THE COURT

(Sheriff MacLeod, Mr D J Houston)

OMNIVALE LIMITED v DOW

(Application SLC 2/13 – Order of 24 July 2013)

AGRICULTURAL HOLDINGS – ACTION FOR REMOVING PURSUANT TO NOTICE TO QUIT FOUNDING ON SEC 22(2)(b) OF AGRICULTURAL HOLDINGS (SCOTLAND) ACT 1991 – FAILURE OF TENANT TO SERVE NOTICE UNDER SEC 23(2) OF THE ACT – WHETHER ANY DEFENCE TO NOTICE TO QUIT IN THESE CIRCUMSTANCES

The landlords of an agricultural holding served a notice to quit on the tenant under sec 22(2)(b) of the Agricultural Holdings (Scotland) Act 1991 on the ground that the land was required for use other than agriculture for which permission had been obtained under enactments relating to town and country planning. Agents acting for the tenant responded by serving what purported to be a counter-notice under sec 22(1) of the Act requiring that the notice to quit should not have effect unless the consent of this Court was obtained. No other notice having been served by or on behalf of the tenant the landlords brought this action for removing, arguing that sec 22(1) did not apply where the notice to quit proceeded under sec 22(2) of the Act and that in respect that no notice had been served by or on behalf of the tenant under sec 23(2) of the Act it was not now competent to raise any question about the validity of the notice under sec 22(2).

HELD that, given the peremptory terms of sec 23(2), the only method of challenging a notice to quit served on any of the grounds listed in sec 22(2) was the service of a notice by or on behalf of the tenant informing the landlord that he required a question arising under sec 22(2) to be determined by the Land Court and that, no such notice having been served in this case, there was no defence to the application and order confirming that the tenant was required to remove from the holding granted; Attorney-General (Duchy of Lancaster) v Simcock [1966] Ch 1; Harding v Marshall (1983) 267 EG 161; Magdalen College, Oxford v Heritage [1974] 1 WLR 441 and Milliken v McNulty 2007 SLCR 80 followed

The Note which accompanied the Court’s Order was as follows:–

[1] The applicants are landlords and the respondent is tenant of the holding of Cockpen Farm, Bonnyrigg, Midlothian, to which the Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act” or “the Act”) applies. The lease is running from year to year.

[2] On 19 November 2012 the applicants served two notices to quit on the respondent, one founding on sec 22(2)(b) of the 1991 Act and one founding on sec 24(1)(d). For present purposes we are concerned only with the former. It contained the following statement of the ground upon which it was being served:–

“This notice is given in terms of section 22(2)(b) of the Agricultural Holdings (Scotland) Act 1991 (as amended) on the ground that the land is required for use other than agriculture for which permission requires to be obtained, and has been obtained, under enactments relating to town and country planning.”

[3] On 10 December 2012 agents acting for the respondent purported to serve a counter-notice in terms of sec 22(1) of the Act, requiring that sub-section of the Act to apply to the notice to quit. No other counter-notice was served and in particular no notice was served by or on behalf of the respondent under sec 23(2) of the Act.

[4] In this application the applicants crave the Court to find and declare that the tenant is bound to remove from the holding as at Martinmas (28 November) 2013 in terms of said notice to quit. They also have a crave for an order for removal in the event that the respondent does not remove of his own accord. The respondent, who is not legally represented, has lodged answers asserting that the notice to quit is “technically defective and therefore invalid” because “emails sent to Midlothian Council Planning dated from 19 November 2012 and their responses from 19 December 2012 and as recently as 25 January 2013 [confirm] that no planning consent has been issued …”. The answers also aver that the respondent’s former agents made an error in the counter-notice they had served on his behalf. Although the nature of the alleged error is not spelt out in the answers lodged the error complained of is the service of a counter-notice under sec 22(1) rather than under sec 23(2).

[5] This defence has been met by a plea-in-law for the applicants in the following terms:–

“In respect that no notice under section 23(2) of the 1991 Act was served on the landlord, it being incompetent to raise any question under section 22(2) of the 1991 Act, the questions purportedly raised by the tenant should not be admitted to probation and decree as first concluded for should be pronounced.”

[6] We heard parties in debate on this plea at Edinburgh on 8 July 2013 when the applicants were represented by Sir Crispin Agnew of Lochnaw QC and the respondent appeared for himself, assisted by his sister, Miss Margaret Dow.

Legislative provisions

The following are all sections of the 1991 Act.

“22 (1) Where not later than one month from the giving of a notice to quit an agricultural holding (or, in a case where section 23(3) of this Act applies, within the extended period therein mentioned) the tenant serves on the landlord a counter-notice in writing requiring that this subsection shall apply to the notice to quit, subject to subsection (2) below and to section 25 of this Act, the notice to quit shall not have effect unless the Land Court consent to the operation thereof.

(2) Subsection (1) above shall not apply where –

(b) the notice to quit is given on the ground that the land is required for use, other than agriculture, for which permission requires to be obtained and has been obtained, under the enactments relating to town and country planning;

and where any of paragraphs (a) to (f) above applies, the ground under the appropriate paragraph on which the notice to quit proceeds is stated in the notice.

23

(2) A tenant who has been given a notice to quit in connection with which any question arises under section 22(2) of this Act shall, if he requires such question to be determined by the Land Court under this Act, give notice to the landlord to that effect within one month after the notice to quit has been served on him.”

Cases

Attorney-General (Duchy of Lancaster) v Simcock [1966] Ch 1
Cawley v Pratt (1988) 33 EG 54
Harding v Marshall (1983) 267 EG 161
Magdalen College, Oxford v Heritage [1974] 1 WLR 441
Milliken v McNulty 2007 SLCR 80

Texts

Hon Lord Gill The Law of Agricultural Holdings in Scotland, 3rd Ed (1997)

Submissions

(i) For the applicants

[7] Sir Crispin began by setting out the background. The applicants had obtained planning permissions for two developments covering, between them, the whole holding on 7 November 2012. They had thereafter served two notices to quit as aforesaid. These notices had been served in the alternative and without prejudice to each other. The respondent’s then agents had served a counter-notice under sec 22(1) but nothing under sec 23(2). The applicants had then lodged the present application with the Court.

[8] The respondent had lodged answers to the application by letter dated 4 March 2013. The only defence stated was that no planning consent had been issued for either planning application. Although the respondent’s averments had to be taken pro veritate for the purposes of the debate, production 14 showed that an administrative error had resulted in the relevant data-base held by Midlothian Council (the relevant planning authority) not being updated to show the grant of the planning permissions with the result that Mr Dow had been misled as to whether planning permission had been granted. By email dated 25 January 2013 sent to Miss Dow (production 13) Mr Graeme King of the Council had advised her that, although the Council were minded to approve both applications, neither had in fact yet been approved. That information was wrong. The emails comprising production 14, exchanged between the applicants’ agents and Mr William Ventners of the Council and dated 18 and 19 March 2013, explained the nature of the mistake and confirmed that planning consents for the developments had indeed been issued on 7 November 2012.

[9] No other defence to the application had been stated. The formal validity of the notice to quit was not being challenged. No notice under sec 23(2) having been served, it was now too late to raise any question arising under sec 22(2), including the question whether planning consents had been granted. Sec 22(1) did not apply where the notice to quit was given for one of the reasons stated at paras (a) to (f) of subsec (2). No notice under sec 23(2) having been served it was now either incompetent for the Court to deal with such questions or the Court had no jurisdiction to deal with them.

[10] Turning to the law, the leading cases were all English but it appeared that they also correctly represented the law in Scotland. Although at the time of its publication there was no Scottish authority on the matter Lord Gill’s Law of Agricultural Holdings in Scotland 3rd Ed contained the following statement (para 17.39):

“If the tenant [who has been served with a notice to quit founding on one of the grounds set out in sec 22(2) of the Act] fails to require arbitration on the notice and the notice is otherwise valid the court has no discretion to refuse to give effect to it, however sympathetic the tenant’s case and however harsh the landlord’s actings.”

[11] Any notion that the landlord had been harsh here was refuted but that was an accurate statement of the law. In making it Lord Gill had been following the English authorities. The first case was A-G Duchy of Lancaster v Simcock but Magdalen College, Oxford v Heritage, Harding v Marshall and Cawley v Pratt were to the same effect. Sir Crispin took us through the first three of these cases. The Magdalen College case was, he submitted, particularly significant because in that case the notice to pay rent upon which the notice to quit proceeded was admitted to be invalid. Despite that being so the court had been unable to do anything about it because the appropriate counter-notice had not been served.

[12] There had been one Scottish decision on the matter since the publication of Gill. It was a decision of this court, sitting as a Divisional Court, in the case of Milliken v McNulty where there had been no contradictor but the Court had accepted a submission to similar effect from Sir Crispin. Particular reference was made to paras [47] – [49] of our judgement in that case where Magdalen College, Oxford v Heritage had been followed but we had expressed the view that, because of slightly different wording in the relevant provisions, the position in Scotland was less doubtful than that in England.

[13] Some of these cases had been decided on the basis that the questions arising had to be decided by arbitration and that the courts therefore had no jurisdiction to entertain them. The fact that since the passing of the Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”) the Land Court now had jurisdiction to deal with questions arising under sec 22(2) made no difference. The jurisdiction conferred on the Land Court to deal with these matters by the 2003 Act was a different jurisdiction from the one it was exercising in the hearing of this application. The jurisdiction it was exercising in relation to this application for removal was one arising under sec 84(1)(e) of the 2003 Act. Jurisdiction to deal with questions arising in relation to sec 22(2) only arose where a sec 23(2) notice had been timeously served. That had not happened in this case and it was now too late to raise any question to do with the planning permissions upon which the notice to quit proceeded. As had been said by us in Milliken “[t]here is no suggestion in sec 23(2) or elsewhere in the [1991] Act … that this Court has jurisdiction to adjudicate on such a question at any other time or in any other context”.

[14] The wording of sec 23(2) was mandatory. There was no material difference between the various English provisions discussed in the English cases and the wording of sec 23(2). There was nothing which would allow us to come to a different result from that in the English cases and indeed, as already noted, we had come to the view in Milliken that the wording of the Scottish provision was clearer than the wording of its English equivalents.

[15] In these circumstances we should sustain the first plea-in-law for the applicants and grant decree in terms of Crave 1 of the application. In relation to expenses we should certify the cause as suitable for the employment of senior counsel given its considerable importance to the applicants – the development of the holding being conditional on the tenant being removed. Also, although the law in relation to sec 23(2) was reasonably clear, had any issue been raised about the proper construction of sec 22(2)(b) as amended that might have raised issues of law and so it had been reasonable to instruct senior counsel. Senior counsel had been instructed at an early stage and it was reasonable that he should remain instructed throughout; it was unreasonable to expect counsel to move in and out of a case. Submissions as to liability for expenses should be invited when our decision was issued.

(ii) For the respondent

[16] At the close of Sir Crispin’s submissions we allowed Mr and Miss Dow time to digest the authorities referred to by Sir Crispin, some of which had only been made available on the morning of the debate. When we resumed, however, no comment was made on these cases. It was not argued that they were wrong or that they did not apply. Instead the substance of the respondent’s plea was that justice and fairness required that he should not be penalised for what had been the mistake of his agent. His agent had served the wrong counter-notice. That was not Mr Dow’s fault. He had no control over that. He had been unaware of that until 25 January 2013. That was the date on which he had taken over the handling of matters from his agent. That was when he and his sister had begun to look into matters. It would be totally unfair at this stage to refuse to investigate the question of whether planning permission had been granted for the two intended developments by the time of service of the notice to quit just because the agent had served the wrong counter-notice. In summary what Mr Dow wanted was to be put into the position he would have been in had his agent timeously served the correct notice, being a notice under sec 23(2).

[17] We allowed Mr Dow to be assisted by his sister in the presentation of his argument and it was in fact Miss Dow who did most of the talking. She explained that there appeared to have been mistakes on the part of everyone else who had been involved with the case. If it was indeed the case that planning permissions had been granted on 7 November 2012, there had been mistakes by Midlothian Council in terms of not updating their computer programmes to show that fact. As late as 25 January 2013 these programmes had been showing that planning permission had not been granted. Page 38 of production 15 was an email from the Planning Officer confirming which computer programmes had been checked and that none of them contained any indication that planning permission had been granted.

[18] There had been mistakes by the solicitors acting for the landlords in that an incomplete copy of a sec 75 (of the Town and Country Planning (Scotland) Act 1997) agreement entered into between the applicants and Midlothian Council in relation to these planning applications had been registered with Registers of Scotland and incomplete copies of other documentation had been lodged with the Court. There may even have been mistakes by Registers of Scotland themselves in terms of not checking the sec 75 agreement. Certainly the mistake with the sec 75 agreement must have been a significant one; otherwise why had the landlords’ solicitors gone to the trouble of correcting it. Moreover, so far as the Cockpen development was concerned, there was a mismatch between the planning decision document as it appeared on the Council’s website and the copy Mr Dow had received. The copy he had received was unsigned and paragraphs 15 and 16 were missing. Also the layout and pagination was different on the copy he had received. This was strange given that the document appeared as a PDF on the Council website. The point of a PDF was that it could not easily be amended in any way. This contrasted with the documentation relating to the Redheugh development where the copy of the decision document received by Mr Dow had been exactly as it appeared on the Council website.

[19] Miss Dow made clear that she was not alleging manipulation of the documentation or, by implication, fraud of any kind. But it was strange that there were all these errors and where the paperwork was not right surely the notice to quit, which proceeded on the basis of the paperwork, could not stand. If they could prove that the paperwork upon which the notice to quit proceeded was wrong they were surely entitled to challenge the validity of the notice.

[20] Sir Crispin intervened to explain that certain photocopying errors had been made by those instructing him in the documentation they had lodged with the Court but these had been rectified. Miss Dow accepted, in answer to the Court, that mistakes of that kind could not affect the validity of the planning permissions. She accepted that only mistakes on the part of Midlothian Council, as planning authority, could have that effect. She was not able to point to any specific mistakes which had the effect of vitiating the planning permissions but she submitted that the cumulative effect of all of the mistakes made must be to bring the validity of the planning permissions into question.

[21] Miss Dow emphasised the unfairness of the position. Everyone else had made more mistakes than she and her brother had made but their mistakes were being overlooked whereas her brother was being penalised for a mistake made not by himself but by his agent. The landlords’ solicitors had had the opportunity of correcting their mistakes: surely she and her brother should be given the same opportunity. That was all they were asking.

[22] We allowed Sir Crispin to respond. Standing his earlier submission all the points made by Miss Dow were irrelevant. If the validity of the planning permissions was being challenged that would now have to be done by judicial review – although what the consequences of a successful challenge by way of judicial review would be for proceedings in this court he did not know. Photocopying errors were irrelevant as were errors in the sec 75 documentation because all sec 22(2)(b) was concerned about was whether or not planning permission had been granted. The applicants’ position was that planning permission for both developments had been granted on 7 November 2012, before the service of the notice to quit, and that they were entitled to found on these permissions unless and until they were reduced by way of judicial review. But even if everything was fundamentally flawed, because no sec 23(2) notice had been served, the tenant could not challenge the notice to quit on these grounds at this stage: Magdalen College, Oxford v Heritage. If, however, we were against him on that we should direct Mr Dow to put in a detailed statement of the errors he was founding upon as vitiating the planning permissions.

[23] Miss Dow raised again the significance of the fact that the sec 75 agreement had required to be amended. Why would it have to be changed if the mistake in it was immaterial? Sir Crispin responded by saying that errors in the sec 75 agreement could not affect the validity of the planning permissions. Miss Dow closed with a submission that the errors made by all the parties here should cancel each other out and we should start again with a clean slate. The effect of that would be to put things in the position they would have been in had Mr Dow’s agents served the correct counter-notice.

Discussion and decision

[24] The first thing we have to say is said for the benefit of the respondent and his sister. It is simply that what the Court can and cannot do in disputes of this kind is entirely controlled by statute. If the relevant statute – in this case the 1991 Act – does not give us power to do something then we cannot do it, however unfair the result might seem. It was the same sort of statutory constraint which led to expressions of regret and reluctance from Pennycuick J in Attorney-General (Duchy of Lancaster) v Simcock (at pages 8 and 9) and from Ackner LJ in Harding v Marshall (at pages 4G and 10H).

[25] So we turn to the 1991 Act. The scheme of secs 22 and 23 of the Act is this. In terms of sec 22(1) where a notice to quit an agricultural holding has been served and the tenant serves a counter-notice in writing within a month (or such longer period as might be allowed where sec 23(3) applies) requiring that sec 22(1) shall apply to the notice to quit then the notice to quit is not to have effect unless this Court consents to its operation. However subsec (2) of sec 22 provides that subsec (1) does not apply where the notice to quit is served on one of the grounds specified in subsec (2). That means that where a notice to quit specifying one of these grounds is met with a counter-notice based on or referring to subsec (1) the counter-notice has no effect because subsec (1) does not apply. Should the tenant want to question any aspect of the subsec (2) ground relied upon, the appropriate course of action is to serve, again within one month of the service of the notice to quit, a notice under sec 23(2) requiring such question to be determined by this court.

[26] The respondent accepts that that is what should have happened in this case and, as we have seen, his case before this court is simply that fairness requires the normal consequences of the failure to serve a sec 23(2) notice to be overlooked. He asks us therefore to proceed as if a sec 23(2) notice challenging the validity of the averred planning permissions had been served.

[27] Since the cases relied upon by Sir Crispin have not been challenged by Mr Dow we need not revisit them. We dealt with some of them in our decision in Milliken v McNulty and, although that was an entirely one-sided debate, we see no reason to depart from anything we said there.

[28] The question is whether we have any power to overlook the failure to serve a sec 23(2) notice. One difference between the facts of this case and the facts of Milliken is that in this case a counter-notice was served, albeit of the wrong kind, whereas no counter-notice of any kind was served in Milliken. The consequence of that difference is that in the present case the landlords were put on notice, as soon as the notice to quit was served, that the tenant wanted to resist it. But that does not provide any sort of basis for equiparating a sec 22(1) notice with a sec 23(2) notice. A sec 22(1) notice is just not capable of serving the same function as a sec 23(2) notice. A sec 22(1) notice does not challenge the validity of the notice to quit. The question to which it gives rise is whether the Land Court ought to consent to the operation of the notice on one or more of the grounds contained in sec 24. A sec 23(2) notice, on the other hand, will usually be directed at challenging the ground on which the notice to quit proceeds. It will raise the question whether that ground is true or not; see Gill para 17.39. The two notices therefore set off two entirely different lines of enquiry.

[29] We have considered whether the fact that the Land Court now has jurisdiction to deal with questions raised in a sec 23(2) notice, whereas prior to the passing of the 2003 Act these required to go to arbitration, makes a difference. The English cases referred to by Sir Crispin can be viewed as having been decided on the basis that the ordinary courts had no jurisdiction to deal with equivalent questions in England; these were matters for arbitration exclusively. That aspect of matters is no longer a feature in Scotland. Had a sec 23(2) notice been served, this court, not arbitration, is the forum in which the questions raised would have to be answered. But the fundamental and inescapable problem is that a sec 23(2) notice is necessary in order to activate that jurisdiction. We cannot treat the service of a sec 22(1) notice as the equivalent of the service of a notice under sec 22(3) not only for the reasons referred to above but also for the following reasons.

[30] Firstly, subsec (1) of sec 22 simply does not apply where one of the grounds listed in subsec (2) is being relied upon. Accordingly a counter-notice served under subsec (1) is a complete irrelevance except, perhaps, in the situation in which the tenant, having served a sec 23(2) notice, has been successful in challenging a so-called “incontestable notice to quit” under sec 22(2): see Gill para 17.41. As matters stand in the present case the sec 22(1) notice served by Mr Dow’s agents has no effect. It takes us nowhere in terms of further procedure under the Act.

[31] Secondly, and fundamentally, there are the peremptory terms of sec 23(2). It says that a tenant who requires any question arising under sec 22(2) to be determined by the Land Court “shall … give notice to the landlord to that effect within one month after the notice to quit has been served on him”. The only way provided for in the Act of challenging a sec 22(2) ground of removal is through sec 23(2). Paraphrasing what we said in Milliken, there is no suggestion in the Act that this court has jurisdiction to entertain such a challenge in any other context.

[32] Accordingly we can see no way round the problem caused by the failure to serve a sec 23(2) notice. Because of that failure we cannot now enquire into the validity of the notices to quit. We know that this will come as a disappointment to Mr and Miss Dow. They will not be the first to have been similarly disappointed. As has been seen, the cases referred to by Sir Crispin involve repeated expressions of regret by the judges deciding them that they could not allow the tenant’s case to proceed. We have mentioned Attorney-General (Duchy of Lancaster) v Simcock and Harding v Marshall. Gill (at para 17.39 fn 42) cites another, Parrish v Kinsey, which involved the removal of a tenant of over 40 years’ standing aged “somewhere between 93 and 100” who suffered from impairment of sight, hearing and understanding of formal documents. The legislative provisions are, therefore, capable of leading to injustice.

[33] How great that injustice is largely depends on how strong was the tenant’s case for challenging the ground specified in the sec 22(2) notice. In the Magdalen College case the tenant had a cast iron case for challenging the demand for payment of rent on which the notice to quit was based: the landlords admitted it was invalid. So there was significant injustice there. There may be doubt as to whether the same is true in the present case. We say that because, if it is in fact the case that valid planning permissions were granted for the landlords’ developments on 7 November 2012, Mr Dow would not have been able to successfully resist the notice to quit in any event. On the face of the documents produced to the Court it seems to us that the permissions did exist, but that is not something which we have had to decide; it is just our impression from the documents. As has been seen, although she was able to identify a number of mistakes made by a number of people in the course of the procedure associated with said planning applications, Miss Dow seemed unable to point out mistakes which were so serious that they might well provide a basis for challenging the validity of the ostensible planning consents.

[34] If we are wrong about that, however, and Mr and Miss Dow believe that they have a good legal case for challenging the validity of these permissions we agree with Sir Crispin that their only recourse is to judicial review in the Court of Session. We would caution them to think very carefully and to take legal advice before resorting to that course of action. If it were to be unsuccessful Mr Dow could well be found liable in very significant additional expenses. But even if such review were to be successful there is no guarantee that it would lead to a different outcome so far as having to remove from the farm is concerned. The failure to timeously serve a sec 23(2) notice might still mean that this court could not consider the legality or otherwise of the planning permissions or have regard to the fact that they had been set aside by the Court of Session. In saying that we are not expressing any concluded view on these matters, merely explaining to Mr and Miss Dow why they should be careful about taking further proceedings. If they consider that failure to serve a sec 23(2) notice has caused Mr Dow loss that is a matter for him to take up with his previous agents.

[35] For the reasons set out above we have sustained the applicants’ first plea-in-law and the consequence of that is that we must grant the first crave of the application. Subject to any appeal taken against this decision, Mr Dow will therefore require to remove from the farm by or on 28 November 2013. Crave 2 will remain extant lest he should refuse or delay to do that.

Expenses

[36] As is our usual practice we have invited written motions and submissions as to who should be liable for the expenses of this application to date within 21 days of intimation hereof. For Mr Dow’s benefit we would explain that the successful party usually gets an award of expenses against the losing party if the successful party moves for such an award. If Mr Dow wants to avoid that result he should send in his submissions saying why no award of expenses should be made against him within 21 days of receiving this decision.

Further procedure

[37] As we have said crave 2 is still extant. Once we have dealt with expenses it would be our intention to sist (i.e. suspend) the application pending what happens at Martinmas.