Agricultural holdings — Licence — Section 2 of Agricultural Holdings Act 1986 — Licence granted for use of agricultural land — Whether gratuitous licence — Whether consideration for licence — Whether section 2 of 1986 Act applying and agricultural tenancy being created — Rent memorandum including disputed land — Whether surrender and regrant by operation of law — Surrender by operation of law — Gratuitous licence — Whether under alternative argument rent memorandum adding land to tenancy — Whether surrender and regrant — Whether Agricultural Tenancies Act 1995 applying — Whether section 4(1)(f) excluding new tenancy from 1995 Act
In 1980, the trustee owners of an estate granted the defendants an agricultural tenancy of around 50.96 acres. The trustees also owned a field of approximately 1.10 acres (the copse), which was not included in the tenancy. In 1990, the trustees sold the estate to G, who then made certain arrangements with the defendants relating to the copse. In 1996, a rent memorandum recorded a rent review in respect of 52.06 acres of land. The claimant, which had acquired the estate in 2000, brought proceedings against the defendants claiming possession of the copse. It contended that, in 1991, G had granted the defendants only a gratuitous licence to farm the copse, and that this licence had not been upgraded into an agricultural tenancy by section 2 of the Agricultural Holdings Act 1986. The defendants argued that they had been granted a licence in 1990 in consideration of the grant to G of shooting or other rights over their land; the licence had been upgraded into a tenancy under section 2. In the alternative, they argued that, even if the arrangement with G were merely a gratuitous licence, the 1996 rent memorandum had given rise to a surrender and regrant of a tenancy that included the copse.
Held: The claim for possession was dismissed. (1) The arrangement for the use of the copse had been made between G and the defendants in 1991; consideration had been given for this licence by allowing G rights over some of the land owned by the defendants. (2) This arrangement created an annual agricultural tenancy under section 2 of the 1986 Act. (3) The area of the copse (1.10 acres) and the area of land originally let under the tenancy agreement (50.96 acres) totalled the acreage in the 1996 rent memorandum. However, this memorandum did not involve the surrender of the previous arrangements, the original 1980 tenancy and that arising under section 2 in 1991, and the grant of a new tenancy. (4) On the defendants’ alternative argument, the 1996 rent memorandum effectively added land (namely the copse) to the existing tenancy, which gave rise to an implied surrender by operation of law of the earlier 1980 tenancy and the 1991 gratuitous licence and the creation of a single tenancy. (5) The possible application of section 4(1)(f) of the Agricultural Tenancies Act 1995 must be objectively judged; the 1996 rent memorandum did purport to vary the existing tenancy by including additional land and, accordingly, the 1995 Act had no application.
The following cases are referred to in this report.
Arrale v Costain Civil Engineer [1976] 1 Lloyd’s Rep 98, CA
Bahamas International Trust Co Ltd v Threadgold: sub nom Threadgold v Bahamas International Trust Co Ltd [1974] 1 WLR 1514; [1974] 3 All ER 881; [1975] 1 EGLR 1; (1974) 233 EG 47, HL
Childers (JW) Trustees v Anker (1996) 73 P&CR 458; [1996] 1 EGLR 1; [1996] 01 EG 102, CA
Colchester Borough Council v Smith; sub nom Colchester Borough Council v Tillson [1992] Ch 421; [1992] 2 WLR 728; [1992] 2 All ER 561, CA; [1991] Ch 448; [1991] 2 WLR 540; [1991] 2 All ER 29; (1991) 62 P&CR 242, Ch
Cox v Jones [2004] EWHC 1006 (Ch); [2004] EWHC 1486 (Ch)
Davies v Davies [2002] EWCA Civ 1791; [2003] 01 EG 65 (CS)
Gladstone v Bower [1960] 2 QB 384; [1960] 3 WLR 575; [1960] 3 All ER 353; (1960) 58 LGR 313, CA
Gold v Jacques Amand Ltd (1992) 63 P&CR 1; [1992] 2 EGLR 1; [1992] 27 EG 140, Ch
Goldsack v Shore [1950] 1 KB 708; [1950] 1 All ER 276; (1950) 66 TLR (Pt 1) 636
Harrison-Broadley v Smith [1964] 1 WLR 456; [1964] 1 All ER 867; (1964) 189 EG 513, CA
Kelly v Chief Constable of South Yorkshire (No 1) [2001] EWCA Civ 1632
Mitton v Farrow [1980] 2 EGLR 1; (1980) 255 EG 449, CA
Verrall v Farnes [1966] 1 WLR 1254; [1966] 2 All ER 808, Ch
This was the hearing of a claim by the claimant, Well Barn Farming Ltd, against the defendants, Peter and Janet Backhouse, for possession of agricultural land.
Zia Bhaloo (instructed by Bircham Dyson Bell) appeared for the claimant; GB Purves (instructed by NC Brothers & Co, of Reading) represented the defendants.
Giving judgment, Mr Paul Morgan QC said:
Claim
[1] This claim concerns some 1.10 acres of agricultural land, which is shown edged blue on the plan annexed to the particulars of claim. The land in question was at one time known as the Old Farm Site, but has more recently been known as Pump House Copse. It seems that, in the 1980s and until September 1991, the land was overgrown with trees and bushes and was not suitable for agricultural use. In around September 1991, the land was cleared, or “grubbed out” as the witnesses described it, and since that date the land has been used by the defendants for agricultural purposes.
[2] The freehold of Pump House Copse has been vested in the claimant since around 2000. Before the claimant acquired the freehold, Pump House Copse had been farmed by the defendants and they continued to farm it save, possibly, for a period in 2002 and 2003.
[3] On 10 June 2004, the claimant issued the present proceedings against the defendants. The only relief claimed is a declaration that the defendants did not hold a tenancy over the Pump House Copse land. The particulars of claim did not put forward any explanation as to the basis upon which the defendants were in occupation of Pump House |page:110| Copse before the claimant acquired it in 2000, nor as to the basis upon which the defendants remained in Pump House Copse after 2000.
[4] The defendants’ defence, as originally served, asserted a tenancy of Pump House Copse pursuant to an express agreement with a predecessor in title of the claimant. The agreement was said to have been made in or around 1990. The defendants also relied upon a subsequent rent memorandum of 6 December 1996, which they entered into with a different predecessor in title of the claimant. Further, the defendants asserted that, if they did not have an express tenancy of the land, they had at least a contractual licence of the land, which was upgraded into a tenancy from year to year by virtue of section 2 of the Agricultural Holdings Act 1986 (the 1986 Act). The defendants also alleged various estoppels said to bind the claimant.
[5] In its reply, the claimant did put forward a positive case as to the basis upon which the defendants occupied Pump House Copse. The claimant contended that a predecessor in title of the claimant had permitted the defendants to occupy Pump House Copse in the early 1990s, but that permission was for no consideration and had therefore been a gratuitous licence that was not upgraded by section 2 of the 1986 Act.
[6] In her skeleton argument prepared in advance of the trial, Ms Zia Bhaloo, who appeared on behalf of the claimant, identified her principal case as one based upon the contention that the defendants had only a gratuitous licence to occupy Pump House Copse and therefore did not have a tenancy of that land within the 1986 Act, or at all.
[7] In the skeleton argument prepared by Mr GB Purves, who appeared on behalf of the defendants, Mr Purves addressed the allegation that the defendants had only a gratuitous licence. He said, first, that the consideration for whatever permission the defendants had to occupy the land was in accordance with the evidence contained in Mr Peter Backhouse’s witness statement. However, he submitted in the alternative that, even on the claimant’s own evidence, there was consideration for the licence to occupy the land and the arrangement was upgraded into a tenancy under section 2 of the 1986 Act. Before the commencement of the trial, this alternative allegation in Mr Purves’ skeleton argument was not given any particular prominence.
[8] After all the evidence in the case had been given, Mr Purves applied to me for permission to amend his defence, and I granted that permission. I will refer towards the end of this judgment to my reasons for so doing. The burden of the amended defence was to put forward an alternative case, very much in accordance with what Mr Purves had said in his skeleton argument (but which he had not up to that time pleaded), to the effect that, even on the claimant’s own evidence, there was consideration for the arrangement that had been made between the owner of the land and the defendants, and the case came within section 2 of the 1986 Act.
Principal issues
[9] Having referred to the cases as identified in the pleadings and in the skeleton arguments, I can summarise the principal issues as involving: first, an issue as to the nature and legal effect of the original arrangement made between the owner of Pump House Copse and the defendants; second, an issue as to the meaning and legal effect of the rent review memorandum of 6 December 1996; and, third, a possible issue as to the application of section 4(1)(f) of the Agricultural Tenancies Act 1995 (the 1995 Act).
Facts
[10] Although there is considerable dispute of fact as to the original arrangement made by the owner of Pump House Copse and the defendants, much of the factual background to this matter is not in dispute and I can set it out quite shortly.
[11] Pump House Copse is at the edge of an area of agricultural land known as Unhill Bottom. Some 51 or so acres of land at Unhill Bottom were the subject of a written tenancy agreement dated 14 April 1980 between the Trustees of the Vandervell Estate and the defendants. That written tenancy agreement did not extend to Pump House Copse.
[12] Pump House Copse has been owned by the owner of the adjoining land known as the Well Barn Estate. That is primarily a shooting estate. Prior to 1990, it had been owned by the Trustees of the Vandervell Estate. The relevant trustees were a Mr Robins and a Mr Few Brown. Mr Few Brown was a chartered surveyor and a partner in the firm of Howard Son & Gooch, which appeared to have merged with Savills in the mid-1980s.
[13] On 1 February 1990, the title to the Well Barn Estate and the title to Pump House Copse were transferred to a Mr Thomas Greenham. Mr Greenham owned the Well Barn Estate and Pump House Copse until around 1994, when he transferred it to Bilton Agricultural Investments Ltd. This company was taken over by Slough Estates plc, which sold the Well Barn Estate and Pump House Copse to the claimant in around 2000. The claimant has remained the owner of Well Barn Estate and Pump House Copse since that time.
[14] Mr and Mrs Backhouse are farmers. They own the freehold of land in the vicinity of the Well Barn Estate, and, in particular, they own an area known as Fullers Firs, which adjoins Unhill Bottom. At the material times, Fullers Firs was covered with trees and bushes and other vegetation. Prior to 1990, the defendants had made agreements from time to time with the owners of the Well Barn Estate to permit those owners to have the shooting rights over Fullers Firs.
[15] The tenancy agreement of 14 April 1980 is, as I have stated, between Mr Robins and Mr Few Brown, as trustees of the Vandervell Estate, and the defendants. The demised premises comprise some 51 acres or, more accurately, 50.96 acres of agricultural land. The plan annexed to the tenancy agreement is obviously based upon the Ordnance Survey plan. The plan quite clearly shows that Pump House Copse is not included in the tenancy. However, a possible source of confusion is that someone has typed upon the Ordnance Survey sheet the field numbers and acreages of the principal fields on the Well Barn Estate and, were one to glance at the plan, the field numbers and the acreages, one might conclude that the land that was let consisted of field no 0004 and field no 0048, and that the acreage of the former field was 36.89 acres and the acreage of the latter field was 15.17 acres, making a total of 52.06 acres. However, that would be the wrong deduction from looking at the plan because, as I have said, the let land extends to only 50.96 acres, and the figure of 15.17 acres includes the 1.10 acres at Pump House Copse, which the plan clearly shows is intended to be outside the tenancy. The plan is also a little unhelpful in that it is not possible to see that Pump House Copse has a separate field number, namely 8841. I have been shown a larger plan from which the tenancy plan was obviously copied, and the larger plan shows that Pump House Copse does indeed have its own field number and, further, that the acreage of 15.17 was not just for field no 0048 but for no 0048 together with the word “etc”. Armed with the larger, clearer plan, the fields that were let and the fields that were excluded and the acreage of the let land and the acreage of the excluded Pump House Copse is quite clear, but the plan attached to the tenancy agreement could have been, and probably was, a source of confusion.
[16] Clause 3 of the tenancy agreement provided that the rent would be £756 pa. Clause 3 also provided that any agreement by which a new rent for the holding was agreed, unless otherwise specifically stated, would be deemed to have been made under clause 3 and not to have created a fresh tenancy agreement. Further, clause 3 contained the following provision:
Until such time as a fully rabbit proof fence is erected around the entire boundary of the land comprised in this tenancy by the Landlord or the Tenants to the Tenants’ full satisfaction the agreed rent per acre at any subsequent rent review shall be applied and the total rent calculated on an area of 42 acres only.
[17] The operation of that provision and the way in which it fitted in with the statutory rent review provisions in the Agricultural Holdings Acts of 1948 and 1986 was not raised in the history of this matter, and, when the fixing of the rent became relevant in 1996, it is quite clear that the parties acted upon the basis that this provision was effective to limit the rent as it provided.
[18] The tenancy agreement contains a number of obligations of the tenant expressed in usual terms, to which it is not necessary to refer. |page:111| By clause 19 of the tenancy agreement, the defendants agreed to keep all livestock out of Pump House Copse, and Pump House Copse was stated to be “OS0048 part”. In fact, Pump House Copse was not part of no 0048 but had its own field number – 8841 – and this provision, together with the plan, was liable to add to the confusion. Finally, I should mention that the schedule to the tenancy agreement describes the land as having field nos 0004 and 0048 on the Ordnance Survey map; this statement was accurate, but I have already referred to the map attached to the tenancy agreement and the possible, but wrong, deduction that field no 0048 extended to 15.17 acres.
[19] It has always been accepted that the land let by the 1980 tenancy agreement was an agricultural holding within the Agricultural Holdings Acts of 1948 and 1986. On 21 September 1982, Howard Son & Gooch, acting for the Trustees of the Vandervell Estate, served on the defendants a notice to review the rent pursuant to section 8 of the 1948 Act. The description of the holding was given in the notice, as follows:
The holding known as Unhill Bottom OS numbers 0004 and 0048 etc in all approximately 51 acres.
The reference to 51 acres shows that the landlord’s agent knew that the acreage of the land let by the tenancy agreement, excluding Pump House Copse, was some 51 acres (and it was in fact 50.96 acres). The reference in the heading to “0048 etc” was slightly inaccurate, and the reference should have been to 0048 without any “etc”. The rent for the holding was agreed pursuant to this notice, and the parties entered into a memorandum of 2 June 1983 revising the rent to £1,050 pa. That rent is £25 per acre for 42 acres. The description of the holding in the memorandum is the same as the description in the section 8 notice.
[20] The rent for the holding was again reviewed in 1986. The documents include the memorandum of 3 September 1986 increasing the rent for the holding to £1,155, which is £27.50 per acre for 42 acres. The description of the holding in the memorandum is the same as in the section 8 notice of 21 September 1982 and the memorandum of 2 June 1983.
[21] The relevant arrangement that led to the defendants occupying Pump House Copse was made either in 1990 (as the defendants contend) or in 1991 (as the claimant contends). The parties who made the arrangement, orally, were Mr Greenham, who had completed his purchase of the Well Barn Estate and Pump House Copse on 1 February 1990, and Mr Backhouse. Mr Greenham is of course no longer connected with the Well Barn Estate and was not called by either party to give evidence as to the arrangement. However, Mr Greenham’s gamekeeper, a Mr Cull, was present at, he said, two meetings between Mr Greenham and Mr Backhouse, and Mr Cull gave evidence. Mr Cull has remained the gamekeeper on the Well Barn Estate since 1990 and is currently employed by the claimant. I heard evidence not only from Mr Backhouse but also from his wife, the second defendant, and from his son, Mr Brynne Backhouse.
[22] In summary, the rival versions as to the facts of what happened can be summarised as follows. Mr Cull said that he attended a meeting between Mr Greenham and Mr Backhouse on 4 February 1990, but the question of Pump House Copse was not discussed. The arrangement that led to the defendants occupying Pump House Copse was actually discussed a year later in February or March 1991. Mr Cull gave detailed evidence, as will appear, as to what was said on this second occasion.
[23] Mr Backhouse’s version of the facts was that he and his wife met Mr Greenham in 1989, at a time when Mr Greenham was negotiating to buy, or had contracted to buy, the Well Barn Estate. Mr Backhouse did not say that any relevant arrangement had been made with Mr Greenham in 1989 relating to Pump House Copse. Mr Backhouse said that he and his son, Brynne Backhouse, met Mr Greenham on 18 February 1990, when the arrangement was made. The fact that the arrangement had been made in 1990, rather than in 1991, is central to Mr Backhouse’s case as to the consideration that he gave for that arrangement. Mr Backhouse did not give any evidence as to an arrangement being entered into in February or March 1991, or indeed at any time in 1991.
[24] It is essential for the purpose of choosing between the various accounts to consider when the arrangement between the parties was made. Fortunately, there is considerable assistance in this respect from contemporaneous documents and from facts that are no longer in dispute.
[25] On 12 February 1990, Mr Greenham wrote to Mr Backhouse. The letter is on the headed notepaper of Westminster Scaffolding Group plc, which was Mr Greenham’s company. The letter refers to a meeting “last year”, namely in 1989. The letter states that Mr Greenham had completed his purchase on 1 February 1990. The letter asks for a meeting between Mr Greenham and Mr Backhouse. That letter shows that Mr Backhouse is right when he says that there was a meeting with Mr Greenham in 1989. It also shows, in my judgment, that Mr Cull cannot be right in dating a meeting that he said he attended as 4 February 1990. The letter of 12 February 1990, and the way in which it is expressed, is inconsistent with the idea that the meeting described by Mr Cull as happening on 4 February 1990 did happen on that date.
[26] Mrs Backhouse kept a diary at the relevant time and made an entry in the diary for 18 February 1990. The diary entry refers to Mr Backhouse meeting Mr Greenham and agreeing on two matters:the first being that Mr Greenham was to let the defendants have some 269 acres formerly farmed by a Mr Shackleton; and the second was that Mr Greenham would continue with shooting over the defendants’ land. The diary entry is also consistent with Mr Backhouse’s letter to Mr Greenham of 19 February 1990. This refers to a meeting on 18 February 1990 and to the same two matters referred to in the diary entry.
[27] There was considerable correspondence between February and August 1990 discussing the matters then in negotiation between the parties. These related to a shooting lease to be granted by the defendants to Mr Greenham over Fullers Firs and a tenancy for more than one year and less than two years – see Gladstone v Bower [1960] 2 QB 384 – in relation to Warren Farm. There is no mention anywhere in that correspondence of the parties having discussed or made an arrangement as to Pump House Copse. I can see that any arrangement as to Pump House Copse would have been a matter of limited importance at the time but, none the less, the content of the correspondence suggests that Pump House Copse had not been a relevant matter at any time during 1990.
[28] The parties entered into a formal written agreement on 29 October 1990 relating to the shooting rights over Fullers Firs and the Gladstone tenancy in respect of Warren Farm. It is not necessary to refer to the detailed terms of those agreements.
[29] One other matter that significantly assists with the dating of the arrangement made between the parties in relation to Pump House Copse is the date upon which Pump House Copse was grubbed out. Mr Backhouse’s witness statement describes how he made an arrangement with Mr Greenham on 18 February 1990 and, very soon after that meeting, Pump House Copse was grubbed out. Brynne Backhouse’s witness statement refers to the arrangement being made in February 1990, and Pump House Copse being grubbed out “subsequently later that year”, that is, in 1990. Mr Cull’s witness statement stated that Pump House Copse was grubbed out in September 1991, and he produced a diary entry that was open to interpretation but that arguably supported his recollection. On this point, the claimant was able to produce a photograph from March 1991 that showed quite clearly that Pump House Copse had not been grubbed out by that date. Faced with the evidence of the photograph, the defendants agreed that Pump House Copse had not been grubbed out until after March 1991.
[30] The other matter that I bear in mind in determining the date upon which the relevant arrangement was made is derived from the purpose of the arrangement. I will refer in detail to Mr Cull’s evidence later in this judgment, but, based upon the reasons that led to Mr Greenham suggesting an arrangement on Pump House Copse, it is very much more probable that Mr Greenham brought up the question of Pump House Copse after the end of the shooting season in February 1991 rather than in February 1990, because, in February 1990, Mr Greenham, as the |page:112| new owner of Well Barn Estate, had not had any real experience of the problems with the shooting on the estate.
[31] In these circumstances, I find that Mr Greenham did have a discussion of some sort with Mr Backhouse (and, possibly, Mrs Backhouse was also present) in 1989, but nothing was said about Pump House Copse. I find that Mr Cull is wrong in dating a conversation between Mr Greenham and Mr Backhouse at which Mr Cull was present as 4 February 1990. I also find that there was a meeting between Mr Greenham and Mr Backhouse on 18 February 1990, but that nothing relevant was said about Pump House Copse. Finally, and most significantly, I find that the arrangement that was arrived at between Mr Greenham and Mr Backhouse was made in February or March 1991.
[32] The significance of finding that the arrangement was discussed and made in February or March 1991 is that it completely undermines Mr Backhouse’s evidence as to the way in which the arrangement came about. Mr Backhouse said that the arrangement on Pump House Copse was all part of the negotiations under which the defendants were to become the tenants of Warren Farm and of Pump House Copse, and Mr Greenham was to acquire the shooting rights over Fullers Firs. However, as I have stated, the arrangements on Warren Farm and Fullers Firs were entered into on 29 October 1990 and cannot have been any part of the consideration for an arrangement that, as I find it, was entered into in February or March 1991.
[33] It is not possible to transpose Mr Backhouse’s evidence of the arrangement that he said he made with Mr Greenham from 18 February 1990 to a date in 1991 and to do so on the basis that Mr Backhouse was right about the content but wrong about the date. As I have indicated, all the content of the arrangement spoken to by Mr Backhouse would be undermined if the arrangement had been made in 1991, as I find that it was. This produces the curious consequence that Mr Backhouse did not give any relevant evidence about the arrangement that had been made in 1991. Mrs Backhouse gave evidence about a meeting in 1989, but the question of Pump House Copse had not been raised at that meeting. Brynne Backhouse, like his father, gave evidence that the arrangement on Pump House Copse had been made in February 1990 and had been tied up with the negotiations on Warren Farm and Fullers Firs, but, as with the evidence of his father, I find that Brynne Backhouse is wrong about the date and I am not able to transpose his evidence from 1990 to 1991, since the content of the evidence is undermined by my finding as to the date upon which the arrangement was made.
[34] This means that the only witness who gave direct evidence as to the discussion that led to the arrangement for Pump House Copse was Mr Cull. I have already indicated that I do not accept Mr Cull’s date of 4 February 1990 for a relevant discussion between Mr Greenham and Mr Backhouse. However, in my judgment, that does not mean that Mr Cull’s detailed evidence as to the relevant discussions in February or March 1991 is unreliable. In any event, neither party asks me to reject outright Mr Cull’s evidence. The claimant called Mr Cull as its only witness as to the relevant arrangement and could scarcely ask me to ignore his evidence, and did not do so. The defendants cross-examined Mr Cull about discussions that he said, and I find, took place in February or March 1991, and, in the event, the defendants now rely heavily upon what Mr Cull said.
[35] Mr Cull’s evidence is contained in his witness statement and in his cross-examination. I have very helpfully been provided with a transcript of the evidence that he gave in cross-examination. In view of the submissions that were made to me as to the consequence of this evidence, I think that I should set it out in some detail in this judgment.
[36] Mr Cull’s witness statement contained the following passages:
7 The date of my arrival at the Estate, 1 February 1990, was the end of the 1989/1990 shooting season. By the end of the following season, 1990/1991, a problem was apparent with the exit of birds from woodland known as Fullers Firs. This land to the north of Unhill Bottom is owned by the Defendants. The birds would fly too low out of Fullers Firs, and then land in the cover provided by the bushes and scrub on the Pump House Copse site.
8 As a result of this, Mr Greenham arranged to meet Mr Backhouse to discuss what, if anything, could be done to rectify the situation. I was also present. We stood at the south east corner of Fullers Firs, on the road which runs alongside. Mr Greenham asked Mr Backhouse if he would be willing for some bushes and undergrowth behind the chalk pit in Fullers Firs to be removed. This was to ensure that the birds would fly higher out of the woodland. We walked in and inspected the area. At the same time Mr Greenham told Mr Backhouse that he intended to remove the scrub on Pump House Copse but keep the mature trees.
9 Mr Backhouse was told by Mr Greenham that once the scrub was gone he could farm the Pump House Copse area for no additional rent, but the agreement was only temporary as no one was sure that this would work. If the arrangement was not satisfactory, then the Pump House Copse area would be replanted at the end of the next shooting season.
10 Peter Backhouse was in full agreement with the proposals and at the end of September 1991, undergrowth was removed from Fullers Firs and Pump House Copse area ready for the 1991/1992 season. A casual labourer known to me only as Sambo, who worked as one of Mr Greenham’s machine drivers, took out the undergrowth in Pump House Copse. He was doing clearance work for the Estate generally at the time. On checking my diaries I have found one relevant entry for 30 September 1991 “Sambo still flattening pit by Fullers Firs”.
[37] When cross-examined, Mr Cull’s evidence included the following:
Q. Let us now go to your para 8 on p139. I am just wondering if you could help me with this – in your para 7 you predicate your para 8 by saying that there was a problem with birds, extra birds from woodland known as “Fullers Firs”, what was that about? A. What was happening was that the birds were flying from Fullers Firs, being driven by the beaters, and actually land into the Pump House Copse, which was not the object. We wanted them to fly right across, high up on to the bank beyond.
Q. Right. And what Mr Greenham wanted to do was to achieve some resolution of that difficulty with Mr Backhouse. Is that correct? A. Correct.
Q. Yes. And he required Mr Backhouse’s consent to do something in Fullers Firs to achieve that. Is that right? A. That’s correct.
…
Q. … So what happened in Fullers Firs? A. Fullers Firs: what we required in Fullers Firs was just a small track cutting behind some bushes there and one of the estate workers at the time, called George Biggs, actually cut some of the bushes to about four foot high right the way across the front of Fullers Firs some thirty feet inside of it.
Q. And to achieve that you had to have Mr Backhouse’s consent. A. Correct.
Q. And did it work? A. No.
Q. And you say that at the same meeting you were present when Mr Greenham and Mr Backhouse walked in, inspected the area that was going to be cut, that is the area in Fullers Firs. A. That’s correct.
Q. And you say Mr Greenham said that he was intending to remove the scrub on Pump House Copse but keep the mature trees. That was all for the shooting, was it? A. It was, yes.
Q. And then you say that Mr Backhouse was told by Mr Greenham that once the scrub was gone he could farm Pump House Copse area for no additional rent. Now, who volunteered the information about Pump House Copse? Tell us how the meeting went. How did the subject of Pump House Copse arise? A. We would have brought it up at the same time as we were talking about the cutting of the track in Fullers Firs. And it was obvious to deal with it all the same day whilst we were all there together.
Q. Yes. The picture I am trying to get from you is this: there is a problem with the birds. A. Yes.
Q. And you need to do some cutting in Fullers Firs, right. So Mr Backhouse agrees to the cutting, you say. A. He did, yes.
Q. Well, how does Pump House Copse come into the equation at all? A. Because the two went side by side. To get the exit from Fullers Firs we also needed them to go over the bank beyond, and to do one was pointless without doing the other.
Q. But why would it require Mr Backhouse to have anything to do with Pump House Copse? A. It wouldn’t have had anything to do with Mr Backhouse, it was Mr Greenham’s choice to take out the cover on Pump House Copse.
Q. But why allow Mr Backhouse in to farm Pump House Copse? A. Mr Backhouse said that at the time when we told him that we were going to remove the scrub from Fullers Firs, could he have permission to use the bit of ground that was left because it would make his life easier for turning his tractors |page:113| and vehicles at the top, rather than go all the way round as it was Pump House Copse which was then going to be removed.
Q. So there was a quid pro quo, was there, for the cutting of Fullers Firs Mr Backhouse was going to get in return the access to Pump House Copse? A. Well, we would have done it regardless, so it would have been done regardless. I don’t know about a quid pro quo, but it was a two-way…
Q. It was a two-way street. A. Yes.
Q. And a deal was struck. A. Yes.
Q. So Mr Backhouse got something in return for his agreement to cut back Fullers Firs. A. Yes.
Q. Thank you. Now, as regards the additional rent, there must have been a bit more conversation than simply “You can have it for no additional rent”. What was the… A. I think Mr Backhouse prompted… Mr Greenham was a demolition contractor and a scaffolder and he actually gave nothing away, so he would not have said “You can have it for nothing”. I think probably Mr Backhouse said to him at the time, you know, “We’ll tidy it up and farm it out, there’ll be no rent to change hands”.
Q. You see, is it not more likely to be the case if Mr Greenham was the sort of fellow that you describe, that there was an agreement that the rent would not increase, ie there might not be any practical rent in respect of Pump House Copse, but it would be taken as being part of the tenancy of Unhill Bottom. A. No, because we explained to Mr Backhouse at the time that should it not work, that the track that we’d cut in Fullers Firs we didn’t actually grub them out, we only cut them off at four foot high, so they would re-grow within a couple of years and if the Pump House Copse, that area that was taken down didn’t work, then we would re-plant it again as and when was necessary.
Q. You see you use this word “we”. It was not you who was making the agreement, it was Mr Greenham that was making the agreement, was it not? You were simply present. A. Mr Greenham and I had and did have quite a good association together and some of the things that he didn’t understand in the shooting world, he relied entirely upon me to give him the advice that I thought necessary and so he would have come back to me with the examples of what he wanted to do there.
Q. Yes, but the deal that was being made was a deal between Greenham and Backhouse, not between Greenham, Cull and Backhouse, was it? A. Well, you can word it like that if you wish, but I am sure that is how it was seen on the day.
Q. What I am putting to you is that any arrangement that was made between Mr Greenham and Mr Backhouse was an arrangement whereby the land at Pump House Copse would be treated as included in the farming arrangements for Underhill Bottom. A. No, most…
Q. … ie as part of the tenancy. A. Most definitely not, because if it didn’t work we would have immediately planted it straight back up again the following year.
Q. And notwithstanding that it, according to you, did not work it was allowed to continue on your evidence from 1991 onwards, was it not? A. The Pump House Copse area did work. It was a success, they didn’t land in there, there was nothing for the birds to land in there. But the track inside of Fullers Firs wasn’t a success and we never used it again after the first shoot day.
[38] I accept Mr Cull’s evidence. In particular, I find that the arrangement between Mr Greenham and Mr Backhouse was made in February or March 1991 and the conversation between the parties was in accordance with the evidence of Mr Cull. I reject Mr Backhouse’s contention that the arrangement was made in February 1990. I also reject Mr Backhouse’s contention that the consideration for the arrangement was Mr Backhouse agreeing to grant to Mr Greenham sporting rights over Fullers Firs. By February 1991, those sporting rights had already been granted by the shooting lease of 29 October 1990. I also reject Mr Backhouse’s contention that it was expressly agreed between the parties that Pump House Copse would be added to the tenancy of the adjoining land at Unhill Bottom.
Legal consequences of the arrangement
[39] The next step is to analyse the legal consequences of the parties making the arrangement described by Mr Cull. This involves a consideration of section 2 of the 1986 Act. Section 2 provides:
Restriction on letting agricultural land for less than from year to year
2.- (1) An agreement to which this section applies shall take effect, with the necessary modifications, as if it were an agreement for the letting of land for a tenancy from year to year unless the agreement was approved by the Minister before it was entered into.
(2) Subject to subsection (3) below, this section applies to an agreement under which –
(a) any land is let to a person for use as agricultural land for an interest less than a tenancy from year to year, or
(b) a person is granted a licence to occupy land for use as agricultural land,
if the circumstances are such that if his interest were a tenancy from year to year he would in respect of that land be the tenant of an agricultural holding.
(3) This section does not apply to an agreement for the letting of land, or the granting of a licence to occupy land –
(a) made (whether or not it expressly so provides) in contemplation of the use of the land only for grazing or mowing (or both) during some specified period of the year, or
(b) by a person whose interest in the land is less than a tenancy from year to year and has not taken effect as such a tenancy by virtue of this section.
(4) Any dispute arising as to the operation of this section in relation to any agreement shall be determined by arbitration under this Act.
[40] There was no real dispute between the parties as to the legal principles that apply to the application of section 2 of the 1986 Act. The meaning of “an agreement” has been considered in a number of cases that are conveniently summarised in para 21.020 of Woodfall on Landlord and Tenant, vol 2, as follows:
The reference to “an agreement” is not to an agreement in the loose and popular sense but to a contract enforceable at law. In particular, there must be an intention to create legal relations and there must be consideration moving from the grantee to the grantor. However, the section has been applied to informal agreements, to agreements between members of the same family, to agreements where the consideration was not in the form of rent or a licence fee, or, indeed, in monetary form, and to an arrangement under which a tenant allowed a family company to farm the land. An attornment clause in a mortgage whereby the mortgagor attorns tenant at will to the mortgagee is not a true contract and so is not “an agreement” for present purposes. A tenancy on sufferance is not a true tenancy and there is no agreement which would come within the section.
[41] Ms Bhaloo took me, in particular, to Goldsack v Shore [1950] 1 KB 708, which establishes that the reference to “an agreement” is not to an agreement in the loose and popular sense but to a contract enforceable at law. She also cited a passage from Hill & Redman’s Law of Landlord and Tenant that consisted of the annotations to section 2 of the 1986 Act. Mr Purves responded by citing Verrall v Farnes [1966] 1 WLR 1254 as showing that the consideration for the agreement need not take a monetary form. I have also reminded myself of the facts of Mitton v Farrow [1980] 2 EGLR 1*, Gold v Jacques Amand Ltd (1992) 63 P&CR 1† and Davies v Davies [2002] EWCA Civ 1791‡ as illustrations of the basic legal principle, which was not in dispute.
—————————————————————————————————-
* Editor’s note: Also reported at (1980) 255 EG 449
† Editor’s note: Also reported at [1992] 2 EGLR 1; [1992] 27 EG 140
‡ Editor’s note: Reported at [2003] 01 EG 65 (CS)
—————————————————————————————————-
[42] Mr Purves submitted that the arrangement as described by Mr Cull involved the grant of a licence to Mr and Mrs Backhouse to farm Pump House Copse and that, under that licence, Mr and Mrs Backhouse had the exclusive right to occupy and to be in possession of Pump House Copse. He also submitted that the licence was granted for a consideration moving from Mr and Mrs Backhouse to Mr Greenham. The consideration in question was the permission by Mr and Mrs Backhouse to Mr Greenham to cut back the bushes and other growth in Fullers Firs. Mr Purves took me to the shooting lease of 29 October 1990 to demonstrate that, in the absence of such a consent from Mr and Mrs Backhouse, Mr Greenham was not entitled to do the work that he wished to do in Fullers Firs. I did not understand Ms Bhaloo to challenge this last proposition.
[43] Ms Bhaloo submitted that the arrangement, as described by Mr Cull, was a gratuitous licence and not a contractual licence. She said that there had been no consideration moving from Mr and Mrs Backhouse to Mr Greenham and, in any event, there had been no intention between the parties to create legal relations. For these reasons, she submitted, the arrangement was not “an agreement” within section 2 of the 1986 Act. |page:114|
[44] In developing her submissions as to the lack of consideration for the arrangement described by Mr Cull, Ms Bhaloo took me in detail to the evidence given by Mr Backhouse, rather than to the evidence given by Mr Cull. She submitted that, based upon the evidence of Mr Backhouse, I ought not to find that the consideration for the permission to farm Pump House Copse was the giving of a consent by Mr and Mrs Backhouse to Mr Greenham to cut back the growth in Fullers Firs. The difficulty that I have with this submission was that the content of Mr Backhouse’s evidence was completely different from the evidence that I have accepted from Mr Cull, called on behalf of the claimant. Mr Backhouse placed the arrangement in the wrong year, which undermined the content alleged by him of the arrangement. Mr Backhouse did not give any evidence that linked the permission to farm Pump House Copse with the cutting back of growth in Fullers Firs. Had Mr Backhouse been the only witness, I would not have had any relevant evidence from him as to the true arrangement that was made in February or March 1991, an arrangement about which he gave no evidence at all.
[45] None the less, I have examined Mr Cull’s evidence to test the submission of Mr Purves that Mr and Mrs Backhouse gave consideration for the arrangement. On Mr Cull’s account, Mr Greenham asked Mr Backhouse’s permission to cut back the growth in Fullers Firs. Mr Cull confirmed in his cross-examination that Mr Greenham required Mr Backhouse’s consent for this work. As Mr Cull described, the work in Fullers Firs and the work in Pump House Copse were obviously connected from a sporting point of view. Mr Cull demurred at the suggestion that there was a quid pro quo, but he did accept that there was a two-way street and that “a deal was struck”. Somewhat tellingly, Mr Cull volunteered the evidence that Mr Greenham gave nothing away and that he would not have said “you can have it for nothing”. Although Mr Cull said that Mr Greenham would have done the work anyway, that can be a reference only to the work in Pump House Copse, which Mr Greenham was entitled to do anyway, but not to the work in Fullers Firs, because the tenor of Mr Cull’s evidence was that Mr Greenham recognised that he needed Mr Backhouse’s consent to this work. Mr Cull’s evidence was that the arrangement was to be temporary and Pump House Copse might be replanted at the end of the next shooting season. In my judgment, the temporary nature of the arrangement does not of itself mean that the arrangement was without consideration.
[46] Following the oral hearing, Ms Bhaloo supplied a copy of an extract from para 3.024 of Chitty on Contracts (29th ed), vol 1. This extract stated:
Consideration may also be said to be illusory where it is clear that the promisee would have accomplished the act of forbearance anyway, even if the promise had not been made. This would be the position if A promised B, who had religious objections to smoking, £10 if B did not smoke for a week. Since “it is not consideration to refrain from a course of conduct which it was never intended to pursue”, B’s forbearance from smoking would not constitute consideration for A’s promise. But where the promise provided an inducement for the act or forbearance, the requirement of consideration is satisfied even though there were also other inducements operating on the promisee’s mind.
The passage in quotation marks in para 3.024 is taken from the judgment of Geoffrey Lane LJ in Arrale v Costain Civil Engineer [1976] 1 Lloyd’s Rep 98, at p106. The facts of that case are not of particular assistance in applying the principle in the present case. Chitty also refers to Colchester Borough Council v Smith [1991] Ch 448, at p489, affirmed without reference to this point at [1992] Ch 421. However, I did not find the reference to this case as being particularly relevant. The passage in the judgment of Ferris J actually involves a discussion of another paragraph in Chitty, which is para 3.009 (29th ed), rather than para 3.024. The footnote in Chitty adds:
Semble the burden of proof on this issue is on the promissor.
[47] The difficulty that I have with the submission based upon para 3.024 of Chitty is that there was no examination in the evidence of the possibility that Mr Backhouse would have given consent to cutting back the growth in Fullers Firs even without the permission allowing him to farm Pump House Copse. I can well see some grounds for speculation that this might have been so. However, it is decidedly not the way that Mr Cull described it in the evidence that I have set out above. Accordingly, in my judgment, I am not able to find that the facts fit the proposition in Chitty. At the very least, the claimant has not discharged the burden that Chitty says is on the claimant of showing the necessary facts.
[48] In these circumstances, I find that there was consideration for the licence to Mr and Mrs Backhouse to farm Pump House Copse. The case is obviously weaker than the other cases cited in [41] above as to consideration for the purposes of section 2 (in that the value of the consideration in this case is much less than the consideration in those cases), but I am unable to accept the claimant’s submission that there was no consideration.
[49] Ms Bhaloo submitted in the alternative that Mr Greenham and Mr Backhouse had not intended to create legal relations in respect of the arrangement that they made. I accept that the subject matter of the arrangement was considered at the time to be of slight importance only. However, part of the background to the arrangement was that Mr Greenham had a shooting lease over Fullers Firs and, in law, needed consent to cut back the growth in Fullers Firs and appears to have proceeded on the basis that he did indeed need such consent. Mr and Mrs Backhouse, as landlords under the shooting lease of Fullers Firs, gave that consent to Mr Greenham. That must have affected the legal relations between the parties under the shooting lease. In these circumstances, I am not persuaded that I can divide up the transaction so that one part of it (concerning Fullers Firs) affected the legal relations of the parties but that the other part of the arrangement (concerning Pump House Copse) did not affect their legal relations. There was no other explanation for the arrangement, such as friendship or a family relationship, and I conclude that the arrangement in respect of Pump House Copse, supported by consideration, had contractual consequences and cannot be dismissed as one where there was no intention to create legal relations. The fact that the parties apparently contemplated that the arrangement might be temporary is not of itself incompatible with a finding that the arrangement did create a legal relationship between the parties.
[50] I ought briefly to refer to the requirement in section 2(1) of the 1986 Act that the agreement is one that can “with the necessary modifications” be converted into a tenancy from year to year. I referred to this question of “the necessary modifications” in argument and Mr Purves took me to Verrall, in particular at pp1267-1269, where the earlier judgment of Pearson LJ in Harrison-Broadley v Smith [1964] 1 WLR 456*, at p467, is quoted. Pearson LJ had stated:
The necessary modifications have to be distinguished from a transformation of the agreement into something radically different.
—————————————————————————————————-
* Editor’s note: Also reported at (1964) 189 EG 513
—————————————————————————————————-
[51] Although Verrall was commented upon in the Court of Appeal in Bahamas International Trust Co Ltd v Threadgold [1974] 1 WLR 1514*, and although the possibility that section 2 might not apply because the “necessary modifications” were too radical has been given renewed vigour by the decision of the Court of Appeal in Davies (referred to in the passage in Hill & Redman that Ms Bhaloo cited), Ms Bhaloo did not make any submission in her closing submissions to the effect that the necessary modifications would be too radical in the present case. Although I would have liked more assistance on the question of “necessary modifications” and the grounds for distinguishing this case from Davies, it does not seem to me to be right to decide the case against Mr and Mrs Backhouse on a point that has not been put forward by the claimant. In any event, I think that it is probably the case that the necessary modifications in the present case can be made. The difficulty in Davies was that the occupier of the land under the contractual licence had agreed to reseed the land at the end of the year. If that arrangement had been converted into a tenancy from year to year, the tenant would have had the right to farm |page:115| the land as arable land, and not to reseed at the end of the year but only to reseed at the end of the arrangement, which might be many years later. In the present case, the reference to the land being taken back and the replanting of Pump House Copse was all on the assumption that Mr and Mrs Backhouse would not have security of tenure in Pump House Copse so that the arrangement could be brought to an end, restoring vacant possession to Mr Greenham, who could then do as he pleased with Pump House Copse, including carrying out the work of replanting. The modification to the parties’ rights therefore comes about because the parties believed that they were entering into a non-secure arrangement, but the effect of section 2 of the 1986 Act is to give Mr and Mrs Backhouse a tenancy from year to year protected by the 1986 Act so that the landlord must operate the procedures of the 1986 Act if he is to be able to recover possession. This kind of transformation, although it is very far-reaching, is implicit in the operation of section 2, and should not therefore be regarded as too “radical” so that section 2 does not apply.
—————————————————————————————————-
* Editor’s note: Also reported at [1975] 1 EGLR 1; (1974) 233 EG 47
—————————————————————————————————-
[52] The result of the foregoing reasoning is that the arrangement made between Mr Greenham and Mr and Mrs Backhouse in 1991 created, by virtue of section 2 of the 1986 Act, a tenancy from year to year within the 1986 Act.
Rent review memorandum
[53] I should next refer to the rent review memorandum of 6 December 1996. This memorandum was entered into at a time when the landlord of Unhill Bottom (and the owner of Pump House Copse) was Bilton Agricultural Investments Ltd. The memorandum was made between that landlord and Mr and Mrs Backhouse as the tenant. It recites the tenancy agreement of 14 April 1980. It states that the land known as Unhill Bottom “containing 52.06 acres or thereabouts” was agreed to be let on a yearly tenancy from 29 September 1979. Of course, the 1980 agreement granted a tenancy of only 50.96 acres from 29 September 1979. On my analysis, the additional 1.10 acres (at Pump House Copse) were added in 1991. The memorandum went on to provide that the agreement of 14 April 1980 should take effect as though the yearly rent was £2,100 as from 29 September 1996. The memorandum stated that this rent had been assessed on an area of 42 acres only, in accordance with clause 3 of the agreement of 14 April 1980. Thus, the rent was agreed at the rate of £50 per acre. Finally, the memorandum states that the terms of the tenancy agreement of 14 April 1980 should remain in full force and effect except as varied by the memorandum. I will refer in a little more detail later in this judgment to the communications between the parties that led to the memorandum of 6 December 1996. In my judgment, this memorandum deals with the entirety of the 52.06 acres of land (as is distinctly stated in the memorandum) and is not confined to the 50.96 acres that were the subject of the original agreement of 14 April 1980. The consequence is that although Mr and Mrs Backhouse had one tenancy of 50.96 acres expressly granted by the tenancy agreement of 14 April 1980 and a second tenancy of Pump House Copse granted with the assistance of section 2 of the 1986 Act by reason of the arrangement in 1991, the 1996 memorandum states a single rent for both tenancies. Because the memorandum was entered into after the coming into force of the 1995 Act, and because a tenancy granted after the 1995 Act is usually a farm business tenancy with much less security of tenure than a tenancy under the 1986 Act, I have considered whether there is any basis for suggesting that the 1996 memorandum created a new tenancy in place of the two pre-existing tenancies. In my judgment, the position in the present case is the same as in JW Childers Trustees v Anker [1996] 1 EGLR 1*. The memorandum of agreement did not create a new tenancy and did not involve a surrender of the two pre-existing tenancies. Accordingly, it is not necessary, in this instance, to consider the possible application of section 4(1)(f) of the 1995 Act. The two pre-existing tenancies remained in being and remained within the 1986 Act.
—————————————————————————————————-
* Editor’s note: Also reported at [1996] 01 EG 102
—————————————————————————————————-
[54] The result of the above is that the claimant fails in these proceedings and the defendants succeed. However, I should also consider the defendants’ alternative case because it was the subject of evidence and was fully argued before me.
Defendants’ alternative case
[55] Mr Purves submitted that even if the position before 1996 was that Mr and Mrs Backhouse had a tenancy, under the 1986 Act, of 50.96 acres at Unhill Bottom and a gratuitous licence only of 1.10 acres at Pump House Copse, by the memorandum of 6 December 1996, Mr and Mrs Backhouse were recognised as being the tenants of all the land, including Pump House Copse. Ms Bhaloo submitted that the memorandum is irrelevant because it related to the land comprised in the original tenancy and did not include Pump House Copse. Whereas Mr Purves would submit that the references in the memorandum to the land let by the original tenancy were erroneous or incomplete and should have more fully recited the arrangement in 1991, Ms Bhaloo submitted that the reference to 52.06 acres is erroneous and should have been a reference to 50.96 acres.
[56] The claimant called evidence from a land agent to explain what he thought the memorandum meant and what he thought certain letters written by himself and his client, the then landlord, meant. This evidence was designed to show that the land agent mistakenly thought that the 50.96 acres at Unhill Bottom (excluding Pump House Copse) extended to some 52 or 52.06 acres. This evidence was tested in cross-examination by Mr Purves. On a number of occasions during the evidence, I raised with counsel the relevance of this evidence. I questioned its admissibility or relevance because the normal approach to construing an agreement, or even considering whether the parties have reached an agreement, is an objective one, which does not involve an enquiry into the subjective states of minds of the parties. Although the evidence was given and cross-examined, neither party submitted to me in their closing submissions that I should adopt anything other than an objective approach. I should stress that there was no claim for rectification of the memorandum nor any other relief based upon the memorandum containing a mistake. Further, whatever the land agent may have thought, a Mr Heller, an employee of Bilton Agricultural Investments Ltd, was very fully involved in the matter in 1996, and Mr Heller was not called to give evidence, and the documents would appear to establish that Mr Heller understood that 52.06 acres included Pump House Copse. Having said all that, I will now put out of my mind all the material that I have about the subjective intentions of the parties and look at the matter objectively.
[57] Looking at the matter objectively, among the relevant background facts are the following. The tenancy agreement extended to 50.96 acres, although, as I indicated in [15] of this judgment, the notation on the plan annexed to the tenancy could be misleading. The 1983 and 1986 rent review memoranda stated that the extent of the land in the tenancy was 51 acres. The next background fact is, of course, the arrangement in 1991, to which I have referred above. Further, after 1991, there does not appear to have been any specific attention given to Pump House Copse. I find that there was no specific attention given to Pump House Copse because both parties treated it as fairly insignificant. The correspondence that preceeded the 1996 memorandum did not draw any distinction between Unhill Bottom and Pump House Copse. In particular, there was no suggestion put forward on the part of the landlord that Mr and Mrs Backhouse were not to be treated in the same way in relation to Pump House Copse as in respect of the balance of the land. The landlord conducted the rent negotiations in 1996 by taking a very firm negotiating position with Mr and Mrs Backhouse so that if the landlord was intending to distinguish Unhill Bottom from Pump House Copse, it is to be expected that some reference would have been made to the distinction. The rent agreed in the 1996 memorandum was £50 per acre for 42 acres, and the parties did not give much attention to the question of whether the total acreage was 51 or 52 acres.
[58] On any view, the terms of the memorandum of 6 December 1996 are not precisely correct. If the memorandum does deal with all 52.06 acres, it was not precisely correct to recite only the tenancy |page:116| agreement of 14 April 1980 nor to say that 52.06 acres were let by that tenancy agreement and not to refer to the arrangement of 1991. Conversely, if the memorandum related only to the land within the tenancy agreement of 14 April 1980, the stated acreage of 52.06 acres was incorrect and the correct acreage was 50.96 acres.
[59] In my judgment, the correct objective reading of the memorandum of 6 December 1996 is that it extends to 52.06 acres and this acreage includes both Pump House Copse and the land originally let by the tenancy agreement of 14 April 1980. I regard the precision of the acreage 52.06 acres as important, and more important than the inaccuracy in the recital that this acreage was let by the original tenancy agreement (when only 50.96 acres were let by the original tenancy agreement). I also rely upon the background facts, as summarised by me above, as indicating that this objective reading is the correct one.
[60] The finding in the last paragraph (by way of an alternative to my principal finding in [52] above) gives rise to an issue under section 4 of the 1995 Act. On this hypothesis, Mr and Mrs Backhouse were tenants under the 1986 Act of 50.96 acres and gratuitous licensees of 1.10 acres prior to the memorandum of 6 December 1996, and following that memorandum they were tenants of 52.06 acres. In my judgment, the memorandum had the effect of an implied surrender by operation of law of the earlier arrangements and the creation of a single tenancy on 6 December 1996 of 52.06 acres: as to surrender by operation of law in such a case, see Woodfall, vol 1, in paras 17.023 and 17.026 (the latter paragraph dealing with purported variations of an existing lease). An increase in the land within the tenancy is one of the few cases where the purported variation compels the conclusion that the new arrangement involves the surrender of the old arrangement and the grant of a new tenancy.
Agricultural Tenancies Act 1995
[61] The conclusion in the last paragraph is that the memorandum created a new tenancy on 6 December 1996, which was after the coming into force of the 1995 Act. Usually, a tenancy of agricultural land granted after the 1995 Act is a farm business tenancy within the 1995 Act and not an agricultural holding within the 1986 Act: see section 4 of the 1995 Act. This is subject to several exceptions and the exception that is relevant for present purposes is in section 4(1)(f) of the 1995 Act, which provides that the 1995 Act does not apply to:
any tenancy of an agricultural holding which –
(f) is granted to a person who, immediately before the grant of the tenancy, was the tenant of the holding, or of any agricultural holding which comprised the whole or a substantial part of the land comprised in the holding, under a tenancy in relation to which the 1986 Act applied (“the previous tenancy”) and is so granted merely because a purported variation of the previous tenancy (not being an agreement expressed to take effect as a new tenancy between the parties) has effect as an implied surrender followed by the grant of the tenancy.
[62] Many of the requirements of section 4(1)(f) are clearly satisfied. The arrangement made by the 1996 memorandum was with Mr and Mrs Backhouse, and they were previously the tenant under the 1980 tenancy agreement. The 1980 tenancy agreement was in relation to an agricultural holding within the 1986 Act. The land in the 1980 tenancy agreement – some 50.96 acres – was a substantial part of the 52.06 acres that was the subject of the memorandum.
[63] Ms Bhaloo submitted that were I to hold that the 1996 memorandum created a new tenancy, I would have to hold that the 1996 memorandum was an “agreement expressed to take effect as a new tenancy between the parties”. The reference to “expressed” requires one to look at the express terms of the agreement and the manner of its expression. In my judgment, the 1996 memorandum is not “expressed to take effect as a new tenancy”. Ms Bhaloo then submitted that section 4(1)(f) was not satisfied because the new tenancy, which I have held, as a matter of operation of law, came into being pursuant to the 1996 memorandum, was not “merely because a purported variation of the previous tenancy… has effect as an implied surrender followed by a grant of the tenancy”. In fact, I have held that the true construction of the 1996 memorandum was that it did vary the tenancy of 14 April 1980 and did involve an implied surrender of that tenancy followed by the grant of a new tenancy. However, Ms Bhaloo submitted that that is not what the memorandum “purported” to do. She submitted that, as a matter of the language of the memorandum, the memorandum appears to vary the tenancy of 14 April 1980 in one respect only, that is, in respect of the amount of the rent. It might also be said that were one to enquire into the subjective intentions of the parties, there might be different answers as to whether the parties were purporting to vary the tenancy of 14 April 1980. For example, Ms Bhaloo would say, based upon the land agent’s evidence, that the land agent was intending the land included in the original tenancy to remain unaltered. It might be that Mr Heller, the employee of the landlord, intended the new arrangement to relate to 52.06 acres, but only because he thought that the earlier arrangement also related to 52.06 acres. There was no examination of Mr Backhouse’s state of mind as to what he thought was the effect of the 1996 memorandum at the time he entered into it. In my judgment, in the ordinary case, the reference to the variation being “a purported variation” should not involve any enquiry into the subjective states of mind of the parties. The reference to “a purported variation” is there to differentiate the case from one where there is an express grant of a new tenancy. The type of case being dealt with by section 4(1)(f) of the 1995 Act is the case of an inadvertent surrender of a pre-existing tenancy of an agricultural holding when the parties thought that all that was happening was a variation, and a continuation, of that tenancy. As with an issue as to the construction of a contractual arrangement, any question as to the parties’ intentions is to be judged objectively. Accordingly, whether the creation of a new tenancy is deliberate or inadvertent is, in my judgment, also to be judged objectively.
[64] Judging the matter objectively in the present case, and in view of the objective reading of the memorandum that I have set out above and notwithstanding the failure of the memorandum to recite that the original tenancy extended to 50.96 acres and that the 1.10 acres was the subject of a gratuitous licence prior to 1996, the memorandum does purport to vary the previous tenancy by including additional land so that the new tenancy extends to 52.06 acres.
[65] As a footnote to the earlier discussion about an objective consideration of the parties’ intentions for the purpose of the phrase “a purported variation” in section 4(1)(f), I should briefly note the discussion in Scammell and Densham’s Law of Agricultural Holdings (8th ed), at pp908-910. That passage includes a discussion as to whether section 4(1)(f) could be manipulated so that even in a case where the parties understand fully that the arrangement they make will be the grant of a new tenancy, none the less those parties could use the format of a purported variation and have the advantage of section 4(1)(f). The textbook argues that the word “purported”, and also the phrase “merely because”, would prevent the subsection from being successfully manipulated in that way. Certainly, the textbook points out the dangers of an attempted manipulation of that kind. I express no opinion as to whether the statement in the textbook is right or wrong. Even if section 4(1)(f) could not be successfully manipulated in the way described, and even if that involved an approach that breaches the normal rule that the parties’ intentions are to be judged objectively, I do not see any sufficient reason to extrapolate from that particular instance so as to admit the subjective intentions of the parties when applying section 4(1)(f) in this case. Indeed, for the reasons to which I have already alluded, it is far from easy to know what were the subjective intentions of all of the relevant parties.
[66] Accordingly, on the defendants’ alternative case, I would also have found for the defendants that the 1996 memorandum created a tenancy of 52.06 acres, including Pump House Copse, and that that tenancy was a tenancy within the 1986 Act and not within the 1995 Act.
Other matters
[67] I should now refer to various other matters. I have not made findings on every single factual dispute that arose between the parties. In particular, I do not think that it is necessary to discuss in any detail the events of 2002. The events of 2002 do not throw any light upon |page:117| the question of whether the 1991 arrangement conferred upon Mr and Mrs Backhouse a right to exclusive possession of Pump House Copse. Further, the claimant did not assert that the events of 2002 involved a surrender by operation of law of Pump House Copse by reason of Mr and Mrs Backhouse giving up possession of that land. It is clear that they did not give up possession of that land.
[68] I should also give my reasons for my disposal of an application made by Ms Bhaloo at the end of the claimant’s case. Ms Bhaloo had earlier referred to the fact that Mr Purves, when cross-examining Mr Cull, had not put certain statements contained in Mr Backhouse’s witness statement. Accordingly, at the end of the claimant’s case, Ms Bhaloo submitted that I should strike out parts of Mr Backhouse’s witness statement and parts of the defence, to the extent that the pleading was based upon those matters. Ms Bhaloo cited a number of textbooks on the law of evidence and took me in detail to an interlocutory ruling given by Mann J in Cox v Jones [2004] EWHC 1006 (Ch); Mann J’s judgment following the trial of that action is [2004] EWHC 1486 (Ch). In Cox, Mann J gave an interlocutory ruling in the course of the trial to the effect that one party was not able to advance a case set out in its witness statements because that case had not been put in cross-examination to the rival party. I fully understand the course that Mann J took in that case. I declined to do anything similar in the present case. It seemed to me that when the application was made there was a relatively narrow dispute of fact as to the arrangements made between the parties in 1990 (as Mr Backhouse said) or in 1991 (as Mr Cull said). Whether I struck out parts of the defence and/or of the witness statement of Mr Backhouse, it would be essential to hear the evidence of both sides about the relevant arrangement. I did not regard it as being in the interests of achieving the overriding objective or in the interests of efficient case-management or in the interests of justice to strike out parts of Mr Backhouse’s witness statement, and any dependent pleading, in advance of Mr Backhouse giving his evidence and being available to be cross-examined. I indicated to Ms Bhaloo at the time that there would be constraints on Mr Purves if he asked me to find for the defendants on the basis of matters spoken to by Mr Backhouse that had not been put to Mr Cull. With hindsight, the course I adopted proved to be the convenient and appropriate one. Mr Purves did not seek findings in the defendants’ favour based upon matters that had not been put to Mr Cull. Ms Bhaloo had no need to object to Mr Purves’ submissions on any such ground. My findings in favour of the defendants have not been based upon any matters that were not put by way of cross-examination to the claimant’s witnesses.
[69] Next, I will set out the reasons for the ruling that I gave in the course of the trial granting the defendants permission to amend their defence to allege; in particular, that the arrangement described by Mr Cull in his evidence was “an agreement” supported by consideration within section 2 of the 1986 Act. I have already referred to the state of the pleadings and the reference in Mr Purves’ skeleton argument before the trial began. When I heard Mr Cull cross-examined, I thought that I could see where Mr Purves was going with his questions. However, Mr Purves did not apply for permission to amend his defence following Mr Cull’s evidence, nor following the close of the claimant’s case. Accordingly, the defendants’ witnesses were cross-examined by Ms Bhaloo at a time when the pleadings were unamended. When Mr Purves began his closing submissions, he sought to advance a case based upon Mr Cull’s answers in cross-examination and their relevance for the purposes of section 2 of the 1986 Act. I then indicated to him that such a case had not been pleaded and invited him to consider his position. Overnight, Mr Purves did consider his position and appeared the following day with a draft amended pleading and sought permission to amend. This application was strongly opposed by Ms Bhaloo, and she pointed out with force that if the amendment had been made at an earlier stage, she might have re-examined Mr Cull and she might have differently cross-examined the defendants’ witnesses. I suggested that she would be entitled to have the witnesses recalled if permission to amend were given, but she pointed out, again with force, that that would not be satisfactory. I regarded the arguments for and against permission to amend as very evenly balanced. I could see that the amendment might, as it has turned out, have a profound effect upon the outcome of the case. I noted the passage in para 17.3.8 of Civil Procedure, vol 1, referring to Kelly v Chief Constable of South Yorkshire (No 1) [2001] EWCA Civ 1632, and I invited the parties to consider that case and make submissions on it. The citation of this authority was, to my mind, of some significance. At [21], Sedley LJ said:
It is not uncommon for a version of the facts to emerge as a possible deduction from the evidence which has so far been neither side’s pleaded case but which one side wants now to plead as an alternative basis, either of liability or of defence. In my experience it is normal and proper practice in the County Courts, and in the High Court too, to allow an amendment to such effect at the conclusion of the evidence if, on any terms which are appropriate as to costs or recall of witnesses, this can be done without injustice to the other party or parties.
In Kelly, the Court of Appeal reversed the trial judge who had refused permission to amend at the end of the evidence. I found the passage quoted above from Sedley LJ’s judgment somewhat more liberal than I had expected. Quite what it means in practice will depend upon how one interprets the phrase “if… this can be done without injustice to the other party or parties”.
[70] With the assistance of that authority and after some hesitation, it seemed to me that the right thing to do in the interests of doing justice between the parties was to grant permission for the defence to be amended. I gave Ms Bhaloo time to consider her position as to whether she wanted any witnesses recalled for re-examination or cross-examination. After a short interval, Ms Bhaloo indicated that she would elect not to have the witnesses recalled.
[71] Finally, I should refer to the fact that the defendants had a further alternative case based upon estoppel. In view of the fact that the defendants have succeeded in law in relation to the 1991 arrangement and also in relation to the 1996 memorandum, I feel that it is not necessary to set out my findings in any detail in respect of the further alternative plea of estoppel. I reject the allegation of estoppel as an alternative defence. In my judgment, the defendants’ evidence fell very far short of establishing any of the necessary ingredients for an estoppel, such as their belief or expectation as to their legal rights, reliance, detriment or unconscionability.
[72] I will hear counsel as to the form of the relief to be granted and as to costs.
Claim dismissed.
