THE COURT

(Lord McGhie)

TRUSTEES OF THE EARL OF MANSFIELD’S 1992 TRUST v ALISTAIR DONALDSON ALSTON & ANOTHER

(Applications SLC 146/12 & 147/12 – Orders of 5 April 2013)

AGRICULTURAL HOLDINGS – RENT – COMPETENCY OF NOTICE – NOTICE BY FACTOR FOR A TRUST – WHETHER REFERENCE TO THE TRUSTEES COULD BE IMPLIED – TWO OWNERS OF LAND – WHETHER ONE OR TWO LANDLORDS – WHETHER LAND RESUMED HAD BEEN RETURNED TO THE TENANCY – ENTITLEMENT TO RENT – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 1991 SEC 13.

A landlord raised applications relating to Dalcrue and Lynedoch, which were run together, seeking orders determining rent. The tenants challenged the competency of each application under reference to the terms of the preliminary notices given. In each case the notice had purported to be given by the factor “on behalf of and as instructed by The Earl of Mansfield’s 1992 Trust for the Master of Stormont, Scone Palace, Perth”. As there was no such legal person as a Trust it was contended that the notices were invalid. A debate was arranged primarily to deal with this point. In relation to the Lynedoch holding, a separate point arose. It became apparent that this might turn on careful examination of fact and that, as the landlords had not adjusted to deal with this the debate was premature. However, matters were explored in the expectation that guidance could be given by the Court. It was asserted that as part of the holding was owned by the Earl of Mansfield in his own name, there were two landlords and notice given only on behalf of one was ineffective. The landlords accepted that if there were two landlords, notice had to be given by both. However, they pointed out that the part held by the Earl in his own name had been resumed for use as a refuse tip. It was argued that, although the tenants had subsequently had use of it and this might appear consistent with the return of the land to them in accordance with contractual arrangements entered in 1992, it was, in fact, to be attributed to permission from the local authority who were still regarded as tenants. They paid rent. No rent attributable to the site was paid by the respondents. In any event, it was said that the two landlords had entered some sort of arrangement whereby the Trust was entitled to the rent from the tip site. Accordingly, if the tip site had indeed been returned to the tenancy, the trustees fell to be treated as landlords of the whole unit. Notice by them was accordingly sufficient.

HELD the notice on behalf of the “trust” was sufficient for the purposes of sec 13 as the role of the trustees was plainly implicit. In relation to the Lynedoch Grazings, as it was conceded that if there were two landlords of tenanted land both had to give notice for the purposes of sec 13, a proof would probably be required to determine whether the circumstances demonstrated that the tip site owned by the Earl had not been returned to the tenancy in accordance with the apparent terms of the contractual arrangements. A proof might also be required to show that the entitlement to rent vested in the trust. However, the landlords should be allowed time to adjust and further procedure required to be considered in light of any adjustment.

The Note referred to in the orders is as follows:

[1] The applications SLC 146/12, relating to Dalcrue and SLC 147/12, relating to Lynedoch Grazings, seek orders determining rent. However, the tenants challenged the competency of each application under reference to the terms of the preliminary notices given. In each case the notice had purported to be given by the factor “on behalf of and as instructed by The Earl of Mansfield’s 1992 Trust for the Master of Stormont, Scone Palace, Perth”. As there was no such legal person as a Trust it was contended that the notices were invalid. In relation to the Lynedoch holding, it was asserted that as part of the holding was owned by the Earl of Mansfield in his own name, there were two landlords and notice given only on behalf of one was ineffective.

[2] We heard debate on these preliminary issues at Edinburgh on 21 February 2013 when Mr Lewis Kermack, solicitor, appeared on behalf of the tenants and Sir Crispin Agnew Q.C. for the landlords.

Authorities

Aitkenhead v Fraser 2006 JC 231
Bell v Trotter’s Tr (1841) 3 D 380
Batt Cables plc v Spencer Business Park Ltd 2010 SLT 860
Bebington v Wildman [1921] 1 Ch 559
Carradine Properties Ltd v Aslam [1976] 1 WLR 442
Cayzer v Hamilton (No 1) 1996 SLT (Land Ct) 18
Cumming and Others v Quartzag Ltd 1981 SLT 205
Donald v Cordale Investments Ltd 1996 SLCR 1
Fforde v McKinnon 1998 SC 110
Frankland and Another v Capstick [1959] 1 WLR 204
Gallagher v Ferns (1998) SLT (Sh Ct) 79
Graham v Lamont 1971 SC 170
Kay v Morrison’s Reps 1984 SLT 175
Land v Sykes 1992 1 EGLR 1
Lodgepower Ltd v Joan Elizabeth Taylor and Others 2004 WL 2355793
Muir v City of Glasgow Bank (In Liquidation) (1879) 6 R (HL) 21
Pickard v Bishop and Another (1976) 31 P&CR 108
Scott v Muir 2012 SLT (Sh Ct) 179
Tinnevelly Sugar Refining Co Ltd v Mirrless, Watson & Yaryan Ltd 1894 21 R 1009

Statutory material

The Agricultural Holdings (Scotland) Act 1991

Text books

The Hon Lord Gill The Law of Agricultural Holdings in Scotland 3rd Ed.

Submissions

[3] The parties provided full written submissions and it is unnecessary in this case to set out their arguments in any detail. In relation to the issue common to both applications, Mr Kermack contended that, as it was admitted that there was no such legal person as a Trust, the notice was plainly invalid. For the landlords it was argued that the words “trustees acting for the Trust” could readily be implied. Reference to a trust was a familiar shorthand and there could have been no doubt about the intention of the notice.

Discussion

[4] The authorities disclose discussion of the implications of errors and omissions in formal notices in a wide range of circumstances. Some cases posed difficult questions where a need to comply with the formal requirements of particular legislation or a particular contract outweighs the apparent requirements of common sense. Fortunately, the present case poses no great difficulty.

[5] The notice was given by an agent on behalf of a trust. The point was taken that a trust has no legal persona. This was not disputed. The notice therefore had to be given on behalf of the trustees. We initially understood Mr Kermack to agree that the only relevant question was whether a reference to the trustees of the trust could be implied. We have no doubt that such an implication is obvious.

[6] In discussion he came to submit that it was necessary to name and designate all the individual trustees acting at the material time. We do not accept this. There was no warrant for it. It would serve no useful purpose.

[7] As we have a clear view it is unnecessary to say much more. We have not found any authority to cast light on the particular issue and there is no purpose in analysis of previous dicta. However, three specific points may be made. In the first place it is to be noted that the Act did not prescribe any particular form of notice. What was required was a notice in writing which conveyed to the tenant the landlord’s intention to have the rent determined by the Court. The Act does not attempt to spell out any particular purpose to be served by the notice. It is part of the statutory time-table. It is impossible to suggest that the notice failed to serve its statutory function. Secondly, the notice was given by an agent and there was no error or false piece of information in the notice which might have led to doubt as to her true principal or her authority. Third, any reader aware of the technicality of the law that a trust itself is not a legal person, would immediately have understood a reference to the trustees as being implied. The absence of express reference to the trustees was a technicality of law which would not have been expected to give an ordinary businessman, such as a tenant farmer, the least pause for doubt. We are satisfied that this notice was adequate for the purposes of sec 13.

Lynedoch grazings

[8] In relation to Lynedoch Grazings a further separate issue arose. Notice had only been given on behalf of the Trust. The tenants contended that the holding included an area of some 17.4 acres known as the Dryarch Wood site. This was still owned by Lord Mansfield. Sir Crispin did not seek to challenge the proposition that if a tenancy had two landlords, a notice, for the purposes of sec 13, required to be given by both. It was clear that no notice had been given by the owner of the Dryarch Wood site.

[9] It became apparent that the debate in relation to this issue was technically premature. The pleadings had not been adjusted to show fully the parties’ respective contentions in relation to certain issues of fact which had a bearing on the dispute. However, the parties were agreed that it was sensible to use the debate to discuss this issue, under reference to documentary productions, to see whether useful guidance should be given by the Court which might limit or preclude the need for further procedure.

[10] The issues can be looked at under three separate heads: 1) the contention that the Dryarch Wood site had been resumed; 2) the status of a small portion of land lying within the apparent boundary of the site but treated separately from it in formal agreements in 1992; and 3) the question of agreement between the Trust and the Earl as to entitlement to rent for the site.

Resumption of Dryarch Wood

[11] The main submission was that the site had been resumed from the tenancy in 1992 as part of an arrangement with Perth and Kinross Council for use as a refuse tip. The landlords’ written note of argument was based on the simple proposition that, although it had been intended to return this area to the tenancy, this had not yet been done. It appeared that the tenants had had use of the site since some date in the mid-1990s but it was contended that this should be viewed as a private arrangement with Perth & Kinross Council. The latter was still paying rent for the site and the respondents were not.

[12] The tenants argued that the return of the resumed area had been fully provided for in agreements between the landlords and the tenants in 1992. In a formal agreement involving the tenants and both the Earl and the Trust as landlords, dated 21 and 24 November 1992, the following provisions appeared:

“4. The Refuge Tip Resumption

4.1 The Tenants withdraw their objection to the Landlords’ proposed resumption of the area of ground for an extension to the Perth and Kinross District Council refuse tip subject to the terms and conditions set out in the draft letter annexed and signed as relative hereto, the terms of which shall be deemed to be incorporated in this Agreement in terms brevitatis causa and is agreed to be binding on both the Landlords and the Tenants.

4.2 The Tenants confirm that they have signed and delivered the Agreement with Perth and Kinross District Council referred to in paragraph 1 of the said letter. “

[13] The letter was one written by D M Hall, Surveyors, on behalf of the tenants. It included the following:

“2. The land required for the refuse tip will be that shown outlined in red on the plan prepared by Perth & Kinross District Council … attached and our clients accept that by virtue of earlier resumptions, with the exception of the land shown hatched red, and of the said notice dated 01.10.91, the land so resumed and to be occupied by Perth & Kinross District Council for the purpose of the refuse tip will be that shown outlined on said plan.

In the case of the land shown hatched red it is agreed that this remains in the Alstons’ tenancy but that it is occupied by the Council only with the agreement of the tenants, which arrangement has the consent of the landlords.”

[14] It is not disputed that the land “outlined in red” was the site at Dryarch Wood. The area “hatched red” is discussed below.

[15] Clause 8 of the letter read as follows:

“8. It is projected by the Perth & Kinross District Council that refuse tipping will cease within 2 years and 6 months of the agreement referred to at point 1 above following which the land will be restored to agriculture. It is an essential condition of this agreement that following restoration the entire refuse tip site will be returned to the Alstons’ tenancy of the Lynedoch Grass Part on the following terms:

a. The date of return to the Alstons’ Tenancy will be the date one month after the date of restoration of the land by the District Council and handover to the Estate. This date is as defined in paragraph 7(iii) of the proposed lease as between the District Council and Estate.

b. The obligations imposed upon the Alstons in connection with this returned land will be no greater than those imposed upon them in connection with their occupation of the other land within their agricultural lease.

c. It is recognised that the District Council will have a right of entry onto the land in order to comply with their obligations in connection with the restored refuse tip.”

[16] As can be seen from condition 4.2 above, the agreement referred to in clause 8 had been executed prior to 21 November 1992. The projected end of tipping was accordingly no later than the end of May 1995. The land was to be restored to agricultural use at some point after that. There was no positive obligation to cease tipping by the end of May 1995 but we did not understand it to be disputed that tipping had, in fact, ceased at about that time if not considerably earlier. It may also be noted that clause 6 of the letter provided:

“6. As a result of the resumption, and inclusion of 9.475 acres constituted by this agreement there will be no change in the rent currently payable and the rent review period.”

[17] This was consistent with the rent for Lynedoch Grazings having been agreed in contemplation of these various changes. There appears to have been no explicit provision dealing with rent for the land after it was restored to the tenancy.

[18] The lease between the Council and the Estate, referred to in the D M Hall letter as a “proposed lease” had in fact been executed on 15 November and 14 October 1992. It provided that the let should commence on 1 December 1992. Clause 4 provided for rent and an initial grassum:

“(FOUR) The rent should be as follows:-

(a) For the period from the date of entry until the cessation of tipping a grassum of ONE HUNDRED AND TWELVE THOUSAND POUNDS (£112,000) exclusive of Value Added Tax payable at the date of entry.

(b) For the period from the cessation of tipping until the restoration of the subjects and their handover to the landlord the sum of ONE THOUSAND POUNDS (£1,000) per annum exclusive of Value Added Tax to be paid half yearly in advance at Whitsunday and Martinmas in each year.

(c) In respect of the residual facilities, for the period from such restoration and handover until final termination the sum of FIVE HUNDRED POUNDS (£500) per annum exclusive of Value Added Tax to be paid half yearly in advance at Whitsunday and Martinmas in each year.”

[19] Clause (Seven)(iii) provided:

“The Tenant shall hand the subjects (other than the residual facilities) back to the Landlord at the first term of Whitsunday or Martinmas occurring after completion of the restoration of the subjects to a condition suitable for grazing purposes, to the reasonable satisfaction of the Landlord.

Notwithstanding the foregoing, the Tenant shall be responsible for implementing the whole five years aftercare scheme in respect of the subjects, or such longer aftercare scheme as may be required by the relevant planning and/or waste regulatory authorities.”

[20] The last paragraph shows that even after handing back the subjects, the Council were to have a continuing role in relation to maintenance of the site.

[21] It was not disputed that the Dryarch Wood site had been available for use and in fact used by the tenants since some date in the 1990s and it would seem to follow that there was no dispute that the land had been restored to a condition suitable for grazing purposes. It is likely that the Trust staff were aware of that use, although a question may arise as to whether such knowledge can be imputed to Lord Mansfield, the owner. However, for the landlords, it was argued not only that there had never been any formal attempt at a hand back but that the fact that the Council had continued to pay rent for the subjects at the level due until handover, showed that the subjects were still tenanted by the Council. Occupation by the occupants was, accordingly, to be attributed to some form of licence by the Council.

[22] On any view, the landlord’s position is not free from difficulty. It can be observed, as a matter of probability, that it is unlikely that the Council would ever have intended such an arrangement. If the site was fit for grazing use they would surely have viewed its return to the applicants’ tenants, in other words, the respondents, as being no more than implement of the express agreement. It seems unlikely that they would ever have taken a conscious decision to let the applicants use it rent free while they themselves were still paying £500 per annum for it. It is likely that the continued payment was an error by accounting departments rather than a reflection of the reality of arrangements. It may be assumed that the site would be stock-proof while the tipping was in progress and while restoration works were being carried out. It is, accordingly, likely, though not certain, that some positive steps were taken to communicate the state of the site before the respondents resumed their use of it.

[23] However, although the picture which emerges from the written material and the fact of repossession of the land by the respondents seems clear enough, we have come to the view that it is not possible to pronounce an order based on an assumption that such picture is necessarily correct. The landlords may be able to find some evidence to support their understanding that the restoration stage had been delayed for some unexpected reason. There may have been some discussion with the Council whereby they agreed to continue the lease of the site and to pay the higher rent. It is possible that a line of argument will emerge whereby it can be contended that the respondents were not taking civil possession on behalf of the landlords when they resumed their use of the site. All of this seems unlikely and the arguments which might be open to the landlords to counter their contractual obligations are far from clear but, with some hesitation, we have concluded that a period of adjustment should be allowed before we reach a final decision as to whether it is necessary to have a proof before answer in order to resolve this issue. This will allow the landlords to consider their position.

The small plot of land

[24] A quite separate argument related to a small plot of land lying within, or at the edge of, the Dryarch Wood site. This was the area referred to above as being “hatched in red”. It was owned by the Earl of Mansfield. The formal documentation in 1992 showed that it was not part of the land formally resumed. It had been tenanted by the respondents and, although Perth and Kinross Council may have had the use of it for a period, it was said on the respondents’ behalf that it had never come out of the tenancy. This assertion was clearly supported by the terms of the formal agreements. The parties had made express provision for this land to be treated separately from the rest of the site in terms of clause 2 of the D M Hall letter quoted above. It was to remain in the respondents’ tenancy but the landlord consented to its use by the Council. We did not hear why that specific exception was made. It may have been because this plot was added to the proposed refuse tip at a late stage and had not been included in any formal resumption notice. It was land owned by the Earl of Mansfield and never formally removed from the tenancy.

[25] However, at the hearing, the landlords founded on a letter bearing to be from solicitors acting for the respondents and addressed to Perth and Kinross District Council. It bore to relate that: “Notwithstanding the terms of clause 4 [which appeared to be a reference to the clause FOUR set out above] … our said clients have given vacant possession to the said The Right Honourable Earl of Mansfield of all land occupied and tenanted by them which forms part of ALL and WHOLE that area or piece of ground at Dryarch Wood, Dalcrue extending to seventeen point four acres or thereby shown delineated in red on the plan annexed and signed as relative hereto”. The productions lodged did not include a plan. However other plans of the site show the area of 17.4 acres delineated in red and to be used for the refuse tip, and including the said hatched area.

[26] The letter was not part of a contract between the respondents and the Earl. But it was a formal confirmation of a state of fact. The reference to giving “vacant possession” to the Earl cannot sensibly be construed as referring to mere physical possession. Plainly Lord Mansfield was not going to occupy the land himself. Although the precise purpose of the reference to clause 4 is far from clear, the broad purpose clearly was to refer to the formalities of resumption and the fact that the resumption did not cover all the land. The effect of the provision was to assert as matter of fact that the respondents, as tenants of the land, had agreed to give the whole 17.4 acres back to the landlord. This may have been done to resolve some doubt raised by the Council when they saw the Compromise Agreement because its provisions in relation to the hatched area were not consistent with their lease from the Earl of Mansfield which purported to cover the whole 17.4 acres and which had been concluded prior to the Compromise Agreement.

[27] We understand that the tenants deny the state of fact narrated in the letter. However, it may simply be that they have no memory of it. The letter itself seems clear. It is, however, possible that the tenants might be able to lead evidence to show that it was based on a misunderstanding of some sort. If the letter is accepted at face value it simply puts that small piece of land into the same category as the remainder of the resumed Dryarch Wood site discussed above. If the tenants maintain their denial, proof might be required. If the hatched area was indeed kept separate there would seem to be no room for dispute that it was returned to the tenancy long since and the applicants would be left to rely on their third argument.

Entitlement to rent

[28] The third argument was that, in terms of section 85 of the 1991 Act, “landlord” means: “Any person for the time being entitled to receive the rents and profits or to take possession of an agricultural holding … etc”. Accordingly, it was contended, the fact that ownership of the holding was divided did not matter. The owners offered to prove an arrangement between the Trust and the Earl of Mansfield that the Trust was the party entitled to receive the rent for the entire holding of Lynedoch Grazings.

[29] We accept that if there was an arrangement in place whereby the Trust was entitled to the income from the Earl’s own land, this could bring the Trust within the scope of the definition in section 85 and allow the Trust to be treated as landlords for the purpose of giving the notice in terms of section 13. This will require proof. It would be premature to express a view on the precise implications of the word “entitled”. It is clear from the discussion in Fforde v McKinnon that this might turn on close examination of particular arrangements. We are satisfied that it would require to be a clear and unequivocal arrangement. It can, perhaps, be assumed that if there was any form of written agreement, such agreement would have been produced. We understand that no rent was ever specifically allocated to the 17.4 acres or any part of it. Accordingly it seems clear that the applicants will not be able to prove this part of their case by pointing to established practice. It is hard to see how the landlords might expect to prove a clear agreement. However, if the rent paid by the Council was treated as Trust income in their accounts, that might be at least an indication of the existence of the relevant agreement.

[30] It may be said that we are not persuaded that there was any need to bring such agreement to the attention of the tenants prior to the notice. We accept that section 84(4) was a provision for the protection of a tenant. In terms of that provision, the tenant could continue to give valid notice to former landlords unless and until advised of change. But changes of landlord do not require the involvement of a tenant. A new purchaser of an estate can give formal notices without any requirement of a “pre-notice”. The need for an explicit provision such as section 84(3) to deal specifically with notice, tends to confirm that, in general terms, knowledge of the tenant is irrelevant to this question.

Decision

[31] We are satisfied that the notice said to be given on behalf of the trust in relation to Dalcrue can be taken to have been validly given on behalf of the trustees of the trust and that application can proceed. We have allowed a period for adjustment on the merits. The notice given on behalf of the trust in relation to Lynedoch was also validly given on behalf of the trustees as landlords but Sir Crispin accepted that if there were two landlords it was not validly given. We do not need to make any formal determination on that point. But the landlords need further opportunity to clarify the facts. If this line of defence is to be maintained, it seems likely that a preliminary proof would be sensible and we propose that adjustment in this application should be limited to that matter, meantime. However, if there is to be a full proof on rent in respect of Dalcrue, it is at least possible that the issues in relation to Lynedoch could be canvassed after a full proof in that case too. If the landlords wish to complete full adjustment including adjustment on the merits, they should advise the Court of this and the time allowed for this and for the tenants’ response could be increased if necessary.

Expenses

[32] We were asked to leave the main issue of expenses over for further submission but to deal with the applicant’s motion that the cause be certified as fit for the employment of senior counsel. One argument in support was that the application itself related to a rent review and might be expected to raise issues which would justify instruction of senior. However, we do not accept this as sufficient to justify employment of counsel for this debate which related to preliminary points quite distinct from the merits of the rent application as such. In considering the sanction of counsel it is appropriate to look at it on its own.

[33] We are not persuaded that the debate can be sanctioned as meriting the employment of senior. The common preliminary point was short. The issue of there being two landlords turns essentially on the facts. There are some potentially difficult issues which might arise at a later stage but the need for clarification or agreement as to fact should have been obvious. We have little doubt that it merited attention of counsel. Mr Kermack did not oppose sanction for junior counsel and we shall so certify.