Decision of the Scottish Land Court

James Forrest Coleman and Kenneth George Coleman (Applicants)
v
J & S Wight Limited (Respondent)

Case reference SLC/122/19
before
Iain F Maclean, Deputy Chairman, and John Smith
18 February 2021

Background

[1] In our order dated 24 November 2020, we (one) appointed parties to lodge fresh proposals for further procedure, revised in the light of the contents of their adjusted pleadings, that addressed how this application and the related application RN SLC/121/19 might be disposed of together. We (two) ordered the applicants, under reference to rule 9 (Call for specification of legal principles etc. upon which party relies) of the 2014 Rules, within the same period, to provide a statement of the legal propositions upon which they relied, together with details of the enactments and authorities cited by them as founding or supporting those propositions, in response to the respondents’ attack on the relevancy and/or competency of their craves (i) and (ii) in this application and (ii) and (iii) in application RN SLC/121/19, and (three), under reference to rule 8 (Call for clarification) of the 2014 Rules, called upon (i) the applicants to state whether they accepted that one or other of the respondents to these two applications would have a tenancy of Penty Farm unless terminated by operation of one or other of the applicants’ notices to quit; and (ii) the respondents in these two applications to confirm that their shared position was that the tenant of Penty Farm is the company J & S Wight Ltd., but esto it is not, the tenant is James Wight as an individual.

[2] We have now received notes of proposals for further procedure from the applicants and the respondents in conformity with that order. The latter note of proposals sets out the shared position of the company J & S Wight Ltd., the respondent in this application, and of James Wight, the respondent in application RN SLC/121/19. The parties are in full agreement with the court that the issues arising in these two applications are, to adopt the language of the respondents’ note of proposals, “essentially identical and overlapping”, and that in consequence, any future procedure we may fix should have as its object the disposal of both applications together.

[3] We have also received from the applicants a statement of propositions and authorities setting out their response to the attack mounted by the respondents on the relevancy and/or competency of their craves (i) and (ii) in this application and (ii) and (iii) in application RN SLC/121/19, and a supplementary note submitted in response to the contents of the respondents’ note of proposals. The respondents have supplied us also with a note of argument expanding upon the points they wish to ventilate at a diet of debate.

Discussion

[4] The contents of these sundry notes are helpful to the extent that they bring out more clearly than do the contents of their pleadings the respective positions of the parties on the matters about which we sought clarification in part (three) of our order dated 24 November 2020. It may be, however, that this is a case of two steps forward, one step back, in that it appears to us that parties, in clarifying their positions in response to the court’s order, have set new hares running that, now they have been flushed out, will require to be pursued and despatched, rendering the task of determining further procedure in these related applications still more impenetrable.

The applicants’ response to the attack on the competency/relevance of their craves

[5] The applicants now acknowledge, at least to the extent that their notices to quit are properly interpreted as notices given under section 22(2)(b) of the Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act”), that crave (i) in this application, and crave (ii) in application RN SLC/121/19, are indeed inept, as the respondents have contended, and they confirm (see paragraph 6 of their note of proposals) that those craves are no longer insisted in. The respondents having given the applicants timeous notice under section 23(2) of the 1991 Act, and subsequently having identified in their pleadings and note of argument the questions arising out of the reason stated in the applicants’ notices to quit they require the court to determine (cf. Highland Council v Matheson 2005 SLCR 23), the next step procedurally in these applications (leaving aside for the purposes of the present discussion the issue of the identity of any tenant of Penty Farm) ordinarily would be for the court to fix a hearing, whether by way of proof or debate as the particular circumstances of the case dictated, to the end of answering those questions, which collectively resolve themselves into the single issue of whether the reason stated in the notices is true. Were the court to determine that question in the applicants’ favour, they would be entitled to decree of removal. Were it to be determined in the respondents’ favour, the notices arguably would become “contestable” notices to quit to which section 22(1) of the 1991 Act would apply, and the respondents would have one month from the issue of the court’s determination in their favour to serve counter-notice thereto in accordance with section 22(1): see section 23(3) of the 1991 Act and the discussion in Gill, Agricultural Tenancies (4th Ed.; 2007), at paragraph 35-129.

[6] In paragraph [19] of the note appended to our order dated 24 November 2020, we requested that the statement of legal propositions to be lodged by the applicants in answer to the respondents’ attack on the relevancy and/or competency of their craves should also “explicate the intended import” of their averment, in paragraph 6 in the statement of facts in this application, that:

Esto the aforesaid Notice to Quit is not valid as a Notice under Section 22(2)(b) of the [1991 Act], the Respondent has failed to serve a counter-notice on the Applicants under Section 22(1) of the [1991 Act].”

We observed that the applicants nowhere in their pleadings, as we read them, offered to prove that their own notice(s) to quit were not valid as notices under section 22(2)(b) of the 1991 Act, and pointed out that the respondents’ section 23(2) notices were directed towards the substantive rather than the formal validity of the applicants’ notices to quit.

[7] The applicants, in their note of proposals and statement of propositions, now confirm that what we were, and are, supposed to take from that quoted averment, supplying the underpinning logic of their surviving crave (ii) in this application and crave (iii) in application RN SLC/121/19, is that they are minded to argue, notwithstanding that their notices to quit expressly invoke section 22(2)(b) of the 1991 Act, that they are not valid notices under section 22(2) of the 1991 Act, because they contain additional wording that innovates upon what is contained in the statutory provision. Albeit that the applicants’ primary position, as we understand it, is that their notices to quit are valid notices under section 22(2) of the 1991 Act, and that the additional wording should be treated as pro non scripto, they go on, in their note of proposals, to relate what the consequences would be, were the wording thereof “not deemed to be competent for the purpose of [s]ection 22(2).” In that event, they contend, the respondents should have ignored the statement in the notices invoking section 22(2)(b) of the 1991 Act, and served a counter-notice requiring that section 22(1) should apply thereto. The respondents not having done so, and now being out of time to do so, the argument runs, the applicants would be entitled to declarator in terms of crave (ii) in this application and crave (iii) in RN SLC/121/19. The respondents themselves, in their note of argument, contend that the applicants’ notices to quit, insofar as relying on section 22(2)(b) of the 1991 Act, are void from uncertainty. Where the applicants and the respondents are at odds here, we infer, is as to whether the effect of the applicants’ divergences from the wording of the statutory provision in their notices to quit is to convert them into “contestable” notices to quit to which section 22(1) of the 1991 Act instead would apply, or to render them null and of no legal effect whatever.

[8] The consequence of the applicants’ intimation that they no longer insist upon their crave (i) in this application and crave (ii) in application RN SLC/122/19 is that they are now left, in each application, with two craves, neither of which proceeds upon the basis that notice to quit was validly given under section 22(2)(b) of the 1991 Act. The applicants’ formal response to the questions the respondents have asked the court, in the wake of their section 23(2) notice, to determine in this process (effectively putting the applicants to their proof on the truth of the reason stated in their notices to quit), is limited to two bald sentences, contained in paragraph 5 of the statement of facts in this application, that:

“In 2006 planning permission was obtained for the construction of a house on Penty Farm and planning permission for a house remains in place. The applicants have applied for approval for a forestry scheme on Penty Farm.”

In their statement of propositions and authorities, the applicants provide a gloss on those bare averments, submitting that the building of a house on Penty Farm “is inimical to the continuation of any agricultural tenancy” and that “it is sufficient [to justify termination of the tenancy] if the implementation of the planning permission would materially affect the tenancy subjects such as to prevent the continuation of the tenancy as granted”.

The parties’ positions on the identity of the tenant

[9] We called upon the applicants to state whether they accepted that one or other of the respondents to the two applications would have a tenancy of Penty Farm unless terminated by operation of one or other of their notices to quit; and the respondents to confirm that their shared position was that the tenant of Penty Farm is the company J & S Wight Ltd., but esto it is not, the tenant is James Wight as an individual. The first of those calls was prompted by the insertion into paragraph 2 of the statement of facts in this application, after answers were lodged, of averments that if, as averred by the respondents, James Wight was in fact acting as an agent for the firm of John M Wight and Sons, and not as an individual, then there was no consensus in idem between the parties as to the identity of the tenant under the intended lease. The applicants had only ever understood John [sic] Wight to have been acting on his own behalf as an individual, and in these circumstances, “there was no valid lease at all, and no valid lease has ever been entered into subsequently”.

[10] The respondents have now confirmed as correct our understanding that their primary position is that the company is the tenant, which failing that the tenant is Mr Wight as an individual. They have, in their note of proposals, elaborated on the thinking behind that position, explaining that it is predicated on what is, at its root, a question of the law of agency. It is suggested that the essential issue between the parties is whether, in the negotiations and discussions that took place between the parties, “Mr Wight was acting as a disclosed or an undisclosed agent for the partnership of J & S Wight and latterly the business of J & S Wight Limited”. They contend that even if the applicants were to succeed in establishing that Mr Wight “never disclosed the involvement of his farming businesses at any stage of their discussions (which is denied), the effect would not be a lack of consensus in idem”, because either: (1) there was no delectus personae in the identity of the tenant that would prevent the farming business now emerging as principal; or (2) there was delectus personae in respect of Mr Wight personally that prevents the farming business from emerging as principal, and as such, the tenancy was framed solely with him personally. This argument provoked a response from the applicants, in the form of a supplementary note of proposals, in which the soundness of this analysis is disputed. This was an agricultural lease, in respect of which delectus personae applied. If Mr Wight were acting as agent for the partnership, then he was not acting as an individual, as he knew at the time, but the applicants did not. The [legal] person who took occupation of Penty Farm was not the person the applicants had agreed could be the tenant. The sole factual dispute, according to the applicants’ supplementary note of proposals, is as to whether Mr Wight made them aware “that he was acting as an agent on behalf of the partnership, ” on which point a short proof should be permitted.

[11] In their note of proposals, the respondents complain that when the applications were first lodged with the court, there was no hint of a dispute about the existence of a tenancy. That dispute was introduced “by a sidewind” only after answers had been lodged. They adhere to their previously indicated position that it would be a substantial waste of time and expense for the parties to have a proof before answer on the issues of the identity of any tenant, and the existence of any tenancy, only to then have it determined that there was a valid notice to quit that had terminated the lease. The issues arising out of the notices to quit are habile, the respondents submit, to be disposed of as preliminary points of law at a debate. In the note of argument submitted by the respondents along with their note of proposals, they develop their attack on the substantive merits of the applicants’ notices to quit, arguing that neither the existing 2006 planning permission for the erection of a house on Penty Farm nor the prospective forestry scheme also founded upon by them are relevant for the purposes of section 22(2)(b) of the 1991 Act. The respondents note, under reference to the contents of paragraph 11 of the applicants’ statement of propositions and authorities, that the applicants “now concede” that their averments regarding the latter are irrelevant (the applicants there acknowledge that the forestry scheme is not something for which permission is required under the enactments relating to town and country planning, and so section 22(2)(b) does not apply), and they question why the averments in connection therewith remain in the applicants’ pleadings. They advance a general criticism of the applicants’ pleadings as confused and confusing, to such an extent that it would be unfair to the respondents, from the perspective of fair notice, for the court to permit them to proceed to proof before answer.

Discussion and decision

[12] We shall, of consent of parties, under reference to rule 11 of the 2014 Rules, formally conjoin this and application RN SLC/121/19, and direct that all evidence and submissions in the one case are to be treated as evidence and submissions in the other. Because the pleadings are more developed in this application RN SLC/122/19 than in application RN SLC/121/19, we shall, in effect, treat application RN SLC/122/19 as the lead application for all practical purposes.

[13] The contents of parties’ respective notes of proposals, the applicants’ statement of propositions and authorities, and the respondents’ note of argument, have to some extent overtaken their pleadings. Although the applicants’ note of proposals, at paragraph 7, contemplates “the deletion of the orders referring to Sections 23 and 24”, they have not yet moved the court to amend their craves, still less to indicate what craves, if any, they intend to insert in their place. The other concessions the applicants have made have yet to be reflected in appropriate deletions from their pleadings, and whilst the respondents are incorrect in their assertion, made at paragraph 15 of their note of proposals, that the lack of consensus in idem issue does not feature in the applicants’ existing averments (cf. paragraph [9] above), it would be fair to say that where the applicants are or may be going with this argument is not well signposted in their pleadings. By a similar token, the agency argument that the respondents develop in their note of proposals is not clearly foreshadowed in their pleadings: indeed, it is far from obvious to us whether the averments in paragraph 3 of the respondents’ answers are intended to lay the basis for the case that Mr Wight was acting as a disclosed or as an undisclosed agent for the partnership and latterly for the company. The respondents expressly aver that the applicants’ notices to quit are invalid, because they do not engage section 22(2)(b) of the 1991 Act, but their answers do not directly address the applicants’ argument that, on that basis, the respondents should have treated them as notices to quit to which section 22(1) of the 1991 Act instead applied. We have, in the foregoing circumstances, in our order, allowed parties four weeks within which to carry out such “tidying up” amendment and/or adjustment as they see fit in order to render their pleadings ready for a hearing.

[14] In respect of the fixing of hearings, we consider that there are preliminary matters here that may be susceptible to being addressed by way of debate, but those matters are not precisely coincidental with those originally identified by the respondents. It seems to us that the first matter that might be addressed by way of a short diet of debate is that of how the applicants’ notices to quit properly fall to be construed. There is copious case law on the subject of the effect of the inclusion of erroneous or superfluous statements on the validity of a notice to quit (see Gill, op. cit., at paragraphs 34-60 – 34-67). If the applicants were to succeed on their “alternative” argument that their notices to quit are not competent notices for the purpose of section 22(2) of the 1991 Act, and that as such, the respondents should have ignored the statement in the notices invoking section 22(2)(b) of the 1991 Act, and served a counter-notice requiring that section 22(1) should apply thereto, which they failed to do, that would be enough to dispose of both applications without inquiry into either what we have termed the substantive merits of the notices to quit or the issue of the identity of the tenant. If the applicants are not well founded in that argument, it can be dismissed, and we can continue upon the settled basis that the notices to quit proceeded under section 22(2)(b) of the 1991 Act.

[15] A second issue that, on the face of it, usefully might be explored at debate is that of the relevance of the applicants’ averments about an absence of consensus in idem between the parties as to the identity of the tenant. The respondents’ position, as we understand it, is that these averments are irrelevant, on the basis that even if Mr Wight did not disclose to the applicants in his dealings with them that he was acting in the capacity of agent for the partnership and then the company (and the respondents’ pleadings, at least as we read them, contain no averment that he ever did in terms so inform them), this would not result in a failure of the contract of lease because of a lack of consensus in idem. If the respondents were to be successful in that argument, thereby removing from the scope of parties’ dispute the issue of whether a tenancy ever came into existence and allowing attention to be focused on the issue of the identity of the tenant, a short proof on the subject of what was disclosed to the applicants as to the capacity in which Mr Wight was conducting the lease negotiations, as contemplated by the applicants’ agents, might prove to be in order.

[16] The respondents submit that the substantive merits of the applicants’ notices to quit (treated as proceeding on the basis that they were given under section 22(2)(b) of the 1991 Act) also are capable of being disposed of at debate. They argue that the 2006 planning permission founded upon by the applicants is not a relevant planning permission for the purposes of section 22(2)(b) of the 1991 Act because it does not apply to all or substantially all of the land to which the notices to quit relate. The planning permission for the house applied to only a very small portion of the whole of the agricultural holding. The respondents acknowledge that there is a dearth of judicial authority on this point, and they set out, at paragraphs 6.5 – 6.7 of their note of argument, the case in support of that proposition.

[17] The applicants’ existing pleadings make no attempt to engage with the questions arising under section 22(2) of the 1991 Act which the respondents require to be determined, but, as we noted in paragraph [8] above, the applicants do assert in their statement of propositions and authorities that the building of a house on Penty Farm “is inimical to the continuation of any agricultural tenancy” and that “it is sufficient [to justify termination of the tenancy] if the implementation of the planning permission would materially affect the tenancy subjects such as to prevent the continuation of the tenancy as granted”. If the applicants intend to advance such an argument in these proceedings, they will require, as a matter of fair notice, to aver any facts and circumstances upon which they would propose, at any proof before answer, to rely, in support of those propositions. In the absence of the introduction of such averments by the applicants, the respondents’ arguments going to the substantive merits of the applicants’ notices to quit could be aired in the course of a subsequent short virtual debate.

[18] It follows from all of the above that, for the reasons hereinbefore marshalled, we consider that the next stage in these proceedings, after parties have carried out any necessary amendment and/or adjustment in the leading application and answers, should be to fix a debate on the preliminary issues identified in paragraphs [14] and [15] above. Agents are asked to provide the court, within two weeks of the date of intimation of this order, of dates during the months of May and June when Counsel and agents would be available to participate in such a hearing, which we would have thought could comfortably be accommodated within a single day, or part thereof.