Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION
CA156/02	OPINION OF LORD MACFADYEN in the cause MRS CAROLE HILDA HISKETT and OTHERS Pursuers; against G. AND G. WILSON and OTHERS Defenders:   ________________

 

 

Pursuers: Sutherland; Shepherd & Wedderburn, W.S.

Defenders: G. M. Henderson; Morisons

18 October 2002

Introduction

1. This action is concerned with questions relating to the tenancy of the farm of Mains of Dellavaird, incorporating Milton of Dellavaird, (together referred to hereinafter as "the farm"), Kincardineshire. The pursuers are the heritable proprietors of the farm. They call as first defenders (1) the now dissolved firm of G. & G. Wilson, and the whole former partners thereof, namely George Sinclair Wilson, and Mrs Marion Wilson, as former partners and as individuals, (2) George Sinclair Wilson as an individual, and (3) George Graeme Wilson as an individual. The pursuers also call as second defender John Pattulo, who was appointed as arbiter by the Scottish Ministers on the application of a firm, G. & G. Wilson (of whom the partners were said, at the time of the application, to be George Sinclair Wilson, Mrs Marion Wilson and George Graeme Wilson), to determine certain questions under the Agricultural Holdings (Scotland) Act 1991 ("the 1991 Act").
2. The pursuers conclude (1) for declarator that the tenant of the farm was the now dissolved firm of G. & G. Wilson, of which George Sinclair Wilson and Mrs Marion Wilson were the partners; (2) for declarator that the lease came to an end on the assumption of George Graeme Wilson as a partner at an unknown date after January 1997, and that as a result none of the first defenders have any further right or title to occupy the farm; (3) for removing; and (4) for interdict of the second defender from proceeding with the arbitration.
3. The first defenders plead inter alia that the subject matter of this action is a question or difference between the landlord and tenant of an agricultural holding, which must therefore, by virtue of section 60 of the 1991 Act, be determined by arbitration. That preliminary issue was appointed to debate.

Section 60

4. Section 60(1) of the 1991 Act provides as follows:

"Subject to subsection (2) below and except where this Act makes express provision to the contrary, any question or difference between the landlord and the tenant of an agricultural holding arising out of the tenancy or in connection with the holding (not being a question or difference as to liability for rent) shall, whether such question or difference arises during the currency or on the termination of the tenancy, be determined by arbitration."

5. The cross-reference in section 60(1) to subsection (2) is to a provision to the effect that the landlord and tenant may by agreement submit a question or difference which falls within the scope of section 60(1) to determination by the Land Court instead of by arbitration. No question of such agreement arises in the present case.

Common Ground

6. It is accepted by the parties that the subject matter of this action is not one for which the 1991 Act "makes express provision to the contrary". There is no question, therefore, of the dispute between the parties falling outwith the scope of section 60(1) on that account.
7. It is also accepted that the dispute which is the subject matter of the action is not a "question or difference as to liability for rent". It therefore does not on that account fall outwith the scope of section 60(1).
8. It is not disputed that the pursuers are the heritable proprietors of the farm, and therefore the landlords in any lease of the farm that is in subsistence. It is likewise not disputed that the farm is an agricultural holding, or that any lease of it is a lease within the meaning of section 85(1) of the 1991 Act.

The Parties' Averments

9. In order to consider the applicability of section 60(1) to the subject matter of this action it is necessary to examine the parties' respective averments to see what the nature of the dispute is.
10. The pursuers' averments set out the following contentions of fact and law:

(1) The farm was originally let to George Wilson and George Sinclair Wilson.
The lease was in their favour as tenants in common, with no provision for succession of the survivor. They took entry at Whitsunday 1961. George Sinclair Wilson is the party of that name who is one of the first defenders. George Wilson was his father.

(2) George Wilson died in the 1970s. No steps were taken to transfer his part of
the tenancy to any other party. The tenancy accordingly terminated.

(3) Thereafter, the firm of G. & G. Wilson, of whom George Sinclair Wilson and
Mrs Marion Wilson were the partners, occupied and worked the farm. Rent was demanded of, and paid by, the firm. A new lease was thus constituted between the pursuers' predecessor as landlord and the firm.

(4) In December 1996, agents for the firm of G. & G. Wilson wrote to the
pursuers' agents, narrating their understanding that the then current lease was in the name of Messrs G. & G. Wilson as tenants, and asking if the pursuers would be agreeable to George Graeme Wilson being "added as a named party to the lease". George Graeme Wilson is the son of George Sinclair Wilson and Mrs Marion Wilson. The consent sought was not given, as negotiations for the sale of the farm to the first defenders were entered into.

(5) In November 2001 the firm of G. & G. Wilson applied to the Scottish
Ministers for the appointment of an arbiter to determine questions relating to the obligations of the pursuers as landlords in relation to fixed equipment on the holding under section 5(2) of the 1991 Act. On 8 November 2001 the Scottish Ministers appointed the second defender as arbiter.

(6) In their statement of claim in the arbitration, G. & G. Wilson averred:

"The tenant is a firm in which the partners are currently George Sinclair Wilson, Mrs Marion Wilson and George Graeme Wilson."

(7) The pursuers responded to that averment by asserting that the tenancy had
come to an end on the assumption of George Graeme Wilson as a partner, because on his assumption a new partnership had come into existence with a separate legal personality, and the former partnership had ceased to exist.

(8) Thereafter in the arbitration G. & G. Wilson sought to amend to aver that
George Sinclair Wilson was the sole tenant of the farm.

(9) The pursuers adhere to their contention that the firm which had been the tenant
since the death of George Wilson in the 1970s ceased to exist on the assumption of George Graeme Wilson as a partner, which event they infer occurred at some stage between January 1997 and the making of the averment mentioned in sub-paragraph (6) above.

11. The defenders' position may be summarised as follows:

(1) They admit that the farm was originally let to George Wilson and George
Sinclair Wilson with entry at Whitsunday 1961.

(2) They explain that the Heads of Conditions offered at that time gave the
tenancy of Milton of Dellavaird to George Wilson, and the tenancy of Mains of Dellavaird to George Sinclair Wilson. At that time, the two tenants were not partners. Nevertheless, the two farms were farmed as one unit.

(3) George Wilson and George Sinclair Wilson entered into partnership under the
name of G. & G. Wilson. Thereafter the landlords and the tenants treated the two holdings as one unit. Rent demands were addressed to G. & G. Wilson or G. & G.S. Wilson.

(4) In 1974 George Wilson retired from the partnership and George Sinclair
Wilson and Mrs Marion Wilson began farming in partnership under the name G. & G. Wilson.

(5) George Wilson died in 1977.

(6) The landlord continued to demand rent from "G. & G. Wilson".

(7) The tenancy was not an asset of the partnership between George Sinclair
Wilson and Mrs Marion Wilson.

(8) On the death of George Wilson, George Sinclair Wilson (the averment says
"the pursuer", but it is obvious that that is a mistake) became the sole tenant.

(9) If the contention that George Sinclair Wilson became the sole tenant on his
father's death is unsound, a new tenancy in his favour came into existence. He continued in occupation and arranged inter alia for the payment of rent. The fact that the farm was operated by the partnership of G. & G. Wilson of whom the partners were George Sinclair Wilson and Mrs Marion Wilson did not alter the fact that George Sinclair Wilson was the tenant.

(10) George Graeme Wilson became a partner in the firm of G. & G. Wilson in
2001. If, contrary to the primary contention, the firm was then the tenant, the lease was to the house, and was not affected by changes in the membership of the partnership.

The Defenders' Submissions

12. Mr Henderson, for the first defenders, submitted that the first defenders' second plea-in-law should be sustained and the action sisted pending resolution of the dispute by arbitration under section 60(1). The dispute between the parties was a "dispute or difference between the landlord and tenant of an agricultural holding arising out of the tenancy" and therefore fell to be determined by arbitration. Mr Henderson referred to the commentary on section 60(1) in Gill on Agricultural Holdings, third edition, paragraph 35.01:

"This [section 60(1)] continues the wide ranging arbitration provisions introduced by section 74 of the [Agricultural Holdings (Scotland) Act 1949 ("the 1949 Act")]. The extensive scope of section 60(1) is well established. The words 'whether such question or difference arises during the currency or on the termination of the tenancy' are to be read along with the rest of the section and relate to questions such as the compensation payable on its termination; not whether the landlord-tenant relationship still exists. Even where it is agreed that there was a tenancy protected by the 1991 Act, the courts retain jurisdiction on the question whether the tenancy has ceased to be an agricultural tenancy or has been terminated altogether. Section 60(1) applies only where there is a subsisting relationship of landlord and tenant between the parties. ...

The comprehensive scope of the arbitration provisions of the 1991 Act was affirmed in the two principal Scottish cases, Houison-Craufurd's Trs. v Davies [1951 SC 1] and Brodie v Ker; McCallum v McNair [1952 SC 216], in which it was established that whenever it is agreed that the parties are in the relationship of landlord and tenant, that the tenancy is a tenancy of an agricultural holding and that the question or difference between them other than one as to liability for rent is one arising out of the tenancy or in connection with the holding whether during the currency or on the termination of the tenancy, the only competent resolution of the question or difference is by arbitration. ...

The issue of jurisdiction commonly arises in actions of removing. In such cases whether the removal is in consequence of a conventional irritancy, a resumption, or a notice to quit, any action of removing must be sisted for arbitration under the Act."

Mr Henderson placed particular emphasis on the last part of that passage. He pointed out that the third conclusion in the present action is for removing, and submitted that that was virtually conclusive of the issue in favour of the need for a sist for arbitration.

13. Mr Henderson also cited certain passages in Brodie v Ker at 224 and 227, in Houison-Craufurd at 5 and 7, and in Cunningham & Sons v Fife County Council 1948 SC 439, but the essence of his submission was that, since the pursuers were seeking removing, and since "any action of removing must be sisted for arbitration under the Act" (Gill on Agricultural Holdings, paragraph 35.01), the arbitration plea in the present case should be sustained and the case should be sisted accordingly.

The Pursuers' Submissions

14. Mr Sutherland for the pursuers submitted that Mr Henderson's submission proceeded on a misunderstanding of the passage from Gill on Agricultural Holdings on which he relied. He emphasised certain sentences in the passage quoted in paragraph [12] above to which, he submitted, Mr Henderson had failed to give proper weight. In particular he founded on the following passages:

"The words 'whether such question or difference arises during the currency or on the termination of the tenancy' are to be read along with the rest of the section and relate to questions such as the compensation payable on its termination; not whether the landlord-tenant relationship still exists. Even where it is agreed that there was a tenancy protected by the 1991 Act, the courts retain jurisdiction on the question whether the tenancy has ceased to be an agricultural tenancy or has been terminated altogether";

and

"whenever it is agreed that the parties are in the relationship of landlord and tenant, that the tenancy is a tenancy of an agricultural holding and that the question or difference between them other than one as to liability for rent is one arising out of the tenancy or in connection with the holding whether during the currency or on the termination of the tenancy, the only competent resolution of the question or difference is by arbitration."

The point was reiterated in paragraph 35.02:

"The court retains the pre-eminent jurisdiction to determine whether the parties are landlord and tenant of an agricultural holding".

15. Mr Sutherland also relied on the following passage from the opinion of the consulted judges in Brodie v Ker at 224:

"Pausing there, we note that it is easy to figure cases in which a question might arise as to whether the subjects let were an 'agricultural holding' within the meaning of the Act, or whether the soi-disant 'landlord' and 'tenant' were entitled to these descriptions, ...; and the determination of such questions would, we apprehend, be for the Court, though we reserve our final opinion until the cases actually arise."

He also cited Cormack v McIldowie's Exrs 1974 SLT 178 per Lord Cameron at 182:

"No doubt the jurisdiction of the court to decide those questions which, under the Agricultural Holdings Act, are properly referred to arbitration is ousted, except in so far as questions of law arising out of the reference can be brought before the court by way of stated case under the statutory procedure. But the question of whether the relationship of landlord and tenant subsists at the time of reference is both fundamental and antecedent to the competency of the reference."

Reference was also made to Donaldson's Hospital v Esslemont 1925 SC 199 at 204. More recently, in Moray Estates Development Co v Butler 1999 SLT 1338, a question as to whether a lease of an agricultural holding had come to an end by virtue of a change in the constitution of the tenant firm (that is, an issue of broadly the same nature as arises in the present case) was litigated (by counsel experienced in agricultural law) on the commercial roll in this Court, without any suggestion being made that the matter was one for arbitration under section 60.

16. Mr Sutherland's submission, accordingly, was that on a sound understanding of the authorities section 60 did not apply to a dispute as to whether the parties were in the relationship of landlord and tenant of an agricultural holding. That was the nature of the dispute in the present case. The plea that the action should be sisted pending arbitration should therefore be repelled.

Discussion

17. It is in my opinion clear on a proper understanding of the authorities that although the scope of section 60(1) is broad, it does not encompass a dispute as to whether a relationship of landlord and tenant of an agricultural holding subsists between the parties. That is, in my view clear from the opinion of the consulted judges in Brodie v Ker at 224, from Cormack v McIldowie's Trs per Lord Cameron at 182, and from a proper reading of the commentary on section 60 in Gill on Agricultural Holdings at paragraphs 35-01 and 35-02, especially in the passages relied upon by Mr Sutherland (see paragraph [14] above).
18. Mr Henderson's submission based on the passage in Gill which puts forward the proposition that "any action of removing must be sisted for arbitration under the Act" involves, in my view, a misunderstanding of that passage. The raising of an action of removing ordinarily indicates an acceptance on the pursuer's part that the party against whom the remedy of removing is sought was, until the notice of irritancy or notice to quit, the tenant of the subjects. It is that ordinary situation to which the passage in Gill refers. The present case is unusual in that, although removing is sought, the primary contention of the pursuers is that there is no extant relationship of landlord and tenant because the tenant ceased to exist when the composition of the firm changed on the assumption of George Graeme Wilson as a partner. I say nothing as to whether the remedy of removing is an appropriate one for the pursuers to seek as a means of giving effect to their contention. The first defenders have a plea to the competency of the conclusion for removing. The fact that the pursuers have sought that remedy does not, however, alter the fact that their contention is that there is no landlord and tenant relationship extant.
19. It is in my opinion clear that the issue between the parties in this case is whether they are parties to an agricultural tenancy. If they are not, no question or difference between the landlord and tenant of an agricultural holding exists, and there is therefore no dispute of the sort to which section 60 applies. The issue between the parties is one which, on the authorities, is for the court to determine. It is inappropriate for me to say anything at this stage about the respective merits of the parties' contentions on that issue. It is sufficient that that is the nature of the issue between them.

Result

20. I shall therefore repel the first defenders' second plea-in-law, and refuse the motion to sist the cause for arbitration. Mr Henderson intimated in the course of the debate that he did not insist on the first defenders' first plea, which is a plea of no jurisdiction. I shall therefore repel that plea as well. I shall put the case out By Order, for the purpose of discussing further procedure in the action. I shall reserve meantime the expenses of the debate.