THE COURT

(Lord McGhie, Mr A Macdonald)

JOHN POLLOCK & SONS LTD v THE FIRM OF ROBERT RENNIE

(Application SLC 47/12 – Order of 29 April 2014)

AGRICULTURAL HOLDINGS – GRAZING LETS – SHORT LIMITED DURATION TENANCY – WINTERING ARRANGEMENT – AGISTMENT – CONTRACT FOR CUSTODY OF SHEEP – OBLIGATIONS OF AGISTER – OBLIGATIONS OF CUSTODIER – OBLIGATION TO PROVIDE ADEQUATE GRAZING – OBLIGATION TO ENSURE SHEEP ADEQUATELY FED – EXTENT OF OBLIGATION OF HUSBANDRY – AGRICULTURAL HOLDINGS (SCOTLAND) 2003 – AGRICULTURAL HOLDINGS (ENGLAND) ACT 1883

The parties entered arrangements for a summer grazing lease of sheep. The first winter arrangement followed the summer grazing without any explicit discussion as to what changes there would be. But the invoices changed from reference to rent to a headage charge. The landowner contended that the arrangement was one of agistment and averred that the sheep were overseen by his employee. The averments of detail made no reference to feeding. The respondents contended that there was a grazing let. They offered to prove that they themselves continued to look after all aspects of care of the sheep over the winter months on a practical basis, indistinguishable from the summer grazing. In particular they had had to provide all the essential supplementary feed. A debate was fixed essentially to deal with the applicant’s contention that the respondents had overstated the duties of an agister.

HELD that the actual terms of a modern contract of agistment would depend on the particular circumstances but a basic contract of agistment required only that there was adequate grass to feed the numbers involved. (It implied also that the custodier would take care for the safety of the animals but the detail of this was not in issue.). However, a proof was required to deal with other aspects of such a contract.

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

[1] For the reasons discussed in our Note of 8 January 2014, we fixed a debate on the issue of whether the respondents had adequately set out a case in their pleadings to counter the averment that the wintering arrangement was simply agistment. At the debate on 31 March, the applicant was represented by Mr Lewis Kermack, solicitor, and the respondents by Mr Peter Barclay, advocate.

Main authorities

Barachander Farm v Scottish Ministers 2006 SLCR 109
Barachander Farm v Scottish Ministers 2008 SC 341
Grant v Ferguson 1957 73 Sh.Ct.Rep 264
Hutchison v MacInnes 1947 SLT (Sh Ct) 51
London & Yorkshire Bank v Belton, Ross and Smith (1885) 15 QBD 457
M’Lean v Warnock 1883 10R 1052
Masters v Green (1888) 20 QBD 807
Richards v Davies [1921] 1 Ch 90

Statutory material

Agricultural Holdings (Scotland) Act 2003
Agricultural Holdings (England) Act 1883

Text books etc

Bell Principles
Bell Commentaries Book III
Lord Gill The Law of Agricultural Holdings in Scotland 3rd Ed

Background

[2] As explained in the Discussion below, it became obvious that the matters in dispute would require to be resolved by way of proof before answer and the following brief summary is intended simply to provide an adequate context for the discussion of a contract of wintering, or agistment. We mention some facts which appear to be undisputed but stress that all matters of fact will be subject to correction after proof. We have, for convenience, adopted the term “agistment” to describe the contract of care and custody of sheep though we note Lord Gill’s comment in Barachander v Scottish Ministers to the effect that it is a term not much used in Scotland: [32]. The more familiar term is “wintering” but there is no doubt that agistment might take place in summer months and that all short winter arrangements are not necessarily agistments.

[3] The availability of suitable grazing for short-term rent suits many farmers. It allows flexibility. It suits landowners who are happy to allow others to use their ground for short periods but who do not wish to lose long term control. Parties accordingly regularly arrange short-term grazing lets. However it is the policy of the Scottish Parliament that such arrangements should be subject to tight control. If landowners do not pay proper practical attention to legalities, the grazier’s rights may be considerably extended. The somewhat arcane nature of the debate in this case arises out of this context. The applicant, a landowner, was prepared to allow the neighbouring farmers to have use of grazing land on an indefinite basis but did not wish to lose long term control. He allowed summer grazing for a fixed period each year. The farmer was allowed to continue to use the land for the stock after the end of the summer period. But the applicant apparently intended that this was to be by way of a contract of custody of the sheep, commonly known as agistment. If that was the nature of the arrangement, the statutory rules would have been complied with and each agreement would stand on its own.

[4] The applicant’s land adjoins the respondents’ farm. The first agreement we heard of was a summer lease. It was a written agreement for a fixed period and at a specified rent. A peculiarity was that the agreement was headed “Agistment of land at Clatto Barns Farm”. However, from the outset of the application it has been clear that the applicant accepted that the summer arrangements were by way of grazing lease. The first winter arrangement may have followed the summer grazing without any explicit discussion as to what changes there would be. The applicant appears to rely on the terms of the first winter invoice as adequately showing the nature of the contract. The earliest invoice we have seen is dated 13 February 2007 . It is headed “Winter grazing 2006/2007” It is a bill for 200 sheep at 45p per sheep per week from 1 November 2006 to 28 February 2007, a total of £1530.

[5] The applicant does not aver there that there was ever any explicit discussion of the contractual basis of the winter arrangements. The case, as presently pled, includes an averment that the invoices for the relevant periods constituted a contract of agistment or wintering. It is said that the respondents paid a headage rate for the service based on the number of stock left in the care of the winterer and that they did not pay a rent. It is averred that matters were overseen by an employee of the applicant who carried out head counts of wintering sheep to check for billing purposes. He checked and repaired fences to keep the stock in. He had to ensure that the grass was being properly “tidied up” and that the land was not over-grazed or poached. It is also averred that he had to advise when the stock was to be moved from over-grazed or poached ground onto ground with grass still available, with a view to moving the sheep through from temporary grass at the early stage of the winter to permanent grass at the later stage of the winter.

[6] The respondents aver that there was a verbal grazing let for the winter although they do not say who was involved in any discussion or how such verbal arrangement occurred. They offer to prove that they themselves continued to look after all aspects of care of the sheep over the winter months on a practical basis indistinguishable from the summer grazing. They admit that there was a different basis of payment. Mr Barclay stressed that the respondents’ position was that they had a right to graze in winter the same land as in the summer and that there was no sharing with other stock owners such as might be expected of agistment. They had had to provide all the essential supplementary feed necessary for their Texel sheep.

[7] The debate was fixed essentially to deal with the applicant’s contention that the respondents had overstated the duties of an agister. It was apparently thought that the respondents were relying on the fact that the applicant’s staff had not been involved in the husbandry of the sheep to show that this could not be an agistment. Mr Kermack had contended that clarification of this matter by way of debate would shorten proceedings. It seemed to us, as the debate progressed, that there was a factual conflict as to all potential criteria of agistment. Mr Kermack said the applicant placed reliance on the terms of an early admission by the respondents that the arrangement was indeed an agistment. This admission will plainly be an important adminicle of evidence although the respondents would not be the first to use the term wrongly. However, no such admission is repeated in the respondents’ pleadings.

[8] Under the present pleading we are satisfied that the parties will be able to lead evidence of the whole facts and circumstances relating to the winter arrangements and seek to draw their separate inferences as to nature of the contract. The parties are unlikely to be taken by surprise by material bearing on the day to day arrangements for the sheep. However, there is no reference to any actual discussions between the parties. Some such evidence might be admissible on the present pleadings to show how the rate per animal was determined. But if evidence of discussion is to go beyond the bare issue of rate, fair notice would require more specification of detail. The respondents should say how, when and by whom they say that verbal grazing agreement was made, if they are to maintain that assertion. It might be helpful to have express averments as to how arrangements were made to determine how many sheep were to be allowed on the applicant’s land at any time.

Submissions

Submissions for applicant

[9] For completeness we note that Mr Kermack, in opening, made reference to the respondents’ averments about sham agreements. For reasons discussed below it is unnecessary to deal with that material at this stage. He based his main argument on the definition of a contract for care and custody in Bell’s Principles at paragraphs 155 and 156. It was plain that Bell took that as applying to agistment. He contended that an agistment or wintering contract was a nominate contract. These were simply the names for a contract of custody applied to sheep. We heard some discussion of the requirement to protect the sheep from dangers. Issues of that sort did not arise sharply in the present case but explained several references to “taking care” for the stock in previous cases. The main focus of debate was related to what might, in neutral terms, be called the welfare of the sheep. We understood it to be accepted that the agister had to ensure that the stock had enough grass available to them but it was not accepted that this went as far as an obligation to ensure that the sheep were adequately fed. A contract of agistment was to be contrasted with one for livery of horses. The former was described by Bell as “depasturage”. It had to do with providing grass. It did not cover what would be required by way of dressing and feeding a horse. Mr Kermack did not accept that the obligation was to look after the animals in the same way as an owner would look after his own stock. Dicta to that effect should be treated as limited to the context of avoiding risk of danger. He submitted that there was, for example, no duty to try to protect the stock from the consequences of adverse weather. The owners had to accept the risk that they might not get all their stock back. The concept of “looking after” the stock was not an essential of agistment. Mr Kermack agreed that, over the years, some other duties such as an obligation to “look after” stock might have come to be implied. But, when considering the question of whether there was a lease or a contract of custody, the latter meant no more than Bell had described. All the agister had to provide was a safe place for sheep to graze and grass for them to feed on.

[10] Reference was made to several Scottish cases which we discuss below, principally: Grant v Ferguson; Hutchison v MacInnes and M’Lean v Warnock. Mr Kermack also submitted that the law of England was the same: Hutchison v MacInnes at p 53. There was an English statutory provision which threw helpful light on the matter. This was sec 45 of the Agricultural Holdings (England) Act 1883. The provision was considered in London and Yorkshire Bank v Belton, Ross and Smith and Masters v Green. He submitted that in Richards v Davies the court had gone too far in saying that an agister “generally looks after the safety and well-being of the sheep”.

[11] Mr Kermack touched on some features which distinguished agistment from let. Agistment did not specify a particular field; it did not allow exclusive use of fields; it left the owner to put the stock where he pleased. The applicant avers that there was an arrangement to that effect. But, at the end of the day it would not matter whether the arrangement was what was now known as agistment or not. It was sufficient that it was not a let or lease of the land.

[12] In his opening submission, Mr Kermack had not found it necessary to refer to dicta in the Barachander case although it was in his bundle of authorities. In response to Mr Barclay, he submitted that the nature of a contract of agistment had not been in issue in that case. All the relevant observations were obiter. He pointed to the quoted evidence of the expert witness that if dosing of sheep was required the agister would tell the owner. This showed an understanding that husbandry of the animals was left to the owner. Agistment might involve two contracts: one for custody and one for services. It was not the same as let. Halsbury provided an updated definition of the term in English law. It did not differ markedly from the definition in Bell.

Submission for respondents

[13] Mr Barclay pointed out that the sole issue appointed for debate was the nature of agistment. He took us, in detail, through the pleadings in support of his submission that the respondents had averred enough to show that they had a lease. In broad summary, the respondents intended to prove that they had been allowed to remain in possession after the summer grazing and that there had been no change in the manner of their operation of the land and their stock. Their sheep had had exclusive use of the same fields as in the summer. They had needed a good deal of supplementary winter feeding. This had been provided by the respondents’ staff. The respondents intended to prove that the applicant and his staff had had no involvement with the sheep. He accepted that there had been a different basis of payment in the winter but this did not point to agistment when there had been no discussion about that. He accepted that if it could be proved that the applicant’s foreman had been actively controlling and moving the sheep, that would point to agistment. This would simply be part of the agister’s job in ensuring their welfare.

[14] Counsel referred to the dicta of Lord Gill in Barachander and observations in his book at 4.15. This material was more up to date than Bell and was more authoritative.

Discussion

[15] On the essential question of whether the wintering arrangement between the parties was to be treated as a contract of let or a contract of custody neither party raised expressly the issue of onus. That was a sensible enough approach to debate in a case with both application and counterclaim. The burden of proof is seldom in issue after a full hearing. However, if there is no clear onus on the respondents, debate as to the precise scope of the agister’s duty would not allow the issues between the parties to be resolved without proof. There is a plain conflict as to fact in relation to whether any of the essentials of agistment were in place. However, it was thought that clarification of the duties of a landowner under a contract of agistment might save time at proof and might facilitate settlement. As we observed at debate, this case raises interesting legal questions. Clients seldom fully share that interest and it seems to us a case where they would be well advised to resume their own attempts to settle their dispute without undue regard to the finer points of law.

[16] Mr Kermack advanced some argument on the subject of “sham” agreements. Mr Barclay accepted that it was not easy to see whether that concept properly applied. But he said this was because the applicant’s position was not clear. It appeared to us that there was no question of parties giving a false label of “agistment” to the winter arrangements – because there were no averments of express agreement. The question was one of the true nature of the contract and the various authorities about sham agreements would have little bearing on that. In the circumstances, and as the debate had been fixed on a narrow basis, we were not prepared to deal with theoretical questions about such agreements. However, any relevant submissions can be advanced after proof. If the winter arrangement was properly to be seen as a contract of custody, it would not appear, to us, to matter that it had been entered in preference to the alternative of a grazing let simply to avoid the provisions of the 2003 Act.

[17] It is important to have regard to the context of the dispute. After proof it may well turn out that the real question is whether the winter arrangement had the cardinal features of a lease and, if so, whether there was some element which could prevent it from falling to be treated as such. It would be enough for Mr Kermack’s purpose to show that the arrangement was not equivalent to a lease. If an intention to have a contract of agistment was established, it would not fail to have effect as a contract for custody merely because it fell short of a modern agreement. However, if there was no explicit agreement, absence of evidence of the landowner taking any significant measures of care for the stock would be a factor to be weighed in considering whether an inference of agistment was properly to be drawn from the whole facts and circumstances established after proof.

[18] We have come to the view that Mr Kermack was right to say that a modern wintering contract has elements which can be seen as additions to the basic concept discussed by Bell. If there was a dispute about an admitted contract of agistment, evidence of current practice might well show how the implications of the contract had grown over the years. Such considerations would not address the question of whether any particular arrangement was agistment or not. Whatever might fall to be implied in the case of any specific contract in modern circumstances we accept that the contract of custody of sheep, known to Bell as depasturage, would have involved only a duty to provide adequate grass and take care for the safety of the stock.

[19] At a time of subsistence farming, availability of extra feed to supplement grass would be very limited. A fundamental practical characteristic of wintering arrangements was that they allowed stock from the harsher parts of the country to take advantage of grass on an agister’s farm. The agister could not have been expected to have ready access to supplementary feeding. He would try to ensure that he did not undertake to care for more stock than he expected to have grass for. Although the owner of the stock might wish to satisfy himself of this before committing his stock, the duty to provide sufficient grass for the numbers taken would lie on the agister. We see no basis for any implication that the duty of feeding was any higher. Taking the same degree of care as the owner would not require provision of more feedstuff if none was to be had. A question does arise as to how sufficiency of grass might be defined. We did not hear submissions on this point. Something on the lines of “sufficient to keep the animals in reasonable health” would seem to be a fair way to put it although we would not exclude the possibility of a more refined definition. Stock might be expected to be pretty scrawny at the end of winter but if alive and capable of making normal progress when grass was growing again, that must have been broadly what was expected. Accordingly, although Mr Kermack’s submission that there was no duty to ensure that the stock were adequately fed, simply a duty to ensure there was adequate food, might seem a rather narrow point, it was consistent with what must have been the expectation in Bell’s day. An illustration of the difference would come in time of adverse weather. The agister would not then have been expected to do more than the owner could have done if the sheep could not get at the grass.

[20] This view is consistent with the basic contract as described by Bell, Principles 155. He explains that the contract for hiring of care and custody was the contract regulating “… persons who keep depasturing fields for cattle. The engagement is for safekeeping: and this implies a secure place of custody … A grazing field guarded against the escape of cattle and free from pitfalls and dangers. It implies the personal care of the lessor and his servants, to prevent injuries incident to property in that situation. By express contract, or even by notice, these liabilities are alterable in extent of responsibility.” In his Commentaries, Bell said of “custody”, “the care required of a custodier is such as a diligent and prudent man takes of his own property … The case differs a little where a horse is sent to a livery stable; since in this case there is not mere custody but also the labour of dressing and feeding. … But if the party be made aware of any peculiarity in the condition of the place of custody, it may by acquiescence or tacit agreement become a part of the contract, or a limitation of the responsibility”.

[21] In other words, the agister’s obligation was to provide a safe place to graze and sufficient grass to keep the stock reasonably healthy. In Barachander there was evidence and discussion of the modern and historical contract, without any clear distinction being drawn. There was also discussion of the obligations imposed by various statutory provisions. However, we see no reason why parties should not enter a contract on basic terms. The problems of responsibility for compliance with statutory provisions would fall to be resolved by reference to the provisions in question rather than by the terms of the parties’ agreement. The implied terms of a modern contract may vary a bit depending on peculiarities of place and other circumstances. It may well be an implied term of a modern contract that the agister should supplement the grass when necessary.

[22] The respondents founded strongly on dicta in the Barachander case and we were taken to the narrative of evidence of one of the expert witnesses for discussion of what was implied in a modern contract. The findings of the Land Court as to the nature of a contract of agistment were conveniently summarised by Lord Gill at [21] as follows: “The Land Court found that the contract … was of a kind well known and well understood in Scottish agricultural practice that had long been in use to govern the away-wintering of stock. It was of the nature of a contract of care and custody for hire with an element of services. Under such a contract the custodian had, historically, had the duties of (i) taking reasonable care for the welfare and well-being of the stock, and in particular by providing them with sufficient food to keep them in good health, and (ii) taking reasonable care to protect the owner of the stock from loss that could reasonably be avoided.”

[23] The description of the contract expressed by Lord Gill at [31] was:” A contract of agistment is a contract under which an agister agrees, for payment, to provide grazing for, and to supervise and look after, the owner’s stock on land that the agister owns or occupies.” At [32] he added: “The contract of wintering specifies the location of the winterings, the duration of the contract, the number of the stock and the winterer’s fee. The contract is almost invariably concluded orally. It is implied in a contract of this kind that the winterer will take reasonable care for the health and safety of the stock by supervising them and ensuring that they are adequately fed.”

[24] We accept Mr Kermack’s submission that these summaries were obiter. The issue before the court related to the fault of the stock-owner and did not involve close examination of the extent of the care obligation. His main contention was well supported by dicta in Hutchison v McInnes. In that case the agister had grass available from April but it was only suitable for cattle which had been out wintered or were reasonably well nourished. The cattle were in a weak and undernourished condition when delivered, not fit to be put out to hill grazing. The agister did augment the feeding when the cattle first arrived but in the first week three died. After the owner took the remaining stock back, three more died. All had died of starvation and exposure. Other cattle on the agister’s hill thrived. Sheriff Alan G Walker, then Sheriff-substitute, said: “The defender having been sent the cattle to graze on the hill, was bound only to graze them on the hill and in hand feeding the weaker beasts he did more than he was bound to do.”: p54. Sheriff Maconochie, on appeal, expressed general agreement with Sheriff Walker except in relation to the three animals which died after they had been taken back. Essentially this was a difference in relation to causation. There was an obligation on a custodier to give the owner warning of any problem in order to give him “opportunity of taking such further measures as may seem proper to him to obviate the danger of further disaster”: p 56. The Sheriff held that if there had been earlier warning the owner might well have been able to save these animals. The case supports our conclusion that the basic obligation was to provide sufficient grass to keep the animals reasonably healthy.

[25] A more elaborate discussion of the general practice of wintering can be found in Grant v Ferguson. This was a typical wintering arrangement when stock from an upland farm was wintered in a more clement situation in Morayshire. The parties had not expressly agreed the nature of the contract but it followed an advert offering “wintering to let; sheep”. The pursuer contended that the arrangement was for “wintering sheep”. The defender said that it was a let of winter grazing together with supervision of the flock from day to day. The problem was that there was virtually no grass. The defender had provided some turnips and a little hay. The animals were found, on police inspection, to be in a seriously starved state. There was a great deal of other evidence about the condition of the sheep and little doubt that they had been very poorly looked after.

[26] Sheriff-substitute Guild discussed the practice of wintering at some length, explaining the practical realities in some detail. He said that the form of contract was perfectly well known and perfectly well understood so much so that written contracts were almost unknown. However, his familiarity with the general practice of wintering arrangements did not lead to an absence of confusion or ambiguity as to the underlying legal principles. The learned Sheriff appeared – correctly in our view – to see wintering as a double contract. However, he described it as “the let of grazing coupled with a measure of location conductio operarum.”In short, a contract of grazing together with a contract for services. We are satisfied that the basis of a normal agistment is a contract of custody together with a contract for services: the implied extent of the latter might vary a good deal.

[27] Sheriff Guild’s discussion of exceptions from wintering included reference to a case where “the pasture was adjacent to the farm from which the sheep came”. Another example was of a man who would “take pasture and provide supervision himself.” He considered the situation where “the recipient (in other words the landowner receiving the sheep) having no duty of supervision, has no right to interfere with the sheep” and described this as “a pure let of pasture.” The sheriff went on to consider some factors which might distinguish wintering from a simple grazing let. He referred to the rate being paid for the sheep. In that case the contractual rate fitted the normal price inclusive of supervision. There was evidence that the defender had penned up the sheep in one field. This pointed to a contract involving supervision rather than simply a grazing let. However, we are satisfied that Sheriff Guild’s analysis and comments based on the idea of a combination of a let of grazings and a contract for services is essentially flawed. It is inconsistent with the passages from Bell, above; the brief comment of Lord Gill in his book at 4.15, and the dicta in Baracchander. Accordingly, we do not think anything said in Grant v Ferguson provides reliable guidance to the issue before us.

[28] For completeness we touch briefly on the English cases although we do not consider them to provide any assistance. The London & Yorkshire Bank case was concerned only with the question of whether payment in milk in exchange for grazing of two cows was a “fair price” within the meaning of the statutory provision in sec 45 of the 1883 Act. We note in passing that the report reveals some confusion as to which party is to be termed “agister”. Nothing turns on this other than that the court might not have been very familiar with agricultural matters. Masters v Green did deal with the question of whether cattle were “taken in” within the meaning of the section by the tenant of the field ( for present purposes equivalent to the owner.) Where such a tenant had simply given another party an exclusive right to feed an identified area of the grass for four weeks this was not an agistment. Some element of supervision was required. Richards v Davies supported the argument that an agistment was to be distinguished from a let. It pointed to the question of whether the grazing was fixed on a particular part of the farm or not, as being a key distinction: p94. Mr Justice Lawrence did observe that, “I do not agree that the mere fact that the grantor waters and generally looks after the safety and well-being of the sheep and cattle determines the question as to whether the grantee is or is not using or occupying the field”. If a specific piece of land was to be used, he plainly considered this had the characteristics of lease. However, we think this adds nothing to the present debate. We note that in In re Capon agistment was defined in terms of an obligation on the agister to feed the animals but the context was of demolition of a completely “fantastic story” and the implications of feeding did not required to be explored.

[29] In short, we are satisfied that the fact that the applicant might never have considered whether the sheep needed extra care or treatment, or provided food for them when they could not get at the grass, would not by itself demonstrate that the arrangement was not one of agistment. The fact that the respondents might have provided extra feeding for the stock would not be critical if there was enough grass there in any event to keep the animals in reasonable health. There might be inferences to be drawn from an arrangement which left all responsibility for stock to the stock-owner but this would simply be a factor to weigh against other matters in considering whether the underlying arrangement was properly described as agistment or let.

Decision

[30] We determine that a contract of care and custody of sheep, of the type referred to as “agistment”, does not necessarily involve the custodier in provision of feeding other than by reference to there being adequate pasture to maintain the agisted stock in a reasonable state of health.

[31] A proof before answer is required. Mr Barclay moved for three weeks for the respondents to make any further adjustment. This need not delay fixing a date for proof. We allow the applicant a further three weeks for that purpose, if necessary.

[32] Parties were agreed that there were no specialities to expenses and that normally expenses of debate would follow success. However, we are not persuaded that the debate in this case has advanced the real dispute. Mr Kermack has successfully persuaded us that the duties of an agister in relation to feeding of stock might be more limited than some dicta might suggest but we are not satisfied that this will advance matters to any significant extent. It may be observed that the debate did not allow any of the many pleas in law to be determined. We think it appropriate to make a finding that expenses should be expenses in the cause. For avoidance of doubt, we take the “cause” for this purpose to be that part of the dispute that relates to the arrangements for the sheep. We certify the debate as fit for the employment of counsel. The case as a whole raises a variety of issues and the question of agistment is one of difficulty in the particular circumstances.