Short Bros (Plant) Ltd v Edwards

Agricultural Holdings Act 1948, section 2–Whether a series of transactions over a period of years resulted in a licence for grazing for a specified period of the year or a tenancy from year to year–Succession of written agreements expressed to be for grazing for six months only in each case–Oral agreement before signature of first written agreement that, despite its wording, the licensee could remain in occupation for several years–In fact he used land for mixed farming for some 13 years and latterly integrated the farming with his own neighbouring farm–Occupier given notice to vacate the land on the expiry of the last written agreement–Deputy circuit judge’s view that final written agreement resulted in surrender of yearly tenancy and restoration of grazing licence rejected by Court of Appeal–Occupier remained, by virtue of section 2(1), a tenant from year to year This was an appeal by Mr A A Edwards, the occupier of land forming part of Tredomen Farm, Ystrad Mynach, Nelson, Mid-Glamorgan, from a decision by Deputy Circuit Judge J Q Evans, sitting at Caerphilly County Court, in an action in which Short Bros (Plant) Ltd, the plaintiffs, succeeded in obtaining an order for possession of the land against Mr Edwards as defendant. In addition to occupying the land which was the subject of the action Mr Edwards owned a neighbouring farm known as Wern Isaf which lay south of the road between Nelson and Ystrad Mynach. The facts are fully set out in the judgment of Brandon LJ. M T Pill QC, V Pugh and N Cook (instructed by O H Parsons, agents for Rees, Currie-Jones, Davies & Evans, of Cardiff) appeared on behalf of the appellant; Derek Wood QC and C Priday (instructed by Robbins, Olivey & Lake, agents for Burges, Salmon & Co, of Bristol) represented the respondents. Giving the first judgment at the invitation of Stephenson LJ, BRANDON LJ said: This is an appeal from an order made by J Q Evans, sitting as deputy circuit judge in the Caerphilly County Court on May 26 1978. By that order he adjudged that the plaintiff company was entitled to possession of a farm known as Tredomen Farm, Ystrad Mynach, Nelson, Mid-Glamorgan, and in addition to damages at the rate of £1,400 per annum from December 1 1977 until the date on which possession should be given. The parties in the action were these. First, the appellant, who was the defendant in the action, A A Edwards. He owns a farm called Wern Isaf, which lies south of the road between Nelson and Ystrad Mynach in Mid-Glamorgan. He is about 55 years of age and has been farming all his life. I shall refer to him as the farmer. Second, the respondents, who were the plaintiffs in the action, Short Bros (Plant) Ltd, a company having its head office at Taffs Well, near Cardiff, and formerly at Hirwaun, Aberdare, in Mid-Glamorgan. They are plant hire and haulage contractors and have two principal shareholders and directors, J G Short and V Short, who are brothers. I shall refer to the respondents as the owners, and to J G Short and V Short together as the Short brothers. Tredomen Farm, the land to which the action related and the possession of which was the subject matter of it, consists of a farmhouse, certain other buildings and some 93 1/2 acres of land. Its western edge adjoins the farmer’s own farm, to which I have referred, Wern Isaf Farm. The court in this case has the advantage of a very full and careful judgment given by the deputy circuit judge, in which he has set out, with great clarity, both his findings of fact and the conclusions of law reached by him on those findings. The quality of the judgment below in these respects has given the court much assistance in dealing with what is by no means an easy case. The material facts, as found by the deputy circuit judge, are these. On November 25 1963 Tredomen Farm was conveyed to the Short brothers jointly. They had bought it as a speculation in the hope that, not immediately but after some years, they would be able to obtain planning permission for the building of dwelling-houses on the land. At the time of the conveyance, the farmer, by arrangement with the previous owners, was grazing some of his cattle on part of the land. After the conveyance he wished to make a fresh arrangement with the new owners for the use of the land by him. He arranged by telephone a meeting with Mr J G Short and at that meeting Mr J G Short made three statements. First, that the farmer would only be allowed to use the land at Tredomen Farm for grazing purposes. Second, that there would be a succession of written agreements in respect of such use, each of which would be for a period of six months only. Third, that there was no reason why such an agreement should not go on for several years. As a result of these statements, both J G Short and the farmer contemplated that the land would be used for grazing only and that the farmer would remain in occupation of the land for several years. Following that meeting, a form of written agreement was prepared by solicitors for the Short brothers and sent to the farmer for signature by him. That was dated December 1 1963. Its main provisions were these. First, that the farmer should have grazing rights over Tredomen Farm from December 1 1963 to May 31 1964. Second, that the farmer should pay a sum of £162 15s for such rights. Third, that the farmer should not use the land for any purpose other than grazing. The written agreement contained certain other provisions, but I do not think it is necessary that I should refer to them. The farmer signed this form of agreement in reliance on the assurance given to him by J G Short at the previous meeting that he would be able to occupy the land for several years. Subsequently, from 1964 to 1977, the farmer occupied Tredomen Farm. He did not use the land for grazing only, but for mixed farming purposes, including the growing of various crops. From 1968 onwards at least he farmed Tredomen Farm with his own farm as a single agricultural unit. The Short brothers took no interest in the use to which the land was being put, and did not know that it was being used for mixed farming purposes, rather than for grazing only, until August 25 1977. During this period of over 13 years a succession of further written agreements in the same form as the original agreement dated December 1 1963 were sent to the farmer and signed by him. Each agreement related to a six months’6 period, so that, if there had been one in respect of every such period there would have been some 28 in all. In fact, due to oversights of one kind or another by one side or the other, there were only 23 such written agreements. In particular, no written agreement was signed for the period from June 1 to November 30 1976. The last agreement to be signed was one dated June 1 1977, relating to the period from June 1 1977 to November 30 1977. During this period of 13 years the farmer paid a regular sum to the Short brothers every six months, both when there was a signed agreement relating to the period concerned and also when there was not. The amount of this sum was increased from time to time from the original sum of £162 15s. It went up to £170.89 in June 1973 and to £187.96 in June 1974. Subsequently it remained at the latter figure. In July 1977, after the last agreement to which I have referred had been signed, the Short brothers decided to sell Tredomen Farm. They instructed agents to effect the sale for them by auction. On September 15 1977 the agents wrote a letter to the farmer in which they asked him, in effect, to vacate the land at the end of the six-month period covered by the last written agreement, that is to say to vacate it after November 30 1977. They also referred to the possibility of the farmer himself buying the land, but that suggestion did not come to anything. They enclosed with the letter a form which they hoped that the farmer would sign, and that form read in this way: ‘Dear Sirs, Land at Tredomen. I write to confirm that, in accordance with the terms of the Grazing Licence, entered into by me with you on June 1 1977, in respect of the Tredomen Land, I agree that by December 1 1977 I will remove all my stock implements and chattels from the land, and give you vacant possession of the land.’  The farmer consulted solicitors about his position and on September 29 1977 they wrote a letter to the Short brothers’ agents in which they said, in effect, that he had been on the land for 14 years, that he was there as the holder of a normal agricultural holding, and that he had the right to remain there by virtue of the Agricultural Holdings Act 1948. On the same day as that letter was written, September 29 1977, the Short brothers conveyed the land to the owners. This change of title is not significant and was presumably effected by some fiscal or similar reasons. On January 12 1978 the owners began the action for possession against the farmer in the Caerphilly County Court. The Agricultural Holdings Act 1948, provides by section 2(1) as follows: Subject to the provisions of this section, where under an agreement made on or after the first day of March, nineteen hundred and forty eight, any land is let to a person for use as agricultural land for an interest less than a tenancy from year to year, or a person is granted a licence to occupy land for use as agricultural land, and the circumstances are such that if his interest were a tenancy from year to year he would in respect of that land be the tenant of an agricultural holding, then, unless the letting or grant was approved by the Minister before the agreement was entered into, the agreement shall take effect, with the necessary modifications, as if it were an agreement for the letting of the land for a tenancy from year to year: Provided that this subsection shall not have effect in relation to an agreement for the letting of land, or the granting of a licence to occupy land, made (whether or not the agreement expressly so provides) in contemplation of the use of the land only for grazing or mowing during some specified period of the year, or to an agreement for the letting of land, or the granting of a licence to occupy land, by a person whose interest in the land is less than a tenancy from year to year and has not by virtue of this section taken effect as such a tenancy. On the primary findings of fact set out above, there were as it seems to me, three questions upon which the deputy circuit judge had to reach conclusions of law. The first question was: what was the effect of the original transaction or set of transactions between the farmer and the Short brothers, which took place either at the end of November or the beginning of December 1963, apart from the application of the Agricultural Holdings Act 1948?  The second question was: how was the effect of that transaction or set of transactions altered by the application of that Act?  The third question was: what was the effect, if any, of subsequent transactions between the parties? With regard to the first and second of these questions the judge reached the following conclusions. First, that there was a collateral oral agreement made at the meeting between the farmer and J G Short before the first written agreement dated December 1 1963 was signed. Second, that the agreement of December 1 1963 was signed by the farmer in reliance on that collateral agreement. Third, that the agreement of December 1 1963 was not a genuine agreement so far as the period for which grazing rights were being granted, namely the period of six months, was concerned, because the oral agreement between the parties was for a period of several years. Fourth, that, on the footing that grazing rights were granted for a period exceeding one year, the effect of section 2 of the Agricultural Holdings Act 1948 was to create a letting from year to year between the Short brothers as landlords and the farmer as tenant. With regard to the third question, the judge held this. First, that a time came, certainly by June 1 1977, and probably earlier, when the collateral agreement, under which the period for which grazing rights were being granted was for several years, was discharged by performance. Second, that in these circumstances the signing by the farmer of a further written agreement dated June 1 1977 constituted, by operation of law, the surrender by him of the letting from year to year created by the Agricultural Holdings Act. Third, that, as a result of that surrender, the farmer’s rights were limited to those granted by the written agreement dated June 1 1977, that is to say were limited to grazing rights for six months until November 30 1977, after which date, if he remained on the land at all, he did so only as a trespasser. Having reached those conclusions of law on the questions which I have set out, he adjudged that the owners were entitled to possession and also to damages for continued occupation after November 30 1977. I propose to examine the three questions which I have mentioned again and see to what extent I feel able to agree with the view which the deputy circuit judge formed upon them. The most crucial of these questions seems to me to be the first: what was the effect of the original transaction or set of transactions between the farmer and the Short brothers apart from the application of the Agricultural Holdings Act 1948?  The learned judge, as I have said, found that it was contemplated by both parties that the farmer would occupy the land for several years, and although he was not prepared to put a figure on the term of years concerned, he concluded that what was contemplated was a period substantially less than the 13 years which had elapsed by 1977. The question is whether that conclusion was the correct one on the primary facts which he found. When the Act of 1948 talks about what is in contemplation of the parties, it seems to me that it must refer to something which is sufficiently certain to be capable of being given some effect to in law. I do not think that it is possible to grant a lease or to grant a licence which, by its terms, is for an indefinite period of years. It seems to me that is something which cannot be done as a matter of law. And, since that cannot be done, I do not think that, for the purposes of section 2(1) of the Act of 1948, the parties can be held to have contemplated that it will be done. It seems to me that the right conclusion of law on the primary facts found by the deputy circuit judge with regard to the original set of transactions is this. The farmer was going to get a series of six months’ periods on the land which in total would amount to at least three years, because I do not think that any lower figure could be described as7 ‘several’ years, and that thereafter he would continue to have further six months’ periods in succession until he was given reasonable notice to the contrary. It would be possible for the owner of land to grant a licence in such terms, and, if it would be possible for him to grant a licence in such terms, it would be possible for the parties to contemplate, within the meaning of section 2(1) of the Act of 1948, that that was what was going to happen. It seems to me that, on a true view of the two transactions–that is the oral meeting before the written agreement was signed and the written agreement itself–that was what was in contemplation I would therefore, to that extent, disagree with the view of the deputy circuit judge that what was in contemplation was a term of years substantially less than thirteen which ended automatically when, whatever the number of years concerned was, they had elapsed. As to the second question, there is no dispute about the effect of the Act, and I agree that, since what was contemplated involved occupation of the land for more than a year, the transaction or set of transactions took effect as a letting from year to year under the Act. Then I come to the third question: what was the effect, if any, of subsequent transactions between the parties?  The deputy circuit judge came to the conclusion that there had been a surrender by operation of law because, by the time the farmer came to sign the last agreement, or possibly earlier, the contemplated period of years had elapsed and therefore the effect of the oral agreement which was collateral to the first written agreement had been spent. He considered that, by the time the farmer came to sign that last agreement, he must be taken to have been aware that what was originally contemplated no longer applied, and that, by signing that agreement, he impliedly surrendered the Agricultural Holdings Act tenancy which he had. I do not think that there is any dispute or question in this case as to the doctrine of surrender by operation of law. The only question is whether it applies on the facts of this case. It seems to me that these written agreements were all subject to the same vice, that is to say, in so far as they provided that the grazing rights were to last only for a period of six months, they were not genuine. It seems to me that that analysis of them is no less applicable to the last agreement signed on June 1 1977 than to the first agreement signed on December 1 1963. The real arrangement between the parties, apart from the Act, was that the farmer would occupy the land for at least three years and thereafter until his occupation was terminated by reasonable notice. No such notice was ever given by the Short brothers to the farmer; indeed, the evidence is that the instructions to sell the farm were not given until July 1977, and it seems to me, therefore, that what had been contemplated originally at the beginning of December 1963 was still being contemplated on June 1 1977. Now it was conceded by Mr Wood, and very properly in my view, for the owners that, if the last agreement, that is to say the agreement of June 1 1977, did suffer from the same vice as the first agreement, in that it was not genuine so far as it provided for occupation and grazing rights for a period of six months only, then the signing of it could not operate as a surrender by operation of law. The principle involved in surrender by operation of law is that a tenant who has one grant from an owner of land and who then accepts a second and inconsistent grant must be taken to have surrendered the first grant because, by taking the second grant, he is accepting that the owner can make it and the owner can only make it if the first grant had been surrendered. But the principle cannot apply when the second grant is itself a grant which is not genuine, and, on the analysis which I have made of these matters, the second grant, which in this case is the so-called ‘licensing’ agreement of June 1 1977, was in one crucial respect not a genuine grant. The signing of it, therefore, would not, in my view, result in the surrender by operation of law of the existing grant, namely the statutory letting from year to year under the Act of 1948. For these reasons, I have come to the conclusion that, full and careful as was the judgment of the judge below, he arrived at the wrong result. I have come to the conclusion that the statutory letting which was created by the original set of transactions continues, and, that being so, the farmer was entitled to remain on the land after November 30 1977 as the tenant under that letting. It would, in my view, have been possible for the Short brothers to have given the farmer reasonable notice, which would have been of at least six months and possibly more, before they required him to sign a further written grazing agreement, that this time the agreement was not like the previous ones, an agreement which was not genuine, but an agreement which was intended to be genuine in all its terms. If they had given such notice to the farmer, and if he, being aware of the true position, had then signed that further agreement, different considerations would apply, and it may well be (it is not necessary to decide the point) that there would have been a surrender by operation of law of the statutory letting from year to year. No notice of that kind was given, however, and accordingly, in my judgment, there was no such surrender. In my opinion, therefore, this appeal should be allowed, the judgment of the deputy circuit judge should be set aside and there should be substituted for it an order dismissing the claim. Agreeing, GEOFFREY LANE LJ said: There is nothing intrinsically wrong or objectionable in a series of genuine six months’ grazing licenses being granted to a farmer, and the fact that there is such a series, or indeed that it is the owner’s intention in his own mind, at the outset, to grant such a series will not, on its own, prevent the licence remaining a licence without being converted into a tenancy from year to year by section 2 of the 1948 Act. That much is clear from the decision of this court in Scene Estate Ltd v Amos [1957] 2 QB 205. In this case, however, the effect of the judge’s findings seems to me to be as follows (although it is not the way in which the judge himself expressed those findings). Before the first of the forms of agreement here were signed on December 1 1963 the owner agreed with the farmer that the farmer would have a licence to graze, and would not be disturbed for what was in effect three years certain and thereafter until the owner chose to tell him to go upon reasonable notice or perhaps upon six months’ notice. This, despite the fact that the written document said otherwise. Consequently, the document, as the learned judge has found, was not a genuine record of the true agreement between the parties. It was without doubt the owner’s intention that similar forms of agreement should continue to be signed by the farmer ostensibly, but not genuinely, limiting the licence period to six months. As I said, I do not accept that the learned judge’s interpretation of those facts is correct. What he said reads as follows: The collateral agreement was that in return for the defendant signing the written agreement the Short Bros would allow him to remain in occupation for several years. The defendant did not then expect or contemplate that he would remain in occupation forever, and for more than a limited number of years. That collateral agreement was discharged by performance after the Short Bros had allowed the defendant to remain in possession for the appropriate number of years. I shall not attempt to define the number of years meant by the words ‘several,’ ‘few,’ ‘some,’ or ‘many,’ but I am satisfied that both J G Short and the defendant considered them to mean fewer than the thirteen and a half years that had elapsed prior to the written agreement of June 1 1977. Therefore by that date, and even before it, the written agreement was unfettred by the oral collateral agreement, and the terms of that written agreement brought it within the proviso that would deprive the defendant of security. What then happened to the tenancy from year to year effected by the operation of section 2(1) of the Act?  I agree with the submission of the plaintiff’s solicitor that it had been surrendered by operation of law. Now it is clear, it seems to me, that the object of this exercise performed by the appellants here, which was indeed explained by J G Short when he gave evidence, was this: It was to enable the owner, if he could, to avoid the automatic conversion of the farmer’s interest into a tenancy from year to year by virtue of section 2. This attempt failed because the licence was not for a ‘specified period of the year.’  Now the owner must be taken to have known in those circumstances–as indeed Mr Wood conceded–that the farmer’s true interest had become a tenancy from year to year, yet he continued, nevertheless, to send these non-genuine forms of agreement for the farmer to sign with the object of avoiding what he no doubt regarded as the mischief of the 1948 Act. That sort of behaviour does not, to say the least, become a plaintiff. I have no doubt that it did not occur to the Short Bros that they were doing anything wrong or indeed were doing any more than they were legitimately entitled to do, however deplorable it might be in fact. There is a fatal flaw in the owner’s contention in this case and it is this: In agreeing in effect to allow the farmer to remain for an indefinite period of at least three years, the owners are saying this, that although you are, by these acts of mine, coupled with section 2 of the Act, getting a tenancy from year to year, yet you must sign a series of meaningless documents, and you must further agree to go, to surrender that tenancy when I give you notice so to do, without any of the statutory protection to which you are entitled. It seems to me that that is a gambit, albeit not so subtly contrived, such as that which was attempted by the landlords in the case of Johnson v Moreton, to which we were referred, the report of which is to be found in [1978] 3 WLR 538. It seems to me that this gambit of the landlord in the present case deserves and gets the same sort of treatment as the effort made by the landlords in Johnson v Moreton. The farmer cannot bargain away in advance his statutory rights in this way. That is not to say that there are not circumstances–and indeed Foster v Robinson [1951] 1 KB 149 is one of them, where there may be, perfectly properly, an actual surrender of a statutory right, a surrender in fact. But a bargain to give such a surrender in the future or, to put it more accurately in the circumstances of the present case, an agreement at the time the protected tenancy is granted not to seek protection by this statute is not an agreement which should be enforced by the court. It simply remains for me to mention the question of surrender. I read from p 862 of the first volume of Woodfall’s Law of Landlord and Tenant, 27th ed: ‘The term ‘surrender by operation of law’ or ‘implied surrender’ (there being no distinction) is an expression used to describe all those cases where the law implies a surrender from unequivocal conduct by the parties which is inconsistent with the continuance of the existing tenancy.’  It would to my mind have been a strange thing if a surrender by operation of law could take place by the signing of a document which was, at the time it came into existence, designed to conceal the true nature of the parties’ rights. Such an act cannot, as I see it, by any stretch of imagination, be described as unequivocal. I can see no basis for the judge’s conclusion that the circumstances here have in some way changed so as to turn the latter document, or if you like, the final document of June 1977, from what up to that stage had been an ungenuine document into a genuine one. The signing of this document could not in any event, as I see it, amount to a surrender in the circumstances of this case. For those reasons, as well as those expressed by my Lord, Brandon LJ, I would allow this appeal with the result that he has indicated. Also agreeing STEPHENSON LJ said: Out of respect to the admirably clear and thorough judgment of the learned deputy circuit judge, I would wish to add something to what my Lords have said. He has held that the written agreement of December 1 1963 was not a genuine agreement in so far as it provided for the farmer’s use of the owners’ land for a period of less than a year. The real bargain was that the period was to be several years, and that period was agreed orally and collaterally with the farmer before the written agreement was signed by J G Short on behalf of the owners. It does not seem to me to matter whether there were two agreements, as found by the judge, or one agreement, partly oral and partly reduced (incorrectly) to writing. The reason is that it is common ground that the effect of what was agreed in 1963 was an agreement for the letting of the land from year to year by reason of section 2(1) of the Act of 1948. That statutory tenancy from year to year was outside the exemption of the proviso to the subsection, and would not then be subject to an agreement not to rely on it. But the judge went on to say that that statutory tenancy from year to year was surrendered by the farmer’s acceptance of the written agreement of June 1 1977 after discharge of the collateral agreement by performance. The appropriate number of years contemplated by that agreement had expired by then, if not earlier. The farmer’s acceptance thereafter of a new written agreement operated in law to estop him from asserting his tenancy from year to year and reduced the period of his lawful occupation to six months. I agree with Mr Wood that there may be circumstances in which a tenancy created by section 2 can be surrendered by a new agreement inconsistent with it, just as a tenancy under the Rent Acts can be surrendered by such a new agreement–see Foster v Robinson [1951] 1 KB 149. But I also agree with Mr Pill that the new agreement must be clearly proved by the owners and must be not only inconsistent with the old agreement but valid. If the new agreement is consistent with the old, or if it is not genuine and misrepresents the true agreement in a material respect, it cannot operate as a surrender; and that is, I think, conceded by Mr Wood. Here the new form of agreement was made collateral not to the same oral agreement but to the tenancy which section 2(1) created from it, and in exactly the same terms as the old. It was sent by the owners and signed by the farmer, as all the similar agreements from first to last had been, without comment or qualification on either side. Those agreements were not genuine in that they contained a false statement about the period of use and occupation, which was not six months but from year to year. Yet implicit in the judge’s findings that the collateral agreement was discharged is, I think, a finding that thereafter those forms of agreement became genuine and stated the agreed period truly. Such a finding is essential to the success of the owners’ claim to possession–see Scene Estates v Amos [1957] 2 QB 205, and I see the logic of the learned judge’s reasoning which led him to uphold the claim. But I agree that the collateral agreement which the learned judge found is too uncertain to be capable of being a legally effective contract, and I would give it validity by interpreting it, as do my brothers, as a licence to occupy the land for grazing, to be determined on notice and not before three years from December 1 1963. The owners then cannot, in my judgment, get rid of the fetters imposed by the oral agreement of 1963 as the judge got rid of them. The agreement continues, and continues to be relied on and acted on until further notice. Or if that is wrong, and it is spent, as the learned judge in effect found and as Mr Wood submits he was entitled to find, I do not think that the owners have got rid of the statutory tenancy by getting rid of the oral agreement. The effect produced by section 2 is not spent. That effect might have been ended if the owners had given notice, when they sent the form of agreement for signature, that the real 1963 bargain was over8 and the farmer had then accepted that termination by signing; but as no notice was given, the agreement had not been discharged or spent by June 1 1977, and there was nothing to indicate to the farmer that in signing the last agreement he was signing away his contractual rights under the licence or his statutory rights under the Act. We should be enforcing an agreement to surrender the tenancy if we were to hold that the farmer was estopped, by signing the agreement of June 1 1977, from disputing its genuineness or from asserting his tenancy from year to year. I therefore find no surrender by the farmer of the major asset of a protected tenancy and I am of opinion that the learned judge fell into error in holding that a surrender had been proved and that the farmer was not, in 1977 as in 1963, a tenant from year to year. I agree that the appeal should be allowed with the results stated by my Lord, Brandon LJ. The appeal was allowed with costs in the Court of Appeal and below.