THE COURT

(Sheriff MacLeod, Mr D J Houston)

TRUSTEES OF INKERSALL FURBS v CALDER

(Application RN SLC/190/09 – Order of 17 November 2010)

AGRICULTURAL HOLDINGS – (1) JURISDICTION OF LAND COURT TO DECIDE VALIDITY OF NOTICES UNDER SEC 12(1) OF 1991 ACT; (2) MEANING OF “AGENT” IN SEC 85(5) OF AGRICULTURAL HOLDINGS (SCOTLAND) ACT 1991 – WHETHER AGENT REQUIRES AUTHORITY FOR PARTICULAR MATTER IN HAND – CIRCUMSTANCES IN WHICH A FIRM OF SOLICITORS WHO HAD SERVED NOTICE ON BEHALF OF LANDLORDS UNDER SEC 13(1) OF ACT FOUND TO BE AGENTS OF LANDLORD FOR PURPOSES OF SERVICE BY TENANT OF NOTICE UNDER SEC 12(1) NOTWITHSTANDING THAT THEY HAD NO AUTHORITY FROM LANDLORDS TO ACCEPT SERVICE OF NOTICE

Sec 85(5) of the Agricultural Holdings (Scotland) Act 1991 (“the Act”) provides as follows:-

“Anything which by or under this Act is required or authorised to be done by, to or in respect of the landlord or the tenant of an agricultural holding may be done by, to or in respect of any agent of the landlord or of the tenant.”

The applicants were landlords and Mr James Calder and Mr Stephen James Calder were joint tenants of an agricultural holding within the meaning of the Act. James Calder died on 29 December 2007. On 9 May 2008 Messrs Tods Murray LLP, solicitors, acting for the applicants as landlords, served notice on Stephen James Calder and the Executors of James Calder advising them, in terms of sec 13(1) of the Act, that the landlords intended to apply to the Land Court to have the rent payable for the holding as from a certain date determined by the Court. Such an application was subsequently made to the Court, with Messrs Tods Murray acting for the landlords, and that application was sisted at the time of the application with which this report is concerned.

By letter dated 8 January 2009 Messrs Blackadders, solicitors, acting for Stephen James Calder, purported to serve on Messrs Tods Murray a notice to the landlords under sec 12(1) of the Act, to the effect that the Executors of James Calder had transferred his interest under the lease to Stephen James Calder. In so doing Messrs Blackadders were treating Messrs Tods Murray as agents of the landlords for the purposes of the Act. On 13 January 2009 Messrs Tods Murray wrote to Messrs Blackadders, acknowledging receipt of their letter and saying that instructions were being taken. No more was heard from them and the time limit within which notice of such a transfer must be given to the landlord in terms of sec 12(1) of the Act expired. The lease had been running on tacit relocation and after Whitsunday 2009 the applicants lodged the present application with the Court seeking declarator that the lease had terminated as at that term because the interest of the deceased James Calder had not been validly transferred to Stephen James Calder, Messrs Tods Murray having had, it was said, no authority to accept service of the notice of 8 January. Parties were agreed that if the notice of 8 January had not been validly served the result was that tacit relocation could not operate as at Whitsunday 2009; Coats v Logan1985 S.LT. 221. The respondent relied on the terms of sec 85(5).

Although the matter was not contentious as between the parties, the Court was concerned as to whether, standing comments made in Garvie’s Trs v Still 1972 S.L.T. 29 and the terms of sec 60(4)(b) of the Act it had jurisdiction to decide upon the validity of notices under sec 12(1) of the Act.

HELD (1) On the question of jurisdiction, that secs 16 of the Succession (Scotland) Act 1964 and sec 12 of the 1991 Act represented two separate stages in the process of transferring the interest of a deceased tenant under a lease of an agricultural holding and that by the time sec 12 came into play the transfer had already taken place and all that remained was for notice of it to be given to the landlord; furthermore a distinction fell to be made between matters arising under sec 16 of the 1994 Act, which were for the ordinary courts to decide, and matters falling under sec 12 of the 1991 Act, which involved no questions to do with the law of succession and were, therefore, within the jurisdiction of the Land Court to decide as part of its jurisdiction to deal with any question as to whether a tenancy of an agricultural holding in relation to which the Act applies exists or has been terminated, in terms of sec 60(2) of the Act; and that accordingly the Court had jurisdiction to deal with the application.

(2) that sec 85(5) did not require an agent to have actual or ostensible authority to accept service of a notice under the 1991 Act, it was enough that the agent had acted as an agent for a purpose under the Act concerning the same tenant and holding; each case would depend on its own facts but where a firm of solicitors acting for landlords had served a notice on the tenant for one purpose under the Act and were still acting for the landlord in connection with that purpose at the relevant time, it was not absurd to regard them as agents for another purpose under the Act so as to entitle the tenant, or his agents, to serve notice on the them as the landlord’s agents within the meaning of sec 85(5), the purpose of sec 85(5) being to facilitate the service of notices under the Act, and application dismissed.

The Note appended to the Court’s order is as follows:

Background

[1] In this application the landlord applicants seek declarator that the tenancy of an agricultural holding has been terminated.

[2] The tenancy in question is of a holding known as the farm and lands of Finfan in Morayshire. It was entered into between Captain Iain Mark Tennant, as landlord, and James Calder and Stephen James Calder, as tenants, by lease dated 5th and 11th November 1980, for a period from the term of Whitsunday 1980 to Whitsunday 1985 and from year to year thereafter. It is a lease, therefore, to which the Agricultural Holdings (Scotland) Act 1991 (“the 1991 Act”) applies and since Whitsunday 1985 it has been continuing on tacit relocation, the express provision as to continuation beyond that date contained in the lease merely reflecting the position under sec 3 of the 1991 Act. The lease is to “the Tenants and their respective executors, but excluding assignees, legal and conventional save to the extent before mentioned … ”.

[3] James Calder and Stephen James Calder were father and son. On 29 December 2007 James Calder died without leaving a valid bequest of his interest in the lease. Perhaps because of the prohibition on assignation which we have just quoted, he left no bequest of his interest in the lease and accordingly that interest fell to be dealt with according to the statutory provisions governing intestacy. These provisions are contained in sec 16 of the Succession (Scotland) Act 1964 (“the 1964 Act”) and sec 12 of the 1991 Act. In short, and subject to qualifications which need not concern us here, sec 16(3)(b) of the 1964 Act requires the interest of the deceased tenant to be disposed of according to law within a period of one year from the date of death of the deceased and sec 12(1) of the 1991 Act requires the person to whom the lease has been transferred under sec 16 to give notice of his acquisition of the lease to the landlord within 21 days after the date of acquisition. It is only if that is done and no counter-notice is served by the landlord under subsec 12(2) of the 1991 Act that the lease becomes binding on the landlord and acquirer as landlord and tenant.

[4] On 23 December 2008 James Calder’s executors transferred his interest in the lease to Stephen James Calder, in terms of sec 16 of the 1964 Act. On 5 January 2009 Messrs Blackadders, Solicitors, Dundee, acting for Stephen James Calder, sent notice of acquisition in terms of sec 12(1) of the 1991 Act to Messrs Tods Murray LLP, Solicitors, Edinburgh, as the landlords’ agents. In doing so they were relying on the provisions of sec 85(5) of the 1991 Act which provides that “Anything which by or under this Act is required or authorised to be done by, to or in respect of the landlord or the tenant of an agricultural holding may be done by, to or in respect of any agent of the landlord or of the tenant”.

[5] On 13 January 2009 Tods Murray acknowledged receipt of said notice and said that instructions would be taken in respect of it. Their letter concludes “We will revert to you shortly”. In fact no more was heard from them until the present application was lodged in November 2009.

[6] The basis for this application is (i) that Blackadders’ notice of 5 January 2009 was invalid because, it is said, Tods Murray had no authority, actual or ostensible, to receive it as agents for the landlords; (ii) that the title of James Stephen Calder to his father’s interest in the lease has, therefore, never been completed; (iii) that as a result of that there was no one to consent, in respect of the interest of the deceased James Calder, to the lease continuing on tacit relocation beyond Whitsunday 2009; and (d) that on the authority of Coats v Logan (infra) the lease therefore terminated on that date. The time limit for serving a corrective notice under sec 12(1), if one were needed, expired on the very day of Tods Murray’s said acknowledgement.

[7] The basis for Blackadders’ belief that Tods Murray were agents for the landlords was that at the relevant time they were acting for the landlords in relation to rent review proceedings in respect of the same holding. Those proceedings had been initiated by them by notice to Stephen James Calder and the Executors of the late James Calder dated 9 May 2008. They are now the subject of an application to this Court under sec 13 of the 1991 Act but that application is presently sisted to await the outcome of the present application. Tods Murray continue to act for the landlords in that case. The present application is, therefore, opposed by the respondent on the ground that the fact that Tods Murray were agents of the landlords in respect of other proceedings between the parties arising out of the 1991 Act made them agents of the landlords within the meaning of sec 85(5) of the Act and that the notice of 5 January 2009 was, therefore, validly given. The respondent also prays in aid that Tods Murray acted for the landlords in relation to a resumption of land from another agricultural holding on the same estate, which is admitted by the applicants under explanation that they only advised in the drafting of a minute of agreement and did not serve the resumption notice.

[8] Parties being agreed that the issue could be resolved without proof, we heard parties’ agents in debate on 5 July 2010 when the applicants were represented by Mr Peter Paterson, solicitor-advocate, of Tods Murray, Edinburgh, and the respondent by Mr Hamish Lean, solicitor, formerly of Blackadders, Dundee, and now of Messrs Stronachs, Aberdeen.

Legislation, authorities and texts

Legislation

Agricultural Holdings (Scotland) Act 1991, sec 12(1), 60(4), 85(5)
Succession (Scotland) Act 1964, sec 16

Cases

Amagas v Mundogas [1986] A.C. 717
Coats v Logan 1985 S.L.T. 221
Danish Dairy Co v Gillespie 1922 S.C. 656
Dornier Gmbh v Cannon 1991 S.C. 310
First Energy (UK) Ltd v Hungarian National Bank Ltd [1993] B.C.C. 533
Freeman & Lockyer v BuckhurstPark Properties
(Mangal) Ltd [1964] 2 Q.B. 480
Galinski v McHugh (1989) 21 HLR 47
Garvie’s Trs v Still 1972 S.L.T. 29
Glen International Ltd v Triplerose Ltd [2007] L & TR 28
Kiely v Lunn 1983 J.C. 4
Leach v Rex [1912] AC 305
Morrison v Statter (1885) 12 R 1152
Saffron Walden Second Benefit Building Society v
Rayner (1880) L.R.14Ch 406
Singer v Trustee in Bankruptcy [1981] W.L.R 1358
Smith v Grayton Estates Ltd 1960 S.C. 349
Stephen v Cawdor English Marriage Settlement
Trust Trustees 2007 S.C. 679
Westway Homes Ltd v Moores & Anr (1992) 63 P.& .R 480

Textbooks

Agnew, Agricultural Law in Scotland
Bennion on Statutory Interpretation, 5th ed.
Hon. Lord Gill, The Law of Agricultural Holdings in Scotland, 3rd ed

Jurisdiction

[9] At the outset of the debate we raised with parties reservations we had about our jurisdiction to deal with this matter. These were based on sec 60(4)(b) of the 1991 Act, as amended by the Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”), which excludes from this court’s jurisdiction “any question as to the validity of (i) any bequest; or (ii) any transfer, of an interest under the lease [of an agricultural holding]”. We invited agents to address us on the matter and allowed a short adjournment for them to consider it. On resuming they were both of the opinion that the Court had jurisdiction and Mr Paterson explained why.

[10] There was a distinction to be drawn, he said, between matters which were really matters of succession under the 1964 Act – which were within the province of the ordinary courts – and matters which were governed by the 1991 Act – which were within the jurisdiction of this court.

[11] More precisely, a distinction fell to be made between questions involving the validity of a transfer under sec 16 of the 1964 Act and notice of intimation of that transfer under sec 12(1) of the 1991 Act. This was a two part process involving, as part one, a transfer under sec 16 and, as part two, the giving of notice of that transfer under sec 12(1). But only the first part was the transfer and the validity of that part was not being challenged in this application. It was only the validity of service of the notice of acquisition under sec 12(1) which was being challenged here and that was not a matter caught by the exclusion contained in sec 60(4)(b)(ii) of the 1991 Act. Some support for that analysis was said to be found in the judgement of Lord Ross in Coats v Loganat page 224 where a distinction is drawn between the acceptance of a bequest and the giving of notice of such acceptance to the landlord and his Lordship says

“In the instant case, notice was given out of time, and so was not effective. Nevertheless, the fact that notice was given shows that the first defender accepted the bequest. There could be no question of a notice being given unless the legatee accepted the bequest. The notice was ineffective as being out of time, but that would not affect the validity of the preceding acceptance of the bequest.”

Reference was also made to a passage at page 227 where his Lordship makes the point that once the executors had transferred the interest to the beneficiary they were no longer in a position to transfer it de novo on the failure of the beneficiary to give timeous notice of acceptance of the bequest to the landlord.

[12] The purpose of sec 60(4) was to exclude narrower issues of succession. Courts were now encouraged to interpret legislation “purposively”. On that approach we should hold that we had jurisdiction.

[13] Mr Lean, although agreeing that the matter was not free from doubt, in effect adopted what had been said by Mr Paterson. We reserved our position on the matter and heard the rest of the debate. We now return to the question.

[14] In raising the question of jurisdiction, we had in mind not only the terms of sec 60(4)(b)(ii), but the strictures of the Second Division of the Court of Session as to the jurisdiction of this court in the case of Garvie’s Trustees v Still and Another.

[15] In that casethis court and the Court of Session were considering the operation of the provisions of sec 16 of the 1964 Act and sec 21 of the Agricultural Holdings (Scotland) Act 1949 (“the 1949 Act”) which, as amended by the 1964 Act, was in similar terms to sec 12 of the 1991 Act. The Land Court held that a notice of purported transfer by the executors of the late Maxwell Garvie of his interest in the lease of an agricultural holding to themselves as tutors of the deceased’s pupil son was invalid because it ante-dated the grant of confirmation in favour of the executors. The jurisdiction of the Court to make that finding having been challenged by Special Case, Lord Justice-Clerk Grant said, at page 36:-

“The Land Court is a creature of statute and its powers and jurisdiction lie solely within the narrow limits which a statute lays down: and, as was pointed out, there are substantial limitations on the right of appeal from its decisions. As I read s. 21 of the 1949 Act, the power which it confers upon the Land Court is to adjudicate upon one question, and one question alone, and, depending on the answer to that question, to make, or not to make an order terminating the lease. That question … is whether the landlord has established “any reasonable ground of objection” to receiving the acquirer of a lease as tenant.”

[16] The legislation upon which that case was decided and the case itself is commented upon at paragraph 34.24 of Gill in the following terms:-

“In relation to bequests and acquisitions, the jurisdiction of the Land Court is confined to that of ruling on the merits of the landlord’s objection and on the entitlement of the legatee or acquirer to interim possession of the holding pending proceedings in the Land Court under either section 11 or 12. All questions as to the validity of the bequest or of the acquisition fall to be determined in the ordinary courts since third party rights may be affected. So clearly is this rule stated in Garvie’s Trs. that it seems to follow that all questions as to the validity of the notice of the bequest or of the notice of the acquisition, and the related questions as to “unavoidable cause” under sections 11(2) and 12(1), are likewise excluded from the jurisdiction of the Land Court.”

[17] It will be easily understood, therefore, why we had reservations as to our jurisdiction in the present case. We now require to decide whether the exclusion of our jurisdiction is indeed as extensive as the passage just quoted suggests.

[18] Garvie’s Trs was, of course, decided, and the foregoing commentary on it written, before the introduction of the jurisdictional provisions which are now contained in sec 60 of the 1991 Act. It is to these provisions we must primarily have regard.

[19] Sec 60(1) of the 1991 Act, as amended, states that the Land Court shall have jurisdiction to hear and determine any of the matters referred to in subsec (2). Subsec (2) sets out what these matters are. Subsec (3) makes clear that such matters include any question of difference between a landlord and tenant arising in relation to Part 2 of the 2003 Act. Subsec (4) provides:-

(4) Such matters do not include any question as to –

(a) who is entitled to succeed to the estate of a deceased person on intestacy by virtue of the Succession (Scotland) Act 1964 (c. 41);

(b) the validity of -

(i) any bequest; or

(ii) any transfer,

of an interest under the lease; or

(c) whether any such transfer is in the best interests of the estate of a deceased person.

[20] It is with subsec (4)(b)(ii) that we are concerned here. The issue is what constitutes a transfer of an interest under a lease for the purposes of sec 16 of the 1964 and sec 12 of the 1991 Act.

[21] Subsecs 16(1) and (2) of the 1964 Act provide as follows:-

16. (1) This section applies to any interest, being the interest of a tenant under a lease, which is comprised in the estate of a deceased person and has accordingly vested in the deceased’s executor by virtue of section 14 of this Act; and in the following provisions of this section “interest” means an interest to which this section applies.

(2) Subject to subsection (4A), where an interest–

(a) is not the subject of a valid bequest by the deceased, or

(b) is the subject of such a bequest, but the bequest is not accepted by the legatee, or

(c) being an interest under an agricultural lease, is the subject of such a bequest, but the bequest is declared null and void in pursuance of section 16 of the Act of 1886 or section 11 of the 1991 Act, or becomes null and void under section 10 of the Act of 1955, and there is among the conditions of the lease (whether expressly or by implication) a condition prohibiting assignation of the interest, the executor shall be entitled, subject to subsection (2A) of this section, to transfer the interest.”

Subsection (2A) provides, in paragraph (a), the circumstances in which the consent of the Crofters Commission is required in connection to succession to a croft and, in paragraph (b), in effect, that the transfer of an interest in a lease, including any agricultural lease, to anyone entitled to succeed to the deceased’s intestate estate or to claim legal rights or prior rights out of it does not require the consent of the landlord. Subsection (3) provides that in the event of the interest of the deceased not being disposed of within certain periods of time either the landlord or the executor may give notice of termination of the tenancy.

[22] Sec 16 prescribes no other step which is required to be taken by the acquirer of the deceased person’s interest in order to perfect his title to the lease.

[23] Sec 12 of the 1991 Act is as follows:-

12. (1) A person to whom the lease of an agricultural holding is transferred under section 16 of the Succession (Scotland) Act 1964 (referred to in this section as “the acquirer”) shall give notice of the acquisition to the landlord of the holding within 21 days after the date of the acquisition, or, if he is prevented by some unavoidable cause from giving such notice within that period, as soon as is practicable thereafter and, unless the landlord gives a counter-notice under subsection (2) below, the lease shall be binding on the landlord and on the acquirer, as landlord and tenant respectively, as from the date of acquisition.

(2) Within one month after receipt of a notice given under subsection (1) above the landlord may give a counter-notice to the acquirer intimating that the landlord objects to receive him as tenant under the lease; and not before the expiry of one month from the giving of the counter-notice the landlord may make application to the Land Court for an order terminating the lease.

(3) On an application under subsection (2) above, the Land Court shall, if they are satisfied that the landlord has established a reasonable ground of objection, make an order terminating the lease, to take effect as from such term of Whitsunday or Martinmas as they may specify.

(4) Pending any proceedings under this section, the acquirer, with the consent of the executor in whom the lease is vested under section 14 of the Succession (Scotland) Act 1964 shall, unless the Land Court on cause shown otherwise direct, have possession of the holding.

(5) Termination of the lease under this section shall be treated, for the purposes of Parts IV and V of this Act (compensation), as termination of the acquirer’s tenancy of the holding; but nothing in this section shall entitle him to compensation for disturbance.

[24] The opening words of that section are significant. They speak of “A person to whom the lease of an agricultural holding is transferred under section 16 of the Succession (Scotland) Act 1964 … ”. What has been transferred is simply referred to as “the lease” and it seems clear, therefore, that the transfer of the lease has already been completed by the time sec 12(1) comes into play. What sec 12(1) does is provide a mechanism for converting the personal right in the lease to a real right, binding upon the landlord. That is an analysis which finds support from Lord Ross in Coats v Logan when, dealing with the effect of acceptance of a bequest under sec 20 of the 1949 Act, his Lordship says (at page 224):-

“In my opinion senior counsel for the pursuers was well founded when he contended that acceptance of the bequest would give the legatee a personal right, but that giving of notice would be necessary to give him a real right.”

[25] Coming full circle, we find the distinction on which Mr Paterson’s argument relies recognised in Garvie’s Trustees itself. At page 37 Lord Walker draws attention to it:-

“At this point it is necessary to bear in mind the difference between the “transfer” and the “notice”. The former is regulated by s. 16 of the Succession (Scotland) Act 1964. The latter is regulated by s. 21 of the Agricultural Holdings Act 1949 (as substituted in 1964). And the link between them is that the “transferee” under the former Act becomes the “acquirer” under the latter.”

After considering the terms of the notice in that case and the Land Court’s treatment of it, his Lordship goes on:-

“It appears to me … that the Land Court have gone behind the notice and have considered the validity of the transfer under s. 16 of the Succession Act.”

It is on that ground that he holds that the Land Court exceeded its jurisdiction. It is almost implicit in what his Lordship says there that the Land Court would have jurisdiction to deal with questions relating solely to the validity of the notice of acquisition.

[26] The distinction is also implicit in what Lord Milligan says in his discussion of the Land Court’s jurisdiction at pages 37-38:-

“The jurisdiction which the Land Court is given by this section [sec 21 of the 1949 Act] is thus limited to the consideration of and the adjudication upon the reasonableness of the landlord’s objections. The statute, in my opinion, postulates that before an application to the Land Court for an order terminating a tenancy is made the landlord should have satisfied himself that the acquirer has a good title to the lease. Unless the acquirer has such a title there cannot be a valid notice of acquisition. The Land Court has no jurisdiction to adjudicate upon the validity of an acquirer’s title; its sole function is to adjudicate upon a landlord’s objections.”

Although the final part of that passage emphasises the limits of this court’s jurisdiction even in relation to sec 21 the passage as a whole makes clear that a two-stage process is involved and that obtaining a good title to the lease is a condition precedent of service of a valid notice of acquisition.

[27] It seems to us, therefore, that their Lordships’ comments in Garvie’s Trs as to the limits of this court’s jurisdiction under sec 21 of the 1949 Act were, strictly speaking, obiter to their decision because the respect in which the Land Court had exceeded its jurisdiction in that case was that it had adjudicated on the validity of the transfer under sec 16 of the 1994 Act. It was because it held the transfer under sec 16 to be invalid that it decided that the notice under sec 21 was invalid. It was the fact that the Land Court had gone beyond the notice under sec 21 and enquired into the validity of the transfer under sec 16 that really put it beyond its jurisdiction. The matter is put very succinctly and clearly by Lord Walker in the second of the two passages from his opinion quoted above but it seems to us also to be what Lord Justice-Clerk Grant is saying at page 36, col 1, where he says that the question of whether or not the candidate for the tenancy is the “acquirer” – which is the question upon which the Land Court had decided the case – is a totally different one from the one upon which the Land Court is empowered to adjudicate under sec 21 and what Lord Milligan is saying in the passage last quoted from his opinion.

[28] Furthermore, it may be that the effect of their Lordships’ comments has been superseded by the provisions of the new sec 60. When Garvie’s Trs was decided the only jurisdiction this court had was what was expressly and explicitly conferred upon it. The scheme of sec 60 is, by contrast, one which confers a wide jurisdiction on this court (subsecs (2) and (3)) but subject to the specific exception provisions of subsec (4). In our view, a plain reading of the relevant parts of sec 60 affords us the jurisdiction required to deal with the question of the validity of the relevant notice. It seems to us that sec 60(2) falls to be read in that way unless something in sec 60(4) prohibits it. As we have noted, the transfer of the interest under the lease has already been effected and no questions arise in relation to that transfer in this case. Accordingly sec 60(4) is not engaged. We are only exercising our jurisdiction in respect of the validity of a notice which purported to inform the landlord that the transfer had taken place. That is a matter upon which the parties are at odds and which falls within the ambit of sec 60(2).

[29] Finally, although matters of policy are not for us, we think it is appropriate to consider this jurisdictional problem from that viewpoint. One of the policy grounds underpinning the exclusion of the Land Court’s jurisdiction is that the rights of other people may be involved in questions of succession and these are not matters upon which it is appropriate for this court to adjudicate; see the comments of Lord Justice-Clerk to that effect in Garvie at page 36, following on from the passage quoted above. These considerations do not apply to the validity of notices under sec 12(1), which can only be given by an acquirer in whose favour there has already been a valid transfer. So, holding that this court has jurisdiction to decide the validity of notices under sec 12(1) of the 1991 Act does not offend against the reasons for which its jurisdiction is excluded in matters concerning sec 16 of the 1964 Act.

[30] For the foregoing reasons, therefore, we consider that the distinction Mr Paterson makes is well founded and, applying it, we have come to the conclusion that we do have jurisdiction to deal with the validity of notices under sec 12(1) of the 1991 Act.

Merits

(i) for the applicants

[31] The applicants’ position was that the notice had not been validly served. That was because Tods Murray were not agents of the landlords for the purposes of sec 85(5) of the 1991 Act.

[32] Sec 85(5) did not innovate on the common law of agency. At common law an agent must have authority in order to bind his principal. That meant that a notice served on an agent was only effective if the agent had authority to accept such notices on behalf of the principal. That authority could be actual (express or implied) or apparent (ostensible). The difference between the two was explained by Diplock L.J. in Freeman & Lockyer (A Firm) v BurkhurstPark Properties (Mangal) Ltd & Anr at pages 502 to 504.

[33] There was also a distinction between a special agent and a general agent and the scope of an agent’s implied authority could depend upon which of these he was. Reference was made to the following passage from the opinion of Lord Young in Morrison v Statter at 1154:-

“Where you have a particular agent employed by a principal to perform a particular piece of business for him, he must act within the instructions given for the particular occasion, and does not bind his principal if he acts otherwise. If you have a general agent employed generally in his master’s or his principal’s affairs, or in a particular department, he is assumed to have all the authority which is necessary to enable him to serve his master as such general agent, or general agent in a particular department.”

[34] There was no clear authority as to whether a solicitor was a general or a special agent. Bell (Principles s. 219(7)) classified him as a special agent. Gloag & Henderson was, said Mr Paterson, usually cited as authority for the opposite proposition. (Mr Paterson made no more specific reference to Gloag & Henderson than this, but we ourselves do not read paragraph 19.21 of the current edition, dealing with the ostensible authority of a solicitor, as being to the foregoing effect.) But, in Mr Paterson’s submission, if a solicitor was a general agent then he was one appointed “in a particular department” in the words of Lord Young (supra).

[35] There were various cases which dealt with the implied authority of a solicitor when conducting certain types of business. An example was Danish Dairy Co v Gillespie in which it had been held that a solicitor does not have implied authority to enter into a lease on behalf of a client. But there were no Scottish cases dealing with authority to accept service of notices.

[36] Given that it was common practice for different solicitors to be used for different types of business and even for different solicitors to be used in carrying out the same kind of business, the better view was that a solicitor is a special agent. The notion of a solicitor as his client’s “man of business” was long gone. The extent of a solicitor’s implied authority was nowadays restricted to what would be usual for a solicitor to have in order to carry out the particular business for which he was instructed.

[37] As to ostensible authority, in Dornier Gmbh v Cannon Lord President Hope, as he then was, had (at pages 314 – 315) approved Diplock LJ’s formulation of ostensible or apparent authority and in Armagas v Mundogas Lord Keith of Kinkel in the House of Lords had affirmed (at page 778) that the representation which creates the apparent authority must come from the principal and cannot originate from the agent. What might amount to a representation by a principal such as would clothe the agent with apparent authority had been examined in recent cases culminating in First Energy (UK) Ltd v Hungarian International Bank Ltd.

[38] Although there were no Scottish cases which dealt with a solicitor’s authority to accept service of notices, there were some English ones. As early as 1880 it had been held that solicitors are not standing agents of a client authorised to accept notices; Saffron Walden Second Benefit Society v Rayner. That had been followed in Glen International Ltd v Triplerose Ltd. In that case, a number of cases had been distinguished which had as their common feature that there had been additional dealings between the principal or the agent and the third party or a course of conduct which suggested that the agent was authorised and which had the effect of creating the apparent authority (Townsend Carriers Ltd v Pfizer Ltd; Galinski v McHugh; Westway Homes Ltd v Moores).

[39] Since sec 85(5) did not innovate on the common law, in order for a notice to be effective when served on an agent the agent had to have authority, whether actual or ostensible, to accept service. A person could only be an agent for the purposes of sec 85(5) if he had the authority to do the act in question, in this case to accept service of notices. There was no case law on the provision but Agnew Agricultural Law in Scotland at page 7 gave the following warning:-

“A landlord or tenant should be slow to serve a notice on an agent, without first ascertaining that the agent has authority to accept service of the particular notice. While a person may have been agent for certain purposes he might not have authority for the purpose of accepting the particular notice. If he does not have authority, the notice will not have been effectively served.

A landlord or tenant (or their agents) would be wise to serve particular notices on the landlord or tenant personally with a copy to the purported agent.”

[40] Asked by the court as to whether the word “any” in “any agent” in sec 85(5) had any significance, Mr Paterson submitted that it could not mean any known agent of the landlord. Landlords might instruct a whole variety of agents – factors, solicitors, accountants – for a range of functions, so the provision had to be read in a commonsense way.

[41] Applying the foregoing law to the facts of this case, Tods Murray would have to have been authorised to accept service of a notice on behalf of the applicants. The authority could have been actual or apparent. The express authority conferred upon Tods Murray in relation to the rent review notice of May 2008 went no further than that, so the authority on which the respondent relied must be either implied or ostensible. Instructing solicitors to serve a rent review notice did not confer on them implied authority to accept service of future notices. Furthermore, there was no course of conduct, or any other representation, by the principal upon which a case for apparent or ostensible authority could be founded. Instructing Tods Murray to serve the rent notice could not amount to such a representation as was necessary to produce that result. It might amount to a representation that they were his agents in matters to do with rent but it could not be a representation that they were his agents for the acceptance of all notices under the agricultural holdings legislation. All the acknowledgement sent by Tods Murray could mean was that they would seek instructions as to whether they were authorised to accept service of the notice. There was a risk that Tods Murray would not be authorised to accept service within the 21 day time limit contained in sec 12(1) and the safe course would have been for the respondent’s agents to serve the notice on the landlords personally. If Tods Murray had reverted to Blackadders saying that they were authorised to accept service, the situation would have been different; First Energy (UK) Ltd v Hungarian National Bank Ltd.

[42] The result was that Tods Murray had had neither actual nor ostensible authority to accept service of this notice and the requirements of sec 12(1) had therefore not been complied with.

[43] The effect of that in turn was that the interest of James Calder in the lease had lapsed. The result of that in turn was that as at Whitsunday 2009 tacit relocation could not operate to continue the lease because the consent of all parties was not available; Coats v Logan.

(ii) for the respondent

[44] Mr Lean submitted that the starting point had to be what was the purpose of sec 85(5). If it was a simple restatement of the common law it served no purpose whatsoever. Had it simply been intended as a restatement of the common law it would have read “any agent duly authorised in that behalf”; cf Galinski v McHugh.

[45] The purpose of the subsection was to facilitate communication between landlord and tenant. The applicants’ argument could be tested by its consequences. If it was right, how would a tenant served with a notice to quit under sec 21 of the 1991 Act by agents acting for the landlord ever know that the agents had been authorised to serve it? How would they know whether the same agents had authority to accept a counter-notice under sec 22?

[46] If an agent was authorised to serve a notice under the 1991 Act why would he not have authority to accept service of one? There was no question but that Tods Murray had been in some way acting as agents for the landlords in January 2009. Mr Paterson’s careful and detailed analysis was largely beside the point: the respondent’s agents had proceeded upon the basis of a clear statutory warrant.

[47] What was said by Agnew was unsupported by reference to authority. Were Mr Paterson’s argument well founded one would have expected some mention of it in the leading textbook on the subject yet Gill at paras 16.09 and 39.01 was silent on the matter.

[48] The fact was that Tods Murray were agents for the landlords at the material time. Sec 85(5) referred to “any agent” (emphasis added) and, while that would not include an agent who had nothing to do with the landlord’s agricultural affairs, it suggested a wide reading rather than a narrow one and certainly one wide enough to include agents who had to do with matters related to the tenancy.

[49] If his primary submission was wrong, Mr Lean submitted that in any event Tods Murray had ostensible authority, as solicitors who had been instructed to serve a statutory notice under the same legislation.

[50] The absence of words such as “authorised in that behalf” as qualifying “agent” in sec 85(5) meant that specific authority in relation to the particular matter with which we were concerned was not necessary.

[51] Mr Lean accepted, on the basis of Coats v Logan, that, if the notice was not validly served, tacit relocation could not operate and that the lease would therefore have come to an end at Whitsunday 2009.

[52] At the time when the notice was served, the respondent had not been a stranger to the tenancy. He already had an interest in it as a joint tenant, or, more accurately, a tenant in common, and he was in the course of completing his title to the other joint tenant’s interest. The notice was therefore being served by a tenant.

(iii) reply by Mr Paterson

[53] Mr Paterson made three short points in reply.

[54] Firstly, there was nothing odd about sec 85(5) merely stating the common law: sec 3 did the same in relation to tacit relocation. For the subsection to innovate on the law would require very clear wording. That was reinforced by the fact that sec 85 was an interpretation section, not a substantive provision.

[55] Secondly, the wording which appeared in the provision under consideration in Galinski was just an example of superfluous drafting. The common law read such a qualification into the meaning of “agent”.

[56] Thirdly, the proposition that if someone has acted as agent under the 1991 Act that person can, as an agent, be served with a notice under the 1991 Act was an oversimplification.

Further submissions

[57] Having heard the foregoing submissions we made avizandum. Whilst at avizandum we looked at the legislative history of what is now sec 85(5). The first equivalent provision appears as sec 35(3) of the Agricultural Holdings (Scotland) Act 1908, which read:-

“Anything which by or under this Act is required or authorised to be done to, by or in respect of the landlord of a holding may be done to, by , or in respect of any agent of the landlord duly authorised in that behalf.” [Our emphasis]

Sec 49(4) of the Agricultural Holdings (Scotland) Act 1923 was in identical terms. However sec 24 and Schedule 9 of the Agriculture (Scotland) Act 1948 amended sec 49(4) of the 1923 Act by (i) including reference to tenants for the first time; and (ii) repealing the words “duly authorised in that behalf”. The provision as it appeared in sec 93(7) of the Agricultural Holdings (Scotland) Act 1949 was, therefore, as follows:-

“Anything which by or under this Act is required or authorised to be done by, to or in respect of the landlord or the tenant of an agricultural holding may be done by, to or in respect of any agent of the landlord or of the tenant.”

Sec 85(5) of the 1991 Act repeats these terms.

[58] We thought it right to bring this to the attention of agents and did so by letter, giving them the opportunity of making written submissions on any significance to be attached to this legislative history. Mr Lean, in a short submission, prayed it in aid of his position. Since the point, if there is one, favours him, no more than a short submission was required. In a much fuller submission, Mr Paterson argued that the legal meaning of “agent” was perfectly plain; that the legislative history was therefore irrelevant; that the words “duly authorised in that behalf” had simply been superfluous; and that their removal in 1948 had not, therefore, changed the law: one simply could not be an agent without authority and the various types of authority were as he had previously submitted. Any other approach led to uncertainty and, ultimately, to absurdity. These absurdities included the possibility of a notice being served, without authority, by someone who had been a party’s agent in the past, or was his agent for some other purpose. Kiely v Lunn was cited as an example of a case where the removal of certain wording from a statutory provision had been held not to change the meaning of the remaining wording and Leach v R as authority for the proposition that, in interpreting legislation, there was a general presumption against a departure from fundamental principles of common law unless done by clear, definitive and positive enactment” (per Lord Atkinson a page 311).

Discussion and Decision

[59] This case centres on the meaning of the phrase “any agent” in sec 85(5). Mr Paterson says that it means “any agent of the landlord or tenant duly authorised in that regard”. Mr Lean says that it means something like “any person or firm who is acting for the landlord or tenant for any purpose under the 1991 Act in relation to the particular holding and to the other party to the lease”.

[60] Both of these interpretations seem to us to be plausible. That means that the meaning of the subsection is not free from doubt. We are therefore obliged to look at extraneous aids to help resolve that doubt. That is why we embarked on our own research as to the provenance of sec 85(5), the results of which are set out at paragraph [57] above.

[61] The question which that history throws up is whether the repeal in 1948 of the words “duly authorised in that behalf” was because these words were thought to be tautologous or because it was intended to change the meaning or scope of the word “agent”.

[62] On the principle that Parliament does nothing in vain and applying the presumption against tautology (see Bennion, pages 1000 and 1157-1163) it is not to be assumed that the words “duly authorised in that behalf” were merely tautologous. They must have meant something. What they meant plainly was that the agent required to have authority for the particular matter in hand. Their use allowed for the possibility that the word “agent” without that qualification could mean an agent in another matter.

[63] Interestingly, the view that what happened in 1948 was not merely the removal of tautological language is supported by one of the cases cited to us, for another purpose, at debate. The case of Galinski shows that Parliament continued to apply the wording “duly authorised in that behalf” after 1948, at all events in English landlord and tenant legislation (although not specifically agricultural holdings legislation): see sec 23(1) of the Landlord of Tenant Act 1927 as applied by sec 66(4) of the Landlord and Tenant Act 1954.

[64] Since the original provision should not be regarded as tautologous its repeal should not be regarded as merely the removal of a tautology. It seems to us, therefore, clear that what the repeal of 1948 did was to remove the requirement that the agent be “duly authorised in that behalf”.

[65] The effect of that is not free from doubt. Did it mean simply that express or implied (as opposed to ostensible) authority was no longer required? In our opinion it is not appropriate to interpret the change in that way. That is because an agent with ostensible authority which covers the matter in hand is also an agent “duly authorised in that behalf”.

[66] The result of this reasoning is that service of a notice under the 1991 Act can be on an agent who is not duly authorised in that behalf; who has no authority, express, implied or ostensible to accept such a notice. From a legal point of view that may seem a surprising conclusion. It might be said that an agent without authority is a creature unknown to the law, that the description is an oxymoron. But it is not nonsensical if one takes it to mean simply someone who is acting as the principal’s agent, albeit in another relevant regard.

[67] Looking at the purpose of the provision as another aid to construction, we agree with Mr Lean that its purpose self-evidently was to improve ease of communication between landlord and tenant, particularly in the matter of service of notices and counter-notices under the successive Agricultural Holdings Acts. That purpose is served to some extent without going as far as Mr Lean says we should. The simple provision that service, and acceptance of service, of the many notices and counter-notices for which the 1991 Act provides does not have to be personally on or by the landlord or tenant – that service on or by an agent is valid – is not the useless provision which Mr Lean describes. It has very considerable utility even if the correct definition of “agent” is the narrower one for which Mr Paterson contends. But it has even greater utility if the landlord or tenant, as the case may be, is relieved of having to establish that someone who appears to be an agent of the other party to the lease in relation to that lease has authority to act in relation to the specific matter in hand. Working out when ostensible authority arises is no exact science, as the cases to which we were referred show. The desirability of such a relaxation in what would otherwise be the meaning of agent may provide the rationale for the repeal of 1948. At all events it is consistent with it. Accordingly we consider that a purposive interpretation also supports Mr Lean’s position.

[68] Mr Paterson argued that Mr Lean’s interpretation leads to uncertainty and absurdity.

[69] That it leads to uncertainty is true but so too does the operation of a requirement for ostensible authority. The advice given by Sir Crispin Agnew in the passage from his book on Agricultural Law in Scotland to which we were referred (supra) will continue to be good advice whichever of the two competing interpretations is correct.

[70] That it leads to absurdity is only true if one takes the provision as meaning something like “any agent whomsoever who has acted for the landlord or tenant whensoever”. That is not the position for which Mr Lean contends. Although the formulation of his position set out at paragraph [59] above is ours rather than his, we understand it to reflect his position. The truth is that it may be difficult to define the precise scope of the provision interpreted in that way but it may not be difficult to recognise on the facts of a particular case whether it comes within the ambit of the provision, thereby avoiding absurd results. Interpreting sec 85(5) in such a way as to hold that a firm of solicitors recently used by the landlord to serve a notice under the 1991 Act on a tenant are agents of the landlords for the purposes of the tenant serving notice under the Act on the landlord involves no absurdity.

[71] As to Mr Paterson’s submission that interpreting the provision in this way would lead to the particularly absurd result that a former agent or someone who was an agent in relation to another matter could serve a notice under the Act without having authority to do so, we do not think that is so if the section is given a purposive interpretation. The purpose of the section being to facilitate the serving and receipt of notices as between landlord and tenant, notices served by agents entirely of their own volition would not be covered by sec 85(5).

[72] Being persuaded, therefore, that Mr Lean’s position is correct, we hold that the notice of 5 January 2009 was validly served on Tods Murray as agents for the landlords. That being the case, Stephen James Calder’s title to the interest of the deceased James Calder was perfected. That in turn has the result that at Whitsunday 2009 tacit relocation could – and did – operate and the lease continued. The application is therefore dismissed.

Expenses

[73] Following our usual practice, we have allowed 21 days for motions on expenses.

For the Applicants: Messrs Tods Murray, Solicitors, Edinburgh

For the Respondent: Messrs Stronachs, Solicitors, Aberdeen