Son succeeding as tenant of farm previously held by father and grandfather as joint tenants — Whether creation of joint tenancy by variation of existing tenancy or novation — Whether son first or second successor — Court holding that parties may add new tenant by variation of original tenancy agreement rather than creation of new tenancy — Appeal by landlord dismissed
The appellants were the trustees of the late FP Saunders and were the landlords of Austral and Boreal Farms at Alton Pancras, Dorchester, Dorset. On October 19 1990 the Agricultural Land Tribunal for the south-western area directed R was entitled to a tenancy of these farms on the retirement of his father, V. It was not disputed that R was entitled to such a direction. Given that he satisfied the statutory criteria, the Agricultural Holdings Act 1986 allowed a father who was a tenant of an agricultural holding to be succeeded among others by his son (the first succession) and his son by his grandson (the second succession).
However, an issue arose whether R was the first successor with the opportunity of being succeeded by one of his own kin, or whether he was the second successor without that opportunity. R’s grandfather, G, had entered into a written tenancy agreement with FPS. G had a son, V. On November 2 1957, there was executed a memorandum of agreement between the trustees of FPS and G and V. Thereafter G and V were joint tenants. What was an issue was whether that was by way of variation of the 1943 tenancy agreement or whether the 1957 agreement took effect as a surrender by operation of law of G’s tenancy and the grant of a new joint tenancy to father and son. The issue was determined against FPS trustees, who appealed.
Held The appeal was dismissed.
1. The language of the 1957 agreement pointed to an intention on the part of the parties to vary the original rather to grant a fresh tenancy on practily the same terms as the old. There was nothing in the authorities to suggest that the addition of a party to a contract was impossible to achieve except by novation. There was nothing to stop parties achieving that objective by variation of the existing contract.
2. There was very wide latitude given to parties to vary existing contracts. The parties to the 1957 agreement wished to make V a joint tenant. If they could achieve that by granting a new tenancy on the same terms as the 1943 tenancy it was difficult as a matter of common sense to see why they could not achieve the same result by varying the 1943 agreement. It was clear that it was their intention to do that and they succeeded. The proposition that a new party could be added only by novation (in the case of tenancy by surrender by operation of the law and regrant) seemed to smack of artificiality rather than principle: see Morris v Baron & Co [1918] AC 1; British & Benningtons Ltd v NW Cacher Tea Co Ltd [1923] AC 48.
3. When a son became a tenant because, while his father was still alive, the father had in agreement with the landlord given up his own tenancy so that the landlord might grant a new tenancy to the son, that transfer was to be treated as one of the two permitted successions: see Agricultural Holdings Act 1986, section 37(2),(7).
4. In the present case if a new tenancy had been created in 1957 G would have been the outgoing tenant in respect of the tenancy created by the 1943 agreement. However, since there was no surrender and regrant but merely a variation of the 1943 agreement then there was no outgoing tenant and nothing to which the combined effect of section 37(2) and (7) could apply.
Lynton Tucker (instructed by Pitmans, of Reading) appeared for the appellant landlord; Jack Denbin (instructed by Lock Reed & Lock, of Dorchester) appeared for the respondent tenant.
