Scottish Court of Session Decisions

[1] The pursuers are the tenants of the defenders in respect of about 85 acres of woodland known as Easter Muirhead Plantation, Muthill, Perthshire. The Minute of Lease (No. 6/1 of process) is between the defenders' predecessor in title, the Earl of Ancaster, and the Secretary of State for Scotland. It is dated 27 January and 8 February 1967 and was recorded in the Books of Council and Session on 13 February 1967. For certain good causes and considerations, the Earl disponed the woodland and other lands to his daughter by disposition dated 25 September 1969 and recorded on 25 September 1970 (6/3). His daughter in turn disponed the woodland to the defenders (including herself as a trustee) for no consideration in terms of a disposition dated 28 April 1997 (6/4). Although the Secretary of State was the original tenant, he held the tenancy relative to the functions of the Forestry Commissioners. The pursuers succeeded to the tenancy in terms of transfer of functions and property brought about by subordinate legislation made under section 60 of the Scotland Act 1998 (c. 46) (infra).

[2] The Minute of Lease provides:

[3] In due course, the defenders expressed an interest in purchasing the pursuers' interest in the tenancy and made an offer of £40,000. The pursuers (or rather, in practice, the Forestry Commissioners), on the other hand, sought the defenders' consent to assign the pursuers' interest in the lease to a company called Taxus Limited. This consent was refused. The present action was raised seeking declarator that:

[4] In their defences, the defenders made a number of averments concerning the powers of the pursuers relative to the disposal of lands managed by the Forestry Commissioners. They seemed to be averring that the assignation of the woodland was in some way ultra vires in circumstances where its object was motivated by profit as distinct from, stated broadly, forestry considerations.

(a) PURSUERS

[5] The pursuers' motion was for the Court to sustain their preliminary plea and grant decree of declarator de plano. Counsel presented two submissions. First, she maintained that the defenders' averments, which suggested that the powers of the pursuers to assign the lease were in some way restricted, were irrelevant. The Forestry Commissioners had been established by the Forestry Act 1919 (9 & 10 Geo. 5. c.58). In terms of sub-section 3(3) of that Act the Commissioners were empowered to purchase or take on lease any land suitable for afforestation and to sell or let land acquired which was no longer deemed so suitable. The Forestry Act 1945 (8 & 9 Geo. 6. c.35) effectively transferred these powers from the Commissioners to the Secretary of State for Scotland (section 4). By the time of the consolidating Forestry Act 1967 (c. 10), this power to sell or let had become a general one given to the Secretary of State to dispose of land for any purpose (sub-section 39(2)). In terms of The Scotland Act 1998 (Cross-Border Public Authorities)(Adaptation Functions etc.) Order 1999 (S/I 1999 No. 1747) the power became vested in the pursuers (paragraph 4(29)). The defenders' averments concerning the pursuers' power were, as a matter of law, not well founded and ought to be excluded from probation.

[6] Counsel's second submission was that the defenders had failed to aver specifically or relevantly that assignation without consent was prohibited by reason of delectus personae in the selection of the tenant. The lease was for an extraordinary term and therefore prima facie assignable in the absence of a clause prohibiting such a course (Rankine: Leases (3^rd ed.) pp.157, 172-4; Paton and Cameron: Landlord and Tenant p. 149-151). Counsel went further and submitted that when one was dealing with a government body such as the pursuers, delectus personae could not operate. This was because it could hardly be said that the landlord selected a particular person to be his tenant when that person would change over time. The provisions to terminate this lease before the ish, which operated solely in the landlord's favour, suggested, it was said, that he did not consider that there was delectus personae. The term of the lease at 99 years militated against the operation of delectus personae (Pringle v McLagan (1802) Hume 808). For there to be delectus personae, there had to be a natural person (Inland Revenue v Graham's Trustees 1971 S.C. (H.L.) 1, Lord Reid at 21).

[7] In any event, such averments as there were on delectus personae were insufficiently specific. Whether delectus personae existed in a given lease was ultimately a question of facts and circumstances. Although there was a general presumption in agricultural leases that there was delectus personae, in this case the indicators in what was a rural rather than strictly agricultural lease pointed away from it being present. Counsel referred also to Jardine-Paterson v Fraser 1974 S.L.T. 93, Lord Maxwell at 98 and to Moray Estates Development Co v Butler 1999 S.L.T. 1338, Lord Hamilton at 1344 E - G on the subject of leases to partnerships terminating on the death of a partner as distinct from those to a "house" (successive partnerships).

(b) DEFENDERS

[8] Counsel for the defenders submitted that his preliminary plea to the relevancy of the pursuers' case should be sustained and the action dismissed. The sole question was whether the lease was assignable and that was a matter of law which could be determined on the pleadings. If it could not then a proof before answer might be required.

[9] In relation to the lease itself, counsel pointed to the use clause ("SECOND") which made it clear that the lease was for a distinct purpose, namely forestry. This purpose was not agriculture and this was not an agricultural lease. The landlord had seen the Forestry Commissioners as the best tenant to achieve the purpose (i.e. the growing of timber). Although the term was for 99 years, the original landlord had an unfettered power to terminate it at ten yearly intervals albeit that this power had been lost with the disposition to the Earl's daughter a few years after the execution of the lease. It was not correct to view the lease as the equivalent of alienation as would normally be the case in a lease of 99 years.

[10] The general law was that it was for a tenant to set out in his pleadings reasons why the normal rule in rural leases should not apply. That rule was that such leases were not assignable as they involved delectus personae (Hunter: Treatise on the Law of Landlord and Tenant (4^th ed.) Vol. 1, p. 236; Rankine supra; Paton and Cameron supra; Cameron in the Stair Memorial Encyclopaedia Vol. 13 "Landlord and Tenant" paras. 353-357). There was no basis for maintaining that a lease for 99 years for the purpose of growing timber was extraordinary (see e.g. the length of the mineral lease case of Duke of Portland v Baird & Co. (1865) 4 M 10, Lord Neaves at 21-22).

[11] The Forestry Commissioners' power to alienate land has been restricted in the past. The defenders were not maintaining that there was an absolute prohibition and it was accepted that the 1981 Act provided an unfettered power to alienate. The reason for the averments was simply to emphasise that the selection of the Forestry Commissioners as tenants had been a particular choice of the landlord. There was no reason why there could not be delectus personae in the selection of such a body as tenant. Lord Reid had not expressed a contrary view in Inland Revenue v Graham's Trustees. Indeed he had said that the persona was the firm (see also Cole v Handasyde & Co. 1910 S.C. 68, L.P. (Dunedin) at 73. Whether there was delectus personae was a matter of facts and circumstances and was capable of determination on the pleadings (cf. McBryde: Contract p. 378). The Forestry Commissioners had been in existence for over fifty years at the time the lease was entered into and had been selected specially as tenants. In the absence of relevant and specific averments to rebut the presumption that the lease was not assignable, the action should be dismissed.

[12] Whether an obligation stipulated in a contract is assignable or not depends upon whether there is an element of delectus personae in it (Cole v Handasyde & Co., L.P. (Dunedin) at 73). Whether the element is present will depend on the facts and circumstances of the particular case. As a generality, a lease will often involve a strong personal element. This is because in many leases it is regarded as of importance that the landlord is able to choose a tenant upon whom he can rely to take care of his property over the lease's duration. There is a presumption therefore that an ordinary lease does involve delectus personae and is not assignable (Duke of Portland v Baird & Co., Lord Neaves at 22).

[13] The personal element has been strongest in rural, and especially agricultural, leases. Many of the reasons for this are historical in origin and have little relevance to the modern world (see Hunter p. 237; Rankine p. 157) but some still remain (Paton and Cameron p. 150). Conversely, the let of unfurnished urban subjects is unlikely to be taken to involve delectus personae (Rankine p. 174). Even then, however, that proposition cannot be an absolute one and it again depends on the particular facts and circumstances whether delectus personae applies. That is true also in the case of rural subjects. Thus, in the case of rural subjects, if the lease is of extraordinary duration then the presumption of delectus personae is substantially weakened probably to the point of it being overcome where the lease involves almost an alienation of the subjects. In that situation, the personal element may no longer be held to exist in the landlord and tenant relationship and the lease held assignable. In the case of leases with natural persons and partnerships, this has been the case where the term of the lease exceeded the ordinary maximum duration (Rankine p. 173, cf. Duke of Portland v Baird & Co.).

[14] Despite the caution expressed in McBryde (p. 378), I do consider that the question of whether the tenant's obligations under a lease contain an element of delectus personae can often be determined on the pleadings. In the present case, for example, there is no dispute about the terms of the lease or the nature of the subjects to which it relates. Both these matters will be of importance in determining whether the element exists. There is no material factual dispute between the parties and neither offers to prove facts or circumstances beyond those narrated upon record. The issue accordingly becomes one of applying the law to the facts averred.

[15] One question raised was whether there can ever be delectus personae where the selected tenant is a government body or agency. I do see any reason why it should not operate just because a natural person is not involved. I do not read Lord Reid's speech in Inland Revenue v Graham's Trustees as suggesting otherwise. A contracting party may, in a particular situation, select such a body or agency as appropriate for reasons of its existing skills or known reliability. The same may apply in the case of a "house" or corporation. However, because the character of corporations and, perhaps to a lesser degree, governments can change, sometimes rapidly, over time, it may be difficult for a party to establish delectus personae in a contract with such a person where, as in the case of a long lease, the contract is to last for a number of years.

[16] Looking at the terms of the lease here and the subjects let, I am of the view that there was and is no delectus personae in the selection of the tenant under the Minute of Lease and that accordingly the tenant's obligations under it can be assigned without the consent of the defenders. Three factors in particular have influenced this view. First, although the lease is obviously of rural subjects it is not an "agricultural" one in the sense of being ancillary to the farming of land. Although, no doubt, the original landlord considered that the Forestry Commissioners would make good and reliable tenants, I do not think that such a consideration is sufficient to introduce delectus personae in relation to the obligations required of the tenant in the same way as might be perceived with a working arable or pastoral farm. There is nothing averred, nor was there anything submitted, to the effect that there is anything special attaching to a landlord and tenant relationship where the subjects are, or are to become, woodland. Secondly, the lease contains a use clause which limits what can be done on the land to the purposes authorised by the Forestry Acts, i.e. forestry. This would appear to restrict the activities of any tenant to a substantial degree and suggests that it was envisaged that the tenant would not necessarily always be the Forestry Commissioners, whose activities are presently largely so restricted in any event. Thirdly, and perhaps of the greatest significance, the duration of the lease at 99 years, especially given the options existing at the ish, puts it into the category termed extraordinary (Hunter p. 239; Rankine p. 173-4) where, even in the case of an agricultural lease, assignation would be permitted. Given that substantial term, I do not consider that the parties envisaged that the tenants would remain thirled to the land for such a lengthy period with no option to terminate or alienate.

[17] So far as the averments concerning the powers of the pursuers to alienate land are concerned, it seems clear that the pursuers do have unfettered power to dispose of the land in question and, ultimately, the defenders did not resist that contention. Although the use clause in the lease might be a factor in determining assignability, I do not consider that the defenders' averments concerning the pursuers' statutory powers now or in the past can have a bearing on that issue in this case. Had I required to determine the matter, I would have excluded from probation the averments in the answer to the fourth article of condescendence from "The Forestry Commissioners were established by..." to "...section 39 of the Forestry Act 1967. In any event"

[18] In all the circumstances, I will sustain the first and second pleas-in-law for the pursuers, repel the defenders' first and second pleas-in-law and grant decree of declarator as concluded for.