FULL COURT

(Sheriff MacLeod, J. Smith)

FORBES v CAMERON

(Application RN SLC/134/08 – Order of 27 October 2008)

AGRICULTURAL HOLDINGS – VALIDITY OF NOTICE TO QUIT – MEANING OF “WHITSUNDAY” – TERM AND QUARTER DAYS (SCOTLAND) ACT 1990

The lease of an agricultural holding entered into in 1915 specified a Whitsunday date of entry without specifying the actual date. The only definition of the term anywhere in the lease documentation was in the rent clause of a Schedule of General Conditions pertaining to farms on the landlord’s estate, which was incorporated into the lease, where “Whitsunday” was defined as 15th May. On 22 May 2008 the landlord served a notice to quit specifying as the effective date “the term of Whitsunday (28 May) 2009”. The tenant having served a counter-notice under section 23(2) of the Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act”), requesting that the question whether said notice complied with section 25(2)(b)(ii) of the 1991 Act be determined by the Land Court, the landlord brought this application seeking declarator that said notice to quit was valid. At debate the applicant argued that wherever in a lease the word “Whitsunday” appeared “without further specification as to date or month” in terms of section 1(4) of the Term and Quarter Days (Scotland) Act 1990 it meant 28 May and that the notice to quit was therefore valid, the definition of Whitsunday as 15 May in the lease falling to be regarded as applying for rent purposes only.

The Court held that the approach taken by the applicant to the construction of the lease was too narrow. The lease and General Conditions had to be read together and, approaching matters in that way, this was not a case in which there was no further specification of “Whitsunday” in the lease, the definition given was not to be confined to rent purposes only but applied to “Whitsunday” wherever it appeared and the notice to quit was therefore invalid not only as being contrary to section 25(2)(b)(ii) but also sec 21(3)(d) of the 1991 Act and decree of absolvitor granted.

The Note attached to the Court’s Order was as follows:-

[1] The parties are respectively landlord and tenant of the holding of Orrin View, Ferintosh, Easter Ross, under a lease originally entered into in 1913 which is continuing on tacit relocation. The present respondent succeeded to the tenant’s interest as a non near relative successor of the late Mrs Elizabeth Ross who died on 3rd December 2005. His succession was originally opposed by the applicant (in application RN SLC/69/08) but that opposition was withdrawn and the applicant accepted the respondent as tenant.

[2] That acceptance, however, seems to have heralded no more than a change of tack on the part of the landlord in his opposition to the succession because hardly had he indicated acceptance of Mr Cameron as tenant (he moved to be allowed to abandon application RN SLC/69/08 on 21st May 2008) )than his agents served a notice to quit founding on sections 22(2)(g), 25(1) and 25(2)(d) of the Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act”), the provisions entitling a landlord to remove a non near relative successor within three years of acquisition of the tenancy. The notice was dated 22nd May 2008 and required the respondent to quit the holding “at the term of Whitsunday (28th May) 2009”. It is the validity of that notice to quit which is the subject of this application.

[3] The applicant’s notice to quit was met with a timeous counter-notice from the respondent under section 23(2) of the 1991 Act requiring the question of whether said notice to quit complies with section 25(2)(b)(ii) of the 1991 Act to be determined by this Court, the point of challenge to the validity of the notice being that it was served too late, the anniversary of the ish of the lease being, the respondent says, 15th May and not 28th May. In response to that counter-notice the applicant has raised the present application in which he seeks declarator that the notice to quit is valid and enforceable and we heard debate on that question on 20th October 2008 when the applicant was represented by Sir Crispin Agnew of Lochnaw QC and the respondent by Mr Anthony MacIver, advocate. At the outset of the hearing parties lodged a Joint Minute agreeing the various documentary productions lodged by the applicant.

Legislation

Agricultural Holdings (Scotland) Act 1949, sec 93(1)
Agricultural Holdings (Scotland) Act 1991, secs 22(2)(g), 25
Term and Quarter Days (Scotland) Act 1990, sec 1

Cases

Austin v Gibson 1979 S.L.T. (Land Ct.) 12
Provincial Insurance PLC v Valtos Limited 1992 S.C.L.R 203

Texts

Encylopaedia of Scottish Legal Styles, 1937
Hon Lord Gill, The Law of Agricultural Holdings in Scotland, 3rd ed.
Hunter, A Treatise on the Law of Landlord and Tenant, 4th ed.
Law Society of Scotland, Aspects of Agricultural Law, 1981
Rankine, A Treatise on the Law of Leases in Scotland, 3rd ed.

Submissions for the applicant

[4] Sir Crispin’s motion was that we should repel the answers and grant decree finding and declaring that the notice to quit is valid.

[5] He confirmed that the sole issue between the parties was whether the ish of the lease is Whitsunday 15th May or Whitsunday 28th May. If the former, it was accepted that the notice was not valid because it was served after 15th May with a stated first removing date of 28th May.

[6] After referring briefly to the provisions of sections 22(2)(g) and 25 of the 1991 Act Sir Crispin dealt at greater length with the Term and Quarter Days (Scotland) Act 1990 (“the 1990 Act”) which, in his submission, was really what was determinative of the issue. It is convenient to set out the relevant provisions of section 1 here:-

1.- Whitsunday, Martinmas, Candlemas and Lammas

(1) For the purposes mentioned in subsection (2) below –

(a) Whitsunday, and Martinmas mean 28th May and 28th November respectively;

(2) The purposes referred to in subsection (1) above are the purposes of –

(a) any enactment or rule of law;

(b) any lease, agreement or undertaking which is entered into or given, or any document which is executed, after this subsection comes into force.

(3) …

(4) Subject to subsection (5) below, where in a lease, agreement or undertaking which is subsisting when, or in a document which has been executed before, this subsection comes into force there is a reference to any of the following –

(a) Whitsunday, Martinmas, Candlemas or Lammas; or

(b) a term or quarter day,

without further specification as to date or month, the date applicable to the reference shall be the date prescribed therefore in paragraph (a), (b), (c) or (d) above.

(5) Subsection (4) above shall not apply if the sheriff (on a summary application made within the period of 12 months beginning with the date of the passing of this Act) on being satisfied that the date intended in the lease, agreement, undertaking or document was a specific date other than the date so prescribed, makes a declaration accordingly.”

[7] Before coming on to subsection (4), which is the critical part for our purposes, Sir Crispin drew our attention to subsection (5). It gave parties to leases 12 months in which to have a different date from the statutorily prescribed date established for the term dates in their leases. In order to do so the sheriff was allowed to look at the intention of the parties and the whole factual matrix. Where parties had not taken advantage of that provision, however, there was no room for considering these matters and in the absence of further specification in the lease itself Whitsunday meant 28th May and Martinmas 28th November.

[8] Turning to subsection (4), Sir Crispin placed particular emphasis on the words “where … there is a referenceto any of the following … without further specification as to date or month, the date applicable to the reference shall be the date prescribed …”. That wording meant that each reference to any of the term dates in a lease had to be looked at individually to see whether the date was further specified for the purpose of that reference. So in the present case one had to look at each reference to Whitsunday to see if the term was further specified for the purpose of that reference.

[9] Sir Crispin then carried out that exercise. The only occasion on which greater specification is given is in paragraph 3 of the General Articles, Conditions and Regulations applying to farms and crofts on the applicant’s estate which document is incorporated into the lease. But that, said Sir Crispin, was a definition date for when rent was due and nothing more. In particular it had nothing to do with the date of entry and, therefore, date of removal. All other references to Whitsunday were “without further specification as to date or month”, in the words of subsection (4), and the date to which they referred was, therefore, 28th May.

[10] The purpose of the 1990 Act had been to define the date of entry where it was “without further specification as to date” in order to avoid having to have proof of what may or may not have been the normal estate date for a Whitsunday or Martinmas entry. This was not, therefore, a case in which the Court had to try to ascertain the meaning and intentions of the parties to the lease, perhaps by looking to the surrounding circumstances at the time it was entered into. Such considerations were irrelevant. In particular the respondent’s averment in this case that “in 1913 the normal date of entry and date of ish for the term of Whitsunday was 15th May” was irrelevant. Instead the position was governed by the 1990 Act and where “Whitsunday” was stated “without further specification as to date” it meant 28th May.

[11] It was significant that the date of Whitsunday and Martinmas were defined for rent payment purposes but not for the purposes of entry and removal. That was clearly suggestive of the rent payment dates being different from the date for entry and removal. In that regard, contrary to the respondent’s averment in the present case that “Reference to dates of payment of rent in agricultural leases normally tie in with the date of entry and date of ish and the equivalent half yearly term”, it was not uncommon to have the rent payment date defined as the earlier Whitsunday and Martinmas. That could, at one time, have been advantageous to the landlord in terms of availing himself of his right of hypothec without haste or undue harshness; Rankine page 341.

[12] Sir Crispin produced a number of styles of lease in order to illustrate (i) that one could, and frequently did, have different dates for rent payment from the dates for entry and ish and (ii) that specifying a date for rental payments did not qualify the meaning of term days in relation to entry and ish. These were style No. 1 from the Appendix to Hunter, Style 146 from the Encyclopaedia of Scottish Legal Styles, and a style of agricultural lease from Aspects of Agricultural Law with commentary by Mr K. M. Campbell thereon at page 11. Reference was also made to the case of Austin v Gibson referred to by Mr Campbell. Hunter on The Law of Landlord and Tenant at pages 381-387 also made clear that the duration and rent clauses of leases were entirely separate and that the payment date for rent could be any date stipulated for and not just the term dates.

[13] The only case he had been able to find on the 1990 Act was the Sheriff Court case of Provincial Insurance PLC v Valtos Ltd which was a case under subsection (5) of section 1. That case was not of assistance because the actual lease was not available which made it impossible to understand the decision fully. In any event the case did not say that where a term date is defined in one instance it must be the same for all purposes. All it said was that because the term Martinmas was defined the first time it appeared, in the absence of a clear indication that a different meaning is intended, one must assume that the same meaning was meant where it subsequently appeared. Furthermore subsection (5) involved the Sheriff in determining the date intended in the lease by looking at the surrounding factual matrix and that approach was not permissible when one was considering subsection (4).

[14] In summary, the ish under the present lease was “Whitsunday” “without further specification as to date” and accordingly the correct date to have inserted in the notice to quit was 28th May and decree should be granted as craved.

[15] So far as expenses were concerned, given that there would be a clear winner one way or the other, expenses should follow success. The case should be certified as suitable for the appointment of senior counsel given the importance and value of the matter to the applicant and the novelty of the issue raised.

Submissions for the respondent

[16] As Sir Crispin had done, Mr MacIver began by confirming that the sole point at issue between the parties was whether the notice to quit had been served timeously. In the respondent’s submission it had not because the ish of the lease was 15th May, not 28th May.

[17] Section 1(4) of the 1990 Act applied in this case, as this was a document executed before that subsection came into force. Subsection (5) was, contrary to Sir Crispin’s submission, of no relevance or assistance.

[18] The lease and the General Articles had to be read as one document. Doing so, the reference to Whitsunday as being 15th May in the rental provision in the General Articles was sufficient to define Whitsunday for the purposes of the lease. It provided sufficient further specification as to date to disapply the definition of Whitsunday contained in section 1(1) of the 1990 Act.

[19] It was significant that the wording of paragraph 3 of the General Articles did not include a provision such as “notwithstanding the date of entry in terms hereof” or anything else to indicate that the definition there given of Whitsunday was different from the meaning to be attributed to it elsewhere in the lease. And it was in fact unlikely that different dates were intended because at common law Whitsunday was 15th May as it was in terms of the statute (1693, c. 24) in force in 1913 referred to by Rankine at page 341. There was therefore no basis for thinking that Whitsunday in a 1913 lease meant anything other than 15th May. The dates of 28th May and 28th November had only come in with the passing of the Agricultural Holdings (Scotland) Act 1949. Reference was made to the history of the changing meanings of term days set out in Gill at paragraphs 16.19-16.22.

[20] The case of Austin v Gibson was of no assistance to us here because it was dealing with a post 1st November 1948 lease on the basis of the 1949 Act. Likewise the various styles produced were of no assistance; they were merely styles and of no direct relevance to this case. Moreover some of them also post-dated the 1949 Act.

[21] So far as Provincial Insurance PLC v Valtos Ltd was concerned, Mr MacIver accepted that the word Martinmas there was defined the first time it appeared and that that made it likely that subsequent uses of it were intended to refer to the same date. In the present case, the lease and the General Articles had to be read together so that the definition in paragraph 3 of the General Articles also applied to the use of the term Whitsunday in the lease. Given the common law and statutory background at the time it was, in any event, quite clear that the reference to Whitsunday was to 15th May and all that paragraph 3 of the General Articles was doing was confirming that.

[22] In summary, it was clear that the references to Whitsunday in this lease were to 15th May and if that was so the notice to quit had not been served timeously and we should grant decree of absolvitor. Expenses should follow success and the case should be certified as suitable for the employment of counsel but whether it was suitable for the employment of senior counsel was a matter which Mr MacIver was happy to leave to the Court.

Rejoinder by Sir Crispin

[23] We permitted Sir Crispin a brief rejoinder in the course of which he reiterated that we were not engaged in finding out what parties’ intention had been in 1913: that was the difference between subsections (4) and (5) of section 1 of the 1990 Act. That made Mr MacIver’s submissions as to the common law and statutory meaning of term days in 1913 irrelevant. He also emphasised that the wording “the date applicable to the reference” in subsection (4) made it clear that one had to look to see whether that reference was further specified and if it was not the prescribed date (28th May for Whitsunday) applied to it. One was certainly permitted to look at the document as a whole for such further specification but it was important to bear in mind that what one was looking for was further specification of Whitsunday for the purposes of entry and, therefore, ish. Further specification of the term for the purpose of payment of rent was irrelevant.

Discussion and decision

[24] Section 22(2) of the 1991 Act lists the grounds for so-called “incontestable” notices to quit, those not requiring the consent of this Court under section 22(1). Section 22(2)(g) provides that subsection (1) shall not apply where

“section 25(1) of this Act applies, and the relevant notice complies with sections 25(2)(a),(b) and (d) of this Act”

Section 25(1) applies where notice to quit is duly given to a tenant of an agricultural holding who acquired right to the lease of the holding under section 16 of the Succession (Scotland) Act 1964, in other words on intestacy of the former tenant or partial intestacy resulting from the failure of a bequest to take effect, or as a legatee under section 11 of the 1991 Act. The respondent here falls into the former category. Section 25(2) reads:-

“Notice to quit is duly given to a tenant to whom this section applies if –

(a) it complies with section 21 of this Act; and

(b) it specifies as its effective date –

(i) where, when he acquired right to the lease , the unexpired period of the lease exceeded 2 years, the term of outgo stipulated in the lease;

(ii) where, when he acquired right to the lease, the unexpired period was 2 years or less, the term of outgo stipulated in the lease or the corresponding date in any subsequent year, being a date not less than one nor more than 3 years after the said acquisition;

(c) where he was a near relative of the deceased tenant from whom he acquired right, it specifies the Case set out in Schedule 2 to this Act under which it is given; and

(d) where he was not a near relative of the deceased tenant from whom he acquired right, he acquired right to the lease after 1st August 1958.”

In the present case the unexpired period of the lease was less than two years, so paragraph (b)(ii) applied and what is at issue is whether the terms of that section are satisfied: whether the notice to quit specified as its effective date the term of outgo stipulated in the lease or the corresponding date in any subsequent year. If the respondent’s position is correct the notice to quit will also be invalid as not complying with section 21(3)(d) of the 1991 Act.

[25] The duration of the lease, so far as relevant for our purposes, is expressed to be “”the space of Fourteen years from and after the term of Whitsunday Nineteen hundred and thirteen”. The date of Whitsunday is not specified in the body of the lease. Paragraph 3 of said General Articles states:-

“Except where stated to the contrary in the leases or minutes of lease of the respective farms, the rent shall be payable half-yearly at the terms of Martinmas (11th November) and Whitsunday (15th May) …”

[26] In our view Sir Crispin’s approach to the interpretation of section 1(4) of the 1990 Act is too narrow. He takes the words “a reference” and “the reference” to apply to each and every use of the term “Whitsunday” in the lease and General Articles. We do not think that an approach which involves such dissection of the documents is appropriate as a matter of construction or required by the terms of the 1990 Act.

[27] As far as the 1990 Act is concerned, it seems clear that the purpose of that Act was to provide a definition of term days where the parties themselves have provided none. As Sir Crispin himself put it, it avoids the need for proof in such situations. But it is no part of that purpose to impose on parties a very exacting standard for the definition of these terms: “further specification” is all that is required, not further specification in any particular way or to any particular standard. In that regard we consider Mr MacIver, in remarks we have not in fact narrated above, to have been correct when he said that the terms of the 1990 Act did not impose on parties a “particularly high hurdle” which they had to clear before the statutory definition was disapplied. It seems to us, in short, that so long as what is intended is clear from the terms of the document itself, without resort to extraneous factors, that is all that is required. The issue therefore becomes one of construction.

[28] Dealing with the matter in that way, firstly we agree with Mr MacIver that the lease and General Conditions should be read as a whole rather than subjected to the fragmentary sort of analysis which Sir Crispin’s approach produces. Secondly, as a general rule, for the sake of consistency, and in the absence of contrary indicators, one would expect terms to be used in the same sense throughout a contract such as this. Approaching matters in that way, it will suffice, in our view, if the term “Whitsunday” is defined only once, rather than each time it appears or each time it appears in relation to a different element of the lease, unless it is clear that that definition cannot apply to the word as it is used in certain contexts.

[29] Here we have a definition of “Whitsunday” in paragraph 3 of the General Articles. It is true that paragraph 3 is dealing only with rent. Sir Crispin sought to show that in many cases the definition of the term dates for rent payment purposes is different from that for entry and ish purposes and we have no difficulty with that. But it is of no assistance at all in construing the present document. Many leases no doubt contain different dates for rent payment from the dates of entry and ish but at least as many do not. There is, therefore, no “norm” against which to measure this document. There is nothing which makes Whitsunday defined as 15th May 1913 unlikely as a date of entry, far less impossible. Sir Crispin sought to infer from the use of a definition in relation to one specific element of the lease that use of the term in that connection was exceptional and that it must, therefore, be taken to mean something else elsewhere in the lease but in our view any such inference, if it exists, must yield to the principle that words are to be taken as being used with consistency as to their meaning in formal legal documents such as this. Cogent reasons are therefore required to attribute different meanings to the same word in different contexts. No such cogent reason has been advanced in this case. The fact that the definition of Whitsunday comes in the clause dealing with payment of rent is, we think, unsurprising: parties require to be absolutely clear as to when rent is due. Its definition in that context, unfenced by words confining the definition to that context, does not, it seems to us, make it unlikely that the term has a different, but unspecified, meaning elsewhere in the document.

[30] Something which points in the other direction – to the word having the same meaning throughout the lease – is that the body of the lease also contains a provision as to rent saying that rent is to be paid “by equal moieties at Whitsunday and Martinmas beginning the first term’s payment at Martinmas Nineteen hundred and fourteen and the next term’s payment at Whitsunday Nineteen hundred and fifteen and that in full of the rent for the first crop and year of this lease and so forth half yearly and termly thereafter during the currency of this lease”. This is presumably intended to reflect, rather than differ from, the position stated in paragraph 3 of the General Articles. Accordingly “Whitsunday” where it appears in the passage just quoted is 15th May and it is inconceivable in our view that it is to be taken to refer to another, unspecified date, in the duration clause of the lease which almost immediately precedes the clause just quoted.

[31] We have therefore concluded that the word Whitsunday is a reference to 15th May throughout the lease and the General Articles. The consequence is that the notice to quit is not valid - it does not comply with section 21(3)(d) or section 25(2)(b)(ii) of the 1991 Act - and the respondent is entitled to absolvitor.

[32] Parties were agreed that expenses should follow success and we have therefore found the respondent entitled to expenses. Parties were also agreed that the case was suitable for the employment of counsel and we too agree. Although, given the way expenses have fallen, the matter is now academic we are not persuaded that the issue was of such complexity as made the case suitable for the employment of senior counsel.

For Applicant: Sir Crispin Agnew of Lochnaw QC; Messrs R & R Urquhart, Solicitors, Inverness

For Respondent: Mr A MacIver, Advocate; Messrs Middleton, Ross & Arnot, Solicitors, Dingwall