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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Knapdale (Nominees) Ltd v Donald & Ors [2000] ScotCS 132 (25 May 2000)
URL: http://www.bailii.org/scot/cases/ScotCS/2000/132.html
Cite as: 2000 SCLR 1013, [2000] ScotCS 132
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OUTER HOUSE, COURT OF SESSION |
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0129/06/96
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OPINION OF LORD KINGARTH in the cause KNAPDALE (NOMINEES) LIMITED Pursuers; against ROBERT DONALD, JUNIOR and ANOTHER Defenders:
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Pursuers: Sir Crispin Agnew of Lochnaw, QC; Burness, WS
Defenders: Upton; Drummond Miller (For Hunter & Murray, Solicitors, Stranraer)
25 May 2000
[1] The pursuers are heritable proprietors of the farm and lands of Ballochmorrie and Drumgrier in the Parish of Colmonell and County of Ayr ("the farm"). In about April 1935 the farm was let by the pursuers' predecessors in title to Mr Robert Donald, Senior. He died on 4 January 1996. From about 1964 farming operations were carried on at the farm by a partnership known as Robert Donald & Son, whose partners from about 1987 onwards were Robert Donald, Senior and his son, Robert Donald, Junior, the first defender. From the beginning of 1993 farming operations were carried on at the farm by a partnership trading under the same name, the partners of which were the two former partners and in addition the first defender's son, Iain Donald, who is the second defender. In the present action the pursuers claim that it can be implied from certain proved facts and circumstances that at least from 1993 Robert Donald, Senior, renounced his interest in the original lease and that thereafter the pursuers on the one hand and the partnership of Robert Donald & Son on the other entered into a new lease of the farm. They further claim that this new lease came to an end on the death of Robert Donald, Senior on 4 January 1996. It is common ground that if Robert Donald, Senior did not renounce his lease before his death, his interest has been properly transferred to the first defender by procedures under section 16(2) of the Succession (Scotland) Act 1964 and section 12(1) of the Agricultural Holdings (Scotland) Act 1991.
[2] The principal conclusions of the summons are for declarator. These (as amended at the bar after evidence was led) are:
"1. For declarator that the lease between the pursuers and R. Donald & Son, a firm of which the partners were Robert Donald, Senior and the first defender or alternatively with the firm of Robert Donald & Son (constituted in 1993) of which Robert Donald, Senior and the defenders were partners, constituted by the actings of the pursuers and the said firm and its partners in and after 1990, of ALL and WHOLE the farm and lands of Ballochmorrie and Drumgrier in the Parish of Colmonell and County of Ayr all as occupied by the said firm came to an end on or about 4th January, 1996 following upon the death of Robert Donald, Senior.
2. For declarator that the first defender and/or the second defender, neither as individuals nor as the surviving partner of the former firm of R. Donald & Son (or alternatively Robert Donald & Son (constituted in 1993) have any continuing right to the possession or occupation of the said farm and lands of Ballochmorrie and Drumgrier in the Parish of Colmonell and County of Ayr and that the pursuers are entitled to vacant possession thereof."
There follows a conclusion which seeks to ordain the defenders as individuals and as surviving partners to remove.
[3] For the pursuers, Mark Wilson, who had been a director of the pursuers for more than 15 years, gave evidence. For the defenders, both defenders gave evidence, as did Mrs Helen Donald, wife of the first defender. A number of productions were lodged by both sides. Certain matters, including a number of these productions, were agreed in a Joint Minute of Admissions. In the event much of the time in the proof was taken up by submissions after evidence had been led. I shall record first however what I find proved.
[4] Robert Donald, Senior, father of the first defender, was originally the tenant of Ballochmorrie Farm until about 1990, in terms of a Minute of Agreement and Lease between John Henderson, Esquire of Ballochmorrie (of the first part) and Mary Phillips or Donald, James Donald and Thomas Donald (of the second part) and Mary Phillips or Donald, Gavin Donald and Robert Donald (of the third part) dated 9th, 14th, 16th and 19th all May, 1932 and subsequent Minutes dated (i) 3rd, 7th and 9th June, 1933, and (ii) 26th and 30th April, 1935 whereby the said Robert Donald, Senior, became the sole tenant. The terms of the said Lease were set out in (i) the said Minute of Agreement and Lease, (ii) the said Minutes, (iii) an Assignation by Mrs Hannah Dick or McGarva and David Dick McGarva in favour of the said Mary Phillips or Donald, James Donald and Thomas Donald, with the consent of the said John Henderson dated 26th March, 17th and 23rd both dates in April and 5th May all dates 1919, (iv) a Minute between the said John Henderson and the said Mary Phillips or Donald, James Donald and Thomas Donald dated 26th March, 17th and 23rd both dates in April and 5th May all dated 1919, (v) a Lease between the said John Henderson and Alexander Wilson McGarva dated 6th July, 1912 and (vi) a Minute of Agreement between Fergus William McKenna, as then landlord and Robert Donald, Senior as tenant dated 28th July and 15th August, both dated 1950. It was a term of the said Lease that the tenant should keep the farm stocked with sheep, cattle, horses and farm implements their own bona fide property.
[5] From about 1964 farming operations at the farm (as accepted in evidence by the first defender) were carried out by a partnership under the name of Robert Donald & Son, of which partnership Ronald Donald, Senior, his wife and the first defender were the original partners. The partnership and its farming operations were carried on after the death of Robert Donald, Senior's said wife in about 1984 by the remaining partners. The written contract of partnership, signed in March 1964, provided that the partners were to be partners "in the business of Farmers to be carried on at Ballochmorrie.... or elsewhere as may be agreed upon." Until the end of 1992, all rent notices (sent together with standard remittance forms) were addressed to Robert Donald, Senior and were in his name. A number of rent notices covering periods from March 1990 until October 1992 were produced. One of the standard remittance forms dated November 1990 was also produced. At all times until the end of 1992 rent was paid by the partnership of Robert Donald & Son by cheque drawn on the partnership account in a bank in Girvan. This had been the case since 1964.
[6] The pursuers became heritable proprietors of the farm by virtue of a disposition in their favour executed on 30 September and 7 and 8 October 1991 and recorded in the Division of the General Register of Sasines for the County of Ayr on 7 April 1992, and as such were the landlords of the holding. The pursuers are corporate trustees of a family trust established by Mark Wilson in 1985. The 1991 disposition provided for entry as of 8 June 1987 "notwithstanding the date or dates hereof".
[7] Until 1990 the pursuers, according to Mr Wilson, believed that Robert Donald, Senior was and remained the tenant of the farm. In the middle of that year a co-operative was formed to enable the joint purchase of certain equipment for production of silage. A number of acres of certain farms were committed. Rules of what became known as the Duisk Forage Group were drawn up in typed form by the organisers (whose identity was not made clear). Certain farms in which the Wilson family had an interest were committed and it was Mark Wilson's father, William Wilson (who was also a director of the pursuers), who was particularly involved. In relation to the farm William Wilson had personal dealings with the first defender, who was known to be involved in the operation of the farm.
[8] It was Mark Wilson's evidence that it became clear to him and his father from the documentation connected with the Duisk Forage Group that Robert Donald & Son were tenants. In the printed rules, 70 acres of the farm were committed by R Donald & Son as "member of the Group". The printed section headed "We, the undersigned agree to abide by the above the rules" included under columns headed "name" and "address" (there being a third column available for "signature") R Donald and Son, Ballochmorrie Farm, Robert Donald (Jnr), Barrhill and Robert Donald (Snr), Girvan"
This section was signed by Robert Donald, Senior and by the first defender on 1 June 1990. Information to enable the printed rules to be completed had been provided to the organisers on forms which left blank spaces for certain details to the filled in. In these documents under "Member's Name (ie. trading name of the farming business)" the first defender had written "R Donald and Son" and indicated that 70 acres were committed. On a separate page the first defender, asked to complete the name, address and full names of all the partners/directors of group members, wrote "R Donald and Son, Ballochmorrie Farm and Robert Donald, Junior and Robert Donald, Senior" respectively. On a further page he wrote "R Donald and Son" under a heading of "Member's Name" and opposite that indicated the holding number and certain details relative to the farm.
[9] The forms were discussed between Mark Wilson and his father when they saw them. No specific consideration however given to the terms of the lease at that stage. Mr Wilson explained that they did not think it important then, since it seemed that Robert Donald, Senior was likely to die soon. The significance of this was, however, not explained. They were however content that, as they saw it, the partnership should continue to occupy. Mark Wilson was, he said, unaware of the form in which rent notices were sent until the end of 1992. These, however, continued to be sent as they always had been by Ernst & Young Financial Management Limited, who acted as agents for the pursuers and their predecessors for the purpose of collecting the rent due in respect of the farm and for other purposes connected with it.
[10] In 1993 Mr Robert Donald, Senior and the first defender entered into a partnership with the first defenders' son, the second defender, for the purpose of continuing to farm at Ballochmorrie, still under the name Robert Donald & Son - all with effect from 1 January 1993. From then until the death of Robert Donald, Senior the partnership carried out farming operations at the farm, although the pursuers did not know of any change of partnership or that the second defender was a partner. At about the beginning of 1993 the pursuer and his father had a meeting at Ernst & Young. William Wilson asked whether rent notices were being properly addressed to Robert Donald & Son, and instructed that matters should be made more clear. Thereafter, in the belief that the partnership of Robert Donald & Son were tenants, the rent notices (a number of which for the period of Martinmas 1992 to Martinmas 1995 were produced) were addressed to R Donald and Son, with printed remittance forms in their name. The rent continued to be paid until the death of Robert Donald, Senior by the partnership of Robert Donald & Son (albeit as now constituted) out of the partnership account in Girvan. It was plain from the evidence that all members of the Donald family (whose evidence, though not always accurate in relation to dates or details, was generally credible) continued to believe that Robert Donald, Senior remained the tenant albeit that the rental was, and always had been, paid by the partnership. They did not question or object to the change of the form of the rent notices, not thinking, in light of the long-standing practice that the partnership paid the rent, that there was anything significant in it, and given also that nothing was said expressly in the notices or accompanying documentation about any change of tenancy.
[11] At the beginning of August 1994 - in accordance with evidence given by the first defender - an application was made on behalf of Robert Donald, Senior, as tenant, to join a Farm and Conservation Grants Scheme (EC) 1991. The application was completed by the first defender in his father's name, and an acknowledgement from the Agriculture & Fisheries Department of the Scottish Office, addressed to Mr Robert Donald as applicant, dated 12 August 1994, was produced.
[12] In January 1995 an application for the farm to be brought into an Environmentally Sensitive Area Scheme was made to the Agriculture & Fisheries Department of the Scottish Office in relation to the farm. The application was made under section 18(3) of the Agriculture Act 1986. This section enabled the relevant Minister to make an agreement with any person having an interest in agricultural land within an area designated as an environmentally sensitive area, whereby that person agreed, in consideration of payment to be made by the Minister, to manage the land in accordance with the agreement. The application was not produced, but a letter dated 25 January 1995 acknowledging receipt of the application and signed for the "Principal Agricultural Officer" was. It intimated that "The Department acknowledges receipt of your application under the above Scheme which was received on 25/1/95". It was addressed to Mr Robert Donald, Ballochmorrie. The first defender's evidence in relation to the application form was somewhat confused and uncertain, but his recollection ultimately appeared to be that he had completed the form in the name of his father, Robert Donald, Senior. This too appeared to be the recollection of the second defender. Section 18(6) of the 1986 Act required the party making an application to notify any other person who was an owner of the land. A printed form headed inter alia "Notification to Landlord of Tenant's Intention to Enter into an Agreement with the Secretary of State for Scotland" was completed with the name of the tenant being shown as "Robert Donald". It was intimated to the pursuers. This was seen by Mark Wilson, and on his instructions a letter dated 10 April 1995 was sent by Ernst & Young addressed to Mr R Donald, R Donald & Son, Ballochmorrie in the following terms:-
"Dear Mr Donald
Mr Wilson has forwarded a copy of the Notification to Landlord of Tenants' intention to enter into an agreement with the Secretary of State for Scotland. Our records show that the agreement should be in the name of R Donald & Son. I would be obliged if you could arrange for the necessary change to be made and for you to send a revised Notification to me for our records".
[13] The first defender thereafter telephoned Mr Chris Savage, apparently an agricultural adviser with SAC (Advisory Services for Food, Land and Environment). Although the evidence was unclear, it would appear that this organisation had assisted in the making of the application. By letter dated 21 April 1995 he wrote a letter addressed to Mr Donald, Ballochmorrie (apparently the first defender) saying inter alia,
"Following your telephone query of yesterday, I can confirm that the application was made in the name of R Donald & Son. My recollection was that I left a blank notification form for you complete to send to the landlord and as such, the first question should have been completed - name of tenant? - R Donald & Son."
On 26 April 1995 the first defender wrote to Ernst & Young enclosing a copy of Mr Savage's letter. He said "We trust this will meet your requirements, but if not, could you please return the Notification to ourselves and we will amend the first question to read R Donald & Son". The notification form was in due course corrected by the first defender so that the first heading opposite name of tenant became "Robert Donald & Son".
[14] Notwithstanding Mr Savage's letter I do not find it proved that the original application was in the name R Donald & Son. On the contrary, standing the original reply from the Department of Agriculture & Fisheries and the evidence of the first and second defenders, and given the way in which the original Notification form was completed, I consider it more likely that the application was made in the name of Mr Robert Donald, Senior. As to the change which was made, at the instigation of the landlords, to that Notification form, the evidence of the first defender was that this was not discussed with Mr Robert Donald, Senior. It was his evidence that the change was made because, so far as he understood it at all, the landlords "wanted it to keep their records straight" and he did not read anything more into it. I saw no reason to doubt the substance of that evidence.
[15] The only other matter of potential relevance about which Mr Wilson gave related to two documents which had their origins - according to his evidence - in an agreement in about 1970 with Robert Donald, Senior. The agreement itself was not produced and its detailed terms remained unclear, but Mr Wilson explained that in the agreement the proprietor of the farm had agreed that Robert Donald, Senior, could build a Kelvin Weir house at the farm to live in in his later years (along with his wife) on terms inter alia that the proprietor would pay so much towards the building but that Robert Donald, Senior would also lend in return the sum of £2,000 and further the occupiers of Ballochmorrie House (a property outside the farm) would receive certain quantities of milk and eggs on an annual basis. Although Robert Donald, Senior lived at all times until 1994 at Ballochmorrie, he became infirm and was thereafter resident in a nursing home at Ainsey Manor, Girvan. As a result these 1970 arrangements were brought to and end by two documents prepared by Mr Wilson and sent for signature at or about the same time.
[16] The first of these dated 30 August 1995 was addressed by Ernst & Young to "Mr R Donald (Senior), R Donald & Son, Ballochmorrie Farm". Under the heading "Kelvin Weir House at Ballochmorrie Farm" it stated
"We confirm that the Landlord is prepared to accept the above property being handed back on the basis that you now live at Ainsey Manor, Girvan and not at Ballochmorrie.
This letter confirms that the date of handback was Friday, 11 August 1995 and that the Landlord inspected the Kelvin Weir House on that date. This letter also confirms that the Landlord requires the fence surrounding the property to comply with the terms of the Agreement entered into on 29 July 1970 in full. It is understood that work is about to commence to renew the fence at your expenses and will be completed within three months of the date of this letter.
Whilst other defects were noted during the inspection we confirm that the Landlord is prepared to waive any other requirements under the Agreement entered into on 29 July 1970 in respect of repair/replacement of such other defects on the basis that all the curtains and carpets as seen by Mr M L Wilson on 11 August 1995 have been left in the house and are now the property of the Landlord.
Under the terms of the Agreement entered into on 29 July 1970 the Landlord is now obliged to repay the interest free loan originally made by you. We enclose a cheque for £2,000 in full settlement of the loan and will be obliged if you could sign the attached copy of this letter and return it to me in order to confirm full repayment of the interest free loan to R Donald & Son and to signify your agreement to the contents of this letter."
A docket underneath in terms:
"We confirm receipt of £2,000 as full discharge of the interest free loan made to the Landlord in respect to the Agreement entered into on 29 July 1970. We also confirm our agreement to the contents of this letter."
was signed by the first defender under the typed script "For and on behalf of R Donald & Son", on 31 August 1995. Neither he nor his father had legal advice in relation to this document. The document itself did not explain who the "Landlord" was. Mr Wilson however indicated that it could not refer to the pursuers in that the property was built on land which was not conveyed to the pursuers. It was however on land in which he himself personally retained an interest.
[17] The other document was a letter signed on 28 August 1995 "For and on behalf of the Landlord" by two directors of the pursuers including Mr Mark Wilson. It narrated,
"The purpose of this letter is to minute the fact that an Agreement entered into by Mr Robert Donald with the landlord of Ballochmorrie Farm on 29 January 1970 has meant that R Donald & Son ('the Tenant of Ballachmorrie Farm') has been under an obligation to supply each year, free of cost, the following goods and services to the occupier of Ballochmorrie House...".
Certain services were listed. The document continued:-
"R Donald & Son, as tenant of Ballochmorrie Farm, no longer wishes to supply the above goods and services and the trustees of the M L Wilson 1985 Trust ('the current landlord') and Mr W S Wilson and Mrs A B Wilson (the current Occupiers of Ballochmorrie House) have agreed that R Donald & Son is not to supply any of the above goods and services to the Occupier of Ballochmorrie House with effect from 11 August 1995".
This document was signed by Robert Donald, Senior and the first defender on 29 August 1995 under the typed heading "For and on behalf of the Tenant of Ballochmorrie Farm (R Donald & Son)". The document, although signed by Robert Donald, Senior, was not, according to the first defender, discussed with him. Neither had legal advice in relation to it.
It was the first defender's evidence that his father never intended to give up the tenancy; further that he had been given no reason at any stage to think that his father had applied his mind to the surrender of the lease or wished to do so or to replace himself with the partnership as tenant, and it was not the first defender's intention or wish either. Although evidence to that effect was objected to in the course of the proof, on the basis that there was no Record for it, I am satisfied that the defenders' denial of the pursuers' averments at Condescendence V that "The pursuers were willing to accept R Donald & Son as then constituted as tenants of Ballochmorrie Farm and the said firm were willing to be accepted as then constituted as tenants of the said farm" provided a sufficient basis for the evidence. Although the parties were ultimately agreed that the question before the Court depended upon objective assessment of the parties' actings (and not upon any subjective intentions, beliefs or understandings), I infer from the evidence which was given that Robert Donald, Senior at no stage acknowledged to his fellow partners that he had renounced the lease or that they were tenants. There was no evidence led to the effect the lease was at any stage treated as an asset of the partnership, and it was not referred to in the partnership deeds. It is perhaps to be noted at this stage that counsel for the pursuers did not dispute that as stated in Lindley & Banks Partnership, 17th ED. at p. 516, the mere fact that land forms the substratum of a partnership business and that the firm is debited with the outgoings is not sufficient to make it partnership property. No evidence was led as to the ownership of farm implements or animals. On his death Robert Donald, Senior left a will, dated March 1976, in which he bequeathed to the first defender "the Lease of Ballochmorrie Farm".
[18] The principal question in the case is whether the pursuers have established that at least from 1993 the original tenant, Mr Donald, Senior, impliedly renounced his lease and that in place a new lease was entered into between the pursuers and the partnership known as Robert Donald & Son. Ultimately, although the approach and emphasis adopted in submissions was not identical, it appeared to be accepted that the answer depended upon whether it could be said that the facts were only consistent with a new lease with the partnership having been entered into by the pursuers at least from 1993 onwards.
[19] The submission on behalf of the pursuers was clear and apparently straightforward . On the whole facts and circumstances a renunciation of the original lease fell to be implied by virtue of the fact that the original tenant, as a partner of the partnership, was involved in the taking of a new lease. Renunciation could be implied from facts and circumstances inconsistent with the continuing existence of the lease. Reference was made to Rankine on Leases p. 524. This was most common when the same parties entered into a new lease or a lease on substantially different terms. Reference was made to Mackie v Gardiner 1973 SLT L.C.R.11; Hunter on Landlord & Tenant 4th Ed. p. 110 and The Campbeltown Coal Company Ltd v Duke of Argyll 1926 SC 126, in particular at p. 131. Equally, renunciation could be implied if the tenant gave up occupancy and the landlords resumed possession and let to a new tenant. Reference was made to Taylor v Maxwell 1728 Morrison 15310 and Halliday, Conveyancing Law & Practice (2nd Ed) para. 46-58. Similarly renunciation could be implied where the original tenant allowed a partnership of which he was a partner to enter a new lease. A lease could be inferred from facts and circumstances viewed objectively, irrespective of the parties understanding of the legal position or any mistaken belief by one party. In ordinary circumstances this would arise where a landlord maintained party in occupation and regularly demanded and received rent from that party. Reference in particular was made to Morrison-Low v Paterson 1985 SC HL 49. Since it was clear that renunciation of a lease could not be implied when the actings could be construed as compatible with retention (reference in particular being made to Hunter op cit. p. 112), the question in this case was whether the pursuers had proved that the facts and circumstances were only consistent, at least from 1993 (which was the pursuers' primary position), with the pursuers and the partnership having entered into a new lease - without which, in the circumstances of this case, it was accepted no question of renunciation could arise.
[20] For his part counsel for the defenders did not dispute that renunciation could, as a matter of law, be inferred from facts and circumstances (subject to an argument later addressed as to the need for averment and proof of rei interventus). A lease however could only be renounced by agreement between both parties. Reference in particular was made to the Stair Memorial Encyclopaedia Vol. 13, para. 440, Halliday, Conveyancing Law & Practice, 2nd Ed. para. 46-59, Bankton II 9 47, Stair II, 9 35 and P T Hamilton Ltd v Ready Mix Concrete (Scotland) Limited 1999 SLT 529. Renunciation could not be implied when the circumstances were compatible with retention of the lease. Reference was made to Hunter, Landlord & Tenant at p. 112. Reference was also made to the position in England, where the doctrine of surrender by operation of law operated only where the conduct of the tenant unequivocally amounted to an acceptance that the tenancy had been terminated. (Tarjomani v Panther Securities Limited 1983 Property Compensation Reports 32, in particular at p. 41). Examples of implied renunciation referred to by Stair and others involved physical abandonment of the property by the tenant. The law was most clearly stated in Hume Lectures (Stair Society Ed. Vol. 4, p. 115-116). There it is said,
"It is even a possible thing (most certainly it requires a strong case) that a tack may be evacuated without any explicit bargain or definite treaty to that purpose - by the conduct and proceedings of parties, if they be such as plainly imply, that this is their final and deliberate resolution on the subject. Put the case, that the tenant displenishes the farm and leaves the country - and the master possess the farm himself or has it possessed by another tenant unmolested for a course of years. In a strong and decisive case (for I speak of such a case only) it seems to me reasonable that this shall be construed (received) into a mutual and irrevocable acquittance of all claim on either side."
In the result a lease could only impliedly be renounced as a matter of law by actings could not be construed as compatible with retention and which strongly and decisively implied that the tenant had finally and deliberately resolved to give it up. In the circumstances of this case the question therefore was whether the facts and circumstances were only and unequivocally consistent with a new lease between the pursuers and the partnership of which the original tenant was a partner. While Morrison-Low v Paterson was an illustration of a case where a new lease could be implied, it was essential to notice that the facts and circumstances of that case were, as their Lordships observed, not capable of being described as consistent with the continuation of the pre-existing lease (which had, as a matter of law, come to an end).
[21] Although their presentation and emphasis was thus different, the parties were essentially agreed on the central legal question. I consider, however, that counsel for the defenders was right to stress that renunciation, however established, was a matter of agreement and that if it was to be implied, in the absence of a formal agreement to renounce, the facts must be such as plainly imply that this was the parties' "final and deliberate resolution on the subject". (Hume op cit.). In the circumstances of this case what the pursuers require to prove therefore is the existence unequivocally of a new lease between the pursuers and a partnership of which the original tenant was a partner. Quite apart from any question of renunciation, counsel for the defenders was also right in my view to stress that a lease could only be implied if the circumstances could only be explained in terms thereof, or, putting it another way, gave rise to an irresistable inference to that effect (in this connection reference was made to Morrison-Low v Paterson and also to Strachan v Robertson-Couper 1989 SLT 488, 490-491). By contrast, however, although counsel for the defenders appeared at some stages to stress observations to the effect that, where a question arose as to whether a renunciation fell to be implied by the tenant taking a new lease, there existed a presumption in favour of revival of the existing lease (Rankine at p. 524 and Hunter on Landlord & Tenant, p.111), and to suggest either that there was a general presumption against renunciation or that a question of revival of the original lease might arise in this case, at the end of the day I did not understand these submissions to be pursued. The observations on which counsel founded in any event appeared to be confined to the particular circumstances discussed.
[22] It was further agreed between counsel that the question fell to be assessed by reference to the objective actings of the parties and not by reference to any subjective understanding of the position. This, as I understood it, was based on the approach in Morrison-Low v Paterson. While I accept counsel for the pursuers submission that the matter falls to be tested by looking at the totality of facts and circumstances, it seems to me to follow from the parties' approach - and if the matter is to be approached even handedly - that the pursuers cannot make much if anything of those documents in which, it is said, the partnership of Robert Donald & Son was acknowledged (at the hand of the partners) to be the tenant (that is documents in which the partnership and their partners indicated their apparent understanding) - particularly if it is not clear in any particular case that Robert Donald, Senior or the defenders had a clear understanding of what they were doing. Against that background, although counsel for the pursuers founded upon what he described as specific acknowledgements by the partnership that they were tenants, in the documentation relative to the ESA application and in the two documents signed in 1995 arising out of termination of the 1970 agreement with Mr Robert Donald, Senior, I am not able to take much if anything from these documents.
[23] In relation to the ESA application, although counsel for the defenders stressed that such an application could be made by anyone with an "interest in land" and suggested, by reference to a definition in the National Parks and Access to the Countryside Act 1949 that this could include someone with a right exercisable "by virtue of a licence", it would seem that under section 19 of the Agriculture Act 1986 the relevant interest in Scotland would be one which enabled the party to bind the land and, more importantly, it seems clear that the application was made in the name, or on behalf ,of the tenant of the farm. The application was, however, as I have found, probably made in the name of Robert Donald, Senior, as tenant. The initial notification to the landlord was also made in his name. Although a change was made at the instigation of the landlord to that form, there was no evidence to suggest that the tenant himself was aware of this, and, as I have found, the first defender in making the change thought only (so far as he understood it at all) that he was doing what was required to keep the landlord's records in some way in order. No legal advice was given or taken.
[24] Equally neither of the two documents arising out of the termination of the 1970 arrangement with Robert Donald, Senior can, in my view, be founded on to any significant effect by the pursuers. The document signed on 31 August 1995, and relating to the Kelvin Weir House, is one in which the reference to the landlord could only be a reference, not to the pursuers, but to Mr Wilson himself. Although the first defender signed the document confirming receipt of £2,000 in full discharge of the interest free loan, there is nothing clearly to indicate an acknowledgement by the partnership of any contractual obligation as tenant of the farm. Indeed on the contrary the letter was addressed to Mr R Donald, Senior and references to where "you now live", the "free loan originally made by you" and work about to commence to renew the fence "at your expense" can, it seems to me, reasonably be construed as referring to him. Moreover it was not clear to me from the evidence of Mr Wilson why it was thought appropriate to pay back the sum lent by Robert Donald, Senior to the partnership. In addition, the document was signed by the first defender without legal advice, and there was no evidence that he clearly understood its implications.
[25] The document signed by Robert Donald, Senior and by the first defender on 29 August 1995 (referred to in the proof as the commodities agreement) is, on the face of it, more difficult for the defenders. It bears to be a minute of agreement with the pursuers as landlords of Ballochmorrie Farm and was signed for and on behalf of the tenant of Ballochmorrie Farm (R Donald & Son). This, however, as Mr Wilson explained in evidence, was related to the original arrangement made with Robert Donald Senior in 1970 (whether by agreement dated 29 January or 29 July was not made clear). It appeared that that arrangement related primarily to an obligation to build a house on land which is not the property of the pursuers. In the absence of the original agreement, I am not satisfied that it is clear that any commodities obligation which Mr Robert Donald, Senior may have owed is properly one which could be said to have transmitted to the pursuers. There was further no evidence to indicate to what extent Robert Donald, Senior or the partnership supplied the materials in question. Mr Wilson explained in evidence that he had compiled the document "in the belief" that the partnership had supplied the items. The matter, however, was not taken further. In any event it is clear (as was fairly accepted on behalf of the pursuers) that the first defender and his father had no legal advice before signing this document, which was presented to them, and there was no clear evidence that they understood what they were doing. Indeed, as indicated, the first defender's evidence was that the matter was not discussed with his father at all. In any event, at best, as indicated above, it is an apparent acknowledgement that the partnership was tenant - that is an indication (albeit to the pursuers) that that was the understanding of the first defender and Robert Donald, Senior. For reasons already explained, it is difficult for the pursuers to make much of that given the agreement that matters fall to be assessed without reference to the subjective understandings of the parties. In any event it seems to me that its effect as an acknowledgement is at least matched by the fact (as I have found ) that Mr Robert Donald, Senior at no time acknowledged to his partners that his tenancy was at an end or that the partnership was now a tenant, by the fact that in his will, which spoke from his death, he bequeathed the lease to his son and by the fact that the applications to the Agriculture & Fisheries Department in respect of the Farm and Conservation Grant Scheme in August 1994 and in respect of the ESA in January 1995 were made (as I have found) in the name of Robert Donald, Senior as tenant.
[26] I comment also at this stage that although Mr Wilson gave evidence that it became clear to the pursuers from the Duisk Forage Group documentation that the partnership were tenants (that is that that was their understanding - which was not seriously challenged), the documentation does not at any point in terms expressly say that, although no doubt indicating that the partnership was involved in farming operations on the farm and was at least to some extent, as the pursuers understood, in occupation.
[27] In the whole matter it seems to me (indeed as the parties agreed) that the question whether the proved facts and circumstances are only consistent with renunciation by the original tenant and the creation of a new lease with the partnership falls to be decided, not by reference to any purported acknowledgements or understandings on either side, but by reference to the parties' actings objectively assessed. In that connection it is important to understand that the pursuers' primary position is that this could be implied at least from 1993 onwards. They do not (at least thus primarily) seek to imply a renunciation and a new lease at any stage up to 1990, notwithstanding that the partnership of Robert Donald & Son carried out farming operations on the farm and paid the rent at all times from 1964, nor on the basis that the partnership continued to carry out farming operations and pay rent until the end of 1992. The choice of 1993 appeared to stem firstly from an acceptance that in general the renunciation of a lease could not be presumed from the circumstance of the rent having been paid not by the original tenant but by a third person. The relevance of the observation made by Gibbs C.J. in Copeland v Watts & Another 1815 1 Stark 95 at 96, to the effect that
"It would be productive of dangerous consequences to presume a surrender to the lessor from the fact that he is receiving payment from an assignee; a landlord in general was willing to receive payment from the person who offered it, whosoever he was, but by receiving it, he did not discharge the lessee."
was not seriously disputed. In the second place it was accepted that the pursuers themselves did not claim to be aware of the occupation of the partnership until 1990, and that notwithstanding that (and their apparent belief that the partnership was tenant) nevertheless continued to demand rent from Robert Donald, Senior until the end of 1992. What was critical thereafter, it was argued, was the sending of rent notices in the name of the partnership and the apparent acceptance of these notices, and the payment of the rent, by the partnership, without question or objection. This change in practice showed objectively on the one hand the pursuers' intention to accept the partnership as tenant and on the other the acceptance by the partnership of the tenant's obligations. The original tenant, or the partnership, it was argued, would otherwise have been expected to object to or challenge the practice.
[28] I am unable to agree as to the significance of this change in practice. So far as the partnership was concerned, it has to be remembered that they had paid the rent since 1964 notwithstanding that rent notices had been addressed to Robert Donald, Senior. Neither the new rent notices nor the remittance documents referred expressly to the partnership as being tenant. In these circumstances it is not surprising they did not think anything more than that it was now thought administratively convenient for the notices to be addressed direct to them.
[29] The question remains, however, whether the pursuers, by allowing the partnership to conduct farming operations on the farm and by demanding and accepting rent from them, and the partnership, by conducting these operations and by paying the rent, acted in such as way as to lead unequivocally, in the circumstances of this case, only to the conclusion that a new lease was entered into with the partnership, and thus that Robert Donald, Senior had renounced his lease. If there was clear evidence that the original tenant ceased to possess and ceded exclusive possession to the partnership, matters might be different. Short of that, however, it seems to me very difficult indeed, standing the unreduced original written lease, to hold that the facts are only consistent with a renunciation and a new lease. Despite the attractive simplicity of the pursuers' case, I am satisfied that there was no clear evidence that Robert Donald, Senior, as an individual, ceased to occupy. He continued to live on the farm, only leaving in late 1994 to stay, when ill, in a nursing home in Girvan - a factor which counsel for the pursuers, very fairly, did not seek to make anything of. It is certainly true that the evidence suggested that the partnership was allowed to occupy to enable it to conduct the farming operations, but there was no clear evidence that exclusive occupation or possession was granted. The evidence was that Robert Donald, Senior continued, until his death, to be involved in decisions relating to the farm and there was no (and perhaps could not be any) clear evidence that he did so only as partner. For what it is worth Mrs Donald thought his involvement was more as tenant. Overall it seems to me that the facts are not inconsistent with the tenant having allowed the partnership to manage the farming operations and to fulfil the financial obligations under the lease. It is notable that their Lordships in Morrison-Low v Paterson were content to proceed on the understanding that the original tenant of the lease (under which all assignees, whether legal or conventional, direct or indirect were excluded) had run the farm in partnership with two of his sons and that although he remained as tenant, the practice had been for the partnership to pay the rent, the position being that "the title to the lease was in him but the management of the farm and all financial transactions in connection with it were carried out by the partnership" (Lord Keith of Kinkel at p.79). The facts of that case thereafter were clearly suggestive of a new lease, it being accepted that the old lease had come to an end. Lord Fraser observed that it was not possible to treat the executors as squatters (p.75). Further there is no evidence in this case that the lease became, or was treated as, partnership property, or that all stock and farm implements belonged to it and not the tenant.
[30] It was argued nevertheless that occupation by the partnership would have been in breach of the original lease which excluded "sub-tenants and assignees legal or conventional and managers or trustees for behoof of creditors, except with the consent in writing of the ... landlords". In particular it was argued that this provision prohibited the engagement of managers. I am not persuaded by this argument. In the first place the question is not whether the original tenant acted in breach of his lease, but whether the facts unequivocally show that he renounced that lease and, as a partner of the partnership, entered into a new lease. In any event as counsel for the defenders rightly stressed, in its context reference to "managers" is to "managers... for behoof of creditors", which is a term of art which has nothing to do with the facts of this case. (Reference is made in particular to Stair Memorial Encyclopaedia Vol. 13, para. 355 and Stair Institutions II 9 26). Further, as indicated above, I am not satisfied the evidence indicated that the original tenant ceded exclusive possession to the partnership. Moreover although it is no part of the pursuers' case that the tenant assigned his interest, it is to be noted that in Hunter on Landlord & Tenant 4th Ed. Vol. 1 at p.246 it is even doubted whether the assumption of partners by a tenant and conveyance of the lease to them would breach a clause excluding assignees, (although it has to be recognised that Dick v Skaills 1706 2 Fount. 330, to which reference is made in the text, did not purport to decide the matter). Further although I consider no direct assistance can safely be obtained from English authority in this area of the law, it is at least not unhelpful to the defenders to notice, as I was invited to do, under reference to a number of authorities, that in similar circumstances in that jurisdiction a tenant who retained legal possession could allow another or others (including a partnership of which he was a partner) to occupy and use the subjects of let without being in breach of a covenant not to part with possession. The cases and authorities to which I was referred were Peebles v Crosthwaite 1897 13 TLR 198; Chaplin v Smith 1926 1 KB 198; Pincott v Moorstons Ltd 1937 1 AER 513; Gian Singh & Co v Nahar 1965 1 WLR 412; Stening v Abrahams 1931 1C. 470; London County Freehold & Leasehold Properties Ltd v Harrison 1956 168 EG 613; Wallace v C Brian Barratt & Sons Ltd 1977 2 EGLR 1; Rainham Chemical Works Ltd v Belvedere Fish Guano Co Ltd 1921 2 AC 465 and Halsbury's Laws of England, Vol. 35 para 1211. I record finally, for completeness, that although referred to Reid, Law of Property in Scotland at p. 105 and Birrell v City of Edinburgh District Council 1982 SLT 111 at p.114, I did not find these references to be of assistance.
[31] Although the pursuers' secondary and alternative position was that if I was not persuaded that the facts demonstrated a lease from 1993 onwards with the partnership then constituted, the Court could infer a lease from 1990 onwards (until the death of the deceased) with the partnership of which Robert Donald, Senior and the first defender were partners. Ultimately, this contention was not, it seemed to me, strongly insisted upon. This was not simply because of the acceptance by the pursuers of the importance, so far as their case was concerned, of what was said to be the change in practice in relation to the rent notices from 1993 onwards, but also because it was clear on the facts that the original partnership essentially ceased to exist. From January 1993 it was the 1993 partnership which accepted rent notices, carried on farming operations and paid rental.
[32] In the whole matter I am not persuaded that the pursuers have established the essential basis of their case, namely that the facts and circumstances unequivocally indicate that a new lease was entered into between the pursuers and a partnership of which the original tenant, Mr Robert Donald, Senior was a partner. That is enough for the resolution of this case. Counsel for the defenders, however, sought to establish that in any event there were three other grounds for rejecting the pursuers' claim - first that the pursuers has neither averred nor proved actings amounting to rei interventus; secondly, that the agreement to renounce which the pursuers sought to prove would be invalid and thirdly that in any event any lease with the partnership constituted in 1993 would not have terminated on the death of Robert Donald, Senior. In deference to the arguments which were addressed I shall indicate my views - albeit shortly - on each of these contentions.
The first argument was presented on the basis that the lease with the deceased, being in writing, could not be varied informally unless the agreement to vary, however established, was supported by averment and proof of actings amounting to rei interventus. Reference was made to Gloag on Contract, 2nd Ed. pp.46, 172-174 and 391-396, Hume Lectures Vol. 4, p. 115; Halliday, Conveyancing Law & Practice, 2nd Ed. para.46 -58. There would need to be averment and proof of actings amounting to rei interventus consistent with the description in Bell Principles, Sec. 26:
"It is inferred from any proceedings not unimportant on the part of the obligee known to and permitted by the obligor to take place on the faith of the contract as if it were perfect, provided that they are unequivocally referable to the agreement and productive of alteration of circumstances, loss or inconvenience, though not irretrievable".
However, in a case where it was sought to prove an agreement to alter a written contract it must be shown that the actings said to amount to rei interventus were also in contravention of the terms of the lease. Reference in particular was made to Gloag op cit. at p.396 and to Kirkpatrick v Allanshaw Coal Company 1888 R 327. Further it was a necessary to show "great cost....incurred by operations carried on under the eye of one having the right to stop them, or ... something... allowed to be done that cannot be undone" - this under reference to Bell, Principles 946, Bargaddie Coal Company v Wark 1859 3 McQ. 467, in particular per the Lord Chancellor (Chelmsford) at p. 480, and Earl of Kintore v Pirie & Sons Ltd 1903 5 F. 818. Merely to prove an informal agreement for a new lease (from which renunciation could be implied) would not be sufficient. No actings had been proved which met the tests of rei interventus described. Reference was further made to Carron Co v Henderson's Trustees 1896 23 R. 1042, Lord Kyllachy at p. 1049, Keanie v Keanie 1940 SLT 441; Morison's Executors v Rendall 1986 SC 73; Walker & Walker on Evidence, p. 307; and The Scottish Law Commission Report on Requirements of Writing No 112, p. 24, para. 3.12(c).
[33] The response on behalf of the pursuers was to the effect that the authorities properly understood (including all those previously referred to by counsel) indicated that renunciation could be implied if the facts and circumstances were only consistent with agreement thereto. This was the pursuers' case. In any event the actings in implement of the new lease with the partnership would satisfy all relevant tests of rei interventus.
[34] I consider that the submissions made on behalf of the defenders on this matter are misconceived. It is of course entirely clear from the authorities to which I was referred that an express, though verbal, agreement to renounce a written lease would not in itself be enough, but would require to be followed by actings amounting to rei interventus to prevent locus poenitentiae. Reference may be made to Hume Lectures Vol. 4, p. 115, Halliday, Conveyancing Law and Practice, 2nd Ed, para 46-58;, Rankine on Leases at p.523; Stair Memorial Encyclopaedia, Vol. 13, para 439, Carron Co v Henderson's Trustees, Morison's Executors v Rendall and Keanie v Keanie. The observations of Gloag op cit. at pp. 391 and following are in the context of the general proposition that where the relations of parties to a contract are regulated by a formal written contract an averment that the contractual provisions "have been altered by a subsequent verbal agreement cannot be proved by parole evidence". The learned author refers at pages 395, 396 to Bargaddie Coal Company v Wark and Kirkpatrick v Allanshaw Coal Company as cases dealing with a verbal agreement to alter a written contract. It was in that context that the Lord Chancellor, in the former case, emphasised that a verbal agreement to vary a written contract required to be followed on the actings amounting to rei interventus (p. 477). Equally, however, the authorities appear also to be at one that renunciation of a lease can be established if the facts and circumstances demonstrate unequivocally that agreement to renounce has been reached. Reference may be made in general to Hume op cit. at pp 115, 116, Stair Memorial Encyclopaedia op cit. at para 440, Hunter op cit. p. 110, Rankine, op cit. at p.524, Halliday, op cit. at para 46-55, Taylor v Maxwell and The Campbeltown Coal Company Limited v Duke of Argyll. As to the need for facts and circumstances pointing unequivocally to agreement, reference may be made to Lord Kyllachy in Carron Co v Henderson's Trustees, Walker & Walker on Evidence op cit, The Scottish Law Commission Report on Requirements of Writing op cit and indeed to Lord Chelmsford's obiter observations at p.480 in Bargaddie Coal Company v Wark. There his Lordship was at pains to stress that the facts necessary to establish rei interventus or homologation/acquiescence were somewhat "less than the facts and circumstances which will be required to enable you to presume an agreement". It is observed in Walker & Walker op cit at p.307 that the facts "must be more compelling than those required to establish rei interventus or homologation". It may also be noted that insofar as Lord Chelmsford referred (in the context of discussion of facts and circumstances from which an agreement could be presumed) to "great costs incurred by the operations etc", he was drawing on observations by Bell, Principles 946 made in the context of what could amount to acquiescence in operations which interfered with a party's exclusive right to property. These observations were no doubt relevant to the particular facts with which the Court was dealing (interference with property by mining operations) but could not have been intended to be and were not, it seems to me, of general application. In these circumstances I consider that it cannot be doubted that the pursuers could relevantly seek to establish implied renunciation by offering to prove that the actings of the parties were such that the only conclusion was that a new lease had been agreed. This indeed could be said to be an example of rei interventus of the second type referr
[35] It was further argued that any agreement to terminate the deceased's lease, consisting of his renouncing it and the pursuers accepting that renunciation, would be an agreement of a kind which section 3, and more particularly section 21, of the Agricultural Holding (Scotland) Act 1991, expressly strikes down as invalid.
[36] Section 3 of the Agriculture Holding (Scotland) Act 1991 provides:
"3. Notwithstanding any agreement or any provision in the lease to the contrary, the tenancy of an agricultural holding shall not come to an end on the termination of the stipulated endurance of the lease, but shall be continued in force by tacit relocation for another year and thereafter from year to year, unless notice to quit has been given by the landlord or notice of intention to quit has been given by the tenant".
Section 21 of the Act, so far as relevant, provides:
"(1) .... a tenancy of an agricultural holding shall not come to an end except by operation of a notice which complies with this sub-section notwithstanding any agreement or any provision in the lease to the contrary.
(2) In this Act, a notice which complies with subsection (1) above is referred to as a "notice to quit" if it is given by the landlord to the tenant and as a "notice of intention to quit" if it is given by the tenant to the landlord.
(3) A notice complies with subsection (1) above if -
(a) it is in writing;
(b) it is a notice of intention to bring the tenancy to an end;
(c) where the notice is to take effect at the termination of the stipulated endurance of the lease, it is given not less than one year nor more than 2 years before that date;
(d) in the case of a lease continued in force by tacit relocation, it gives not less than one year nor more than 2 years' notice."
Section 22 provides:
(1) Where not later than one month from the giving of a notice to quit an agricultural holding (or, in a case where section 23(3) of this Act applies, within the extended period therein mentioned) the tenant serves on the landlord a counter-notice in writing requiring that this subsection shall apply to the notice to quit, subject to subsection (2) below and to section 25 of this Act, the notice to quit shall not have effect unless the Land Court consent to the operation thereof."
Subsection (2) provides that subsection (1) shall not apply in certain enumerated circumstances.
[37] The parties were agreed that the present action related to an agricultural holding, and that the matter fell to be judged by the 1991 Act, which came into force on 25 September 1991. In particular this was agreed notwithstanding the secondary position adopted by the pursuers (relative to a potential lease from 1990 onwards with the then existing partnership), on the basis that there was no material difference in the relevant language of the Agricultural Holding (Scotland) Act 1949, and in particular of section 24 thereof (which was the equivalent of section 21).
[38] The argument on behalf of the defenders - in outline at least - was that any agreement to renounce a lease was an agreement to bring it to an end. As a matter of language such an agreement was struck at by the terms of section 21. The apparently peremptory terms of the section were consistent with the strong public policy which underlay the provision of security of tenure for tenants of agricultural holdings, all as described most clearly in House of Lords in Johnson v Moreton 1980 AC 37 (in particular by Lord Hailsham at p. 57-62). Although this was in the context of section 24(1) of the Agricultural Holdings Act 1948, this was a provision approximately equivalent to section 22 of the Agricultural Holding (Scotland) Act 1991. Other provisions of the 1991 Act suggested the need for a definite date for termination. Reference was made to sections 17, 18, 43, 44, 45 and 62. The inability of parties to contract out of previous similar statutory provisions in Scotland was established in Glendinning v Board of Agriculture 1918 SC HL 56 and Duguid v Muirhead 1926 SC 1078. Although in Morison's Executors v Rendall 1986 SC 69 - a case concerned with section 24(1) of the Agricultural Holdings (Scotland) Act 1949 - the Lord Justice Clerk (Lord Ross) indicated (at p. 73) "Of course, parties may circumvent these provisions by one of them renouncing the lease or by their agreeing to a new lease in substitution of the old lease.", and at p. 74,
"I appreciate that in practice parties may agree to terminate the tenancy without notice to quit having been given in terms of the subsection, and if they both act upon such agreement it will not doubt be effective. Likewise if such an agreement is made and one party acts upon it, the other party may be personally barred from finding on the provisions of the subsection. Apart from that I am of opinion that an agreement made in contravention of the plain provisions of the final sentence of section 24(1) would not be enforceable."
these comments were obiter and could not be supported in the face of the language of the section of the Act. The same could be said of Lord Robertson's comment in the same case at p.79,
"This is not to say that a tenant may not give up a lease during its currency and remove the subjects or that both parties may not terminate a tenancy by agreeing to do so and acting upon such an agreement - say by entering into a new lease".
The cases of Kildrummy (Jersey) Limited v Calder 1994 SLT 888 and Macfarlane v Falfield Investments Limited 1988 SLT 145 were referred to as being clearly distinguishable. Although in Elsden v Pick 1980 1 WLR 898 the Court of Appeal had upheld an agreement between parties to waive the strict requirements of a notice after it had been served, this too was distinguishable on its facts, and the case in any event was not authoritative in Scotland. Reference was also made to Gill, The Law of Agricultural Holdings in Scotland, Third Edition. p. 1-3; Connell, The Agricultural Holdings (Scotland) Acts, 7th Ed. p. 130 and 151-152 and Muir, Watt & Moss, Agricultural Holdings 14th Ed. p. 183 and 272-273. No amount of actings or personal bar could operate to prevent the defenders from founding upon the clear terms of the Act. Personal bar was of no effect in relation to agreements rendered invalid by Act of Parliament in accordance with a clear discernible public policy such as was described in Johnson v Moreton. Reference was made to Kok Hoong v Leong Cheong Kweng Mines Limited 1964 AC 993 (in particular pages 1015-1016), Welsh v Nagy 1951 KB 455, and Keen v Holland 1984 1 EGLR 9 at p. 11-12. Reference was also made to Rankine on Personal Bar, pp. 1-2 and 6, Agnew of Lochnaw, Agricultural Law in Scotland, pp 30-32 and to Halsbury's Laws of England. Vol. 16, para. 962 where it was said, "The doctrine of estoppel may not be invoked to render valid a transaction which the legislature has on grounds of general public policy enacted to be invalid...".
[39] Counsel for the pursuers argued, in the first place, that it was not open to the defenders to present this argument, there being no notice of it in the pleadings. Had there been, consideration would have been given to whether more evidence was needed in relation to the question of personal bar. In any event, the defenders' argument based on the construction of section 21 should not be sustained. The reality was that landlords and tenants regularly re-negotiated new terms for their relationship by entering a new lease (this, it was said, was the background to Mackie v Gardiner and, although not apparent from the report, to Moray Estates Development Co v Butler 1999 SLT 1338). This was recognised in section 34(5) of the Agricultural Holdings (Scotland) Act 1991 which specifically provided that a tenant would not be deprived of his right to compensation by reason only that improvements were not carried out during the tenancy on the termination of which he quit the holding. If the defenders' argument was correct it would be open to a tenant not merely to challenge such arrangements but even many years after he had abandoned his lease, and a new lease had been entered into by the landlord, to return and declare it invalid. This could not be right. The effect of section 21 was necessarily more restricted than the language might suggest. The section had no application (as the defenders themselves agreed) to the termination of a tenancy by death or where the tenant was a partnership as a result of termination of that partnership. Although prima facie an agreement to renounce would be an agreement of the type referred to in section 21, that section properly construed was not such as to render invalid or unlawful the agreements with which it was concerned. Instead its effect was to render such agreements unenforceable. Such agreements could accordingly be rendered binding if both parties acted upon them, at least in circumstances where they brought the relationship of landlord and tenant to an end in the way agreed. The observations of the Lord Justice Clerk and of Lord Robertson in Morison's Executors v Rendall were consistent with this approach. There was no public policy contrary to such an interpretation. It was important to note that in Elsden v Pick, under reference to section 23 of the Agricultural Holdings Act 1948 (which might be said to be the approximate equivalent of section 21 of the Agricultural Holdings (Scotland) Act 1991), Lord Justice Shaw said:
"It is clear that is designed principally to protect the tenant farmer from peremptory or unduly prejudicial ejectment on the part of the landlord. Nonetheless it serves also to protect the landlord from the abandonment of the tenancy in circumstances which may cause it discontinuity in cultivation or a lapse from proper standards of husbandry. Thus the time for the ending of the tenancy is a matter of common interest both to a landlord and to his tenant. It may suit them both to determine a tenancy without waiting for what may be as long as nearly two years to bring it to end. No 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 if they are in accord, and does it matter whether they demonstrate that accord by an agreement to surrender or an agreement to accept short notice?"
Had that case been before the Second Division in Morison's Executors v Rendall (as it was not) the observations of the Lord Justice Clerk and Lord Robertson, to the effect that in general parties could not at any time (and not merely ab ante) contract out of the statutory provisions, might not have been made. The cases referred to in connection with personal bar in the face of statutory provisions were not concerned with agreements which had been implemented by both parties and were in any event of no application standing the proper construction of section 21. The cases of Glendinning and Duguid were cases in which the Court had refused to enforce agreements made in advance to proceed without notices to quit. They were moreover cases where the tenant refused to leave.
[40] The arguments advanced on behalf of the defenders were, I consider, competently open to them in support of their general plea to the relevance of the pursuers' case. I was further informed that notice of intention to raise this matter had been given at a previous procedural roll. Nevertheless, as regards the arguments presented to me as to the proper construction of section 21, I am inclined - although not without some hesitation - to prefer those of the pursuers. My hesitation arises in particular from the peremptory nature of the language of section 21. The construction advanced by the pursuers, however, would avoid the apparent absurdity that even if the parties agreed to renounce and implemented that agreement, one party could at some future date seek to set it aside as invalid. Even in Johnson v Moreton, notwithstanding the apparently peremptory language of the provision with which their Lordships were dealing, Lord Salmon spoke of an agreement contrary to the Act as being "unenforceable" (at p. 51). Lord Russell of Killowen posed the question of whether a tenant farmer could "effectively" bind himself in advance, and even Lord Hailsham at p. 61 said,
"I have a certain reluctance in this case to use the phrase 'contracting out' without some further qualification. It is because there is clear authority that whilst a purely executry contract to contract out of statutory provisions may be unenforceable for the reasons stated above, an executed agreement for good consideration which has been executed by the weaker party may nonetheless be enforceable against the stronger. See for instance the distinction drawn between Barton v Fincham 1921 2 KB 291, especially at p. 297 and Rajbenback v Mamon 1955 1 KB 283. I see no reason why this reasoning should not apply to contracts under section 24 of the Agricultural Holdings Act 1948 and there may be many other cases where the same distinction applies."
Further the submissions made on behalf of the pursuers would appear to be consistent with the observations of the Court in Morison's Executors v Rendall.
[41] I would wish to add however that it seems to me to be clearly arguable in any event (in light of the general approach of the Court in Elsden v Pick) that a present agreement between parties to waive such rights to notice etc as might be given by the lease, such as by agreeing to renounce the lease with immediate effect, would not fall foul of section 21. As is observed in Muir, Watt & Moss at p.272 at para. 12.4, the reasoning of Brightman and Buckley, LJ in the case of Elsden appears to be securely based on the distinction between creation of a tenancy agreement shorn of some aspect of security of tenure (which is prohibited) on the one hand and, on the other, enforcement of a subsequent decision by a party who is fully protected to forego some aspect of the protection as part of a contract. I consider that counsel for the pursuers was right to observe that the observations in Morrison v Rendall to the effect that in general the terms of section 24 of the 1949 Act prevented parties from contracting out of its provisions at any time (and not simply ab ante) might well have been different if the case of Elsden had been before the Court. Further it is not at all clear that the language in section 21 could properly be said to apply to an agreement to renounce with immediate effect. The section directs that a tenancy "shall not come to an end" except by operation of a notice etc. It does not, as the parties were agreed, purport to relate to all ways by which a lease may be terminated (such, for example, as on death). The language of the previous equivalent provision in section 24 of the 1949 Act began "Notwithstanding the termination of the stipulated endurance of any lease of an agricultural holding, the tenancy shall not come to an end unless....". It thus seems clearly arguable that the provision is concerned with the ending of a lease at its agreed term (or the term provided for by operation of tacit relocation), and that it does not refer to termination by immediate renunciation. Although in Elsden v Pick the language of the clause in question was different, it is not without significance to observe that both parties and the Court proceeded on the basis that an agreement for immediate surrender would have been entirely valid. In the absence, however, of specific argument directed to these matters I do not think it right to say more.
[42] I would only add that if I had preferred the construction submitted on behalf of the defenders there would, it seems to me, have been much force in their submission that no amount of personal bar or actings could prevent them founding upon the relevant section.
[43] Lastly, counsel for the defenders argued that even if there was a new lease with the partnership as constituted in 1993, the lease did not come to an end on the death of Robert Donald, Senior.
[44] The pursuers' position was that as a matter of law the death of a partner ordinarily brought a lease in favour of the partnership to an end, even if there was a clause in the partnership agreement to the effect that, notwithstanding the death of a partner, the partnership would not be dissolved. Reference was made to Inland Revenue v Graham's Trustees 1971 SC HL 1, Jardine-Paterson v Fraser & Others 1974 SLT 93 and Moray Estates Development Company v Butler. It was accepted that it was possible to have a lease which was not limited to the partners at the time but which extended to the "house" under all the changes it might undergo. This was essentially a matter of the intention of the parties at the time the lease was entered into. This was clear from the same authorities. Although in William S Gordon & Co Limited v Mrs Mary Thomson Partnership 1985 SLT 122 the Court and parties had proceeded on the basis that the critical question of whether a lease with the partnership continued was whether the partnership agreement itself provided for the partnership to continue notwithstanding the death of a partner, the case was out of line with the other authorities and should not be followed. In this case, although it was accepted that Clause Fifth of the Partnership Agreement (which provided "The death or resignation of any one or more of the parties shall not terminate the partnership, which shall continue without break, failing written agreement to the contrary") was such as to provide for the continuation of the partnership notwithstanding Mr Donald, Senior's death, there were no indicia to suggest that the lease with the partnership was one with any continuing house. In agricultural leases, where there was a strong element of delectus personae, such indications would need to be clear. Reference was made in particular to Lord Maxwell in Jardine-Paterson v Fraser & Others. There were none in this case. Instead the apparently short duration of the lease (being from year to year) was against any such notion. The fact that the pursuers did not know that the second defender was a partner was neutral or, if anything, against the defenders' contention. Nothing could be made of the fact that the evidence suggested that the pursuers had made no enquiries. The Duisk Forage Group documentation suggested that Robert Donald, Senior and the first defender were the partners and there was no reason for the pursuers thereafter to think anything different - not least having regard to the signature of the commodities agreement in August 1995 by Robert Donald, Senior and the first defender. The case was much less strong for the defenders than Moray Estates Development Company v Butler, where an argument in support of a lease to a qualified house (that is a lease in favour of the business so long as it continued with any one or more of the original partners remaining as partners) was also rejected.
[45] Counsel for the defenders did not, as I understood it, contest any of the legal propositions on which the pursuers founded. In particular he did not seek to suggest that the case of William S Gordon & Co Limited v Mrs Mary Thomson Partnership should be followed. He argued, however, that in circumstances where it was clear that the pursuers did not know of the second defender's position as partner, and made no enquiries specifically as to who the partners were, it could not be said that the circumstances disclosed any intention to enter into a lease only with the partners as then constituted. Any lease was therefore with the house. Reference was made to Pickard v Ritchie 1986 SLT 466.
[46] Had I required to decide this matter I would have preferred the arguments advanced on behalf the pursuers. It could not, it seems to me, be said that the one factor referred to on behalf of the defenders would be enough - in light of the authorities - to indicate that the lease in question extended to the "house" under all the changes it might undergo. I did not find the case of Pickard v Ritchie - which dealt with the question of whether an agreement to lease could be inferred at all - to be of assistance. It is to be noted, however, that no specific argument was advanced that the lease in question could be said to have been with a qualified house, for example with any continuing partnership so long as the partners were immediate members of the Donald family.
[47] In the whole matter I shall repel the pursuers' first and second pleas-in-law, sustain the second, third and fourth pleas-in-law for the defenders, and assoilzie the defenders from the conclusions of the summons, reserving all questions of expenses meantime.