Scottish Court of Session Decisions

This action was raised by a landlord for the purpose of recovering from an agricultural tenant certain sums in name of pactional rent, said to be due on account of miscropping during the last three years of the lease. The clauses in the lease on which the action was founded were as follows—“That during the last three years of the lease there shall never be more than two-fifth parts of the whole lands let in crops of corn, nor less than two-fifth parts thereof in one and two year old grass, one-fifth at least being two year old, the

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remaining fifth part of the farm being to be in green crop, to which, and to the sowing down to grass corn crop, the whole manure made from the preceding crop shall be applied… Not only immediately to restore such part of the lands as may be so miscropped to the rotation and course of cropping applicable thereto under this lease, but likewise to pay to the proprietor an additional rent of £5 for every imperial acre which shall be cropped differently from the rotation above laid down, during any year other than the last year of this lease; and if the deviation shall take place during the last year of the lease, then the additional rent shall be at the rate of £10 for each imperial acre cropped differently from the rotation above provided for, and that over and above the rent stipulated for the whole lands as aforesaid; and the said additional rent shall not be considered penal or be subject to modification, but shall in each case be deemed the actual agreed on rent or value to be paid by the tenant for the benefit to be derived from the deviation; and even though there be consent by the proprietor or his factor to the departure from the rotation, the additional rent shall nevertheless be paid, nothing liberating the tenant but the written consent of the proprietor or his factor, agreeing in explicit words to the departure without payment of extra rent.”

The sums claimed were £45, £180, and £120.

The Lord Ordinary ( Gifford) pronounced the following interlocutor:—

“ Edinburgh, 16 th June 1874.—The Lord Ordinary having heard parties' procurators, and having considered the closed record, proof adduced, and whole process, Assoilzies the defender from the conclusions of the action, and decerns; Finds the defender entitled to expenses, and remits the account thereof, when lodged, to the Auditor of Court to tax the same and to report.

Note.—The question in this case is, Whether the pursuer is entitled to exact, and the defender bound to pay, penal but pactional extra rent, in respect the defender has ‘deviated from the mode of cropping described and agreed upon’ in the lease between the parties? The case involves several points of some difficulty and nicety.

The Lord Ordinary was favoured with an able and instructive argument, as to how far pactional rent of a penal nature, such as that stipulated for in the present lease, was subject to equitable modification by the Court; and how far there was room for the equitable interposition of the Court to restrict the pursuer's claim. The Lord Ordinary is of opinion that, if the pursuer can clearly establish the contravention or miscropping, the Court has no power to restrict the liquidated or pactional damages which the parties themselves have fixed and ascertained under the name of additional rent. This doctrine seems to be quite established by a long series of decisions, both in this country and in England. [See the cases collected in Hunter on ‘Landlord and Tenant,’ vol. ii. p. 265, 3d ed. One of the leading cases is Miller v. Lord Gwydir, 26th May 1824, affd. H. L., 3d March 1826, 2 W. & S. 52; but there are many other cases to the same effect.] The principle is, that where the parties themselves have agreed upon and liquidated the damages, the Court cannot interfere to modify, for this would be setting aside the deliberate bargain of the parties themselves. The terms of the lease in the present case are exceedingly explicit that the penal rent shall not be subject to modification, and although, notwithstanding such a clause, the inherent equitable power of the Court may not be excluded, and exceptional cases for interference may arise, the present does not seem one which can be made an exception from the general rule. [See Forrest Barr v. Henderson, 26th Nov. 1869, 8 Macph. p. 187.]

But while the Lord Ordinary is of opinion that the pactional rent is not subject to modification by the Court if it can be shown that it has been really incurred, he feels that it is a demand of a highly penal nature, and great strictness must he applied in considering whether it has been really incurred or not. The whole proper rent stipulated in the lease has been paid. It was hardly pretended on the part of the pursuer that the defect in the amount of grass of a particular age, of which alone he complains, had led to injury anything like the penal rent claimed, and no attempt was made to prove actual damage from deficiency of grass. In short, it was conceded, at least in argument, that if the tenant was found liable it would be an exceedingly hard case; and no attempt was made to show that the pursuer's demand was to any extent founded in equity. In such circumstances, and where the landlord's severe demand is founded on the precise words of the lease, he cannot complain if a strict interpretation is applied to that lease in ascertaining whether it supports his plea. In short, while the Court will not modify the penal rent, they will equitably consider whether penal rent at all has been incurred. Certainly on this last point equity is not excluded, but imperatively called for.

Now, on considering the whole structure and terms of the lease, and applying them to the facts established in evidence, the Lord Ordinary has come to be of opinion, though not without difficulty, that the pursuer has failed in sufficiently establishing ‘miscropping’ in the fair sense of the lease, or that the defender has ‘deviated from the mode of cropping above described and agreed on.’

The lease is a long and complicated document, and it is a little difficult to read from it what in many respects were the precise duties of the tenant. The clause stipulating for penal rent is not confined, as the pursuer suggested, to the last three years of the lease. On the contrary, it is quite general, and applies to the whole currency of the lease; so that, if incurred, it might have been enforced the very first year, and it is expressly stipulated that the penal rent shall be exigible at the same terms of payment as ‘the ordinary rent.’ The clause for penal or pactional rent is in these terms:—‘And the said Patrick Birrell (the defender's author) binds and obliges himself and his foresaids to labour, manure, and crop each division successively during the currency of the lease, without any departure from the rules above written; and in case the said Patrick Birrell and his foresaids shall deviate from the mode of cropping above described and agreed upon, either in opposition to his landlord or by his tacit consent, he shall be bound, as he hereby binds and obliges himself and his foresaids, not only immediately to restore such part of the lands as may be so miscropped to the rotation and course of cropping applicable thereto under this lease, but likewise to pay to the proprietor an additional rent of £5 for every imperial acre which shall be cropped differently from the rotation above laid down,’ and so on.

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The first observation which occurs is, that although this penal clause speaks of ‘rotation’ and ‘rotation above laid down,’ the lease does not provide any particular rotation or shift of cropping. It does not require a four year shift, a five, six, or eight year shift, or any other shift. The lease confines itself to specifying certain restrictions, and under these restrictions the tenant may follow any shift he pleases. Now, it is at least an awkward thing for the landlord to rely upon a penal clause providing penalty for deviation from a rotation of cropping when no particular rotation is prescribed.

The next point is that the tenant is taken bound to crop each ‘division during the currency of the lease without any departure from the rules above written.’ What is meant by ‘division’? The landlord says it is the set or series of fields which constitute a break, being a fifth, a sixth, or other aliquot part of the farm. The tenant says ‘division’ simply means field, the farm being completely divided into separate fields by permanent fences. The Lord Ordinary inclines to the tenant's view as most consistent with the restrictive structure of the lease. It is difficult to suppose that ‘division’ means a new laying out of the farm into exact fifths or sixths, which would necessarily imply new permanent fences. The skilled evidence, so far as competent, confirms the Lord Ordinary in the view that ‘division’ simply means ‘field.’

But the main point relied upon by the tenant is, that the farm being a completely enclosed farm, consisting of a definite number of fields separated from each other by permanent fences, it is not possible to lay it out into exact fourths, fifths, or sixths under any of the known shifts or rotations. This really happens in every arable farm; and when, for example, a five shift is stipulated, this merely means that each field must follow the shift, and that the farm shall be approximately divided into fifths as nearly as the fences will allow. This is universal practice, and quite equitable; for although the tenant under a five shift may have rather more than two-fifths in white crop one year, he will have so much less the next, and so on.

The present lease stipulates that there shall never be more than one-half of the farm in crops of corn during the first sixteen years. This seems to point to a four-shift rotation; and it is thought in equity that it would be implemented if the farm were divided into four equal breaks as nearly as the size of the fields would permit, so that, though there might be a few acres too many one year, there would just be so many less the next.

Now, apply this to the last three years of the lease, the only years complained of by the landlord. The landlord's complaint is, that the tenant had not enough of grass. Two-fifths of the arable part of the farm is as nearly as possible 166 acres, and two-fifths are required to be in two years' and one year's old grass the throe last years of the lease. The complaint is that the tenant in 1871 was 9 acres short; in 1872, 36 acres short; and in 1873, 12 acres short of two years' old grass, although he had in all 187 acres, being an excess of 21 acres of one year's old grass. It seems proved in evidence that this was as near as the divisions of the field would admit, unless, indeed, the tenant had gone back a good many years, and cultivated his farm under greater restrictions than the lease imposes. It is proved also that there was no miscropping and no scourging of any one field on the farm; and it further appears from the evidence that whereas the tenant was not bound to have grass more than two years old, he had, during the last three years, considerable quantities of grass three and four years old.

Now, in these circumstances, the Lord Ordinary has come to be of opinion, though he cannot say without difficulty, that there has been substantial implement of the lease. He cannot modify the penalty, but he can equitably consider whether any penalty has been incurred or not according to the fair reading of the instrument. The skilled evidence is all one way; for example, Mr Goodlet says that he thinks there has been no substantial deviation from the terms of the lease; and, speaking of the last three years, he says:—‘If you take an average of the three years, the tenant had 166 acres in each crop. He did not have it every year, but what he wanted in one year he made up for in another. If you go to the green crop, again, he ought to have had 83 acres each year in green crop; but, on an average of the three years, he had 97 acres in green crop, so that there was an excess of 14 acres in green crop on the whole. That is not considered bad management. It would have been worse if it had been 14 acres of oats or grain crop. Again, he had in grass in those three years altogether 160 acres each year on an average. He was bound to have had 166 acres, so that he had a deficiency during three years of about 18 acres. The deficiency was in grass, and the excess was in green crop; and, according to the way in which he was bound to farm, the one would about make up for the other, so that, practically, there was no substantial injury.’

The other skilled witnesses speak to the same effect; and it would be the hardest possible construction against the tenant to hold that, while, for example, in 1871 he had 102 acres in old grass three and four years old, whereas he was only bound to have 83, he is to be subjected in a penal fine because he was 9 acres short upon the one year's grass to make up the full quantity of 166 acres. The year 1872 is a more difficult year, for here there was a deficiency of 36 acres in all, although there was 93 acres of old grass instead of 83; but then in 1873 there was a surplus of 20 acres, so that on the whole there is only a deficiency of 6 acres per annum, and much of the grass was three and four years old, whereas the tenant was only bound to have it two. The Lord Ordinary thinks that on this point of the question he is entitled to look to substantial compliance, and if so the tenant's defence is complete.

It is really vain to say that the tenant was bound to run up temporary fences, and leave the fields cultivated in patches. It is proved that this would have led to great embarrassment, and disconcerted the fair cultivation of the farm. It would have done more injury than 6 acres per annum shortcoming in grass. The total arable acreage is 416 acres.

There is some force in the defender's plea founded on the discharges for rent. No doubt, the landlord's mere silence, or not stating objection, would not be enough; but, seeing that the penal rent is due year by year, and was not reserved when the ordinary rent was received and discharged, each discharge may fairly imply a passing from the penal claim. This defence was expressly sustained in Hunter v. Broadwood, 2d Feb. 1854, 16 D. 441; but perhaps there were specialties which may found a distinction. On the whole, the Lord

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Ordinary thinks that the landlord has failed to make good his claim.”

The pursuer reclaimed, and pleaded—“(1) The defender having, contrary to the terms of the lease, deviated from the mode of cropping therein prescribed, without the written consent of the proprietor or his factor, is liable in the additional rents stipulated in that event to be paid by the tenant. (2) As the lease itself provides that nothing shall liberate the tenant from the duty of following the rules agreed upon for the cultivation of the farm but the written consent of the landlord or his factor, and the additional rent stipulated in the event of a departure therefrom being expressly declared not to be penal or subject to modification, the defences stated are irrelevant, and ought to be repelled.”

The defender pleaded, inter alia,—“(2) The pursuer is barred from insisting in the present claim, by mora, taciturnity, and acquiescence. (3) The pursuer cannot insist in the present action, in respect, 1, he discharged the defender by the receipts granted, and his other actings; and 2, he approved of and acquiesced in the cultivation now complained of. (4) The cultivation of the farm of Castleton by the defender having been, in the respects founded on by the pursuer, consistent with the lease, and in fulfilment of obligations contained therein, the present action cannot be maintained. (5) No damage having been sustained by the pursuer, the defender should be assoilzied. (6) Separatim, the sum sued for being exorbitant and unconscionable in the circumstances, decree cannot be obtained for the same.”

At advising—