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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Fergusson v. M'Quater [1911] ScotLR 560 (07 March 1911)
URL: http://www.bailii.org/scot/cases/ScotCS/1911/48SLR0560.html
Cite as: [1911] ScotLR 560, [1911] SLR 560
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SCOTTISH_SLR_Court_of_Session
Page: 560↓
Court of Session Inner House First Division.
[Sheriff of Ayr.
v.
Expenses-Arb it ration — Agricultural Holdings (Scotland) Act 1908 (8 Edw. VII, cap. 64), Schedule II, sec. 14 — Expenses of Proceedings before Sheriff in Case Stated.
Facts:
The Agricultural Holdings (Scotland) Act 1908 enacts, sec. 1, sub-sec. (1) — “Where a tenant of a holding has made thereon any improvement comprised in the first schedule to this Act lie shall, subject as in this Act mentioned, be entitled, at the determination of a tenancy, on quitting his holding, to obtain from the landlord, as compensation under this Act for the improvement, such sum as fairly represents the value of the improvement to an incoming tenant.” Subsec. (2) — “In the ascertainment of the amount of the compensation payable to a tenant under this section there shall be taken into account—( a) any benefit which the landlord has given or allowed to the tenant in consideration of the tenant executing the improvement; ( b) as respects manuring as defined by this Act, the value of the manure required by the lease or by custom to be returned to the holding in respect of any crops sold off or removed from the holding within the last two years of the tenancy or other less time for which the tenancy has endured, not exceeding the value of the manure which would have been produced by the consumption on the holding of the crops so sold off or removed.”
The first schedule to the Act specifies in Part 3 “Improvements in respect of which consent of or notice to landlord is not required.… (23) Application to land of purchased artificial or other purchased manure.”
A lease contained provisions which required the tenant to manure the land with a certain amount of farmyard manure per acre, and so far as he did not make on the farm sufficient farmyard manure to apply artificial manure. Held that the application of the articial manure was an “improvement,” that it could not be assumed that the landlord in fixing the rent had given “any benefit” in consideration of this
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improvement, and that the tenant was entitled at his outgoing to claim compensation for the unexhausted value of the artificial manures which he had applied. The second schedule of the Agricultural Holdings (Scotland) Act 1908 enacts as to expenses:— “14. The expenses of and incidental to the arbitration and award shall be in the discretion of the arbiter … and the expenses shall be subject to taxation by the Auditor of the Sheriff Court on the application of either party, but that taxation shall be subject to review by the Sheriff.” The schedule makes provision for the statement by the arbiter of a Stated Case for the opinion of the Sheriff.
Held that the expenses of a case stated for the opinion of the Sheriff by an arbiter under the Act fell to be dealt with by the Sheriff.
The Agricultural Holdings (Scotland) Act 1908 (8 Edw. VII, cap. 64), sec. 1 (1) (2), Sched. I, Part 3 (23), Sched. II (14), are quoted supra in rubrics. Section 5 enacts—. . Any contract or agreement made by a tenant of a holding by virtue of which he is deprived of his right to claim compensation under this Act in respect of any improvement comprised in the first schedule hereto, shall be void so far as it deprives him of that right.”
A Case was stated on 20th July 1910 for the opinion of the Sheriff at Ayr in an arbitration under the Agricultural Holdings (Scotland) Act 1908 (8 Edw. VII, cap. 64), between Sir Charles Fergusson, Baronet, proprietor of the estate of Kilkerran, and James M'Quater, formerly tenant of part of the farm of Aird on that estate, in respect of a claim under the above Act, on the determination at Martinmas 1909 of the tenancy.
The Case stated as follows:— “Under the lease of said holding it is provided ‘that the said lands shall be managed and cultivated in six divisions as nearly equal as the present fences with the aid of subdivision fences may admit, and according to the rules and regulations following, that is to say, the tenant shall never break up more than one of said divisions in any one year of this lease, and which division, after being broken up, shall bear a white crop, next year it shall be in drilled green crop (beans excluded), properly prepared with a sufficient number of ploughings and harrowings, thoroughly cleaned and sufficiently manured with not less than 25 tons of good farmyard dung per imperial acre, so far as the tenant may have dung, and so far as he may not have dung to manure the same, with 40 bushels of bone dust or with 5 hundred weights of the best Peruvian guano or other similar manure of equal value per imperial acre.’ The said lease is referred to and held to be part of this case. Sufficient artificial manure was applied to the green crop in the years 1907, 1908, and 1909 to meet the said regulation.
“It is contended by the said Sir Charles Fergusson that the said James M'Quater is not entitled to claim for the unexhausted value of the purchased artificial manures applied to the land, except in so far as these artificial manures exceed the quantity which he was bound to apply in terms of the foregoing provision. The said James M'Quater contends that he is entitled to the unexhausted value of the artificial manures purchased and applied as directed by said lease, and that the clause of the lease above founded on is, in terms of sec. 5 of the Agricultural Holdings (Scotland) Act 1908, void in so far as it deprives him of any right to claim compensation.”
The question of law submitted for the opinion of the Court was—“Is the said James M'Quater entitled to claim compensation for the unexhausted value of artificial manures which under the said lease he is bound to apply to the holding?”
On 6th October 1910 the Sheriff-Substitute ( Shairp) answered the question of law in the negative.
Note.—“As to the question of law submitted to the Court, the answer is in the negative. It was contended for Mr M'Quater that section 5 of the said Act prevented the clause in the lease quoted in the Stated Case from barring his present claim. If that is a sound contention it ends the matter, but I am unable to give an interpretation to the section which I think would work a manifest injustice to landlords in such circumstances as the present. I refer to section 1, sub-section 2 a, of the foresaid Act. A contract was entered into in terms of the clause of the lease quoted in the Stated Case, under which the landlords agreed to accept a certain rent on certain conditions, viz., that manure should be applied to their land at the rate of 25 tons of good farmyard manure per imperial acre, so far as the tenant might have such manure, and in the case of his not having such manure, 40 bushels of bone dust or 5 cwts. of the best Peruvian guano, or other similar manure of equal value. It was distinctly on the footing that the tenant should carry out these obligations that the landlords agreed to let him the farms in question at the rent named in the lease. In carrying out these obligations the tenant has merely fulfilled his side of the bargain, and I am unable to hold that he is entitled to any additional payment for doing so.
The view I am inclined to take of section 5 is that it was framed for the purpose of preventing a tenant contracting himself out of the benefits of the Act, but I am unable to hold that it was intended to make, as it were, a double payment to the tenant for fulfilling his contract.
In a word, the landlords have (in terms of section 1, sub-section 2 a, of the said Act) given the tenant the benefit of obtaining the farm at the rent stated in the lease in consideration of the tenant executing the
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improvement of applying the manure covenanted for in the lease. It seems not to fall upon me, but to be the duty of the arbiter, under the 14th paragraph of the second schedule to said Act, to deal with the expenses of parties in connection with the Stated Case.”
The tenant appealed, and argued—The obligation in the lease as to manure did not exclude the tenant's right to claim compensation, and he had received no benefit in lieu thereof. The provisions of the Act as to the right to receive compensation were peremptory. If the tenant's right to compensation were to be excluded, that would have to be specifically provided for. The Sheriff had misconstrued subsection (2) of section 1. If his view was sound, the right to compensation could always be defeated by provisions in a lease specifying what manure would be applied. The provisions of the Agricultural Holdings (Scotland) Act 1883 (46 and 47 Vict. cap. 62), sec. 6, were repeated in the present Act, sec. 1 (2) ( b).
Argued for the respondent—Any obligation imposed upon a tenant was part of the contract contained in his lease; therefore the agreement embodied in the lease covered any benefit which the landlord gave in fixing the rent, and it could not be said that the appellant had received no benefit. He would be paid twice over if his claim for compensation was sustained. The respondent would have had a just claim against the appellant if the manure in question had not been applied. The rent was not the only consideration due by the tenant, the obligation to apply manure was a further consideration.
At advising—
I am unable to come to the same view as the Sheriff-Substitute. The Agricultural Holdings Act provides that where a tenant has made an improvement comprised in the First Schedule he is to be entitled to compensation (I am glossing the words), and accordingly it seems to me that the moment that you find that an improvement is an improvement under the Act there is no more to be said, unless in some way you can get out of the provision. Now the only way in which it is said you can get out of the provision is in respect of the terms of section 1 (2) ( a) of the Act. That section provides that “In the ascertainment of the amount of the compensation payable to a tenant under this section there shall be taken into account ( a) any benefit which the landlord has given or allowed to the tenant in consideration of the tenant executing the improvement.”
Now it is said that here there is a benefit allowed by the landlord in the sense of that sub-section, viz., that if it had not been for the stipulation in the lease the landlord would have asked more rent. I cannot so read the sub-section. I think any benefit must be a benefit specially mentioned and allowed, and that it cannot mean the mere consideration that if the stipulations had not been exactly as they are the landlord would have asked for more rent; and that therefore the so-called benefit is the fact that the tenant got the land for the particular rent which was stipulated. I think you are there going into the region of speculation; whereas I think the subsection clearly applies not to a speculative question but to the case where a particular benefit is mentioned as having been given in respect of a particular thing.
Now no doubt it seems a little unjust at the first sight that a person should have to pay a certain sum for a thing being done which he stipulated should be done. But I think the answer is that after all persons must contract with the Agricultural Holdings Act before them. And they knew perfectly well in this case that manure was and would be an improvement under this Act; and therefore if they wanted to get out of what would be the obvious operation of the Act, then they must get out of it in the only way which the Act permits. Of course the simplest way would be to contract yourself out of the Act, and this is what anybody could do if it were not for the section in the Act which prevents it being done. That just accentuates the consideration that the only way in which you can escape the operation of the Act is the one way in which the Act allows you to escape it.
Accordingly I think that anybody entering into a lease and knowing that something was to be put upon the ground which would constitute an improvement, must look at this sub-section, and if he wants to get out of it contract accordingly. It is quite clear, I think, that the result could have been reached by a proper stipulation,
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I have made my remarks entirely upon the present Act; but of course upon these matters the prior Act, under which this lease was constituted, is the same.
Accordingly I am of opinion that the second question should be answered in the affirmative, leaving it of course for the arbiter to say what the amount is of the value of the improvement to an incoming tenant.
But I have, on a more full study of the lease as a whole, come to see that this is neither a sound view of the lease nor of the statute.
Under the lease the farm must be cultivated on a six years' shift. All green crop, straw, and other fodder (rye grass, hay, and potatoes excepted) must be consumed, and therefore turned into manure, and all manure made must be applied to the land. It follows that the farm cannot be cultivated so as to reduce purposely the amount of farmyard manure made and to be applied to the land. It follows, further, that the stipulation relied on is an obliga tion to do merely that which the tenant ought to do, as a good husbandman, to keep the farm in good heart, not only during but to the end of his lease, by applying the necessary additional artificial manure to a conventional minimum.
That this may be done in respect of agreement and not of mere freewill does not, I am now satisfied, disentitle the tenant to his compensation under the Act, and I therefore agree that the second question falls to be answered in the affirmative.
The outgoing tenant here says he has made an improvement under the First Schedule, Part III (23), which provides for the application to land of purchased artificial or other purchased manure. He seeks to have the value of this to the incoming tenant ascertained in the mode prescribed by section 2 of the Act, i.e., by an arbiter.
He is met by the defence stated for the landlord, that this is a case to which section 1 (2) applies, which provides—“… ( quotes, v. sup.) …” The way in which this is said to apply is that because the manure in question was applied by the tenant to the land under an obligation imposed by the lease, therefore he must be held to have got a corresponding benefit from the landlord in the shape of a reduced rent. The argument is that but for his undertaking to apply the quantity of manure stipulated (which is all he put on) his rent would have been so much higher. This may or may not be the case, but in the absence of any express declaration in the lease upon the matter the question is one for the arbiter. He will have to decide (1) whether the outgoing tenant made an improvement in terms of the Act; (2) whether this is of value to the incoming tenant; and (3) if so, what amount of compensation, if any, is due by the landlord. Of course the arbiter may, if he thinks it just on a consideration of the facts of the case, come to the conclusion that the rent was fixed to cover not only the purchased manure that the land received during the tenancy, but also to cover the resulting value that remained, if any, on the determination of the tenancy, In the absence, however, of an express declaration to this effect in the lease itself, I am of opinion that the matter is one which the arbiter must determine. Section 5 does not appear to me to affect the present question.
I think the second question should be answered in the affirmative.
In support of a motion for expenses in the Court of Session and the Sheriff Court, the Sheriff not having dealt with the latter for reasons stated at the close of his note,
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I do not think that the Sheriff was right in that view, and I think he ought to have dealt with the expenses of the proceedings before him, and that upon this ground, that whenever you are told in an Act of Parliament that you may go by way of stated case to a court of law (which the Sheriff is), then the usual incidents of a court of law follow, one of which is that that court of law shall have a power of disposing of the expenses of the proceedings before it. It seems to me that the Sheriff is obviously very much better qualified to dispose of the expenses of what has been before him than the arbiter to whom the case goes back, and who can only judge by what his view of the result is. There might be things, for instance, in the conduct of the case of which he has no knowledge.
Accordingly I think that we should put that matter right, and that we should award the expenses of the proceedings before the Sheriff as well as the proceedings here. Of course the general expenses of the arbitration are a different matter and are in the determination of the arbiter.
The Court pronounced an interlocutor sustaining the appeal and answering the question of law in the affirmative, and upon expenses the interlocutor was in the following terms—
“… Find the appellant entitled to expenses both in this Court and in the Sheriff Court, and remit,” &c.
Counsel for the Appellant— Chree— Mair. Agents— Connell & Campbell, S.S.C.
Counsel for the Respondent— C. N. Johnston, K.C.— Pitman. Agents— J. & F. Anderson, W.S.