Landlord and tenant — Whether agreement adding additional tenant operated by way of surrender by operation of law and regrant
holding — Succession — Whether agreement granting tenancy to original tenant
and close relative a deemed succession by agreement
On June 9 1943
the respondent’s grandfather, Gilbert Ralph, was granted a tenancy of Austral
and Boreal Farms by Francis Perceval Saunders. On November 2 1957 the trustees
of Francis Perceval Saunders (who had since died) entered into a memorandum of
agreement with Gilbert Ralph and his son Victor. Since that date Gilbert and
Victor held the tenancy as joint tenants. In 1978 Gilbert died and Victor
continued as sole tenant. In 1988 Victor retired and his son Christopher, the
respondent, applied to the Agricultural Land Tribunal for a direction that he
was entitled to a tenancy of the farms. The tribunal made a direction to that
effect deciding that the respondent was a first successor. The trustees
appealed by way of a case stated contending that the respondent was a second
successor pursuant to the Agricultural Holdings Act 1986, because the effect of
the 1957 agreement was a surrender of Gilbert’s tenancy or alternatively
because the 1957 agreement amounted to a succession by agreement under section
37(1) of the Agricultural Holdings Act 1986.
by the addition of Victor as a joint tenant. A single tenant can assign a
tenancy to joint tenants and therefore there was no reason in principle why an
additional party could not be added without the artificiality of novation and
the fiction of surrender of the original tenancy by operation of law and a
regrant of new tenancy.
in section 37 of the Agricultural Holdings Act 1986 relating to succession by
agreement and the grant of a tenancy to a person who would have been a close
relative of the outgoing tenant do not apply to the grant of tenancy granted to
the close relative and another who is not a close relative. Section 37(2) of
the 1986 Act does not include either the grant of a joint tenancy or an
assignment to joint.
was not granted in 1957, but, if that agreement was effective to create a joint
tenancy by surrender by operation of law and regrant to Gilbert and Victor,
they did not then obtain a tenancy by virtue of a deemed direction under
section 39 of the 1986 Act.
The following
cases are referred to in this report.
Attorney-General v Wood [1897] 2 QB 102
Baker v Merckel [1960] 1 QB 657; [1960] 2 WLR 492; [1960] 1 All ER
668, CA
British
& Beningtons Ltd v North Western Cachar Tea
Co Ltd [1923] AC 48
Inland
Revenue Commissioners v Gibbs [1942] AC 402
Jenkin R
Lewis & Son Ltd v Kerman [1971] Ch 477;
[1970] 3 WLR 673; [1970] 3 All ER 414; (1970) 21 P&CR 941, CA
Morris v Baron & Co [1918] AC 1
Ormond
Investment Co v Betts [1928] AC 143, HL
Savile
Settled Estates, Re [1931] 2 Ch 210
This was an
appeal by way of a case stated from the Agricultural Land Tribunal for the
south-western area which, on October 19 1990, determined that the respondent,
Christopher Ralph, was entitled to a tenancy of Austral and Boreal Farms owned
by the applicant, the trustees of Francis Perceval Saunders.
Lynton Tucker
(instructed by Pitmans, of Reading) appeared for the applicants; Jack Denbin
(instructed by Lock Read & Lock, of Dorchester) represented the respondent.
Giving
judgment, JOWITT J said: This is an appeal by the trustees of the late Francis
Perceval Saunders, by way of case stated from a direction of the Agricultural
Land Tribunal for the south-western area, made on October 19 1990 pursuant to
section 53 of the Agricultural Holdings Act 1986, that the respondent to this
appeal, Christopher Ralph, is entitled to a tenancy of Austral and Boreal
Farms, at Alton Pancras, Dorchester, Dorset, the appellants being the landlords
of those farms.
In this appeal
it is not in issue that the respondent was entitled to such a direction. That
is accepted. Given that he satisfies the relevant statutory criteria, the Act
allows a father who is the tenant of an agricultural holding to be succeeded
by, among others, his son (the first succession) and his son by his grandson
(the second succession).
What is in
issue in this appeal is whether the respondent is a first successor, with the
opportunity of being succeeded by one of his own kith and kin, or whether he is
a second successor without that opportunity. As the respondent is still only in
his mid-30s and in all probability has a good many active years ahead of him as
a farmer, it might at first blush be thought that the matter in issue is at the
present time academic and likely to remain so for some years to come. That is
far from being the case.
First, the
tribunal has made a finding in the respondent’s favour that he is a first
successor. This might place difficulties in the appellant landlords’ way at
some future date if the respondent is in fact a second successor, and they were
to seek to argue the point.
Second, the
respondent would no doubt wish there to be finality about this issue since
farming being an occupation which must often call for long-term forward
planning, he must naturally want to know whether he is planning only for
himself or, he might hope, for his own successor.
Third, whether
these farms are to have a protected tenant for one generation or possibly two
is something which may affect their investment value to the trust.
The brief
facts
The facts can
be told very shortly. On June 9 1943 the respondent’s grandfather, Gilbert
Ralph, entered into a written tenancy agreement with Francis Perceval Saunders
as a result of which he became tenant of Austral and Boreal Farms. Gilbert had
a son, Victor. On November 2 1957 there was executed a memorandum of agreement
made
and Victor Ralph.
It is common
ground that thereafter Gilbert and Victor were joint tenants of the farms. What
is in issue is whether that was by way of a variation of the 1943 tenancy
agreement or whether the 1957 agreement took effect as a surrender by operation
of law of Gilbert’s tenancy and the grant of a new joint tenancy to father and
son. If the latter, it is common ground that the new tenancy, save as to the
change in tenants and the rent payable, was in all respects on the same terms
as the old.
In 1978
Gilbert Ralph died and his son, Victor, continued as sole tenant of the farms.
In 1988 Victor
Ralph retired and his son, Christopher Ralph (the respondent), applied to the
tribunal for the direction of which I spoke at the outset of this judgment.
That application was made pursuant to the retirement provisions introduced by
the 1986 Act.
Mr Tucker, who
appears for the appellants, conceded that he could not begin to show that
Christopher Ralph is a second successor unless he could first show that the
1943 tenancy was surrendered by operation of law and a new joint tenancy
created in 1957. I shall explain why that concession is made when I come to
consider the statutory provisions.
Amendment
of case stated
Before I
consider that issue I ought first to explain why, by consent of the parties,
the question set out in para 7 of the case stated came to be amended by me at
the outset of the hearing. As originally stated the question included this
preliminary sentence:
The Tribunal
found as a fact that an agricultural tenancy of the holding had been granted by
the Applicants to the deceased and Mr Ralph in 1957 as evidenced by a
Memorandum dated 2nd November 1957.
I should
explain how the case came to be stated. A request to the tribunal made by the
appellants for a case to be stated was refused. Thereafter an ex parte
application was made to Auld J, seeking an order of mandamus requiring
the tribunal to state a case, but not posing the question now posed to be
answered by this court in the case stated.
Auld J, being
minded to make an order, made the suggestion which was adopted that a letter be
written to the tribunal inviting them to state a case containing the question
as appeared in the unamended case stated.
The letter was
approved by Auld J and the tribunal thereafter agreed to state a case and they
posed as the single question the question set out in the letter.
At the outset
of this hearing, after I had queried the form of the question, Mr Denbin, for
the respondent, invited me pursuant to Ord56, r11, to amend the question by
deleting from it the first sentence and making a slight consequential amendment
which did not affect the substance of the question. It was pointed out, as was
true, that the tribunal had never been asked at the hearing to consider whether
the 1957 agreement had operated to vary the 1943 tenancy agreement or to create
a new tenancy and that the matter had not been addressed in the tribunal’s decision
and the reasons supporting it.
The further
point was made that what was said to be a finding of fact was in part at least
a matter of law. Mr Tucker very properly conceded these points and agreed that
the case stated should be amended.
The appellants’
legal advisers had prepared two volumes of document, containing over 500 pages
for use in this appeal, entirely overlooking the fact that on an appeal by way
of case stated the parties are confined, save exceptionally, to the case
itself. It was agreed by both parties, though, that it would not be possible
for me to reach a decision in this case without being able to refer to some of
the documents. The parties helpfully agreed on a list of documents and so there
were before the court, along with the case stated, 70 or so pages of documents,
which have been identified on the court record.
A
variation of the existing tenancy or a new one?
The tenancy
agreement dated June 9 1943 was for a period of 12 months certain from October
10 1943 and thereafter from year to year until determined. In 1957 the trustees
were minded to allow Victor Ralph to become a tenant of the farms jointly with
his father Gilbert. Prior to the execution of the memorandum of agreement dated
November 2 1957 Gilbert and Victor gave an undertaking to the trustees that in
consideration of them agreeing to Victor becoming a joint tenant they would
give up possession of the farm in response to a notice to quit which did not
expire earlier than October 10 1977. I mention this undertaking to explain how
the willingness of the trustees to allow Victor to become a joint tenant came
about. Mr Tucker fairly concedes, though, that this undertaking was never
enforceable and that he gains no help from it. He accepts that it is an
irrelevance so far as the resolution of this appeal is concerned.
The memorandum
of agreement was apparently sewn into the original 1943 tenancy agreement as
were subsequent memoranda purporting on their face to vary the 1943 tenancy
agreement.
The 1957
memorandum of agreement reads as follows:
MEMORANDUM OF
AGREEMENT made between KATHLEEN GRACE ELAINE SAUNDERS of Orchard Cottage Alton
Pancras aforesaid and ROBERT MOULD-GRAHAM of Fawdon House Fawdon
Newcastle-upon-Tyne the Trustees under the Will of the said Francis Perceval
Saunders of the one part and the said GILBERT JAMES RALPH and his son VICTOR
JAMES RALPH of the other part WHEREBY it is mutually agreed that with effect
from 10th October 1957
1. The said
Victor James Ralph shall become joint tenant of the said holding and the said
Gilbert James Ralph and Victor James Ralph shall jointly and severally become
responsible for the due performance of all the agreements on the part of the
Tenants contained in the within written Agreement and Memorandum thereto.
2. The rent
of the said holding shall be increased to EIGHT HUNDRED AND FIFTY POUNDS
(£850.00) per annum.
3. The said
holding is as described in the following revised Schedule.
There then is a
schedule of the land comprised within the holding, and the document is signed.
The ‘within
written Agreement and Memorandum’ was obviously the tenancy agreement of June 9
1943.
In my
judgment, the language of this agreement points far more strongly to an
intention on the part of the parties to it to vary the original rather than to
grant a fresh tenancy on the same terms as the old, save for the joint nature
of the tenancy and the rent. If the intention had been to create a new tenancy,
I would have expected to find formal words of surrender by Gilbert of his
existing tenancy and formal words, such as are to be found in the 1943
agreement, of grant to Gilbert and Victor with a stipulation that the letting
was to be on the same terms as the old tenancy, save as to rent. I referred to
subsequent memoranda and it is enough if I refer to three on them.
The first is
headed ‘Memorandum to the Agreement made between Commander F P Saunders, RN and
Mr Gilbert James Ralph in respect of Austral Farm and Boreal Farm, Alton
Pancras, Dorchester and dated the 9th June 1943’. The document is signed by
both Gilbert and Victor Ralph. Among other things, the rent is raised by that
memorandum of agreement.
The second
memorandum to which I refer is headed ‘AN AGREEMENT made the Twenty Third day
of February 1983 between ANDREW MOULD-GRAHAM (hereinafter called the Landlord)
of the one part and VICTOR RALPH (hereinafter called the Tenant) of the other
part’.
The agreement
reads on:
WHEREBY it is
mutually agreed and declared that, in consideration of the terms and conditions
written hereunder, the Tenant will surrender his tenancy of part of one field,
as set out in the attached schedule, part of the land held in the Tenancy
Agreement dated 9th June 1943 . . .
The third is a
memorandum to the agreement is stated to be a ‘MEMORANDUM TO THE AGREEMENT . .
. dated the 9th June 1943.’
In 1984 there
were proposals, which came to nothing, that Andrew Mould-Graham and Victor and
Christopher Ralph should enter into a partnership for the purpose of farming
Austral and Boreal Farms. The trust was a family trust. Andrew Mould-Graham was
one of the beneficiaries of the trust and the proposal had the endorsement of
the
conditional upon a tenancy being granted to the partnership. Of significant
interest is the description in para 2 of the proposed holding. It reads:
Austral and
Boreal Farms extending to 795 acres which is currently let to VJR [Victor
Ralph] under the terms of a Tenancy Agreement dated the 9th June, 1943, as
varied by subsequent memoranda.
When
considered along with the terms of the 1957 agreement, this document and the
various memoranda from which I have selected three demonstrate without any
doubt, in my judgment, the intention of the parties in 1957 that the 1957
agreement should be given effect to by a variation of the 1943 agreement and
their subsequent understanding that this was what had been achieved.
Mr Tucker
submits, however, that whatever the parties intended it was simply not possible
for them to achieve their desired result of making Victor a joint tenant with
his father by way of varying the 1943 agreement. He submits that the 1957
agreement effected a surrender by operation of law of Gilbert’s tenancy and a
regrant of a joint tenancy to Gilbert and Victor. Mr Tucker accepts that not
every attempt to vary the terms of a tenancy agreement has to take effect in
this way. He began his submissions on this aspect of the case by referring me
to the way in which an agreement to extend the term of a lease has to take
effect. He cited para 1-1853, Vol 1, of Woodfall, Landlord and Tenant
and three decisions.
The first
decision was that of Maugham J in Re Savile Settled Estates [1931] 2 Ch
210 in which he stated the bald proposition that an extension of the demised
term can only take effect by surrender by operation of law and regrant. The
judgment gives no reasons for this and my impression is that the judge was
stating the effect of a well-established and long-recognised rule.
The next case
is Baker v Merckel [1960] 1 QB 657. This was a case dealing with
an agreement whose effect was to enable the term of a lease to be extended.
Sellers LJ said (at p665):
The agreement
did not of itself enlarge the original term but it provided that it might be
extended without any further consent of the lessor and was, therefore, a
substantial alteration of a character to which the rule applies.
This seems to
me to have been a reference to the rule spoken of by Maugham J in Re Savile
Settled Estates.
Pearce LJ (at
p667) said:
Although the
implication of surrender and fresh grant is a fiction based on estoppel, and,
as Clauson J said In re Bruce, Brudenell v Brudenell, it is not
to be encouraged or extended, it is not easy on the authorities to avoid the
implication of a surrender and fresh grant where such a change is made in the
term, namely, a variation of a term of seven years to a term of seven years
with an option for a further four years.
Sellers LJ and
Havers J agreed with Pearce LJ’s judgment. It would seem that Pearce LJ felt no
enthusiasm for the application of the fiction of surrender by operation of law,
a concept which is described in para 1-1849 of Woodfall in the following
terms:
The term
‘surrender by operation of law’ or ‘implied surrender’ (there being no
distinction) is the expression used to describe all those cases where the law
implies a surrender from unequivocal conduct of both parties which is
inconsistent with the continuance of the existing tenancy. Thus it is properly
applied to cases where the owner of a particular estate has been party to some
act having some object other than that of a surrender, but which object cannot
be effected whilst the particular estate continues, and the validity of which
act he is by law estopped from disputing. Such surrender is the act of the law,
and takes place independently of, and even in spite of, the intention of the
parties. It is presumed to have preceded the act to which the tenant is
party.
The fact that
a term can be extended by surrender only by operation of law and regrant seems
to me to be based upon long-standing rule rather than principle and I do not
gain any help from it in resolving this issue.
The third of
the cases to which I was referred was Jenkin R Lewis & Son Ltd v Kerman
[1971] Ch 477. This was a landlord and tenant case in which a new rent had been
agreed, there not being any rent review clause, and the question arose whether
the effect of that agreement was to surrender the old lease by operation of law
and create a new one. The Court of Appeal held that the agreement operated
simply to vary the lease. At p496B Russell LJ said:
The question
then arises whether it is correct in law to say that a mere agreement by
landlord and tenant for an increase in the rent reserved on a letting
necessarily involves a new letting despite their contrary intentions.
If a tenant
holding land under a lease accepts a new lease of the same land from his
landlord he is taken to have surrendered his original lease immediately before
he accepts the new one. The landlord had no power to grant the new lease except
on the footing that the old lease is surrendered and the tenant by accepting
the new lease is estopped from denying the surrender of the old one. This
‘surrender by operation of law’ takes effect whether or not the parties to the
new lease intend it to take effect. Moreover, even if there is no express grant
of a new lease the old lease will be surrendered by operation of law if the
arrangements made between the landlord and the tenant are such as can only be
carried out so as to achieve the result which they have in mind if a new
tenancy is in fact created.
Mr Tucker was
driven to accept that a variation of the 1943 agreement to make Victor a joint
tenant with his father would not have effected any alteration in the nature of
the mutual obligations of landlord and tenant, save that there were now two
tenants in place of one. What he submitted was that whether an additional
tenant can be brought in by variation of the tenancy agreement has to be
resolved by general contract law principles. He put his submission in this way:
the addition of a party to a contract is ipso facto a fundamental
alteration to the contract and cannot be achieved save by rescission of the old
contract and the formation of a new contract; a party can never be added to a
contract save by novation. Mr Tucker accepts that unless this proposition is
sound the appellants must fail on this issue.
There is no
doubt that if parties wish to bring another person into their contractual
arrangements this can be achieved by rescission of the old contract and
formation of a new one. It must often happen that contracting parties,
especially businessmen, do wish to bring in a further party to their
arrangements. If this is something which simply cannot be achieved by variation
of the existing contract, I would have expected to find authority which says
so. The researches of counsel and those researches I have been able to make
have failed to reveal any decision in support of this proposition. The nearest
one comes to it is in the law of partnership. The present edition of Lindley
on Partnership (16th ed) states, repeating what is to be found in the 2nd
and 3rd ed, that the law, ignoring the firm, looks to the partners composing it
and any change among them destroys the identity of the firm. Halsbury’s Laws
of England vol 35 4th ed, in the section dealing with partnership (Nourse
LJ was a contributor), states that an incoming partner is subject to the terms
of the partnership except as varied by express agreement.
Mr Tucker
placed reliance on Inland Revenue Commissioners v Gibbs [1942] AC
402. This case was concerned with the application of one of the income tax
rules to the situation arising when a new partner is admitted to a partnership.
Mr Tucker drew my attention to a passage in the speech of Lord Wright (at
p429):
Rule 9, like
s6 of the Act of 1880, is a slipshod piece of draftsmanship. It must, it seems,
have been intended to cover the types of case mentioned in r 11 of the Act of
1918. The framers of r 9 may fairly be held to have taken the view that, if
four partners admit a new partner and continue the business as a partnership of
five, there is a change. The four old partners do not carry on the business on
the same footing as before even if the actual business operations are
unchanged. There is, on any view, a cessation of the old partnership business
and the starting of a new partnership business. Even if the business remains
the same and the name remains the same as before the change still the five who carry
it on succeed to the four who did so before the change and the five can only
succeed to the four if the four cease to carry it on, which is the fact because
five partners carrying on a business jointly are different from four. Thus, a
change in the persons jointly carrying on a business by the admission of a new
partner may fairly be held to come within the very general words of r 9 even
though in one sense the previous partners may not cease to carry on the
business. But the business is not the old business. The old business is
superseded by a new business, with a different division of property ownership,
of powers of agency and representative capacity, of rights on dissolution and
of all the incidents of partnership, including joint liability. The draftsman
may have had in mind that by English law the admission of a new partner
involves
succeeds to the old firm. In that sense, the old partners may be said to cease
to carry on the business.
I was referred
also to a passage from the speech of Lord Macmillan at p421. Lord Russell
dissented from the decision and Viscount Simon LC and Lord Porter did not found
their decision on partnership law but simply on the construction of the rule
and its application to the factual situation which arose when another person
was admitted to the partnership.
The current
edition of Lindley at para 34-34 cites this case as authority for the
proposition that a change in the membership of a partnership will technically
involve the dissolution of the old firm and the creation of a new firm. Mr
Tucker accepted, though, that it cannot be said that this proposition is part
of the ratio of the decision, although he points out, and with justification,
the high authority of these dicta from Lord Wright and Lord Macmillan.
Although the decision of the Court of Appeal at [1940] 2 KB 615 was overruled
by the House of Lords, it is of more than passing interest that there is no
reference in the judgments to the contractual position when a new partner is
admitted to a partnership. Goddard LJ, who was an acknowledged master of the
common law, was a party to the decision in the Court of Appeal.
Whatever be
the position in relation to partnership, I am not persuaded that this provides
authority for the proposition relied on by Mr Tucker that the addition of a
party to a contract is impossible of achievement save by novation.
I find help on
the question of variation of contract from two decisions of the House of Lords.
The first is Morris v Baron & Co [1918] AC 1. This
case concerned a contract for the sale of goods and the question was whether
the contract had been varied or rescinded by a subsequent agreement.
At p19
Viscount Haldane said in his speech:
What is, of
course, essential is that there should have been made manifest the intention in
any event of a complete extinction of the first and formal contract, and not
merely the desire of an alteration, however sweeping, in terms which still
leave it subsisting.
At the foot of
p25 of Lord Dunedin’s speech one finds this passage (continuing over the page):
The
difference between variation and rescission is a real one, and is tested to my
thinking, by this: In the first case there are no such executory clauses in the
second arrangement as would enable you to sue upon that alone if the first did
not exist; in the second you could sue on the second arrangement alone, and the
first contract is got rid of either by express words to that effect, or
because, the second dealing with the same subject-matter as the first but in a
different way, it is impossible that the two should be both performed. When I
say you could sue on the second alone, that does not exclude cases where the
first is used for mere reference, in the same way as you may fix a price by a
price list, but where the contractual force is to be found in the second by
itself.
Lord Atkinson
contrasted the terms of the first and second agreements in the case before
their lordships and said (at p33) that it was impossible to reconcile them. He
went on:
With the
exception already pointed out as to price, they are in conflict in all those
material and fundamental provisions which go to the root of each of them. It
is, I think, impossible to arrive at any rational conclusion as to the meaning,
aim, and effect of this new arrangement other than this, that it was the clear
intention of both the appellant and the respondents to put aside, in their
future dealings, the original agreement, and to treat it thenceforth as
abandoned or non-existent.
At p38, having
compared the differences in the terms of the two agreements, Lord Parmoor said:
It is clear
that these terms are an alteration of the September contract, but this in
itself would not be sufficient to support the plea of rescission. It is
necessary further to inquire whether the conditions have been so changed in
their essential character that there is a substantial inconsistency, such as to
lead to the inference that the parties did intend to rescind the earlier
contract of September. It is not possible to lay down any general principle,
but where the alteration is such that the conditions of the earlier contract
cannot be restored without placing one of the parties under a permanent and
substantial disability there is a strong prima facie probability of an
intention to rescind.
The second
case is British & Benningtons v North Western Cachar Tea Co Ltd
[1923] AC 48. At p62, in the speech of Lord Atkinson, one reads:
A written
contract may be rescinded by parol either expressly or by the parties entering
into a parol contract entirely inconsistent with the written one, or, if not
entirely inconsistent with it, to an extent that goes to the very root of it .
. .
Morris v Baron & Co, to which I have referred already, is cited
in support of that proposition. Lord Sumner (at p68) said:
The change
[that is in the later agreement] does not go to the very root of the original
contracts nor is it inconsistent with them . . .
On a
consideration of these dicta there seems to me to be a very wide latitude given
to parties to vary an existing contract. The parties to the 1957 agreement
wished to make Victor a tenant jointly with his father. If they could achieve
this by granting a new tenancy on the same terms as the 1943 tenancy I find it
difficult, as a matter of common sense, to see why they could not achieve the
same result by varying the 1943 agreement. It is quite clear that it was their
intention to do that and, in my judgment, they succeeded. The proposition that
a new party can be added only by novation (in the case of a tenancy by
surrender by operation of law and regrant) seems to me to smack of
artificiality rather than principle. I am fortified in this view by the fact
that a sole tenant is able to assign to joint tenants. While it is true that in
this situation there is only privity of estate between the landlord and the
joint tenants and not privity of contract this does not, to my mind, remove the
artificiality of the proposition that, whereas Gilbert Ralph could have
assigned the tenancy to himself and Victor jointly, the landlords were unable
to make them joint tenants save by the fiction of surrender by operation of law
and regrant.
I therefore
find against the appellants on this issue.
The
construction of section 37(2) and (7) of the Agricultural Holdings Act 1986.
The
Agricultural Holdings Act 1986 is a consolidating Act. The right of a close
relative, who satisfied conditions as to eligibility and suitability to succeed
to the tenancy of an agricultural holding on the death of a sitting tenant was
first provided by the Agriculture (Miscellaneous Provisions) Act 1976. Those
provisions were amended by the Agriculture Act 1984, which inserted new
provisions into the 1976 Act. I propose to summarise the statutory provisions
now to be found in the 1986 Act which bear upon the resolution of this appeal.
I do not propose to refer to qualifications, exemptions and conditions which do
not. I shall also make reference to the legislative history of the succession
provisions.
Part IV of the
1986 Act deals with succession to an agricultural tenancy on the death or
retirement of the present tenant. Section 34(1) applies Part IV of the Act to
any tenancy of an agricultural holding granted before July 12 1984. Sections 35
to 48 apply to succession on death. Section 35(1) applies sections 36 to 48 to
a tenancy falling within section 34(1)(a) when the sole or sole
surviving tenant dies and is survived by his close relative. By virtue of
section 36(1) such a relative, if eligible, may apply under section 39 to the
Agricultural Land Tribunal for a direction entitling him to a tenancy and, if
he is deemed a suitable person, the tribunal is bound, subject to
qualifications which are not germane to the present case, to make the
direction.
It will be
noted that thus far the Act provides for succession only upon the death of a
tenant who has either to have been a sole tenant or to have become by the time
of his death a sole surviving tenant.
If the
sections considered so far stood alone, the possibility would be open to an
endless series of successions with the result that a landlord might never be
able to regain possession of the agricultural holding of which he was the
owner. The purpose of section 37 is to set a limit on the number of successions
permitted under the Act. Section 37(1) places on them a limit of two. Section
37(1) reads:
Section 36(1)
above (and section 41 below) shall not apply if on each of the last two
occasions when there died a sole (or sole surviving) tenant of the holding or
of a related holding there occurred one or other of the following things,
namely —
(a) a tenancy of the holding or of a related
holding was obtained by virtue of a direction of the Tribunal under section 39
below, or such a tenancy was granted (following such a direction) in
circumstances within section 45(6) below, or
(b) a tenancy of the holding or of a related
holding was granted by the landlord to a person who, being a close relative of
the tenant who died on that occasion, was or had become the sole or sole
remaining applicant for such a direction.
Subsection
(1)(b) of section 37 is of interest. There would obviously be cases in
which the landlord accepted that the only applicant to the tribunal for a
direction would be entitled to succeed. The landlord might be quite willing
himself in such a case to grant a tenancy to the applicant without the need for
the matter to be considered by the tribunal and a direction being made. The
parties might be quite ready as well to agree to the terms of the tenancy
without recourse to the provisions of sections 47 and 48. But the landlord
would not want by granting a tenancy, rather than require the applicant to come
in on the strength of a direction by the tribunal, to find that this operation
did not count as one of the two successions permitted by the legislation and
that indeed the succession clock had been turned back to zero. Section 37(1)(b)
allows a new tenancy to be created without the need for a direction from the
tribunal while protecting the landlord’s interest by treating what has happened
as a succession.
I come now
with subsections (2), (7), (4) and (5) of section 37 which provide further
cases which are to be treated as successions for the purpose of section 37(1).
Subsection (2) in its present form and subsections (4) and (5) were first
enacted in the 1984 Act. The 1976 Act contained a provision which is now to be
found by reading subsection (2) as amended by subsection (7) of section 37 and
I consider now the effect of these two subsections when read in combination.
They read together as follows:
If on any
occasion [before 12th September 1984 and] prior to the date of death, the holding
. . . became let under a new tenancy agreement granted by the landlord, with
the agreement of the outgoing tenant, to a person who, if the outgoing tenant
had died immediately before the grant would have been his close relative, that
occasion shall for the purpose of subsection (1) above be deemed to be an
occasion such as is mentioned in that subsection on which the tenancy of the
holding . . . was obtained by virtue of a direction of the Tribunal under
section 39 below.
In short, as
it seems to me, when a son became a tenant before September 12 1984 because,
while his father was still alive, his father had in agreement with the landlord
given up his own tenancy so that the landlord might grant a new tenancy to the
son that transfer was to be treated as one of the two permitted successions. By
the time of the 1986 Act these deemed successions were, of course, in the past.
September 12 1984 was the commencement date of the relevant provisions of the
1984 Act.
Again it is
possible to see the legislative purpose behind this provision which in the 1976
Act related to future as well as past events. A farmer might want to hand over
the reins in his lifetime and it might be better for the efficient management
of the land that he should do so. But again, once succession rights were
created by the 1976 Act the landlord might be discouraged from agreeing to this
unless the hand-over could rank as a succession. The provision which I have
just considered allowed the hand-over while safeguarding the landlord’s interests.
Mr Tucker
submits that the combination of subsections (2) and (7) of section 37 is apt to
include a case where there is, as he contended happened here, a surrender of
the original tenancy and the grant of a new joint tenancy to the outgoing
tenant who has surrendered his original tenant, thus becoming the outgoing
tenant and the close relative. He argues that if a tenancy is granted jointly
to a person who falls within these statutory provisions and one who does not,
the question, has there been a grant to a person who falls within the
provisions, admits only of an affirmative answer.
I explain now
the concession made by Mr Tucker to which I said I would come later. It is
because these provisions do not, in any event, operate unless there is an
outgoing tenant that Mr Tucker conceded it was necessary to establish that the
1957 agreement created a new tenant. If a new tenancy had been created, Gilbert
would have been the outgoing tenant in respect of the tenancy created by 1943
agreement. If though there was, as I have held, no surrender and regrant but
merely a variation of the 1943 agreement, then there was no outgoing tenant in
1957 and nothing to which the combined effect of subsections (2) and (7) of
section 37 could apply.
Mr Tucker
accepts that if one were to look only at the statutory provisions as they
appear in the 1986 Act, ignoring their legislative history, there would be no
need for section 37(4)(b) if the wording of subsection (2), read with
subsection (7), bore the meaning for which he contends. So far the provisions I
have examined were all contained in the 1976 Act. Mr Tucker submits that they
must be construed without reference to the provisions added by the 1984 Act,
now contained in section 37 of the 1986 Act. An amending Act cannot determine
the construction of the Act amended: Attorney-General v Wood
[1897] 2 QB 102 and Ormond Investment Co v Betts [1928] AC 143.
Mr Tucker drew
my attention to a passage from the speech of Lord Buckmaster in the latter
decision (at p154):
In the view
that I have formed, the consideration of the question as to the effect of the
subsequent statute does not become material, but the point has been dealt with
by the Court of Appeal, and it is, therefore, not desirable that I should
abstain from stating my opinion. I do not think that, in the circumstances of
this case, the subsequent statute can properly be referred to for the purpose
of interpreting the earlier.
A few
sentences later Lord Buckmaster’s speech continues with these words:
It is also
possible that where Acts are be to read together, as they are in this case, a
provision in an earlier Act that was so ambiguous that it was open to two
perfectly clear and plain constructions could, by a subsequent incorporated
statute, be interpreted so as to make the second statute effectual, which is
what the Courts would desire to do, and it is also possible that, where a
statute has created a crime or imposed a penalty, a subsequent Act showing that
that crime was intended to have a limited interpretation or the circumstances
regarded as narrow in which the penalty attached, would be used for the purpose
of giving effect to the well known principle of construction to which I
referred at an earlier stage.
I derive
assistance from a passage at p69 of the 12th ed of Maxwell on the
Interpretation of Statutes under the heading ‘Construction by reference to
later legislation’
‘How far one
may one look at a later statute is questionable.’ The question was discussed by the House of
Lords in Kirkness v John Hudson & Co Ltd, where Lord Reid
said (at p735) that the earlier decision of the House in Ormond Investment
Co v Betts afforded ‘conclusive and binding authority for the
proposition that, in construing a provision of an earlier Act, the provisions
of a later Act cannot be taken into account except in a limited class of case,
and that that rule applies although the later Act contains a provision that it
is to be read as one with the earlier Act. Of course, that does not apply where
the later Act amends the earlier Act or purports to declare its meaning: in
such cases the later Act operates directly by its own force. But where the
provisions of the later Act could only operate indirectly as an aid to the
construction of words in the earlier Act those provisions can only be used for
that purpose if certain conditions apply to the earlier Act when it is
considered by itself.’ For the later
statute to become relevant, there must be something ‘obscure or ambiguous, or
readily capable of more than one interpretation’ in the earlier one, some
‘phrase fairly and equally open to diverse meanings.’ If such an ambiguity can be found, it becomes
permissible to look at the later Acts ‘not perhaps to construe the earlier
statute, but to see the meaning which Parliament puts on the self-same phrase
in a similar context, in case it throws any light on the matter.’
Section 37(2)
as amended by subsection (7) of the 1986 Act was first to be found in section
18(5) of the 1976 Act. I approach the construction of this statutory provision,
ignoring the amendments to the succession limitation provisions now to be found
in subsections (2), (4), (5) and (8) of section 37 of the 1986 Act.
In the context
of the 1976 Act, a succession as of right (that is, by direction), as opposed
to a succession by agreement, came about by the direction that an eligible
person shall have a tenancy. The direction cannot require a tenancy jointly to
an eligible person and one who is not. The succession limitation provisions in
the 1976 Act need to be seen in this context. They deal with succession by
direction and succession by agreement, the latter to be treated as though it
were a succession by direction. There would be nothing surprising, therefore,
if the succession by agreement which is to be treated as though it were a
succession by direction of the tribunal was one relating to the same end
result, that is, a tenancy to an eligible person and not a tenancy granted
jointly to such a person and another. The fact that a direction could be made
in favour of up to four eligible persons does not, in my view, affect the
question of construction. In my judgment, the statutory reference to a new
tenancy granted to a person who would have been a close relative of the
outgoing tenant is not apt to include a tenancy granted to that person and
another who is not a close relative. If I were wrong about this, I would not be
prepared to go further in Mr Tucker’s favour than to say that the provision is
ambiguous and admits also of the reading which he suggests.
Suppose the
provision in 1976 Act was ambiguous. Do the amendments introduced by the 1984
Act offer any assistance to construction in the way suggested in the passage I
have cited from Maxwell?
The 1984 Act
preserved the provision contained in section 18(5) of the 1976 Act, but only in
respect of tenancies granted before September 12 1984. A new provision, now
section 37(2), was provided to apply to successions by agreement occurring
after September 11 1984. It reads:
If on any
occasion prior to the date of death, as a result of an agreement between the
landlord and the tenant for the time being of the holding or of a related
holding, the holding or a related holding became let —
(a) under a tenancy granted by the landlord, or
(b) by virtue of an assignment of the current
tenancy, to a person who, if the said tenant had died immediately before the
grant or assignment would have been his close relative, that occasion shall for
the purposes of subsection (1) above be deemed to be an occasion such as is
mentioned in that subsection on which a tenancy of the holding or a related
holding was obtained by virtue of a direction of the Tribunal under section 39
below.
This change
enlarged the scope of the former provision by allowing a succession consequent
upon an agreement to fall within section 37(1) not only where the agreement
resulted in the grant of a tenancy to a close relative of the outgoing tenant
but also from an assignment to such a person. I cannot see that the ambit of
this new provision was in any respect less than that of the provision it
replaced. Mr Tucker accepts that this is so.
It is now
appropriate to consider subsections (4) and (5) of section 37 of the 1986 Act.
(4) Subsection (1) and (2) above —
(b) shall apply where a joint tenancy is granted
by the landlord to persons one of whom is a person such as is mentioned in
either of those subsections as they apply where a tenancy is granted by the
landlord to any such person alone.
(5) Subsection (2) above shall apply where a
tenancy is assigned to joint tenants one of whom is a person such as is
mentioned in that subsection as it applies where a tenancy is assigned to any
such person alone.
By virtue of
subsection (8) these two subsections have no application to tenancies granted
before September 12 1984 or to certain other tenancies. The fact that
subsection (2) applies only in a limited number of cases to a tenancy granted
to joint tenants or to an assignment to joint tenants can only mean, in my
judgment, that save in a case where subsection (4) applies a tenancy granted to
joint tenants cannot fall within subsection (2)(a) and save where
subsection (5) applies an assignment to joint tenants cannot fall within
subsection (2)(b). Bearing in mind that subsection (2) of section 37 is
in no respect less wide in ambit than the old section 18(5) of the 1976 Act, if
one approaches the construction of the original 1976 provision on the basis
that there is an ambiguity in its meaning it seems to me permissible to resolve
the ambiguity by reference to the fact that subsection (2) of section 37 of the
1986 Act does not include either the grant of a joint tenancy or an assignment
to joint tenants and that its ambit is not any less than the ambit of the old
section 18(5), now subsection (2) as amended by subsection (7) of section 37 of
the 1986 Act.
Retrospectivity
For the sake
of completeness I deal with the issue of retrospectivity raised by Mr Denbin for
the respondent. He submits that in any event a succession falling within
subsection (2) of section 37 cannot be one which occurred before the passing of
1976 Act. The submission, in my judgment, is misconceived. Before the passing
of that Act there were no rights of succession. The Act created such rights and
subsection (2), just as subsection (1) of what is now section 37, merely placed
limits upon the availability of those rights.
The
question in the case stated
The question
of law is whether, for the purposes of section 37(2) of the 1986 Act (or, as
the case may be, Section 18(5) of the Agriculture (Miscellaneous Provisions)
Act 1976), the making of the memorandum dated the 2nd November 1957 is deemed
to have been an occasion on which a tenancy of the holding or a related holding
was obtained by virtue of a Direction of the Tribunal under Section 39 of the
1986 Act or, as the case may be, Section 20 of the Agriculture (Miscellaneous
Provisions) Act 1976.
My conclusion
that a new tenancy was not granted in 1957 means that the question does not
arise. If I am wrong in my conclusion about the effect of the 1957 agreement
and if in fact that agreement was effective to create a new joint tenancy by
surrender by operation of law and regrant in favour of Gilbert and Victor Ralph
then the question posed by the case stated falls to be answered to it is ‘no’.
This appeal
accordingly fails and is dismissed.
