SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Kingarth Lord Hardie	[2010] CSIH 36 X61/08 OPINION OF THE LORD JUSTICE CLERK in the appeal by ALEXANDER BISHOP LOUDON Appellant; against JAMES HAMILTON and OTHERS Respondents: Against an Order of the Scottish Land Court dated 10 April 2008 _______

For appellant: Stuart QC; Turcan Connell WS

For first respondent: Party

For second respondent: Upton; Hughes Walker

27 October 2009

Introduction

[1] This is an appeal from an Order of the Scottish Land Court. The issue is whether in March 2000 the first respondent granted to the appellant an agricultural lease of certain land at East Gartfarran Farm, Gartmore, Stirlingshire (the farm).

The application

[2] On 8 May 2006 the appellant applied to the Land Court (1) for declarator that he was tenant of the farm under a 1991 Act tenancy, as defined in section 1 of the Agricultural Holdings (Scotland) Act 2003 (the 2003 Act); (2) for interdict against the first and second respondents from taking occupation of the farm, from obstructing and interfering with the appellant's peaceful occupation of it, or any part or parts of it, from causing damage to the appellant's goods, gear and fixed equipment and from moving and interfering with the appellant's goods and stock; (3) for a finding that the first respondent was liable to the appellant for losses amounting to £54,000 sustained by the appellant as a result of the first respondent's failure to comply with his obligation to provide adequate fixed equipment on the holding; (4) for an order requiring the first respondent to provide a suitable steading, slurry tank and silage pit to enable the appellant to maintain efficient production on the farm, and (5) for expenses.

[3] The application was founded on averments that in March 2000 the first respondent let the farm to the appellant at an annual rent of £22,000; that the appellant took entry on 1 April 2000; that the farm was let as a stock farm; that the appellant had been in continuous occupation of it since then; that a large steading, silage pit and slurry tank formed part of the fixed equipment on the farm; that the effect of the lease was to create a tenancy of an agricultural holding; and that, because the tenancy was in existence on the coming into force of Part 1 of the 2003 Act, the tenancy was a 1991 Act tenancy. The applicant averred that the first and second respondents were harassing him and his stock in various ways.

[4] On the same date, the appellant's solicitors applied to the Land Court by letter for interim interdict in terms of the appellant's second crave. In the letter, they asked that the court should consider the granting of the interim interdict as soon as possible "due to the ongoing nature of harassment that our client is currently enduring." On 9 May 2006 the court granted interim interdict as craved. It did so without a hearing and before intimation of the application to the respondents. The interim interdict remained in force until April 2008.

[5] It is agreed that in March 2000 the first respondent owned the farm and that between then and the making of this application he sold it off in six transactions which I shall describe. The appellant convened each of the purchasers as respondents and in his pleadings referred to them and the first respondent collectively, and illogically, as "the landlord respondents." The application was opposed by the first, second, fourth and seventh respondents.

[6] In due course answers to the application were lodged by the first respondent to the effect that he had given the appellant only a series of grazing lets over parts of the land, it being understood by both of them that the lets would not create a protected tenancy.

[7] On 6 April 2006, shortly before the application was lodged, the first respondent sent to the appellant a schedule showing the rents that remained unpaid by the appellant for these lets for the periods 1 April 2000 - 28 March 2001 to 1 April 2005 - 28 March 2006. In the course of adjustment it was averred on behalf of the appellant that this schedule was "obviously an attempt at a sham" and later that it was "obviously an attempt at inferring that the agreement [between the appellant and the first respondent] was something other than a 1991 Act tenancy notwithstanding the unequivocal agreement reached between [them] in 2000." When the case came to proof, the appellant's reply to the first respondent's defence was an outright denial that in March 2000 the parties had agreed to enter into a grazing let.

The decision of the Land Court

[8] The Land Court held a proof on the question whether the first respondent had granted the appellant the tenancy that he claimed. It found against the appellant. By its Order of 10 April 2008 it assoilzied all of the respondents from craves 1 to 4 of the application and recalled the interim interdict. That is the Order appealed against.

The legislative framework
The 1991 Act

[9] Section 1 of the 1991 Act provides inter alia as follows.

"1(1) In this Act (except sections 68 to 72) "agricultural holding" means the aggregate of the agricultural land comprised in a lease, not being a lease under which the land is let to the tenant during his continuance in any office, appointment or employment held under the landlord."

Section 85(1) provides inter alia that -

"'lease' means a letting of land for a term of years, or for lives, or for lives and years, or from year to year."

Section 3 provides as follows.

"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 2 was in force at the relevant date in this case. It provided inter alia as follows.

"2(1) Subject to subsection (2) below, where, under a lease entered into on or after 1st November 1948, land is let for use as agricultural land for a shorter period than from year to year, and the circumstances are such that if the lease were from year to year the land would be an agricultural holding, then, unless the letting was approved by the Secretary of State before the lease was entered into, the lease shall take effect, with the necessary modifications, as if it were a lease of the land from year to year.

(2) Subsection (1) above shall not apply to -

(a) a lease entered into (whether or not the lease expressly so provides) in contemplation of the use of the land only for grazing or mowing during some specified period of the year ... "

[10] Sections 1, 3 and 85(1) (sv "lease"), taken together, are the foundations of the agricultural tenant's security of tenure. Section 2(2)(a) was designed to exclude from the operation of security of tenure the traditional practice of letting land seasonally for grazing or mowing. This appeal is based on it.

The 2003 Act

[11] The 2003 Act created new forms of limited duration tenancies. In association with those reforms it repealed section 2 of the 1991 Act (2003 Act, s 1(3)) and put leases for grazing or mowing on a new footing (ibid, s 3). It referred to the tenancy of an agricultural holding by the new nomenclature "1991 Act tenancy" and restricted the creation of any new tenancy of that kind (ibid, s 1(1), (2)).

The issue in this case and its significance

[12] The appellant's case is that in March 2000 the parties entered into an express oral agreement by which the first respondent let the farm to the appellant on the terms to which I have referred and that the lease created a 1991 Act tenancy. That case is straightforward. As it is pled, section 2(2)(a) of the 1991 Act has no bearing on it.

[13] A 1991 Act tenancy confers on the tenant valuable rights that are enforceable against both the landlord and any acquirer of his interest, and are potentially available to successors of the tenant through an indefinite number of generations. The most fundamental is the tenant's security of tenure. The tenant also has rights to certain compensations at waygoing and, since the 2003 Act (Pt II), a qualified right to buy.

[14] Unless a landlord has valid grounds for serving an incontestable notice to quit or for obtaining the consent of the Land Court to the operation of a notice to quit, he must accept that the land may be burdened with the tenancy indefinitely. In such a case, if he should wish to sell the land, he can realise the vacant possession value of it only with the tenant's co-operation.

[15] If the present claim is well founded, the appellant can exclude the second to seventh respondents, the present owners, from the subjects of the alleged tenancy and can invoke section 5 of the 1991 Act to require them to equip the land as a stock farm. That provision underlies craves 3 and 4 of the application.

[16] I mention these matters to demonstrate what is at stake for the second to seventh respondents who innocently acquired title to parts of the farm before the appellant made any claim to a tenancy of it.

The Land Court's findings in fact

The agreement for a grazing let

[17] The Land Court has found that in the Spring of 2000 the first respondent decided to retire from farming. His intention was to keep the farm until his son, then aged 10, was old enough to decide whether he wished to take it over.

[18] In about March 2000 the first respondent and the appellant entered into an informal oral agreement by which the first respondent gave the appellant a let over certain parts of the farm at a rent of £22,000. Both understood and contemplated that this was a let for grazing or mowing purposes and was for a period of less than one year. Both parties understood that the let would not attract security of tenure. They agreed that the let would run from 1 April 2000. They were aware that the proposed let could not be for more than 364 days. They also contemplated that seasonal lets of this kind would be renewed in successive years for as long as that suited them both. The first respondent contemplated a period of about 6 years, by the end of which his son would be of an age to make his decision. He told the appellant as much in their discussions at that time. The farmhouse and all of the agricultural buildings were excluded from the let; but the first respondent told the appellant that he could use some of the buildings so long as the first respondent had no need of them.

[19] The following findings as to the duration of the grazing let are central to the submission for the appellant.

"[300] Two things are clear, however. First that the agreement was to run from 1 April 2000 and secondly that the applicant was not to be entitled to occupy the subjects for more than 364 days in the year commencing on that date. The applicant gave clear evidence, which we accept, as to the former and both parties expressed their understanding that a seasonal grazing let which was to avoid the security of tenure provisions of the 1991 Act could not be for a period longer than 364 days.

[301] It is also possible to make inferences as to duration from the interests of the parties as at March 2000. So far as the First Respondent is concerned he had given up farming and had no further use for the land. It is reasonable to assume that he would have wanted to maximise the rental from the land, given his apparent financial position at the time. These factors point to a longer, rather than shorter, period of let. What the First Respondent was determined to avoid, however, was the creation of a secure tenancy and he knew that the period of lease could not therefore be more than 364 days: but short of that nothing mattered and he was quite content that the applicant should occupy the ground for 364 days. So far as the applicant is concerned he did have use for the land on a year round basis if he could get it, as his subsequent occupation and use of it demonstrates. His desire was, therefore, to have the land for the maximum period possible consistent with the avoidance of the security of tenure provisions, which he was aware, as we have found despite his evidence on the matter, was an over-riding priority for the First Respondent. The interests of the parties therefore coincided in a letting of the land for 364 days from 1 April 2000 which we have, therefore, by this process of inference found to be the period of the let."

A period of 364 days would have qualified as a "specified period of the year" under section 2(2)(a) (Reid v Dawson, [1955] 1 QB 214).

[20] The Land Court made the following specific finding in fact.

"[317] (6) It was also the understanding of the parties that a seasonal grazing let would not attract the security of tenure provisions of the 1991 Act whereas a lease of a year or more would. Both parties were aware that such a let could not, therefore, be for more than 364 days. Parties did not explicitly agree a duration in terms of dates but did agree that the lease would start as at 1 April 2000. Although not explicitly agreed as aforesaid, as a matter of inference (explained above) it was the agreement of parties that the lease would endure until 30 March 2001"

It found that the appellant took entry under the grazing let on 1 April 2000; that he also wintered cattle in the buildings until they were demolished in 2003, and that from 1 April 2000 he had stock on the farm continuously.

[21] The Land Court found that the basis on which the appellant was entitled to occupy the farm, or any part of it, in the years April 2001-March 2002, April 2002-March 2003 and April 2003-March 2004 was the same, as to both use and duration, as that which pertained in April 2000-March 2001. It found it unnecessary to make findings in fact on that question beyond March 2004 because by then the relevant provisions of the 2003 Act had come into force.

The subsequent sales

[22] After the first grazing let had expired, the first respondent disposed of the farm in the six sales to which I have referred. Five of these related to land to which the grazings lets applied. The appellant knew of these sales, with the exception of one trivial transaction, around the dates at which they were entered into. He did not object to any of them.

[23] The details and the circumstances of the sales are as follows. In about May 2002 the first respondent sold off 1.024 ha to the third respondent. The appellant then removed his stock from that part of the land. In about June 2002, the first respondent sold 13.68 ha to the sixth respondents. The appellant then entered into an agreement with the sixth respondents for the grazing of his stock on that land. After these sales the first respondent, in view of the reduced area of grazing land that he could provide, reduced the rent for each of the ensuing grazing lets to £16,800.

[24] In April 2003 the first respondent sold 7.33 ha of the farm to the fourth respondents. This sale did not include any of the land let for grazing. This area included the farmhouse, steading and other outbuildings. The fourth respondents thereafter refurbished the farmhouse and demolished most of the outbuildings. The appellant knew of their intention to do this before the sale went through and he knew of the demolition of the outbuildings when that occurred. He made no objection.

[25] In July 2004 the first respondent sold 62.26 ha to the seventh respondent. After this sale, the appellant removed his stock from this area and gave up the use of a part of it that he had previously used as his main silage field, all without demur. In or about August 2005 the first respondent sold a small area of land to the fifth respondents for the construction of a road giving access to subjects already owned by them. In or about April 2006, the first respondent sold off all of the land that remained in his ownership to the second respondent. The second respondent then spent £12,000-£13,000 on the repair and replacement of fences on this land.

The appellant's credibility

[26] If one leaves aside the findings in paragraphs [300] and [301] of the Land Court's Note (supra), and its specific finding in fact (6) in paragraph [317] (supra), it is obvious that the Land Court's findings are fatal to the appellant's claim. That is scarcely surprising. The Court had at least three good reasons for rejecting it. First, the appellant failed to persuade the Court that he was a credible or reliable witness. Second, the Land Court considered that his responses to the first four sales, his failure to object to the demolition of the buildings, and his failure at any time before May 2006 to assert any claim to a 1991 Act tenancy were inconsistent with his claim. Third, the appellant admitted that on 12 May 2000, only weeks after the date of the alleged lease, he submitted his IACS application for 2000 in which he entered the land at East Gartfarran as being land held by him under a short term or seasonal let and entered the period of occupancy as being from 20 March 2000 to 19 February 2001. The Land Court found that he made the same entry in his IACS application for 2004. We have examined the productions. They show that, notwithstanding the Land Court's limited findings on the question of the IACS forms, which were recovered from the appellant, he made this entry in each of the years 2000 to 2004. His IACS forms for 2005 and 2006 are not in the process. The appellant could offer only the preposterous explanation that he made these entries because he had nothing in writing to say that he had a secure tenancy and that in his 2000 IACS application he entered the period of occupancy as being from 20 March 2000 to 19 February 2001 because "you couldn't leave the box blank" (paras [111]-[112]). I am not surprised that the Land Court did not believe him. It drew the obvious inference. In my view, the Land Court's conclusions were inevitable.

The submission for the appellant

[27] Counsel for the appellant was not involved in the Land Court proceedings. He accepted that, on the Land Court's findings, he could not submit that in 2000 the first respondent and the appellant agreed to create a 1991 Act tenancy. Instead, he submitted that while the parties intended to enter into a grazing let, they failed to agree on a "specified period of the year." Therefore their agreement did not qualify as a let under section 2(2)(a) and had precisely the consequence that they intended to avoid.

[28] The submission for the appellant depends on the proposition that the Land Court had no basis for its finding in fact that the March 2000 agreement was for a period of 364 days. The Land Court said that it made its finding by way of inference. Counsel for the appellant submitted that there was no evidence that the parties ever agreed on that or any other specific duration. If the Land Court's inference was unsound, there was no other agreed period of the let. Therefore the conditions of section 2(2)(a) (supra) were not satisfied and the lease fell to be regarded as a lease from year to year. Counsel for the appellant moved us to alter finding in fact (6) (para [317], supra) by deleting the last sentence.

Conclusions

The application

[29] This application is another opportunistic attempt by a grazing tenant to acquire a tenancy to which he has no right. It is deplorable that the appellant made this application in the knowledge that only weeks after the date of the alleged agreement, he had made a formal and signed declaration in his IACS application that he held the land on a short term or seasonal let and that he had repeated that declaration in subsequent years. It is deplorable that the appellant supported the claim with scandalous averments that the first respondent's schedule of the unpaid rents was an attempt at a sham and, in later adjustments, an attempt at inferring (sic) that the nature of the agreement was something other than a 1991 Act tenancy. Worst of all, in my opinion, the appellant has caused trouble and inconvenience to the respondents by means of an interim interdict that he obtained on averments of fact that the Land Court's findings have disproved and, in particular, on averments of harassment by the first and second respondents that, if pursued, were not established at the proof.

The submission in the appeal

[30] The appellant failed comprehensively to establish the claim on which the application is based. In this appeal he has given up on that claim and instead has claimed the tenancy on a basis of fact that he denied in his own sworn evidence. His case from the outset has been that in March 2000 he and the first respondent reached an "unequivocal agreement" that he would have a tenancy of an agricultural holding and that the tenancy has continued ever since. In the prolix and confused record for the appellant, much of which is irrelevant, it is nowhere averred that the tenancy was created as an unintended consequence of the former section 2(2)(a). On the contrary, the defence that the parties intended to enter into a grazing let is expressly denied. In my opinion, the case put forward by counsel for the appellant is a fundamentally new case for which there is no foundation on record. For that reason alone, in my view, the appeal fails.

Applicability and interpretation of the former section 2(2)(a)

[31] However, assuming in the appellant's favour that he has record for the new submission, I consider that it is unfounded. The words "whether or not the agreement expressly so provides" (s 2(2)(a)) make it clear that the duration of a grazing let can be established by a process of inference (Scene Estate Ltd v Amos [1957] 2 QB 205, Denning LJ at p 211). In my opinion, the Land Court was entitled, in the absence of direct evidence on the point, to infer that the parties agreed that the grazing let would run for 364 days. The two considerations relevant to that question were (1) that the parties agreed that the period of the let should be less than a year and (2) that the appellant should have the maximum occupation of the land consistent with his having such a let. From that and from the other evidence, it was open to the Land Court, as a specialist court experienced in agricultural practice in these matters, to infer that in March 2000 the parties must have agreed on a period of 364 days. In my opinion, the Land Court's inference (para [301], supra), was based on cogent considerations related to the practicalities of the situation in which the contract was made. I can see no basis on which that inference could be assailed.

[32] Even if I am wrong in that conclusion, I consider that the parties nonetheless agreed on a "specified period of the year" for the purposes of section 2(2)(a). The fallacy in the submission for the appellant is that it confuses a specified period of the year with an exactly defined period. The submission is contrary to authority of long standing to the effect that the period of the year to which section 2(2)(a) and its predecessor, and their English equivalents, referred need not be defined in terms of days, weeks or months.

[33] The decisive issue is whether the parties agreed on a duration of less than one year. That was the view of the Inner House in Mackenzie v Laird (1959 SC 266, Lord Justice Clerk Thomson at p 269; Lord Patrick at p 271; Lord Mackintosh at p 272). In that case the parties' agreement did not specify the dates on which the let was to begin and end. Nevertheless, their agreement that the let was to be for a season was held to be a sufficient specification that the let was to be for a period of less than a year. Similarly, in Watts v Yeend ([1987] 1 WLR 323) the evidence failed to establish that the parties had agreed on any exact number of days for which the let was to run; but it did establish that the parties had agreed that it should be for less than a year. It was held that if the parties agreed on that point, the requirement that the let should be for a specified period of the year was satisfied (ibid, Kerr LJ at p 329 D-E; Swinton Thomas J at p 335 E-G; cf Scene Estate Ltd v Amos, supra, Denning LJ at p 211). In this case the Land Court has made a finding that the parties agreed that the period of the let should be less than a year. On these authorities I consider that the requirements of section 2(2)(a) were met. Even if we were to vary the Land Court's finding (6) as counsel has proposed, my conclusion would be the same.

Interim interdict in cases of this kind

[34] A dispute as to the existence of an agricultural tenancy is seldom resolved in a matter of weeks or months. The question of the interim occupation of the subjects of the dispute has important financial implications for all parties. If the claimant to a tenancy secures his possession of the land by means of an interim interdict against the landowner, he may obtain significant financial advantages (eg Bell v Inkersall Investments Ltd 2006 SC 507) and may cause the landowner to suffer considerable loss, particularly because the landowner cannot accept rent from the claimant while the issue remains unresolved (Bell v Inkersall Investments Ltd (No 2) 2007 SC 823, at para [37]). Since balance of convenience is the test, an interim interdict granted on the ex parte representations of the claimant may be difficult to have recalled. In all such cases, the probable length and cost of the litigation and its many uncertainties can put such a claimant in a strong negotiating position that the merits of his case may not justify.

[35] Interim interdict ought not to be granted as a matter of course (Fife v Orr, supra, Lord McLaren at p 11). A party applying for it should explain the whole circumstances to the court with complete candour. Bell v Inkersall Investments Ltd (supra) is an example of what may follow when an interim interdict is obtained irresponsibly.

[36] An interim interdict is granted periculo petentis (Fife v Orr (1895) 23 R 8). Where it is shown that the claimant obtained an interim interdict to which he was not entitled, he will be liable in damages to those who were subject to the interdict for the losses that they have sustained in consequence of it. A claim for damages in such a case may necessitate further litigation in which not all of the pursuer's expenses will be recoverable if he should succeed; and there is always the risk for the pursuer that at the end of the day a decree for damages may be worthless.

[37] The Land Court has a flexible and responsive approach to its procedures. That is one of its strengths. It deals with a wide range of disputes and a wide range of litigants, from crofters to major agricultural entrepreneurs. It is sensible that, where appropriate, the Court should deal with incidental applications informally and expeditiously; for example, in cases where the parties live in a remote area.

[38] But in some cases a formal approach is essential. In this case, the Land Court granted interim interdict on the strength of a letter from the appellant's agents. That, in my view, was not appropriate. The Court may have been influenced by the appellant's allegations of harassment. It is inconceivable, in my view, that the Court would have granted the interdict if it had seen the appellant's IACS applications.

[39] It is for the Land Court to use its discretion in these matters; but since the practical consequences of an interdict can be so serious, I hope that it is not discourteous of me to make the following suggestions. I think that the Land Court should consider whether, in cases where the interim possession of land is in issue, it would be wiser (1) to grant an interim interdict ex parte only in circumstances of real emergency and then only after hearing submissions for the applicant; (2) in the absence of such emergency, to hold the hearing only after adequate notice has been given to the other side; (3) to apply a stringent test in assessing the reliability of the representations made by the applicant; and (4) if it is minded to grant interdict, to take into account its power to require the applicant to lodge caution (cf Williams & Son v Fairbairn (1899) 1 F 944).

Disposal

[40] I propose to your Lordships that we should refuse the appeal.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Kingarth Lord Hardie	[2010] CSIH 36 X61/08 OPINION OF LORD KINGARTH in the appeal by by ALEXANDER BISHOP LOUDON Appellant; against JAMES HAMILTON and OTHERS Respondents: Against an Order of the Scottish Land Court dated 10 April 2008 _______

For appellant: Stuart QC; Turcan Connell WS

For first respondent: Party

For second respondent: Upton; Hughes Walker

27 October 2009

[41] For the reasons given by your Lordship in the chair, I agree that we should refuse the appeal and otherwise dispose of the case as proposed by your Lordship. I have nothing further to add.

SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk Lord Kingarth Lord Hardie	[2010] CSIH 36 X61/08 OPINION OF LORD HARDIE in the appeal by ALEXANDER BISHOP LOUDON Appellant; against JAMES HAMILTON and OTHERS Respondents: Against an Order of the Scottish Land Court dated 10 April 2008 _______

For appellant: Stuart QC; Turcan Connell WS

For first respondent: Party

For second respondent: Upton; Hughes Walker

27 October 2009

[42] For the reasons given by your Lordship in the chair, I also agree that we should refuse the appeal and otherwise dispose of the case as proposed by your Lordship. I have nothing further to add.