Agricultural holdings — Fixed-term tenancy — Ministerial consent — Whether tenancy granted on terms consented to by minister
James Cockburn was the owner of and farmed Lower Farm, Hillfield, Dorset, in
partnership with the defendant, Mr Trevor, until Mr Cockburn’s death in March
1984 — The partnership came to an end on Mr Cockburn’s death — His executors
included his son, Mr Malcolm Cockburn, and his daughter, the plaintiff —
Because the plaintiff had a son of 16 and it was envisaged that he would take
over the farming following a period at agricultural college, on September 24
1984 a joint application was made by the defendant and Mr Malcolm Cockburn to
the Ministry of Agriculture, Fisheries and Food for consent to the grant of a
five-year tenancy of the farm within the meaning of section 3B of the
Agricultural Holdings Act 1948 — By a letter dated September 28 1984 the
minister approved an agreement that section 3 of the 1948 Act should not apply
to a tenancy to be granted after the date thereof for a period of not less than
two years commencing on October 1 1984 and ending not later than September 31
[sic 30] 1989 — The tenancy was executed at the end of November and was
expressed to commence on October 1 1984 for a term of five years — Upon the refusal
of the defendant to give possession when the contractual term ended on
September 30 1989, the plaintiff, who by then was solely and beneficially
entitled to the reversion, brought proceedings for possession — In Weymouth
County Court Mr Recorder Boyle dismissed the plaintiff’s claim holding that the
agricultural tenancy was protected by the Agricultural Holdings Act 1986
because the fixed-term tenancy commenced at the date of its execution and not
the expressed date of October 1 1984 and was accordingly not within the terms
of the minister’s consent — The plaintiff appealed
and Stuart-Smith LJJ, protection given to an agricultural tenant by what is now
the Agricultural Holdings Act 1986 does not apply where: the tenancy is for a
term of not less than two or more than five years; before the grant of the
tenancy the prospective landlord and tenant agree that section 3 of the Act
shall not apply to the tenancy; the prospective landlord and tenant make a
joint application to the minister for his approval; the minister notifies his
approval; and the contract of tenancy must be in writing and must indicate in
whatever terms that section 3 of the 1986 Act does not apply to the tenancy —
Notwithstanding that the term of the lease (the legal estate) does not commence
until the date when the agreement for lease is executed, other obligations,
such as payment of rent, may commence from the date stated in the lease — It
was common ground that the term in this case resulting from the agreement for
tenancy entered into at the end of November 1984 commenced at that time and ran
until September 30 1989, but the obligation to pay rent was backdated to start
from October 1 1984 — All the requirements of what is now section 5 of the 1986
Act were satisfied — The issue turned not so much on any proposition of law but
upon the proper construction of the words of the minister’s approval — This
approval did not specify the date upon which the tenancy was to be granted but
made it clear that the minister was consenting to the grant of the tenancy for
any period which fell within the ambit of what is now section 5, that is to say
not less than two or more than five years — The minister did not require that
the term should commence on October 1 1984, three days after his consent — The
minister did not use the expression ‘a term of not less than two years’
but referred to ‘a period of not less than two years’ — There was no
reason why the minister should have wished to grant a consent to a tenancy
which would commence on a precise date
dissenting: The consent of the minister required the term to be for not less
than two years commencing on October 1 1984 — The word ‘period’ in the consent
was to be read as meaning the same as ‘term’ — ‘A term of not less than two
years’ — The wording of the minister’s consent had been drawn to follow the
wording of the Act
The following
cases are referred to in this report.
Bradshaw v Pawley [1980] 1 WLR 10; [1979] 3 All ER 273; (1979) 40
P&CR 496; [1980] EGD 100; 253 EG 693, [1980] 1 EGLR 49
Cadogan
(Earl) v Guiness [1936] Ch 515
Colton v Becollda Property Investments Ltd [1950] 1 KB 216
Gladstone v Bower [1960] 2 QB 384; [1960] 3 WLR 575; [1960] 3 All ER
353; (1960) 58 LGR 313, CA
Javad v Aqil [1991] 1 All ER 243; [1990] 2 EGLR 82; [1990] 41 EG
61
Keen v Holland [1984] 1 WLR 251; [1984] 1 All ER 75; (1984) 47
P&CR 639; [1984] EGD 9; 269 EG 1043, [1984] 1 EGLR 9, CA
Roberts v Church Commissioners for England [1972] 1 QB 278; [1971] 3
WLR 566; [1971] 3 All ER 703, CA
This was an
appeal by the plaintiff, Mrs Janice Pahl, from an order of Mr Recorder Boyle,
sitting in Weymouth County Court whereby on March 14 1991 he dismissed the
plaintiff’s claim for possession of Lower Farm, Hillfield, Dorset, holding that
the defendant, Roger Trevor, had a tenancy protected by the Agricultural
Holdings Act 1986.
Michael Barnes
QC and John Grove (instructed by Batten & Co, of Yeovil) appeared for the
appellant; Joanne Moss (instructed by Porter Bartlett & Mayo, of Yeovil)
represented the defendant.
In dissenting,
DILLON LJ said: This is an appeal by the plaintiff in the action, Mrs
Janice Pahl, from an order made by Mr Recorder Boyle sitting as a deputy county
court judge in Weymouth County Court on March 14 1991. By that order the
learned recorder dismissed with costs the plaintiff’s claim for possession of
some land known as Lower Farm, Hillfield, Dorset.
The essential
question in the proceedings is whether Mrs Pahl is entitled to rely on the provisions
for the grant of tenancies of agricultural holdings to which the security of
tenure provisions of the Agricultural Holdings Act 1986 will not apply, which
were first introduced by section 3B of the Agricultural Holdings Act 1948
(brought in by the Agricultural Holdings Act 1984) and which are now contained
in section 5 of the Agricultural Holdings Act 1986.
The
circumstances of the present case are that Lower Farm was owned by a Mr Malcolm
James Cockburn of Hillfield Manor, Cerne Abbas, Dorset, who died on March 11
1984. During his lifetime Mr Cockburn had farmed Lower Farm in partnership with
Mr Trevor, the defendant, but the partnership came to an end on Mr Cockburn’s
death. The partnership year ran to September 30. Mr Cockburn’s executors were
his son, Mr Malcolm Cockburn, and his daughter, Mrs Pahl. They proved his will
in May 1984. They had then to consider what should be done with Lower Farm.
Mrs Pahl was
entitled to Lower Farm under the terms of the will. She sues now as sole
plaintiff as a result of an assent in her favour subsequent to the creation of
the tenancy in favour of Mr Trevor to which I shall come. She had children and
in particular a son of 16 and the idea was that the son would read agriculture
at an agricultural college and then take over the farming of Lower Farm, which
was a dairy farm. It was therefore thought a good idea to take advantage of the
new section 3B, which came into force on September 12 1984. That section
provides as follows:
(1) This section shall apply to any tenancy of an
agricultural holding for a term of not less than two, and not more than five,
years.
(2) Where, before the grant of any such tenancy —
(a) the persons who will be the landlord and the
tenant in relation to the tenancy agree that section 3 of this Act shall not
apply to the tenancy; and
(b) those persons make a joint application in
writing to the Minister for his approval of that agreement; and
(c) the Minister notifies them of his approval;
section 3
shall not apply to the tenancy if it satisfies the requirements of subsection
(3) of this section.
(3) A tenancy satisfies the requirements of this
subsection if the contract of tenancy is in writing and it, or a statement
endorsed upon it, indicates (in whatever terms) that section 3 of this Act does
not apply to the tenancy.
Those being
the provisions of the section, Mr Malcolm Cockburn wrote to the divisional
executive officer of the Ministry of Agriculture, Fisheries and Food in Taunton
a letter which actually bears no date but is believed to have been written on
or about September 20 1984. It reads as follows:
Short Term
Tenancies: Lower Farm, Hillfield, Dorchester
I am one of
the two Executors to the Will of my father, M J Cockburn. He farmed Lower Farm,
Hillfield, in partnership with Mr R J Trevor (of Church Farm [and another
village is named]). My sister, Mrs J M Pahl is the beneficiary of Lower Farm under
the will and she has children at the late school/University age.
It seems to
us, with the agreement of Mr Trevor, that a short term tenancy would be
suitable in this situation. We would like the tenancy to last for the maximum,
five years. There is some urgency because the financial year for the old
partnership finishes at the end of September, but our solicitors
— and he gives
the name of a local firm —
say that they
will be able to complete the agreements by that date so long as the MAFF give
their consent by that date.
I telephoned
your department in Taunton and they suggested that I write to you, with our
case and two maps of the farm, which are enclosed. I apologise for the pressure
on you.
That letter of
course was not a joint application, but the joint application followed. It is
dated September 24 1984 and bears a stamp showing its receipt in the ministry
offices in Taunton on September 26. It reads as follows:
Agricultural
Holdings Act 1948 (1984) Sec 3b Lower Farm, Hillfield, Dorchester, Dorset
This
application for a 5 year tenancy on Lower Farm, Hillfield is made by Mr R P
Trevor (the tenant) and Mr M D Cockburn (executor to the Will of M J Cockburn).
As explained in M D Cockburn’s previous letter, Lower Farm, Hillfield was
farmed by Mr Trevor in partnership with the late M J Cockburn as a dairy farm
with 135 cows. The farm has been left to Mrs J M Pahl (daughter) who has a son
aged 16. It is the intention that this boy will take over the farm at the age
of 21 after attending college. Meanwhile Mr Trevor is able and willing to
maintain the farm as a dairy farm.
Since the old
partnership ends its financial year at the end of September, we would very much
appreciate your quick decision.
The ministry
obliged with admirable dispatch and granted, as it seems to me, what had been
asked for. There is a covering letter of September 28 1984, which as it happens
was a Friday. This is addressed to Mr M D Cockburn. It refers to his
application with Mr Trevor, which I have just read, and goes on:
I am pleased
to tell you that approval has been given and is enclosed, together with a copy
of the plan. I would remind you that the tenancy agreement must state, or be
endorsed to the effect that Section 3 does not apply.
A copy of this
letter has also been sent to Mr Trevor. The consent in its operative parts is
in these terms:
Approval by
the Minister of an agreement under section 3B.
In exercise
of the powers conferred upon him by section 3B of the Agricultural Holdings Act
1948 as amended, the Minister of Agriculture, Fisheries and Food hereby
approves (but only for the purposes of the said section) the agreement between
Malcolm D Cockburn and Roger P Trevor that Section 3 of that Act shall not
apply to a tenancy to be granted after the date hereof by the said Malcolm D
Cockburn to the said Roger P Trevor of the land at Lower Farm
— and it is
then described —
for a period
of not less than two years commencing on the 1st day of October 1984 and ending
not later than the 31st day of September 1989.
In the absence
of evidence that the Taunton area lives by a different calendar to the rest of
the world, the last date must be taken to be the day September 30 1989.
The position
was, however, contrary to what Mr Malcolm Cockburn had supposed in his original
letter to the department, that the parties had not in truth agreed all the
terms of their tenancies; they had agreed that there should be a tenancy which
should be exempted from the statutory protection under section 3B by the
minister’s approval, but they had not agreed the rent or some of the other
terms.
Having
therefore got the approval, they proceeded to negotiate the remaining terms
while Mr Trevor no doubt continued farming the land. The tenancy agreement
ultimately achieved is dated back so as to bear the date ‘1st day of October
1984’ but was in truth not
the tenant agrees to take the holding known as Lower Farm, Hillfield, and it
provides in clause 1 that:
THE TENANCY
shall commence on the First of October . . . (1984) and continue for a term of
5 years expiring on the 30th September 1989.
Clause 2
provides that:
THE RENT is
to be seven thousand five hundred POUNDS PER ANNUM payable on March 25 and
September 29 in each year the first payment to be made on the twenty fifth of
March . . . 1985:
There then
follow all the usual detailed provisions that you would expect in an
agricultural tenancy and there is the appropriate note to satisfy subsection
(3) of section 3B.
When the
contractual term came to an end at September 30 1989, Mrs Pahl, who by then was
entitled to the reversion, brought immediate proceedings for possession against
Mr Trevor as she was entitled to if Mr Trevor was not protected by the
Agricultural Holdings Act 1986 as it is now. If, however, as the recorder held,
he was entitled to that protection, then Mrs Pahl’s claim for possession was
bound to fail because a tenancy for a term of years which is protected by the
Agricultural Holdings Act continues as a periodic tenancy after the expiration
of the term of years and can be terminated only by a much longer notice to
quit, which Mrs Pahl had not given, and by a consent from the agricultural land
tribunal if the tenant objects to giving up possession.
The contention
of Mr Trevor, which the learned recorder upheld, was quite simply:
It is well
settled [law] that a lease [or tenancy agreement] cannot retrospectively vest
an estate in the lessee. If today a lease is granted for seven years from this
day a year ago, no term of seven years is brought into being, but only a term
of six years from today.
I read from
the judgment of Sir Robert Megarry V-C in Bradshaw v Pawley
[1980] 1 WLR 10* at p 14E. He refers to earlier authority in 1847. There are
also many other cases where the same principle has been applied, such as the
decision of Clauson J in Cadogan (Earl) v Guinness [1936] Ch 515
and, even more to the point, the decision of this court in a case in relation
to the Agricultural Holdings Act 1948, Keen v Holland [1984] 1
WLR 251† .
*Editor’s
note: Also reported at (1979) 253 EG 693, [1980] 1 EGLR 49.
† Editor’s
note: Also reported at (1984) 269 EG 1043, [1984] 1 EGLR 9.
Mr Trevor’s
point is, in short, this: that a tenancy agreement made at the end of November
1984 which purports to create a term commencing on October 1 1984 and
continuing for a term of five years expiring on September 30 1989 in law
creates a term starting only on the execution of the tenancy agreement and
continuing until September 30 1989. The term cannot, because of the principle
that Sir Robert Megarry enunciated, be made to commence at a date prior to the
execution of the tenancy agreement. Therefore, as is accepted by Mr Barnes QC,
in his submissions for the appellant, the position of Mr Trevor from October 1
1984 until the tenancy agreement was executed and took effect was that he was
not a tenant but a tenant at will of the property: see the recent decision of
this court in Javad v Aqil [1991] 1 All ER 243§ .
§ Editor’s
note: Also reported at [1990] 2 EGLR 82.
Mr Trevor
therefore says that the condition of the minister’s consent, that the section
is not to apply to a tenancy ‘for a period of not less than two years
commencing on the 1st day of October 1984 and ending not later than the 30th
day of September 1989’, is not satisfied because the tenancy which Mr Trevor
was granted was for a term which commenced at some date at the end of November
1984 and not on the first day of October 1984.
Section 3B
refers to a ‘tenancy of an agricultural holding for a term of not less than
two, and not more than five, years’ and the term actually granted to Mr Trevor
by the tenancy agreement at the end of November was indeed for not less than
two and not more than five years from the date when the term was granted. That
is not the point. The point is that the consent of the minister required the
term to be for two years commencing on the first day of October 1984. I read
the word ‘period’ in the consent ‘for a period of not less than two years’ as
meaning the same as ‘term’ — ‘a term of not less than two years’.
As I have
said, in Keen v Holland this principle of construction was held
to be applicable to agricultural holdings. The position in that case was that
it was an established exception to the Agricultural Holdings Act that there was
no protection given where a tenancy was granted for a fixed term which was of
more than one year but less than two years’ duration. That followed from a
decision of this court in Gladstone v Bower [1960] 2 QB 384. That
decision was regarded as somewhat anomalous but no legislative step was taken
to counter it. Therefore, in Keen v Holland the parties intended,
with the full concurrence of the tenant, to avoid — and I do not use the word
pejoratively — the protection conferred by the Act for the tenant by granting
him a term for more than one year but less than two years. However, there was
delay in the preparation of the necessary agreement while negotiations took
place and the tenancy agreement actually granted, though dated back to the date
from which it was intended that the period of more than one year but less than
two years should run, was actually granted only a few weeks before the end of
that period. It was consequently held by this court that the term granted was a
term for very much less than one year. It was merely a term of some two weeks
from the date when the tenancy agreement was executed until the expiration of
the intended term and so the tenant was entitled to the protection of the 1948
Act.
Oliver L J,
who gave the leading judgment in this court, referred at the foot of p258 to an
alternative argument which was put forward by counsel then appearing for the
landlord. He said:
As an
alternative — although it is, we think, merely a different way of expressing
the same concept — [counsel] submits that where (as here) the tenant is already
in occupation before the formal grant of a tenancy, a tenancy agreement for a
term commencing from a prior date is to be treated as clothing [the tenant], as
between the parties, with the status of tenant under the agreement as from the
agreed commencement date. His ‘interest’ for the purposes of the Act is,
therefore, to be determined in accordance with that agreed status. Terms of a
tenancy are frequently negotiated well prior to the execution of a formal
tenancy and it is a commonplace that the tenancy when formally granted is
expressed as creating a term commencing on a date prior to the date of the
instrument. Whilst it is no doubt true that no estate is created until the
instrument is executed, the agreement as to the duration of the term is
effective for all other purposes, for instance, as regards payment of rent and
covenants in the lease.
The court
therefore rejected that alternative way of putting the case and held that the
tenant was entitled to protection. If one comes to section 3B(1) of the 1948
Act, one finds that that is to apply to any tenancy of an agricultural holding
for a term of not less than two and not more than five years. If, therefore,
what the parties had purported to do in their agreement of late November 1984
had been to grant Mr Trevor a tenancy for a term of two years from October 1
1984, that would have been outside the Act and would not have avoided giving
him the protection of the Act.
It necessarily
follows, to my mind, that the wording of the minister’s consent has been drawn
to follow the wording of the Act. There is emphasis that the tenancy is to be
granted after the date of the approval. It is to be for a period which, as I
have said, I read as ‘term of not less than two years and ending not later than
30th September 1989’. It is also, however, to be for a term of not less than
two years commencing on the first day of October 1984. As a matter of law it
can only be for a term commencing on the first day of October 1984 in that
sense, if the agreement was executed on or before October 1 1984.
It may well be
that the date, October 1 1984, was put into the consent because it had been
stressed in Mr Malcolm Cockburn’s original letter and in the joint application
that expedition was desired because the old partnership ended its financial
year at the end of September. But while that may be the reason for having
chosen that date and while it may well be the case that the minister might have
granted a consent which did not actually specify the date for the commencement
of the term, what he has given, and it is the only approval that he gave before
the grant of the tenancy, was approval for the grant of a tenancy for a period
of not less than two years commencing on the first day of October 1984. In law
the term under the tenancy agreement actually entered into commenced not on the
first day of October 1984 but on a day at the end of November. Therefore, the
terms of the approval have not been satisfied. What has been done is something
outside the scope of the approval granted.
In my
judgment, therefore, and speaking for myself alone, the tenant is entitled to
the protection of the Act and I would dismiss this appeal.
Mr Barnes
raised an alternative submission to the effect that it was, if the consent
bears the meaning which, in my judgment, it does bear, unreasonable for the
minister to have granted a consent which required the execution of the tenancy
agreement on September 29 or 30 or on October 1. But the minister’s
representative in Taunton had been told by Mr Malcolm Cockburn in his earlier
letter,
agreements by the end of September so long as the ministry gave their consent
by that date and I cannot regard the minister as having acted unreasonably in a
Wednesbury sense in acting as he was requested to act in the letters he
had received from Mr Cockburn.
I lay aside
also any question of whether Wednesbury unreasonableness is a concept
applicable to the construction of consents given by the minister outside the
field of judicial review in the field of ordinary litigation between private
people.
As I have
said, for my part I would dismiss this appeal.
Giving
judgment, GLIDEWELL LJ said: Section 3B of the Agricultural Holdings Act
1948 as inserted by the Agricultural Holdings Act 1984 and repeated, though not
in identical words, in section 5 of the Agricultural Holdings Act 1986 provides
that the protection given to an agricultural tenant by section 3 of the 1948
Act shall not apply to a tenancy of an agricultural holding in the following
circumstances. First, the tenancy has to be one for a term of not less than two
or more than five years. Second, by subsection (2) three conditions which are
cumulative have to be fulfilled: that before the grant of the tenancy the
prospective landlord and tenant should agree that section 3 shall not apply to
the tenancy, that the prospective landlord and tenant must make a joint
application to the minister for his approval of that agreement and that the
minister must notify his approval. Finally, the contract of tenancy must be in
writing and must indicate in whatever terms that section 3 of the Act does not
apply to the tenancy.
In this case
the agreement for a tenancy, which operated as a lease, was expressed to be
entered into on October 1 1984 for a term commencing on the same date. However,
it is common ground that that agreement was not concluded nor entered into
until a date at the end of November 1984. Mr Barnes submits that this agreement
had two effects. First, it created a legal estate, that is to say a term of
years and, second, it imposed a variety of obligations on the parties in usual
form. Mr Barnes accepts that where, as here, a lease is expressed to commence
on a date earlier than the date of its execution, the term of the lease (the legal
estate) does not commence until the date when the agreement or lease is
executed. If authority for that proposition be needed, it is to be found in the
decision of this court in Roberts v Church Commissioners for England
[1972] 1 QB 278 as repeated in and relied upon by this court in the judgment of
the court delivered by Oliver LJ in Keen v Holland [1984] 1 WLR
251.
However, Mr
Barnes argues, and I agree, that other obligations may commence from the date
stated in the lease; for instance, it is a commonplace that rent shall start to
be payable from some earlier date or that a rent review date shall be at a
given period after such earlier date. In Keen v Holland, at p
259, Oliver LJ quoted a passage from a judgment of Denning LJ (as he then was)
in Colton v Becollda Property Investments Ltd [1950] 1 KB 216,
the particular passage being from p 231 in that decision, where Denning LJ
said:
It
continually happens that the tenant goes into occupation whilst the
negotiations are still pending and before the lease is executed, and then,
afterwards, when the lease is drawn up, it is expressed to start as from the
date the tenant went into occupation. In such cases, in point of law the legal
interest of the tenant starts from the date when the lease was executed: . . .
But as between the parties it may start from the date stated in the lease,
because the parties, by their agreement, have related its commencement back to
the date when the tenant went into occupation. This relation back is not to be
regarded as a nullity; it may often mean that the conditions and covenants of
the lease relate back to that time also.
Mr Barnes also
relied upon a judgment of Sir Robert Megarry V-C, in Bradshaw v Pawley
[1980] 1 WLR 10, the particular passage, which I forbear to read, being from pp
14B-15B in that decision. It is to much the same effect as the passage from the
judgment of Denning LJ to which I have just referred.
It follows,
and indeed it is common ground, that the term in this case resulting from the
agreement for tenancy entered into at the end of November 1984 commenced at
that time and ran until September 30 1989; in other words, the duration of the
term was some four years and 10 months. But the obligation to pay rent was
back-dated to start from October 1 1984, and so, though we have not considered
them, some of the other obligations in the agreement may have been.
On the face of
it, therefore, all the requirements of section 3B were satisfied. This was a
tenancy for more than two but less than five years. The landlord and tenant had
agreed that section 3 should not apply. They had applied to the minister for
his consent for that agreement. On the face of it he had given his consent and
that fact was recorded in the agreement for lease itself. The argument advanced
by Miss Moss, for Mr Trevor, which convinced the learned recorder, was that the
minister’s approval was subject to a condition which was not satisfied. Since
the condition was not satisfied the approval never took effect.
This,
therefore, depends not so much upon any proposition of law as upon the meaning
of the condition and of the whole of the minister’s grant of approval. Before I
turn to that wording I would say that, in my view, the decision in Keen
v Holland, though of course binding on us, does not assist us to
construe the words of the minister’s approval. Keen v Holland is
authority for the proposition that parties who execute an agreement for a
tenancy on a date less than a year before the expressed end of the term,
although they insert in the agreement a commencement date more than a year
before the termination, nevertheless create an interest which is ‘less than a
tenancy for year to year’, which therefore falls within the protection afforded
by section 2(1) of the 1948 Act and, indeed, the same section in the 1986 Act.
The wording of
the minister’s consent, to which Dillon LJ has referred and to which it is
necessary to go back briefly, having referred to section 3B, referred to the
agreement between Mr Cockburn and Mr Trevor as follows:
. . . that
Section 3 of that Act shall not apply to a tenancy to be granted after the date
hereof by the said Malcolm D Cockburn to the said Roger P Trevor of the land .
. . [and then defines the land] for a period of not less than two years
commencing on the 1st day of October 1984 and ending not later than the 31st
day of September 1989.
It is
noticeable that in the middle of that consent are the words ‘a tenancy to be
granted after the date hereof’, not at that point specifying the date upon
which the tenancy is to be granted, and it is clear that the minister was
consenting to the grant of the tenancy for any period which fell within the
ambit of section 3B, that is to say not less than two or more than five years.
The terminal date, September 30 (31st as it reads) was obviously designed with
the five years in mind.
The question
is: did the minister require that the term should commence on October 1 1984,
which itself meant, if it was to take effect, that the agreement for the lease
had to be executed not later than that date, three days after the minister gave
his consent, two days after, presumably, it was received by the parties?
Mr Barnes
argues that the passage in which the minister has concerned himself with the
question, when should the tenancy be granted, is answered by the words ‘tenancy
to be granted after the date hereof’ and he points to the fact that the
minister has not referred to a term of not less than two years but a period
of not less than two years. We are not of course here construing a statute and,
in my view, the same principles do not apply as apply to the construction of a
statute. But, nevertheless, I agree with Mr Barnes that we are entitled to
assume that, although the minister was here putting into effect a statute which
had only just come into force a few weeks before the giving of this consent,
nevertheless it is of some significance that he chose a different word from
that which is contained in section 3B(1), namely ‘a term of not less than two
and not more than five years’ and speaks of a ‘period’. Unlike Dillon LJ, I
regard that as being of some significance.
The parties
here were no doubt concerned that their obligations under the tenancy,
particularly the payment of the rent, should commence on October 1 1984. But I
cannot see why the minister should have wished to grant a consent to a tenancy
which would commence on a precise date. I can see that he would not wish to
grant a consent that would be, as it were, left in limbo for a very long
period, that he would hope, as was indeed the case, that it would be acted upon
in the near future. But as to whether it was part of his concern that the term
of the agreement should commence on a particular date, I can find no reason to
justify that if indeed it is right to consider the practicalities of this
matter.
In my
judgment, this tenancy, entered into at the end of November 1984, but expressed
to run from October 1 1984, did comply with the condition contained in the
minister’s consent. It follows that I conclude that section 3 of the 1948 Act
did not apply to this tenancy. It is not necessary, therefore, for me to
express any view about the unreasonableness argument, but had I done so I would
on that part of the matter have expressed my entire agreement with Dillon LJ.
I would
therefore allow the appeal and order that the plaintiff recover possession of
the land.
Agreeing, STUART-SMITH
LJ said: In order to avoid the provisions as to security of tenure afforded
to tenants of agricultural land under the Agricultural Holdings Acts, section
3B of the 1948 Act (as amended) and now contained in section 5 of the 1986 Act
requires that seven conditions are complied with in addition, of course, to the
fact that it has to be a tenancy of an agricultural holding: first, that the
term must be for not less than two years; second, that it should be for not
more than five years; third, that before the grant the parties must agree that
section 3 shall not apply; fourth, that a joint application is made to the
minister; fifth, that the minister must consent to it; sixth, that the tenancy
is in writing and, finally, that the consent is endorsed on the tenancy
agreement. All those conditions were complied with in this case.
The question
is whether, on the true construction of the consent, the minister in fact imposed
a further condition specifying that the term of the tenancy had to begin on
October 1 1984. It may well be that in an appropriate case the minister can, if
he sees fit, impose further conditions other than those required in the
statute. But in this particular case, for my part, I can see no point in his
having done so, particularly since he expressed the consent in terms of great
flexibility, namely that the term should be not less than two years or not more
than five. It is very common to find that leases are executed on a particular
day but are expressed to run from some prior date. Where this happens there is
no tenancy or estate or interest in land prior to the execution of the
document. But the parties can relate the time of their obligations to such a
date. In Bradshaw v Pawley [1980] 1 WLR 10 at p 14 between D and
E, Sir Robert Megarry V-C said:
First, it is
well settled that a lease cannot retrospectively vest an estate in the lessee.
If today a lease is granted for seven years from this day a year ago, no term
of seven years is brought into being, but only a term of six years from today.
A lease, of course, is more than a mere contract, for it operates by way of
grant to create an estate or interest in the land; and you cannot grant today
that X shall have had a term of years vested in him a year ago. Whatever
contractual obligations there may be between the parties, no actual term of
years can be created until the lease has been executed and so the grant has
been made. Thus where the question is what term has actually been created, as
where a statute refers to terms of a particular length, the commencement of the
term cannot be earlier than the date of the grant of the lease. There is, of
course, no objection to a lease defining the term by reference to some past
date, as in the grant of a term of seven years from this day a year ago; but
this merely creates a term of six years from today.
Second, a
lease for a term from some past date will not, at any rate normally, make into
a breach of covenant that which was not a breach when it was committed. An act
or omission by a prospective lessee which would be a contravention of the
proposed lease is not turned into a breach of covenant by him merely because he
subsequently accepts the grant of the lease for a term which is expressed to
run from some date anterior to the act or omission.
Then he refers
to the authorities for that proposition and at p 15B he says:
However, when
what is in issue is not to title but obligation or liability, I do not see why
the parties should not, if they choose, make the obligation or liability
enforceable in respect of such anterior date as they wish. Thus if a lease is
granted for a term of 21 years from a date two years prior to the grant of the
lease, with a provision for determination at the end of the seventh or
fourteenth year of the term, then, in the words of Clauson J in Earl Cadogan
v Guinness [1936] Ch 515, 518: ‘it is perfectly easy as a matter of
construction of such a document to say that the seven years according to the
obvious intention of the parties is not to run as from the date of the
execution of the lease but from the moment spoken of, though inaccurately, as
the beginning of the term in the document’.
This case, in
my judgment, turns solely on the construction of the consent granted by the
minister and it is to be noted, as it seems to me, that if the minister had
wished that the grant of the lease should be made from October 1 and no other
date, he could easily have said so. In fact he did not use that language but he
specified that the tenancy was to be granted on a date after the date of the
consent itself, which was September 28 1984. I can see no good or rational
reason why he should want the parties to exchange lease and counterpart on that
date in particular, especially as it would be extremely difficult, having
regard to the date of the consent, which was Friday September 28, for that to
have taken place. As it seems to me, all he was concerned with was that the
tenancy should be granted within the full and wide words of the limits of the
statute, namely that it should be for not less than two years or more than
five. Second, had he wished that the term should commence on October 1, again,
it seems to me, he could have said so and thereby have followed the words of
the statute. In fact he did not do so. He used the expression ‘for a period of
not less than two years commencing from the first day of October’. I do not
think that it is necessary to construe that expression as the same as the word
‘term’. In my judgment, the minister must be taken to have known the common
practice of backdating leases to a date prior to the actual execution of it,
and, in my judgment, that is the likely interpretation or it is likely that he
had that practice in mind when he used those words at the end of the consent.
I can see
nothing in the language of the statute itself or of the decision in Keen
v Holland which compels a different interpretation. It is quite true that
if the parties here had simply entered into a lease for a period of two years
from October 1 1984, that lease being executed on the date when it was in
November, they would have fallen foul of the principle enshrined in Keen
v Holland and would not have avoided the protection of the Act. But that
is not what happened and, as I have indicated, the term which in fact was
created was less than five years and more than two years. I do not think that
the interpretation of this consent requires the imposition of what I would
regard as an unreasonable and unnecessary condition by the minister and I would
so construe the consent. For those reasons I, too, would allow the appeal.
Petition to
the House of Lords for leave to appeal was dismissed.
