DIVISIONAL COURT

(Sheriff MacLeod, J A Smith)

SCOTTISH YOUTH HOSTELS ASSOCIATION v PATERSON

(Application RN SLC/16/07 – Order of 21 August 2007)

AGRICULTURAL HOLDINGS – WHETHER A SINGLE WRITTEN CONTRACT PURPORTING TO CREATE A SERIES OF GRAZINGS LETS OVER A PERIOD OF YEARS RESULTED IN A FULL SECURE TENANCY UNDER THE AGRICULTURAL HOLDINGS (SCOLAND) ACT 1991 OR IN A SERIES OF SEPARATE GRAZING LEASES EACH COVERED BY SECTION 2(2)(A) OF THAT ACT – EFFECT OF INTRODUCTION OF AGRICULTURAL HOLDINGS (SCOTLAND) ACT 2003 ON SUCH A CONTRACT – MEANING OF “LET” FOR PURPOSES OF SECTION 3(2) OF 2003 ACT

On 19 February 1997 the parties entered into a written agreement, prepared by the applicants’ solicitors, whereby the applicants offered and the respondent accepted what was described as “a succession of Grazing Leases” of certain land adjacent to the applicants’ Youth Hostel at Loch Lomond extending over a period of ten years, the period of let in each year being from 1 February to 31 December. The expiry of that agreement having been reached on 31 December 2006 and the respondent then claiming that he had a full secure tenancy under the 1991 Act, the applicants sought declarators to the effect that the respondent had no such tenancy and no continuing right to occupy the subjects beyond that date together with decree for removing. The respondent lodged answers to the effect that the agreement of parties constituted a 1991 Act tenancy and that section 2 of that Act did not apply. It was not disputed that, in respect of each of the ten periods covered by said agreement, the terms and conditions contained in the agreement conformed to the requirements of section 2(2)(a) of the Act, the respondent’s contention being that one had to look at the whole agreement and that, seen from that perspective, it amounted to a lease for a term of years and, as such, was within the definition of “lease” in section 85(1) of the Act with the result that it enjoyed the full protection of the Act. As an esto position the respondent argued that following upon the introduction of the Agricultural Holdings (Scotland) Act 2003 the agreement had become a short limited duration tenancy, there being no point in time during the currency of the remainder of the agreement then left to run in which the land had not been let for the same purpose to the same tenant within the meaning of section 3(2) of that Act.

The Court held that said agreement constituted a series of lets, each within the terms of section 2(2)(a) of the 1991 Act and that the effect of sections 3 and 4 of the 2003 Act was not to convert said agreement into a short limited duration tenancy, each of the periods of let being within the exception contained in section 3(2) of that Act and the respondent not having remained in occupation of the land with the consent of the landlord, so that section 4(1) did not apply; and Orders for declarator granted.

The Note which accompanied the Court’s Order is as follows (the paragraphs omitted dealing with matters with which this report is not concerned):-

[1] In this application the applicants seek (1) declarator that the respondent does not have a tenancy of certain subjects adjacent to their youth hostel at Loch Lomond in terms of the Agricultural Holdings (Scotland) Acts 1991 and 2003; (2) declarator that the respondent has no continuing right to occupy these subjects beyond 31 December 2006; and (3) an Order for removal.

[2] The matter came before us by way of debate on 6 July when the applicants were represented by Sir Crispin Agnew of Lochnaw, QC, and the respondent by Mr Lewis Kermack, solicitor.

Legislation, authorities and texts

Statutes

The Agricultural Holdings (Scotland) Act 1991, section 2
The Agricultural Holdings (Scotland) Act 2003, sections 3 and 4

Statutory Instruments

The Agricultural Holdings (Scotland) Act 2003 (Commencement No. 3, Transitional and Savings Provisions) Order 2003 [SSI 2003 No. 548]

Cases

Bell v Inkersall Investments Limited 2006 SC 507
Commercial Components (International) Ltd v Young 1993 S.L.T. (Sh. Ct.) 15
Dallas v Muir 2006 SLCR 78
James v Lock [1978] 1 EGLR 1
James v United Kingdom (1986) 8 EHRR 123
Lory v Brent London Borough Council [1971] 1 W.L.R. 823
Mackenzie v Laird 1959 S.L.T. 268
Sansom v Chalmers 1965 SLCR App 135
Scene Estate Ltd v Amos [1957] 2 Q.B. 205
Short Bros (Plant) Ltd v Edwards [1979] 1 EGLR 5
Stirrat v Whyte 1968 S.L.T. 157
Trade Development Bank v David W. Haig (Bellshill) Ltd 1983 S.L.T. 107
Watts v Yeend [1987] 1 W.L.R. 323

Texts

Gloag on Contract
The Hon. Lord Gill, The Law of Agricultural Holdings in Scotland, 3rd ed.
Walker and Walker, The Law of Evidence in Scotland, 1st ed

Submissions

(i) For the applicants

[12] Sir Crispin’s motion was for decree de plano, including decree for removing, although the case should be put out By Order to discuss the date of removing. That was later amended, however, to seeking decree in terms of craves 1 and 2 only and neither granting nor rejecting crave 3. The reasons for that are explained below. Expenses, including certification of the cause as suitable for the employment of senior counsel, should be reserved.

[13] The respondent had entered into a written agreement with the applicants’ unincorporated predecessors in 1997 to take a series of grazing lets for specific periods of the year conform to section 2(2) of the Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act”). There was no averment that this agreement was a sham or that it was otherwise than what it bore to be. The Court could not therefore look beyond its terms (Gloag on Contract pages 365 to 366; Walker & Walker on Evidence page 254). This approach was supported by Scene Estate Ltd v Amos per Denning LJ at page 211 and Parker LJ at page 213.

[14] A consequence of this was that the respondent’s averments, in Answer 2, as to onus of proof were irrelevant. If one could not look beyond the terms of the document – as was the case here – there was nothing to prove.

[15] There was nothing in section 2(2) of the 1991 Act to prohibit agreeing a series of seasonal lets in one document and there was authority to support the proposition that one could have a series of successive grazing lets agreed in a single document (Gill, paragraph 4.14 to 4.17; Mackenzie v Laird; Watts v Yeend).

[16] In Mackenzie v Laird the issue was not material in the case: it had just been accepted in that case that such an arrangement was competent. Watts v Yeend involved an oral agreement which was extended indefinitely and which allowed the use of land for unspecified portions of the year in each year although the land was never to be used throughout the whole of any year. Again the competency of such an arrangement had not been challenged.

[17] So there was nothing in the 1991 Act to say that one could not have a succession of grazing leases encapsulated in a single agreement nor was there any authority to that effect. Beyond that it was a matter of analysing what the agreement was in any particular case.

[18] In the present case parties’ agreement comprised an offer dated 19 February 1997 by the applicants and a docquet accepting that offer completed by the respondent, production 2. Sir Crispin took us through its terms.

[19] It was an offer of a succession of grazing leases. It was within the judicial knowledge of this Court what the phrase “grazing lease” tended to mean. The offer went on to specify a period of occupation in each of the 10 years covered by the agreement. It then stipulated that either party could bring it to an end at the expiry of the fifth such period. It referred to rent for each of the first five periods and there was then provision for a rent review for the subsequent five. The rent was to be fixed by reference to the use of the subjects for grazing purposes. Had the intention been to create a full lease one would have expected the rent review to proceed on the basis of section 13 of the 1991 Act rather than by reference to the use of the land for grazing. This indicated that parties had contemplated a grazing lease.

[20] Clause 8 of the offer made clear that it was a let for grazing only. Clause 12 dealt with stamp duty and it was Sir Crispin’s understanding that grazing lets were exempt from stamp duty.

[21] All the indications from the terms of the agreement itself were, therefore, to the effect that what it created was a series of successive agreements. Although Bell v Inkersall Investments Ltd had to do primarily with interim interdict, paragraphs 22-24 of the Lord Justice Clerk’s opinion emphasised that where there was a document incorporating agreement it was not permissible to go beyond its terms unless it was being averred that it was a sham.

[22] All the respondent’s averments about this being a letting for a period of years were, therefore irrelevant.

[23] At this point Sir Crispin dealt with field 6554 shown on the plan annexed to the offer. It was not included in the terms of said offer but had been occupied by the respondent. It was therefore the subject of a separate part of craves 1 and 2 in the present application. Mr Kermack, having taken instructions, interrupted at this stage to concede on behalf of the respondent that crave 2 should be granted of consent in so far as it related to this field.

[24] Sir Crispin then dealt with the competency of the incorporated company seeking an order for removing. What we had here was a series of grazing leases which ought to have ended in December 2006. The applicants had been incorporated in October 2006 and the disposition in their favour had been granted in January 2007 and was now with the Keeper for registration on the Land Register. It was the party who was infeft when decree was granted who was the relevant party and the party competent to move for decree of removal. Infeftment here would be backdated to the date of lodging of the disposition with the Keeper. So crave 3 of the application should be neither granted nor repelled at this stage.

[25] Sir Crispin then dealt with the effect of the Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”). It had repealed section 2(2) of the 1991 Act with effect from 27 November 2003. Existing leases under that section were dealt with by paragraph 2 of the Agricultural Holdings (Scotland) Act 2003 (Commencement No. 3, Transitional and Savings Provisions) Order 2003 (hereinafter referred to as “the Transitional Provisions Order”). Paragraph 2(1) provided that any lease of land to which section 2(2)(a) of the 1991 Act applied as at 27 November 2003 continued in effect until its expiry and paragraph 2(2) provided that on the expiry of such a lease, the 1991 Act provisions would cease to apply and the 2003 Act provisions would apply to the land under the lease. That was said to be notwithstanding any contract for successive leases of that land which was in effect on 27th November 2003. The transitional provisions therefore recognised the validity of a contract for successive leases of land which was still in force on 27 November 2003.

[26] The effect of successive contracts for leases of land after 27 November 2003 had to be looked at by reference to section 3 of the 2003 Act so section 3 of the 2003 Act applied to the grazing lease starting on 1 February 2004 and on a proper construction of section 3 the succession of grazing leases continued in 2005 and 2006 until the last one terminated on 31 December 2006.

[27] Sir Crispin then subjected the terms of section 3 to closer analysis. Section 3(1) was much the same as section 2(1) of the 1991 Act. Section 3(2) was the crucial subsection for our purposes. The individual leases in the present case were for periods of less than 364 days so that was not a problem. The sub-section provided that after the expiry of the term of the lease the land could not be let again for the same purpose to the same tenant before one clear day had elapsed. The issue was what the phrase “may not be let” meant. In his submission letting, in this context, meant the granting of physical occupation of the land, whereas he understood Mr Kermack’s position to be that one could not agree to let the land before one clear day had expired. If one clear day did elapse without the letting of the land to the same person for the same purpose, section 4(2) of the 2003 Act did not apply. The effect of that section was to create a “statutory default position”. It provided that where the tenant had remained in occupation after the expiry of the term of the lease a short limited duration tenancy resulted. Here the respondent had not remained in occupation – he had gone out under the terms of his agreement pending his right to go back in again at the start of the next agreed period of let. The 2003 Act contained no provision to the effect that an agreement for a succession of grazing lets made in advance was null and void. There was no good reason why a well established agricultural practice which made sense should be struck down by vague words.

[28] Section 3(2) was clearly an anti-avoidance provision which sought to prevent continuous occupation on the basis of, ostensibly, a series of grazing lets and for that reason Parliament had decided that there must be a break of at least one day in physical occupation.

[29] Either his submission was right or any agreement made before one clear day of non-occupation had elapsed was a nullity. If the agreement in the present case was a nullity for this reason it meant the respondent had no rights to occupy after 31 December 2004. The respondent was not entitled to the benefit of section 4(2) because he had not remained in occupation after the expiry of the agreed period with the consent of the landlord. If he had remained in occupation without the consent of the landlord that would have put him in breach of the agreement and he would not have been entitled to rely on his occupation for the purposes of setting up a short limited duration tenancy under section 4(2) (Bell v Inkersall Investments Ltd per the Lord Justice-Clerk at page 637).

[30] The Oxford English Dictionary defined “let” in this context as meaning “to grant the temporary possession and use of (land, buildings, rooms, moveable property) to another in consideration of rent or hire”. The operative word was “grant”: it was the granting which was the let. The Imperial Dictionary defined “let” as “to lease; to grant possession and use for compensation” these were all positive and immediate words and if Mr Kermack’s construction had been intended one would have expected section 3(2) to have read “may not agree to let”. If there was ambiguity it should be resolved in favour of the applicants who stood to lose the use of their property. That would be the required approach in terms of section 3 of the Human Rights Act 1998. It could not have been the intention of the Scottish Parliament to convert a perfectly lawful arrangement involving the grant of a series of grazing lets under the 1991 Act, into a short limited duration tenancy for five years under the 2003 Act without compensation for diminution in the value of the property. That would be the imposition of a control on property that was neither a fair balance nor proportional and there was no public interest to justify it (James v United Kingdom). The Scottish Parliament was bound to legislate compatibly with the Convention on Human Rights (the Scotland Act 1998, section 29).

[31] In summary, the respondent had no right to occupy after 31 December 2006. That was because he had neither a secure tenancy under the 1991 Act nor a short limited duration tenancy under the 2003 Act. Accordingly decree de plano in terms of craves 1 and 2 should be granted.

[35] Mr Kermack submitted that the respondent had stated a defence which was relevant and specific. If the respondent’s answers were proved the court would not be justified in pronouncing any of the orders sought by the applicants.

[36] In his submission the offer dated 19 February 1997 and the undated acceptance thereof constituted a letting of land for 10 years with a break after five years and was not a succession of 10 grazing lets.

[37] On the applicants’ interpretation this was a personal contract, not creating a real right in land at all, between the trustees of the Scottish Youth Hostel Association and the respondent. If that was so, the incorporated entity who were now the applicants were strangers to that contract and, in Mr Kermack’s submission, did not have title and interest to determine what the contract meant.

[38] But the applicants’ interpretation was not correct. The correct view was that this was a lease for a term of years and, therefore, an agricultural holding within the meaning of section 1 of the 1991 Act. It had qualified as such on 27 November 2003, when the 2003 Act had, largely, come into effect, and accordingly it constituted a 1991 Act tenancy as that was defined in section 1(4)(a) of the 2003 Act.

[39] The contract contained the four essential elements of a lease: parties, subjects, rent and a term of years. Clause 12 of the offer clearly stated that the missive of let constituted a single lease and not 10 separate leases. The provision for a break contained in clause 1 was incompatible with an agreement for 10 separate leases. Other than that break provision there was no locus poenitentiae and both parties were bound to the lease for a period of 10 years.

[40] Section 2(1) of the 1991 Act had not applied to this contract as the contract was not one whereby land was let for use as agricultural land for a shorter period than from year to year. As section 2(1) had not applied there was no question of section 2(2), which was merely a proviso to section 2(1), having applied. In other words the now repealed section 2 of the 1991 Act had no application on the facts of this case.

[41] The facts of the cases referred to by Sir Crispin were also very different from the facts of the present case. In these cases the letting of the grazings was not in terms of an agreement covering a longer period of time: they were all separate agreements, each made in the year to which it applied. In the present case, however, we had an agreement covering a period of 10 years. The whole obligations extending over the 10 year period could be enforced by specific implement whereas in the other cases referred to it would have been open to the tenants to refuse to accept the particular lease on offer in any particular year. In the present case only clauses 1 and 2 of the missive of let referred to “periods of lease”. All the other clauses applied to the whole 10 year period. Clause 3 was a cumulative interest provision for all sums due under the contract. Clause 6 spoke of the fences and others being maintained “during the whole of the tenancy” so the obligation was to maintain the fences all year round for the whole 10 year term of the agreement. On the authority of Lory v Brent London Borough Council, dealing with the equivalent provision in the English legislation, that in itself should be sufficient to take it outwith the terms of section 2(2) of the 1991 Act. The present contract may entitle the respondent to have his stock on the land for only 11 months of each year but he had to be on the land for 12 months of each year in order to discharge this obligation to maintain the fences etc. It could not therefore be said to be an agreement for the occupation of the land for only a specified period of the year: it required occupation for the whole 10 year period.

[42] Reverting to the terms of section 2 of the 1991 Act, we had to consider whether this was a lease for a shorter period than year to year, within the meaning of section 2(1). On any view the letting here was for a period of at least 110 months in total which was not a shorter period than from year to year and it was only where one had a let of land for less than year to year than that one could consider the application of the proviso contained in section 2(2).

[43] With reference to Scene Estate Limited v Amos Parker LJ at page 212 had made clear that the reference to “contemplation” in the equivalent English provision related not only to it being in contemplation that the lease was only for grazing and mowing but also that it was only for a period of less than a year. It could not be said that the present contract had been entered into in contemplation of use for less than a year: it referred to 10 separate years. It therefore did not meet the terms of the proviso.

[44] With reference to Mackenzie v Laird and Watts v Yeend, being the cases referred to in Gill (at paragraph 4.17) as authority for the proposition that a single contract for a succession of seasonal grazing lets over a number of years was within section 2(2)(a), the comment of Kerr LJ in the latter at page 331 to the effect that the English Act also applied in Scotland was enough to undermine the authority of that decision whilst the ratio of Mackenzie v Laird had to do withwhether seasonal lets for grazing purposes were lets for a “specified period of the year”. Furthermore Mackenzie v Laird had been considered in Dallas v Muir in which it had been said (at page 84) that Mackenzie v Laird was “not authority for the proposition that if parties have entered a single contract covering seasonal use over a period of years the Court can ignore that contract and assume a short term contract in each individual year”. The principal distinction between the present case and Mackenzie v Laird was that in Mackenzie v Laird there was an ancillary agreement accompanied by separate grazing leases entered into in each successive year. The ancillary agreement in Mackenzie v Laird could not stand on its own as an agricultural lease but in the present case we had all the requirements for a lease of an agricultural holding.

[45] The same was true of the other cases referred to. In Bell v Inkersall Investments Limited there were five separate grazing lets each for a period of less than a year with no obligation at the end of one lease to grant another.

[46] So far as the English cases were concerned none of them was like the present case. They all featured some sort of ancillary agreement coupled with individual leases in each year and the cases demonstrated that such an arrangement did not amount to a full agricultural lease. In Short Brothers (Plant) Limited v Edwards such an arrangement had not been effective for the purpose of avoiding a full agricultural lease but that case turned on what was in the contemplation of parties at the outset.

[47] So far as the effect of paragraph 2 of the Schedule to the Transitional Provisions Order was concerned, its reference to “any contract for successive leases of that land” was apt to apply to a situation in which there was an ancillary agreement coupled with individual leases in the individual years. The result of the provision would be that any such lease which was running as at 27 November 2003 would be allowed to run to its expiry but any new let in 2004 or subsequently would be a new and separate agreement to which section 3 of the 2003 Act would apply. However, the present agreement was, on Mr Kermack’s primary argument, for a 10 year lease and did not come within paragraph 2 at all.

[48] Commercial Components (International) Ltd v Young was not relevant. There the occupier had been relying upon an implied agreement based upon many years of occupation but his claim that he had a full agricultural tenancy had been defeated because (a) his occupation of the subjects had not been exclusive, and (b) in the absence of a written lease the terms of rent invoices which related to entitlement to occupy for only part of each year were regarded as sufficient to displace any inference that the occupier enjoyed security of tenure. Here there was a written agreement and the respondent did not seek to rely upon any irresistible inference such as was a feature of Morrison-Low v Paterson, discussed by the Sheriff Principal in Commercial Components (International) Ltd v Young at page 18.

[49] Concluding his primary argument, Mr Kermack invited us to hold that this was a full secure tenancy under the 1991 Act. If, however, we were against him on that, we should not dispose of the matter without proof in light of what the Full Court had said in Dallas v Muir (at page 84). This was not a question of law: it was a question of fact and a debate could not settle questions of fact. Pressed by the Court as to what any proof would be about, given that the terms of parties’ agreement were admitted and that nothing of a factual nature was put in issue on parties’ pleadings, Mr Kermack simply reiterated that the issue was one of fact and that a proof was therefore appropriate.

[50] Mr Kermack then turned to his secondary, or esto, position. If the present agreement was an agreement for 10 separate grazing leases each lease would be covered by section 2(2)(a) of the 1991 Act and the particular lease in force as at 27 November 2003 would be covered by paragraph 2 of the Transitional Provisions Order. The effect of paragraph 2(2) would be that the lease then in force would run its course until the 31 December 2003 but that the lease commencing on 1 February 2004 would be governed by section 3 of the 2003 Act. On the expiry of that lease, however, on 31 December 2004, the present agreement would fall foul of section 3(2) of the 2003 Act because the land had already been let for the same purpose to the same tenant back in 1997. “Let” in that subsection did not mean physically let – with the tenant being given occupation of the land – but was apt to cover the granting of the lease itself. The word “let” was also used in subsection (1) of section 3 and there it clearly referred to the creation of the contract rather than the physical taking of entry to the land. If Parliament had intended to use the same word in two different senses in the same section of an Act that would have been signalled in some way.

[51] The crucial point here, said Mr Kermack, was that, as at January 2005, each party could enforce the contract entered into in 1997 and locus poenitentiae was long gone. The land had, therefore, already been let and the terms and the requirements of section 3(2) were not therefore satisfied.

[52] The case of Trade Development Bank v David W Haig (Bellshill) Limited was authority for the proposition that it was the point at which specific implement became available to the parties which determined when the subjects had been let. Applying that principle to the present case, that point had been reached as early as 1997. Accordingly, by the time one got to 31 December 2004 the land here had already been let for the same purpose to the same tenant and section 3(2) of the 2003 Act did not apply. The result was that the tenant remained in occupation of the land and the tenancy at that point became a short limited duration tenancy under the 2003 Act. Beyond that it was simply a question of fact as to whether the duration of that tenancy was one of five years or, by virtue of an agreement between the parties, less than five years. That was a matter for proof. If section 4(2) did not have that result, because section 3 of the 2003 Act did not apply here, then the same result was reached by virtue of section 4(1) of the 2003 Act. However one approached it, the result was that as at 31 December 2004 there was a continuing right of occupation of the land with the consent of the landlord in terms of the 1997 agreement. In Mr Kermack’s submission the short limited duration tenancy then enduring was one of five years duration and the applicants were therefore not entitled to seek removal of the respondent as at 31 December 2006.

[53] Asked by the Court as to whether the applicants would have been entitled to let the subjects to anyone else during January of each year of the ten year period covered by the 1997 agreement, Mr Kermack said that they would have been provided that such letting did not impinge upon the right of the respondent to re-enter the subjects as at 1 February in each year. Although that was so, resolution of this case was a matter of interpretation of the relevant statutory provisions.

(iii) Response for applicants

[54] On the question of title and interest to bring the application, Sir Crispin argued that after 31 December 2006, when, on the face of it, the agreement between the parties expired, the applicants, as the then uninfeft proprietors of the subjects, had been entitled to raise the proceedings against the respondent as someone who was not entitled to occupy the subjects. If the respondent answered the application, as he had done, by contending that he was entitled to occupy on a lease which was good against singular successors, the applicants were entitled to oppose that. It did not matter that the contract was a personal contract between the unincorporated association and the respondent. It was the applicants’ contention that the respondent’s right to occupy had ended before the incorporated association had become uninfeft proprietors.

[55] With reference to the various clauses of the 1997 agreement which had been relied upon by Mr Kermack, Sir Crispin submitted that these were consistent with the applicants’ position. Clause 3 was perfectly consistent with what was being referred to being the rent for each period of let. Similarly section 4 prevented the sub-letting or assignation of each individual period of let. Clause 5 reserved certain rights of access to the landlords but 5(c) referred specifically to “any of the periods of lease”. Clause 6 was easily comprehensible in the context that it applied only in the period of each lease. Thus the phrase “your operations” could only apply to individual periods of the lease because the respondent was entitled to carry out operations only during these periods. Similarly the phrase “your purposes” was a reference to the grazing purposes for which the leases had been granted. The phrase “whole of the tenancy” should be read as meaning the whole of each tenancy. Clause 8 contained an explicit obligation on the part of the respondent to remove stock on termination of each period of let.

[56] Even if we thought that there was an obligation to maintain fences throughout the year, and not just for the 11 months of the respondent’s occupation, the case of Lory v Brent was supportive of the applicants’ position rather than opposed to it. What that case said was that one had to read the whole contract in order to determine what was in the contemplation of the parties and it had held that the obligation to plough was not necessarily inconsistent with a grazings lease provided it was subservient to the main purpose. He referred particularly on a passage from the opinion of Ungoed-Thomas J at page 829 containing the sentence “Such matters as fencing and shelter for the grazing of animals may be essential or required as a matter of practical farming to enable the animals to be grazed on the land; and such fencing and shelter might then be “use of the land for grazing only” ”. So an obligation to maintain the fences year round was perfectly consistent with a letting of the land for grazing during only 11 months of each year.

[57] Sir Crispin then dealt with Dallas v Muir. The Court there had been proceeding in the absence of any argument analysing the effect of section 2 of the 1991 Act (page 82) and when it came to the Court’s reference to Mackenzie v Laird not being authority for the proposition that if parties entered a single contract covering seasonal use over a period of years the Court could not ignore that contract and assume a short-term contract in each individual year, what the Court was really saying was that one had to look at the contract. So one had to look at the contract in each case. If that was not what the Court had been saying in that passage from Dallas v Muir then its approach was wrong.

[58] As to Mr Kermack’s submission that a proof was necessary, there was nothing to prove here. The respondent’s pleadings contained no factual averments, only legal propositions. The applicants’ averments were not in dispute so there was nothing to prove there. In any event when one had a written agreement which covered all the necessary points there was nothing left to prove.

[59] So far as the 2003 Act was concerned, the use of the word “let” in section 3(1) was not inconsistent with the applicants’ position: it could equally refer to the point at which occupation was taken. He noted that the section begins by referring to a “tenancy under a lease”. The tenancy could be agreed in advance but until occupation had been taken no real right was created and the lease was not binding on singular successors. So a singular successor could refuse entry. That made it more likely that the word “let” in sub-section (1) was referring to the taking of physical entry.

[60] So far as the application of section 4(2) of the 2003 Act was concerned, the respondent had no averment that he had remained in occupation of the subjects with the consent of the landlord. Remaining in occupation after the expiry of each individual period of let would have been contrary to clause 8 of the agreement. Section 4(2) applied where the tenant remained in occupation of the land after the expiry of the term of the tenancy with the consent of the landlord. That was not the position in the present case and section 4(2) did not apply.

[61] So far as the possible application of section 4(1)(c)(ii) was concerned, it fell to be applied in the following way. What one had here as at 1 February 2003 was a lease subject to section 2(2)(a) of the 1991 Act. The 2004 lease was one to which section 3 of the 2003 Act applied. Accepting the argument that the next let had been undertaken before one clear day had expired, so that section 3(2) of the 2003 Act did not apply, the 2005 lease was a short limited duration tenancy which ended on 31 December 2005. On 1 February 2006 the respondent got another lease which expired on 31 December 2006. Whether it was to be viewed as a grazing lease under the 1997 document or as a short limited duration tenancy it expired as at 31 December 2006 and on no view of things was there a continuing right in the respondent to occupy the subjects after that date.

[62] In conclusion Sir Crispin submitted that it all came back to the construction of the 1997 document. That document was clearly an offer of a succession of leases and there was nothing in the 1991 Act to prevent one agreeing a series of lets in advance. There was no distinction between the present position, where one agreement containing a series of lets, and what had happened in Mackenzie v Laird and in Watts v Yeend. The agreement in Mackenzie v Laird certainly seemed to be enforceable while Mr Laird remained in occupation of the main house. The fact that an agreement was enforceable did not prevent it from being an agreement for a succession of individual lets.

Discussion and Decision

(i) Title and interest to sue

[63] The applicants are uninfeft proprietors of the heritable subjects with which this application is concerned. That, in our view, gives them enough by way of both title and interest to pursue craves 1 and 2 of this application, being, in short, craves for declarator that the respondent neither has a lease of said subjects under the 1991 or 2003 Acts nor any other right to go on occupying them. It is accepted on their behalf that it is will not be competent for the applicants to move crave 3 of the application, seeking removal, until such time as the title in their favour, now with the Keeper for registration in the Land Register, has been registered and we are asked not to do anything with that crave for the moment.

(ii) Whether a single contract for a succession of grazings lets over a number of years is within section 2(2)(a) of the 1991 Act

[64] Although the present case was argued largely on the basis of the terms of the 1997 agreement and the difference between parties was as to whether it constituted an agreement for a series of separate and distinct grazing leases - in which case it was accepted that each of the leases would come within the terms of the now-repealed section 2(2)(a) - or a lease for a period of years - in which case the arrangement would not be within the terms of the subsection - behind that discussion there may be a more fundamental question as to whether a single agreement covering a period of years could ever satisfy the terms of section 2(2)(a). We detect echoes of it in the Full Court’s comments in Dallas v Muir referred to below. It is as well to deal with that question first.

[65] We start with the terms of section 2 itself. Subsection (1) applies where, “under a lease…land is let for use as agricultural land for a shorter period than from year to year..”. Mr Kermack’s submission in the present case was that section 2(1) could not apply here because where there was a letting of land covering several years it could not be a let for a shorter period than from year to year. Because section 2(1) did not apply, there was no question of section 2(2) applying. However that is predicated upon the 1997 agreement constituting a lease rather than a series of leases. Subsection (2)(a) itself refers to “a lease entered into (whether or not the lease expressly so provides) in contemplation of the use of the land only for grazing or mowing during some specified period of the year”. Both subsections refer to “a lease” and it seems to us that what one has to do in testing the application of section 2 is first of all identify what, on the facts of the particular case, the lease is. It may be that what the draftsman was anticipating was individual leases separately negotiated in each year but we do not see anything in section 2 which rules out the possibility of a series of leases being agreed in advance and the section applying to each of these.

[66] Gill, at paragraph 4.17, seems to answer the above question unequivocally in the affirmative: “A single contract for a succession of seasonal grazing lets over a number of years, even an indefinite number, is within section 2(2)(a).” However, in neither of the cases cited as authority for that proposition – Mackenzie v Laird and Watts v Yeend – was the point argued. Rather the argument in each was as to the meaning of the phrase “during some specified period of the year”, which appeared in both the Scottish and English provisions of the time.

[67] Next, for what it is worth, there is the apparent acknowledgement of the validity of such an agreement contained in paragraph 2(2) of the Transitional Provisions Order which reads: “After the expiry of any lease to which paragraph (1) above applied [i.e. any lease to which section 2(2)(a) of the 1991 Act applied as at 27th November 2003] sections 1(3) and 3 of the 2003 Act shall apply in relation to the land under such a lease, notwithstanding any contract for successive leases of that land which has effect on 27th November 2003.” We cannot attach a great deal of significance to this since it is something contained in what is merely a transitional provision but it may indicate an acknowledgement on the part of the Parliament that such agreements were valid.

[68] We return now to the remarks of the Full Court in Dallas v Muir. That case was concerned with the question whether the arrangement whereby the applicant made use of a field belonging to the respondent was a single, long term, one or a series of short lets. There was no written agreement of any kind and the facts of the case are quite different from those of the present case, the present case being more akin to Mackenzie v Laird in which there was a prior written agreement providing for a succession of seasonal lets on certain terms and conditions. At page 84 of its judgement in Dallas, however, the Court sounded a note of caution as to the import of Mackenzie v Laird, saying that that case“is not authority for the proposition that if parties have entered a single contract covering seasonal use over a period of years, the Court can ignore that contract and assume a short-term contract in each individual year”. It then goes on to say that “[t]he decision is not inconsistent with our view that the question of whether a particular occupancy of a holding is governed by one agreement or by a distinct series of separate agreements falling within section 2, is a question of fact”.

[69] These comments seem to attach considerable significance to the question whether the arrangement between parties is governed by one agreement or two but they stop short of saying that a single agreement incorporating a succession of leases is not within section 2(2)(a). Fairly read we think that what the Court is saying is that the whole agreement or agreements between parties must be looked at and that the nature of parties’ agreement in any case is, of course, a question of fact. Applying the guidance contained in the first sentence quoted to this case, this is, of course, a case in which there is a single contract covering seasonal use over a period of years but all the Full Court enjoins us to do is not to ignore the terms of that agreement and not to make any assumptions as to the existence of a short term contract in each individual year.

[70] More generally, and as a matter of principle, it is difficult to see why the Court would have intended to say that a single contract covering seasonal use over a period of years could not come within section 2(2)(a). It is not easy to see why, where there is no suggestion of a sham, such agreements should be outwith section 2(2)(a). On the contrary, from a practical point of view, it is easy to understand that parties, perhaps particularly the tenant, would want the certainty of a repetition of their arrangement in a succession of years.

[71] We have not found the cases on the equivalent English provision cited to us (Scene Estate Ltd. v Amos; Short Bros (Plant) Ltd v Edwards; Watts and Ors v Yeend) nor Commercial Components (Int) Ltd v Young helpful because of their very different facts. Undoubtedly the case closest on its facts of those cited to us is Mackenzie v Laird but there, as we have said, this point was not argued.

[72] Our conclusion is, therefore, that there is nothing about single contract arrangements per se which takes them out of the ambit of section 2(2)(a). Whether that is the result in a particular case will depend upon the terms of the particular agreement and such other facts as may have a bearing on what parties had in contemplation when the agreement was made. For section 2(2)(a) to apply it will require to be shown that the agreement creates not one lease but a succession of individual leases. That brings us to a consideration of the particular agreement before us in this case..

(iii) The form and terms of the 1997 agreement

[73] Agreements of this kind are always vulnerable to the suspicion that they are a device to avoid the creation of security of tenure, the true nature of the agreement between the parties being different. So the first thing to be said about the present agreement is that it is not averred by the respondent that it is in any sense a sham. Thus it is not said that it is a device to get round the security of tenure provisions of the 1991 Act. Nor does the respondent aver that it does not disclose the whole agreement of parties. He does not aver, for example, that notwithstanding the terms of the agreement parties had something else in contemplation at the time. Although the respondent’s pleadings do not contain any express admission of the terms of the agreement nor do they assert any other form or basis of agreement: to a very great extent they are concerned not with matters of fact at all but with applying the law to the terms of the agreement. And in terms of how the agreement has been implemented it is not disputed that the respondent has occupied the subjects on the strength of, and in conformity with, the terms the agreement. For all of these reasons we consider that the document embodying the 1997 agreement (a copy of which is production 2) is to be viewed as a complete and accurate record of a bona fide agreement which was made by parties at that time and which has regulated their relationship since.

[74] That being so we are not entitled to look beyond its terms (Gloag pp 365-366; Walker & Walker para 240; Bell v Inkersall Investments Ltd per the Lord Justice Clerk at 637; Scene Estate Ltd v Amos per Denning LJ at 221 and Parker LJ at 213) and there is no need for a proof of any kind: we have to decide this case by the application of the law to the terms of the 1997 agreement.

[75] These terms are tolerably clear. The agreement takes the form of an offer with a docquet of acceptance. It is therefore in the form of missives rather than in the form of a document of lease. The offer is an offer by the applicants’ unincorporated predecessors “to grant to [the respondent] a succession of Grazing Leases” of the subjects for certain periods and on certain terms and conditions. That seems clear enough. It is not an offer of lease but an offer of a succession of leases. That offer having been accepted by the respondent the result, on the face of it, seems to be a contract, in the form of concluded missives, for ten such successive leases on the terms and conditions contained in these missives.

[76] Mr Kermack contends, however, that closer examination of the agreement shows it to be not that at all but a letting of the land for a period of ten years, or, at all events, for a period which is not shorter than from year to year. A clause by clause analysis of the offer is therefore required.

[77] Before coming to clause 1 we note that the offer is for a succession of leases “for the periods and on the terms and conditions following”. So the language used at this point is not the language of a single lease for a single period but for a succession of leases for a succession of periods.

[78] Clause 1 identifies what these periods are to be: 1 February to 31 December in each year. Again it talks of “periods of lease” and refers to the period expiring on 31 December 2006 as the “final period”. It then goes on, however, to provide that the agreement can be broken by either part at the expiry of the fifth period. The language used is that either party shall be entitled to bring “the Agreement to follow hereon” to an end. By “follow hereon” we think the drafters simply meant the agreement which would result if their offer was accepted. Breaks are common in leases so it is not surprising that Mr Kermack prays this in aid as an indicator that this is an offer of single lease and not an offer of a series of leases. But we have to have regard to the language used and that speaks not of breaking the lease but breaking (off) “the Agreement”. There is no reason of principle or practice that requires us to substitute “lease” for “Agreement”.

[79] Clause 2 deals with rent and begins “The rent for each of the first five periods of lease shall be…”. So the language again is of a plurality of leases. There is then a rent review provision which begins “The Association shall be entitled to review said rent for the subsequent five periods of lease”. The point here is similar to the point about a break in the agreement: a rent review provision is said to be indicative of a single lease. But again that has to give way, in our view, to what the agreement actually says and what it refers to is the rent payable “for the subsequent five periods of lease”. Just as there is no reason of principle or practice which makes a break provision incompetent or inappropriate in an agreement for a succession of lets we see no reason why a rent review should not be competent as part of an agreement for a succession of leases without it changing what otherwise purports to be the essential character of the agreement.

[80] We see nothing in clause 3, which deals with interest on arrears of rent, which assists us one way or the other.

[81] Clause 4, which reads “Sub-tenants and assignees are expressly excluded”, is certainly suggestive of a single lease simply in so far as it makes no reference to each individual lease but it may simply mean that sub-tenants and assignees are not allowed at any time, in any of the lease periods.

[82] Clause 5 reserves certain rights to the Association. Paragraph (c) refers to a right to work timber “at any time during any of the periods of lease or during the intervening periods”. That seems to point both ways: it talks of a plurality of leases with intervening periods but there is really no need to mention the intervening periods unless the tenant has some rights of occupancy during these periods.

[83] Clause 6 contains some similarly confusing material. It deals with acceptance of risk and the condition of the fixed equipment. It refers, in the first line, to “this letting arrangement”. We take that to be a term deliberately used so as to distinguish the arrangement from a lease. It then goes on to say that the tenant will maintain fences and the like in stockproof condition and in a thoroughly efficient state “during the whole of the tenancy”, a clear reference to a single lease rather than to a series of leases. The obligations contained in the clause do not appear to be confined to the eleven months of occupancy in each year. However, an obligation to maintain fences for periods outwith the occupancy of the land by stock may, in the context of an eleven months let at least, be appropriate since it imposes upon the tenant the obligation of putting the fences and such like in good repair ready for the start of each successive period of let. So, although the obligations in this clause are typical of what one would find in a lease they are not necessarily inconsistent with the arrangement being one involving a series of leases. Both parties argued that Lory v Brent London Borough Council favoured them in relation to this point but we have not found it persuasive in either direction.

[84] Clause 7 is of no assistance.

[85] Clause 8 contains the restriction on use of the land to grazing only and provides that the tenant will undertake to remove his stock from the subjects “on termination of each period of Lease”.

[86] Clause 9 is of no assistance.

[87] Clause 10, dealing with breach of the tenant’s obligations, refers to terminating “this letting arrangement”, which again we take to be a term deliberately used in order to distinguish the arrangement from a lease.

[88] When one comes to clause 12, however, it appears that the drafters of the offer have dropped their guard and for the first time refer to “this Lease” rather than “this letting arrangement” or any such phrase. That clearly favours Mr Kermack’s argument but it would carry a great deal more weight if this was a case in which it was being averred that the agreement was a sham. We place no reliance on what Sir Crispin said about the stamp duty provisions contained in clause 12 since it was said, as he explained, on the basis of uncertain knowledge and without reference to the terms of the legislation.

[89] What is the result of that review of the terms of the 1997 agreement? We start by having regard to what the arrangement bears to be. That is an offer and acceptance of a succession of grazing leases in each of ten successive years. We then ask ourselves whether there is anything in the agreement which is so inconsistent with such an arrangement that it must be an agreement of a different kind, more particularly a single lease. As we have just seen, the agreement is not wholly internally consistent but our view is that on a fair reading of the whole agreement the proper conclusion is that it is what it bears to be: a contract providing for a succession of grazing leases in each of ten successive years. Any other reading – for instance Mr Kermack’s submission that it is a lease for letting of land for at least 110 months – is artificial and does unwarranted violence to the plain language used in the opening paragraph of the offer which contains the description of the intended arrangement. In our view the agreement is not a lease at all but a contract obliging the parties to grant and accept ten successive grazing leases for particular periods and uses and on the terms and conditions stated.

[90] Mr Kermack argued that the fact that the contract was enforceable and that there was no locus poenitentiae once it had been signed was significant but we do not see how the fact of enforceability changes the fundamental nature of the agreement. It is a single contract, certainly, and it is enforceable, certainly, but it is a contract for ten separate and successive leases. In that respect we observe that it is no different from the contract in Mackenzie v Laird, which was enforceable while the landlord continued to lease the house although we accept that no issue regarding the fundamental nature of the contract was argued in Mackenzie v Laird.

[91] The conclusion we have come to therefore is that it is to the leases for each of the ten successive years that we must look in order to test the application of section 2 of the 1991 Act. That conclusion has been arrived at solely on the terms of the agreement in this particular case and on the basis that it is a bona fide agreement of the kind described at [73]above. That conclusion having been arrived at, however, there is no dispute that, viewed separately, each of the leases comes within section 2, including the proviso contained in section 2(2)(a), and that the result is that there was no secure tenancy under the 1991 Act.

(iv) The effect of the Transitional Provisions Order and the 2003 Act

[92] Paragraph 2 of the Schedule to the Transitional Provisions Order applies to any lease to which section 2(2)(a) of the 1991 Act applied as at 27 November 2003. In this case there was, standing the conclusion we have come to above, such a lease in force as at that date. Paragraph 2(1) provides that such a lease shall continue in force until its expiry as if (a) section 2(2)(a) had not been repealed and (b) section 3 and any other section of the 2003 Act which would have effect in relation to the leased land had not been commenced. Accordingly the lease in force in the present case as at 27 November 2003 continued in force until its expiry on 31 December 2003.

[93] Paragraph 2(2) of the Schedule provides that after expiry of such a lease sections 1(3) and 3 of the 2003 Act shall apply in relation to the land in question notwithstanding any contract for successive leases of that land which had effect on 27 November 2003. Its effect is that, as of 1 January 2004, section 2(2)(a) of the 1991 Act was replaced by section 3 of the 2003 Act so far as the land under the lease at 27 November 2003 was concerned. It does not have the effect of terminating a contract for successive leases of that land, however, so the 1997 agreement lived on beyond 31 December 2003.

[94] Accordingly, when 1 February 2004 came round and the land was again let to the respondent, it was section 3 of the 2003 Act which applied. It is in the following terms:-

“(1) This section applies to a tenancy under a lease under which agricultural land is let for the purpose of its being used only for grazing or mowing during some specified period of the year (whether or not the lease expressly so provides).

(2) The tenancy is not to be constituted for a period of more than 364 days; and where the term of the tenancy has expired the land may not be let for the same purpose to the same tenant before one clear day from the date of expiry of the tenancy has elapsed.”

[95] The question here is whether the situation at the expiry of the 2004 lease fell foul of the prohibition of re-letting the land for the same purpose to the same tenant before one clear day had elapsed.

[96] We have already decided that the 1997 agreement did not operate as a lease of the subjects for a period of ten years. Accordingly the land was not let under that agreement as at 1 January 2005 in the sense that that is not a date within the currency of any of the leases mentioned in the 1997 agreement. It was not surprising, therefore, that Mr Kermack accepted, for the purposes of his esto case, that the land could have been let to someone else for the month of January in each year. What there was as at 1 January 2005 was an enforceable obligation on parties to enter into another lease as at 1 February 2005. The question is whether that comes within the meaning of “let” in section 3(2) of the 2003 Act.

[97] We have not found the various dictionary definitions of “let” helpful and we would in any event be reluctant to decide the point on what might be quite subtle distinctions of meaning. Nor are we persuaded that the term “let” is used in subsection (1) so as to refer to the entering into of the contract as opposed to the giving of the physical possession of the land and we do not, therefore, find its use there a useful guide to the sense in which it is used in subsection (2). Even less are we helped by anything said in the very different factual context of Trade Development Bank v David W. Haig (Bellshill) Ltd.We prefer to approach the matter from the point of view of what makes sense in the present context. Section 3 uses the words “tenancy”, “lease” and “let”. Nowhere does it refer to “an agreement to enter into a tenancy or lease” or to “an agreement to let”. The purpose of the section is to allow land to be let for limited periods and for limited purposes without creating a tenancy which is protected by the subsequent provisions of the Act. The condition upon which the attraction of such protection is avoided is that there must be a break in arrangements: there cannot be a continuum of the same arrangements without a break beyond certain limits. Such a break involves, in our view, the same person not being entitled to occupy for the same purposes on the day after a lease under section 3 expires. Section 3(2) then allows the same person to become entitled to occupy for the same purposes again on the day after that. So the essence of the protection against the creation of a tenancy under the 2003 Act is a break of at least a single day in the arrangement. Accordingly the critical question in our view is whether the same person is entitled to occupy the land for the same purposes on the day after a grazings lease expires. It is in that sense, we think, that the word “let” is used in section 3(2). If he is so entitled there is clearly no break such as can satisfy the requirements of section 3(2) but if he is not it does not seem to us to matter that he is already entitled to occupy again a month later. In our view the respondent here was not entitled to occupy the land for the purpose of grazing stock as at 1 January 2005 and the terms of section 3 are, therefore, in our view satisfied. The same is true at the end of the 2005 lease.

[98] The consequence of the application of section 3 to the successive leases is that the arrangement between parties never becomes a short limited duration tenancy under section 4(1). Nor does it become a short limited duration tenancy under section 4(2) because that subsection only applies where the tenant remains in possession after the expiry of a lease to which section 3 applies with the consent of the landlord. There is no averment that the tenant here remained in possession at the expiry of any of the periods of lease but even if he did that would be in breach of clause 8 of the 1997 agreement and there is no suggestion that any part of that agreement has been supplanted or departed from in any way. He would therefore be in possession without the consent of the landlord and no short limited duration tenancy could result.

[99] Even if section 3 does not apply in this case because Mr Kermack’s argument on section 3(2) is correct, our ultimate decision would, we think, require to be the same. If the terms of section 3 are not satisfied here, section 4(1) of the 2003 Act would apply with the result that, as at 1 January 2005 a short limited duration tenancy came into existence. As to the duration of that tenancy, we do not see any basis in any of the other provisions of section 4 for saying that it could endure beyond 31 December 2006 at the latest so that on that view of matters, also, the respondent would have no right to occupy beyond that date.

[100] Accordingly, on the whole matter, we find that the respondent’s right to occupy the subjects referred to in part (i) of craves 1 and 2 terminated as at 31 December 2006 when the 1997 agreement expired. It is a matter of concession that he had no right to occupy the subjects mentioned in part (ii). We have therefore granted craves 1 and 2 and continued consideration of crave 3.

For applicants: Sir Crispin Agnew of Lochnaw, QC; Messrs Lindsays, Solicitors, Edinburgh

For respondent: Mr L Kermack, Solicitor; Messrs Turcan Connell, Solicitors, Edinburgh