Partnership — Father held tenancy — Son paid rent to father — Licence — Collusive agreement between father and plaintiff — Notice to quit — Whether son had tenancy — Whether breach of covenant — Whether tenancy held in trust by father — Appeal by plaintiff purchaser dismissed
Until his death in 1982, William Smart held an agricultural tenancy of Halfway Farm, Stanton Drew, Avon. His son, Rodney, the respondent, was taken into partnership by his father in 1972 and worked the farm. When William asked the landlords to consent to an assignment or a subletting of the farm to Rodney, the agent stated that such consent could not formally be given. However, it was clear that the agent was aware that Rodney would be paying the whole rent to his father who would then pay it as the tenant.
In January 1980 William’s son-in-law, Kelston Sparkes, the appellant, acquired the freehold of the farm and served a notice to quit on William under Case E alleging breach of covenant by wrongful subletting. William, who had agreed to the purchase of the freehold with the object of making a profit with other members of his family from a resale, did not serve a counternotice as he did not want any subtenancy Rodney may have had to continue: Rodney having opposed the scheme for the resale of the farm with vacant possession. The appellant appealed against the decision of His Honour Judge da Cunha (June 6 1988), who had dismissed his claim for trespass against Rodney.
Held The appeal was dismissed.
1. Whether in breach or probable breach of covenant, William created an exclusive licence in favour of Rodney to which section 2 of the Agricultural Holdings Act 1948 applied. As the landlord’s agent was aware of the circumstances, the landlords must be taken to have waived any breach of covenant through acquiescence. Rodney therefore had a subtenancy as a result of section 2 and William’s failure to serve a counternotice within one month of the notice to quit was a result of a collusive agreement with the appellant.
2. In the alternative, if there were no licence, then it was the common intention of William and Rodney that William would hold his tenancy on trust for Rodney until it could be transferred to him with the landlord’s consent, or he became entitled to a succession tenancy. The appellant well knew of this position, made a collusive agreement with William and knew that William, in failing to serve a counternotice, would be in breach of trust. The appellant was bound by the constructive trust arising out of his collusive part in the breach of trust by William.
Mark Evans (instructed by Bevan Ashford, of Bristol) appeared for the appellant; and Christopher Gosland (instructed by Lyons Davidson, of Bristol) appeared for the respondent.
