Agricultural Holdings Act 1948 — Minister of Agriculture’s approval under section 2(1) of a licence to use the land as agricultural land for a period of 364 days — Land not suitable for grazing or mowing but intended to be used for arable farming — Object of obtaining minister’s approval to avoid the creation of a tenancy from year to year with security of tenure — Period of 364 days expired without any steps having been taken to renew the licence, it being assumed by all concerned in the subsequent transactions that the minister’s approval continued in force — Tenders were invited for the grant of the licence, it being stated that the approval of the minister had been obtained — The defendant submitted the highest tender, which was accepted by the authority which managed the land in question on behalf of the nominal plaintiff, the Secretary of State — The result was the creation of a contractual licence for 364 days which was not approved by the Minister of Agriculture and was not for grazing or mowing — Unless any of the points put forward on behalf of the plaintiff were valid, the transaction resulted in the conversion of the licence into a tenancy from year to year by virtue of the main part of section 2(1) of the 1948 Act — None of the plaintiff’s objections held to be valid — The licence was not gratuitous; the fact that no date was specified for the commence-
This was an
action for possession of two parcels of agricultural land, together amounting
to some 45 1/2 acres, which were part of the grounds of Leybourne Grange
Hospital, near West Malling, Kent. As the hospital was in the national health
system the title was vested in the Secretary of State for Social Services, the
nominal plaintiff in the action. The defendant was Dr Frank Beavington, his
doctorate being in agricultural subjects. The main question concerned the
application of section 2 of the Agricultural Holdings Act 1948 to a licence
granted to Dr Beavington.
David
Neuberger (instructed by Bird & Bird) appeared on behalf of the plaintiff;
Rodger Bell (instructed by Bracher, Son & Miskin, of Maidstone, Kent)
represented the defendant.
Giving
judgment, MR PETER BAKER QC said: This is an action for possession of land
which is part of Leybourne Grange Hospital near West Malling in Kent. The land
comprises some 45 1/2 acres. The hospital is a psychiatric hospital which
stands in extensive grounds. It is a National Health Service hospital and as
such it is vested in the Secretary of State for Social Services, who is the
nominal plaintiff in this case. But in fact he is of course assisted in the
discharge of his responsibilities by a considerable administrative structure,
and the particular administrative organ which has the general supervision of
this hospital is the South-East Thames Regional Health Authority of which a Mr
G F Goodall is the officer principally concerned with the matters which arise
in this case. He is the senior assistant secretary for planning. In addition
the hospital itself has an administrative staff, and the principal officer
there is Mr Malcolm George Hodgson, who is the assistant sector administrator,
and he is responsible for the farming and gardening activities. As I have said,
there are extensive grounds, and these grounds in so far as they are not
occupied by the hospital itself are used for farming or gardening. For that
purpose Mr Hodgson is assisted by a farm manager and other staff who actually
do the physical work, the farm manager being a Mr Osbourne.
The land in
question is two parcels of land, one on each side of the main drive which leads
to the hospital. One parcel is of some 29.5 acres and the other some 16 acres.
Up until the events with which I am concerned this land had been farmed by Mr
Osbourne under the supervision of Mr Hodgson. In April 1979 the decision was
reached to give up direct farming or gardening in regard to those lands. Mr Goodall
arrived at that decision and wrote about it to the Ministry of Agriculture. In
his letter he said that these areas were not immediately needed for hospital
purposes but were likely to be required in a year or two under plans which are
currently being developed for improvement of mentally handicapped services. He
went on:
We wish to
ensure the land is fully used until its future is determined and as we are
unable to farm it ourselves any longer, we would be obliged if you would agree
to a 364 day licence to avoid establishing an agricultural tenancy for the
short period involved, which would then prevent us from selling the land.
That was the
opening and the general background to it.
They were
looking for a temporary letting which would avoid creation of an agricultural
tenancy which would bring into train the protection of the Agricultural
Holdings Act 1948. That was the plan, and it is based on section 2 of the
Agricultural Holdings Act which, when the conditions are satisfied, provides
for the creation of licences and contracts of tenancy which, though otherwise
protected, would escape that provision. The section reads as follows:
Subject to
the provisions of this section, where under an agreement made on or after the
first day of March, nineteen hundred and forty-eight, any land is let to a
person for use as agricultural land for an interest less than a tenancy from
year to year,
that is one
case
or a person
is granted a licence to occupy land for use as agricultural land, and the
circumstances are such that if his interest were a tenancy from year to year he
would in respect of that land be the tenant of an agricultural holding,
that is
another case
then, unless
the letter or grant was approved by the Minister before the agreement was
entered into, the agreement shall take effect, with the necessary
modifications, as if it were an agreement for the letting of the land for a
tenancy from year to year.
That brings
into protection lettings for less than a tenancy from year to year and licences
to occupy land for use as agricultural land, but with this exception, that if
the letting or grant was approved by the minister, that is the Minister of
Agriculture, Fisheries and Food, before the agreement was entered into, then
the agreement takes effect. Then there is a proviso which allows another
exception and which is not dependent upon the minister’s consent. It reads as
follows:
Provided that
this subsection shall not have effect in relation to an agreement for the
letting of land, or the granting of a licence to occupy land, made (whether or
not the agreement expressly so provides) in contemplation of the use of the
land only for grazing or mowing during some specified period of the year, or to
an agreement for the letting of land, or the granting of a licence to occupy
land, by a person whose interest in the land is less than a tenancy from year
to year and has not by virtue of this section taken effect as such a tenancy.
That exception
is limited to the particular agricultural purpose contemplated, for grazing or
mowing. The land in question here was not fit for grazing or mowing because the
fences were not in a good enough condition for them to contain animals, so this
matter proceeded on the basis that it would be arable farming going on there,
and therefore it was essential, if protection was to be avoided, that the
letting or grant should be approved by the minister before the agreement was
entered into. For that reason the minister was approached, and the letter, part
of which I have already read out, is an application for such a licence. On June
12 1979 the minister gave his consent in these terms:
In exercise
of the powers conferred upon him by section 2 of the Agricultural Holdings Act
1948, the Minister of Agriculture, Fisheries and Food hereby approves but only
for the purposes of the said section the grant of a licence to occupy by an
agreement to be entered into after the date hereof the land at Leybourne Grange
Hospital Farm, West Malling, comprising 36.52 acres and 17.12 acres, and shown
hatched black on the plan annexed hereto signed by the undersigned for use as
agricultural land for a period of 364 days commencing after, but not more than
three months after, the date hereof.
That licence
in terms expired by September 12 1979. In fact it was allowed to run out before
any further steps were taken to find a licensee for this land. It is not part
of my function to allocate any blame for overlooking that or indeed to consider
whether any blame attached to anybody over it. But what is clear is that
everybody concerned in the subsequent transactions in this case thought that
the consent continued to run and continued in force. It was not until July 11
1980 at the earliest when people began to wake up to the fact that the licence
given by the minister had expired before any further steps were taken pursuant
to it. On July 11 1980 the solicitor then acting in the matter for the regional
health authority alerted the authority’s official there to the matter.
Thereafter it quickly came to light that there were difficulties concerning
this licence.
The case was
pleaded on the basis that despite its apparent expiry the licence did continue
to govern the situation and take the subsequent licensing out of the section,
but that point was abandoned earlier in the hearing and in my judgment quite
rightly abandoned as it seemed hopeless to run that particular point.
As I have
said, there was a licence granted, and I must look into what did in fact happen
subsequent to September 12, which is the final date on which the consent was
available for the grant of the licence. In order to find a licensee or person
to take this land the method adopted was to engage a local firm of auctioneers
and estate agents, Page & Wells. The assistant who actually dealt with it
was a Mr Murray James Wills, and the method adopted was to invite tenders.
Particulars were prepared. Some of the particulars I must refer to. I do not
want to state all the particulars, but they took the form of inviting tenders.
After setting out the description of the land, which I have already mentioned,
they stated: ‘The land is easily defined although in part it is unfenced and
therefore unsuitable for keeping stock.’
So quite clearly the whole thing pro-
mowing or for any sort of use of animals but was for arable farming. There were
no buildings included in the licence. ‘The licence shall be subject to the
approval of the Ministry of Agriculture, Fisheries and Food and full vacant
possession will be required when the licence expires.’ Then they go into the means of access, which
I need not go into, at all events at this stage. ‘Rent shall be paid in advance
by two equal instalments, the first on completion of the licence and the
remainder six months later.’ Then there
is a point about sporting rights which are reserved. Then they go on: ‘For the
benefit of prospective tenderers we attach a list of terms which may form the
basis of the licence, although the licensor reserves the right to vary the form
of licence appropriate to the letting of these parcels of land. Applicants
wishing to submit an offer for the licence of this land should complete the
attached form of tender and return to the licensor’s agents, Messrs Page &
Wells, not later than 12 noon on Friday November 2 1979.’ I think that is all I need to refer to in the
particulars.
In the
attached form of licence there were the usual sort of terms for an agricultural
licence, and there are two paragraphs which I should refer to: ‘8. A right of
access and use without prior notice for all purposes other than the subject of
this licence is to be reserved at all times for the landlords and their
agents.’ Then, ’10. The approval of the
Ministry of Agriculture, Fisheries and Food has been obtained for the creation
of this licence and full vacant possession will be required at the termination
of the agreement.’ That was not put
forward as the terms on which it would be allowed but it was the sort of
framework of the terms that the licensor had in mind while reserving the right
to vary them.
A number of
farmers were interested in taking this land and went to see it and looked round
it and submitted their tenders. One gets to the point that the tenders are in,
and the highest tender was that of the defendant, Dr Frank Beavington. He is a
doctor of philosophy in agricultural subjects. He was already farming in the
area at Church Farm, Ryarsh, which is I understand quite near, so that he was
obviously looking at this as an addition to his farm for the period of the
licence and working it in with his farm. I should read the tender which he submitted.
It was on a printed form supplied by the estate agents and he filled it up
without alterations. He merely filled in the blanks as he was required and did
not attempt to vary the terms in any way. It starts off: ‘Form of Tender Land
at Leybourne Grange Hospital, near West Malling, Kent. I/We Dr Frank Beavington
of Church Farm, Ryarsh, Maidstone, Kent hereby offer the following sums for the
grant of a 364 day licence for the land described in the letting particulars.
£652.00 for the parcel of land described as Block 1.’ That was the smaller parcel. ‘£1,344.00 for
the parcel of land described as Block 2. I/We agree that in the event of an
offer being accepted I/We will complete without undue delay the form of licence
provided by the licensor and will pay six months’ rent on completion of the
document.’ Then he signs it and ‘Dated
November 2 1979’, the last day for tenders. Then it says: ‘The solicitors/land
agents (if appropriate) instructed to act for me/us are Messrs Bracher Son
& Miskin’, and then, ‘If required, the agents who would act on my behalf
are Messrs Geering & Colyer.’ He was
asked to set out details of his farming experience and he sets that out, but I
do not think I need read that. Then, ‘Please state if you are not prepared to
take a licence of one block of land only.’
That does not arise because he was willing to take the two and he was
offered the two.
That tender
went in on November 2 1979. On November 5 Mr Wills reported to his principal,
Mr Goodall of the South East Thames Regional Health Authority, on the result of
the tender operation. He sets out a list of some nine farmers who had offered
and Dr Beavington’s was the highest in an aggregate value of £1,996 for the two
parcels. He says: ‘I am quite pleased with the response and hope that you are
satisfied with the offers which have been submitted. All the applicants are
anxious to have access to the land in the hope that winter cereal can be
planted and if possible it would be preferable if a licence could be completed
before the end of this month.’ That was
sent on November 5. After consultations with the district valuer among other
people it was decided to accept Dr Beavington’s tender. Mr Wills, and there is
no question that he had authority to write the letter, wrote to Dr Beavington
in these terms:
Further to my
letter dated November 6 I am now pleased to advise you that your offer of
£1,996 has been accepted by the South East Thames Regional Health Authority and
the letting has been approved by the Ministry of Agriculture. I have asked my
clients to submit the licence document to Messrs Bracher, Son & Miskin and
unless I hear from you to the contrary I trust this is in order. It has now
been decided that the proposed route of access to the smaller parcel of land
south of the main entrance drive would be inadequate for large farm vehicles
and I enclose a plan on which I have marked in red the proposed alternative
route which I hope you will agree is better for all concerned.
On the face of
it, that exchange of documents, the tender submitted by Dr Beavington and
accepted by that letter, would appear to be a contract. The point of having
tenders is to bring about a contract in which the purchaser or taker, the
lessee, licensee or whoever he is, makes an offer which is capable of being
accepted by the owner. Once it is accepted, in the ordinary way a contract
results. Two reasons have been put forward as to why that result should not
ensue. The first rests on the fact that it was to be followed up by a
subsequent licence. When the plaintiff’s solicitors came into the matter to
deal with the conveyancing, they wrote a letter to Dr Beavington, it having
emerged in the meantime that Dr Beavington was going to deal with the matter
himself and was not at any rate at that stage going to engage solicitors. They
wrote: ‘We thank you for your letter of January 18 which crossed our letter to
you of the same date. We have copied your letter to our clients with a request
that they let us have their instructions on the proposal you make. For the present
however we are proceeding on the basis of your original tender which, subject
to licence, has been accepted.’ That was
a letter by the solicitor, Mr Zonena, who was then an assistant solicitor with
Messrs Bird & Bird, the solicitors acting in this matter then and now for
the plaintiff. What he told me about it was that ‘the last sentence reflected
my understanding. I added the words ‘subject to licence’ to indicate that the
whole matter, the whole range would be subject to a formal licence being actually
expedited.’ I am quite unable to accept
that view of the matter.
As I see it
this was intended to be a binding contract. There was nothing in there that it
would be subject to contract or subject to licence or anything of that sort
when it was being handled by Mr Wills. And the normal intention is that a
tenderer should be bound, once his tender is accepted, and it is not intended
that he should be able to back off from it. Otherwise why go through the system
of tendering? What it is, as I see it,
is that the tenderer makes an offer to take a grant of the licence in terms of
the particulars, and when that is accepted then the landlord or owner becomes
under an obligation to make the grant corresponding to it. As I say, I cannot
accept that as a reason. It was introduced subsequently, and in my judgment
ineffectually, by the solicitor.
Then a more
formidable point was taken by Mr Neuberger for the plaintiff. The grant was
said to be defective because there was no date in the documents which I have
read out for the commencement of the term. Therefore, even assuming that it was
intended to be effective, the whole matter was too uncertain to be enforceable.
That is a point which is not new in relation to leases. There is quite old
authority but it was recently considered in the case of Harvey v Pratt
[1965] 1 WLR 1025. This concerned an agreement to lease a property known as a
service station ‘including offices therein, at an inclusive annual rent of
£2,125 per annum exclusive of rates for a period of 21 years with option to
renew or purchase at the end of that period.’
There was nothing in that agreement to say when the 21 years was to
begin. Nothing further was done about it in the sense that the proposed lessee
did not go into possession in any way or get anything started or pay any rent
or anything of that sort. The landlord brought an action claiming that the
document was not binding or an enforceable contract. It seems what had happened
was that the lessee or potential lessee had registered an estate contract and
these proceedings were to get rid of that on the basis that there was no
enforceable agreement. I think I can best take from Davies LJ’s judgment on p
1027 the principle on which this failed.
The analogy
which [counsel for the proposed lessee] seeks to draw between an agreement or
contract for sale of freehold and an agreement for a lease
of freehold, the subject-matter is ascertained, namely, the land. In the case
of an agreement for a lease, if the length of the term and the commencement of
the term are not defined, then the subject of the agreement or contract is
uncertain. Therefore, there is no agreement.
Then Russell
LJ on the same page:
Never has it
before been suggested that in the case of an alleged contract to grant a lease
such as this, where nothing whatever is said to indicate to what date the term
is to commence, the law will imply that it will commence at the expiration of a
reasonable time from the contract, although opportunity to make such a
suggestion in reported cases has by no means been lacking.
Then he deals
with some authority, and the learned lord justice goes on:
The truth is
that the parties must themselves define the subject-matter of their bargain,
and a term of years can only be defined by indicating the commencement and the
termination.
One notices
that in that case there was a term of years, that that was the subject-matter
of the contract, the grant of a term of years, and there was no circumstance to
indicate when it would begin. The situation here is, as I see it, very
different. What was offered here was a licence. There was certainly no question
of any interest in the land under a licence. The 364-days period is not the
subject-matter. What was being offered here was a contractual right for the use
of the land for the next growing season. In the context as I see it the
important matter was that the land was being offered in the autumn for the next
growing season, and what was being offered was the chance to cultivate and take
the crops off this land. The actual date in the sense of one day or the other
on either side of a few days was secondary. There is also this matter, that the
contract, which is one of the contractual documents as I have found, did
provide that in the event of the offer being accepted, ‘I’, that is to say Dr
Beavington ‘will complete without undue delay the form of licence provided by
the licensor and will pay six months’ rent on completion of the document.’ So there was a further step to be taken which
would fill in terms and make the matter more certain. As I see this type of
contract, having regard to what I have said as to its timing and being
agricultural, the circumstances as to the background of this, that as soon as
the tender was accepted, the landlords then became under an obligation as soon
as reasonably possible to let Dr Beavington in. That was the basis on which the
contract had been made. It could vary one day to another. That might be
dictated by the time needed for the preparation of the licence and also for the
time needed for the previous occupants, the hospital administration itself, to
vacate the ground and get it ready. In that contractual situation as I see it,
within those limits the obligation was to grant the licence to Dr Beavington as
soon as reasonably possible, and certainly in time for him to sow and reap for
the next season. But within those limits the actual date could be varied. That
is on the basis that nothing further had been done at all. The licensor could
not have turned round and said, having accepted the tender, we have had second
thoughts and we are not going ahead at all. But in this case something else did
occur and took it further than Harvey v Pratt in that occupation
did ensue. Part of the defence is put in this way in paragraph 3: ‘The
contractual licence was made by: (i) the defendant’s written tender and offer’,
and (ii) the letter of acceptance, and (iii) ‘the oral agreement of Mr Hodgson
acting for and on behalf of the plaintiffs, on an occasion between about
November 21 and 30 1979, that the defendant could take possession of the
premises and start the cultivation thereof as soon as he wished.’ I have heard some evidence about this. It is
common ground that towards the end of November Dr Beavington went to the
hospital and saw both Mr Hodgson and Mr Osbourne. And I think it is common
ground that Mr Hodgson said, ‘it is okay to go in’. This was a meeting towards
the end of November, I think about the 26th. But there is a curious conflict
about the whereabouts of the meeting, in which particular office. I do not
propose to resolve that. There is also a conflict as to the true background of
the meeting. Mr Hodgson said he got to understand from Dr Beavington that he,
Dr Beavington, was the highest bidder, that the defendant knew that he had been
successful, ‘and I was not aware that any tender had been accepted at that
time.’ He said in relation to the
documents that he had seen lists, a copy of the report of tenders was sent to him
but he had not seen a particular letter in which Mr Wills reported further to
Mr Goodall that he was proposing to accept one tenderer and write to the others
advising the other tenderers that they were unsuccessful. So when Dr Beavington
arrived that was the first he knew that Dr Beavington had been the successful
tenderer, but he, Mr Hodgson, accepted it from Dr Beavington and said, ‘well if
that is so you can go on the land.’
Dr Beavington
puts it differently, in this way. After he had spoken to Mr Wills and he
learned that he was the successful tenderer, then he spoke to Mr Wills about
when he could get on to the land. Mr Wills told him he would have to talk to
the staff at Leybourne Grange. So he telephoned the farm manager and said he
would like to come and talk to him, and the next day he went there and saw the
farm manager in his office. ‘He appreciated what I had come for and said you
had better go and talk to Mr Hodgson. He said, I think you will want to get on
the land as soon as possible. I said I do because it is getting late to farm
wheat and it is already too late for barley. He took me to another office where
Mr Hodgson was and introduced me to Mr Hodgson.’ He had not been to that office before. And according
to Dr Beavington Mr Hodgson knew what it was all about, and it appeared from
his manner that Mr Hodgson knew that Dr Beavington was the successful tenderer.
In so far as it is necessary to resolve that conflict I much prefer the
evidence of Dr Beavington. It seems to me inconceivable, having regard to the
fact that Mr Hodgson was furnished with a copy of Mr Wills’ report of the
outcome of the tender, that he was not subsequently advised that Dr Beavington
was the successful applicant. After all, it came directly within the range of
his responsibilities, the handover of the farming land to Dr Beavington. And
looking at the letter of November 20 1979, a letter to Mr Goodall from Mr
Wills, Mr Wills says: ‘I note that the district valuer has approved the letting
to Dr Beavington’, and he would be writing to the other applicants who tendered
for this land advising them they were unsuccessful. ‘I have also received a
telephone call from Mr Hodgson of the hospital regarding the right of access to
the land and he informs me that you intend to use the original access to the
northern larger area.’ Then he goes on
about that. So at the same time that he was in communication with Mr Goodall he
was in communication with Mr Hodgson over the details of the handover and the
access that the successful tenderer was to use. I do not find specifically that
Mr Hodgson had this letter or a copy of it, I accept his evidence on that
point. But I do find it inconceivable that Mr Hodgson should not have been
informed that Dr Beavington was the successful tenderer. I think his
recollection has faded. I accept Dr Beavington’s evidence on that episode.
The outcome of
that was that Dr Beavington got the green light, as it were, from Mr Hodgson
and within a day or two, on December 3 as I find, he was starting work on the land.
This was evidenced by a diary which is kept by Mrs Beavington and which has an
entry which I accept as the day he did start. That as it seems to me was an
admission, the letting into occupation of Dr Beavington on to the land. It was
in anticipation of the licence. At that point no licence had been sent to Dr
Beavington, so that there is no question of his failing to sign it and return
it at that stage. In my judgment they were already under an obligation to grant
the licence to Dr Beavington. This seems to me to be just a matter of the
performance of their obligation to let him in as soon as reasonably possible. I
am quite satisfied that Mr Hodgson had authority to do that, and I accept the
submissions of Mr Bell who appears for Dr Beavington on this point. The
plaintiff had put Mr Hodgson in the position where he had authority. Dr
Beavington was sent by the estate agent, Mr Wills, to the hospital staff itself
and not to any higher authority to ascertain the details of taking possession
of the land and getting on with the work, when it would be convenient to do so,
and it was Mr Hodgson’s direct responsibility to see to the proper management
of the land at Leybourne Grange Hospital which I take it included the access of
tenants and licensees to it.
Accepting, as
I do, that there was a binding contract on the grant of this licence, there is
no question that it was gratuitous, the alternative way it was put. The licence
was not in any way gratuitous. It was, as I see it, enforced by the obligation
that was created by the
liability to pay what he had tendered in the way of rent, and the terms for
that in the tender were that on the offer being accepted he would complete the
form of licence and pay the first six months’ rent on completion of the
documents. As I see it he came under an obligation to pay that amount, but the
actual time for payment depended upon the licence being produced to him and
being completed. That was a matter wholly within the control of the licensors.
Dr Beavington’s obligations in the matter were to complete it without undue
delay as soon as it had been proffered to him. Of course the reason for that is
obvious, that he was not to delay the completion of the licence and thereby
delay the actual date when the first instalment of rent was to be made. But
that was wholly in the control of the licensors to proffer the licence and then
the liability would crystallise to make immediate payment.
I thus find
that there was a contract. I now have to consider a further point taken by the
plaintiff on the terms of it, an alternative ground for saying that what is
claimed in this case by the defendant does not arise, even assuming a contract
to grant a licence exists. I must explain this a bit, reverting to section 2 of
the Agricultural Holdings Act. The method by which this works in relation to
licences is that if there is granted a licence to occupy land for use as
agricultural land and the circumstances are such that if the interest were a
tenancy from year to year he would in respect of that land be a tenant of an
agricultural holding. Then ‘the agreement shall take effect, with the necessary
modifications, as if it were an agreement for the letting of the land for a tenancy
from year to year.’ The effect is that
where you have a licence to occupy land for use as agricultural land, it gets
converted into a tenancy from year to year and that of course brings into train
the protective provisions of the Agricultural Holdings Act, protective of
agricultural tenants that is. The courts have had certain difficulties with
making the modifications necessary to convert some of the licences which have
come before them into tenancies from year to year. And one of the difficulties
which has arisen is: if it is not a licence which gives exclusive control or
occupation, it is impossible, whatever modifications you make to it, to convert
that into a tenancy from year to year because it is of the essence of a tenancy
that there shall be exclusive possession. That is the setting of that, and I
was referred to some illustrative cases where what are undoubtedly licences to
use land for farming purposes have nevertheless escaped from the provisions of
section 2 owing to the impossibility of converting them into tenancies from
year to year bringing them within the ambit of the Act.
One case was Harrison-Broadley
v Smith [1964] 1 WLR 456. The essence of it was there was a partnership
agreement. One party was the joint administratrix of a deceased husband and she
remained in occupation of the farm of 176 acres. She had no power to grant a
lease. She entered into a partnership agreement with the defendant, a working
farmer. Each was to contribute £1,000. The defendant was to work the land, had
the powers of management, and was to take nine-tenths of the profits and the
other party was to take the remaining one-tenth. The partnership was
terminable. That was the essence of the agreement, but the point there was that
the defendant, while he was to do all the work on the land, was in partnership
with somebody else. He was not exclusively the farmer, so that it was the joint
parties on the ground. There was only one farming business that was going on,
but it was shared between two people, the landlord as it were, and the
licensee. Although he had a licence to go on it was not exclusive in the sense
that he could exclude the licensor from the land, because she also had a share
in that business and indeed took a tenth of the profits of it. It is not
difficult to see that that partnership arrangement could not be converted into
a tenancy from year to year which would have had the effect of excluding
totally the joint administratrix.
Another case
is Bahamas International Trust Co Ltd v Threadgold [1974] 1 WLR,
1514. In this case there was a separate farming business being carried on. The
defendant’s mother had been the tenant, but on her death the tenancy
determined. The arrangement with the defendant, who continued to carry on the
dairy business, was that he was allowed to remain in the farmhouse rent and
rates free for a limited period. By clause 2 of the licence document they paid
him as caretaker of the farm. ‘By clause 3 they allowed him to retain his cows
and other livestock and to sell milk until October 31 1969.’ This was a farm of 11 acres of pasture, quite
a small place, but it was larger than was necessary for the cows that he was
allowed to retain. He was not allowed to introduce other cows, but just
maintain the cows that were already there. And one can see that that
arrangement could be given effect to without at the same time excluding the
licensor from the land to make what use of it he could which did not in some
way impinge on the rights granted to the defendant. This case somewhat
surprisingly went to the House of Lords, and it turned on the construction of
the document I have referred to. Lord Diplock delivered the only reasoned
speech. I think the essence of it is this, that he would dismiss the appeal
‘upon the ground that the agreement of March 27 1969, the terms of which must
be unique, did not upon its true construction grant to the appellant the right
to use the land for agricultural purposes to the exclusion of its use for
agricultural purposes by the respondents.’
That seems to be the ratio of that case, that it was not
excluding the right to use the land for agricultural purposes by the
respondents. It is pressed on me that one would have to show that not only was
the lessor excluded from the land for agricultural purposes but also for any
purposes. If he could use it for any purpose, although not agricultural, that
would take it out of the ambit of section 2, but I do not see that as the ratio
of the decision in the Bahamas International Trust case.
Those are the
authorities on agricultural holdings which bear on exclusivity. Another case
was cited to me on this point. It is not an agricultural case. I propose at
this stage to return to the facts before dealing with that case.
We must now go
forward in time from the point when Dr Beavington first went on the land in
December 1979. The licence which was envisaged in the tender document was not
sent out until June 13 1980. The reason was not explained to me; but it was
explained this far, and this I accept, that the solicitor concerned prepared it
in January and sent it to the regional authority but it did not come back from
there until shortly before June 13 1980. We find a letter from Mr Zonena, the
solicitor, sending the draft to Dr Beavington. In that draft there is this
clause, no 9: ‘The licensee shall not impede at any time the entry of the
owner’s servants or agents on to the land for any purpose whatsoever.’ And I mention that in clause 12 there is
stated that the approval of the Ministry of Agriculture, Fisheries and Food had
been obtained for the creation of this licence and full vacant possession will
be required on or before the end of the period. And I see in clause 6 that the
land is to be used solely for the purposes of agriculture. Then in clause 1:
‘The term of occupancy to run from 1.11.79 to 30.10.80.’
As to clause
9, much reliance is placed on this clause as indicating that this is a licence
which does not fall within section 2 of the Agricultural Holdings Act. Its
provenance is as follows: it is not to be found in the specimen document which
was sent out by the estate agents which I have already mentioned. It was
introduced by Mr Zonena into clause 9 because he thought that was consistent
with what had been agreed. Dr Beavington was not being given an agricultural
tenancy. So that was a form which he thought was appropriate to create a
licence as opposed to a tenancy, without specially differentiating between
exclusive and non-exclusive licences. This document in general was acceptable
to Dr Beavington. He had no real quarrel with any of its terms except the first
one, that the period of occupancy was to run from 1.11.79 to 30.10.80. It did
not accord with the facts as he understood them. He had not been there until
December, not been allowed on, or had not got on, until December, so, as he saw
it, it was unfair that the year should start to run from a month earlier which
in any event was the day before the tenders had to be submitted. That is a
reasonable objection. Dr Beavington amended the draft and sent it back and sent
his cheque. He altered the provision to begin on January 1 1980, and run for
364 days from then. So it went back with an amendment that he put in, January 1
1980 to December 30 1980. That again did not quite accord with the facts. That
was a bit too generous to Dr Beavington if one accepts that he went in on
December 3. But be that as it may, that is what he did, he amended it in that
sense. He signed it. He had no quarrel with the rest of it,
However, that alteration was not acceptable to those acting for the plaintiff,
or not immediately acceptable. They were insisting that it had to be as
originally drawn. It was sent back to Dr Beavington to be altered back again,
but while it was in Dr Beavington’s hands the plaintiff resiled from the
position he had taken up in regard to the date and was prepared to accept Dr
Beavington’s proposals. That emerges from the letter of July 21 1980. So one
has the position that Dr Beavington accepted the terms in general but the
period was unacceptable and he signed the document in that sense. That was
returned to Dr Beavington but subsequently the date that he had first proposed
was accepted, but of course by that time the document was in Dr Beavington’s
hands and, as I have said, that particular point was resolved by July 21, but
in the meantime much more serious matters had arisen over the minister’s
consent.
On July 11
1980 there was a series of telephone calls by the solicitor and a note in the
bundle of his of what occurred on that occasion. Apparently what woke the
parties up to the fact that there was a serious difficulty about consent was
this, that the solicitor, as the date might be going to be changed, thought
that it might be necessary to check that the licence covered the proposed new
date. Up to that date, as I find, no one had the slightest suspicion that the
licence that was proposed was not within the original consent. Of course a very
unpleasant surprise was in store, because when the licence was inspected it was
apparent that not only did it not cover the revised dates, it did not cover any
date that was under consideration at the time. That unpleasant fact having been
unearthed, the solicitor’s note goes on: ‘In the afternoon I received a call
from Dr Beavington who said that he had received our latest letter and was just
wondering where I had got the dates specified for the licence, since he could
not recall ever having agreed them.’
Then having gone into that with the doctor Mr Zonena said: ‘I then
mentioned the Minister of Agriculture point and that I was waiting to hear from
the clients on this. If that consent did not restrict the client it might be
that they would agree to the dates proposed by Dr Beavington.’ And it is a fact that Dr Beavington on the
same day himself was getting in touch with the Minister of Agriculture to check
the position as to the licence because we see that the appropriate official of
the Ministry of Agriculture is writing to Mr Goodall that he had received a
call from Dr Beavington on July 11 1980. It was Dr Beavington’s evidence that
that is purely coincidental. He denied that he was prompted to do that by the
solicitor but he did it independently. But on that point I cannot accept the
evidence of Dr Beavington, and I accept the evidence of Mr Zonena supported as
it is by the contemporaneous note.
I have gone
into that because I thought I should give my findings on the matter in case the
matter goes further. For my part I am prepared to accept and deal with the case
on the basis that Dr Beavington did agree to the terms of the licence, and the
effect of what was done was that he went into occupation on the basis of the
terms of the agreement which he signed on July 2 1980, and those were the terms
on which he was and still is occupying the premises. It is true it was not
completed and was not accepted by the plaintiff, but I am prepared to accept
that those are the terms on which this land is held or was held by Dr
Beavington.
So the
question then is: is clause 9, which as I find is under the terms on which he
is holding, exclusive? It was very much
pressed on me that that was sufficient, because it reserved rights to the
licensor which were inconsistent with an exclusive licence and was so
inconsistent with it that it was not capable of a conversion into a tenancy
from year to year and fell on the Bahamas International Trust Company
and the Harrison-Broadley side of the line. There was prayed in aid of
that and pressed on me the case of Shell-Mex & BP Ltd v Manchester
Garages Ltd [1971] 1 WLR 612. This was a case which had nothing to do with
agricultural holdings, but was a case where the question was whether the
transaction fell within the ambit of the Landlord and Tenant Act 1954, Part II,
the business premises protection. In that case the issue was whether there is a
licence or a lease. Any licence, whether it is exclusive or non-exclusive, will
escape the ambit of that 1954 Act because that Act only applies to leases.
There is no question in that Act of converting licences into leases in the way
that there is in the Agricultural Holdings Act whereby certain licences are
converted into annual tenancies. So it would not be sufficient for the
plaintiff’s purposes to show that this was a licence. To be of assistance in
this case he would have to show that it was a licence which was non-exclusive
and covered the present situation. The subject-matter was a filling station
with land behind it in Manchester. It was owned by the plaintiff oil company,
and they allowed the defendant garage company to go into occupation. The back
land which was a storage and servicing area was covered by a genuine underlease
for 21 years.
The filling
station was covered by a document called a licence which expired on July 31
1970 and by the terms of the licence the defendants agreed to do all they could
to foster the sale of the plaintiff’s products. Under clause 19 the defendants
agreed not to impede the plaintiff’s rights of possession and control of the premises.
It is suggested that that clause, which I have summarised, is parallel to the
clause 9 we have in this case. The plaintiff petrol company attempted to put an
end to it, and then the defendants claimed that they had exclusive possession
of the filling station and the licence constituted a tenancy to which Part II
of the Landlord and Tenant Act 1954 applied. ‘Held — that clause 19 showed that
the transaction concerning the filling station constituted a licence and not a
tenancy. Accordingly since the licence had ended the judge was right to give
summary judgment for an injunction.’
This went to
the Court of Appeal and the essence of the judgment of the Master of the Rolls,
I think, is this. I am reading from p616D so far as it concerns this matter. The
learned Master of the Rolls sets out the conditions of the licence. He sets out
at C the full terms of the clause in question, the clause not to impede: ‘. . .
not to impede in any way the officers, servants or agents of the company in
exercise by them of the company’s rights of possession and control of the
premises, and in particular to give all reasonable assistance and facilities to
such officers and servants or agents for the alteration at any time of the
layout, decorations or equipment of the premises.’ Then he goes on: ‘That shows that Shell-Mex
Company’s men can go and visit the premises whenever they like. The Manchester
Garages are not to impede them in any way, they are to give them assistance.
Those provisions point to a licence and not to a tenancy.’ Then the Master of the Rolls goes on: ‘Mr
Dillon’ (he was for the defendants) ‘says that Manchester Garages Ltd have
exclusive possession and that that carries with it a tenancy. That is old law
which is now gone. As I have said many times, exclusive possession is no longer
decisive. We have to look at the nature of the transaction to see whether it is
a personal privilege or not.’ As I read
it, the Master of the Rolls was saying, even given that it is exclusive,
nevertheless it may still be a licence and that is sufficient in that case to
exclude it from the Landlord and Tenant Act 1954, Part II. If that is the true
basis of the decision then obviously this is of no assistance in this case,
because an exclusive licence would be fatal to any point that the plaintiff
takes here. Sachs LJ, who is looking more at what went on, starts his judgment
in these terms:
Upon looking
at the substance of the matter as a whole it becomes apparent that the dominant
objective of the contractual relationship between the parties was to further
the promotion of the sale of the Shell-Mex Co’s products on the site which they
had selected with the aid of the structures and equipment which they had
provided and over which they were to exercise a right of control including the
right to deal with the layout and equipment as they desired from time to time.
The general tenor of the relevant document of August 1 1969 points strongly in
this direction when taken as a whole.
Then he goes
on to say that the tenor of the document is consistent with that assessment.
The essence of that judgment as I see it is that you look at the factual
situation and see that this really was a joint enterprise between Shell-Mex on
the one hand and the garage company on the other for the exploitation of this
land. It would not be sufficient simply to find a clause which perhaps
permitted it, taken in isolation, but one has got to look at the circumstances
to see what the parties intended. The clause assists, but one cannot by putting
in a clause convert what is one arrangement to another. If it is an arrangement
for exclusive possession on the true facts of it, one cannot convert that by
reserving a power to intervene if that
well understand that on the basis described by Sachs LJ it was a non-exclusive
licence, or could be argued to be a non-exclusive licence, because looking at
the matter as a whole that is what the parties intended. Shell-Mex were to go
in, not actually to run the business, but were to have an important part in it.
It was their goods that were being sold, they provided the selling area and
structures, they could go in and change them as required and direct the conduct
of the business.
But when one
comes to the facts of this case the matter is very different. This was an
arable piece of land that was intended to be and was in fact used as arable
land by Dr Beavington and no one else during 1980. As Mr Wills put it, right at
the beginning I think of his cross-examination: ‘I understood that only the
licensee would farm the land. There was no question of anyone from the hospital
farming the land.’ That was the basis on
which they went ahead, and there was no evidence that anyone else farmed it.
The activities that did go on from the hospital, I think the evidence showed,
were these. There was a piece of woodland at the far side of the land for which
the hospital authorities remained responsible and to which they required access
across a portion of the land. I was shown the route on which they went in order
to get access to that. The land is used to carry drains and similar services to
the hospital. There was a tree in the middle of the land which from time to
time required attention. Tree surgeons had to go to attend to it. The land was
used for cross-country running at times. Cross-country events were organised
and went round it. I think the only other matter was occasionally the inmates
of the hospital were found in the land or might wander into it and had to be
gathered or shepherded back by the hospital staff.
None of that
in my judgment detracts from the exclusive nature of the grant to Dr
Beavington. They are all intermittent. Certainly the drains and the access to
the woodland come under the heading of ordinary easements.
Nobody has
ever suggested that an easement was inconsistent with a tenancy. The
cross-country running, in so far as Dr Beavington had to submit to it, was not
inconsistent with his exclusive occupation of the arable land. But in fact Dr Beavington’s
consent was sought for that, and I think it is extremely doubtful whether it
comes within clause 9 at all. Whether the hospital could insist there should be
cross-country running around the field I very much doubt having regard to the
context of this agreement. And as to the inmates, it was not proved to me that
it was necessary to have this land as a sort of cordoning off of the hospital
from the outside world. Some patient might wander off and go anywhere, but that
does not mean to say that there were rights of property involved in that. So I
find that this is an exclusive licence, and on that basis, which is caught by
section 2, converted into a tenancy from year to year. As it is conceded that
on that basis the action must fail it is quite obvious that there is nothing
for me to do but to dismiss this action.
The action
was dismissed with costs.
