Agricultural holdings — Agricultural Holdings Act 1986 — Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973 and Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) (Amendment) Regulations 1988 — Cost of replacing roof of a barn — Tenant liable for all repairs — Claim by tenant for cost of replacing roof on failure of landlord to execute work — Landlord accepted that the replacement, as distinct from the repair, of the barn was his liability — Dispute, however, as to the effect of the proviso in para 12(2) of the 1973 regulations limiting the tenant’s right of recovery — Position in regard to the amendment made by the 1988 regulations — Difficulties of construction — Importance of commas
appeal arose out of the need for the roof of a barn to be replaced as being no
longer capable of repair — The tenancy was a yearly tenancy which included a
covenant by the tenant to carry out all repairs to buildings and other fixed
equipment — There had been an arbitration and the arbitrator had determined
that the roof of the barn required replacement, which was not the liability of
the tenant — The landlord accepted that it was his liability under the 1973
regulations, but he failed to respond to a request by the tenant to carry out
the work — The tenant therefore went ahead and carried out the work himself in
accordance with the regulations — The cost was £7,992.50 and it was the
recovery of this amount which caused the difficulties — In a county court
action to recover the sum the recorder gave judgment in the tenant’s favour for
the full amount — The recorder rejected the landlord’s plea that his liability
was limited by the proviso in para 12(2) in the Schedule to the 1973
regulations — He accepted a submission that the procedure under the regulations
was an option and did not rule out a remedy at common law for damages, based on
breach of contract or statutory duty, unfettered by the limitation in the
regulations — The landlord appealed
Appeal did not find much difficulty in deciding that the recorder had been
wrong — The tenant’s right of recovery was derived solely from the regulations
and was qualified by the proviso in para 12(2) — Questions remained, however,
in regard to the true construction of the proviso — Did it mean that the
tenant, having spent £7,992.50, was restricted to one single payment of £500,
which was less than his rent? — Or could
he recover £500 in respect of each year of the tenancy until in the end he had
recouped his whole outlay of £7,992.50 (although without interest for waiting)?
— The court decided, not without some difficulty, in favour of the latter view
considered the impact (if any) of the 1988 regulations — The replacement was
carried out in 1985 — The 1988 regulations provided for an increase in the
maximum amount recoverable by the tenant from the amount of the rent or £500
(whichever was the smaller) to the amount of the rent or £2,000 (whichever was
the smaller) — The increased maximum applied only to replacements executed in
any year of the tenancy terminating after March 24 1988 — It was clear,
therefore, that the tenant was not eligible for the increased maximum — It was
not so clear (although perhaps not very important) whether his ineligibility
was due to his case being governed by the 1973 regulations or to a specific
provision in para 12(4)(a) of the substituted provisions in the 1988
regulations — There was some difference of opinion on this point — According to
one view, the recorder was right in holding that the relevant law was contained
in the 1973 regulations; according to another view, it was necessary to look at
the substituted para 12 of the 1988 regulations — In practical terms the result
was the same — A variant was a suggestion that the 1988 regulations, although
not applicable to the case, could be looked at to throw some light on the
construction of the 1973 regulations — The placing of the commas in the 1988
regulations indicated how commas might be inserted in the 1973 regulations to make
the position clear — The 1988 regulations thus tended to support the conclusion
that the tenant was entitled to recover the full cost of the replacement but at
a rate not exceeding £500 in any year of the tenancy — Judgment was therefore
given for £500 in respect of the year of the tenancy which terminated on
January 30 1986 and £500 for each successive year to date — The sum awarded by
the recorder was reduced accordingly
The following
case is referred to in this report.
Kirkness v John Hudson & Co Ltd [1955] AC 696; [1955] 2 WLR 1135;
[1955] 2 All ER 345, HL
This was an
appeal by the landlord, Jack Watkinson, from the decision of Mr Recorder
Bulmer, at Barrow-in-Furness County Court, in favour of the tenant, Denis
Grayless, of Mount Pleasant Farm, at Roosebeck, near Ulverston, in respect of
the tenant’s right to recover the cost of replacing the roof of a barn.
Timothy Hirst
(instructed by Scotts, of Leyburn, North Yorkshire) appeared on behalf of the
appellant; John R Gregory (instructed by Boxall & Boxall, for W C Kendall
& Fisher, of Dalton in Furness, Cumbria) represented the respondent.
Giving
judgment, DILLON LJ said: This appeal, from a decision given by Mr
Recorder Bulmer on June 28 1989 in the Barrow-in-Furness County Court after the
trial of the action, is concerned with the right of a tenant of an agricultural
holding to recover from his landlord the cost of replacing the roof of a barn.
The appellant,
Mr Jack Watkinson, who was the defendant in the court below, is the current
landlord, and the respondent, Mr Denis Grayless, who was the plaintiff in the
action, is the tenant of an agricultural holding known as Mount Pleasant Farm,
at Roosebeck, near Ulverston. That holding was let to the respondent for a term
of one year certain from February 1 1969 and thereafter from year to year by
one John Edmondson Watkinson, a predecessor of the appellant, under a written
tenancy agreement dated January 21 1969. That tenancy agreement contains many
detailed provisions, but the only one which it is for present purposes
necessary to mention is clause 2(3), whereby the tenant agreed with the
landlord that he would:
Duly and
properly carry out at his own expense all repairs of whatsoever nature to the
buildings and other fixed equipment the intent being that the landlord shall
not be responsible for any repairs at all.
At the time
the tenancy agreement was entered into, certain provisions of the Agriculture
(Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1948 (SI
1948 no 184) were deemed to be incorporated in the tenancy agreement, but it is
unnecessary to set out these 1948 regulations, since it is common ground that
they were replaced from September 29 1974 by the Agriculture (Maintenance,
Repair and Insurance of Fixed Equipment) Regulations 1973 (SI 1973 no 1473)
(‘the 1973 regulations’). The 1973 regulations were themselves amended in 1988,
although the amendments came into force only after the pleadings in the action
were closed. I shall have to refer to these amendments later in this judgment,
but for the present it is sufficient to refer to the 1973 regulations in their
original form. The argument in this court was, and the argument in the court
below seems to have been, mainly founded on the 1973 regulations in their
original form before the 1988 amendments.
The 1973 order
itself provided by para 3 that the provisions set forth in the Schedule to the
order relating to the maintenance, repair and insurance of fixed equipment
shall be
deemed to be incorporated in every contract of tenancy of an agricultural
holding, whether made before or after the commencement of the
the parties to an agreement in writing a liability which under the agreement is
imposed on the other: . . .
It follows, in
view of clause 2(3) of the tenancy agreement, that the 1973 regulations do not
impose any obligation on the landlord to carry out repairs.
The Schedule
sets out in Part I the rights and liabilities of the landlord. The following
provisions are material:
Para 1(1) The landlord is to be liable
to ‘execute all repairs and replacements to the undermentioned parts of the
farmhouse, cottages and farm buildings, namely: roofs . . .’
Para 1(3) (with an immaterial
exception) the landlord is to be liable ‘to replace anything mentioned in para
5(1) which has worn out or otherwise become incapable of further repair unless
the tenant is himself liable to replace it under para 6’ and
Para 4(3) ‘If the tenant wishes to
contest his liability to execute any repairs or replacements specified in a
notice served upon him by the landlord’, he can serve a counter-notice
‘requiring the question of liability in respect thereof to be determined by
arbitration’.
There is then
Part II which is headed ‘Rights and Liabilities of the Tenant’.
Para 5(1), which is relevant only because mentioned in para 1(3), imposes a
repairing obligation on the tenant, in so far as repairing liabilities do not
fall to be undertaken by the landlord under Part I. The matters mentioned in
para 5(1) include ‘the farmhouse, cottages and farm buildings together with all
fixtures and fittings’.
Para 6 obliges the tenant, in brief, to ‘replace anything mentioned in
para 5(1) which has worn out or otherwise become incapable of repair if its
condition has been brought about by or is substantially due to the tenant’s
failure to repair it’.
Finally, there
is para 12, which provides by subparas (1) and (2) as follows:
12(1) If the landlord fails to execute repairs
which are his liability within three months of receiving from the tenant a
written notice specifying the necessary repairs and calling on him to execute
them, the tenant may execute such repairs and, except to the extent to which
under the terms of Part I hereof the tenant is liable to bear the cost, recover
the reasonable cost from the landlord forthwith.
(2) If the landlord fails to execute any
replacements which are his liability within three months of receiving from the
tenant a written notice specifying the necessary replacements and calling on
him to execute them, the tenant may execute such replacements and, except to
the extent to which under the terms of Part I hereof the tenant is liable to
bear the cost, recover the reasonable cost from the landlord forthwith;
provided that the tenant shall not be entitled to recover in respect of the
aggregate of the replacements so executed by him in any year of the tenancy any
sum in excess of whichever is the smaller of the two following sums, that is to
say, a sum equal to the rent of the holding for that year or £500.
Para 12(1)
repeats in relation to repairs a provision which had been in the 1948
regulations. Para 12(2), which is concerned with replacements and not repairs,
was new in the 1973 regulations and had no previous counterpart. The crux of
this case is the proviso at the end of para 12(2) which limits the amount which
the tenant is entitled to recover in respect of the cost of replacements.
The landlord
served a notice on the tenant requiring the tenant to execute works in respect
of many items, and that notice was duly referred to arbitration under the 1948
Act. One of the items was the roof of the four-bay barn adjoining the
farmhouse. In respect of that item the award of the arbitrator, a chartered
surveyor, was that ‘the barn roof requires renewal and this is not the
liability of the tenant’. Whether that award was correct in fact or in law is
not a matter with which we are concerned. The appellant accepts that he is
bound by the award and that the replacement, as opposed to repair, of the barn
roof is therefore his liability under the 1973 regulations.
The respondent
then, by a notice of January 25 1985, required the appellant to renew the barn
roof, as being incapable of repair, and gave notice that if the appellant
failed to do so within the prescribed time the respondent would exercise his
right under the 1973 regulations to execute the repairs or replacements and
recover the reasonable cost thereof. The appellant did not do the work, and so
the respondent did in the summer of 1985, at a total cost of £7,992.50, the
reasonableness of which is not in issue.
By the writ
and statement of claim in the action, both dated July 22 1987, the respondent
claims to recover the full sum of £7,992.50 by way of damages for breach of
contract and/or statutory duty. The appellant in his defence of October 1 1987
denied liability (an aspect with which we are not concerned) and also pleaded
the limitation of his liability (if any) under para 12(2) of the 1973
regulations. The respondent in his reply of February 23 1988 asserted that the
procedures under para 12(2) were optional and did not affect the respondent’s
claim for damages.
The recorder
gave judgment for the respondent for the full amount of £7,992.50 claimed,
together with interest. He accepted an argument from counsel for the respondent
— foreshadowed, I apprehend in the reply — that, if the landlord has a
liability to the tenant under the 1973 regulations to replace the roof of the
barn, the tenant has remedies at common law in addition to his option under
para 12(2) and so, having himself done the work, can recover the reasonable
cost from the landlord at common law, without having to submit to the
restriction on the landlord’s liability in the final proviso in para 12(2). One
of the troubles about that argument, however, is that it would deprive the
final proviso in para 12(2) of all effect, except where the tenant, being
ill-advised, chose to agree to the landlord’s liability being limited by the
proviso.
The true
position, as I see it, is that para 12(2) is the sole source of the tenant’s
right to recover the cost of replacing the barn roof from the landlord, and the
tenant must accept para 12(2) as a whole, including the proviso. The only
liability of the appellant as landlord which is available for the respondent as
tenant to enforce where the respondent has carried out works after the
appellant had failed to do so is a liability qualified by the proviso.
Therefore the
recorder was wrong, in my judgment, to award the respondent the full sum of
£7,992.50 claimed. He should (subject to the 1988 amendment) have given
judgment only for the sum to which the respondent was entitled under the
proviso.
That raises a
question of construction of the proviso. The wording of the proviso is:
. . .
provided that the tenant shall not be entitled to recover in respect of the
aggregate of the replacements so executed by him in any year of the tenancy any
sum in excess of whichever is the smaller of the two following sums, that is to
say, a sum equal to the rent of the holding for that year or £500.
It is common
ground that £500 was less than the rent of the holding for any relevant year.
The question is, therefore, whether the respondent is limited to recovering one
sum of £500 or whether he can recover £500 in respect of every year of the
tenancy from the execution of the replacements until the total outlay of
£7,992.50 has been fully recouped to him. That depends on whether the words ‘in
any year of the tenancy’ in the proviso relate to what immediately follows — viz
‘any sum’ — so that the proviso would read ‘shall not be entitled to
recover in respect of the aggregate of the replacements so executed by him any
sum in any year of the tenancy in excess of’ etc — or whether they relate to
what comes before — viz the aggregate of repairs executed — so as to
read ‘shall not be entitled to recover in respect of the aggregate in any one
year of the replacements so executed by him any sum in excess of whichever is
the smaller’ etc.
The latter
construction would limit the landlord’s liability for replacements to a maximum
of £500 for all replacements executed by the tenant in any one year. The former
would spread over the liability for all replacements at a maximum rate of £500
a year.
I prefer the
former construction to the latter for two reasons.
(1) The latter would leave it open to the tenant
to increase the landlord’s liability by deferring the execution of some
replacements until a later year. If it were necessary to execute various works
of replacement whose total cost would be £1,000, the tenant could recover only
£500 if he executed all the works in one year, but he could recover the whole
£1,000 if he executed half the works in one year and deferred the other half to
the next year.
(2) From the nature of the items in question, the
cost of replacements is inherently likely to be much higher in some years than
in other years. In some years there will be expensive bills, for example the
replacement of a roof, while in other years the bills may be small. In such
circumstances I can see commercial sense in a provision which allows the
landlord to spread over the cost so that it cannot exceed the rent of the
holding in any year, and may be less. But I do not see why the tenant’s
recovery should be limited to the one sum of £500 (or the rent if less) however
necessarily expensive a particular replacement has been.
It follows
that if the case falls to be decided on the 1973 regulations in their original
form I would hold the respondent entitled to recover £500 for each year, and
not just one sum of £500.
The 1973
regulations were, however, amended in 1988 by SI 1988 no 281. This was made on
February 17 1988, was laid before Parliament on February 29, and came into force
on March 24 1988.
12 in the 1973 regulations in their original form. Subparas (1) and (2) of the
new para 12 are concerned with repairs and are not material. Subparas (3) and
(4) are concerned with replacements and provide as follows:
(3) Subject to sub-paragraph (4) below, if the
landlord fails to execute any replacements which are his liability within three
months of receiving from the tenant a written notice specifying the necessary
replacements and calling on him to execute them, the tenant may execute such
replacements and, except to the extent to which under the terms of Part I
hereof the tenant is liable to bear the cost, recover (subject to the
landlord’s right to require arbitration under sub-paragraph (5) below) the
reasonable cost from the landlord forthwith.
(4) The tenant shall not be entitled to recover,
in respect of the aggregate of the replacements executed by him after being
specified in a notice given in pursuance of sub-paragraph (3) above, in any
year of the tenancy any sum in excess of whichever of the following sums is
hereinafter specified in relation to the replacements so executed, that is to
say —
(a) in relation to replacements executed in any
year of the tenancy terminating on or before 24th March 1988, a sum equal to
the rent of the holding for that year or £500, whichever is the smaller, or
(b) in relation to replacements executed in any
year of the tenancy terminating after 24th March 1988, a sum equal to the rent
of the holding for that year or £2,000, whichever is the smaller.
This amendment
was retrospective in that, like the original 1973 regulations, it applied to
all existing tenancy agreements, including those made before the commencement
of the 1948 Act, and applied to replacements executed before its own
commencement date, March 24 1988. At any time after March 24 1988, therefore,
if there was a question as to what a tenant’s rights were in respect of
replacements executed before that date, it was necessary, in my judgment, to
look at the substituted para 12 and not at the original para 12 in the 1973
regulations. That is what should have been done at the trial of this action in
1989.
The original
proviso to para 12(2) is replaced by subpara (4) of the substituted para 12.
That has its own difficulties of construction that do not arise directly in the
present case. But the punctuation in the opening part of the subpara — the
comma after ‘to recover’ and the further comma after ‘subparagraph (3) above’
and before ‘in any year of the tenancy’ — shows that the words ‘in any year of
the tenancy’ in the opening part are linked with what follows ‘any sum in
excess of whichever of the following sums is hereinafter specified’ and not
with the words between the commas, namely the aggregate of the replacements.
As I read the
subparagraph, therefore, a tenant can only recover in any one year of the
tenancy either a sum under (a) or a sum under (b). In the present
case (b) is inapplicable, since the only replacements executed were
executed several years before March 24 1988. So long as that is the case the
appropriate sum is £500 for each year, but that is to be set annually against
the aggregate of the replacements executed by the respondent, which is a
running balance. It is not to be set only against the aggregate of the
replacements executed by the respondent within the same year. If the landlord
fails to pay, the tenant will have to sue to recover what is due; but he is not
bound to sue in the very year in which the repairs were executed, and can sue
later to recover annual sums up to the total of the outstanding aggregate
balance.
Accordingly,
under the 1988 substitution the respondent is entitled, in my judgment, in
respect of the replacement of the barn roof to £500 for the year of the tenancy
which terminated on January 30 1986 and £500 for each successive year of the
tenancy to date.
I would reduce
the sum awarded by the recorder accordingly.
Agreeing, RALPH
GIBSON LJ said: As Dillon LJ has said, we are not concerned with any
question, whether of fact or law, as to the correctness of the arbitration
award. The landlord accepts that the replacement of the barn roof was his
liability under the provisions incorporated in the tenancy agreement under the
1973 regulations. I agree with Dillon LJ that the judgment of the learned
recorder awarding the full cost of the replacement to the tenant cannot be
sustained and that the tenant’s right of recovery against the landlord in
respect of the replacement of this roof is limited to recovery of £500 in each
year of the tenancy commencing in the year from February 1 1985 to January 31
1986.
The learned
recorder awarded to the tenant the full cost of the replacement in the sum of
£7,992.50, together with £3,883 for interest, on the basis that the defendant
was liable in damages at common law for breach of a term in the tenancy
agreement ‘that the defendant shall replace this roof when it has become
incapable of further repair unless its condition has been brought about by or
is substantially due to the plaintiff’s failure to repair it’. That term he
held to be implied into the tenancy agreement by regulation 3. Since it was not
open to the landlord to contend that the roof had in fact become incapable of
further repair because of breach by the plaintiff of any obligation to repair
it, the defendant was held liable to pay the full cost of the replacement. The
proviso in para 12(2) of the Schedule did not impose any limitation, as the
recorder held, upon the amount recoverable by the tenant in respect of the
replacement of the roof, because para 12(2) itself was merely an optional or
alternative basis of claim which did not affect the tenant’s claim to damages
for breach of the implied term.
I agree that
that part of the recorder’s judgment cannot be sustained. The Act and the
regulations made under it did not imply into the contract of tenancy a separate
or independent term that the landlord should replace the roof, or any other
part of the premises. The effect of the regulations is as stated in regulation
3:
The
provisions set forth in the Schedule . . . shall be deemed to be incorporated
in every contract of tenancy . . . except in so far as they would impose on one
of the parties to an agreement in writing a liability which under the agreement
is imposed on the other.
The tenant,
therefore, acquires no contractual right and the landlord is subjected to no
contractual liability, by reason of incorporation of those provisions, save as
contained in the provisions in the Schedule. To the extent that the rights and
liabilities there described are qualified or limited, the tenant and the
landlord can neither acquire nor be subjected to any greater rights or
liabilities by reason of incorporation of the provisions. The provisions of the
Schedule do not, of course, reduce any rights or liabilities given or imposed
by the terms of the tenancy agreement itself. If the tenancy agreement had
contained an obligation under the landlord to replace the roof, the provisions
in the Schedule would not, as I understand the position, reduce the tenant’s
rights in that regard: both rights and obligations, those under the tenancy
agreement itself and those incorporated therein by the regulations, would
co-exist.
As to the
alternative claim based upon the provisions of para 12(2) of the 1973
regulations, the claim was advanced at the trial on the basis that the
applicable law was that contained in the 1973 regulations before amendment by
the 1988 regulations. Reference was made by both sides to the 1988 regulations
only for the purpose of submissions to the effect that the provisions of the
1988 regulations supported the rival contentions as to the proper construction
of the unamended provisions in para 12(2). For the landlords it was submitted
that, if by the 1973 regulations it was intended that the tenant should be
entitled to recover £500 in any year of the tenancy until the full cost was
recovered, then the 1988 regulations would have incorporated transitional
provisions, so as to cover the case where recoupment was continuing
notwithstanding the commencement of the new regulations, and no such
transitional provisions were included. For the tenant, it was submitted that
the 1988 regulations make clear the original intention of the 1973 regulations
by placing the phrase in subpara (4) ‘in respect of the aggregate of the
replacements executed by him’ between commas. The submissions proceeded upon
the same basis in this court.
It seems to
me, on first consideration of the papers, that the parties and the learned
recorder had been right to regard the relevant law to be that contained in the
regulations in force at the date when the acts were done upon which the
tenant’s claim was based. The writ was issued in 1987 and the 1988 regulations
did not come into force until March 24 1988.
As Dillon LJ
has pointed out, however, it is clear from the terms of the new para 12,
inserted into the 1973 regulations with effect from March 24 1988, that the new
para 12 is retrospective in that it applies to replacements executed before its
own commencement date. The new para 12(3) says: ‘. . . if the landlord fails to
execute any replacements . . . within three months of receiving . . . notice .
. . the tenant may execute such replacements and . . . recover . . . the
reasonable cost . . . forthwith’. The language appears to contemplate such
facts occurring after the coming into force of the provision. The new para
12(4), however, provides that ‘the tenant shall not be entitled to recover, in
respect of the aggregate of the replacements executed by him after . . . notice
. . ., in any year of the tenancy any sum in excess of whichever of the
following sums is hereinafter specified in relation to the replacements so
executed, that is to say — (a) in relation to replacements executed in
any year of the tenancy terminating on or before March 24 1988, £500 . . . or
(b) in
March 24 1988 . . . £2,000 . . .’.
It is thus, I
recognise, possible to contend that from March 24 1988 the new provisions were
made applicable to the decision of the tenant’s claim at the trial of this
action in June 1989. It is further to be emphasised that the provisions of the
new paragraph are such that, if applied to this case, they produce, in my
judgment, the same answer as that which would be produced by the unamended version
of para 12. Nevertheless, the point is not without importance because
provisions, which would affect the right answer to issues raised in a pending
case, might be introduced in regulations having a similar structure and effect.
It is to be regretted that these regulations are in such form as to give rise
to the difficulties of construction encountered in this case.
After
considerable hesitation and having read the judgment of Stuart-Smith LJ, I have
reached the conclusion that the recorder was right to regard the relevant law
as that stated in the unamended 1973 regulations. In accordance with ordinary
principles of construction I would give no further retrospective effect to the
language of the 1988 regulations than is clearly achieved by the words used:
see Halsbury’s Laws, vol 44, para 922. The amended provisions of para
12, therefore, I would hold to be applicable to a case where the replacements
were executed in any year of the tenancy terminating on or before March 24
1988, and where the tenant claims to recover the cost after March 24 1988, but
although they would thus be applicable in the case of a writ issued after March
24 1988, I would hold that they are not applicable in a case where, as here,
the writ was issued before that date.
If I am right
in my view that the unamended version of para 12 was applicable in this case,
the question arises whether the 1988 regulations are properly available as an
aid to construction of the 1973 regulations: see para 888 of Halsbury’s
Statutes, vol 44, and Kirkness v John Hudson & Co Ltd
[1955] AC 696: Lord Reid at pp 735-736. Although I agree with the explanation
of the proper construction of the unamended para 12 given by Dillon LJ, the
language of para 12(2) was such, in my judgment, as to justify recourse to the
1988 regulations for the purposes of construction. I agree further with Dillon
LJ that the language and punctuation of the new para 12 supports the preferred
construction of the original provisions.
Lastly, I must
mention the submission made for the landlord that the new para 12 appears not
to contain such provisions as might be expected to be found (if the
construction contended for by the tenant were right) to deal with the case
where a tenant has, as in this case, executed replacements in a year of his
tenancy terminating on or before March 24 1988, in relation to which he is
entitled to recover £500 in several ensuing years of the tenancy until the cost
has been recovered, and (as is not this case) has also executed replacements in
a year of the tenancy terminating after March 24 1988. Since a tenant can have
a continuing right of recovery at the rate of £500 per year of the tenancy,
continuing after March 24 1988, it would I think be expected, having regard to
the apparent purpose of the new provision, that the tenant would be able to
recover in any year of the tenancy terminating after that date, in addition to
the £500, not more than £1,500 in relation to replacements executed by him
after notice and failure by the landlord in any year of the tenancy terminating
after March 24 1988, so as to bring the maximum permitted recovery in any
ensuing year up to the new maximum of £2,000. Upon its face, however, the new
para 12(4) appears to say that the tenant can recover only the sum of £500 or
the sum of £2,000. If that be the right construction, I agree that the
transitional provisions appear to be less effective for a tenant in such a
position than might reasonably be expected. The point, however, does not arise
for decision in this case and, whatever be the right answer to it, it does not
cause me to doubt the correctness of the conclusion that the tenant’s right of
recovery is not limited, as the landlord contended, to one sum of £500 in
respect of the replacement of the roof of the barn at the cost of £7,992.50. I
agree that this appeal should be allowed to the extent proposed by Dillon LJ.
Also agreeing,
STUART-SMITH LJ said: Three questions arise for determination in this
appeal.
The first is
whether the recorder was right in giving judgment for the whole amount expended
upon the replacement of the barn roof by the tenant, namely £7,992.50, without
regard to the limitation or restriction of liability imposed by the proviso to
para 12(2) of the Schedule to the 1973 regulations. In my judgment he was not.
I agree entirely with the reasons given by Dillon LJ for holding that the
tenant’s sole right derived from para 12(2), and he is bound by the restriction
imposed by the proviso.
The second
question related to the construction of para 12(2) of the Schedule to the 1973
regulations. Is the tenant limited to a single payment of £500 or is he
entitled to recover the full cost of the repairs but at a rate not exceeding
£500 in any year of the tenancy, this being a sum lower than the rent? I have not found this an easy question, since
I think the proviso to para 12(2) is capable of either meaning. But I have come
to the conclusion that the latter construction is the correct one.
This is best
achieved by inserting commas after the words ‘recover’ and ‘so executed by
him’, so that it reads ‘provided that the tenant shall not be entitled to
recover, in respect of the aggregate of replacements so executed by him, in any
year of the tenancy any sum in excess of whichever is the smaller of the two
following sums, that is to say, a sum equal to the rent of the holding for that
year or £500’.
I have reached
this conclusion for the following reasons.
(1), it seems
to me to be more consonant with justice and commercial sense that the tenant
should be able to recover the full cost of doing what the landlord should have
done, subject to spreading the cost over a number of years, if need be, so as
not to impose too great a burden on the landlord. There will in any event be a
substantial disincentive to the tenant to do expensive repairs, since he cannot
recover interest on his outlay, save only to the extent that the annual payment
of £500 has become payable and remains unpaid.
(2), it
appears to me that the words ‘aggregate of the replacements so executed by him’
relate back to replacements carried out by the tenant following non-compliance
by the landlord with the notice referred to in the earlier part of para 12(2),
irrespective of the year in which they were performed. This avoids the somewhat
absurd consequence of the alternative construction, namely that the tenant
could do the replacement of the roof piecemeal over a number of years,
expending no more than £500 at a time, recovering each such £500 annually.
(3), this
construction seems to me to be consonant with the amendment to para 12
introduced by the 1988 regulations. The new para 12(3) and (4) is set out in
full in the judgment of Dillon LJ and I need not repeat it. The placing of the
commas after the words ‘recover’ and subpara (3) above make it plain, in my
judgment, that the recovery is to be at an annual rate and not a once-for-all
payment. While it is possible that the legislature in fact intended to change
the law, it seems to me far more probable that the wording of the new
regulation was simply intended to clarify a previous ambiguity, as well as
updating the amount recoverable. It would, I think, be surprising if the
draftsman had intended greatly to enlarge the existing rights, depending upon
whether the claim for payment was made by the tenant before or after March 24
1988. It seems to me that this is a transitional provision preserving the
status quo until the coming into force of the 1988 regulations on March 24
1988.
The third
question is whether, as Mr Gregory contends, the tenant is entitled, after the
coming into force of the 1988 regulations, to recover at the rate of £2,000 per
year. In my judgment he is not. There are, in my view, two reasons for this.
First, on the plain construction of regulation 12(4)(a) where, as here,
the replacement in question has been executed before March 24 1988, the limit
of £500 per year applies. Second, although the 1988 regulations, like the 1973
regulations, apply to tenancy agreements in existence before they came into
force, they do not, in my judgment, affect existing rights and liabilities
which have already crystallised by March 24 1988. I accept that if the
appropriate notice had been served and repairs done by the tenant before that
date, but no claim had been made until after March 24 1988, the tenant would
claim pursuant to the new regulation 12 which by then would have been
incorporated into his lease. But that was not the position here; at the time
the claim was made and the writ served the rights and liabilities of the
parties were governed by regulation 12(2) of the 1973 regulations.
I agree
therefore that the appeal should be allowed to the extent proposed by Dillon
LJ.
The appeal
was allowed with costs; respondent’s costs below on Scale 3. Application for
leave to appeal to the House of Lords was refused.
