THE COURT

(Lord McGhie, Mr A Macdonald)

PATRICIA MARGARET PATON v CHARLES HECTOR OGILVY MACLEAN

(Application SLC 97/12 – Order of 22 August 2013)

AGRICULTURAL HOLDINGS – POST LEASE AGREEMENT ACCEPTING CONDITION OF FIXED EQUIPMENT – CONSTRUCTION OF STATUTE – “WHICH PURPORTS TO PROVIDE” – A CONSTRUCTION WHICH GIVES POSITIVE EFFECT TO THE PROVISIONS – PURPOSIVE CONSTRUCTION – INTERFERENCE WITH EXISTING RIGHTS – AGRICULTURAL HOLDINGS (SCOTLAND) ACT 1991, AS AMENDED, SEC 5(2), SEC 33A

The applicant claimed various payments arising out of the termination of her tenancy of Spott Farm, Glenprosen. She had initially been general partner in a limited partnership which had entered into a PLA in terms of which the tenants accepted “the whole … fixed equipment as in a state of repair sufficient to enable them to maintain production as regards the kind of farming carried out on the said farm …” – “the acceptance provision”. The applicant claimed for various works said to come within the provisions of sec 33A as being works carried out by the tenant because the equipment supplied by the landlord at the outset of the lease was not sufficient to allow the tenant to maintain efficient production of the enterprise suited to and present on the holding at the time. She contended that sec 33A superseded the acceptance provision which might otherwise preclude the leading of evidence on the subject. The landlord contended that as the legislation had made no attempt to set aside the “extrinsic evidence rule” that rule should prevail. It was contended that it would prevent the leading of evidence that the agreement was inaccurate.

HELD that it was impossible to avoid the conclusion that Parliament intended to strike at agreements which had the effect of restricting claims for compensation and not just agreements which did so in terms. That was the view the Court had taken in the Telfer cases and there was no reason to depart from it. However, the issue could be seen to turn on the proper meaning to be given to the words “which purports to provide” in sec 33A. This fell to be construed as equivalent to “having the effect of providing”. In other words it required consideration of the effects of an agreement rather than the language in which is expressed.

OBSERVED that in straightforward cases the Court would expect to hear submissions on expenses at the conclusion of a hearing rather than always deferring for written submissions.

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

[1] The applicant claims various payments arising out of the termination of her tenancy of Spott Farm, Glenprosen. She had initially been general partner in a limited partnership with the respondent as the limited partner and the tenancy was based on a sub-lease. However, for present purposes nothing turns on the detail of these arrangements. The limited partnership had entered into what can conveniently be referred to as a post lease agreement (“PLA”). It was not disputed that the applicant stood in the shoes of the partnership as far as that agreement was concerned and that the present parties could simply be referred to as “tenant” and “landlord” respectively. We heard debate on the question of whether the provisions of the agreement were vulnerable to the effects of section 33A of the Agricultural Holdings (Scotland) Act 1991, as amended by the 2003 Act. The parties were represented by Mr Hamish Lean and Mr Colin Hamilton, respectively, both solicitors.

Authorities referred to

Cameron (Scotland) Ltd v Melville Dundas Ltd 2001 SCLR 691
Johnson v Moreton [1978] AC 37
L. Schuler A.G. v Wickman Machine Tool Sales Ltd [1974] AC 235
Salvesen v Riddell [2013] UKSC 22
Telfer’s Executors v The Buccleuch Estates Ltd 2006 SLCR 131 (“the first Telfer decision”)
Telfer v The Buccleuch Estates Ltd 2009 SLCR 110(“the second Telfer decision”)
Telfer The Buccleuch Estates Ltd 2010 SLCR 149(“the third Telfer decision”)
Turton v Turnbull [1934] 2 QB 197

Other material

Stair Memorial Encyclopedia Vol 12
Bennion on Statutory Interpretation 5th Ed.
Agricultural Holdings (Scotland) Bill as introduced
Scottish Parliament Official Reports (Rural Development Committee): 19 November 2002, 21 January 2003, and 4 February 2003.

Statutory Material

Agricultural Holdings (Scotland) Act 1949
Agricultural Holdings (Scotland) Act 1991
Agricultural Holdings (Scotland) Act 2003

Main relevant provisions

Section 5(2)(a) of the 1991 Act provides:

“(2) There shall be deemed to be incorporated in every lease of an agricultural holding to which this section applies—

(a) an undertaking by the landlord that, at the commencement of the tenancy or as soon as is reasonably practicable thereafter, he will put the fixed equipment on the holding into a thorough state of repair, and will provide such buildings and other fixed equipment as will enable an occupier reasonably skilled in husbandry to maintain efficient production as respects both—

(i) the kind of produce specified in the lease, or (failing such specification) in use to be produced on the holding, and

(ii) the quality and quantity thereof,

and that he will during the tenancy effect such replacement or renewal of the buildings or other fixed equipment as may be rendered necessary by natural decay or by fair wear and tear;”

Section 5(3) of the 1991 Act until repealed by the 2003 Act with effect from 27 November 2003 provided that:

“(3) Nothing in subsection (2) above shall prohibit any agreement made between the landlord and the tenant after the lease has been entered into whereby one party undertakes to execute on behalf of the other, whether wholly at his own expense or wholly or partly at the expense of the other, any work which the other party is required to execute in order to fulfil his obligations under the lease.”

Section 34(4) of the 1991 Act until repealed by the 2003 Act with effect from 27 November 2003 provided that:

“(4) Nothing in this section shall prejudice the right of a tenant to any compensation to which he is entitled -

(b) in the case of a new improvement, under an agreement in writing between the landlord and the tenant;

in lieu of any compensation provided by this section.”

Sec 43 of the 2003 Act introduced sec 33A into the 1991 Act. Sec 33A provides:

“33A Agreements as to compensation for improvements

Where the tenant has carried out an improvement–

(a) specified in Part II or III of Schedule 5 to this Act; and

(b) by executing work which the landlord was required, at the time the lease was entered into and by virtue of section 5(2)(a) of this Act, to execute in order to fulfil his obligations under the lease,

any term of the lease or of an agreement between the landlord and tenant made before the coming into force of this section which purports to provide that the amount of compensation payable to the tenant for the improvement is less than the amount of compensation to which the tenant is entitled under this Part of this Act for the improvement (or that no compensation is payable) shall not apply in relation to such part or proportion of the improvement as the landlord would have been so required to carry out in order to fulfil those obligations.”

Background

[2] The PLA was executed on 24 December 1982 and 25 January 1983. It included the following provision in Clause One:

“The Sub-tenant accepts the whole … fixed equipment as in a state of repair sufficient to enable them to maintain production as regards the kind of farming carried out on the said farm …” (Hereinafter “the acceptance provision”)

[3] Clause One also included a specific provision (f) which provided, in effect, that neither the respondent, who was head tenant, nor the Partnership, who were sub-tenants, should be liable for renewing fixed equipment that had worn out or was incapable of further repair; but that the respondent could optionally renew such fixed equipment provided that unless agreed otherwise the compensation at waygoing would be written down at a rate of 1/20th of the net outlay per complete year since being incurred.

[4] In terms of Statement 3 of her Statement of Facts, the applicant has claims for various works carried out in course of the lease. These are said to come within the provisions of sec 33A as being works carried out by the tenant because the equipment supplied by the landlord at the outset of the lease was not sufficient to allow the tenant to maintain efficient production of the enterprise suited to and present on the holding at the time. In short, that the landlord did not comply with sec 5(2)(a). The work in respect of which the relevant claims were being made was carried out in the two or three years following execution of the lease. The tenant proposes to lead evidence supporting these averments, including a report by SAC Consulting. This appears to base a finding as to the situation at the start of the lease in 1982 on evidence of the work done by the tenant after execution of the PLA. The applicant contends that sec 33A has effect to set aside the acceptance provision of the PLA which might otherwise preclude the leading of evidence on the subject.

Submissions for respondent

[5] Mr Hamilton had helpfully provided full written submissions. We need not attempt to restate them in any detail but it is appropriate to indicate the broad lines of his argument. Further detail will be apparent from the discussion below.

[6] Under the acceptance provision in the PLA the tenant expressly accepted that as at the date the lease was entered into there were no requirements for the landlord to execute work under sec 5(2). Evidence of the parties’ conduct subsequent to the acceptance provision would be excluded if the term in question was clear: Cameron (Scotland) Ltd v Melville Dundas; L. Schuler A.G. v Wickman Machine Tool Sales Ltd [1974] AC 235. This could be referred to as “the extrinsic evidence rule”. It was not suggested that there was any ambiguity about the contractual provisions in this case. The extrinsic evidence rule was a wide rule. It was well established. It would exclude direct evidence of the state of the equipment in 1982.

[7] Section 33A exhaustively set out the circumstances in which it applied. He accepted the analysis in the first Telfer decision, at p 169, where the Court said:

“Under section 33A various conditions must be met before any agreement is to be set aside. The section can be analysed as saying:

(a) the tenant must have carried out work capable of being an improvement;

(b) it must have been of a type specified in Part II or III;

(c) it must have been by executing work which the landlord was required to execute by virtue of section 5(2); and

(d) that requirement must have existed at the time the lease was entered into.”

[8] It was accepted by the landlord, for the purpose of this debate only, that the tenant would meet (a) and (b). The landlord’s position was that, in the circumstances of the present case, the tenant failed on (c) and (d) because the provisions of the PLA barred the applicant from arguing that (c) and (d) applied.

[9] It was submitted that the underlying question for determination was whether Parliament had legislated to disapply the extrinsic evidence rule for the purposes of sec 33A. There was nothing to suggest such intention. Accordingly, sec 33A of the 1991 Act was not engaged in the present case. If this was correct, it was unnecessary to consider whether sec 37A of the 2003 Act was within the legislative competence of the Scottish Parliament. However, if the tenant’s position was correct, valuable contractual rights would be removed from the landlord without compensation. The landlord reserved his position on the legislative competence of the section. We understood that this reservation was intended to relate to any appeal stage.

[10] The object of all interpretation was to discover the intention of Parliament, deduced from the language used. Mr Hamilton referred to a variety of authorities dealing with the proper approach to construction. He stressed that Parliament must be assumed to know the common law, and the court should not readily infer alteration of an established principle. He cited the Stair Encyclopedia at paras 1102, 1114, 1124, 1126, 1127, 1131 and 1190; and Bennion pp 846 and 943. There was nothing to suggest any intention to change the extrinsic evidence rule. A strict approach was appropriate where a party might otherwise lose rights retrospectively.

[11] He submitted that the analysis of sec 33A in Telfer, above, was correct. The mischief at which the section was directed was landlords who potentially reduced tenants’ compensation at waygo for works the landlord should have done at the outset of the lease. He referred for convenience to such a landlord as a “bad landlord”. Parliament could have provided that any agreement made before the Act providing for less compensation for an improvement than provided for in the Act was null and void. That would have struck at the PLA. Parliament did not provide for that. ‘Good’ landlords could continue to benefit, subject to any future nullification under the new provisions of sec 5 at subsecs (4A) to (4C).

[12] Parliament restricted the retrospective effect only to one category of person: “the bad landlord”. Because sec 33A was a retrospective measure it would have been obvious that evidence of the state of equipment well in the past might be required. Parliament did nothing to alter the extrinsic evidence rule, which was well established by the time of the 2003 Act. Section 33A had to be interpreted as consistent with the extrinsic evidence rule. Where it could be proved that the landlord did not comply with sec 5(2) the tenant would be entitled to have any write-down provision set aside. But Parliament had done nothing to change methods of proof.

[13] Mr Hamilton referred to the observations of the Court in the third Telfer decision at para [36]. It was submitted that the Court had looked at the argument from the wrong viewpoint. It was necessary to consider the state of the law when the 2003 Act was passed. Nothing needed to be read into the 2003 Act to infer intention that the admissibility of evidence would be restricted, because that was established law. On the contrary, to reach the conclusion that the statement in the PLA could be overridden it was necessary to infer an intention that Parliament wished to oust the extrinsic evidence rule. Johnson v Moreton could be distinguished. The issue there was a mandatory provision in force when it was purportedly contracted out of. The present case related to an attempt retrospectively to alter the effect of the acceptance provision. Plainly the acceptance provision had never been intended to subvert the purpose of the 2003 Act. In making no attempt to alter the law of evidence Parliament had struck the balance between the continuity of the law and interference with existing rights.

[14] Because the intention of Parliament was clear from the wording of the Act, there was no need to refer to the pre-enactment material. However, he referred to some of that material for completeness and said it supported his position. The relevant provisions as originally introduced in the Bill, at sec 37, had said that “Any agreement referred to in sub-section (4)(b) above which purports to provide that no compensation is payable in respect of an improvement shall be null and void.” Parliament could, by different wording, have provided that write-down agreements were null and void. It chose not to do so.

[15] The Rural Development Committee of the Scottish Parliament considered the Bill in detail on various occasions. There was concern about the retrospective effect on writing down agreements and post lease agreements. Government witnesses said that the effect on prior agreements would have to be carefully considered. Parliament was aware of the widespread use of acceptance provisions in post lease agreements. It obviously chose - for whatever reason - not to deal with it.

[16] In short, the tenant’s argument subverted the intention of Parliament. There was no gap to be filled by the Court. On a proper interpretation the PLA excluded other evidence which might support the tenant’s contention that the fixed equipment did not comply with sec 5(2). The Court should sustain the respondent’s second plea in law and exclude from probation the averments in Statement 3.

Submissions for the applicant

[17] For the tenant, it was submitted that the issue had effectively been determined by the court in several of the decisions in Telfer v Buccleuch. Reference was made to the first Telfer decision at pp 68 – 170 and to the second at [99].

[18] The “extrinsic evidence” rule was more accurately to be looked at as following from the proposition that parties were bound by their contracts. But, clearly section 33A was, indeed, intended to interfere with contracts. The broad reference to an extrinsic evidence rule could not hide that. The contract was displaced if the tenant overcame the evidential burden of proving the points required by the section as set out by the court at page 169 of the first Telfer decision.

[19] Clearly the effect of the acceptance provision was that the tenant would not be able to claim compensation. That, in substance, brought the matter under section 33A. It was appropriate to have regard to the provisions for nullification of agreements in terms of sec 5. The principle of looking beyond the words used and at the substance had been accepted by the court: first Telfer decision at p169. There was no question of injustice because the tenant had to establish as a fact that the landlord had not complied with the obligations under section 5. The whole purpose was to prevent the landlord benefiting from work he should himself have done.

[20] Although Mr Hamilton had simply reserved his position in relation to a possible human rights argument, Mr Lean submitted that it was clear that Parliament had a substantial margin of appreciation: Salvesen v Riddell at [36]. In his submission it was plain that the provisions of sec 33A fell well within that margin. All it meant was that the landlord would no longer get something without paying for it when it was something he should have paid for in the first place.

Response

[21] In a brief response, Mr Hamilton affirmed his reliance on his main submission. He pointed out that there was a significant distinction between the nullification provisions of sec 5 and the provisions of sec 33A. The former looked forward. Dicta bearing on the former were referring to quite different territory from the provisions of sec 33A. He stressed the difference between “acceptance provisions” and “writing down provisions”. Clause 1(f) was an example of the latter but the main provisions of clause were not struck at.

Discussion

[22] Mr Hamilton presented his material attractively. He made use of shorthand labels to refer to certain elements of his argument and this can be a very useful way of simplifying a presentation. For example, “acceptance provision” is a helpful label which we have readily adopted to cover the provisions of the PLA set out in para [2] above and we use the plural to refer more generally to provisions of this type. However, we have come to the view that his reliance on the “extrinsic evidence rule” as a distinct concept was misleading. He defined it in terms of a rule that evidence of the parties’ conduct subsequent to the acceptance provision would be excluded if the acceptance provision was clear and he did appear to intend the definition to be precise and to refer to future conduct of parties. He vouched it by reference to Cameron (Scotland) Ltd v Melville Dundas Ltd and the decision of the House of Lords in Schuler A.G. v Wickman Machine Tool Sales Ltd. Both these cases dealt with the exclusion of the actings of parties as a guide to interpretation even of an ambiguous provision. However, we are satisfied that the argument in terms of an extrinsic evidence rule, though persuasively presented, set up a false target. The underlying rule is that parties are bound by the terms of their contracts: pacta sunt servanda. There was no scope in this case for any suggestion that the future conduct of parties could have the effect of qualifying the meaning of the acceptance provision. The intention was to lead evidence of what one party, the tenant, had had to do after the contract by way of providing herself with sufficient equipment with the intention of showing the true state of affairs. No attempt was being made to change the meaning of the acceptance provision. The real question is whether the plain meaning and effect of that provision is overruled by the provisions of sec 33A.

[23] This is not a matter which turns on any disputed question of construction of the contract. At risk of labouring the point, the irrelevance of the extrinsic evidence rule can be illustrated by imagining a lease which included a description of the state of the equipment, perhaps by reference to a record, but explicitly set out the tenant’s agreement to accept the equipment as sufficient performance of the landlord’s obligations. Evidence of the true state of the equipment would be found within the contract but would not over-ride the plain contractual acceptance. It seems to us that the exclusion of extrinsic evidence as a matter of construction has no bearing on the present case.

[24] Nothing appeared to turn on Mr Hamilton’s use of the label “bad landlords” as part of his explanation of the statutory provision. He defined it as meaning “landlords who potentially reduced the tenant’s compensation at outgo for works the landlord should have done at the outset of the lease”. He tried to draw a distinction between such landlords and “good landlords” but the distinction was never made very clear. It might be thought that the tenant was offering to prove that the respondent was, indeed, a bad landlord within the meaning of the label. The landlord’s obligation to provide sufficient equipment under sec 5(2)(a) existed at the outset of the lease. The tenant says the landlord did not do the work necessary to fulfil his obligation. She had to provide the necessary equipment herself. The landlord required her to enter an agreement which has potentially removed her entitlement to compensation for the work. Mr Hamilton did not attempt to define a “good landlord” except by contrast. If that term was to apply to the present landlord by way of contrast with a bad landlord, it would seem to have to cover a landlord who did not seek to reduce compensation but tried to exclude it altogether by requiring the tenant to agree to acceptance provisions which, ex hypothesi, must have been known to the parties to be false.

[25] Although we have not found these particular labels helpful, it is clear that problems over labelling do not go to the heart of the dispute. The arguments used in connection with Mr Hamilton’s extrinsic evidence rule do not appear to us to add to the proposition that parties are bound by their contracts. The provisions of sec 33A are quite specific. They do not make any reference to acceptance provisions. They should be read narrowly and accordingly cannot be said to deal with the relevant contractual provisions in this case. While the good and bad landlord labels did not assist us, we think they may have tended to obscure a distinction which Mr Hamilton came to describe in a different way when dealing with the Parliamentary history discussed further below. We have no doubt that an obvious distinction can be drawn between agreements which proceed on the basis of acceptance provisions and those expressed in terms of writing-down agreements.

[26] We discussed this briefly in the first Telferdecision where we observed, at page 170, that the provisions of PLAs tend to be expressed in terms of obligations of repair and renewal rather than by reference to improvements. Acceptance provisions would tend to appear in relation to the provision of sufficient equipment at the outset of the lease. They might be expected in any agreement entered in virtue of the provisions of sec 5(3) of the 1991 Act. In other words such provisions would be expected to be used in connection with the provision of equipment at the outset of the lease. On the face of them they will tend to deal with landlords’ obligations. Their purpose would be to prevent immediate claims against the landlord. The agreement would not be seen as an agreement dealing with improvements and it would not be expected to make any provision for compensation. It made be added that although this particular PLA did contain, at clause 1(f), described at para [3] above, a reference to compensation being written down, the provision itself was unusual, perhaps explained by the fact that the agreement actually related to a sub-lease.

[27] By contrast with acceptance provisions, writing–down provisions would normally appear in relation to works expressly treated by the parties as improvements. A main feature of agreements relating to such improvements would be to cover issues of compensation. Indeed, the heading of Part IV of the 1991 Act, which is the Part that deals with improvements, is “Compensation for Improvements”. It can be assumed that Parliament had in mind the provisions of the 1991 Act. Some needed positive consent of the landlord. Others required intimation and gave the landlord rights to object. In relation to both these categories a primary consideration would be the potential obligation of the landlord to compensate the tenant when the tenancy came to an end. A common condition was, therefore, that the cost of improvements would be written down over a fairly brief period.

[28] There is some force in the argument that, as the distinction between acceptance provisions and writing-down provisions was well known and only the latter would normally make reference to compensation, a statutory provision expressed in terms of restricted compensation should not be read as intended to include acceptance provisions. Justification for a narrow construction in the present context is to be found in a wealth of authority dealing with statutory construction. However, as it seems to us, that argument is outweighed by the fact that the section deals only with agreements relating to the landlord’s obligations under sec 5(2)(a). The intention to deal with such agreements is explicit. Such agreements would be expected to have the effect of preventing any claim for compensation for work covered by them but not to make any express reference to compensation as such. Accordingly, we cannot avoid the conclusion that Parliament intended to strike at agreements which had the effect of restricting claims for compensation and not just agreements which did so in terms. To take a strictly literal approach to agreements for the purposes of sec 33A would mean, in practice, that no effect would be given to the obvious intention of the section.

[29] That was the view we took in the Telfer cases and we accept Mr Lean’s basic position that, on the face of it, the landlord’s contentions are inconsistent with the view we expressed in these cases. To succeed the landlord requires to persuade us, either that the circumstances of the present case can be distinguished from the context of these decisions or that our previous views require some relevant modification. Mr Lean made specific reference to our finding at para [99] of the second Telfer decision: “An agreement by which a tenant agreed to carry out work which was in fact an improvement on terms which clearly implied that he would get no compensation at all appears to us to be within the scope of sec 33A”. It is unnecessary to repeat our discussion of the proper approach to sec 33A set out in the first Telfer decision at pages 168 to 169 and the discussion from paragraphs [35] to [41] of the third decision.

[30] For completeness it may be noted that in the third Telfer decision we supported our main conclusion by consideration of the precise scope of the relevant contractual term. It was not in quite the same terms as the acceptance provision and no similar argument was advanced in the present case. Accordingly, we do not need to consider the question of whether, and to what extent, acceptance of equipment for one purpose precludes challenge of it in a context which was not within the contemplation of parties at the time.

[31] Mr Hamilton’s explicit challenge was to our observations in the third decision at [36]. That was in the following terms: “Put another way, it would be something of a circular argument to say that an agreement could be set aside if certain conditions existed but to infer an intention that proof of these conditions could be restricted by the terms of the agreement itself. We are satisfied that establishment of the statutory conditions is a matter which requires to be considered independent of the agreement which is under challenge.” He pointed out that this appeared to view matters from the wrong direction. We should have been looking at the statutory provisions to see whether they clearly set aside the agreement rather than considering whether there was any inference of intention. There is some force in this point although our observations were intended simply as another way of looking at a matter we had addressed more positively in the preceding paragraph. We do not think anything turns on this criticism.

[32] However, in light of the landlord’s contentions, we have reconsidered the dicta in the Telferdecisions. We had addressed construction of sec 33A in terms of the intention of Parliament as we derived it from the scheme of the provisions as a whole. If we address the language of the section more closely, it can be seen that the issue appears to turn on the proper meaning to be given to the words “which purports to provide”. If this is to be construed as meaning something on the lines of “on the face of the actual language used” or “sets out in terms” the present agreement would not be within its scope. However, we are satisfied that “purports to provide” falls to be construed as equivalent to “having the effect of providing”. Such a construction was implicit in the approach we preferred in the Telfercases. It is a construction which requires consideration of the effects of an agreement rather than the language in which is expressed. It is the construction which gives positive effect to the provisions. As discussed above, we think it would be comparatively unusual to find an agreement relating to the tenant’s acceptance of obligations or acceptance of equipment which was expressed in terms of restricted rights to “compensation”. We consider the need for a purposive construction to outweigh the need to find a construction which minimises interference with existing rights. The intention was plainly to interfere with such rights.

[33] The use of the word “purports” can, perhaps, be seen as a cautious draftsman’s device primarily intended to avoid the risk of any apparent inconsistency in appearing to say that an agreement which has a particular effect does not have that effect. But, in any event, we cannot accept that it is indicative of an intention to limit sec 33A to agreements which purport in express terms to have a particular effect.

[34] We are satisfied that no modification is required of the substantive conclusions we reached in the Telfer cases in relation to construction of sec 33A. Where the statute gives a right to set aside a particular provision if certain factual conditions are established it is plain that the provision itself cannot prevent the statute from having effect. There may well be cases where the factual conditions to be established include the terms of the agreement in question and we accept that it goes too far to say that contractual terms are never relevant at the first stage. But a distinction must be drawn between consideration of whether the necessary preconditions are established and consideration of the effect of the Act once it is to be applied. Once satisfied of the intention of Parliament as expressed in the language of the statute, the application of that intention to a particular agreement requires consideration of the effect of the agreement rather than the way it is expressed. There is no question of a need for a strict or narrow construction of the agreement itself.

[35] The Parliamentary material to which Mr Hamilton drew our attention shows that Parliament would be aware of the distinction discussed above between “acceptance provisions” and “writing-down provisions”. This might appear to support the view that Parliament intended to give effect to the distinction. But closer examination reveals only that the distinction has not been maintained. Sec 33A clearly deals with the obligations incumbent on the landlord in terms of sec 5(2)(a) and, as discussed above, it would be unusual to find an agreement in relation to these obligations referring expressly to “improvements” and “compensation”. We do not think that the statements made in the Committee are of any assistance. Nor do we think that the contrast between the provision as it stood in in the Bill as introduced and the provision as enacted takes matters much further. It does not throw any real doubt on the construction we think clear. The original Bill provided: “Any agreement referred to in sub-section (4)(b) above [being a reference to that sub-section of sec 34 of the 1991 Act] which purports to provide that no compensation is payable in respect of an improvement shall be null and void”. In other words it related to “improvements” without any attempt to explain that term by reference to work the landlord should have carried out. Reference to the term improvements as used the 1991 Act might have suggested that the provision was limited to “writing-down” agreements. By contrast, the provision as enacted makes it very clear that it is aimed only at work which the landlord should have done at the outset. There is no attempt to strike at subsequent writing-down agreements. The reasons for this change in approach are not explained by the Parliamentary material we saw.

[36] In conclusion we note that Mr Lean made brief submissions in relation to the human rights issues but as Mr Hamilton reserved his position and did not advance any contrary argument, it is inappropriate for us to express a view. We might express a doubt as to whether it is appropriate to seek to reserve matters for appeal in this way but that is ultimately a matter for the appeal court.

Decision

[37] For the reasons discussed above, the landlord’s challenge to the relevancy of direct evidence of the sufficiency of the equipment on the holding at the outset of the lease fails and the second plea falls to be repelled.

[38] No submissions were made about expenses but we assume that parties had in mind our practice of dealing with this by inviting written submissions. We have followed this course. But it may be noted that although this is necessary in many of the cases with which we deal, we think that, broadly speaking expenses should be dealt with as soon as possible. Unless there is an identified reason to await the detail of a decision, it is preferable to make any submissions at the conclusion of a debate. The usual result of a debate will be that the successful side will be entitled to expenses and motions for expenses can be presented on that basis. There may be cases where it might turn out that success could properly be said to be “divided” and there may be cases where a party will wish to argue that for some reason, the debate should not be treated as a separate chapter in the case. But even where such complications arise, they can often be adequately addressed on the basis of alternative submissions at the hearing and without any need to await the detailed decision.