Landlord and tenant — Appeal from orders of Whitford J giving summary judgment under Order 14, RSC, in favour of tenant for damage caused to the surface of land and to crops by operations carried out by the third party under licence from the landlord — Whitford J ordered the landlord to pay the tenant £77,769.71 compensation and £14,451 in respect of interest — The licence contained an indemnity on the part of the third party in favour of the landlord in respect of claims by the tenant — The operations in question were the getting and taking of sand by surface working — A valuer (not an arbitrator) appointed under the tenancy agreement had made an award of £87,193 in favour of the tenant — The valuer, in a ‘speaking valuation’, expressly took into account the probable diminished yield of future crops as well as damage to crops actually on the land when the sand-getting operations took place — In giving summary judgment in favour of the tenant Whitford J upheld the valuer’s view in this respect — Allowing the landlord’s appeal and granting unconditional leave to defend, the Court of Appeal held that there was an issue which ought to be tried and which could not properly be dealt with on an Order 14 summons — As the valuation was a ‘speaking valuation’ it was capable of being impugned if it could be shown to be made on a fundamentally erroneous basis — It was at least arguable that the phrase ‘damage to crops’ did not cover damage to crops sown after the completion of the sand-getting operations
These were in
fact two appeals in two separate actions raising the same issues. In one the
plaintiffs were James Heyes Senior and James Heyes Junior and in the other John
Basil Heyes Senior and John Basil Heyes Junior. The defendant in both cases was
the Earl of Derby and the third party in both cases Pilkington Bros plc. For
convenience the judgment in the Court of Appeal dealt only with the facts of
the James Heyes action.
J S Trenhaile
(instructed by Lawrence Graham) appeared on behalf of the appellant Earl of
Derby; Jonathan Parker QC and T A W Lloyd (instructed by Mace & Jones, of
Liverpool) represented the respondents, John Basil Heyes and James Heyes;
Charles Sparrow QC and Derek Mallard (instructed by T G Chambers, Legal
Department, Pilkington Bros plc) represented the third party.
Giving the
first judgment at the invitation of Watkins LJ SLADE LJ said: These are two
appeals from two orders of Whitford J made on May 11 1983 under Order 14 of the
Rules of the Supreme Court. One of the orders was made in an action (which I
shall call ‘the James action’) in which the plaintiffs were Mr James Heyes
Senior and Mr James Heyes Junior, the defendant was the Earl of Derby and the
third party was Pilkington Bros plc. The other order was made in an action
(which I shall call ‘the John Basil action’) in which the plaintiffs were Mr
John Basil Heyes Senior and Mr John Basil Heyes Junior, the defendant was the
Earl of Derby and the third party was, again, Pilkington Bros plc. Both orders
were made on appeal from orders of Master Gowers dated April 12 1983. He had
refused applications by the respective plaintiffs in the two actions for
summary judgment under Order 14 of the Rules of the Supreme Court.
By his order
in the James action Whitford J substantially discharged the master’s order made
in that action and ordered that the defendant should pay to the plaintiffs the
sum of £77,769.71 as being the balance of compensation found to be due to them
under a written award of January 27 1982, and the sum of £14,451 in respect of
interest.
By his order
in the John Basil action Whitford J substantially discharged the master’s order
made in that action and ordered that the defendant should pay to the plaintiffs
the sum of £32,664.98 as being the balance of compensation found to be due to
them under a written award of January 27 1982, and the sum of £4,993.80 in
respect of interest.
Lord Derby and
Pilkingtons now appeal from both these orders.
Though the two
actions are separate proceedings, we have been told that, for the purposes of
the present appeal, there are no material differences between the two cases. It
is common ground that the appeals in each of them must stand or fall together.
As I understand, the learned judge was referred only to the relevant documents
in the James action, and counsel have taken this course before us. Accordingly,
save where otherwise appears, all subsequent references in this judgment will
be to the facts of the James action, and references to the plaintiffs will be
to the two Messrs James Heyes.
The history of
the matter begins with the execution of a document called a licence, which was
dated April 5 1967 and was made between Lord Derby of the first part,
Pilkingtons of the second part and two other persons of the third part; I shall
call it ‘the 1967 agreement’.
By clause 1 of
the 1967 agreement Lord Derby, in consideration of certain royalties, granted
to Pilkingtons the sole and exclusive licence from April 5 1967 for 25 years to
work, get and take sand by surface workings from certain lands in what was then
called Lancashire and is now called Merseyside. Clause 3(k) of the 1967
agreement contained an indemnity on the part of Pilkingtons in favour of Lord
Derby in respect of claims by tenants of the licensed land arising by reason of
the exercise of the rights thereby granted. For present purposes the precise
terms of this indemnity are not material; its existence is nevertheless
important.
On July 20
1970 a written tenancy agreement (which I shall call ‘the 1970 tenancy
agreement’) was entered into between Lord Derby and the plaintiffs whereby the
plaintiffs became agricultural tenants from year to year in respect of some 543
acres of land now known as Mossborough Hall Farm, Rainford, Merseyside. The
land comprised in the tenancy was described in a plan attached to the tenancy
agreement and was more particularly described in a schedule, from which it
appears that a substantial part of it was arable land.
Clause 1(a)(2)
of the 1970 tenancy agreement read as follows:
The following
items and rights are hereby excepted and reserved out of this tenancy in favour
of the Landlord and of all persons authorised by him to exercise such rights
(that is to say):– . . . .
(2) All mines minerals quarries stones sand
brickearth clay gravel and other substrata with the right to search for work
and remove the same making the Joint Tenants reasonable compensation for any
damage to the surface buildings or crops occasioned thereby.
Clause 4(5)
contained a covenant by the plaintiffs to cultivate the arable land. Clause
4(6) obliged them to keep a record of the cropping of the farm. Clause 5(4)
contained a covenant for quiet enjoyment by Lord Derby, and by clause 6(7) the
parties mutually agreed as follows:
Without
prejudice to any right of action or other remedy of the Landlord against the
Tenants all compensation for damage done to the Farm by the Landlord or any
person authorised by him in the exercise of any of the rights hereby reserved
to him and all compensations allowances valuations damages and dilapidations to
which either party may claim to be entitled under this Agreement or otherwise
(not being in respect of matters compulsorily referred to arbitration by the
Agricultural Holdings Act 1948) shall be assessed by a valuer who shall be
appointed (in default of agreement between the parties) by the President for
the time being of the Royal Institution of Chartered Surveyors and the
decisions of such valuer shall be final.
At various
times between January 1973 and July 1975 or thereabouts, Pilkingtons carried
out certain sand-getting operations on parts of Mossborough Hall Farm in
exercise of their rights under the 1967 agreement. The plaintiffs claimed that
these operations of Pilkingtons had caused damage to the surface of the land of
which they were tenants and to crops thereon. In the first instance they
brought proceedings against Pilkingtons in an attempt to obtain recompense for
this damage; but by judgments delivered on February 15 1978 the Court of Appeal
struck out the proceedings as disclosing no reasonable cause of action. It
decided that the effect of the 1967 agreement was to create a profit a prendre
which was capable of subsisting as a legal estate in land, and that, since the
1967 agreement was of earlier date than the 1970 tenancy agreement, that legal
estate must override the rights of the plaintiffs as tenants under the 1970
tenancy agreement. The Court of Appeal held that the 1970 tenancy agreement
itself imposed no obligation on Pilkingtons whatsoever to pay compensation to
the plaintiffs, but the relevant obligation of Pilkingtons, if any, was to
indemnify Lord Derby under clause 3(k) of the 1967 agreement.
Having failed
to obtain relief by direct action against Pilkingtons, the plaintiffs set about
obtaining compensation from Lord Derby under the 1970 tenancy agreement. For
this purpose, in June 1981 a valuer, Mr Peter Michael Poole, was appointed
pursuant to clause 6(7) of that agreement. Mr Poole made his investigations and
in due course, by a written award of January 27 1982, he determined that the
amount of reasonable compensation to be paid to the plaintiffs by Lord Derby in
respect of the relevant damage was £87,193.
In the course
of making his written award Mr Poole said this, among other things:
as to the
damage to crops, I am of the opinion that the liability to pay compensation is
not limited to crops growing at the time of entry but that the Landlord is
liable to compensate the Joint Tenants for damage to crops planted subsequent
to the handing back of the land to the Joint Tenants, provided the cropping was
in accordance with the Joint Tenants’ covenants in Clause 4(5).
The valuer, in
his reckoning of the damage, thus expressly took into account the diminished
yield from future crops, as well as damage to crops actually on the land when
the sand-getting operations took place. I think there is no doubt that this
point substantially increased the figure at which he ultimately arrived.
At the time of
the sand-getting operations, Pilkingtons had paid to the plaintiffs the sum of
£9,423.09 by way of compensation, which the plaintiffs had accepted on account
of the sum due to them under the 1970 tenancy agreement. The difference between
that sum and the sum of £87,193 awarded by the valuer was £77,769.91, the sum
to which I have already referred.
Since Lord
Derby did not accept his liability to pay the latter sum, the plaintiffs issued
proceedings against him to recover it, plus interest. The writ was issued on
December 22 1982, endorsed with a statement of claim.
The plaintiffs
applied for summary judgment on this claim. When the matter came before the
master on this application, Pilkingtons applied to be joined as third party,
having regard to their interest in the proceedings by virtue of the indemnity
clause contained in the 1967 agreement. It has at all material times been their
contention that, even if Lord Derby is liable to pay the full sum claimed
against him by the plaintiffs, they themselves, on the true construction of the
indemnity clause, are not liable to reimburse him. Nevertheless, they wished to
have the opportunity to make their submissions as to the liability of Lord
Derby himself. The master granted leave to Pilkingtons to be joined as third
party and, after hearing argument, gave Lord Derby leave to defend the action.
Whitford J,
however, after hearing argument, took a different view from that of the master,
and by his order of May 11 1983 made an order for summary judgment against Lord
Derby in the manner which I have already mentioned. Both Lord Derby and
Pilkingtons now appeal.
They have been
represented by separate counsel before us and it has not been disputed that
each of them has been entitled to be fully heard on this appeal. Though both
must be closely interested in its outcome, their particular interests must be
rather different. Lord Derby is concerned because his is the primary liability,
if any, to the plaintiffs. Pilkingtons are concerned because of their possible
obligations to indemnify Lord Derby under clause 3(k) of the 1967 agreement. As
I have indicated, the true construction of this subclause is in dispute, though
these questions of construction do not arise on this appeal and are, I
understand, the subject of separate proceedings between Lord Derby and
Pilkingtons. On this appeal there has been a division of labour in the course
of argument between Mr Trenhaile, representing Lord Derby, and Mr Charles
Sparrow QC, representing Pilkingtons, though Mr Trenhaile has specifically
adopted the whole of Mr Sparrow’s argument. We have had the benefit of very
full and careful argument from counsel on all sides.
Before turning
to the arguments, it is perhaps worth reminding oneself of the wording of Order
14 r 3(1) of the Rules of the Supreme Court, pursuant to which the learned
judge made his order. This rule provides as follows:
Unless on the
hearing of an application under rule 1 either the court dismisses the
application or the defendant satisfies the court with respect to the claim, or
the part of a claim, to which the application relates that there is an issue or
question in dispute which ought to be tried, or that there ought for some other
reason to be a trial of that claim or part, the court may give such judgment
for the plaintiff against that defendant on that claim or part as may be just
having regard to the nature of the remedy or relief claimed.
As appears
from the very terms of the rule itself, the jurisdiction conferred by it is not
exercisable in any case where the defendant has satisfied the court with
respect to the claim, or the part of the claim, to which the application
relates, either (a) ‘that there is an issue or question in dispute which ought
to be tried’, or (b) ‘that there ought for some other reason to be a trial of
that claim or part’. This is not to say that a defendant by the mere fact of
raising a so-called question of construction or other point of law will
necessarily succeed in satisfying the court as to these matters. At least since
Cow v Casey [1949] 1 KB 474 this court has been prepared, in
appropriate cases, to decide questions of construction or other questions of
law on Order 14 applications, even if they may at first sight be of some
complexity and therefore take ‘a little longer to understand’ (see that case at
p 481, per Lord Greene MR).
Robert Goff LJ
and I recently pointed this out in our judgment in European Asian Bank AG
v Punjab and Sind Bank (No 2) [1983] 1 WLR 642, to which I
referred in the course of argument in the instant case; and indeed in that case
we did decide that a particular argument based on the construction of certain
documents raised no issue or question ‘which ought to be tried’. Nevertheless,
for my part, I think that in a case where a question of construction or other point
of law is raised by the defendant on an Order 14 application and the court,
having fully understood what the question is, still regards the question as
difficult, and the answer to it as doubtful, it should not ordinarily purport
finally to decide the question unless both sides agree to its doing so. A
fortiori, in my opinion, it should not take this course, in the absence of
agreement of the parties, in a case where the answer could be affected by
evidence which is not available to it, but might be adduced at the trial. I
make these observations because the proper general approach of the court to
Order 14 applications has naturally been the subject of a number of submissions
on this appeal.
The
plaintiffs’ case against Lord Derby is essentially a simple one; it may be
summarised as follows. On the true construction of clause 1(a)(2) of the 1970
tenancy agreement Lord Derby is obliged to pay to the plaintiffs ‘reasonable
compensation for damage to
operations carried out by Lord Derby or by any person ‘authorised by him’
within the meaning of the opening words of clause 1(a). Pilkingtons, it is
submitted, were persons authorised within the meaning of this subclause because
of the authority given to them by Lord Derby under the 1967 agreement. Damage
was occasioned to the surface of the land and crops by sand-getting operations
carried out by Pilkingtons. It thus became necessary for the compensation in
respect of such damage to be assessed by a valuer under clause 6(7) of the 1970
tenancy agreement. To that end, in June 1981 the parties jointly appointed Mr
Poole. By the terms of his appointment he was expressed to be appointed as the
valuer under clause 6(7). In due course he assessed such compensation. Clause
6(7) provides for the valuer’s valuation in such circumstances to be ‘final’.
Accordingly his decision was final, and the sums assessed thereby became
payable by Lord Derby to the plaintiffs. In the premises the plaintiffs, it is
submitted, are entitled as against Lord Derby to payment of such sums with
interest as from the date of the assessment. The plaintiffs say, and the judge
held, that there is no issue in dispute which ought to be tried; nor is there
any other reason for there to be a trial of the claim.
This brief
summary of the plaintiffs’ case, I think, makes it clear, as Mr Jonathan Parker
QC on their behalf expressly accepted in argument, that their claim is based on
clause 1(a)(2) of the 1970 tenancy agreement and not on the covenant for quiet
enjoyment contained in that agreement.
The principal
arguments put forward on behalf of the appellants in opposition to these
contentions, and in support of this appeal, fall into two quite separate
categories, which I shall call ‘the demurrer arguments’ and ‘the valuation
arguments’.
The demurrer
arguments, which were advanced by Mr Sparrow on behalf of Pilkingtons, and
adopted by Mr Trenhaile on behalf of Lord Derby, essentially run as follows.
The whole action, it is said, is based on the hypothesis that the relevant
damage was done to the relevant land by persons authorised by Lord Derby in the
exercise of rights reserved to Lord Derby by the 1970 tenancy agreement.
There is no reliance on excepted rights. Thus the relevant provisions of
clause 6(7) of the 1970 tenancy agreement are pleaded in para 2 of the
statement of claim as follows:
Further it
was agreed and declared by clause 6(7) of the Tenancy Agreement that, inter
alia: ‘all compensation for damage done to the Farm by the Landlord or any
person authorised by him in the exercise of any of the rights hereby reserved
to him . . . shall be assessed by a valuer who shall be appointed (in default
of agreement between the parties) by the President of the Royal Institution of
Chartered Surveyors and the decisions of such valuer shall be final’.
The valuer
himself, in making his award, stated that he had been appointed to assess
compensation for damage done ‘following the exercise by the landlord of his
rights referred to in clause 1(a)(2) whereby the right is reserved out of the
tenancy in favour of the landlord and of all persons authorised by him to
exercise such rights to extract’ etc. The award itself, it is submitted, is
thus simply directed to the exercise of reserved rights. Mr Sparrow points out
that a reservation essentially involves a regrant. While an exception is a
subtraction of some part from that which has previously been expressed to be
granted, a reservation involves the new grant of a new right newly created out
of something which has been previously granted. The grant by Lord Derby to
Pilkingtons in 1967 gave Pilkingtons the exclusive right to take sand from the
relevant land during the terms of the 1967 agreement. The Court of Appeal, as I
have said, decided that this amounted to the grant of a profit a prendre, that
is to say, a legal estate in favour of Pilkingtons. It follows, so it is
submitted, that after the grant in 1967 Lord Derby had no right, during the
term of the 1967 agreement, to deal with the sand in his own favour, and that
any purported reservation of sand under clause 1(a)(2) of the 1970 tenancy
agreement was a complete nullity. The present action, Mr Sparrow submits,
invokes such reservation and assumes its validity. Accordingly, Pilkingtons’
first line of defence is that this action is fundamentally misconceived and is
demurrable on the grounds that it is founded upon a covenant for compensation
pursuant to a purported reservation in the 1970 tenancy agreement.
Alternatively,
Pilkingtons submit that even if, contrary to their first submission, it can
properly be said that any relevant rights in respect of sand have been
‘reserved’ to Lord Derby within the meaning of clause 1 and clause 6(7) of the
1970 tenancy agreement, it cannot correctly be contended that Pilkingtons are
‘persons authorised to exercise such rights’ within the meaning of the opening
words of clause 1(a) of the 1970 tenancy agreement and the words of clause 6(7)
thereof. The reference in these two subclauses to ‘persons authorised’ is, in
Pilkingtons’ submission, on their true construction confined to persons given
the requisite authority after the date of the 1970 tenancy agreement.
The relevant authority given by Lord Derby to Pilkingtons, on the other hand,
antedates the 1970 tenancy agreement.
As Mr Parker
pointed out on behalf of the plaintiffs, the effect of the demurrer arguments,
if well founded, would be that clause 1(a)(2) of the 1970 tenancy agreement
itself would give the plaintiffs no rights whatsoever to demand compensation
from Lord Derby in respect of the sand-getting activities of the one person
exclusively entitled to get sand from the relevant land, namely Pilkingtons.
These arguments are thus of a far-reaching variety.
I have
attempted, I hope reasonably fully and fairly, to record the demurrer arguments
because they logically precede all the appellants’ other arguments and, if
well-founded, would wholly destroy the plaintiffs’ claims in this action at the
outset. Nevertheless, for my part I do not think it necessary to deal further
with these arguments, which I should mention were unhesitatingly rejected by
the judge, or with the submissions of law which Mr Parker on behalf of the
plaintiffs has forcefully put forward in argument in answer to them, including a
reference to the decision of Scrutton J in Jones v Consolidated
Anthracite Collieries [1916] 1 KB 123. I say this because, for reasons
which I am about to give, the appellants’ valuation arguments by themselves
clearly give rise, in my opinion, to a question or issue which ought to be
tried and which entitles them to leave to defend. In these circumstances,
having recorded the demurrer arguments, I think it better to express no view at
all as to their validity or otherwise, but to leave them to be dealt with,
along with all the other disputed matters, by the judge at the trial.
I now turn to
consider the appellants’ valuation arguments. It has been common ground on this
appeal that the award of January 27 1982 was a true valuation and not an
arbitral award. We have been referred to three decisions dealing with the power
of the court to impeach valuations made by experts, namely, the decisions of
the Court of Appeal in Dean v Prince [1954] Ch 409 and
Campbell v Edwards [1976] 1 WLR 403 and the very recent decision of
Nourse J in Burgess v Purchase & Sons (Farms) Ltd [1983] Ch
216. These cases illustrate that there has been some development in this field
of the law over the past 30 years, particularly following the decision of the
House of Lords in Arenson v Arenson [1977] AC 405.
In the Burgess
decision, in the course of a careful review of the authorities, Nourse J drew a
distinction between ‘speaking valuations’ — that is to say, valuations in which
the valuer gives some express indication as to the manner in which his
valuation has been arrived at — and ‘non-speaking’ valuations, where no such
indication is given. Nourse J summarised his conclusion, so far as relevant to
present purposes, as follows at p 225 of the report:
The question
whether a valuation made by an expert on a fundamentally erroneous basis can be
impugned or not depends on the terms expressed or to be implied in the contract
pursuant to which it is made. A non-speaking valuation made of the right
property by the right man and in good faith cannot be impugned, although it may
still be possible, in the case of an uncompleted transaction, for equitable
relief — as opposed to damages — to be refused to the party who wishes to
sustain the valuation. On the other hand, there are at least three decisions at
first instance to the effect that a speaking valuation which demonstrates that
it has been made on a fundamentally erroneous basis can be impugned. In such a
case the completion of the transaction does not necessarily defeat the party
who wishes to impugn the valuation.
We were told
by counsel that the Burgess decision is under appeal. Nevertheless,
before us it has I think been common ground that the valuation made in the
present case was a speaking valuation in so far as it referred to crops, and that,
on the basis of the authorities as they stand, it is at the very least arguable
that the valuation could be successfully impugned by the appellants if they
could satisfy the court that it had been made on a fundamentally erroneous
basis.
The appellants
submit that the award was made on a fundamentally erroneous basis, (a) because
the valuer assessed the amount payable to the plaintiffs as being reasonable
compensation for damage as mentioned in clause 1(a)(2) of the 1970 tenancy
agreement, instead of being damages for quiet enjoyment under clause 5(4); and
(b) because he took into account damage to crops planted subsequent to
Pilkingtons’ sand-getting operations.
I say no more
about argument (a), which is closely connected with the appellants’ demurrer
arguments and will fall to be dealt with by the judge at the trial. Most of the
rest of this judgment will be directed to argument (b), on the assumption that
the plaintiffs have succeeded in surmounting the hurdle of argument (a).
The provisions
of clause 1(a)(2) of the 1970 tenancy agreement permit ‘reasonable compensation
for any damage to the surface buildings or crops’. The learned judge without
hesitation rejected the appellants’ argument that this subclause contemplates
nothing more than damage to crops which are in existence when the Pilkingtons’
sand-getting operations take place.
In this
context he said this:
I cannot see
for the life of me why any limitation of this sort should be implied into these
words. One has only got to consider what the purpose of a provision such as
this is. The landlord, understandably enough, wants to reserve rights in
respect of workings of the land for minerals. He recognises that the carrying
out of work of this character may amount to an interference with the tenants’
agricultural operations, and he says that he will give reasonable compensation
for damage caused by the operations provided it is damage to the surface, which
appears to me to be naturally enough the surface of the land, to any buildings
or crops. That is damage to crops, not merely the existing crops but crops
which may be subsequently sown, for operations of this kind may quite plainly
affect not only a growing crop but crops subsequently sown having regard ‘to
the disturbance to the earth’ which is necessarily going to take place in the
course of the sand-getting operation; and I am of the opinion that Mr Poole
very properly considered that it was his duty, in making an assessment for the
purposes of compensation, to take into consideration the fact that existing
crops might have been damaged and the yield on subsequent crops might be
damaged, not only because of disturbance to the earth but because I should
imagine the timing of the operation might be such that this, that or the other
crop might not have been successfully sown having regard to the period at which
the operation was being carried out. I can see absolutely no reason for taking
into this provision a limitation to standing crops, and I reject this aspect of
the argument.
Mr Parker, in
supporting the conclusion of the learned judge, submitted that there is indeed
no good reason for adopting a narrow construction of the relevant words,
‘reasonable compensation for any damage to the surface buildings or crops’; on
the contrary, he says, to limit the meaning of crops so as to exclude crops
sown after the completion of the sand-getting operations would, as the judge
himself thought, be to frustrate the manifest purpose of the provision for
compensation. The phrase ‘damage to crops’, he submitted, is, according to its
natural meaning, perfectly apt to include damage to future crops as well as
damage to present crops. The manifest purpose of clause 1(a)(2), he submitted,
was to ensure that the plaintiffs should receive full compensation for any
damage to crops suffered by them by the sand-getting operations carried out by
Lord Derby or any persons authorised by him. This purpose, it is said, would be
frustrated if damage to future crops was not covered by the compensation
provision in clause 1(a)(2). Mr Parker, as I understood his argument, did not
seek to justify the valuer’s taking into account the diminished yield from
future crops as falling within the phrase ‘damage to the surface of the land’.
I am far from
saying that Mr Parker’s submissions as to the construction of clause 1(a)(2)
are necessarily wrong. But that is not the point which this court has to
decide. The point is whether the appellants’ arguments to the contrary raise an
issue or question which ought to be tried. For my part, I have been wholly
convinced by the arguments of Mr Trenhaile for Lord Derby and Mr Sparrow for
Pilkingtons that they do. Whether or not Mr Sparrow is right in submitting (as
he does) that the word ‘the’ in clause 1(a)(2) governs ‘buildings’ and ‘crops’
as well as ‘surface of the land’, it seems to me plainly arguable in the
context of that subclause that the phrase ‘damage to crops’ refers to no more
and no less than physical damage to the crops which are actually present on the
land when the sand-getting operations take place. I am not convinced that Mr
Parker is necessarily right in submitting that this construction involves
giving the clause a meaning more restricted than its natural meaning; on the
contrary, I think it is at least arguable that his construction involves giving
the words a broader meaning than they naturally bear. Mr Trenhaile illustrated
his clients’ argument on this point pithily by the following example: If, in
1984, a man bulldozes a field of cabbages, he damages a 1984 crop, but does not
in any ordinary sense, so it is submitted, damage a 1985, 1986 or 1987 crop.
My conclusion
that this point of construction is not a simple and obvious one which can
appropriately be dealt with by the court on an Order 14 summons is reinforced
by the following considerations: As the learned judge himself rightly
recognised, the court, in construing clause 1(a)(2), would have to look to its
commercial purpose. It seems to me, however, that it might well be possible for
the appellants to adduce evidence at the trial which was both relevant to this
point and admissible as part of the ‘matrix’ of the transaction within the
principles expounded by Lord Wilberforce in Prenn v Simmonds [1971]
1 WLR 1381.
I will give
merely two examples of categories of evidence which I think might (I do not say
would) be admissible and relevant in this context. The first would be evidence
as to the physical state and use of the demised land at the date of the 1970
tenancy agreement and as to the particular parts which were or were not at that
time demonstrably capable of producing sand. The second would be the knowledge
or otherwise of the plaintiffs as at the date of that agreement of the
existence and provisions of the 1967 agreement.
As regards the
latter point, there appears to be a conflict of evidence. The plaintiffs assert
that at the date of the 1970 tenancy agreement they had no knowledge of the
1967 agreement. The appellants do not accept this assertion. It seems to me at
least possible (I put it no higher) that it would assist the appellants in
rejecting an argument that the reference to crops in clause 1(a)(2) should be
extended beyond what they assert as the natural meaning of that reference, so
as to include the diminished yields from future crops, if they were in a position
to adduce evidence that the plaintiffs were well aware of the existence of the
1967 agreement at the date when the 1970 tenancy agreement was executed.
In this
context it may be significant that clause 1(a)(2) of the 1970 tenancy agreement
appears to give the plaintiffs no rights to compensation for disturbance of
their possession of the land as such. It thus seems to me plainly arguable that
they would have no rights under that subclause to seek compensation in respect
of loss of profit from a crop which they had never been able to plant at all;
indeed, I understood Mr Parker to accept that this particular point was
arguable. A fortiori, in my opinion, it is arguable that the subclause
did not contemplate compensation in respect of a future crop which was planted,
but proved to be a poor one.
More
generally, I think there is some force in Mr Sparrow’s submission that one is
not entitled to approach the construction of clause 1(a)(2) of the 1970 tenancy
agreement with any presupposition that it was necessarily intended to
compensate the plaintiffs fully for the entire loss which they might suffer
from sand-getting operations by Lord Derby or persons authorised by him. The
commercial purpose and legal effect of clause 1(a)(2) would, as I have
indicated, fall to be determined in the light, not only of the words of the
1970 tenancy agreement, but of the admissible evidence as to relevant
circumstances surrounding the execution of that document. While prejudging
nothing, I merely say that the court’s decision on this point at the trial can,
in my opinion, by no means be regarded as a foregone conclusion in favour of
the plaintiffs. It is an issue which, in my opinion, clearly ought to be tried.
I therefore
find it unnecessary to do any more than record a further submission of Mr
Sparrow to the effect that the figure arrived at by the valuer in his valuation
was so extravagantly large as by itself to show that he must have gone wrong
somewhere in principle.
For the
reasons which I have already given, respectfully differing from the learned
judge, I would allow the respective appeals in the James action and in the John
Basil action, in which the same result must follow. I would give Lord Derby
unconditional leave to defend in each case.
WATKINS LJ
agreed and did not add anything.
The appeals
were allowed with costs in the Court of Appeal and below in favour of the
defendant (appellant) and third party. Unconditional leave to defend granted.
