Copyright © 1995 Ian Dawson.
First Published in Web Journal of Current Legal Issues in association with Blackstone Press
Ltd.
Hence it may safely be asserted that we are currently experiencing a period of change and the pace of that change will increase rather than decrease over the coming years. In that context it may be thought especially advantageous for there to be certainty within the farming world as to what the legal consequences of a proposed transaction are. Take a situation which is common enough in other areas of commerce, that of a tenant wishing to agree with his landlord on the surrender of an existing lease with effect from a specified date in the future. Obviously a smooth transition from one use to another may well require that the tenant surrenders the part of the land upon which the change is to take place at some specified time in the future, so that as that tenant farmer quits the land is forthwith available for the new use. In that context certainty is important, perhaps more important than the precise date upon which the changeover is to take place.
Yet a leading textbook on agricultural law (Scammell and Densham's Law of Agricultural Holdings, 7th ed.) firmly states (at p 212):
"...doubts have been expressed as to whether an agreement to surrender in futuro, as opposed to an immediate surrender, would be enforceable, or whether it would be held unenforceable as being contrary to public policy."
Prima facie that seems surprising on at least two counts. Firstly one might expect that the efficient management of a scarce resource capable of varied use would require forward planning, whatever the nature of the resource; and the more so where livestock and growing crops are involved. Secondly one would have expected doubts on a matter of such central importance to the management of many estates to have been clarified either by legislation or by a decision of the court.
But if these doubts are well founded then it will be legally impossible for the landlord and tenant of an agricultural holding so to arrange matters between them that on an agreed date in the future the tenancy will end either as regards the whole of the premises comprised in the tenancy or even of a part - perhaps a small area in relation to the whole subject matter of the lease. For it is well settled that a tenancy cannot be surrendered in futuro. (see eg per Buckley LJ in Elsden v Pick [1980] 3 All ER 235, at p 243). Thus in practice the parties will have to await the passing of the agreed date to see whether the tenant has, or has not, kept his word and quitted. And worse, if such an agreement is void on grounds of public policy, then an unscrupulous landlord who had entered into a 'contract' of surrender under which he agreed to pay a premium to the tenant upon the latter's quitting the land could lawfully, albeit morally indefensibly, refuse to pay that premium.
These doubts do not rest on principles of landlord and tenant law of general applicability. At common law there is no impediment to an agreement to surrender in the future. It is of course true that in respect of tenancies of premises used for business purposes a contract of surrender is void. (Joseph v Joseph [1967] Ch 78) But this is because such a contract offends against section 38 of the Landlord and Tenant Act 1954. This makes void any agreement whereby the right of a tenant of such premises to apply, at the end of the existing tenancy, to the court for a new tenancy is precluded. And in the leading case which so decided, (Joseph v Joseph, supra) the Court of Appeal was very conscious that their decision enabled a tenant to behave dishonourably. Furthermore the Court recognised that in practice the effect of their decision could be circumvented by the landlord and tenant agreeing terms upon which the tenant would serve a notice to quit pursuant to section 27 of the 1954 Act.(1) Hence the 1954 Act itself affords no support for a public policy based on the inappropriateness in general of contracts of surrender. Neither do the Rent Acts which do not themselves preclude agreements of, or in the nature of, surrender.(2)
Rather these doubts rest upon the true breadth of wide statements of public policy emanating from the courts, including the House of Lords.
Undoubtedly the starting point for the doubts expressed in Scammell and Densham (Densham 1989) is Johnson v Moreton [1978] 3 All ER 37, a decision of the House of Lords. In that case the landlords granted a 10 year lease of a farm. In the lease the tenant covenanted, inter alia, that if the landlords served a notice to quit upon the tenant, the tenant would not serve a counter-notice under section 24(1) of the 1948 Act. Since the service of such a counter-notice under section 24 was an integral part of the mechanism by which security of tenure was given to tenant farmers, it is immediately apparent that the purpose of this tenant's covenant was to prevent him enjoying the security of tenure afforded by the 1948 Act. It is therefore wholly unsurprising that the House should approach such a term with scepticism.(3)
The policy which their Lordships discerned in the legislation may have been coloured by the concern that if such policy was formulated narrowly, there could be an argument that the security existed solely for one person, namely the tenant, who ought therefore to be allowed either to take or decline its protection, as he, the tenant, wished. Three strands run through their Lordships' dicta (see Lords Salmon at pp 42 and 43, Hailsham at p 48, Simon at pp 56- 7, Russell at p 59 with Lord Edmund-Davies agreeing with all other speeches but especially that of Lord Salmon):
All these assertions were negatived in the course of the consideration by Parliament of the Bill which led to the 1995 Act, and which has outlawed statutory security of tenure, as is explained more fully below. Implicit in (iii) is that the statutory security was not given exclusively for the benefit of the tenant and hence that the tenant was not free either to take or decline it.
Secondly one may question whether, with the current balance between owner occupation of, and tenancies of, farms, security of tenure is necessary. Until fairly recently this doubtless would have been instantly dismissed as heresy by anyone closely connected with the farming community, for whom security of tenure has been a catch phrase for almost 50 years. But the reality is that over recent years increasing areas of land have escaped the security of tenure provisions of the 1986 Act. So, for example, in introducing the 1995 Bill into the House of Lords, Earl Howe (Parliamentary Secretary for Maff) stated that although one-third of agricultural land was let "much of this is now rented on short-term arrangements such as Gladstone v Bower tenancies" (i.e. tenancies granted for more than one but less than two years, which were not, perhaps by oversight, caught by the 1948 Act).(5) In the Standing Committee A Report on the 1995 Bill Mr Geoffrey-Brown (a specialist land agent member of that Committee) pointed out that there were some
"10,000 agreements on terms that are not in the provisions of the various Agricultural Holdings Acts. They are Gladstone v Bower tenancies, short-term licences, Ministry licences, partnerships or short-term contracting agreements" (6) The continuing use of Gladstone v Bower tenancies in particular is noteworthy. For when Diplock J decided that case in 1959 he said ([1960] 1 QB 170, 179):
"If it were permissible to speculate at large as to the intentions of Parliament, I should be tempted to guess that Parliament simply overlooked the case of a lease for a fixed term of between one and two years."
Yet if that really had been the case (attractive though the suggestion might, at that time, have appeared from a common sense standpoint, since such a term has no obvious merit for exclusion from security of tenure), why did Parliament not include the necessary amendment in one of the many statutory interventions in this area since 1959?
Furthermore, the 1948 Act included provision for full compensation to a tenant, on quitting a holding, in respect of unexhausted manurial values (ie to compensate the tenant for benefits to the land from which he was unable to benefit being no longer in possession - see the 1986 Act Schedule 8 Part II ) so tenants' improvement of the land would not go unrewarded.
The third strand discerned in Johnson may now also be doubted. For if the tenants do not themselves see security of tenure as necessary, it must follow that they do not see its departure as bringing harm to their industry. And if they do not, surely persons outside the industry will not know better.
It is therefore submitted that their Lordships' analysis arguably never did, and certainly does not now, accurately reflect the genuine public interest. Furthermore, their Lordships in Johnson expressed concern that without the intervention of the court to preclude the weaker (7) tenant farmers from bargaining away in advance their security of tenure, the demand for land by younger persons wishing to enter the industry would result in the security being denied to such persons. (8) But their Lordships did not, in their speeches, expressly address the probable consequences of landlords not being legally capable of granting tenancies of their land without security of tenure, to wit that they might not let them at all: hence resulting in large areas being farmed arguably by second choice options. In fact, since 1976 (when succession for relatives of tenant farmers was introduced) "there has been a catastrophic drop in the supply of tenanted farms" (per William Waldegrave, Minister of Agriculture, Fisheries and Food, HC Deb vol 251, col 468, 8 December 1994, talking in the context of the introduction of the 1995 Act): a point amply supported by evidence given in the House of Lords.(9) But in fact the 1948 Act itself, in s 2 as interpreted in Gladstone v Bowers, contained the very means of achieving a result whereby from the outset the tenant does not have security of tenure. But their Lordships did not consider how their decision might lead (some would say, compel) landowners to let their land, if at all, on such Gladstone v Bower tenancies, thereby leading to more, not less, 'short- termism'.(10)
Finally it is most noticeable that although the House in Johnson was aware of Gladstone v Bower, and indeed notwithstanding that Lord Hailsham (at p 50) believed that case to be correctly decided (and none of their Lordships even suggested that it was incorrectly decided), none of the speeches attempted to address the difficulties raised by juxtaposing Gladstone v Bower with the other provision of the 1948 Act which did give security of tenure, so as to conclude that security of tenure was paramount. In other words, given that it is possible to grant tenancies without security of tenure by following Gladstone v Bower, given that sub-tenants obtain no security of tenure (see the reference to Sherwood v Moody in the section above "Why is agriculture so different?"), and given the other specific exemption which applies where the "land is let to the tenant during his continuance in any office, appointment or employment held under the landlord" - see s 1(1) of the 1948 Act, now s 1(1) of the 1986 Act) - then even considering the position immediately after the enactment of the 1948 Act, the proposition that Parliament intended security of tenure as the paramount consideration might not appear to others so obvious as it appeared to their Lordships. The continued non- intervention by Parliament to close the Gladstone v Bower 'lacuna', if such it was, might also be thought to have been worthy of their Lordships' express attention.
Thus in Featherstone v Staples [1986] 2 All ER 461 the plaintiffs granted to two brothers and a company, whose only shareholders were the plaintiffs, a tenancy of land. By a separate partnership agreement the company and the brothers agreed that if the plaintiffs served a notice to quit the land, the brothers would not serve a counter-notice without the consent of the company. Although Slade LJ (who delivered the only reasoned judgment, but with whom Stocker LJ and Sir Roualeyn Cumming-Bruce agreed) admitted that his "mind has fluctuated greatly on all the principal issues in this case, [he regarded] this issue of public policy as particularly difficult." Nonetheless he held that because Johnson rendered void a provision in the tenancy agreement by the tenant not to serve a counter-notice, so also a provision in a document outside the tenancy agreement, (i.e. here the partnership agreement), under which a person agreed not to serve a counter-notice must likewise be void. He summarised his reasoning thus (at p 447):
"I am driven to the conclusion that, if a landowner chooses to grant other persons a tenancy of agricultural land (whether or not including himself as a tenant), public policy (affirmatively) requires that those other tenants should have authority, or be treated as having authority, to serve an effective counter-notice under [now s 26(1)(b)] on behalf of all the tenants without his concurrence, and thus (negatively) requires the avoidance of any contractual condition, whether express or implied and whether contained in the tenancy agreement itself or in a partnership agreement or elsewhere, which purports to deny those other tenants such authority."(emphasis added.)
As with Johnson, so in Featherstone the court emphasised that any different construction would lead to "widespread evasion... to the detriment of the security of tenure which Parliament clearly intended to confer on agricultural tenants".
Thus in Johnson and Featherstone "public policy was applied so as to ensure that the tenants retained the rights which the legislation intended them to have by reason of the tenancy which had in fact been granted to them." (per Ralph Gibson LJ in Gisborne v Burton [1988] 3 All ER 760 at p 770.) It has been submitted above that policy may be less obvious than their Lordships had surmised. But be that as it may, if the limits of that policy were as are implicit in the quotation of Ralph Gibson LJ, then the consequences of applying that policy in any given circumstances would be capable of reasonably certain prediction: one would merely have to ascertain what were the rights prima facie attaching by force of the statute to the actual tenancy which was granted and then excise any covenants by the tenant which derogated from his statutory right to security of tenure.
But if the policy is not so limited then, quite obviously, another boundary has to be found. That was the issue in Gisborne v Burton. [1988] 3 All ER 760. There a Mr Christopherson, aged 70 granted his wife a tenancy of their farm and the same day she granted a sub-tenancy thereof to the defendant. This was done in order to enable him to serve on her a notice to quit to which she would serve no counter-notice, with the result that the sub-tenancy to the defendant would automatically end at the same time as the tenancy to her.
The legislature anticipated the possibility of sub-tenants being dispossessed upon the determination of the headlease and provided machinery enabling the Lord Chancellor to make regulations to safeguard the interests of subtenants, (11) but none have been made. So it might be assumed that the legislature has not seen any evidence of prejudice to sub-tenants, otherwise presumably the Lord Chancellor would have intervened. Therefore, giving the words of the 1986 Act their ordinary meaning, if, as in fact happened, notice to quit was served on Mrs Christopherson, and she served no counter-notice, then just as in Sherwood v Moody (referred to above under the heading "Why is agriculture so different?"), so here the sub-tenant should have had no defence to a claim for possession. And that was the view of Ralph Gibson LJ, dissenting. He reasoned that there was nothing "unlawful or against public policy" in seeking to achieve a different result than that which would follow if the defendant was a direct tenant of Mr Christopherson (see p 768). Neither in his view were the documents a sham in the sense that "the parties said one thing in the documents but meant another." (12) In addition Johnson was not an authority justifying the court in holding that Mr Christopherson had granted a tenancy to the defendant when he had not. Johnson applied where a tenancy had been granted, to which undoubtedly the security of tenure provisions contained in the 1948 or 1986 Act applied and as a matter of policy the court would not allow the tenant to contract out of those provisions in advance. In the instant case however, in the opinion of Ralph Gibson LJ, the defendant never had any tenancy to which the Act purported to, or did, give security of tenure. The majority, Dillon and Russell LJJ, founding themselves (albeit in separate judgments) on Lord Templeman's dictum that "the court should...be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts (13)", held that the purported lease to Mrs Christopherson and the purported sub-lease to the defendant had to be taken together so that in law what "actually happened was that Mr Christopherson granted such a tenancy [i.e. "a tenancy to the defendant"]" (per Dillon LJ at p774). Russell LJ referred to "The composite nature of the two transactions [i.e. the lease and sub-lease]". Thus, although the majority did not expressly follow the Furniss v Dawson [1984] AC 474 line of tax cases, which had been "thoroughly" put before the court, nonetheless they accepted their underlying philosophy that a series of transactions intended by the parties to be but parts of a larger composite whole should be so treated by the courts.
The approach of Dillon LJ was not identical to that of Russell LJ. Dillon LJ held that the two arguments advanced on behalf of the defendant must be taken together, namely firstly were the two documents a 'sham' and secondly did the policy arguments accepted by the House of Lords in Johnson require that the two documents must be construed as the grant of a tenancy by Mr Christopherson to the defendant. Thus he elided those two arguments and having found that the documents were 'shams' or 'artificial', then simply held that ([1988] 3 All ER 760, 767):
"Essentially the scheme must fail because the Christophersons were trying to do by the documents what, for the reasons given in Johnson v Moreton, the law does not permit, viz. to grant the defendant an agricultural tenancy without the statutory protection."
Russell LJ reasoned (at p 775):
"Assuming artificiality [which he had already found], there remains for consideration what course the court should follow. Are there good social reasons for depriving the [plaintiffs] the right to possession...?. So long as [the defendant] remained in reality a tenant of Mr Christopherson and his successors in title there was no right, even by consent to deprive [the defendant] of the protection of the legislation."
After Gibson, one was therefore left in considerable doubt as to the circumstances in which the courts would look through the documents actually executed and perceive some intention other than that which the documents convey. It can be seen that both Dillon and Russell LJJ reasoned expressly by a two stage process, namely artificiality and Johnson policy. So it should follow therefore that if there is no artificiality the document(s) will be taken at face value. On that basis if an existing tenant of an agricultural holding agrees (thus after he has acquired the statutory protection) to give up possession that agreement ought to be upheld.
It should be noted that in Johnson's case Lord Salmon said of s 24 of the 1948 Act ([1978] 3 All ER 37, 42):
"Its meaning is plain and unambiguous. It gives the tenant a statutory option...to go voluntarily or to serve a counter-notice and remain in possession....The option cannot be exercised any sooner or any later than the subsection prescribes. Nor can it, in my view, be renounced by the tenant in advance."
That does not in terms preclude the landlord and tenant agreeing to terminate the tenancy other than by the service of a notice to quit. Neither did the speeches of the other Law Lords. So if the tenant wishes to give up his tenancy, for example because he is in ill health and he has no family wishing to succeed to the tenancy, and the landlord is willing to pay a, perhaps generous, premium to him because, for example the landlord can sell the land with vacant possession advantageously, that ought to be enforceable. Hence in that scenario the doubts of Scammell and Densham (Densham 1989) referred to above should be misplaced. But suppose that the agreement to surrender arises because the tenant is in dire financial straits and the landlord is prepared to agree that if the tenant agrees to 'go quietly' the landlord will not enforce a potentially large dilapidations claim against the tenant?
Less emotively, suppose that a landowner ("L"), a highly experienced and most proficient farmer, bona fide enters into partnership with (i) a company all of whose shares he owns and (ii) a young man ("Y") desiring to enter farming, but having only 'college training' and no practical experience. L grants a yearly periodic tenancy of a farm to the partnership. Y is enthusiastic, optimistic as to his abilities, past present and future, and utterly incompetent. The common law position was summarised by Sir John Donaldson in Greenwich London BC v McGrady (1982) LGR 288:
"In my judgment it is clear law that if there is to be a surrender of a joint tenancy, that is, a surrender before its natural termination, then all must agree to the surrender. If there is to be a renewal, which is the position at the end of each period of a periodic tenancy, then again all must concur."
If that applies to the last example then L will be able to obtain vacant possession of the farm by not concurring in the renewal of the tenancy at the end of any year. That is not within the letter of the test set out by Slade LJ in Featherstone, neither is it in advance seeking to oust the protection of the legislation. In one sense it may be said not to be contrary to public policy in that to the extent that Y's actions are reflected in the state of the farm, the farm will be deteriorating. Further, suppose that L refuses (or is unable) to pump money into the company so that it becomes insolvent within the Insolvency Act 1986 s 123. By virtue of s 214(3) of that Act he is then under a duty to "take every step with a view to minimising the potential loss to the company's creditors...." Does public policy require him not to put the company into liquidation? What constraints, if any, are there on the duty of the liquidator of the company to realise the assets if that prejudices Y? Can the liquidator in order to stem the losses which the company is making cause the company not to concur in continuing the tenancy after the expiration of the next period?
If the answer to all these possibilities is not that, come what may, Y is empowered to continue the tenancy, the result fits ill with Featherstone inasmuch as in that case, instead of serving a notice to quit and then requiring the co-tenants not to serve a counter- notice, all the landowner need have done was to cause the company there to decline to concur in the renewal of the periodic tenancy, which manifestly would have produced a similar result to that outlawed by the court.
The position is further complicated by Elsden v Pick [1980] 3 All ER 235. There the tenant, on 4th April 1977, anticipating that he would not be able to keep the tenancy of Woodside Farm, spoke to his landlord's agent. They agreed that he should write out a notice to quit dated 4th April 1977 terminating the tenancy with effect from 5th (it should have been the 6th, but no point was taken on that) April 1978, and that if he still wanted to give up the tenancy, he could serve it later that week, which on 7th April he did. What is now s 25 of the 1986 Act (then s 23) required that a notice to quit was "invalid" if it purported to terminate the tenancy within 12 months, "notwithstanding any provision to the contrary in the contract of tenancy". In August 1977 the tenant sought to be released from that notice. There was therefore no question that the actual notice given was less than the 12 months. Yet the Court of Appeal, reversing the trial judge, unanimously held that the arrangement thus made between the tenant and the landlord's agent was fully effective, so that the tenant could not resile from it as he sought to do in August 1977.
The case is especially strong in that the tenant asserted that he with his family had given "40 years...as loyal tenants", he "was very close to a nervous breakdown" and his giving of the notice was "a hasty, unnecessary act done without any advice": hence his plight may have been expected to have evoked some feelings of sympathy from the court. All three Lords Justices approached the construction of s 25(1) (as it now is) similarly. Shaw LJ held that s 25, although principally for the benefit of the tenant also protected the landlord against the tenant abandoning the tenancy in "circumstances which may cause a discontinuance in cultivation or a lapse from proper standards of husbandry." Thus, one may discern similarities with their Lordships in Johnson in the public interest of good husbandry, greater food production, etc. But Shaw LJ reasoned from the quotations from Johnson set out above that the time for the ending of the tenancy was a matter of common interest and that it could suit them both to end it at some time other than that prescribed by s 25. He stated that ([1980] 3 All ER 235, 240):
"[n]o statute could have so absurd an intention as to constrain a landlord and a tenant of an agricultural holding to remain bound in that relationship at a time when neither desires that it should endure."
He proceeded to hold that there
"was no impediment created by s 23(1)[s 25(1)] to the party in receipt of a notice to quit to waive his strict right that the notice should expire on a particular day or that it should be of a particular duration." (at p 240.)
Similarly Brightman LJ drew a distinction between agreeing in advance to accept a notice which failed to comply with s 25, which the section rendered ineffective, and after an ineffective notice has been served, which the recipient could ignore, agreeing that the notice should "be followed by the same consequences as if it were valid." That latter situation he equated with an offer by the tenant to quit on 5th April 1978 with an acceptance by the landlord of that offer. "Such an agreement is clearly outside s 23" (at p 242).
Shaw LJ expressed, albeit by means of a rhetorical question, the opinion that "If they [the landlord and tenant] are in accord, can it matter whether they demonstrate that accord by an agreement to surrender or an agreement to accept short notice?" (at p 240.)
Buckley LJ adverted to the distinction between a contract to surrender and a notice to quit stating (at p 243):
"An agreement to surrender a term or to terminate the relation of landlord and tenant on a particular date and an effective notice to terminate the tenancy on that date may have the same legal effect, but they are different transactions; one operates bilaterally by way of contract, the other unilaterally by setting a term to a contract (viz. the tenancy) in exercise of a power under that contract."
For him an agreement to accept short notice did not vary the terms of the tenancy: it simply represented an agreement to the tenancy ending on the specified date: "subject to which the tenancy remains in full force and effect." ([1980] 3 All ER at p 243.) The overall legal effect of such an agreement was, in Buckley LJ's view, to bring it within counsel's concession which Buckley LJ had stated was correctly made. That concession was that "the parties to an agricultural tenancy can bring the tenancy to an end by an agreement that the tenant shall surrender the tenancy to the landlord forthwith or by an agreement that the tenancy shall come to an end at some future date which is less remote than the earliest date at which it could be brought to an end by a notice to quit in accordance with the section." Although Buckley LJ refers there to "some future date which is less remote than the earliest date at which it could be brought to an end by a notice to quit in accordance with the section" it is submitted that that is no more that a comment germane to the facts of that case, namely that the notice to quit was for a lesser period than that prescribed by s 25, and that Buckley LJ had no intention to distinguish between an agreement relating to such short notice on the one hand and an agreement relating to a longer period of notice. Certainly there seems no reason for such a distinction, and it is noteworthy that in fact Buckley LJ was in any event referring to the concession of counsel for the tenant, so that it would naturally relate to the shorter period there in contention. It is therefore submitted that, in essence, the reasoning of Buckley LJ was that starting from a hypothesis that an agreement to surrender is valid, the agreement to waive the defect in the notice is akin to an agreement to surrender, therefore it is valid. And the essence of Brightman LJ's reasoning was that he "doubted whether there was any substantial difference between the two interpretations of the events", namely whether the relevant agreement was reached after the service of the defective notice to quit (thus amounting to an agreement to waive the defect) or by treating the service of the notice to quit and its acceptance as on offer to surrender on the date specified together with an acceptance of that offer.
The point has been set out at length here because Scammell and Densham (Densham 1989) specifically notes "that Buckley LJ obiter refers only to an agreement to surrender within a year being enforceable." (at p 212 fn 8) It is submitted that Elsden is in fact authority for the proposition that there can be an enforceable agreement to surrender an agricultural tenancy, and further that if a defective notice to quit has been served that may be cured by agreement between the landlord and tenant that nonetheless the notice should be treated as valid.
On that analysis the doubts of Scammell and Densham (Densham 1989) are misplaced. They do, however, additionally refer to Short Bros. (Plant) Ltd v Edwards (1987) 249 Estates Gazette 539 in which the Court of Appeal, differently constituted from Elsden, expressed doubts as to the enforceability of any agreement to surrender. In that case a common form grazing agreement from December 1 1963 to 31 May 1964 was signed by the landlord and tenant after an agreement that the tenant would be granted grazing rights for at least three years ("the collateral contract"). Although not expressly so characterised by the Court, that grazing licence and its successors were shams in the sense that they purported to disguise the true agreement between the parties. It is not therefore surprising that the Court was not well disposed to the landlord, Geoffrey Lane LJ using the words "unbecoming" and "deplorable". One of the questions raised in the case was whether given that, because of the collateral contract, the landlord had created a tenancy to which security of tenure under the 1948 Act attached, there was an implied surrender of that tenancy by the signing of the grazing licences. Since those licences did not express the true intention of the parties and were consequently held to be of no legal effect the question of implied surrender did not arise. Therefore any remarks of the Court on whether one may ever have an agreement to surrender an agricultural holding were obiter. But in fact the doubts were distinctly muted. Of the three members of that Court of Appeal, the first, Brandon LJ did not express any opinion on the general point. The second, Geoffrey Lane LJ said, (at p 249):
"That is not to say that there are not circumstances - and indeed Foster v Robinson [1951] 1 KB 149 is one of them, where there may be, perfectly properly, an actual surrender of a statutory right, a surrender in fact. But a bargain to give such a surrender in the future or, to put it more accurately in the circumstances of the present case, an agreement at the time the protected tenancy is granted not to seek protection by this statute is not an agreement which should be enforced by the court."
It is submitted that the reference there to a bargain to give a surrender in the future, whilst entitled to respect, did not purport to be, and was not, a considered statement on this aspect of the law, when immediately followed, as that reference is, by a specific recognition that it could be put more accurately in the context of the case in which it was spoken, and almost immediately preceded by a reference to Johnson and a statement that "The farmer cannot bargain away in advance his statutory rights in this way", The third Judge, Stephenson LJ said, (at p 249):
"We should be enforcing an agreement to surrender the tenancy if we were to hold that the farmer was estopped, by signing the agreement of June 1 1977 [i.e. the last 'grazing agreement'], from disputing its genuineness or from asserting the tenancy from year to year."
Taken out of context that could suggest that any agreement to surrender would be unenforceable. But the earlier part of his judgment gives no clue as to the legal process by which he concluded, if indeed he did, that agreements to surrender were ineffective. It is therefore submitted that the almost throwaway dicta of Geoffrey Lane and Stephenson LJJ, in a case where they were clearly obiter and uttered without the benefit of any citation of authorities relevant to that issue, should not be followed in preference to what it is submitted are firm indications to the contrary in Elsden.
Thus, since Gisborne, the position has been obscure as to the precise boundaries of the policy which ensured security of tenure to tenant farmers, notwithstanding the absence of any express statutory provision specifically achieving that result.
1. It is not obvious that in fact the 1948 Act did so clearly underscore a policy that security of tenure was so necessary for farmers.
2. The House of Lords made assumptions (such as that the tenant farming community affords a high priority to security of tenure) which are certainly not now, even if they were then, accurate.
3. The Court of Appeal in Gisborne asserted (per Dillon LJ), that there was no evidence that Gladstone v Bower arrangements were at all used, yet 10,000 arrangements were, in February this year, in existence outside the 1986 Act.
4. There is firm evidence from tenant farmers that the House of Lords' attempt to prop up the security provisions of the 1986 Act by reference to policy has failed inasmuch as both owners and tenants willingly enter into arrangements outside the security provisions without contravening that policy - eg Gladstone v Bower tenancies.
5. There is clear evidence that the policy has introduced uncertainty in "innocent" areas, as demonstrated by Scammell and Densham's (Densham 1989) doubts - which, as a leading textbook on the subject, would undoubtedly be accorded great weight by those in the market.
6. It is debatable whether the House of Lords can ever have the means fully to understand the precise underlying policy of an Act since it may not have before it the materials to do so - had it had the evidence in Johnson which was before the Standing Committee when the 1995 Act was passing through Parliament it may not have been so keen to discern a policy with which at least some tenants would not associate themselves.
7. Given that the policy as adumbrated by the House of Lords is most assuredly not the present Government policy, as emerges from the 1995 Act which had, perhaps uniquely, the support of all sections of the industry including the Tenant Farmers Association, the Young Farmers and the NFU, all of whom may fairly be said to represent the interests of the supposed beneficiaries of the security of tenure policy, the courts should not extend the policy into any area not fully covered by precedent.
8 The law is in an unacceptable state of uncertainty.
Densham, HAC (1989) Scammell & Densham's Law of Agicultural Holdings, 7th edn, (Supplement 1993) (London: Butterworths).
(1) The Court gave its seal of approval to such an agreement inasmuch as the possibility of using such an agreement formed an integral part of the reasoning of Diplock LJ - see p 91 - as to why the language of section 38 should be given its full meaning, and both Lord Denning MR at p 88 and Russell LJ at p 93 expressed a similar view. Back to text.
(2) "in the nature of " because a "statutory tenant" will in law have no tenancy but merely a personal right of occupations - see Megarry on the Rent Acts, 11th ed. pp 252 -3. Back to text.
(3) Interestingly it is noteworthy that the strong Court of Appeal in Joseph's case, supra, gave a wider construction to s 38 of the 1954 Act partly in recognition that if they did not, then in the words of Diplock LJ at p 90 "there would be nothing to prevent the inclusion in the tenancy agreement of a covenant by the tenant to give notice to quit if called upon by the landlord or to surrender the tenancy on or before a specified date." And see Russell LJ to similar effect at p 93. Back to text.
(4) See for example exchanges in the House of Commons on 8th December 1994, HC Deb vol 251, col 467. Back to text.
(5) HL Deb vol 559, col 486 (28 November 1994). Back to text.
(6) Report p 14 col 2 - p 15 col 1. The Report refers to quotations from the Tenant Farmers Association and a member of the NFU refuting the idea that security of tenure was necessary - see pp 21-3. Back to text.
(7) It is interesting to note the significant number of Lords who, in the debate on the 1995 Bill in the House, declared an interest as tenants, including Earl Howe! Back to text.
(8) As Lord Salmon said at p 48 "If any clause such as cl 27 [i.e. the clause which sought to exclude the security of tenure provisions in Johnson itself] was valid landlords might well insist on a similar clause being introduced into every lease and prospective tenants, having no money with which to buy the land they wanted to farm, would, in reality have had little choice but to agree. Accordingly, if cl 27 is enforceable the security of tenure which Parliament clearly intended to confer, and did confer on tenant farmers for the public good would have become a dead letter." Lord Hailsham at p 50 and Lord Russell at p 58 also referred to " a dead letter". Back to text.
(9) For example, Earl Howe stated that only about 10% of tenanted land is re-let under the 1986 Act (HC Deb vol 559, col 486, 28 November 1994); Lord Dixon-Smith stated that of a survey by the Central Association of Agricultural Values for 1993 of 230,000 acres, 14,000 acres were taken in hand upon the tenancies falling in; The Marquis of Hartford stated that of the 24 tenanted farms when he inherited in 1940, just three remained tenanted. He continued, "many - probably most- people in my position have done everything possible to take their land in hand and farm it themselves" ibid. col. 516. Back to text.
(10) In Gisborne v Burton [1988] 3 All E.R.760 referred to more fully below, Dillon L.J.,
seemed equally unaware of the scale of such tenancies for, in giving the leading, but
not the only reasoned, judgment he said of such tenancies,
"In fact Parliament has never done so [i.e. legislated to fill the lacuna, if such it was,
identified in Gladstone], but that may be because an 18-month tenancy of farming
land is inconvenient and unpractical, and there has been no hint of any common
practice developing of landlords granting such tenancies to take advantage of the
lacuna."(emphasis added). Cf. the quotation from Mr Geoffrey-Brown referred to
above. Back to text.
(11) The present power is in s 20 of, and Sch 4. para 4 to, the 1986 Act and provides for the Lord Chancellor "Making such provision as appears to the Lord Chancellor expedient for the purpose of safeguarding the interests of sub-tenants including provision enabling the Tribunal [i.e. ALT], where the interest of a tenant is terminated by notice to quit, to secure that a sub-tenant will hold from the landlord on the same terms as he held from the tenant." Back to text.
(12) See ibid. p 768, i.e. applying the well-known passages of Diplock L.J. in Snook v London and West Riding Investments Ltd [1967] 2 Q.B. 786 at 892 and Bingham L.J. in Antoniades v Villiers [1988] 2 All ER 309 at 316. Back to text.
(13) In Street v Mountford [1985] AC 908 at 825: there the House of Lords held that two separate 'licence' agreements entered into with two individuals were to be construed as a single agreement granting a joint tenancy. Back to text.