Scottish Court of Session Decisions

In this action the pursuers are the heritable proprietors of 87 acres of ground which are part of Dowan Farm, Milngavie. The defender obtained occupation of the subjects in April 1994 in anticipation thereafter of entering a lease with the then owners of the subjects. This lease was however never formalised and the pursuers subsequently acquired the subjects in March 1996. The pursuers and defender entered into negotiations at that time concerning the defender's occupation of the ground and an agreement was then reached in about July 1997, in terms of which the defender remained in occupation of the subjects for a payment of £4,100 per annum, increasing by 3% per annum from 1 April 1998. In terms of this arrangement the defender agreed to vacate the land on being given six months notice. The pursuers maintain that this agreement consisted of a grant by them to the defender of a right of occupation. The defender's position is that the agreement between the parties was a lease of agricultural subjects, and that the condition of six months notice was accordingly void, as section 21 of the Agricultural Holdings (Scotland) Act 1991 requires that a notice to quit must be served before a tenant can be required to leave an agricultural holding. The defender's use of the subjects had throughout been connected with her riding school business. The pursuers now wish to obtain vacant possession of the subjects in order to sell them for development purposes, and the defender declines to remove. The pursuers have accordingly raised the present action which contains two conclusions, the first for declarator that they have the right to enter into possession of the heritable subjects, and the second to grant warrant for summary ejection of the defender from the subjects. The case came out for debate, the defender wishing to argue her two preliminary pleas; the first plea-in-law is directed at the competency of the action, and the third challenges the relevancy of the pursuers' pleadings.

The defender's first submission therefore was to the effect that the present action as raised is incompetent. Section 39 of the Sheriff Courts (Scotland) Act 1907 provides:

Schedule 1 contains the Ordinary Cause rules. Exceptions to this general provision are found in the Sheriff Courts (Scotland) Act 1971. Section 35 of that Act provides that there shall be a form of process to be known as a summary cause which is to be used for the purpose of certain kinds of civil proceedings. The terms of this requirement are mandatory. The classes of case which must be brought under summary cause procedure are contained in Section 35(1) of the Act and are as follows:-

Sheriff Court in November 1998, but was transferred to the Court of Session on 6 August 1999, apparently on the unopposed motion of the pursuers. The Initial Writ contained two substantive craves, the first for declarator that the pursuers have a right to enter into possession of the subjects and the second for ejection of the defender from the subjects. The terms of these two craves are repeated in the conclusions of the present action in the Court of Session. In effect, it was submitted in support of the defender's first plea-in-law that the action was essentially one of ejection, and that the original crave (and the present conclusion) for declarator were unnecessary to give effect to the conclusion for ejection, and added nothing to it. The conclusion for declarator, it was said, did not attempt to set up the right in terms of which the pursuers seek to reclaim possession of the property. Reference was made to Rutherford v Virtue 1993 SCLR 886. Accordingly this was an action ad factum praestandum which had been raised as an ordinary action but which should have been raised as a summary application in terms of section 35(1)(c) of the 1971 Act, despite the addition of the crave for declarator. In response the pursuers argued that the original crave for declarator was necessary and justified. An action for declarator could only be raised in the Sheriff Court as an ordinary action. The pursuers sought the right to enter the subjects and to eject the defender. This was not, and could not have been, simply an action of removing, which was a process which could only be taken after a notice to quit had been served in terms of the appropriate legislation. The pursuers therefore had to assert the right to enter the subjects before they could establish their claim to eject the defender. The pursuers maintained that what the defender had was simply a right of occupancy and not a lease, and that the concept of such a right of occupancy was well recognised. Reference was made to Milmor Properties Ltd v W & T Investment Co Ltd 2000 SLT (Sh. Ct.) 2.

In the case of Rutherford v Virtue the pursuer sought declarator that in terms of a disposition the defender was bound to make up a roadway, and further craved a decree ad factum praestandum in respect of the obligation. There was no alternative financial crave. The Sheriff Principal (Nicholson) held that the action, which had been raised as an ordinary action in the Sheriff Court, was incompetent. The pursuer had argued that while it was accepted that in normal circumstances and in terms of section 35(1)(c) of the 1971 Act, an action ad factum praestandum unaccompanied by any financial conclusion for more than £1500 could only be raised as a summary cause, the inclusion of a crave for declarator made it competent to raise the action under the ordinary cause procedure. This submission was rejected for two reasons. Firstly, the Sheriff Principal appears to have considered that an action of declarator could be raised in terms of procedure other than that appropriate to an ordinary action, while an action ad factum praestandum could only be raised in normal circumstances as a summary cause. I share the reservations about the correctness of the first part of this line of reasoning expressed by Sheriff Principal Risk in the case of Milmor Properties Ltd v W & T Investment Co Ltd, for the reasons therein expressed. I do not think that it can be in doubt that in the Sheriff Court an action for declarator can only be raised as an ordinary action. However, and more significantly, in Rutherford v Virtue Sheriff Principal Nicholson held that the crave for declarator was not essential to the action, and therefore concluded that the action was simply one of specific implement and was accordingly incompetent. At page 5H of the Report, the Sheriff Principal notes:

This line of reasoning was followed by Sheriff Principal Risk in the case of Milmor Properties Ltd v W &T Investment Co Ltd, where he observed that what was needed was to categorise actions rather than craves, and that craves added simply as a decoration should not be allowed to characterise the form of procedure taken in any particular case.

While I agree in general terms with the principles expressed in the two cases cited above, I am not satisfied that they apply to the present case. An action for declarator can only be raised in normal circumstances as an ordinary action, as I have noted. In terms of section 35(1)(c) of the 1971 Act the present conclusion for decree ad factum praestandum, had it stood alone, could only have been raised as a summary cause. I do not think that it is realistic to propose, on the assumption that both conclusions are truly necessary for the pursuers, that two separate actions should be raised (see McPhail on Sheriff Court Procedure, 2^nd Ed. paras. 23.08 and 23.09). In fairness I do not think that it was suggested by either side in the present debate that this should happen. It may be that ancillary or consequential claims are as important to the resolution of the overall dispute between the parties, but when a conclusion for declarator must be established before such further matters are considered, I have no doubt that it is reasonable and practical to allow all such conclusions to be included in one ordinary action even although the subsequent conclusions, were they to be considered separately, would require to be treated in a different way by virtue of the statutory provisions.

The issue therefore depends on whether in the present case the conclusion for declarator can be said to be necessary to allow the pursuers to achieve the remedy of ejection which they also seek. In my view it is clear that the pursuers can properly claim that such a conclusion is necessary to their case. It is I think important to note that the right of entry claimed by the pursuers to justify the declarator is denied by the defender. The defender's claim is specifically to the effect that she has acquired occupational rights to the subjects in terms of the agricultural holdings legislation, and that therefore the pursuers do not have the right to enter upon the subjects at all. This directly contradicts the claim made by the pursuers in terms of their first conclusion. The pursuers can therefore in my view legitimately seek to have their rights in this matter determined by the Court by tabling their declaratory conclusion. Had there been no such conclusion, it may be that the pursuers would have been open to criticism for not establishing judicially the nature of their claim to eject the defender. Accordingly, I am satisfied that the declarator is necessary to the prosecution of the pursuers' claim, and is thus reasonably included in the present action for the purpose of resolving that claim. I conclude therefore that both the original Initial Writ and the present action are competent. For the sake of completeness, I should add that it was not disputed that if the original action as laid in the Sheriff Court was incompetent, then the transfer of the action to the Court of Session would not have cured that defect. I therefore propose to reject the plea to the competency at this stage.

The defender's second submission was that the case as pled was wholly irrelevant. It was argued that the pursuers had in effect averred themselves into describing the arrangement between the parties as an agricultural lease, and the subjects therefore as an agricultural holding. All of the cardinal elements of such a lease, it was said, were present. The subjects were properly described and admitted. The parties were clearly identified. The rent had been agreed at a price per annum. The only matter which had not been expressly specified was the duration of the lease. However, in the defender's submission where there is an agreement of an annual rent this indicates that there is an annual lease. Alternatively it was submitted that the law implies an annual lease where possession of the land is ceded by the owner to the party in occupation, as clearly was the case here. At the very least the provision of six months notice in the arrangements between the parties, which is common ground, implies that there is an indefinite ish with a minimum duration of six months. Reference was made to Gray v The University of Edinburgh 1962 SC 157. Accordingly the defender argued that all the bases for an agricultural lease of an agricultural holding could be found in the pursuers' own pleadings. If there is an admitted relationship of landlord and tenant, then this Court could have no jurisdiction as removal proceedings could only be taken in terms of section 21 of the Agricultural Holdings (Scotland) Act 1991. Simply because the landlord describes the arrangement between the parties as a licence did not necessarily make it so. In response, counsel for the pursuers maintained that the defender's submissions depended entirely on the correct interpretation to be put on the six months period of notice which was provided for in the arrangements between the parties. It required a proper construction of that period of notice to establish whether or not a lease could be said to exist between the parties. The pursuers' position was that the six months period only related to the notice which the pursuers as proprietors agreed to give the defender when they wished to resume occupation of the subjects. The arrangement was not a lease but a right of occupation terminable when the pursuers required to regain possession. That this was the correct position could be inferred from the defender's own pleadings. The termination of the agreement was not something to be arrived at as a matter of consent between the parties, nor was it to be decided on an inference by the court from an examination of the pleadings, but was something which would happen at the will and instance of the pursuers. Reference was made to Scottish Residential Estates Development Co Ltd v Henderson 1991 SLT 490.

I am satisfied that in the present circumstances the question of whether the arrangement between the parties in respect of the subjects was a lease or a licence is a matter which must go to enquiry. The defenders' submission that the arrangement in question constituted an agricultural lease, and that consequently the subjects are to be regarded as an agricultural holding may, or may not, prove to be correct, but I cannot see how these questions can be properly determined at this stage. In particular I do not think it is appropriate to infer from an examination of the pleadings that there is a duration, or an ish, of the supposed lease, particularly when one party to that arrangement has specifically averred that the nature of the occupation of the subjects was not that of a lease but rather a licence. There is certainly no essential agreement between the parties as to the nature of the arrangement between them, and I therefore do not think it is helpful at this stage to consider the relative submissions made at this stage on the basis of the authorities cited until the factual position is decided.

There were two ancillary matters which were also discussed at debate. The first of these was whether it could be said in the circumstances and in terms of the Agricultural Holdings legislation that a horse riding establishment is properly to be described as an agricultural holding. For the defender reference was made to the case of Rutherford v Maumur 1962 1 QB 16 where a riding establishment of a sort that seems to be similar to that in the present case was held to be an agricultural holding. Further reference was made to section 1 of the Agricultural Holdings (Scotland) Act 1991 which in effect provides that an agricultural holding is defined in terms of what is agricultural land, and agricultural land means land used for agriculture for the purpose of a trade or business. It was submitted that using the land for grazing by horses as part of running a riding stables was self evidently use of the ground for the purposes of a trade or business. For the pursuers it was argued that horse riding was not an agricultural use of the land and could not therefore be a trade or business in terms of the Act. As there is no Scottish authority directly in point on this matter I am again of the opinion that this question should be settled after proof, and that it would be inappropriate to determine the issue as a matter of principle at this stage.

Finally the defender argued that if the present circumstances meant that there is a lease of an agricultural holding then the provision of a six months period of notice is irrelevant and the action must fail because no notice to quit had been served in terms of the 1991 Act. I have no doubt that this is correct, but again the argument depends upon the pursuers being able to establish that the arrangements between the parties comprise an agricultural lease, and as I have indicated above, that is something which I think can only be determined after inquiry.

In all the circumstances I shall repel the defender's first plea-in-law to the competency at this stage, and send the case to a Proof Before Answer with all the other pleas remaining on record. I have reserved the question of expenses.