Agricultural holdings — Agricultural Holdings (Notices to Quit) Act 1977, section 2(3), Case D(a) and Agricultural Holdings (Arbitration on Notices) Order 1978, article 9 — Notice in writing under Case D(a) requiring payment of rent claimed by landlords to be due — Tenant, who took the view that the rent claimed was not due, did not pay the rent claimed and did not serve a notice on the landlords under article 9 of the above order requiring the question to be determined by arbitration under the 1948 Act — Landlords gave tenant notice to quit in accordance with Case D and on expiry of the notice to quit took proceedings for possession of the holding in the county court — County court judge held that, even if the tenant was correct in his contention that the rent as claimed was not due, his failure to resort to arbitration under article 9 was fatal and prevented him from defending in court the landlords’ claim to possession, in view of the mandatory character of article 9 — Held by the Court of Appeal, ‘reluctantly’, that the county court judge was correct as the wording of article 9 and the authorities thereon were quite clear — A-G (Duchy of Lancaster) v Simcock and Magdalen College, Oxford v Heritage cited — Ackner LJ’s expression of regret that there is no statutory obligation on a landlord when he serves either the notice to pay or the notice to quit to include a statement informing the tenant of ‘his very restricted rights’ — ‘It is to be hoped that in the light of this decision those who concern themselves with the security of tenure and the welfare of tenant farmers seek to have something done about this situation’ — Tenant’s appeal dismissed
This was an
appeal by the tenant, William George Marshall, from the decision of Judge Hazel
Counsell at Bristol County Court, granting possession to the landlords, Leslie
John Coombe Harding and Elsie Davy, of an agricultural holding at Chewstoke in
the county of Avon.
Alan Sebestyen
(instructed by Lawrence & Co, of Bristol) appeared on behalf of the
appellant; David Neuberger (instructed by Burges, Salmon & Co, of Bristol)
represented the respondents.
Giving
judgment, ACKNER LJ said: Mr William George Marshall, who is the defendant in
the action and the appellant before us, has for many years been a tenant of a
holding of a few acres at Chewstoke in the county of Avon — an agricultural
holding. His agreement was in writing. It was dated March 25 1967 and it
provided for the modest rent of £30 per annum, a little more than £5 per acre.
In 1976 the question arose as to the increase of this rent — its increase to
£76. There is a dispute as to what was agreed in relation to increasing the
rent to that figure. The landlords’, the plaintiffs in the action, contention
was that they threatened to go to arbitration if that figure were not accepted
and accordingly Mr Marshall agreed. Mr Marshall’s contention was quite
different. His case was that he was prepared to pay that extra rent provided
that a supply of main water was laid on to the holding. For a very short period
the increased rent was paid, but thereafter it ceased to be paid.
Following
that, a notice in writing dated May 22 1978 was served upon Mr Marshall
requiring him to pay that rent of £76, or what he had failed to pay out of that
sum, within two months. He, taking the view that as the water was not laid on
he was not required to make such payment, persisted in his refusal. That was
then followed by a notice to quit dated August 4 1978, the material parts of
which read as follows:
This Notice
is given on and for the following grounds and reason and in pursuance of the
paragraph appropriate thereto set out in section 24(2) of the said Act.
That was a
reference to the Agricultural Holdings Act 1948 and the Agriculture
(Miscellaneous Provisions) Act 1963 which were referred to at the heading of the
notice. The notice then continues:
At the date
of giving this Notice you have failed to comply with a Notice in writing dated
May 22 1978 served on you by him
that is, the
landlords
requiring you
within two months of the service of such Notice to pay rent due in respect of
the above holding to which this Notice to Quit relates.
That notice
was in fact given in order that the landlords could take advantage of Case D,
which is one of the provisions which enable a landlord, despite the security of
tenure generally given to a tenant of an agricultural holding, to regain
possession. The relevant Act to which I should refer is the Agricultural
Holdings (Notices to Quit) Act 1977 and in particular section 2(3), which deals
with Case D in these terms, and I will omit the unnecessary or irrelevant
language so far as this case is concerned:
Case D — 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 . . . a notice
requiring him within two months from the service of the notice to pay any rent
due in respect of the agricultural holding to which the notice to quit relates
. . . and it is stated in the notice to quit that it is given by reason of the
matter aforesaid.
On the expiration
of that notice to quit proceedings in the Bristol County Court were commenced
on June 11 1980 by particulars of claim. Those particulars of claim set out
simply the title of the plaintiffs. It pleaded the agreement. It dealt with
necessary intervening events in relation to the plaintiffs’ title. It asserted
that on March 25 1976 the rent was increased to £76 a year. The final paragraph
read as follows:
By a Notice
to Quit dated August 4 1978 and served on the Defendant on August 5 1978 the
Plaintiffs determined the said Tenancy on March 25 1980 yet the Defendant has
thereafter remained and still remains in occupation of the land as a trespasser
thereon.
In due course
a defence was entered taking many points, but centrally the point that the rent
of £76 was never due and accordingly the notice upon which reliance was placed
in the action was an invalid one. When the matter came before Her Honour Judge
Counsell in October 1980 a preliminary point was taken in regard to the
jurisdiction of the court. The landlords submitted that, even assuming the
contention of the tenant that there was no rent outstanding and therefore no
rent due when the notice to pay within two months was served, the defendant,
who had failed to call upon the landlords to go to arbitration, had thereby
lost the entitlement to challenge the notice or anything connected with it and
could not therefore raise before the courts, and in particular the Bristol
County Court, the issues which he sought to raise in the defence. In short,
there was, so the landlords submitted, no answer to the claim for possession,
the notice to quit having expired.
Her Honour
very properly decided that she would deal with that as a preliminary issue,
making the assumption for the purpose of determining that issue that the
farmer, the tenant, was right in his contention that the rent had never been
increased from £30 to £76 because the condition precedent to its increase,
namely, the provision of a main water supply, had never been fulfilled.
In a carefully
reasoned judgment the learned judge concluded that the defendant’s failure to
resort to arbitration was fatal and barred him from defending the claim to
possession, the notice to quit having taken effect. I reluctantly agree. I do
not know whether the farmer knew of his rights to go to arbitration and refused
to exercise them because he thought he would not bother or whether he was
totally ignorant of them. I do not speculate as to whether, if he had gone to
arbitration, he would have necessarily succeeded in his contention or, if he
had failed, whether the notice to quit would have operated. What I regret is
that there is no statutory obligation upon the landlord, where he serves either
the notice to pay within two months or, more important still, the notice to
quit based upon an alleged failure to comply with the earlier notice, to
include a statement informing the tenant of his rights, and his very restricted
rights if my judgment in this case is correct. I can well envisage a case in
which the tenant farmer is confident that he has paid the rent which is alleged
to have been outstanding. He might even hold a receipt to that effect because
the landlord quite innocently, perhaps operating through agents, has overlooked
the fact of that receipt. In such a situation the farmer might well take the
view that sooner or later the penny would drop and no further problems would
arise, or he might take the view that, if the landlord really proceeded further
after serving the notice to quit, he would soon back down when the receipt was
shown to him or otherwise the appropriate explanation given.
It seems to me
to be highly undesirable that a tenant farmer, who inevitably is likely to be a
very busy man and whose control over his paperwork may not be all that everyone
would wish, should not appreciate how restricted his rights are, and so does
not hurry off to his solicitor for advice or not take the necessary steps to
which I shall make reference when the result of this failure is so fatal as
this case and other cases show. It is to be hoped that in the light of this
decision those who concern themselves with the security of tenure and the
welfare of tenant farmers seek to have something done about this situation.
I have already
mentioned the Act. I should just refer to section 5(1), which provides that:
The Lord
Chancellor may by order provide . . . for — (i) requiring any question arising
under the provisions of section 2(2) and (3) above to be determined by
arbitration under the 1948 Act.
Finally, I
refer to the Agricultural Holdings (Arbitration on Notices) Order 1978 (SI 1978
no 257), article 9 of which reads as follows:
Where it is
stated in a notice to quit an agricultural holding or part thereof that the
notice is given for one or more reasons specified in Case B, D or E, and the
tenant wishes to contest any of the reasons so stated he shall within one month
after the service of the notice serve on the landlord notice in writing
requiring the question to be determined by arbitration under the 1948 Act.
Mr Sebestyen,
who has argued this appeal with great skill, has said that in substance the
appeal raises a pure question of the construction of that article, and with
that submission I agree.
There are two
authorities which are particularly relevant to the problem. The first is a
decision of Pennycuick J in Attorney-General (Duchy of Lancaster) v Simcock
[1966] Ch 1. That was a case where the notice requiring payment was properly
served and was in all respects in the appropriate form, but the money was not paid
by the tenant within the two months but shortly after the two months. However,
he made the payment before any notice to quit was served. The notice to quit
was in fact served on him on the same day but later following the payment by
him of his rent. He wished to argue that the notice to quit was invalid because
he had in fact, albeit not within the two months, paid the rent required by the
notice and there was therefore no rent outstanding when the notice to quit was
served upon him. That was a clear point of law. He wished to urge that there
was no failure to comply within the meaning of Case D if a tenant pays the rent
outside the two months specified in the notice but before the receipt of the
notice to quit. The contention made by counsel in that case was that where a
question of law is involved that question can still be taken before the court.
Pennycuick J in his judgment at p 8 said that he had
considerable
sympathy for this contention, but I find it impossible to accept it. Article 6
provides in unqualified terms for reference to arbitration of the question
raised by the tenant’s contest of a reason stated by the landlord, and it is, I
think, impossible to construe the article as providing that in so far as the
question represents a contest of the reason in fact, it must be referred to
arbitration; but in so far as the question represents a contest of the reason
in law, it need not be so referred. Whether the reason comprises matter of fact
alone, matter of law alone or matter both of fact and of law, the question
must, I think, under the plain words of the article, be referred as a whole to
arbitration.
The learned
judge said in terms that he had reached the conclusion with reluctance,
firstly, because the question of law — that was the construction of the
relevant statute — was eminently one appropriate to be determined by the court,
and, secondly, because it was apparent that the failure to serve an arbitration
notice precluded the tenant from raising the question altogether. But the
learned judge found that the terms of article 6, which are for all practical
purposes the same as article 9, were too plain to allow any escape.
That case was
referred to more recently in a case in this court in 1974, the case of Magdalen
College, Oxford v Heritage [1974] 1 WLR 441. In that case it was
common ground that the notice which required payment was an invalid notice
because it did not give the requisite two months. No steps had been taken to
refer the matter to arbitration, but the defendant tenant wished to assert that
the notice to quit must be treated as an invalid notice because of the
invalidity of the notice requiring payment. I need only read a short passage
from the judgment of Megaw LJ beginning at the bottom of p 446:
If the
tenant, having received a notice to quit, stating that the reason is failure to
comply with such notice in writing, referring to rent, desires to contest the
landlord’s right to obtain possession on any ground relating to the contents or
form of that notice to pay rent, in my judgment, that is a ‘contest’ by the
tenant. Thus, if the tenant says ‘I did not fail to comply with the notice in
writing because I never received a notice in writing at all,’ that is a matter
which falls to be determined under article 9. It is a contest as to ‘the reason
so stated’: the reason stated by the landlord being the reason that the tenant
failed to comply with a notice in writing under paragraph (d), and the tenant
contesting that reason by saying, ‘I did not fail to comply with a notice in
writing because I received no such notice.’
So, again, if there is any dispute as to whether or not rent was due at
the time when the notice was served, that is a contest falling within article
9. So, equally, in my judgment, it must be a contest falling within article 9
if what the tenant desires to contest is not: ‘I received nothing purporting to
be a notice at all’; but is: ‘I received a notice in writing which purported to
be a notice under section 24(2)(d), but which failed to fulfil a
vital-requirement of that paragraph as to the form or content of the notice’:
for example, that the notice did not specify in terms that the payment was to
be made within two months from the service on the tenant of that notice to pay.
All such points fall within the scope of article 9. Therefore the complaint by
the defendant in the present case, namely, that the notice to pay was invalid
because it did not contain words saying expressly that payment should be made
within two months, is a matter that falls within article 9.
Mr Sebestyen
says, as of course he is constrained to say, that Megaw LJ’s observation — ‘So,
again, if there is any dispute as to whether or not rent was due at the time
when the notice was served, that is a contest falling within article 9’ — is obiter,
as indeed it was. Mr Sebestyen submits that the learned judge was wrong and he
was wrong for this reason: the notice provides only one reason, namely, a
failure to comply with the payment notice. In this case he says there was no
contest that his clients did not comply with that notice. He accepts that they
did not comply with it. The contest, he says, is in regard to whether or not
rent was due when that notice was served or at any other material time. That,
he says, is not a reason to be found in the notice. Accordingly, his client did
not fail to contest any of the reasons given in the notice: there was only one
reason and that was a reason in regard to which there was no contest and
therefore nothing to refer.
In my judgment
there are within the notice to quit a number of sub-reasons, all of which are
capable of being the subject-matter of a contest. The notice says in terms:
At the date
of giving this Notice you have failed to comply with a Notice in writing dated
May 22 1978 and served on you . . . requiring you within two months of the
service of such Notice to pay rent due.
Mr Sebestyen
accepts that a possible contest might arise in relation to the assertion ‘you
have failed to comply with a Notice’, because the tenant may wish to contend
that he had in fact paid under and pursuant to the notice. Mr Sebestyen accepts
that, if that is a contest, then it must go to arbitration.
Mr Sebestyen
accepts that a contest in relation to this notice could be that no notice in
writing dated May 22 was ever served upon him. That again would be a contest
which he accepts would have to go to arbitration. He accepts, as indeed was
decided in the Magdalen College case, that a contest might arise as to
whether the notice relied upon in the notice to quit did require the tenant to
make payment within two months. That is a third possible contest and that would
have to go to arbitration. It seems to me that there is clearly a fourth
possible contest relating to one of the sub-reasons contained in the notice,
namely, that rent was due. It would be remarkable if that were not to be
treated as a reason in the notice, because it is of the very foundation of case
D that there must be rent due, followed of course by the necessary notice in
writing requiring payment within two months. It is fundamental, as Mr Sebestyen
said, that there should be outstanding rent due and owing to the landlord.
I am content
to adopt the words of Buckley LJ towards the end of his judgment in the Magdalen
case at p 449 where he said:
The defendant
is seeking to contest the validity of the notice to quit, and she is seeking to
do that by contesting the reason which is given for the service of the notice
to quit. The language of article 9 is clear and mandatory language which says
that such a matter must be raised by a notice referring the dispute to
arbitration, and it is not to be dealt with by any other form of procedure.
In this case
the defendant was seeking to contest the validity of the notice to quit. He was
seeking to do that by contesting the reason given for the service of the notice
to quit, namely, that there was rent due and owing to the landlord which had
not been paid despite the notice requiring payment within two months. I, again
expressing my regret, would accordingly dismiss this appeal, concluding that
the learned county court judge had reached the right conclusion. I should add
that our attention was drawn to the case of Jones v Gates [1954]
1 WLR 222, a case relating to an earlier regulation made under the Agriculture
(Control of Notices to Quit) Regulations 1948 (SI 1948 no 190) in different
terms. It does not assist me in a matter which, as Mr Sebestyen said, is one of
pure construction and I find no assistance in the judgments in that case. As
previously stated, I would dismiss the appeal.
OLIVER LJ
agreed that the appeal should be dismissed for the reasons given by Ackner LJ.
The appeal
was dismissed with costs, subject to special legal aid directions. Possession
was ordered to be given within 56 days.
