Agricultural holding — Notice to quit purporting to be served in accordance with Case E in Schedule 3 to the Agricultural Holdings Act 1986 — Notice served by landlord with no honest belief in its grounds — Whether notice a nullity — Counternotice by tenant stated to be served in pursuance of section 26(1) of the 1986 Act whereas the correct response to the landlord’s notice, if valid, would have been a notice requiring arbitration to which section 26(2) and Case E applied — Whether counternotice could nevertheless be treated as if it referred to section 26(2), the reference to section 26(1) being regarded as an obvious error — Held that the landlord’s notice to quit was a dishonest document to which the court could not give effect
proceedings the plaintiff landlord sought a declaration that the defendant’s
tenancy of two farms, held on an old Michaelmas Day tenancy, would duly
determine by a notice to quit on October 11 1989 — The tenant sought a
declaration that he had given a valid notice requiring arbitration and also
sought an injunction restraining the landlord from taking steps to enforce the
notice to quit — The tenancy agreement included a covenant by the tenant not to
assign, let or part with possession of the farms or any part thereof (except
cottages and gardens to workmen on the farms) — There were a number of cottages
included in the tenancy — After a deterioration in the relationship between the
parties, the landlord at first served a notice requiring arbitration as to
rent, then a notice to remedy invoking Case D in Schedule 3 and complaining of
alleged breaches of the tenancy agreement in relation to the letting of
cottages, and finally a notice to quit referring to Case E in Schedule 3 and
stating as the grounds thereof alleged breaches of covenant by letting farm
cottages to persons who were not workmen on the farms — The tenant served a
counternotice which stated that he required section 26(1) of the 1986 Act to
apply to the notice to quit — The facts in regard to the cottages at the date
of the notice to quit were that one was let to a retired farm worker and the
others were either vacant or let in accordance with specific written
permissions given by the landlord — These facts assumed great importance when,
as will be seen later, the bona fides of the landlord’s notice to quit was
considered
landlord’s notice to quit, although it contained misdescriptions of the
cottages (a matter which could have been raised if there had been an
arbitration), was on the face of it clear in essentials and complied in form
with the statutory requirements — The judge rejected a submission that it was
void for uncertainty — He also rejected a suggested implied term excluding a
notice to quit in relation to the subletting of the cottages — The landlord’s
attitude was that, as there had been no effective notice by the tenant
requiring arbitration, the notice to quit took effect and the tenant must
depart on October 11 1989, harsh though this result might be — The important,
and in this context novel, question raised by the tenant that the notice to
quit was fraudulent, and for that reason a nullity, is dealt with below
served by the tenant, described as a counternotice, required section 26(1) of
the 1986 Act to apply, whereas the correct response should have been a request
for arbitration — The landlord had invoked Case E in Schedule 3 to the Act, one
of the Cases to which section 26(2) referred and one for which arbitration was
provided by article 9 of the Agricultural Holdings (Arbitration on Notices)
Order 1987 — It was strongly argued on behalf of the tenant that the notice he
served was obviously intended to be an effective legal challenge to the notice
to quit and to operate as a statutory notice; a benevolent construction would
be to regard the reference to section 26(1) as an understandable error and
treat the notice as given in accordance with section 26(2) — In favour of such
a construction the tenant cited the non-agricultural cases of Nunes v Davies Laing
& Dick Ltd and Glofield Properties Ltd v Morley; against it the
landlord cited A-G (Duchy of Lancaster) v Simcock — The judge held
that the tenant’s notice could not be treated as an effective notice requiring
arbitration
was, however, concluded in favour of the tenant by the judge’s decision,
breaking some new ground in this area, that the notice to quit was fraudulent
and therefore void — There had been a hint as to the possible effect of fraud
or dishonesty in a reference by Megaw LJ in Magdalen College, Oxford v Heritage — The
classic statement as to the nature of fraud was, of course, in Derry v Peek; and
Denning LJ in Lazarus Estates Ltd v Beasley said ‘fraud unravels everything’ — In
the present context the fraudulent element was the landlord’s lack of any
honest belief in the grounds he was putting forward in the notice to quit,
namely breaches by the subletting of cottages to persons other than farm
workmen with consequential material prejudice to himself — There was evidence
that the landlord knew that the tenant was not in breach of the tenancy in
regard to any of the cottages mentioned — The alleged breaches were negated, to
the knowledge of the landlord, by the facts of permissions, vacancies and occupation by an ex-farmworker — At best, in
the words of Lord Herschell in Derry v Peek, he acted in regard to the complaint in
his notice to quit ‘recklessly, careless whether it be true or false’ — The
notice to quit was thus a nullity
The following
cases are referred to in this report.
Akerhielm v De Mare [1959] AC 789; [1959] 3
WLR 108; [1959] 3 All ER 485, PC
Angus v Clifford [1891] 2 Ch 449
Attorney-General (Duchy of Lancaster) v Simcock [1966] Ch 1;
[1965] 2 WLR 1126; [1965] 2 All ER 32
Derry v Peek (1889) 14 App Cas 337
Dickinson v Boucher [1984] EGD 19; (1983)
269 EG 1159, [1984] 1 EGLR 12, CA
Glofield Properties Ltd v Morley [1988] 1 EGLR
113; [1988] 02 EG 62
Lazarus Estates Ltd v Beasley [1956] 1 QB
702; [1956] 2 WLR 502; [1956] 1 All ER 341, CA
Magdalen College, Oxford v Heritage [1974] 1
WLR 441; [1974] 1 All ER 1065; (1974) 27 P&CR 169; [1974] EGD 1; 230 EG
219, CA
Mountford v Hodkinson [1956] 1 WLR 422;
[1956] 2 All ER 17, CA
Nunes v Davies Laing & Dick Ltd
(1985) 51 P&CR 310; [1986] 1 EGLR 106; 277 EG 416
Pickard v Bishop (1975) 31 P&CR 108;
[1975] EGD 24; 235 EG 133, [1975] 2 EGLR 1, CA
Smith v East Elloe Rural District Council
[1956] AC 736; [1956] 2 WLR 888; [1956] 1 All ER 855; (1956) 54 LGR 233; 6
P&CR 102, HL
The plaintiff
in these proceedings was the landlord, the sixth Earl of Stradbroke, and the
defendant was the tenant, Matthew Miller Mitchell. The farms subject to the
tenancy were known as Valley and Green Farms, Henham, Suffolk. The dispute was
essentially as to the validity of the notice to quit given by the landlord
purporting to determine the defendant’s tenancy of the farms on October 11
1989.
Robert Pryor
QC and Martin Rodger (instructed by Wedlake Saint, agents for Leathes Prior, of
Norwich) appeared on behalf of the plaintiff; Derek Wood QC and John Male
(instructed by Robbins Olivey & Blake Lapthorn, agents for Burges Salmon,
of Bristol) represented the defendant.
Giving
judgment, ALDOUS J said: The plaintiff is the freehold owner of the Henham
Estate, which includes farms known as Valley and Green Farms, Henham, Suffolk.
The defendant, by an agreement made between himself and the fourth Earl of
Stradbroke, became the tenant of those farms from October 11 1953 and has
farmed them ever since. By a notice dated June 3 1988, the plaintiff required
the defendant to quit and deliver up possession of the farms as from October 11
1989. The plaintiff contends that no valid counternotice requiring arbitration
was served by the defendant, as was required under the Agricultural Holdings
Act 1986, and therefore the defendant’s tenancy will determine on that date.
The defendant contends that the notice to quit was not a valid notice on three
grounds, namely, that it was uncertain, that the plaintiff acted unconscionably
and fraudulently in serving the notice, and that there was an agreement between
the parties that the plaintiff would not serve a notice to quit for the reasons
relied on in the notice. He also contends that a valid counternotice was served
and therefore the appropriate procedure is arbitration.
Thus the
plaintiff seeks a declaration that the defendant’s tenancy will determine on
October 11 1989. The defendant seeks a declaration that a valid counternotice
requiring arbitration was given by him and also an injunction restraining the
plaintiff from taking any steps to enforce the notice to quit.
The background
to this dispute started in 1953 when the defendant started to farm Valley and
Green Farms as a tenant of the fourth Earl of Stradbroke. The tenancy agreement
was dated August 9 1958 and included a covenant not to assign, let or part with
possession of the farms or any part thereof (except cottages and gardens to
workmen on the farms) but at all times during the tenancy personally to inhabit
the farmhouse with his family and servants. Included within that tenancy
agreement was a number of cottages.
In about 1980
the fourth Earl granted a tenancy of that part of the Henham Estate that was
not tenanted to a company. The fourth Earl’s brother, who was the plaintiff’s
father, objected to the grant of the lease. In 1981 the plaintiff started
proceedings in his father’s name and on his instructions seeking to set aside
that tenancy. That litigation was settled in 1984, with the result that the
tenancy was set aside; and from October 1984 the plaintiff became responsible
for running the estate and for the farming of the non-tenanted part.
On July 14
1983 the fourth Earl of Stradbroke died, leaving no son, and four days later
his brother died. The plaintiff, as his eldest son, inherited the title and the
estate and therefore became the freehold owner of Valley and Green Farms.
The plaintiff
has lived in Australia for 32 years and is resident there. He has a number of
business interests in Australia. Prior to July 1983 he visited England on a
number of occasions, but most of his time was spent in Australia with his
family.
In December
1983 the plaintiff came to England and it was made clear to him that he would
have to pay a considerable amount of capital transfer tax. He paid about
£300,000 and was advised that he would have to make further payments of about
£66,000 per annum. Towards the end of 1984 it became clear that he would obtain
possession of the land which had been in-hand prior to the grant of the tenancy
to the company and therefore had to make arrangements for it to be managed and
farmed. He met the defendant, liked him and his family and was impressed by the
way that he farmed. The plaintiff and the defendant discussed the idea that
they would farm the in-hand land in partnership with the idea that the
plaintiff would have first call on the profits to enable him to make the CTT
payments. While this was being considered, arrangements were made for the
defendant to manage the farming of the in-hand land and their agreement is
recorded in a letter of October 2 1984 written by the plaintiff to the
defendant. Under that agreement the defendant was to act as farm manager for
£2,000 per month, he would provide all the necessary machinery and labour and
would be paid normal contract rates; he would supply all materials which the
plaintiff would pay for at cost and, as it was an interim arrangement, either
party could give seven days’ notice to determine the agreement. This appeared
to be a satisfactory arrangement for both parties, as the plaintiff contemplated
the profit would enable him to meet the CTT payments, and they appeared to be
in complete agreement as to what they hoped could be achieved.
About this
time the plaintiff started to exploit certain ideas by which further revenue
would be forthcoming from the estate and was also advised not to enter into a
partnership arrangement with the defendant. The matter was discussed with the
defendant and in a letter dated June 26 1985 the terms they agreed were
recorded. The defendant was to manage the estate and would receive £2,000 per
month and 10% of all income from new projects, such as caravans, steam rallies
and a skeet shooting club. The defendant was to make any decision he saw fit as
regards the farm, lands, wood, shoot and all items on the estate, except for
tenanted cottages and houses which the plaintiff would control from Sydney. To
enable this to be done the plaintiff made arrangements for banking facilities
at Barclays Bank with an overdraft limited to £500,000.
In accordance
with those arrangements the defendant managed the estate with the support of
the plaintiff from June 1985. However, the profit anticipated by the plaintiff
did not materialise and by December 1985 the full overdraft facility had been
taken up. The plaintiff in January 1986 considered a number of ways to prevent
more money being spent on the estate and how to achieve a satisfactory return.
In March he terminated his arrangement with the defendant for managing the
estate but continued to use him as the contractor. Soon after, upon advice
which he seems to have obtained from a Mr Rod Jones [an independent
agricultural contractor], he came to the conclusion that the defendant’s
charges for contracting were too large. By harvest time of 1986 the
relationship between the plaintiff and the defendant had broken down and the
defendant’s services were dispensed with and he ceased to have any dealing with
the in-hand land. The plaintiff refused to pay the defendant his contracting
charges and issued proceedings, claiming over £100,000 because of alleged
overcharging. This claim is disputed by the defendant and those proceedings
will be heard this year [1989]* in the Official Referees’ Court.
*Editor’s note: This case has
subsequently been settled.
In August 1986
the plaintiff engaged a firm of chartered surveyors and estate managers called
William H Brown to seek from the defendant an increase of rent in respect of
Valley and Green Farms. In accordance with the plaintiff’s instructions, William
H Brown served on the defendant the appropriate notice requiring that the rent
payable with effect from October 11 1987 be referred to arbitration. The
defendant appointed Thos Wm Gaze & Son to act for him in the arbitration.
Negotiations between the parties’ agents reached a stage when the basis of an
agreement was achieved, but this was not implemented, as the plaintiff, upon
advice from his solicitors, served a notice to remedy and a notice to quit.
The notice to
remedy was served by letter dated June 2 1987 and was headed ‘Agricultural
Holdings Act 1986 Schedule 3 Part I Case D’ and required the defendant to
remedy within two months from the date of service of the notice alleged
breaches of the defendant’s lease. The breaches particularised were:
That you let or entered into agreement to
let to tenants who are not workmen on the farm —
(1) the pair of cottages nos 20 and 21 King’s
Lane, Sotherton;
(2) the pair of cottages which make up what was
once the Old Valley Farm house known as nos 2 and 3 Old Valley Farm Cottages,
Henham and
(3) 24 Green Farm, Sotherton.
The notice to quit was served by letter
dated June 3 1988. It was headed ‘Agricultural Holdings Act 1986 Schedule 3
Part I Case E’ and stated:
Re: The Holding known as Valley and Green
Farms situate in the Parish of Henham in the County of Suffolk.
To: MATTHEW MILLER MITCHELL of Valley
Farming Company, Valley Farm, Henham, Wangford, Beccles, Suffolk NR34 8AE.
I give you NOTICE TO QUIT and deliver up
possession of the holding of which you are my tenant at the expiration of the
year of your tenancy which shall expire next after the end of 12 months from
the service of this notice.
This notice is given in accordance with
Section 26(2) of and the undermentioned Case E in Schedule 3 to the
Agricultural Holdings Act 1986 and for the following reason:
In respect of your breach of Clause 4(13)
of the tenancy agreement dated 9th August 1958 which provides:
‘The tenant agrees to observe the form of
the following stipulations: . . . (13) not to assign, let or part with
possession of the farm or any part thereof (except cottages and gardens to
workmen on the farm) but at all times during the tenancy personally to inhabit
the farmhouse and the farm with his family and servants.’
in that you have let or entered into
agreements to let to tenants who are not workmen on the farm: (1) the pair of
cottages known as nos 20 and 21 King’s Lane, Sotherton, (2) the pair of
cottages which make up what was once the Old Valley Farm House known as nos 2
and 3 Valley Farm Cottages, Henham and (3) 24 Green Farm, Sotherton.
It is dated June 3 1988, signed by
Leathes Prior of 74 The Close, Norwich, Norfolk, solicitors to the Rt Hon
Robert Keith Rous, Sixth Earl of Stradbroke, the landlord.
The defendant
sent the notice to the solicitors acting for him at that time, who by letter
dated June 16 1988 served a counternotice in these terms; it is directed to:
The Rt Hon Robert Keith Rous, Sixth Earl
of Stradbroke, the Landlord, c/o Leathes Prior of 74 The Close, Norwich,
Norfolk
and stated:
I hereby give you a counternotice that I
require subsection (1) of Section 26 of the Agricultural Holdings Act, 1986, to
apply to the Notice to Quit the farm, land and premises situate at Henham in
the County of Suffolk, known as Valley and Green Farms, which I hold as Tenant
thereof, and which Notice to Quit is dated 3rd June 1988.
At this stage
it is sufficient to draw attention to the terms of the counternotice and in
particular that it stated that section 26(1) was required to apply, whereas the
only procedure applicable was a request for arbitration under section 26(2).
Also the notice to quit was served because it was alleged the defendant had let
or entered into agreements to let certain cottages.
There were 12
cottages which were included in the defendant’s lease. These are set out in
exhibit D1, which was prepared by counsel for the defendant. It accurately sets
out the addresses of those cottages, the rights given to the defendant to
sublet and the history of the occupancy, save for that of 2 Old Valley Farm
House. It is not necessary to consider the cottages at Sotherton Corner, as
they had all been surrendered prior to the notice to quit. The only part of
this exhibit which needs explanation is the column headed ‘Right to sublet’.
In 1981 the
defendant sought and obtained from agents acting for the fourth Earl permission
to let the Old Valley Farm House as a holiday cottage. This was not known to
the plaintiff, but by letter dated March 16 1984 he agreed that the defendant
could sublet 20 Valley Farm Cottage and 24 Henham Green. Also in a letter dated
November 1 1985 the plaintiff recorded an agreement between himself and the
defendant that the defendant could sublet all or any of the cottages for
holiday-let situations as and when required and no extra rent would be paid.
Thus at the date of the notice to quit the position was as follows:
20 Valley Farm
Cottage. Written permission had been granted in 1984 to sublet this cottage and
pursuant to that permission it had been sublet on two-year protected shorthold
tenancies. At the date of the notice to quit it was occupied by Mr Warren under
a two-year lease dated March 18 1988.
21 Valley Farm
Cottage. This was occupied by Mr Briggs, who was a semi-retired farmworker
working for the defendant.
1 Old Valley Farm House. Permission had been
granted to let this as a holiday cottage in 1981 and 1985. It had been used by
the plaintiff to store certain items he had inherited. On September 14 1986 it
had been let on a two-year protected shorthold tenancy to a Mr Marsham. He gave
notice to terminate that tenancy and the tenancy terminated at the end of May.
It was vacant at the time of the notice to quit.
2 Old Valley Farm House. Written permission had
been granted in 1981 and 1985 for subletting as a holiday cottage, and this was
the only subletting done. It was also vacant at the date of the notice to quit.
23 Henham
Green. This had been occupied by the defendant’s foreman, Mr Mann, until 1986
and had been vacant since then.
24 Henham
Green. In 1984 written permission had been granted to sublet this cottage and
this had been done upon two-year protected shorthold tenancies. At the date of
the notice to quit it was occupied by Mr Willard pursuant to a tenancy dated
October 1 1985.
18 Hoggs
Corner. This had been occupied since 1983 by Mr Hartshorn, who was a farmworker
employed by the defendant.
The notice to
quit mentioned five cottages in respect of which it was alleged that the
defendant had either let or agreed to let in breach of the clause in the lease.
The first two were called 20 and 21 King’s Lane, Sotherton. There were no such
cottages, but the defendant accepted in his evidence that he realised that the
cottages that were meant to be referred to were 20 and 21 Valley Farm Cottages,
King’s Lane. No 20 was let on a protected shorthold tenancy to Mr Warren, but
that was permitted pursuant to the letter of March 16 1984. No 21 was occupied
by Mr Briggs, who was a semi-retired farmworker of the defendant.
The second two
cottages were described in the notice to quit as ‘the pair of cottages which
make up what was once the Old Valley Farm House known as Nos 2 and 3 Valley
Farm Cottages’. The Old Valley Farm House had been split into two cottages
which were known as 1 and 2 Old Valley Farm House. No 1 was vacant. No 2 had
been let as a holiday cottage pursuant to the written agreement of 1985 but was
vacant at the date of the notice to quit. The fifth cottage was described in
the notice to quit as 24 Green Farm, Sotherton. No such cottage existed, but
the defendant realised when he received the notice that the cottage referred to
was 24 Henham Green. This cottage was let pursuant to the written permission of
1984 to Mr Willard on a protected shorthold tenancy.
Upon those
facts, it was not surprising that Mr Pryor, who appeared for the plaintiff,
accepted that in any arbitration the plaintiff’s chances of success were nil.
However, he submitted that the notice was a valid notice and that as a counternotice
requiring arbitration had not been served the notice was effective to terminate
the defendant’s tenancy as of October 11 1989. He also accepted that the result
was harsh in that the defendant would lose his business and his house, but
that, he said, was not the plaintiff’s fault but the fault of the defendant or
the solicitors then acting for him in not serving the appropriate notice.
Validity of the notice — uncertainty
The first
point taken by Mr Wood, who appeared for the defendant, was that the notice was
not a valid notice in that it was void at common law because it was uncertain.
He drew attention to the misdescription of the cottages, particularly relying
upon the first two and the last, which were admittedly misdescribed. To support
his submission he drew to my attention Pickard v Bishop (1975) 31
P&CR 108* and Dickinson v Boucher (1983) 269 EG 1159, [1984]
1 EGLR 12. Both those cases were concerned with matters raised by an arbitrator
by case stated. In Pickard v Bishop the Court of Appeal held that
under the 1948 Act a notice to pay rent was void as it required the rent to be
paid to a person who was not the landlord. In Dickinson v Boucher
a similar conclusion was reached as the notice to pay rent stated the wrong
amount of rent to be paid. In both cases the court drew attention to the
requirement that notices, such as the notice to quit in this case, must be
strictly construed and must comply strictly with the requirements of the
relevant statutory provisions.
*Editor’s note: Also reported at (1975)
235 EG 133, [1975] 2 EGLR 1.
Under the
Agricultural Holdings Act 1986 a notice to quit pursuant to Case E in Schedule
3 can be given only if at the date of giving the notice the interest of the
landlord in the agricultural holding had been materially prejudiced by the
commission by the tenant of a breach which is not capable of being remedied and
that it is stated in the notice that it is given by reason of the said matter.
Article 9 of the 1987 order states that, if the tenant wishes to contest any
question relating to the reasons stated, he must serve notice requiring
arbitration. Thereby a distinction is drawn between the notice to quit and the
reasons stated by the landlord for the notice. In the case where the tenant
disputes the reasons he must seek arbitration (see Magdalen College, Oxford
v Heritage [1974] 1 WLR 441). However, that does not preclude the tenant
from contending in the High Court that the notice to quit is not a valid
notice, provided that his contentions do not relate to the reasons stated in
the notice.
The notice to
quit in the present case is headed ‘Agricultural Holdings Act 1986 Schedule 3
Part I Case E notice to quit’.
in the parish of Henham in the County of Suffolk’. It goes on to name the
tenant and states:
I give you NOTICE TO QUIT and deliver up
possession of the holding of which you are my tenant at the expiration of the
year of your tenancy which shall expire next after the end of 12 months from
the service of this notice.
So far no
criticism was made nor could be made. It was directed to the tenant, it
correctly referred to the holding and required him to quit after 12 months’
notice. Further, it correctly identified the name of the landlord on whose
behalf the notice was given. The notice thereafter states that it is given in
accordance with section 26(2) and Case E for the reasons which are set out.
The notice on
its face fully complies with the statutory requirements and cannot be
criticised as being uncertain. However, Mr Wood contends that the
misdescription of the cottages contained in the reasons for the notice renders
the whole notice void for uncertainty. I cannot accept that submission.
The notice to
quit, although one document, is in two halves: first, a notice stating that the
tenant is required to quit the holding and, second, the reasons for that
requirement. No criticism can be made of the first half and Mr Wood’s criticism
relates to the reasons. Such criticism can be raised only before an arbitrator.
I accept that the document must be read as a whole, but even so there is no
uncertainty that what the landlord required was that the defendant should quit
the holding known as Valley and Green Farms. Anybody reading the notice would
realise that, as it was clearly stated, even though there were mistakes in the
names of the cottages which were alleged to have been let in breach of the
terms of the tenancy. As the defendant admitted in his evidence, he was under
no misapprehension as to what was stated in the notice and was able to identify
the misdescribed cottages. That misdescription was not such as to render the
first part of the notice unclear. Nobody could have been under any
misapprehension that what the landlord required was that the defendant should
quit Valley and Green Farms.
The counternotice
If the
counternotice was a valid counternotice as required by the legislation, then
the dispute is resolved in the defendant’s favour. I have already read the
counternotice and referred to article 9 of the 1987 order. It is agreed by the
parties that the only effective response to the notice to quit, which was
served, and stated to be served, in accordance with section 26(2) of the 1986
Act, was a notice requesting arbitration. If the counternotice had been such a
request, then under article 10 it would have ceased to be effective unless
within three months an arbitrator was appointed or an application had been made
either by the landlord or the tenant for the appointment of an arbitrator. To
safeguard the rights of the defendant an arbitrator has been provisionally
appointed pending the outcome of this action and without prejudice to the
parties’ contentions.
The
counternotice stated that the defendant required subsection (1) of section 26
of the Act to apply, whereas it should have requested arbitration under
subsection (2) of section 26. Mr Wood submitted that this notice was a clear
response to the notice to quit. It was obviously intended to be a legal
challenge to the notice and in that respect was obviously intended to take
effect as a statutory notice. The reference to section 26(1) was an obvious
error and any ambiguity was resolved, as the counternotice clearly referred to
the notice to quit. There was, he said, only one challenge possible to the
notice, and the notice served was a sufficient challenge despite the error.
Before coming
to the cases cited to me by the parties, I must decide the facts. I have no
doubt that the notice clearly required section 26(1) to apply and not the
appropriate arbitration procedure. Further, I have no doubt that the notice was
intended as a challenge to the notice to quit and would be so read. Further, a
person having a working knowledge of the Agricultural Holdings Act 1986 would
realise that an error had been made in that the only response that was possible
to challenge the reasons given in the notice was a request for arbitration.
However, a person who did not have such knowledge would not appreciate that
there was an error.
Mr Wood
referred me to Nunes v Davies Laing & Dick Ltd [1986] 1 EGLR
106. That was a case in which the Vice-Chancellor had to decide whether or not
under a rent review clause a tenant had duly exercised his right to have the
rent determined by an independent surveyor. The lease contained a provision
that the open market rent payable should be determined as being either the rent
stated in a notice serviced by the lessor, or that agreed between the parties,
or at the election of the lessee, to be made by counternotice, the rent to be
determined by an independent surveyor. The lessor served a notice stating his
view of the correct rent and the response of the lessee was a letter giving
formal notice of the rent sought by the lessee and calling on the lessor to
agree it. The letter also asked the lessor to confirm that the letter was
accepted as due notice. The Vice-Chancellor considered, first, what were the
legal requirements of a valid notice in such a case and then went on to decide
whether the response of the lessee was a sufficient response. He held, at p
107K:
In my judgment, the test is that applied
by the Court of Appeal in the Amalgamated Estates case [Amalgamated
Estates Ltd v Joystretch Manufacturing Ltd (1980) 257 EG 489, [1981]
1 EGLR 96], namely that the counternotice should be in terms which are
sufficiently clear to bring home to the ordinary landlord that the tenant is
purporting to exercise his right under para (c), and that is the test
which I propose to apply.
Applying that
test, the Vice-Chancellor held that the letter from the lessee was not merely
an attempt to agree a rent. He drew attention to the fact that the letter was
headed ‘In the matter of the Rent Review’ and stated that it was a formal
notice and asked for confirmation that it was a ‘due’ notice. He concluded at p
108D:
There is a theoretical possibility that
the draftsman was under the misapprehension that he had to give formal notice
of disagreement. Therefore, if the test was that the notice must be
unequivocal, it could be said that the letter of December 6 was not a good
notice. But, in my judgment, that is not the test. Any ordinary landlord
receiving the letter of December 6 would know that he was in receipt of formal
notice under proviso (iii) and that the only provision for such notice in the
event of disagreement with the rent was a notice under para (c).
Hutchison J in
Glofield Properties Ltd v Morley [1988] 1 EGLR 113 had to decide
a similar case, in which the letter from the lessee stated: ‘Please accept this
letter as formal objection and counternotice.’
Relying upon the judgment of the Vice-Chancellor in the Nunes
case, he held that the letter was a valid counternotice, as it was sufficient
to bring home to the ordinary landlord that the tenant was purporting to
exercise his right to have the rent determined by arbitration.
Those cases
are not concerned with the Agricultural Holdings Act 1986 and turn in part on
the construction of the letters written by the lessees. Even so, the basic test
suggested by the Vice-Chancellor appears to me to be applicable to the present
case, namely that a counternotice should be in terms which are sufficiently
clear to bring home to the ordinary landlord that the tenant is purporting to
exercise his right under the provisions of his lease or under the provisions of
certain legislation. Further, the way that the Vice-Chancellor applied that
test seems to me to be applicable. He rejected theoretical possibilities and
the submission that the notice must be unequivocal. I note that the test
suggested is an objective test to ascertain whether an ordinary landlord would
know what was being said by the tenant.
Mr Pryor
relied on Attorney-General (Duchy of Lancaster) v Simcock [1966]
Ch 1. In that case, the landlord served a notice to quit on a tenant of an
agricultural holding by reason of the tenant’s failure to comply with a notice
to pay rent. By a document expressed to be a counternotice under section 24(1)
of the Act of 1948, the tenant’s solicitors required that that subsection of
the Act should apply to the notice to quit. Like the present case, that was the
wrong subsection and the notice should have referred to section 24(2) of the
1948 Act. That case appears to me to have similar facts to the present case in
that, so far as can be seen from the report, the notice served on behalf of the
tenant made a similar mistake and was in similar form. The conclusion of
Pennycuick J was that no notice had been served by the tenant under section
24(2) requiring arbitration and therefore he had no jurisdiction to consider
whether the reasons given in the notice to quit were valid. However, the point
as to whether or not the counternotice could be properly read as a notice
relating to section 24(2) may not have been argued.
In Mountford
v Hodkinson [1956] 1 WLR 422 the landlord of an agricultural holding
served a notice to quit on a tenant who replied by letter which stated: ‘I
don’t intend to go. I shall appeal against it and take the matter up with the
Agricultural Executive Committee.’
Unfortunately for the tenant, the legislation provided that the tenant
should, if he wished to contest the notice to quit, serve a counternotice
requiring that section 24(1) of the 1948 Act should apply, and if such a
counternotice be served the landlord had to apply
a valid notice. Romer LJ at p 427 said:
For my part, I think that the position
was put accurately by Mr Miles who was acting for the tenant in Ward v Scott
[1950] WN 76 to which Mr Megarry referred us. In that case the tenant of an
agricultural holding was given notice to quit, and he served a counternotice
which was perfectly right in form except that it referred to the Act of 1947
instead of the Act of 1948, section 31 of the Act of 1947, by the time he
served his notice, having been replaced by section 24 of the Act of 1948. It
was objected on behalf of the landlord in that case that the notice was not a
valid counternotice. Apparently, according to the judgment which Danckwerts J
delivered, Mr Miles for the tenant had said: ‘The court is indulgent in respect
of notices of this kind and does not in effect care for merely technical
points, and if the meaning is so plain that the landlord cannot mistake what is
meant, then effect should be given to the notice.’
That proposition, I think, commended
itself to Danckwerts J, though he actually decided the case on another point.
For my part, I think that is right, though perhaps subject to this, as Mr
Megarry pointed out, that one should add the word ‘reasonably’ so as to make it
read: ‘and if the meaning is so plain that the landlord cannot reasonably
mistake what is meant, then effect should be given to the notice’. It seems to
me to be the proper test to apply to notices of this sort. The reason why the
tenant has to make his intention reasonably clear is that the landlord has to
take action upon the counternotice. Under the Agriculture (Control of Notices
to Quit) Regulations 1948, he has, within one month of being served with a
counternotice, to make application to the Minister for his consent. It is,
therefore, quite obvious that he has to have served upon him some notice which
he understands, that is to say, a notice which reasonably indicates that the
tenant is intending to invoke, and is in fact invoking, the operation of
section 24(1). Unless the notice sufficiently enables the landlord to
understand that, I think that it is a bad notice.
For the reasons which the county court
judge stated in his judgment, it seems to me quite impossible to say that the
counternotice now in question satisfied that criterion, and I, accordingly,
agree that this appeal fails.
The test
suggested by Romer LJ, that the meaning of the counternotice must be so clear
that the landlord cannot reasonably mistake what is meant, suggests a
subjective test rather than the objective test suggested by the Vice-Chancellor
in the Nunes case but otherwise is in essence the same. That difference
in this case is not material, but it would seem right that the notice must be
such that an ordinary landlord would know what was meant, but there might be
cases in which a notice which was not clear to an ordinary landlord would be
clear to a particular landlord. In such a case I can see no reason why it would
not be an effective notice.
Upon those
cases I believe that there is no requirement that a counternotice under the
1986 Act should follow any particular form. However, the terms of the notice
must be of sufficient clarity to convey to the landlord what the tenant
requires.
The
counternotice is, to my mind, quite clear. It is explicit in stating that the
defendant requires section 26(1) of the Act to apply. The submissions of Mr
Wood in effect are that the landlord should read the counternotice as amended
by substituting section 26(2) for section 26(1). There is, to my mind, no
ambiguity as there was in the Nunes and Glofield cases, where the
court had to decide what would be understood by the letters. The result of
those cases must be contrasted with the result in the Mountford and Simcock
cases, in which the terms of the counternotice were wrong but in no way
uncertain. In both those cases a landlord skilled in the relevant law would
have suspected that a mistake had been made, but as the counternotice clearly
did not invoke the proper procedure they did not act to invoke that procedure.
Similarly in
the present case, I conclude with reluctance that the counternotice clearly did
not require arbitration as it should have done. Its terms were not uncertain
and any ordinary landlord, such as the plaintiff, on reading it would know that
the tenant wanted section 26(1) and not section 26(2) to apply.
However, if
such a landlord had a working knowledge of the law he would suspect that a
mistake had been made. To read the counternotice in the way suggested requires
knowledge that the only procedure available to challenge the notice was under
section 26(2) and entails the landlord amending the notice because of that
knowledge. To adopt that approach would mean that nearly all counternotices
which made it clear that the tenant was challenging the notice would be
sufficient. That approach would be contrary to the reasoning of the Court of
Appeal in the Mountford case and would also be contrary to the
legislation which lays down what the proper response should be.
My conclusion
is that the notice served on behalf of the defendant was not a notice effective
to invoke the arbitration procedure.
Validity of notice — agreement
The next
matter for me to decide is whether there was an agreement between the parties
that the plaintiff would not serve a notice to quit for one or more reasons
stated in the notice and, if so, what is the effect of such an agreement.
Mr Wood relied
upon the letter of November 1 1985 granting the defendant permission to sublet
as evidence of a contract between the parties. It is in these terms:
Dear Matthew,
Re Cottages at Sotherton Corner attached
to your lease
I refer to our recent conversation and
note that you would be prepared that all the cottages at Sotherton Corner be
returned from your lease to the Estate’s control. I note that you are prepared
to waive claims for the water, toilets, bathrooms and other improvements that
you have put in at Sotherton Corner for your workers and families etc.
I note that the Estate will compensate
you by allowing you the use of no 17 Nova Scotia Cottage and no increase in
rent is to be added to your lease. I note it was further agreed that you may
sublet all or any of your cottages for holiday let situations as and when
required and no extra rent from you is required.
I would be grateful if you could sign the
foot of the copy letter enclosed if you are in agreement etc.
That letter is signed by the plaintiff
and was countersigned by the defendant.
Mr Pryor did
not contest the submission that the letter had contractual effect but said that
it acted as a modification of the terms of the tenancy. This appears to me to
be correct.
Mr Wood’s
submission proceeded to the conclusion that having regard to the fact that the
right to sublet was contractual, there must be implied into the contract a term
that the plaintiff would not serve a notice to quit in respect of acts falling
within the permission granted. He submitted that such a term should be implied,
as it was a necessary term to give business efficacy to the agreement, and it
was a term that reasonable men faced with the suggested term would without
hesitation have said: ‘Yes, of course, that is a term of the agreement.’
I cannot
accept that submission. I believe that the effect of the agreement was to
modify the terms of the tenancy and, if so, I cannot see any good reason for
implying into the tenancy agreement, either as granted or as modified, an
implied term not to serve a notice to quit for wrong reasons. The Agricultural
Holdings Act 1986 provides for a notice to quit to be served in cases where a
landlord believes he has good reasons for such a notice, and the right is given
to the tenant to dispute the reasons in arbitration proceedings. There is no
necessity for reasons of business efficacy to imply any such term as Mr Wood
suggests, nor would reasonable men think that such an implied term was part of
their agreement. Further, if there be an implied term, then the correct
procedure is to challenge the reasons stated in the notice in arbitration
proceedings. That is the procedure laid down in article 9 of the order of 1987.
The objection of the defendant is that the reasons stated in the notice were
not valid reasons because he was not in breach of his tenancy as modified by
the 1985 agreement. Such an objection can be taken only in arbitration
proceedings.
Validity of notice — fraud
The defendant
contends that the notice to quit was fraudulent and therefore void. The
plaintiff denies that it was fraudulent and also contends that, even if it
were, it was still an effective notice in that the only effective remedy for
the defendant to challenge the notice was by way of a notice requiring
arbitration. I will deal with this last argument first.
Section 25(1)
of the Agricultural Holdings Act 1986 states that a notice to quit an
agricultural holding shall be invalid if it purports to terminate the tenancy
before the expiry of 12 months from the end of the then current year of the
tenancy. Section 26(1) is as follows:
Where —
(a) notice to quit an agricultural holding or
part of an agricultural holding is given to the tenant, and
(b) not later than one month from the giving of
the notice to quit the tenant serves on the landlord a counternotice in writing
requiring that this subsection shall apply to the notice to quit,
then, subject to subsection (2) below,
the notice to quit shall not have effect unless, on an application by the
landlord, the Tribunal consent to its operation.
(2) Subsection (1) above shall not apply in any
of the Cases set out in Part I of Schedule 3 to this Act; and in this Act ‘Case
A’, ‘Case B’ (and so on) refer severally to the Cases set out and so named in
that Part of that Schedule.
(3) Part II of that Schedule shall have effect in
relation to the Cases there specified.
Section 27
lays down the matters to be taken into account by the tribunal pursuant to the
service of a counternotice under section 26(1). Section 29 permits the Lord
Chancellor by order to provide for any of the matters specified in Schedule 4.
Schedule 3 to the Act contains Cases A to H and Schedule 4 to the Act sets out
certain matters for which provision may be made by order under section 29.
Pursuant to
the powers given to the Lord Chancellor under section 29 and Schedule 4, the
Agricultural Holdings (Arbitration on Notices) Order 1987 was made. Article 9
of that order states:
Where it is stated in a notice to quit an
agricultural holding or part thereof that the notice is given for one or more
of the reasons specified in Case A, B, D or E and the tenant wishes to contest
any question arising under the provisions of section 26(2) of, and Schedule 3
to, the 1986 Act relating to any of the reasons so stated, he shall within one
month after the service of the notice serve on the landlord notice in writing
requiring the question to be determined by arbitration under the 1986 Act.
Thus if the defendant wished to contest
the reasons stated in the notice, the only course open to him was to serve a
notice requiring arbitration. I have already held that he did not do so. The
plaintiff contends that the alleged fraud, namely that the notice was served
dishonestly without an honest belief that it had a chance of success, or that
the defendant was in breach of his tenancy agreement, or that the plaintiff had
suffered material prejudice, all relate to the reasons and therefore can be
considered only in arbitration proceedings.
That
contention of the plaintiff is unattractive, in that on the assumption that the
notice to quit was a fraudulent document, he seeks a declaration from the court
that it is a document effective to determine the tenancy. On the ground of
public policy and justice I cannot believe it would be right, unless there are
clear directions in the legislation, that a court should give effect to a
fraudulent document.
Mr Pryor’s
argument starts from the principle, which was accepted by the defendant, that
the High Court had no jurisdiction to consider any contest relating to any of
the reasons stated in a notice to quit. This is clearly laid down in Magdalen
College, Oxford v Heritage [1974] 1 WLR 441. However, in that case
Megaw LJ said at p 446B:
There is no suggestion in this case of
any fraud or dishonesty or misrepresentation on the part of the plaintiffs.
Nothing that I say is to be taken as having any necessary application in any
case where any such factor exists.
Mr Pryor submitted that the sort of
dishonesty contemplated in that passage was where a landlord deliberately
served a notice while the tenant was on holiday, while Mr Woods submitted that
Megaw LJ had in mind the sort of dishonesty alleged in this case. I do not
believe that any conclusion can be drawn as to what sort of dishonesty he had
in mind.
To support his
submission, Mr Pryor also referred me to Smith v East Elloe Rural
District Council [1956] AC 736. In that case the appellant sought to
challenge a compulsory purchase order after the time laid down for challenge
had expired. The appellant contended the compulsory purchase order had been
made and confirmed wrongly and in bad faith and therefore it was open to the
court to quash it. The relevant legislation provided that any person aggrieved
by a compulsory purchase order who desired to question its validity had six
weeks to apply to the High Court. Para 16 of Part IV of the Acquisition of Land
(Authorisation Procedure) Act 1946 provided that subject to the provisions made
enabling challenge within six weeks a compulsory order shall not ‘be questioned
in any legal proceedings whatsoever’. By a majority of three to two their
lordships decided that the action against the council could not proceed as it
was precluded by para 16.
The decision
in that case turned on the words in paras 15 and 16 of Part IV of the Act. Para
15 allowed a challenge in the High Court within six weeks and para 16 stated
that thereafter the order could not be questioned in any legal proceedings
whatsoever. Those words are very wide and I do not consider that the case lays
down any general guidance as to whether or not a notice to quit can be
challenged on the ground of fraud when the legislative framework is different,
as are the words. In particular, in the Agricultural Holdings Act there are no
words that expressly prevent a challenge in the High Court to a notice to quit
except challenges to the reasons stated. Thus it would appear that all
challenges to notices to quit can be taken to the High Court except in relation
to the reasons stated. This is in complete contrast to the words used in the
legislation considered in the House of Lords in Smith v East Elloe
Rural District Council. Further, it is not unimportant that their lordships
seem to contemplate that without the particular words in paras 15 and 16 of Part
IV of the Act, a challenge could have been made in the High Court to a
compulsory purchase order on the ground of fraud, despite the failure to object
within six weeks. Before passing from that case, I draw attention to the fact
that the Court of Appeal in Lazarus Estates Ltd v Beasley [1956]
1 QB 702 also considered that it was a case decided upon the particular words
in the legislation.
In the Lazarus
case, a tenant was served with a notice of increase in rent under the Housing
Repairs and Rents Act 1954, together with a declaration that repairs to the
value of £566 had been carried out. The tenant failed to challenge the value of
the repairs as required by para 4 of Schedule 2 to the Act but refused to pay
the increase of rent. When the landlord sued her for the increase of rent, she
contested the action upon the ground that the declaration was fraudulent. The
Court of Appeal held that she was entitled to defend the action upon that
ground. The reasoning of Denning LJ was that the schedule prevented a tenant
challenging the declaration only on certain grounds and therefore by
implication it was open to the tenant to challenge the declaration on any other
ground. He said at p 712:
We are in this case only concerned with
this point: can the declaration be challenged on the ground that it was false
and fraudulent? It can clearly be
challenged in the criminal courts. The landlord can be taken before the
magistrate and fined £30: see Second Schedule (para 6); or he can be prosecuted
on indictment, and (if he is an individual) sent to prison: see section 5 of
the Perjury Act 1911. But the landlords argued before us that the declaration
cannot be challenged in the civil courts at all even though it was false and
fraudulent; and that the landlords can recover and keep increased rent even
though it was obtained by fraud. If this argument is correct, the landlords
would profit greatly from their fraud. The increase in rent would pay the fine
many times over. I cannot accede to this argument for a moment. No court in
this land will allow a person to keep an advantage which he has obtained by
fraud. No judgment of a court, no order of a Minister, can be allowed to stand
if it has been obtained by fraud. Fraud unravels everything. The court is
careful not to find fraud unless it is distinctly pleaded and proved; but once
it is proved, it vitiates judgments, contracts and all transactions whatsoever:
see as to deeds, Collins v Blantern (1767) 2 Wils 341; as to
judgments, Duchess of Kingston’s case (1776) 20 How St Tr 573; and as to
contracts, Master v Miller (1793) STR 367. So here I am of
opinion that if this declaration is proved to have been false and fraudulent,
it is a nullity and void and the landlords cannot recover any increase of rent
by virtue of it.
Parker LJ was
of the same view. At p 721 he said:
Accordingly, the question here is whether
the tenant is seeking to challenge the validity on some ground other than that
repairs had not been carried out during the period specified to a value not
less than that specified. That the tenant is seeking to challenge the validity
on that ground is clear, but is she also seeking to challenge it on another
ground? The contention on her behalf is
that should she succeed in proving fraud on the part of the landlords the declaration
would be a nullity, whereas mere proof that repairs had not been done to the
value specified would not make the declaration a nullity but would merely make
it cease to have effect. Therefore, it is said, the tenant is seeking to do
something more than challenge the validity of the declaration on the ground
that repairs had not been done to the value specified. I think that this
contention is correct. No doubt it can be said that the real question in any
case is whether repairs to the value specified have in fact been done, and that
proof of fraud in the making of the declaration is merely proof of the quality
of the act or its motive. Nevertheless, that quality, if proved, vitiates all
transactions known to the law of however high a degree of solemnity.
That reasoning
applies to the present case. The defendant contends not only that the reasons
stated in the notices were bad reasons but also that the notice as a whole was
a nullity. Success in an arbitration would mean only that the defendant would
not have to quit his farm, whereas establishing fraud would make the notice to
quit a nullity.
There does not
appear to me to be any provision in the Agricultural Holdings Act 1986 or the
order of 1987 which would prevent a tenant asserting in the High Court that a
notice to quit was a nullity. It is only if he accepts that the notice is a
notice that his right to challenge it is confined to arbitration. I therefore
hold that the defendant is not precluded from challenging the notice on the
ground of fraud and in particular to contend that the notice is a nullity and
should not be given effect to.
Considerable
argument was directed by counsel as to what would amount to fraud. Judges have
in the past shrunk from giving a definition of fraud. It is sufficient for me
to adopt the classic statement of Lord Herschell in Derry v Peek
(1889) 14 App Cas 337 at p 374:
Secondly, fraud is proved when it is
shewn that a false representation has been made (1) knowingly, or (2) without
belief in its truth, or (3) recklessly, careless whether it be true or false.
Although I have treated the second and third as distinct cases, I think the
third is but an instance of the second, for one who makes the statement under
such circumstances can have no real belief in the
must, I think, always be an honest belief in its truth. And this probably
covers the whole ground, for one who knowingly alleges that which is false, has
obviously no such honest belief.
On p 375 Lord Herschell went on to state:
At the same time I desire to say
distinctly that when a false statement has been made the questions whether
there were reasonable grounds for believing it, and what were the means of
knowledge in the possession of the person making it, are most weighty matters
for consideration. The ground upon which an alleged belief was founded is a
most important test of its reality. I can conceive many cases where the fact
that an alleged belief was destitute of all reasonable foundation would suffice
of itself to convince the Court that it was not really entertained, and that
the representation was a fraudulent one. So, too, although means of knowledge
are, as was pointed out by Lord Blackburn in Brownlie v Campbell
(1880) 5 App Cas 925, a very different thing from knowledge, if I thought that
a person making a false statement had shut his eyes to the facts, or purposely
abstained from inquiring into them, I should hold that honest belief was
absent, and that he was just as fraudulent as if he had knowingly stated that
which was false.
Mr Pryor,
although accepting the principle in the speech of Lord Herschell which I have
just cited, submitted that before fraud could be found the court must also hold
that the dishonest and false representation was calculated to deceive and did
deceive the recipient. That may be necessary in actions in which a party seeks
to recover damages based on fraudulent statements, but in a case where the
party committing the fraud seeks to rely upon his fraudulent conduct a court
will not give effect to that conduct whether or not it deceives the recipient.
In practice all fraudulent statements and notices to quit under Schedule E are
calculated to deceive in that they are assertions that the landlord honestly believes
that he has a good ground of complaint, honestly believes the facts stated as
reasons for the notice and honestly believes that he has a reasonable case to
terminate the tenancy because his interest has been materially prejudiced. But
the fact that the tenant is not deceived is irrelevant. The notice if
fraudulent is a nullity and the court will refuse to give it effect.
In the Lazarus
case (supra) there is no indication in the report as to whether or not
the tenant was deceived by the declaration and I suspect that she was not, as
she refused to pay the increase in rent. The statements by Denning and Parker
LJJ which I have already quoted are not qualified by the requirement that the
tenant had to be deceived. A notice to quit which is fraudulent in the sense
that it was made without an honest belief in its truth is no notice to which
the court will give effect and the recipient need take no action to serve any
counternotice. If the tenant suffers damage by reason of such a fraudulent
notice, then he may recover it. No doubt to succeed in recovering damages he
must establish that he was deceived by the fraud, as otherwise he will have
brought upon himself the damage that he claims.
I was also
reminded of the advice tendered by the Privy Council in Baron Uno Carl
Samuel Akerhielm v Rolf De Mare [1959] AC 789 at p 805, that when
considering whether a statement was fraudulent, it was necessary to decide
whether the person making the statement believed it to be true in the sense
that he understood the statement and not in the sense that the court on an
objective consideration understood it. A similar statement of the law was made
60 years earlier by Bowen LJ in Angus v Clifford [1891] 2 Ch 449
at p 472:
Now whether
you take the enquiry in the one order, or in the other, whether you regard it
from the point of view which is indicated in the expressions which are well
known to the common law, and which have been used by Lord Herschell and Lord
Bramwell, that a man is bound to have some honest belief in a statement if he
makes it, or whether you treat the matter in the inverse order, with regard to
the necessity of finding at least some recklessness to truth, that is to say,
some indifference to truth which amounts to dishonesty, in either view it seems
to me the result is the same. A man ought to have a belief that what he is
saying is true; but a man may believe what he is saying — the expression which
he uses — to be true, because he is honestly using the words in a sense of his
own, which, however inappropriate, however stupid, however grossly careless, if
you will, is the special sense in which he means to use the words, without any
consciousness being present to his mind that they would convey to other
reasonable persons a different sense from that in which he is using them — a
man may believe a statement in that sense of his own, and yet the use of the
language may be wholly improper, that is to say, in respect of want of caution
in the use of it. It does not follow because a man uses language that he is conscious
of the way in which it will be understood by those who read it. Unless he is
conscious that it will be understood in a different manner from that in which
he is honestly though blunderingly using it, he is not fraudulent, he is not
dishonest. An honest blunder in the use of language is not dishonest. What is
honest is not dishonest.
That passage
is particularly apposite to the present case, as it is accepted that the notice
to quit would not have succeeded in an arbitration as it was mistaken as to the
breaches alleged. The defendant says that it is grossly mistaken and was made
fraudulently, whereas the plaintiff accepts that mistakes were made but
contends that the statements in the notice were at the time honestly made. If
he be right, then even if the mistakes were negligently made, provided that
they were made with an honest belief that they were true, there is no fraud.
Before coming
to a conclusion as to whether or not the statements in the notice to quit were
made with an honest belief in their truth, I must examine in more detail the
circumstances in which the notice to quit came to be served.
In 1984 when
the plaintiff inherited the Henham estate, he was taken round Valley and Green
Farms by the defendant. He showed him not only the farms but all the cottages.
The plaintiff said in his evidence that he remembered meeting Mr Briggs and
being told by the defendant that Mr Briggs had worked on the defendant’s farm
for many years. By July 1984 the plaintiff had decided to deal with the running
of the estate himself and wrote to every tenant. He took photographs of a
number of cottages. The ones that he took of Mr Briggs’ cottage, 21 Valley Farm
Cottage, were prominently displayed in his office as an example of the way that
the plaintiff considered that the estate had been allowed to fall into
disrepair. For this he blamed the agents in charge and this is the subject of
litigation. In September 1984 he again toured Valley and Green Farms with the
defendant, and by letter dated September 11 1984 he sought a quotation for
repairs to 21 Valley Farm Cottage knowing that Mr Briggs lived there. He also
by letter of the same date sought a quotation for repairs to 24 Henham Green,
which at that time had been sublet on a protected shorthold to Mr Tonks
pursuant to the written permission of March 16 1984. Clearly the plaintiff was
correct when he stated in his evidence that during 1984 he was becoming more
and more familiar with details of the estate and who was living in the
cottages. He certainly knew that Mr Briggs was living at 21 Valley Farm Cottage
and must have known that 24 Henham Green had been sublet to a person who was
not a farmworker.
By letter
dated February 13 1985, the plaintiff stated that the files relating to all the
property on the estate would be transferred to Fleetwood in Australia and
handled by himself and his wife. Each cottage within the defendant’s tenancy
had a file and was named in the letter. Thus when he agreed in November 1985 to
allow the defendant to sublet all the cottages as holiday lets he was the
person in charge and was fully aware of the names of the cottages and, as he
said in cross-examination, was taking a day-to-day interest in them.
In 1986 the
plaintiff continued to be the person in charge of the cottages on the estate and
took an active interest in them, as the cost of repairs was a major item of
expense. It was at this time that the relationship between the plaintiff and
the defendant began to deteriorate, leading to severance in the late summer of
1986.
In August 1986
the plaintiff engaged William H Brown to consider an application to increase
the rent of the defendant. By letter dated September 11 1986 he instructed
William H Brown to serve a notice to arbitrate the defendant’s rent as at
Michaelmas 1987. In that letter he referred to the fact that some of the
cottages were let and said:
I may have written him a letter allowing
him to lease his cottages out as holiday lets — this was when he told me what a
super job he was going to do on the land in hand. This never eventuated — a
loss of £350,000 was incurred. Please use every effort to claw back any
cottages, any buildings and land, or any other of my assets you can — at the
same time putting the rent on at least what Hallsworth and John Holmes are
paying only on a short lease and with no buildings! By the way, Billy Fairhead is even paying £45
an acre!!
Thus at that time he did recollect the
letter he had written in 1985.
Pursuant to
those instructions, William H Brown served upon the defendant a rent
arbitration notice dated September 23 1986 requiring the rent to be reviewed.
In a letter dated January 21 1987 to William H Brown the plaintiff gave them
more information about the defendant. That letter concluded in this way:
(4) He is said to have 3 or 4 of his cottages
rented out at around £40 a week to non ag workers — I may have written him
allowing this 3 or 4 years ago — please revoke it immediately or bring it to
his notice he appears to be in breach.
(5) He has generally been not co-operative —
please try to up his rent, or put him on a full repairing and insurance lease,
please make him surrender the houses vacant and those sublet to outsiders —
keep chipping away — then ask him what money per acre he would take to
surrender his tenancy — possibly a long shot but you never know till you
try!! Mick Toy head keeper on 050278-696
may be able to give you more evidence.
Again this letter shows that the
plaintiff had a recollection of a written permission he had given to the
defendant to sublet.
Mr N R Wild
[FRICS], a partner in William H Brown, visited Valley and Green Farms on Monday
July 20 1986 and was shown round by the defendant. He inspected the farms and
the cottages and produced a report for his own benefit in which the cottages
were accurately recorded, as was the nature of the tenancy. The defendant
showed Mr Wild a copy of the 1984 letter from the plaintiff giving his
permission to sublet two cottages.
Mr Wild
reported to the plaintiff the result of his visit and in September 1987 they
met and agreed that Mr Wild should seek to negotiate with the defendant an
agreement to dispose of the arbitration. The approach to be adopted was set out
in a letter dated September 7 1987 from the plaintiff to Mr Wild. In essence,
Mr Wild would seek to negotiate a return of all the cottages, except the two at
Henham Green, which would be put in good repair; the rent would be reduced to,
say, £20,000 per annum; redundant farmbuildings would be returned and the lease
would become a full repairing lease. This was put to the defendant by Mr Wild
in a letter dated September 8 1987. The defendant replied to that letter on
September 16 1987 stating that the cottages need not be too much of a problem
but that the idea about the buildings needed more thought.
In the
beginning of October 1987 Mr Wild met the defendant and the agents acting on
his behalf. In principle, agreement was reached on the cottages and the
redundant farmbuildings. The defendant wanted a building to replace those that
he was to give up and was seeking a reduction of rent of £8,500 per annum.
Quotations were obtained for the replacement building. The cost of this was not
acceptable to the plaintiff and he instructed Mr Wild to proceed with the
arbitration. On October 20 1987 Mr Wild wrote to the plaintiff in these terms:
Dear Keith,
Thank you for your comments concerning
the proposed arrangements with Matthew Mitchell.
We cannot force MM to give up the
cottages. He is allowed to occupy them with his own employees and I have seen a
letter from you giving MM permission to let out two of the properties. He
maintains this permission is not rescinded by the termination of your joint
farming arrangements and certainly your letter does not contain any conditions.
The whole question of what letting arrangements are permitted is fundamental to
the rent arbitration and I do need more information from you.
The letter goes on to list information
required by Mr Wild to conduct the arbitration and advice as to how to proceed.
On November 17
1987 the plaintiff wrote from Australia to Mr Wild in these terms:
Re Matthew Mitchell
At last we have found the original file
and will be registering it to you as soon as we can.
(2) Herewith is a demand copy we sent
Matthew for his rent. Sutuse Pty Ltd acts as my agent on all the properties —
Hope this is OK — Please serve him the appropriate notices to ensure he pays
the rent due direct into Sutuse Pty Ltd, Barclays, Southwold.
(3) Still keen to get Green Farm Barn back if I
can!!
Good luck with arbitration.
Regards, Keith.
PS See my letter dated 3/84 — 20 Valley
Farm Cottages, King’s Lane + 24 Henham Green. 2 cottages only agree be rented
out.
It is quite
clear that the plaintiff looked into the file and read the letter of March 1984
in which he agreed that the defendant could sublet 20 Valley Farm and 24 Henham
Green. The request that Mr Wild should serve a notice to pay rent arose because
the defendant withheld part of the rent because of a claim for crop damage by
game birds and for repairs that he had had to carry out. On Mr Wild’s advice, this
was referred to Mr Chadd, a partner in the firm of solicitors acting for the
plaintiff. He served a notice to pay rent and the full rent was paid. The next
instalment of rent was also not paid in full, at first for the same reasons,
but was paid before Mr Chadd served a second notice to pay.
Mr Wild
continued to negotiate with the defendant’s agents and reported to the
plaintiff by letter dated January 25 1988 in these terms:
I am now able to reach agreement with
Matthew Mitchell as follows:
1 MM will surrender the old Valley farmhouse
and three cottages retaining the new Valley farmhouse and the Henham cottages.
2 MM will give up the buildings at Green
Farm, Top Barn and the traditional buildings at Valley Farm.
3 MM will accept a full repairing and insuring
agreement on the remaining property.
In return MM would require:
1 A new grain store and general purpose
building which I estimate would cost in the region of £65,000 at todays prices.
There will be no need for you to provide a grain drier. Some improvements will
have to be carried out to the Henham cottages.
2 I have not reached final agreement on the
rent but I believe MM would not agree to pay more than £22,000. However, he
will be responsible for all repairs and insurance and would obviously not be
receiving any income from the cottages he has given up.
I would be
grateful for your further instructions.
The reply of the plaintiff written on
February 7 was:
Dear Nigel,
(1) Thanks for yours dated 25.1.88 that Matthew
has agreed in principle to the swap.
(2) As previously advised I want J Chadd to get
the damage claim and repairs out of the way.
(3) Once the tenancy is back on a proper footing
we can proceed.
All this time
the arbitration had been stayed hoping that a settlement could be reached and
in principle most of the terms of an arrangement which was thought to be
satisfactory by the agents acting for the parties had been worked out. That was
also the attitude of the plaintiff in that in a letter dated March 22 1988 to
Mr Wild he wrote:
Dear Nigel,
I think Matthew has paid the back rent
but I have to get J Chadd to just tie up the game damage claim and the repairs
that were not authorised by us but done with Mitchell’s labour etc etc. We have
no trouble with all the other 50 odd tenants on the place so before handing it
over to you I want everything down in black and white.
I don’t mind at all if the rent is
arbitrated. I shall be very surprised if the arbitrator reduces the rent under
the 14500.00 we now get. I have asked my office to send all rent back if
Mitchell tries to pay any which I think becomes due in April.
I do agree that what you have proposed is
very reasonable and fair to both sides. I hope to be over in May or June and
would sooner fix up the whole thing on the ground. It’s a bit open ended at the
moment as I have not got a firm price on what’s to be done at the Henham Green
cottages and I don’t know what the exact cost of the building is. If Mitch
rings you ask him if the Potato shed or old grain store can be used?
Pursuant to
those instructions Mr Wild did not proceed further with the negotiations or the
arbitration pending Mr Chadd’s resolving the dispute between the plaintiff and
the defendant relating to crop damage and repairs.
Sometime in
1986 the plaintiff became aware of Heritage relief, which, as I understand it,
is a scheme whereby payment of CTT can be avoided provided that the estate is
managed in a way approved by the Countryside Commission and that income from
the estate is spent on it. It seems that it was not possible to include Valley
and Green Farms within an arrangement for Heritage relief without planting
hedges, and also there was the requirement that the skeet shoot should be
removed from the in-hand land. The plaintiff therefore had the idea of
transferring the shooting club to the defendant’s land and seeking to claw back
land from the defendant so that hedges could be planted. Early in May 1988 he
told Mr Chadd of his ideas and also asked Mr Chadd whether the defendant was
entitled to sublet any of the cottages. What was actually said is now difficult
to ascertain, as Mr Chadd does not seem to have kept a note of this
conversation. The plaintiff in a note dated May 4 1988 instructed Mr Chadd as
follows:
2. Please
ring Sir Patrick Garland . . . and see if we obtain Planning Consent for a Golf
Course/Skeet Shoot we can recapture 4 acres per annum from the date the lease
started. If we can’t, we will put in for planning permission now and drag back
4 acres per annum until further notice.
3. Please
check the lease and see if there is any reason why Mitchell should let out six
of his eight cottages/houses to people outside farm labourers. Each cottage
needs about £20,000 minimum spending on it and I want them back. Please note I
did give him permission to do what he liked re letting them out whilst he was
Manager for THKPL but not afterwards ie August 1986. Even if we made him keep
them empty it would save repairs etc and cost him rates.
Para 3 did not record the fact that
permission had been given in writing in 1984 and 1985 and this is particularly
surprising, as on November 17 1987 the plaintiff had sent to Mr Wild the letter
containing the 1984 permission to sublet and drawn his attention to it.
Mr Chadd
sought the advice of counsel and in instructions sent on May 19 he requested
advice on a number of matters, including
in breach of his tenancy agreement by operating a trucking company, whether the
defendant’s house could be recovered with or without planning permission to
convert it into a club house for the skeet shoot and advice as to what action
could be taken about subletting of the cottages. On this matter the
instructions stated that the defendant was in breach of the terms of the lease
as he had sublet to tenants who were not agricultural workers, but the
plaintiff had orally indicated to the defendant that he could do as he wished
so long as he remained manager of the estate. Counsel was asked to advise
whether the oral waiver provided the defendant with grounds for successfully
resisting a notice to remedy the breach.
Those
instructions were plainly wrong. The plaintiff had on two occasions given
written permission to sublet.
Counsel
advised on the telephone and that advice was reported to the plaintiff in a
letter dated May 23 1988, and it is necessary that I should read the relevant
part in full:
The Cottages
6.1 Under the terms of the lease Mr Mitchell is
not allowed to assign or part with possession of any part of the farm (except
cottages and gardens to workmen on the farm). If he is renting the cottages out
to tenants who are not workmen on the farm then he is in breach of the terms of
the lease. The prohibition in the lease is absolute and is not subject to his
obtaining your approval.
6.2 A difficulty may arise, however, in the event
of your having given him permission to sub-let them. I understand that such
permission was given orally to him and was limited to the period during which
he was managing the estate on your behalf under the contractorship arrangement.
If he acted upon your consent to non workmen occupying the cottages and allowed
them into occupation he may now find it difficult to remove them. He may,
therefore, plead estoppel, ie that you cannot now say that the tenants should
not be there. In addition, we may have some evidential difficulties in
establishing exactly what the ambit of the permission given to him was in the
absence of anything in writing. He, of course, has the same difficulty but the
point is that it gives scope for argument which means delay and, inevitably,
expense.
6.3 The first step would be to establish exactly
what the position is in respect of the tenancies of the various cottages which
he has let to non agricultural workmen. If he is offering to hand them back to
you as part of the settlement in respect of the rent review currently under
arbitration then it suggests that he is able to recover possession of them at
any time he wants. If that is so then his breach is capable of remedy. This is
important because the procedure which would need to be adopted if you wish
action to be taken on this item would be for notices to be served on Mr
Mitchell and those notices must either specify (under Case D of schedule 3 to
the 1986 Act) that the breach be remedied or under Case E where the breach
cannot be remedied. If we are in any doubt about the exact nature of the
tenancies of the cottages we should serve notices under both Cases in respect
of all of them.
6.4 The tenant, in any event has a right to serve
counternotice requiring arbitration and it would be necessary for you to
establish damage and prejudice from the breaches which have occurred. It would
be possible to establish damage to your reversionary interest in those cottages
if the tenants cannot be removed and have obtained statutory or protected
tenancies.
I draw
attention to the fact that the plaintiff was advised that the first step was to
find out what the position was in respect of the tenancies and that if the
defendant was able to recover possession the breach was capable of remedy and
only if there was doubt should a Case E notice be served. He was also advised
that it would be necessary to establish damage and prejudice from the breaches.
On May 25 the
plaintiff wrote on the letter of May 23 his reply, which he sent to Mr Chadd.
It read:
Dear Jonathan,
(a) Cottages. Pls get back. Pls ring Mick Toy on
696.
(b) Sir Patrick will prepare report on hedges.
(c) I will get PP . . .
— which I understand means ‘planning
permission’ —
. . . on Mitchell’s house.
On May 31 Mr
Chadd spoke to the plaintiff on the telephone and I believe that the plaintiff
provided Mr Chadd with details of who was living at the cottages, which details
he had obtained from Mr Toy, the gamekeeper on the estate. That information was
recorded by Mr Chadd in a note and was used by him to prepare the notices to
remedy and to quit which I have read. The note is in this form:
Mitchell’s tenancies.
No. 2 Uggeshall. Mr Hartshorn genuine
agric.
23 Green Farm Cottage, empty.
24 Green Farm Green, Sotherton. Mr
Willard non agric.
20 King’s Lane, Sotherton. Mr Briggs ret
agric OK.
21 King’s Lane. Mr Warren out.
Old Valley Farm Cottages, Nos. 2, 3 (both
empty, let for holidays).
Thereafter the
notices were served with the result that I have referred to. The plaintiff did
not see the notice to quit before it was served, but Mr Chadd said that he was
sure that it did go to him shortly thereafter. On the plaintiff’s evidence it
seems clear that he read it soon after it was served and must be taken to have
affirmed its contents, as it was signed on his behalf. He took no action to
draw any mistake in it to anybody’s attention.
One of the
issues I have to decide is whether or not the plaintiff had by May 1988
forgotten that he had given written permission for the defendant to sublet
cottages. If he had not, then the information given by him to Mr Chadd upon
which counsel’s advice was sought was so incomplete as to be false and known to
be false and the whole basis of the notice to quit was also false in that 20
Valley Farm Cottage was sublet pursuant to the 1984 permission, as was 24
Henham Green, and all the cottages were covered by the 1985 permission to let
for holiday situations.
The written permissions
to sublet were made in 1984 and 1985. The plaintiff remembered that something
had been put into writing on September 11 1986 and again on January 21 1987 and
saw the 1984 letter of permission on November 17 1987 when he sent it to Mr
Wild. It is therefore very surprising that by May 1988 he had forgotten.
Despite this the plaintiff was clear in his evidence that he had forgotten. His
excuse was that he had a bad memory. Mr Wood submitted that I should not accept
this evidence, on the basis that the plaintiff should not be believed.
I do not
believe that the plaintiff deliberately sought to mislead me by giving false
evidence. He said that he had a bad memory and this I accept. He also struck me
as a person who did not bother himself with details which did not coincide with
that which he considered important. At the time when the question of the
notices was being considered the defendant was irritating the plaintiff by not
paying his rent. Also the plaintiff was irritated by the fact that Valley and
Green Farms were (as he put it) a weak link in the chain for Heritage relief.
At that time the negotiations had reached the stage when the defendant was
prepared to return certain buildings, and all but two of the cottages, but the
plaintiff would have to pay for a new building and for repairs to the two
cottages left in the tenancy. He saw the opportunity based on the advice of Mr
Chadd to exert pressure upon the defendant by way of the notices to remedy and
quit. His motive was to use any means that occurred to him to get what he
wanted, namely the cottages and the buildings, without paying anything. The
letter he wrote on July 6 1988 to Mr Wild, after Mr Wild had said that he could
no longer act for the plaintiff, is an indication of the plaintiff’s attitude:
Dear Nigel,
Re Valley Farm
(1) I note approximately 2 years ago we asked
Derek Turnbull to arbitrate the rent to get the cottages back and paid about
£2000 up front? + we asked the Valley
Farm Truck Business to be stopped.
(2) I note it was on your recommendation we pay
out approximately £38,000 on a new grain store for the tenant + do some repairs
+ accept a large reduction in rent etc.
(3) I note our legal advisers QC etc advised it
is their opinion that I can recover most of the cottages by litigation even
though I gave the tenant permission to sublet. I note it is your opinion my
legal advisers are incorrect–indeed it would seem to me I have no legal legs to
stand on but this bloke hasn’t been wrong before so I got to give him a go!!
(4) I note you feel you are unable to act for us
in the circumstances and will send the file back + a refund of fees etc. Kind
regards.
As I have
said, I do not believe that the plaintiff deliberately set out to mislead me by
giving false evidence. However, I cannot accept his evidence as to what
happened and what was in his mind, as his recollection cannot be relied on,
particularly where it did not accord with the documents and was contrary to
reasonable explanation. Clearly Mr Chadd was under the impression that the
permission that the plaintiff had given to sublet was oral and I can see no
reason why the plaintiff should have deliberately given him false information.
The conclusion must be either that the plaintiff did not remember that written
permission had been granted or that the information he gave Mr Chadd was
imprecise, which led Mr Chadd to conclude that the permission had been given
orally. I do not believe that Mr Chadd’s recollection can be relied on as to
what was said unless recorded in a document, as I came to the firm conclusion
from his evidence that his recollection of what happened was a reconstruction
of what he believed happened on the basis of documents and what he did.
I suspect that
what did happen was that the plaintiff gave to Mr Chadd information similar to
that recorded in his note of May 4 1988, namely that he had given the defendant
permission to do what he liked about letting the cottages out while he was
manager but not afterwards. From that Mr Chadd assumed it was an oral permission.
However, I believe that the plaintiff’s mind was fixed on his objective of
getting the cottages back by pressure and that if he had paused to think about
it he would have remembered that something had been put into writing. He never
bothered to think; he impulsively went ahead with an intention to achieve his
aims. He was indifferent as to whether his instructions on this point were
properly understood and whether written permission had been given. He was sent
the instructions to counsel and did not bother to read them carefully enough or
think about what was said to form a view that they were correct.
I turn to the
statements made in the notices to quit. The first breach alleged was that the
defendant had let or entered into agreements to let to tenants who were not
farmworkers the pair of cottages known as 20 and 21 King’s Lane, Sotherton. The
plaintiff knew that one of these was occupied by Mr Briggs, as this was the
information he obtained from Mr Toy which he gave to Mr Chadd on May 31 1988. I
also believe he must have been sufficiently familiar with the estate to know
this from his own knowledge. In his evidence he said he knew that there were
two bona fide farmworkers and that he never authorised Mr Chadd to serve a
notice in relation to the cottage occupied by Mr Briggs. He was, he said, sure
that he told Mr Chadd that Briggs was OK. That was the word which appeared in
the note of the conversation of May 31 1988. The only conclusion that I can
draw is that the plaintiff had no honest belief that the defendant was in
breach of the tenancy in letting the cottage to Mr Briggs. In fact he believed
to the contrary. Despite that, he took no step to correct the position when he
saw the notice. He was not interested in seeing that the notice was correct but
only in achieving his aims.
I hold that
the statement that the defendant was in breach of his lease by subletting 21
Valley Farm Cottage was false, was known to the plaintiff to be false and was
approved by him. It therefore was a fraudulent statement.
Mr Chadd on
his evidence had no recollection of the details of the conversation he had with
the plaintiff on May 31 1988. As I have said, his evidence was what could be
called a reconstruction of what he believed had been said, having regard to his
note of the conversation and what he did. He said that he believed that ‘OK’ in
relation to Mr Briggs’ cottage meant OK to put in the notice. If so, he
misunderstood the plaintiff’s instructions. I have great doubts as to whether
Mr Chadd’s reconstruction is right, particularly as the note says ‘Out’ for 21
King’s Lane, which was occupied by Mr Warren under a protected shorthold
tenancy. I suspect that Mr Chadd was under pressure to serve a notice which he
realised was intended to achieve the return of the cottages and was not
sufficiently bothered whether the statements made were true or false, as he
expected a proper counternotice to be served and therefore any mistake would be
sorted out by the arbitrator. However, I cannot on the evidence hold that he
did not believe that he had instructions based upon information that was
credible that the letting to Mr Briggs was in breach of the tenancy agreement.
As to 20
Valley Farm Cottage, this was let pursuant to the 1984 written permission to Mr
Warren under a protected shorthold tenancy. As I have said, I accept the
plaintiff did not have in the forefront of his mind that written permission had
been granted. He never bothered to think whether written permission had been
granted. He recklessly went ahead, not caring whether the instructions given by
Mr Chadd to counsel were correct in this respect. It did not matter to him, as
he hoped the effect of the notice to quit would achieve his aim of the return
of the cottages without having to pay for a new building and repairs for the
cottages at Henham Green. I cannot accept that he had an honest belief that
only oral permission had been granted. It was no concern of his whether the
permission was oral or not, despite the fact that if he said it was written
then Mr Chadd would have wished to have seen the document. I accept that the
plaintiff, if he had bothered to remember that written permission had been
given, would not have remembered the details of the permission and would have
needed to consult the document to find out that 20 Valley Farm Cottage was
within the permission.
However, I
believe that the statement in the notice relating to 20 Valley Farm Cottage was
based on the understanding of Mr Chadd that the permission was oral and that
the plaintiff knew as he read the instructions. The plaintiff did not have any
honest belief that it was true in the sense that he did not care whether it was
true or false. The statement in the notice was based on a fraudulent statement.
It would probably not have been made except for that statement. In such
circumstances it seems to me that the whole basis for the statement was
fraudulent.
The notice
also alleged that there had been wrongful subletting of the Old Valley Farm
House Cottages. Both were empty at the date of the notice to quit, as the
plaintiff knew, as that was the information he gave Mr Chadd on May 31 1989. He
said in his evidence that he did not believe that he could suffer material
prejudice provided the cottages were vacant. It was quite clear that he had no
belief that these cottages were let, nor that it was right to serve a notice to
quit in respect of cottages which were vacant. He just did not bother to
consider whether the statements made in the notice to quit in relation to those
cottages were true or false. The plaintiff had no honest belief that those
cottages were let in a manner which would establish a reasonable ground for
serving a notice to quit. His attitude is also illustrated by the notice to
remedy. I cannot accept that he had an honest belief that the defendant should
remedy subletting breaches in respect of those cottages when he knew that they
were vacant at the time. I hold that the notice to quit was fraudulent in this
respect also.
I am not able
to absolve Mr Chadd from blame in respect of the statements made in relation to
Old Valley Farm House Cottages. He knew they were empty. He made no proper
inquiries as to whether they were both let at the time. Despite that, he served
a notice requiring the defendant to remedy and a notice to quit. He had been
advised by counsel that if it were possible for the defendant to hand the
cottages back, then the appropriate action was a notice to remedy. It was only
in case of doubt that both a notice to remedy and a notice to quit should be
served. There could be no doubt on the facts known to Mr Chadd that the
cottages were vacant and had been let for holidays. In those circumstances he
could not have properly believed that the appropriate notice was a notice to
quit.
The notice to
quit also alleged that 24 Henham Green had been let in breach of the tenancy.
This cottage was let pursuant to the 1984 permission to Mr Willard under a
protected shorthold tenancy, in the same way as 20 Valley Farm Cottage had been
let, which I have already dealt with. It seems to me that the same conclusion
should be arrived at in respect of 24 Henham Green as that of 20 Valley Farm
Cottage for the same reasons, and I so hold.
Finally, I
come to material prejudice. Counsel advised that if the plaintiff could not
establish material prejudice then the notice to quit would fail. This advice
was communicated to the plaintiff by Mr Chadd. It seems that neither the
plaintiff nor Mr Chadd ever thereafter considered whether that could be
established. The plaintiff did not care. He intended to put pressure upon the
defendant by the notice to quit with the aim of securing the return of the
cottages without having to pay for a new building and for repairs to the Henham
Green Cottages. The defendant irritated the plaintiff and he wished to put
pressure on him whatever the chance of success. The plaintiff did not believe
that he had suffered or was suffering material prejudice by Mr Briggs’
occupation of 21 Valley Farm Cottage or by the empty Old Valley Farm Cottages.
In that respect also the plaintiff did not honestly believe the case put
forward in the notice to quit. He purposely abstained from considering the
matter.
I have come to
the conclusion that the plaintiff did not believe the matters set out in the
notice to quit. It was a document not intended, or even thought by him, to have
a chance of securing that Valley and Green Farms should be delivered up. It was
a document designed to harm the defendant in that it was served with a view to
putting pressure upon him to release all but two of the cottages in his
tenancy. It was a dishonest document which the plaintiff did not believe
sustainable in fact or law. In such circumstances, I hold that it is a nullity
and I refuse to give effect to it.
I will hear
counsel upon the proper order to be made to give effect to my conclusions.
