his submissions it is necessary to set out much of
sections 2, 3 and 4 of the Agricultural Holdings (Notices to Quit) Act 1977.
Section 2(1):
Where — (a)
notice to quit an agricultural holding or part of an agricultural holding is
given to the tenant thereof; and (b) not later than one month from the giving
of the notice to quit the tenant serves on the landlord a counternotice in
writing requiring that this subsection shall apply to the notice to quit, then,
subject to subsection (2) below, the notice to quit shall not have effect
unless the tribunal consent to its operation. (2) Subsection (1) above shall not
apply in any of the Cases set out in subsection (3) below.
In section
2(3) eight different sets of circumstances, or Cases, are specified, one of
which, Case D, reads:
At the date
of the giving of the notice to quit the tenant had failed to comply with a
notice in writing served on him by the landlord, being . . . (b) a notice
requiring him within a reasonable period specified in the notice to remedy any
breach by the tenant that was capable of being remedied or any term or
condition of his tenancy which was not inconsistent with the fulfilment of his
responsibilities to farm in accordance with the rules of good husbandry, and it
is stated in the notice to quit that it is given by reason of the matter
aforesaid.
Section 3(1):
Subject to
subsection (2) below, the tribunal shall consent under section 2 above to the
operation of a notice to quit . . . If, but only if, they are satisfied as to
one or more of the matters mentioned in subsection (3) below, being a matter or
matters specified by the landlord in his application for their consent.
Section 3(2):
Even if they
are satisfied as mentioned in subsection (1) above, the tribunal shall withhold
consent under section 2 above to the operation of the notice to quit if in all
the circumstances it appears to them that a fair and reasonable landlord would
not insist on possession.
Section 3(3):
The matters
referred to in subsection (1) above are: (a) that the carrying out of the
purpose for which the landlord proposes to terminate the tenancy is desirable
in the interests of good husbandry as respects the land to which the notice
relates, treated as a separate unit;
(b) that the carrying out thereof is desirable in
the interests of sound management of the estate of which the land to which the
notice relates forms part or which that land constitutes;
(c) that the carrying out thereof is desirable
for the purposes of agricultural research, education, experiment or
demonstration, or for the purposes of the enactments relating to smallholdings
or allotments;
(d) that greater hardship would be caused by
withholding than by giving consent to the operation of the notice;
(e) that the landlord proposes to terminate the
tenancy for the purpose of the land’s being used for a use, other than for
agriculture, not falling within Case B.
Section 4:
(1) Subsections (2) to (4) below shall apply
where — (a) notice to quit an agricultural holding or part of an agricultural
holding is given to the tenant thereof; and
(b) the notice includes a statement in accordance
with Case D to the effect that it is given by reason of the tenant’s failure to
comply with a notice to do work.
A ‘notice to
do work’ is defined in subsection (5) of section 4 as follows: ‘In this section
‘notice to do work’ means a notice served on a tenant of an agricultural
holding for the purposes of paragraph (b) of Case D requiring him to remedy a
breach of a term or condition of his tenancy, being a notice requiring the
doing of any work of repair, maintenance or replacement.’ That is the situation here.
Section 4(2):
If not later
than one month from the giving of the notice to quit the tenant serves on the
landlord a counternotice in writing requiring that this subsection shall apply
to the notice to quit, the notice to quit shall not have effect (whether as a
notice to which section 2(1) above does or does not apply) unless the tribunal
consent to the operation thereof.
There is then
a proviso which is immaterial for present purposes.
Section 4(4):
On an
application made in that behalf by the landlord, the tribunal shall consent
under subsection(2) . . . above to the operation of the notice to quit unless
in all the circumstances it appears to them that a fair and reasonable landlord
would not insist on possession.
The similarity
between the requirements for consent under sections 2 and 4 is obvious. In each
case the service of a counternotice renders the notice to quit ineffective
unless the tribunal consent to its operation, the consent can be given only if
certain specified matters exist and, even then, the decision turns upon whether
a fair and reasonable landlord would insist on possession in the circumstances.
One wonders why, when the ultimate test is the same in each case, the procedure
is laid down in separate sections. The answer may be historical.
Whatever be
the explanation, the fact that matters (a) to (e) are referred to in section 3
and are not referred to in section 4 forms the basis of Mr Burke’s submission
that, where the tribunal is exercising its discretion under section 4, it
cannot take into account any of the matters (a) to (e). He submits that if a
landlord wants the tribunal to take any of those matters into account then he
must go through the section 3 procedure and in his application he must specify
such of them as he wants taken into account. Upon those matters the tribunal
will then make findings of fact in the light of which it will determine the
attitude of a fair and reasonable landlord.
Mr Hogg, for
the tenant, submits that under section 4 the discretion is at large and the
tribunal can and should take into account anything which is relevant to the
decision which a fair and reasonable landlord would make, whether or not it is
referred to in section 3.
In my judgment
Mr Hogg is right. I say so for a number of reasons. First, the plain words of
section 4(4). On their face they give to the tribunal the widest discretion. It
is not fettered in any way. It must simply take into account ‘all the
circumstances’; it must put itself in the shoes of a fair and reasonable
landlord and ask itself whether or not he would insist on possession. Secondly,
it seems to me that any tribunal, when considering the question raised by
section 4(4), will inevitably have to have regard to the relative hardship
involved in granting consent and in withholding consent. Yet this is the matter
referred to in section 3(3)(d). It would make no sense to say that because this
is referred to in section 3(3)(d) it must be ignored under section 4(4).
Thirdly, in the prescribed form in which the tenant makes his reply to the
landlord’s application for consent, the tenant may well assert that he has
farmed in accordance with the rules of good husbandry. That has happened here,
where, under the reasons why he alleges that his landlord is not acting fairly
and reasonably, he raises this very point. The tenant himself, rightly in my
judgment,
section 3(3)(a). Parliament cannot have intended that the tribunal should
disregard his submissions about good husbandry because it is one of the matters
referred to in section 3(3).
I conclude
that the discretion to be exercised under section 4(4) is at large. In my
judgment the tribunal can take into account every relevant circumstance,
whether or not it is also referred to in section 3(3). Under section 4 landlord
or tenant can each raise any matter which he suggests the tribunal should take
into account. Each party has the opportunity to deal with the other’s
submissions. Neither is taken by surprise. For these reasons I reject Mr
Burke’s primary submission that the tribunal was wrong to take account of
matters referred to in section 3(3).
In addition to
his main submission Mr Burke makes a number of specific criticisms of the
tribunal’s findings in paragraphs (2), (3) and (4). To what extent they raise
matters of law is, to say the least, questionable, but I shall deal with them,
despite this and despite the equal difficulty I have had in detecting any point
of law in the tenant’s request to the tribunal to refer to this court questions
of law under section 6(1) of the 1954 Act or in his notice of motion.
As to
paragraph (2) Mr Burke submits that the tribunal was wrong to take into account
economic considerations and to hold, as it did, that the unit was no longer
economically viable. He submits that economic considerations can only be
relevant if they jeopardise the landlord’s reversion. He argues that, although
the holding was yielding only a modest income for the tenant and his son, it
was enough to enable them to pay the rent. The tenant had carried out most of the
works of repair and there was every indication that he was about to carry out
the rest. What remained to be done would have cost little. Thus, he submits,
there was no reason to believe that the landlord’s reversion would be
jeopardised if the tenancy were allowed to continue. He goes on to submit that
the tribunal may have approached the question of economic viability in the
wrong way. Its criticism may have been that the unit was not producing as great
an income as they would have liked to see or as a landlord would have liked to
see.
I do not think
these criticisms are valid. Although the tribunal did not expressly say that
economic viability would be relevant only if it jeopardised the landlord’s
reversion, there is nothing to show that it took economic viability into
account in any wrong way. The tribunal’s paragraph dealing with economic
viability ends by saying: ‘He had maintained a very low level of capital
investment in the holding and spent very little on repairs.’ It is undeniable that the tenant had spent
very little on repairs over the years, and by 1980 he had done only
three-quarters of the work which he had been told to do in 1977 and which he
had been obliged to do throughout the intervening three years. This factor
could properly be taken into account in deciding whether or not the landlord’s
reversion might be prejudiced if the tenancy were allowed to continue.
Mr Burke
argues that the tribunal were perverse in finding that the unit was not
economically viable. He relies particularly on the fact that it was producing
enough money to satisfy the tenant and his son. Having regard to the accounts
and to the facts as found by the tribunal, I do not share that view. I think
that this finding of fact was open to them on the evidence. Indeed I can see no
room for any other finding. A glance through the accounts shows, in my
judgment, that it was inevitable.
For these
reasons I see nothing in paragraph (2) of the tribunal’s findings which raises
any question of law which should be referred to this court.
In relation to
paragraph (3) Mr Burke submits that the desired amalgamation with Jowett House
Farm ought not to have been taken into account because this is a consideration
referred to in section 3(3). I have already said enough to indicate that that,
in itself, cannot be an objection in law. He goes on to argue that, although
Jowett House Farm was available, in the sense that it was tenant-free and in a
position to be amalgamated with Flash House Farm in the reasonably near future,
Clough Green Farm was not. The agreed documents contain a coloured plan showing
the proximity of Jowett House Farm to the holding, and one can see at a glance
that their amalgamation is desirable; even though the future amalgamation with
Clough Green Farm may have to wait for many years.
Mr Burke draws
attention to the fact that Clough Green Farm is still tenanted. The tenant has
a son and the son might apply and eventually secure a further tenancy or a
continuation of the same tenancy. Be that as it may, I do not think this
invalidates the tribunal’s reasoning. Nor do I think it matters that there was
no evidence about Kidfield Farm which was intended to be the potential
recipient of the land at Gadding Moor. I reject Mr Burke’s argument that, in
its finding about the desirability of amalgamation, the tribunal has reached a
conclusion to which no reasonable tribunal could have come or that it has made
any other error of law, and I see in paragraph (3) no question of law which
should be referred to this court.
In relation to
paragraph (4) Mr Burke’s argument is that there was no evidence to support the
finding because the offer of alternative accommodation was not binding, as it
was unsupported by consideration. Mr Hogg, who appeared before the tribunal,
tells me and I accept it, as does Mr Burke, that throughout the proceedings
below it was assumed that if the landlord said he would make other
accommodation available he would do so. That being so, no one required an offer
supported by consideration or one that was for some other reason legally
enforceable. That being so, I reject Mr Burke’s attack on this finding. I see
nothing in paragraph (4) to raise a question of law for this court.
Finally, Mr
Burke submits that two strong arguments in the tenant’s favour were not
mentioned by the tribunal in its finding. First was the argument that the
failure to repair the gates, walls, etc did not injure the reversion. Next,
that clause 12 put on the tenant an excessively onerous obligation and that in
correspondence the landlord had on two or three occasions suggested that a new
agreement might be made, which contained a covenant much less onerous and which
more nearly equated the obligations of landlord and tenant as to repair. No
doubt these points were strongly urged below, but because a point is not
mentioned in the findings of a tribunal it does not follow that it was not
taken into account.
At the end of
the day I have to ask myself not whether I think the tribunal’s decision was
harsh or whether I would have liked to have seen this elderly gentleman and his
son carrying on as they have in the past and as they wish to do in the future.
I have to ask whether I am satisfied that there is a fairly arguable point of
law which would justify ordering the tribunal to refer it to this court for
decision.
Mr Burke put
the questions as follows: is there a relevant matter which the tribunal ought
not to have considered but did? Is there
a relevant matter which it should have considered but did not? Has its discretion been exercised on a wrong
basis of law? Has it made findings of
fact unsupported by evidence? Has it
made findings which no reasonable tribunal could have reached?
I have asked
myself all these questions and have answered each in the negative. Accordingly,
I am driven to the conclusion that there is no basis upon which this court
could order the tribunal to state a question for the decision of this court.
Accordingly, regrettable though it may be from the tenant’s point of view, and
serious though this decision will be for him and his son, the application must
be refused.
The
application was refused with costs. Leave was given to appeal.
