Scottish Court of Session Decisions

Robert Wylie Hill of Balthayock, Perthshire, appellant, brought a Special Case in an application to the Land Court by George Wilkie, applicant and respondent, for an order determining whether he was a landholder or a statutory small tenant of his holding of Craignorth Pendicle, of which the appellant was proprietor, and for an order fixing a first fair rent, or alternatively a first equitable rent and the period of renewal of the tenancy.

The Case stated—“1. By lease, dated 18th and 21st May 1895, the said Robert Wylie Hill let to the said George Wilkie, Balthayock school and dwelling-house, together with 25 acres or thereby, imperial measure, of Craignorth Muir contiguous thereto, for the period of nineteen years from Martinmas 1895, with a break in favour of either party at Martinmas 1908. The rent stipulated was £18, 15s. for the first three years of the lease, and £31, 5s. yearly during the remainder thereof, payable at the two terms of Whitsunday and Martinmas by equal portions. The subjects are known as Craignorth Pendicle.

2. By said lease it was provided that the proprietor should (1) put said dwelling-house into tenantable order, (2) convert the schoolhouse into a stable and byre capable of accommodating two horses and six cows respectively, (3) form the porch and coal cellar at end of school into a milkhouse, (4) convert one of the privies into a poultry house, (5) erect a wooden shed to measure 26 feet 6 inches by 16 feet internally, (6) provide a small wooden coal cellar, and (7) erect a wire fence on the north and east marches of said 25 acres of Craignorth Muir.

3. By said lease it was conditioned and agreed upon that the tenant should break up not less than 5 acres of the land and bring it into tillage in each year, and should crop the land either on a five-course or six-course rotation, the land to be managed and cropped according to the rules of good husbandry, and all hay, turnips, straw, or other crops except the first cut of rye grass hay should be consumed on the land, and said George Wilkie being always bound and obliged to bring and apply to the land a full and sufficient supply of manure so as to prevent the land being at any time exhausted or deteriorated. With regard to the houses, fences, and ditches of the said pendicle the tenant agreed to accept same after the foresaid repairs and alterations were executed as in a complete state of repair, and to uphold them in that state during the currency of the lease, and to leave them in such state and condition at his removal, ordinary tear and wear excepted.

4. In or about 1903 the said RobertWylie Hill let other 10 acres of adjoining muir land to the said George Wilkie conform to offer by the applicant, dated 30th November 1903, whereby he agreed to rent the land at 18s. per acre for the first three years and 25s. per acre “for the remainder of his lease.” No other written evidence was produced with reference to the let of this land, but it was not disputed that the agreement was that it was to be taken on the same terms as those contained in the lease so far as applicable thereto, and except in so far as modified by said offer. The applicant's holding now comprises the said 35 acres.

5. Said lease was terminated by the proprietor at Martinmas 1908 by notice in terms thereof. Thereafter the applicant continued to possess the holding from year to year at the same rent as he had previously paid.

6. On 31st December 1913 the tenant applied to the Court for an order determining whether he was a landholder or a statutory small tenant, and for an order fixing a first fair rent for the holding, or alternatively a first equitable rent therefor and the period of renewal of the tenancy thereof.

7. Answers were lodged to the application by the proprietor, and the application

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was heard on 14th April 1914, when evidence was led. No objection was stated to the competency of the application or the jurisdiction of the Court. Parties were agreed that the said George Wilkie was entitled to be declared a statutory small tenant. No objection was taken by the landlord to the tenant under section 32 (4) of the Act of 1911. The holding was inspected by the Court on 18th April 1914.

8. It was admitted or proved (1) that said lease was entered into by parties of the dates it bears; (2) that the proprietor had carried out the repairs and improvements, and that the tenant had broken up the land and brought it into tillage, all as stipulated in the said lease; (3) that prior to the applicant's entry the land let under the said lease, and also the additional land let in 1903, consisted of moor and whins, that before the application to the Court was presented the said land had been improved by draining and the removal of the roots, whins, broom, and large stones, and had been converted into arable land by the tenant; (4) that the proprietor had supplied 3000 drain tiles or thereabouts which were put in by the tenant, and that the tenant had also supplied and put in 2000 tiles or thereabouts at his own cost; and (5) that the proprietor and the tenant had erected a wooden cattle shed at mutual cost, and that the tenant had put up at his own cost some division fencing and a piggery, and had also borne half the cost of certain small repairs to buildings executed by the proprietor.

9. After inspection of the holding the Court were of opinion that assuming that the rent was fixed at a reduced figure for the first three years of possession under the said lease and letter of offer respectively in respect of the obligation undertaken by the tenant to improve the land as stipulated for, the said reduction was not fair consideration for the amount of the improvements actually executed and carried out by the tenant, but in so far as it was consideration to the tenant the Court gave effect to it as an element in fixing the equitable rent….

11. In fixing the equitable rent the Court did not exclude from consideration the improvements executed by the tenant after the commencement of the said lease, and in pursuance of the stipulations thereof, but in so far as they took into consideration these and other improvements made by the tenant or at his expense, in fixing the equitable rent of the holding, they did so only to the extent to which they held in fact that the tenant had not received therefor payment or fair consideration from the landlord. Assuming but not deciding that certain of the said improvements were executed under a specific agreement contained in said lease, under which the tenant was bound to execute the same, the Court held that in fixing an equitable rent improvements executed in virtue of such a specific agreement in writing were not excluded from consideration. No question was raised in the pleadings or at the proof, as to the term from which the equitable rent and period of renewal of the statutory small tenancy should run, but the term was fixed, in accordance with the practice of the Court, as from the termination of the last completed year of tenancy prior to the lodging of the application.

12. The proprietor maintains that the foregoing decision is erroneous in law, in respect that (1) the said George Wilkie's tenancy was tacitly renewed for a year from Martinmas 1912 to Martinmas 1913 on the old terms, and his application to the Land Court having been made during the currency of the year from Martinmas 1913 to Martinmas 1914 the determination of the tenancy such as would be, in terms of section 32 (4), an occasion for a renewal thereof is Martinmas 1914, and (2) the improvement of the 35 acres of the holding by the said George Wilkie by removing tree roots, whins, broom, and large stones and making it into arable land, being performed in implement of a specific obligation upon him in the said lease for which he received consideration in the form of a reduced rent for the first three years, such improvement is not an improvement made by or at the expense of the tenant for which he has not received payment or fair consideration from the landlord within the meaning of said Small Landholders (Scotland) Act 1911.

13. The tenant maintains that the foregoing decision is a finding in fact and is right in law, that having regard to the provisions of the Small Landholders Act 1911 the Court were entitled to make the period of renewal of the said George Wilkie's tenancy of said holding and the payment of the equitable rent therefor run as from Martinmas 1913, that on a sound construction of the terms of the said lease between the parties the said George Wilkie was not under any obligation by said lease to remove tree roots, whins, broom, and large stones from the holding, nor to bring the whole of the holding under tillage as he did, nor to execute or pay for the numerous other permanent improvements which he did, and that as the Court found in fact that for these and other improvements made by him or at his expense on the holding he did not receive payment or fair consideration from the said Robert Wylie Hill within the meaning of the said Act, the Court were entitled, having regard to the provisions of the said Act, to take into consideration said improvements.”

The order of the Land Court was—“Edinburgh, 26th May 1914.—The Land Court having inspected the holding and resumed consideration of the application and the evidence adduced, find and declare that the applicant is a statutory small tenant within the meaning of the Small Landholders (Scotland) Act 1911, in and of the holding specified in the application, and that no ground of objection to him as tenant has been stated under section 32 (4) of the said Act: Therefore find that he is entitled, in virtue of the said section, to a renewal of his tenancy and to have an equitable rent fixed: And having considered all the circumstances of the case, holding, and district, including the condition and value of the improvements made by the applicant and

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respondent respectively or their respective predecessors in title, have determined, and do hereby fix and determine, the period of renewal at seven years, and the equitable annual rent payable by the applicant at £27 sterling, each to run from the term of Martinmas 1913: Find no expenses due to or by either party.”

The note appended thereto stated—“The considerable reduction made on the rent is due (1) to the fact that the land is for the most part naturally poor, and (2) to the value of the permanent improvements made on the holding by the applicant without receiving from the landlord payment or fair consideration therefor. The applicant improved the whole of the 35 acres of his holding, removing tree roots, whins, broom, and large stones and making it into arable land. …”

The questions of law were—“(1) On the facts stated, were the Land Court entitled to make the period of renewal of the tenancy of said holding, and the payment of the equitable rent run as from Martinmas 1913? (2) Were the Land Court bound in fixing an equitable rent to exclude from consideration as tenant's improvements such improvements as were executed on the holding by the tenant in virtue of a specific agreement in writing under which the tenant was bound to execute said improvements? (3) In the event of the preceding question being answered in the negative, were the Land Court bound, in fixing an equitable rent, to exclude from consideration as tenant's improvements such improvements as were executed on the holding by the tenant in virtue of a specific agreement in writing under which the tenant was bound to execute said improvements, but for which he had not received payment or fair consideration from the landlord?”

Argued for the appellant—(1) The commencement of the renewal of the lease should have been Martinmas 1914 not Martinmas 1913. Renewal could only be granted “on any determination of the tenancy”—Small Landholders (Scotland) Act 1911 (1 and 2 Geo. V, cap. 49), sec. 32 (4)—and in December 1913, when the application was made, the tenancy did not determine till Martinmas 1914. Section 31 (1), defining “termination of the lease,” confirmed this; and it was not permissible to innovate in the middle of a year's lease. Clyne v. Sharp's Trustees, 1913 S.C. 907, 50 S.L.R. 688, was really in favour of this view, although the decision was adverse owing to the very special circumstance that the Act had only just come into operation, the application though late for the term from which renewal was granted being made as soon as reasonably could be expected. If, moreover, a choice had to be made between the decision in Clyne and the statute, the statute must prevail. (2) The Land Court had erred in taking into account the improvements which the tenant was bound to execute. A tenant did not get compensation for an improvement if he was bound to execute it— Earl of Galloway v. M'Clelland, 1915 S.C. 1062, at 1101, 52 S.L.R. 822. It might be asked whether these were landlord's or tenant's improvements? That was a question upon which section 32 (5) of the 1911 Act entitled the Land Court to use its own knowledge, but they had to consider it fully. In this case the landlord removed the whins, &c., through the tenant by paying him for the work. According to the Earl of Galloway that made it a landlord's improvement, when there was, as here, a stipulation that the tenant should do the work. The second and third questions should be answered in the affirmative.

Argued for the respondent—(1) In the case of Clyne ( cit.) it was decided that the Land Court was entitled to fix an equitable rent from the past term where the tenant was holding merely from year to year after the expiry of a lease for years. The Lord President at p. 913 said that tacit relocation was suspended by the Small Landholders (Scotland) Act 1911 ( cit.), and that the tenant was rather under a statutory renewal. If in this case there was tacit relocation from Martinmas 1912 to Martinmas 1913, and so on, it was therefore a tacit relocation which carried the right with it of going to the Land Court to fix an equitable rent. That was the tacit relocation referred to by Lord Johnston in the case of Clyne. An analogous situation was that of a tenant under notice to quit when the Act came into force, for such notice did not make the tenant cease to be a tenant from year to year for the purposes, and entitled to avail himself, of the Act— Morison's Trustees v. Grant, 1913 S.C. 919, 50 S.L.R. 696. The case of Clyne might not be exactly an authority, but it stated the principle applicable here. The time taken in presenting the application was much less in this case than in that of Clyne, i.e., the harking back of the rent, which the Land Court allowed here, was much less than in that of Clyne. Tacit relocation was not a continuation of the existing lease. It was a renewal of the lease from year to year; but the Land Court was entitled to step in at the “determination of the tenancy,” i.e., under the definition of “termination of the lease” in section 31 (1), at any time when the stipulated term ran out. The Land Court could therefore renew the tenancy and fix an equitable rent from the end of the last completed year— Thomson v. Grant, Scottish Land Court's Reports, vol. iii, p. 4. (2) It was for the Land Court to arrive at an equitable rent. That was a pure question of fact. There was no question of equity entitling the Court to review the Land Court's decision on the point. That this was so was proved by the Crofters' Holdings (Scotland) Act 1886 (49 and 50 Vict. cap. 29), secs. 6 (1) and 8. But the Land Court had not erred here in considering the improvements made by the tenant under the stipulation in the lease. The section of the Act of 1911, 32 (8), referring to improvements was perfectly general. There was nothing therefore to prevent the Land Court from not shutting its eyes to improvements made under agreement— M'Alpine v. Duke of Hamilton's Trustees, 1914, Land Court Reports, vol. ii, p. 74.

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At advising—