THE COURT

(Lord McGhie, Mr D J Houston)

TELFER v THE BUCCLEUCH ESTATES LIMITED

(Application RN SLC 225/07 – Order of 25 April 2012)

AGRICULTURAL HOLDINGS – NULLIFICATION OF POST LEASE AGREEMENT – PLA – PROOF ON RESTRICTED ISSUES – EQUIPMENT IN REASONABLE STATE OF REPAIR – COMPARISON WITH REPLACED EQUIPMENT – UNIT OF EQUIPMENT – PART OF EQUIPMENT– RENDERING OF COTTAGE WALLS – WATERGATE – DRAINAGE – FENCING – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 1991 SEC 5 (4A) AND SEC 5(4B).

The tenant of an extensive hill farm applied for an order declaring that he had given valid notice of nullification of his Post Lease Agreement (“PLA”) under the provisions of sec 5 of the Agricultural Holdings (Scotland) Act 1991, as amended by the 2003 Act. The relevant provisions allow a tenant to set aside a PLA in certain circumstances. The fixed equipment must be in a reasonable state of repair at the specified date unless the tenant can show that it was not then in a worse state of repair than it was when the PLA was made. Reference is made to previous Notes in this case. The Court heard detailed evidence about certain pieces of equipment. HELD (1) the rendering of cottage walls was not in a reasonable state of repair on the specified date but this was irrelevant where the landlords had agreed that the appropriate unit was the cottage which, taken as a whole, was; (2) the watergate was not in a reasonable state of repair but was not of sufficient significance to be regarded as a relevant item or part of the equipment for the purposes of the relevant provision; (3) the drainage in each of two fields had not been proved to be in a worse state than it was at the outset of the PLA; and (4) the section of fence known as the Duntercleuch fence was of such length and importance as to be a part of the equipment to be looked at on its own; it was not in a reasonable state of repair; it had been a new fence, replaced after the start of the PLA and that the state of the old fence as it existed at the time of the PLA was accordingly irrelevant. In the circumstances the tenant was not entitled to nullify the PLA at his specified date.

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

[1] In this application Mr Telfer, the tenant of an extensive hill farm near Wanlockhead, seeks an order declaring that he gave valid notice of nullification of his Post Lease Agreement (“PLA”) as at 22 October 2007 under the provisions of sec 5 of the Agricultural Holdings (Scotland) Act 1991 as amended by the 2003 Act. Put shortly, the relevant provisions allow a tenant to set aside a PLA in certain circumstances. The fixed equipment must be in a reasonable state of repair at the date chosen by him to nullify the agreement (the “specified date”). We heard debates in 2009 and 2010 on issues relating to the proper construction of the new provisions. We concluded that the fixed equipment was not to be looked at as a whole. Regard had to be had to individual items though minor parts could be ignored. Even if a landlord could show that a significant item, or part, of the fixed equipment was not in reasonable state of repair on the specified date, the tenant would still be entitled to succeed if he could show that it was not then in a worse state of repair than it was when the PLA was made. This was in terms of the provisions of sec 5(4B)(b)(ii). But, where the equipment had been installed after the PLA was made, the tenant would not be able to take advantage of these provisions. The equipment in question would not have been there when the PLA was made and it would not be relevant to point to the condition of earlier equipment which had been replaced. We also determined that the concept of “a reasonable state of repair”, in the context of these provisions, was an objective one to be determined by looking at the state of the equipment without regard to the parties’ respective responsibilities for maintenance.

[2] The landlords listed a number of items of fixed equipment which they contended were not in reasonable state of repair at 22 October 2007, the specified date. After the debate on 19 August 2010 they reduced the list to take out some minor items and they subsequently moved the Court to allow a preliminary proof restricted to six items. In course of the proof they withdrew one of the items. We heard evidence on 31 January and on 1, 8, 9, 20, 21 and 22 February and submissions on 23 and 24 February, all 2012, in relation to: Muirhead cottage; the Duntercleuch march fence; the Coshogle water-gate; the drains in field 7; and the drains in field 23. At the hearing Mr Telfer appeared on his own behalf, with support from his wife. Sir Crispin Agnew Q.C. appeared for the landlords.

[3] We heard evidence first on behalf of the landlords. Sir Crispin led evidence from Mr David Taylor who gave evidence relating to the roughcast rendering at Muirhead Cottage; Mr John Angus Mitchell, who gave evidence of his examination of the estate records; Mr Scott Wilson, a fencer; Mr William Hunter who gave evidence of his investigations of the drainage; and Mr Mark Coombs, the factor representing the respondents. Mr Telfer led evidence from Miss Linda Campbell, a shepherd who spoke to the condition of fencing, and from Mr Marchbank, who lived in Muirhead Cottage and who was a shepherd with long experience of various aspects of operations at the farm. Mr Telfer gave evidence himself.

[4] We deal below with the landlords’ criticisms of the quality of the evidence of Mr Telfer. However, it can be said that we had no real doubts about the honesty of all the witnesses. The case did not appear to turn on issues of credibility.

Statutory material

Agricultural Holdings (Scotland) Act 1991
Agricultural Holdings (Scotland) Act 2003

The case turned on the provisions of sec 5 of the 1991 Act as amended by the 2003 Act, and, in particular subs (4A) and (4B) which are in the following terms:

“(4A) Any agreement between the landlord and tenant made before the coming into force of this subsection which purports to provide for the tenant to execute on behalf of the landlord (whether wholly at his expense or wholly or partly at the expense of the landlord) any work effecting such replacement or renewal of the building or other fixed equipment on the holding as is rendered necessary by natural decay or by fair wear and tear shall be nullified provided that subsection (4B) below is complied with.

(4B) This subsection is complied with if –

(a) following a determination (in accordance with section 13 of this Act) of the rent payable in respect of the holding, the tenant gives notice to the landlord that the agreement be nullified as from a date specified in the notice; and

(b) on that date –

(i) the buildings and other fixed equipment are in a reasonable state of repair; or

(ii) if the buildings and other fixed equipment were in an unreasonable state of repair when the agreement was made, they are not in a worse state of repair than they were then.”

For convenience we shall use “(4B)” to refer to that subsection and in particular to the provisions of subsec (4B)(b), as should be clear from the context.

Authorities

Gloag on Contract 2nd Ed.
Walker and Walker on Evidence 3rd Ed.
Lawson v Murray (1825) 3S 536

Legal issues

[5] We have dealt with the main legal issues arising out of the amended provisions of sec 5 and in particular subsec (4B) of that section, in our Notes of 6 May 2009 and 3 November 2010. It is unnecessary to restate our conclusions. However, we did hear further submissions in relation to the acceptance provisions of the lease and it is appropriate to deal with this issue before turning to the detail of the individual items. We discussed these provisions under the heading “Question 2”, in our Note of 3 November 2010 but it is convenient again to quote the relevant provision of the lease which was in the following terms: “AND the Tenant hereby ACCEPTS the houses and offices … and other buildings on the Farm, as also the remainder of the fixed equipment thereon, or serving the same all as defined by Section 93 (1) of the Agricultural Holdings (Scotland) Act 1949 in the condition in which they now are, as evidenced by a Record to be made by the Proprietor in conjunction with the Tenant (which Record shall be prepared at mutual cost), as in sufficient tenantable and habitable condition, and adequate for the purposes for which the Farm is let, and shall be bound at his own expense to keep maintain and leave the same, … in the like good condition, natural decay and fair wear and tear excepted.” In our Note we dealt with an argument that these provisions limited the evidence the tenant could lead of the condition at the start of the PLA. We concluded that the tenant was not constrained by the terms of the lease in relation to the evidence he could lead to show the state of the equipment at the time of the PLA: see paras [28] to [45] and [104] of the Note.

[6] Sir Crispin suggested that the basis of our decision had been that the terms of the lease did not apply to the PLA which was a separate agreement. He contended that the tenant was nevertheless constrained by the agreement in respect that he could not lead evidence to suggest that the drainage was not adequate for the purposes for which the farm was let and could not lead evidence to contradict the classification of the fields as arable in the lease. In relation to the general point he cited Gloag at p 365/6 and Walker and Walker at p 493/3. On the latter point he referred, in particular, to Lawson v Murray. He contended that the classification of a field as arable was equivalent to a valuation and therefore that this case was directly in point.

[7] We do not accept these submissions. As we discussed at [40] and [41] of the Note, the word “sufficient” is important. It ties the acceptance provision to some purpose and we are satisfied that, whatever the purpose, it has no bearing on issues arising under the 2003 Act: see para [42]. Further we accept Mr Telfer’s submission about the importance of the record. Consideration of the lease provisions as a whole supports the view that the purpose of the acceptance of the equipment as in sufficient order and adequate for the purposes was intended to limit any claim against the landlord at entry. The purpose of the record must have been to provide clear evidence of the state of the equipment at the outset. In other words, the parties must have envisaged circumstances where evidence as to the true state of the equipment would be relevant in the context of some dispute. The parties cannot have intended that acceptance of the fixed equipment as being sufficient for some purposes would preclude all investigation of the actual state of affairs – even if they expected that matter to be governed by the record.

[8] The case of Lawson v Murray concerned a specific agreement that subjects had been valued at the outset. They were to be valued at the ish and a balancing figure paid one way or another according to whether the latter value was higher or lower. At termination the landlord argued that the agreed valuation figure was not a true value. The Court held the landlord was bound by the agreed figure which was clearly expressed in a way directly related to the purpose of the claim. In the present case the acceptance of a field as arable might have prevented a claim to the contrary in a context where such a claim was contrary to the intention of the initial provision. But where the matter in issue is the state of the drainage, inferences from the listing as arable are indirect and we do not accept that the landlord is entitled to draw any conclusive inference from the description of the fields as arable. We think that description in the lease is simply one adminicle of evidence we have to take into account. We turn now to the equipment dealt with at the proof.

Muirhead Cottage

[9] There was no doubt that the position of the landlords’ factor was that the cottage should be seen as a single item of fixed equipment. Mr Telfer did not dispute this and we must proceed on that basis. Mr Coombs was asked by Sir Crispin whether he thought the cottage was in a reasonable state of repair. His reply was that if he was leasing it he would want it re-rendered. However, he then said expressly that he would describe the cottage as in a reasonable state of repair notwithstanding the state of the render. It appeared that counsel might not have expected that response and he asked “So would you describe the cottage as in a reasonable state of repair even though the render requires to be replaced”. Mr Coombs answered “Yes”. Mr Telfer did not cross examine in relation to the cottage and indicated that in light of the concession he felt it unnecessary to give evidence on that subject himself. We are satisfied that Mr Telfer was entitled to rely on the fact that Mr Coombs, as representative of the respondents, expressly conceded this fundamental point. Although the Act does not deal with the matter in terms of units and the agreement of parties as to what might or might not be a “unit” only takes matters so far, we have no reason not to accept the views of Mr Coombs in the circumstances of the present case. To determine what particular piece of equipment should properly be the focus of attention for the purposes of (4B) is a matter of degree and judgement. We did not hear submissions that the roughcast rendering itself should be regarded as a separate unit.

[10] For completeness, however, it may be said that we are satisfied on the evidence of Mr Taylor that the roughcast itself at Muirhead Cottage was not in a reasonable state of repair at the time of his inspection. It was at the end of its useful life and full re-rendering was needed to prevent water penetration. His report – production 45 – was clear on that matter although somewhat vague on the question of the extent to which the existing render would need to be removed. He had not attempted to examine this issue, saying simply that where the roughcast was found to have become detached from the bricks it would need to be cut out and replaced. For the rest it was a question of rendering over the existing render. He conceded that he had found very few bricks needing to be replaced. Frost damage to exposed bricks was relatively minor.

[11] We heard some discussion as to the cause of boss roughcast. When roughcast had deteriorated to the stage where it would allow moisture penetration, the moisture would get into the face of the outer layer of the brick wall. It would not affect the interior of the dwelling because the cavity was designed to prevent this. But the face of the brick would be liable to deteriorate and become crumbly. Where this happened the roughcast could become boss, in other words detached from the brick. Frost was a main cause of the deterioration of damp bricks but the evidence was not clear as to whether this was the only mechanism causing a brick face to deteriorate. As we accept the evidence that only a few bricks were identified as needing to be replaced, we need not express a concluded view. On any view of the evidence, any work by way of such repair as Mr Telfer was responsible for, was insignificant. The problems were caused by the roughcast having reached the end of its natural life. The brick walls as such were in a reasonable state of repair.

[12] Against that background, the terms of the PLA and the effects of sec 5(4A) can best be described as peculiar. Under the agreement the tenant did not enter any specific commitment in relation to the cottage binding him to execute on behalf of the landlord work effecting replacement or renewal rendered necessary by natural decay or by fair wear and tear. However, he entered a general undertaking to “replace any broken parts where necessary including parts of fixed equipment broken or displaced by reason of flood, storm, tempest or frost”. Some of such work would potentially be covered by a tenant’s ordinary repairing obligation but Mr Telfer’s position was that it went further. Damage by storms, tempests or ice was to be seen as part of normal wear and tear and this provision committed him to replace items which were beyond repair. This was properly a landlord’s responsibility. Accordingly the provisions of clause first relating to flood, storm, tempest and ice would fall to be nullified if he succeeded in the application.

[13] The effect of clause first was that in practical terms all – or nearly all – the equipment on the farm was subject to those provisions of the PLA because all equipment was potentially subject to damage in this way. According all the fixed equipment had to be in a reasonable state of repair before the tenant could nullify the PLA. This was not disputed and we proceed on that basis.

[14] In the present case any damage to the brickwork caused by frost was insignificant and was due to moisture penetrating the old roughcast in the first place. But the actual cause of any disrepair would be irrelevant. We did not understand it to be disputed that the landlords could bring themselves within the scope of (4B) if they established that the cottage was not in a good state of repair at 22 October 2007. They did establish that the roughcast render was not in a good state of repair. It needed to be renewed due to natural decay and there was no suggestion that it had been in a worse state in 1971. There was nothing to suggest that the condition of the roughcast had been caused or contributed to by any failure by the tenant to comply with his repairing obligations. In short, the landlords sought to prevent the tenant exercising his right to set aside the PLA by reference to a state of affairs for which he had neither responsibility nor any potential liability.

[15] However, as we have previously commented, it is plain that Parliament has provided only a simple tool to deal with a potentially complex situation. While the statutory provisions may apply without difficulty in relation to some types of PLA and in relation to some common factual situations they will not provide a satisfactory solution in relation to all agreements and all situations. Mr Telfer did not attempt to suggest that the responsibility for the necessary work was a relevant factor in the application of the statutory provisions. His argument was that the walls should be seen simply as part of the cottage. That was the relevant unit of fixed equipment. It could be said to be in a reasonable state of repair even though the rendering did need some attention. That was the view clearly expressed by Mr Coombs. It is consistent with the fact that the landlords had not found it necessary to carry out any work themselves. In the circumstances, the respondents cannot rely on the condition of the rendering as a relevant failure to comply with the provisions of (4B).

Coshogle Water-gate

[16] The evidence in relation to the water-gate was confused. There were some 20 to 30 water-gates on the Coshogle march and the one shown in the photograph in the landlords’ schedule turned out not to be the one they were founding on. However, we understood that the parties knew which water-gate was in issue and on the evidence we can conclude that the relevant water-gate on the Coshogle march was not in a reasonable state of repair on 22 October 2007; that it was in no worse a state of repair than the water-gate there in 1971; but that such gate had been wholly replaced at some time. It may be added for completeness that Mr Telfer disputed the proposition that the water-gate needed to be replaced in 2007 and the evidence of the detail of its condition was insufficient to allow any specific finding to be made. But he had been complaining about its condition and we accept that it was replaced. We are satisfied that this would not have been done had it been in a reasonable state of repair.

[17] However, although we do not doubt that the water-gate was identified as a management item and was referred to by both parties as an identified item of equipment, we do not accept it as a significant item for the purposes of (4B). It is essentially just part of a fence modified to meet the requirements of crossing a burn. Although it does not function as a conventional gate, it has similar features. It is essentially part of a boundary intended to contain stock but capable of a hinged or pivoting movement to allow it to swing above varying volumes of water without leaving a gap.

[18] As will be seen from our discussion of the Duntercleuch march fence, the question of whether a section of fencing is sufficiently important to be treated as a significant identifiable part of the fixed equipment for the purposes of (4B) is one of degree and judgement. It is enough to say that we do not accept that a finding in relation to a single water-gate in this case is a sufficient basis for a conclusion that a significant part of the fixed equipment was not in a reasonable state of repair for the purposes of (4B).

Duntercleuch March

[19] Although the provisions of (4B) are not straightforward in their application to the present PLA we must give them as much practical effect as possible. For reasons discussed in our Note of 3 November 2010 we concluded that it was not appropriate to treat the references to fixed equipment in (4B) as if the provisions referred to the relevant equipment taken as a whole. We considered that the more workable approach was to look at individual items of equipment. Minor items might be ignored. Plainly Parliament must have intended to address issues of substance. We are satisfied that a proper approach is to identify a significant part of the fixed equipment on a holding the state of which can, if necessary, be compared with the state of the same item as it stood when the agreement was made, if that item still exists. The concept of an item, or unit, of equipment does present difficulties in relation to fencing. Mr Telfer stressed that a section of fence was no use without the fences on either side. We have no difficulty in accepting that proposition. But while we are satisfied that reference to an “item” of equipment is a useful tool when approaching the provisions of sec 5, it is no more than a tool. There is no inherent need to find a part of the fixed equipment which can function independently of other parts.

[20] There was no doubt as to what the parties understood as the Duntercleuch march fence. It was the march fence with Clenries at the Duntercleuch valley. It ran north from Stood Hill down into the valley, turned north west along the south side of the water-course, then north east across the water and then east up to Sowen Dod where the march with Hopetoun started. It was readily identified as an item of equipment. As discussed below we are satisfied that it can properly be regarded as a significant item.

[21] Evidence of its condition at the specified date was not entirely clear. We think this was attributable to Mr Telfer’s initial unqualified acceptance that the fence was entirely “done” and requiring to be renewed as at the specified date. One important consequence was that the landlords did not consider it necessary to make a detailed record of the state of that part of the fence. Although they sent staff to photograph most of the fixed equipment, including fencing, they decided that it was unnecessary to take photographs of the Duntercleuch fence.

[22] Mr Telfer’s assertions as to the state of the fence were contained in correspondence with the landlords – the “19 items” letter of 9 June 2005 and the follow up of 10 March 2006. In a letter of 14 August 2006 he wrote: “Would you please let me know your decision on the Duntercleuch march fence as this needs immediate renewal”. By letter of 4 June 2007 the estate wrote referring to the “renewal of the Auchengruith / Duntercleuch march fence shown on the attached plan”. The plan showed the whole line from Stood Hill to Sowen Dod. Mr Telfer responded contending that if he was to pay 25% of the cost “of this fence renewal” it should be treated as a tenant’s improvement. He went on to comment on the specification and cost and on his proposal for the new fence to be erected on a different line. This was reflected in his early pleadings where he contested only the cost of complete replacement and did not attempt to assert that much of the fence required no more than repair. He sought interim interdict on the basis of the respondents’ “failure to replace” the fence. It is sufficient to say that in light of this material we have no doubt that the comparatively poor quality of the respondents’ evidence on this issue was largely due to the fact that they understood the state of the fence to be agreed.

[23] It may be added that Mr Telfer did not dispute that at previous debate hearings before us he had referred to the fence as “done” or “on its last legs” and had appeared to accept as accurate terms such as “knackered” and “flat on its back”. We recognise that the last two of these descriptions might simply have arisen as part of what he may have seen as an academic discussion. It is now plain that no section of the fence was actually lying flat on the ground. Taken together, his various assertions had led us to assume that the state of this fence was beyond dispute. But this material came after the landlords had replaced the fence and has no bearing on their approach to recording evidence of the old fence. It might be thought to have a bearing on the landlords’ criticism of the reliability and credibility of Mr Telfer’s evidence. It is sufficient to say that although we accept that the landlords had material for such a challenge we are satisfied that Mr Telfer was trying to give his evidence honestly. The apparent change in his attitude might be explained by his coming to realise that it might be important to show that it was no worse in 2007 than the 1971 fence had been, or perhaps by his view that there had been some deliberate contrivance by the landlords. However, we have not identified any critical element in the case as turning on an issue of credibility or reliability of witnesses. Mr Telfer was able to point to various errors and misunderstandings in the evidence of the landlords’ witnesses but we have not found anything to turn on this.

[24] The main direct evidence as to the state of the fence came from Mr Scott Wilson who gave evidence that he was a foreman fencer and that he had been instructed to examine the fence with a view to its replacement. He had inspected most of it in the company of Mr Telfer. It appeared from the evidence of both that there had been little discussion of the condition of the fence in course of the inspection. This would have been consistent with the understanding on both sides that Mr Telfer thought it needed replacing. However, Mr Coombs and Mr Wilson both said that if the latter had thought that it could economically be repaired he would have reported to that effect. It seems clear, for example, that he did report that part of the fence did not need to be replaced. This was the “Rylock” section, about 300 yards long, at the westmost part of the fence. It was not disputed that despite the picture painted in pleadings and at debate as to the condition of the whole fence, this part was in a reasonable state of repair and was not replaced.

[25] Two issues were relied on by Mr Telfer as having a bearing on the argument that the replacement of the rest of the fence was not needed. He made much of the fact that, following Mr Wilson’s inspection, the respondents had proposed to renew both the Duntercleuch march fence and a section of the march fence with Hopetoun. Duntercleuch was a part of Clenries Estate which was also owned and now occupied by the respondents. Accordingly, they did not need to discuss their proposals for it with any other proprietor or occupier. However, when they came to discuss matters with Hopetoun Estate, they were persuaded that the fence at the relevant point did not need replacement. It could be repaired for much less cost. Mr Telfer relied on this to show that Mr Wilson’s judgment as to the state of the Duntercleuch fence was not reliable. He also challenged the reliability of Mr Wilson and Mr Coombs on the basis that while Mr Wilson had given evidence that he examined part of the fence in the company of Mr Coombs, the latter said he had never inspected the bulk of the fence. He had been able to look at the level riverside section from the road and said he thought it was “done”. We are satisfied that Mr Wilson was mistaken but are not persuaded that this had any bearing on the fact that he had examined the fence and agreed that the bulk of it needed to be replaced.

[26] We are well aware that decisions as to whether fixed equipment should be replaced or whether its useful life can economically be prolonged by further repair are matters of assessment and degree. Even where it might clearly be more economical in the long term to replace, there might be reasons for simply repairing in order to defer capital expenditure. While we accept that the different treatment of the two fences might have been a relevant matter to consider had the dispute turned on whether complete replacement was needed, we do not consider that it has any real bearing on the question of whether Duntercleuch march fence was in a reasonable state of repair.

[27] Mr Telfer did not dispute that there were extensive parts of the sections from Stood Hill and Sowen Dodd respectively down to the lower ground which did require to be replaced. The main argument was about the section along the length of the valley from the corner at the old mine to the “Rylock”. Miss Campbell told us that was capable of holding stock. Neither Mr Telfer nor Mr Wilson appeared to have made a close inspection of it. They had viewed it from the road up the centre of the valley as had Mr Coombs. However, Mr Marchbanks was led by Mr Telfer to speak to this. Although his responsibility as shepherd was for the hirsels nearer his cottage, he had had to assist with sheep handling in the area of the Duntercleuch fence. In cross examination he said that the fence needed renewal or substantial repair. He though it all needed more intensive repair than would normally be carried out by a tenant. It needed attention by a fencer. Apart from the “Rylock”, the fence was in fact replaced by the estate early in 2008. We do not accept that the estate had any hidden motive for carrying out the work and where a proprietor carries out complete renewal work – in respect of which he expects to have to pay the bulk of the cost – we accept that it is reasonable to presume that the equipment in question was not in a reasonable state of repair when he decided to do so.

[28] The other issue was Mr Telfer’s contention that his main concern in discussion with Mr Coombs was to persuade the estate to change the line of the fence so as to minimise further maintenance and make it less likely to suffer the depredations of “tourists”. We heard evidence that it was common to find visitors to the area taking wooden fence posts or rails from a fence, or cutting material from such items, to use for fires. Mr Telfer clearly felt indignant at what he perceived to be the stupidity of the estate in refusing his suggestion to alleviate that problem and to make future maintenance of the fence much easier. We accept that his proposed line might well have produced these benefits. It would have increased the area of land falling within his tenancy but not to any significant extent.

[29] This issue had no direct bearing on the state of the fence – although it may be thought to be implicit in proposing a new line that he accepted that the old fence needed to be replaced. Plainly the estate had no obligation to extend or alter the area leased to Mr Telfer, however sensible that might have appeared to be in terms of fencing and even though the lost area would be of no great significance in relation to sheep carrying capacity. We accept Mr Coombs’ evidence that, as the estate had resumed the land for the purpose of heather regeneration, he simply did not wish to complicate matters by transferring part of it to Mr Telfer. We do not know the terms on which the land was taken in hand but it may be added as a general proposition that even a widely expressed power to resume would not have allowed the landlords to resume from one tenant simply to give it to another. Be that as it may, we do not think that the reasonableness or otherwise of the factor’s rejection of a proposed new line has any bearing on the state of the fence. We reject Mr Telfer’s contention that this should be seen as part of a wider plan by the estate under which they deliberately replaced large parts of the fence when they did not need to do so, simply to give themselves ammunition against him for the purposes of a case under (4B). We much regret that Mr Telfer has come to think in such terms. It will not make it any easier for him to negotiate other matters with the estate. But we do not accept this as a likely course of action for the estate and accept Mr Coombs’ evidence that it formed no part of their thinking. There was no evidence to support Mr Telfer’s suspicion other than the timing. We accept that the respondents had reason for delay because of the nature of the dispute with Mr Telfer. They would not have expected any difficulty over the defective condition of the fence when Mr Telfer appeared to have accepted this not only in correspondence but in his formal pleadings. It may also be noted that the respondents had offered, in open court in 2010, to allow Mr Telfer to drop the PLA from the specified date provided he undertook to pay for work covered by it and outstanding at that date. When their claim against him in respect of this fence was only 25% of the total, this offer seems inconsistent with a plan deliberately to incur unnecessary expenditure to prevent him dropping the PLA.

[30] In short, we are satisfied that apart from the short section of “Rylock”, the fence from Stood Hill to Sowen Dod was not in a reasonable state of repair at the specified date. We are also satisfied that it was in no worse state then than the old fence had been in 1971. There was no real dispute about this. The evidence in relation to the 1971 fence was that it needed complete renewal. The respondents’ contention was that it was, indeed, wholly replaced in or about 1972.

[31] We have no doubt that the 1971 fence was substantially replaced at some point shortly after the PLA was made. However, there was a question as to whether there was such use of old material as to mean that we should regard the 1972 fence as essentially the same fence as the pre-existing one. The onus is on the landlords to establish what was done in 1972 and to show that, in effect, a new fence was installed at that time. Essentially, they sought to rely on documentary evidence. However, we learned that Mr Derek Moffat, who had been the foreman in charge of the work in 1972, was now aged about 72 and living in Sanquar. There was no explanation for the landlords’ failure to lead him as a witness. Mr Coombs sought to rely on the fact that he had been told by Mr Moffat that the whole fence from Stood Hill to Sowen Dod had been completely replaced in 1972 but, in the circumstances, we are not prepared to place any weight on such evidence. This was plainly a critical issue in the present case. If his evidence was to be relied on he should have been a witness.

[32] The direct documentary evidence was that there was a scheme in place in 1971 to replace the Duntercleuch march fence. As we have said, there was no dispute that that term referred to the fence from Stood Hill to Sowen Dod. There was a question as to whether the whole length of the fence was in fact replaced. There were several adminicles of evidence supporting the view that it had. But Mr Telfer did not accept this. The respondents referred to a schedule and plan prepared by Mr Telfer showing the whole of that length as having been renewed as an item of landlord’s “fixed equipment needing replaced at commencement”. We understood Mr Telfer to assert that this document had simply been prepared for the purposes of discussion but there is no doubt that it was, on the face of it, an assertion that the whole fence was renewed. We also heard evidence from Mr Telfer that, as a young lad, he personally had been involved in laying out the materials for a new fence down the slope from Stood Hill into the valley and in the opposite direction down the slope west from Sowen Dod to the foot of the valley. It is a fair inference that these sections of the old fence were replaced. He was not able to say much about the section along the valley. Except for the “Rylock” there was no evidence that any section of the fence line between Stood Hill and Sowen Dod was of a different age from any other. There was no evidence from Mr Telfer or anyone else suggesting that any part of the fence had seemed different in age or appearance at any time after 1972. Although he was then a youth unlikely to notice all the detail of fencing, it was plain that he had been actively involved with his father in the running of the farm by the late 1970s. He did not speak to any section of old fence remaining. His contention that the part running along the valley was still in a reasonable state of repair in 2007 certainly suggests that it was no older than the remaining fence although its more sheltered position might have explained its comparatively better condition. Although the evidence about the “Rylock” was not entirely clear it appeared to have some connection with the Southern Upland Way and the date talked of was 1994. We are satisfied that its presence and its condition in 2007 tells us nothing about the replacement work in 1972.

[33] The only evidence which might have indicated that the fence was not wholly replaced in 1972 came from a contrast between the figures recovered from the estate files; one quoted as the length of the fence when estimating for the work and the other a figure which might have been based on the work to be paid for at the end. The former came from a document of 15 November 1971 which showed an estimate for “Glenim/Clenries 4,934 yards 6 wire fence renew.” It was not disputed that this related to the section we have referred to as the Duntercleuch march fence. The figure of 4,934 yards was said to be subject to measurement on completion. It appeared to be the basis for approval by the Department of Agriculture and Fisheries for grant at a level of £1996.73. It appears that the work was done by the estate fencers but no record was produced to show either time sheets or materials used. Mr Mitchell said that he produced all the files he could find relating to this and the only relevant entry was a handwritten note scrawled on the second page of the approval letter. The first few words clearly read “4422 yards done 1972”. The other words are not clear but could read “and claim see Glenim file”. Mr Telfer contended that this meant that no more than 4422 out of the 4,934 yds was actually replaced. However, we heard no unequivocal evidence of the actual length of fencing which would be required to erect a fence on the line from Stood Hill to Sowen Dod on the original line shown in production 33 – in other words the line before the change represented by the new line of the Rylock fence. We have no reason to regard either figure as absolutely accurate and no reason to regard the figure of 4934 yds as more accurate than 4422 yds. On plan the total length appears to be just under 4000 m. Over 1500 m is on fairly level ground and the plan measurement of this section may be quite accurate even allowing for a few undulations. Where the fence goes uphill allowance must be made for the effect of the slope. We heard no direct evidence of this but it is essentially a matter of geometry and within the range of the practical experience of the Court. For example, there is no room for dispute that a fence on a constant 15 degree slope would be about 3.5% longer than a similar fence on the level. However, allowance has to be made for any significant changes in slope including undulations. Basic calculations can be done by reference to the relevant heights. Stood Hill rises to about 590 m from the old mine area which is about 350 m over a distance of about 1150 m, an average of about 11 degrees. Sowen Dod rises from the floor of the valley at 320 m to a height of about 550 m over a distance of about 1350 m, an average slope of about 10 degrees. We are not in a position to make an accurate allowance for undulations and variation but it can be said that our own calculations do not support the view that the figure of 4422 yds was intended to represent something less than the whole length from Stood Hill to Sowen Dod. We did not hear any evidence of methods of measurement used for estimations in or about 1971 but we are aware that it is common practice when estimating to measure from plan and then add a percentage to allow for slopes and undulations. Such a broad approach can be quite inaccurate and in our experience fencers prefer to base their estimates on cost per metre subject to final measurement – knowing that the ultimate figure will be based either on direct measurement or a calculation from records of materials used. It may be noted that the respondents’ proposal in 2007 was to renew the whole line except the 300 yd section of Rylock. Their estimated length was 3600 m (3937 yds). We return below to Mr Murray’s figures for the completed work.

[34] Put shortly, we do not think that any great significance is to be attached to the apparent difference between the quotation at 4934 yds and a claim for 4422 yds. There was no direct evidence that only part of the fence was replaced. Mr Telfer’s own evidence certainly suggested that work had been done from each end and made no suggestion that any part had not been finished. It is also relevant to note that such a fence would not be expected to last for much over thirty years. If the whole fence was approved for replacement in 1971, the inference that the whole would have been done is not displaced by the reference to 4422 yds. Even if that figure was short of the total length there could be various explanations for such a cryptic note. It clearly would not be intended as a final record. We are satisfied on balance of probability that the whole fence was replaced.

[35] We accept that some of the old metal posts were used in the replacement fence and that that fence was substantially on the line of the old one. Mr Wilson had counted them in 2008. He found at most 20 metal posts still in use. Some were straining or turning posts but the majority appeared to have been incorporated into the new fence in 2008 simply because they were in the line and it was possible to pass the wires through them. There was no evidence that they played any special part in the new fence. Mr Wilson said that any metal posts incorporated into the fence in 1972 would still have been visible in 2008 although they might have deteriorated so as to be unusable by that time. We heard evidence of one such at the corner near the mine workings. There was no evidence that many more metal posts were incorporated in 1972 than in 2008. Mr Wilson thought that in 1972 there might have been about 24 in total. This would be something of the order of 1% of all the posts, strainers and stobs needed for the whole fence from Stood Hill to Sowen Dod.

[36] There might also have been some use of old wood. We heard that the estate fencers would normally expect to replace all the wood but might not do so where any old posts were still sound at the base and could not readily be extracted. In that case they would be cut back and a new upright attached to them. Contractors tended to use more old material than the estate’s own fencing teams. In 2008 the respondents had attempted to use Mr Telfer’s preferred contactor, Mr Anderson, but he was not available and they instructed a Mr Murray. There is no reason to suppose that greater use of existing timber would have been made by the estate fencers in 1972 than by a contractor in 2008. It should be added that we do not consider use of wood from an old fence in a replacement fence to be relevant to the question of whether the old fence can be taken to continue in existence, if the wood has been used in a different way. But, in any event, we are satisfied that use of old timber in this case can be ignored as insignificant in percentage terms. We accept it as unlikely that wires would be reused under a grant scheme. Indeed, Mr Telfer said he remembered that they had dug a pit to dispose of the old wire which was in such a state that it could be broken by hand into suitable lengths for disposal. It is, accordingly, plain that any old material incorporated would have been a very small percentage of the total material in the new fence in 1972.

[37] It may be added that, in respect of the fence erected in 2008, Mr Telfer made much of possible inferences to be drawn from Mr Murray’s invoice and the so-called “Detailed Breakdown” provided by the respondents in their claim for payment from him. The breakdown provided a cost figure for various different sizes of stobs but made no attempt to identify the unit costs. In other words it did not show the numbers used. Mr Telfer suggested that the figures had been derived from Mr Murray’s invoice rather than from genuine estate figures and involved a double claim. He pointed out that the bulk of the material bore to have been supplied on 19 October 2007 and suggested that this was suspiciously close to the date intimated by him for nullification of the PLA. However, we are not satisfied that this material has any useful bearing on the issues currently before us. We have discussed above the evidence as to the state of the fence at the specified date. We have no concern in this case with the work done on it thereafter. We did not follow all the criticism Mr Telfer made of the invoice and we take nothing positive from the figures. However, it may be noted that the bill from Murray for completed work was for 3719 m (4067 yds). If 300 yds of Rylock fence is added the total does not cast doubt on the 4422 yards discussed above.

[38] In our Note of 3 November 2010 we discussed the issues which might arise where an item of equipment was replaced. We did not attempt to define the circumstances necessary to demonstrate the distinction between renewal and complete replacement. We were satisfied that Parliament would not have intended the matter to turn on a careful analysis of how many old parts were used. A broad approach was required. If a fence was replaced but a significant number of old posts remained in position or if existing wires or netting was still used, it would fall to be treated as a renewal. However, the circumstances disclosed in the present case seem far from such a situation. An insignificantly small percentage of the old fencing material may have been used. No one looking at the fence in 1972 would have been in any doubt that the old one had been replaced. We are satisfied that there is no justification for comparing the state of the Duntercleuch fence in 2007 with the fence which was there in 1971. It is simply not the same piece of equipment – even though it serves the same purpose and is located on or very close to the line of the one which it replaced.

[39] In relation to the question of whether the Duntercleuch march fence should be treated as a significant item of equipment, perhaps the most obvious point is that it runs for some 2.5 miles. However, it is part of the boundary of the applicant’s IACS field No. 36 and it was not disputed that the total fencing of this field would extend to some 22 miles. Further, Mr Coombs accepted Mr Telfer’s proposition that the total fencing on the holding would be of the order of 50,000 metres – in other words about 31 miles. Clearly, the Dunterecleuch fence is a small percentage of that. However, in trying to identify a significant item we think it misleading to test the matter by having regard to the totality of equipment involved. We refer to our discussion of this issue in the Note of 3 November 2010 at paras [85] to [96]. It may be added that such an approach might mean that what was clearly a substantial item on one farm might fall to be disregarded on another. A substantial item under one PLA might fall to be disregarded under another. The measure of the tenant’s liability in each might be the same. The Duntercleuch march fence was initially the whole boundary with Clenries farm on the west. It was regularly identified by name as the “Duntercleuch march fence”. It was treated as a unit when it was to be replaced under a grant scheme in 1971. Unlike the water-gate, we are satisfied that the Duntercleuch fence is a significant item. The figure of about £20,000 said to have been the cost of replacing it in 2008 is disputed by Mr Telfer. In his pleadings he appears to suggest £14,320 as a reasonable figure although some of his cross-examination leaves us in doubt as to his current position. It may be noted that the replacement in 1971 was to cost almost £2000 and with changes in the value of money a modern equivalent would be of the order of at least ten times that sum. Mr Telfer made a point at debate to the effect that any reference to a “significant sum” as a measure of the significance of an item was meaningless because any sum would be significant if you did not have funds to pay. Significance depends on context. The parties might have different views as to whether a rent of £12,000 was a significant sum. What is a significant cost is ultimately a matter of impression. However, although we are satisfied that the repair or replacement of the Duntercleuch fence can properly be said to involve a significant sum, this is not of itself determinative of the importance of it as an item of equipment.

[40] For reasons discussed in that Note of 3 November 2010, we concluded that assessment of the state of equipment does not turn on issues of causation. The question of whether a particular item is in a reasonable state does not require consideration of which party has responsibility for putting it into a better state. It follows that when considering the practical application of (4B) we must avoid being unduly influenced by the particular provisions of the specific PLA in this case. The matter might be tested by considering whether, if the whole responsibility for maintenance had rested on the tenant, the work outstanding could or could not properly be said to involve a significant item of fixed equipment? We do not think that the fixed equipment could properly be said to be in a reasonable state of repair at the specified date having regard to the condition of the Duntercleuch march fence. On the whole evidence we are satisfied that the Duntercleuch march fence was a significant part of the fixed equipment which was not in a reasonable state of repair at the specified date. The fence as it stood in 2007 was a replacement one and accordingly its state of repair does not fall to be compared with state of the predecessor fence as it stood in 1971.

Drainage

Field 7

[41] We accept that, for the purposes of (4B), it is appropriate to look at the drainage of fields 7 and 23 as two separate significant items of equipment. We recognise that drainage systems will often run through more than one field but in this case, at least, the fields adequately define relevant parts and where, as here, the fields are of a size capable of being worked as a unit, we are satisfied that the drainage in each can properly be regarded as a significant item for the purposes of the relevant provisions.

[42] As discussed above, we do not accept that the provisions of the lease have the effect of limiting the evidence which we can consider. However, the evidence relating to the drains remained confused. Drainage does raise special questions in relation to the scope of the term “reasonable state of repair”.

[43] Normally, field drainage systems – other than open ditches – lie under ground. In the present case, some exploratory work was carried out in 2009 – almost 18 months after the specified date – but this involved only a small sample of the total system or systems thought to exist in the field. It appeared that the system was based on tile drains although there were some stone drains. Traditionally, tile drainage systems utilise round or oval unglazed clay pipes, each about 300 mm or so in length, laid end to end to form continuous sections. Tiles abut. However, they are not sealed at the joins and the gaps between each tile are an essential feature of the system allowing water to pass into the drain. The tiles are porous and this also allows a gradual passage of moisture into the drain through the walls of the tile itself. However, we accept the evidence of Mr Telfer that the main draining effect was by water entering the drain through the gaps between each tile.

[44] Such investigation as was done appeared to have confirmed his assertion that the system in field 7 was inherently inefficient as laid. It became apparent that, at the spacing provided, it was too close to the surface to allow it to take water from a reasonable area. Certain specific defects came to light as to the way in which the drainage, in both fields, had been laid. These features indicated a poor standard of workmanship and design and it is reasonable to assume that the parts of the system which were not opened up contained similar deficiencies. On the evidence of Mr Hunter, the main problem was that there was too much soil compaction to let the drains work properly. He also said that the drains were too shallow.

[45] We had no evidence as to the specific age of the drains. It is within in our knowledge, as an expert court, that many drainage systems were installed in the mid 19th century following the Drainage Act 1843 and some of these continue to function to this day. It was very common to have two inch drains in the early days although later systems tended to use larger diameter tiles. The drains may well have been many years old at the start of the lease but the only clear evidence was to the effect that they had been installed sometime before Mr Charles Telfer’s first occupation of the subjects in the early 1950s.

[46] Field 7 extends to some 8 ha. The drainage revealed on inspection was shown on a plan prepared by the estate from Mr Hunter’s report and forming production No. 64. The investigation revealed one 6 inch main drain broken at its outlet at the west side of the field and blocked at that point. The blockage was readily attended to by rodding. There was evidence of several repairs to tiles at about the mouth of that drain. The drain turned a sharp right angle when it left the field and it then discharged into a ditch. At one excavation point a single two inch tile lateral drain was found to be blocked. This was readily freed by rodding. At one other point, a stone was found which had broken through a tile. No explanation for this was advanced and, indeed, it was not clear from the evidence whether it was possible that the damage had been inflicted during the investigation. Repair simply required removal of the stone and replacement of the tile.

[47] It was contended that the system had been badly designed, or badly installed, in two identified respects. One lateral drain was found to be unconnected to the main drain. On the basis of the evidence in this case, that can be taken to be a defect dating from the time of the original installation. It was not disputed in the present case that this was a defect in the system. Other laterals exposed were connected to the main. At another point, two four inch lateral tiles joined another four inch lateral drain in such a way that the flow from one drain opposed the flow from another. This feature was shown as a “V” shaped junction on the plan but we accept Mr Telfer’s evidence that the angles were not accurately shown on the plan and that the opposing effect of the contrary flow of water would cause a potential blockage greater than might appear from such a lay-out as shown on that plan.

[48] In broad terms, we heard of three factors which could lead to a change in the efficiency in a drainage system over the years: the efficacy of the drainage system might be significantly impaired by compaction of the soil above it; the drains might become blocked by gradually silting up; and there was also a possibility of inevitable deterioration in the state of the tiles themselves.

[49] In relation to compaction, we recognise that a tenant might be expected, as a competent agriculturalist, to take steps to deal with compaction although we accept the evidence of Mr Telfer that obvious methods of dealing with this, such as by mole plough would not be possible with shallow drainage systems such as those in field 7. But, in any event, we have not been persuaded that the need for steps to alleviate compaction can properly be said to have a bearing on the state of repair of fixed equipment. The soil itself is not part of the fixed equipment.

[50] A second factor was that the drains might silt up. In an efficient system the flow of water would normally be expected to keep the drains clear. Serious silting might follow accidental damage or be indicative of an inadequate system with insufficient fall. Silting could be dealt with by rodding. However, except at points where the drains discharge into an open ditch, rodding would only take place if such a blockage occurred as to cause the water to come to the surface at a point near the blockage. In that event, a tenant would be expected to dig down to see if he could trace the point of blockage, clear it, replace any broken tiles, and do as much rodding as he could from that point. The length of drain which could be rodded effectively in this way turned to an extent on manual strength. We heard a suggestion that professional rodding systems could extend 200 yards along a drain but we accept Mr Telfer’s evidence that the practical range of manual clearance would be likely to be nearer to 10 yards. Clearing drains in this way would be regarded as a routine maintenance operation. A drainage system which was, in itself, properly designed and installed, could be described as being in a reasonable state of repair even if some blockage needed attention. In any event, a finding in 2009 that the flow in some sections of the drain could be improved by rodding was not, in our view, indicative of an unreasonable state of repair of the drainage system at the specified date.

[51] In relation to the blockage at the main outlet, Mr Telfer explained the problem he had had at that point. The sharp bend on the outside of the field boundary caused water to back up. This tended to cause blockages which needed regular attention. We accepted this evidence and taken with the evidence of repairs to tiles at that point, we are satisfied that the tenant had not neglected maintenance at this outlet. Accordingly, we are not satisfied that evidence of the findings at inspection demonstrate that this part of the system was not in a reasonable state of repair in October 2007.

[52] It was also suggested that the efficiency of the system might be affected over time by deterioration in the tiles themselves. Mr Hunter suggested that there might be two aspects to this. The tiles might lose their porosity as they became clogged with microscopic soil particles. They might also become soft and more prone to accidental damage. However, our own knowledge and experience as an expert court leads us to prefer Mr Telfer’s views on these matters. He said that drains could last for hundreds of years. This we took to be no more than a turn of phrase and plainly it contains an element of exaggeration. However, there is little doubt that tile drains can remain in existence, functioning effectively, after 100 years or more. We also accept that the main drainage function relies on the natural gaps between the tiles rather than the permeability of the walls of the tile. The latter may depend to some extent on the nature of the surrounding soil. The effects of tile porosity and the implications of any changes in porosity are specialist subjects. We are satisfied that the latter is a matter which would require examination at close, if not microscopic, level. There was no suggestion that Mr Hunter had specialist knowledge of such matters. He did not attempt to explain typical patterns of change in porosity. He did not suggest that he had found any direct evidence that any of the tiles he examined had, in fact, been so affected. It may be added, for example, that there was no evidence that any clogging of porosity would occur uniformly over time. If it was, indeed, a significant effect, it might well be more significant in early years and of diminishing significance thereafter. If it was a significant problem it would be expected to affect all tile drains and to give them a limited life span. We are not aware of any sound evidence of this. In other words, we are satisfied that no relevant change in the state of repair of the drainage has been established in relation to deterioration of the condition of any individual tiles.

[53] We also accept Mr Telfer’s evidence that he had never seen evidence of tiles softening. If this had been a significant feature and a real cause of collapsing tiles, we would have expected Mr Hunter to be able to point to some examples of this either in fields 7 or 23 or elsewhere in his experience. In short, there was no direct evidence of identifiable change in the tiles between 1971 and 2007. We do not accept that the possibility of gradual deterioration was in any sense a significant change in their state of repair where there was no evidence that such deterioration had led to any observable change in the efficiency of the system.

[54] When considering the state of repair of the drainage system in October 2007, it may be noted that Mr Mitchell’s summary in relation to field 7 asserted that the drainage was not in a reasonable state of repair for the “reasons described”. The reasons to which he referred were simply two letters from Mr Telfer: the “19 items” letter of 9 June 2005 and the follow-up letter of 10 March 2006. Both contain little more than an assertion by Mr Telfer that the drains were “worn out”. In their pleadings the landlords made the bald assertion that “whatever the state of the drainage at the commencement of the lease it has deteriorated since 1970 and accordingly will be in a worse state of repair than it was when the PLA was entered into”. In their Minute of November 2010, they relied on a comparison of cropping patterns as showing that the drainage was in a worse state in 2007 than in 1970. In short, they not only failed to identify any specific way in which the drainage could be said not to be in a reasonable state of repair in 2007 but gave no notice of the nature of inevitable deterioration.

[55] We are satisfied that the tenant’s assertion that the drains were “worn out” was not factually accurate. In his pleadings, his contention was to the effect that the drains had never worked properly. In any event, unlike the case of a fence which is fully visible and open to routine inspection, the view of a tenant on the state of his underground drains cannot be treated as having any self-evident evidential weight. He can say that the drainage does not work. Many farmers will acquire a fairly accurate knowledge of the drainage systems in their fields, but this is by no means inevitable. Although attempts to clear specific blockages might give some indication of what lay beneath, a tenant cannot be assumed to have a full picture of the underground system or the full reasons for its inefficiency. The weight to be given to his views must depend on evidence of the basis upon which any assertion is made. Had there been discussion of Mr Telfer’s complaint in 2006, it is possible that he could have said little more than that the drainage did not work properly. His evidence to us had the advantage of the material derived from Mr Hunter’s investigations.

[56] Mr Telfer’s direct evidence was to the effect that there had been little change in the efficacy of the drainage over the period since 1971. He asserted that this was explained by what had been found on exploration by Mr Hunter. This showed no sign of tiles being, in any way, worn out. It did, on the other hand, show a poor and inefficient system. In particular, it showed the drain which had not been connected and the other two laterals connected in such a way as to create a contra flow which would tend to form a blockage in both lines. Perhaps the main, overall problem was that the drains were so shallow that they would not be capable of draining much more than the land immediately above them.

[57] Mr Hunter did not purport to be a specialist in the theory of agricultural drainage. He had wide experience in the installation and renewal of drainage systems including drainage schemes over agricultural land. He said he had found fields 7 and 23 waterlogged. His explanation for this started by referring to possible compaction. He said this would prevent the water getting off the surface and into the drains. He had found places where the surface was very wet but, under the grass layer, the soil was quite dry and this demonstrated the existence of compaction. He also suggested, as a cause of the waterlogged fields, that some drains would be blocked with silt which would hamper their ability to remove the water which did reach the drains. After his initial inspection, he instructed an excavator to be used for further investigation. He saw the field after this. He described compaction as “natural in such clay”. It was something which just developed over time. We had little doubt from the way in which he gave his evidence about this matter that he considered compaction to be a major problem and the main source of difficulty in relation to the drainage as a whole. As we have said, we do not consider that this is a feature of the element of fixed equipment referred to as the drainage system in the field.

[58] Asked to describe the drains as he found them in 2009, he said they were inefficient because the outlets were not clear. There were some blockages. There was poor runoff. Blockages could easily be remedied by excavating, clearing and rodding as shown on the plan prepared from his report. His evidence seemed to be based on his findings in relation to one main drain. He did not give clear evidence of any findings in relation to any other main drains although Mr Telfer was able to refer to more than one. When asked whether the drainage would have deteriorated since 1970, Mr Hunter again answered in terms of compaction. He said the fields needed to be ploughed and aerated to burst the pan. He thought field 7 was in a better condition than 23.

[59] When asked explicitly in chief whether he thought that the drains were in a reasonable state of repair he said, “not really” and went on to refer to the blockage at the outlet and blockages at two other points. He said the drains were very shallow. Some repairs were needing done. He initially referred to a “number of broken and detached tiles” but conceded in cross-examination that what he had seen was simply a couple of tiles in a poor state and one lateral not connected.

[60] We did not find this evidence a persuasive basis for a finding that the drainage system as installed in field 7, taken as a whole, was not in a reasonable state of repair in October 2007. Mr Hunter was later pressed to say, in relation to the drainage in field 7, that major works would have been required in 2007 “to put it in order”. However, having regard to his main emphasis on compaction and his evidence that the drainage was too shallow, we have little doubt that he was contemplating an improved drainage system rather than renewal or repair of the existing one. For example, he said that the main drain would need to be “replaced”. His evidence of poor run-off would be a feature of excessive compaction of soil and that would not be improved by renewal of the existing drains themselves.

Field 23

[61] The evidence in relation to field 23 involved similar issues. It was clear that, here again, the investigations had only been able to deal with samples of the drainage system or systems within the field. Although Mr Hunter had appeared, initially, to be speaking to his own knowledge of investigations of damage done by the laying of a water pipe, he appeared to accept that his own sightings in relation to such damage had been nearer the dyke to the north. There were two water pipes and damage may have been caused by both. It seems that he was speaking to the line of a second water pipe going from a tank in the north east corner of the field to Muirhead Cottage. The more extensive damage had been caused by a pipe running from that tank to Auchengruith Farmhouse. The investigations showed that this pipe had been run right through a set of at least nine lateral drains in the centre of the southern third of a field, shown as a rectangular pattern of laterals in blue on the plan of drainage in that field: (production 65).

[62] It was not disputed that this water pipe had been installed by the landlords in the 1950s. Sir Crispin led Mr Hunter to say that the breakage would not affect the pipes below the breakage point and that water which could not flow in the drain past the breakage would make its own way back to the lower section. However, we also heard evidence that the breakage would tend to cause the tiles to silt up. Put very simply, we were not persuaded that the drainage in field 23 was in any worse state in 2007 than it had been in 1971. The drainage system had sustained significant damage in the 1950s. That was demonstrated by reference to the comparatively small area opened on investigation. The line of the water pipe ran right up the centre of the field. It is a reasonable inference that any drainage further up the field would also be likely to have sustained damage. In course of his evidence, Mr Telfer appeared to take the position that the parties in 1971 had known of the damage done and had, agreed, in effect, that the drainage shown by the blue lines on the plan should be treated as redundant, unnecessary and no longer part of the fixed equipment. That section of the field had, since the outset of the tenancy, been treated as rough grazing. The field tables in the lease do show part of the field which is now field 23 as such rough grazing. His position was surprising in light of the broad claims in the letters and absence of any similar assertion in his pleadings but we think it understandable having regard to the essentially hidden nature of drainage systems and his assertions that the drainage never worked. It was, perhaps, no more surprising than the fact that the landlords had chosen to rely on the state of drainage in this particular field knowing that the dominant cause of its defective condition was the damage caused by the landlords’ operations prior to 1971.

[63] There may be some substance in the tenant’s contention that there was an agreement that this drainage should be regarded as redundant. There was certainly no evidence of any attempt by the landlords to deal with the situation at any time thereafter. However, we think that the matter can be dealt with on the basis set out in the pleadings. In formal terms, we must accept that the landlords demonstrated that the drainage in this field was not in a reasonable state of repair in October 2007. But we are satisfied, on the whole evidence, that it was not then in a worse state of repair than it had been in 1971. A “state of repair” is a broad concept. As in field 7, whatever minor changes may have occurred, there was no clear evidence of any significant deterioration in the state of the drainage in field 23 between 1971 and 2007.

[64] It may be added that we heard a good deal of evidence about the classification of the fields as arable or rough grazing. There was a broad contention on behalf of the landlords that as the fields had been regarded in the lease as arable in 1971 and had not been ploughed in recent years, this demonstrated a deterioration in the drainage. We do not accept this. In marginal land, cropping patterns depend on an assessment of the most beneficial use of land in economic terms. It appears that field numbers have changed, but both fields, although then listed as arable, were shown in the schedule to the lease as being in grass at the start of the lease. We heard evidence that Mr Telfer concentrated on production of silage after he had created facilities at the steading capable of coping with substantial volumes of silage. We have little doubt that this would have been an efficient way to use the land even if it had remained capable of use for hay or other arable crops. We do not consider that this tract of evidence justifies any clear inferences as to the state of the drainage.

Decision

[65] In short summary, we are not persuaded that the condition of the rendering at Muirhead Cottage was such as to bring the landlords within the provisions of (4B). The cottage, taken as a unit, was in a reasonable state of repair at the specified date and the parties must be taken to have agreed that this was the appropriate unit to have in mind when assessing the significance of the condition of the rendering. In the circumstances, the respondents cannot rely on the condition of the rendering as a relevant failure to comply with the provisions of (4B) although we are satisfied that the rendering taken by itself was not in a reasonable state of repair at the specified date. There was no suggestion that it had not been in reasonable repair at the date of the PLA. We have found that the Coshogle water-gate was not in a reasonable state of repair on the specified day but that it was not then in a worse state than it had been when the PLA was made. However, we have concluded that a finding in relation to that single water-gate is not a sufficient basis for a conclusion that the fixed equipment was not in a reasonable state of repair for the purposes of (4B) because it is not an item or part of sufficient substance. We did not find the evidence sufficient to justify a conclusion that the drainage system as installed in field 7 was not in a reasonable state of repair in October 2007. We are satisfied that the drainage in field 23 was not in any materially worse state in 2007 than it had been in 1971.

[66] The Duntercleuch march fence is a substantial piece of the fixed equipment. We are satisfied that it was not in a reasonable state of repair on the specified date and that, as the fence as it stood on that date was a replacement fence erected in 1972, it cannot be said that it was in a worse state when the PLA was made. We determined in our Note of 3 November 2010 that it would be sufficient to prevent a tenant from setting aside a PLA if one significant item or part of the relevant fixed equipment was not in a reasonable state of repair at the date selected by him for nullification. It follows that our findings in relation to the Duntercleuch march fence prevent Mr Telfer from setting aside his PLA from 22 October 2007. For reasons discussed in the Note, this may well seem an unsatisfactory result. We have little doubt – having visited the farm in May 2009 – that Mr Telfer has been attentive to his own repairing obligations. Renewal of the fence was a matter for the landlord. However, the provisions of (4B) do not appear to us to allow examination of questions of responsibility for the state of the equipment. We find that the application must be refused.

For the tenant applicant: Party

For the landlord respondent: Sir Crispin Agnew Q.C.; Anderson Strathern, Solicitors, Edinburgh

Note: This decision has been appealed to the Court of Session.