Johnson v Moreton

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Salmon,Lord Hailsham of St. Marylebone,Lord Simon of Glaisdale,Lord Edmund-Davies,Lord Russell of Killowen
Judgment Date27 Jul 1978
Judgment citation (vLex)[1978] UKHL J0727-3

[1978] UKHL J0727-3

House of Lords

Lord Salmon

Lord Hailsham of St. Marylebone

Lord Simon of Glaisdale

Lord Edmund-Davies

Lord Russell of Killowen

Johnson and Another
(Appellants)
and
Moreton
(Respondent)

Upon Report from the Appellate Committee to whom was referred the Cause Johnson and another against Moreton, That the Committee had heard Counsel as well on Monday the 19th as on Tuesday the 20th, Wednesday the 21st and Thursday the 22nd days of June last upon the Petition and Appeal of Henry Leslie Johnson and Caroline Johnson both of Offchurch Bury, Leamington Spa, Warwickshire, praying, That the matter of the Order set forth in the Schedule thereto, namely an Order of Her Majesty's Court of Appeal of the 15th day of February 1977 might be reviewed before Her Majesty the Queen in Her Court of Parliament and that the said Order might be reversed, varied or altered and that the Petitioners might have the relief prayed for in the Appeal or such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament might seem meet; as also upon the Case of Samuel Moreton lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 15th day of February 1977 complained of in the said Appeal be, and the same is hereby. Affirmed and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay or cause to be paid to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments if not agreed between the parties.

Lord Salmon

My Lords,

1

This appeal raises an important point of law relating to the degree of security of tenure which the Agricultural Holdings Act 1948, as amended by the Agriculture Act 1958, affords a tenant farmer.

2

By a lease dated 11th August 1967 the present landlords' (the appellants) predecessors in title granted to the tenant (the respondent) a lease of Village Farm, Offchurch, Warwickshire (a farm of some 236 acres) for a term of ten years from the 1st January 1967. The rent was £1,888 for the first three years of the term and £2,360 for the remainder of the term subject to a rent review in respect of the last three years of the term. Clause 27 of the lease reads as follows:

"The Tenant agrees to give possession of the whole of the farm to the Landlords immediately upon the determination of the term hereby granted and not in any event to serve a counter-notice under section 24 (1) of the Agricultural Holdings Act 1948 or to take any steps to claim the benefit of any statutory provision granting security of tenure which may be in force at the time of the determination thereof."

3

The clear intention of this clause was to deprive the tenant of the security of tenure afforded him by the Act of 1948 or any other Act which might be passed by Parliament for the protection of tenant farmers.

4

I must now set out the relevant parts of sections 3, 23 and 24 of the Act. The result of this appeal depends entirely upon the true construction of section 24(1).

Section 3.-(1) "A tenancy of an agricultural holding for a term of two years or upwards shall, instead of terminating on the expiration of the term for which it was granted, continue (as from the expiration of that term) as a tenancy from year to year, but otherwise on the terms of the original tenancy so far as applicable, unless, not less than one year nor more than two years before the date fixed for the expiration of the term, a written notice has been given by either party to the other of his intention to terminate the tenancy.

(2) A notice given under the foregoing subsection shall be deemed, for the purposes of this Act, to be a notice to quit.

…… ……

(4) This section shall have effect notwithstanding any agreement to the contrary."

Section 23.-(1) A notice to quit an agricultural holding or part of an agricultural holding shall (notwithstanding any provision to the contrary in the contract of tenancy of the holding) be invalid if it purports to terminate the tenancy before the expiration of twelve months from the end of the then current year of tenancy:

……

Section 24.-(1) Where notice to quit an agricultural holding or part of an agricultural holding is given to the tenant thereof, and not later than one month from the giving of the notice to quit the tenant serves on the landlord a counter-notice in writing requiring that this subsection shall apply to the notice to quit, then, subject to the provisions of the next following subsection, the notice to quit shall not have effect unless the Agricultural Land Tribunal consents to the operation thereof.

(2) The foregoing subsection shall not apply where—

…… ……

(e) at the date of the giving of the notice to quit the interest of the landlord in the agricultural holding to which the notice relates had been materially prejudiced by the commission by the tenant of a breach, which was not capable of being remedied, of any term or condition of the tenancy that was not inconsistent with the fulfilment by the tenant of his responsibilities to farm in accordance with the rules of good husbandry, and it is stated in the notice that it is given by reason of the matter aforesaid;"

5

On the 27th November 1975 the landlords served the tenant with a notice under section 3(1) of their intention to terminate his tenancy on 31st December 1976. I will call this the first notice to quit.

6

On the 16th December 1975 the tenant served the landlords with a counter-notice under section 24(1) requiring that that subsection should apply to the first notice to quit so that that notice to quit should have no effect unless the Agricultural Land Tribunal consented to its operation.

7

On the 22nd December 1975 the landlords served the tenant with a second notice to quit in precisely the same terms as the first notice save that it added:—

"And further take notice that this notice is given under section 24(2) (e) (of the Act of 1948) for the following reasons:— that at the date of the giving of this notice the interest of the landlords … has been materially prejudiced by the commission by you, of a breach, which is not capable of being remedied, of a term or condition of the lease … namely serving a counter-notice contrary to clause 27 of your lease."

8

On the 23rd December 1975 the tenant served a notice on the landlords that he wished to contest the reasons stated in their second notice to quit and that he required that issue to be determined by arbitration under the Act.

9

An arbitrator was accordingly appointed; and the parties agreed that he should state a Special Case for the opinion of the court. The question of law propounded in the Special Case was whether the reasons stated in the landlords' notice of the 22nd December 1975 were good or not. The Special Case was argued before His Honour Judge Harrison-Hall who in a full and careful judgment held that the Act did not preclude the parties from agreeing to exclude the operation of section 24(1); and that accordingly the tenant's counter-notice of 16th December 1975, which was in breach of clause 27 of the lease, fell within section 24(2) (e) and therefore the second notice to quit was a valid notice which terminated the lease on 31st December 1976. The tenant's appeal to the Court of Appeal was allowed and the landlords now appeal from that decision to your Lordships' House.

10

The case for the landlords and for the tenant has been argued with outstanding ability by both leading and junior counsel.

11

The first, and by far the most important question which arises is whether that part of clause 27 of the lease which purports to exclude the tenant's right to serve a counter-notice under section 24(1) is enforceable.

12

The second question, which arises only if the answer to the first question is in the affirmative, is (a) whether the landlord has been materially prejudiced by the service of the counter-notice and (b) whether the tenant's breach of clause 27 of the lease by serving the counter-notice is capable of being remedied.

13

As to the first question, it has been rightly conceded on behalf of the landlords that the first part of clause 27 of the lease which provides that the tenant shall give the landlords possession of the whole farm on the 31st December 1977, and the third part of clause 27 which provides that the tenant shall take no steps to secure the benefit of any future statutory provision granting him security of tenure are each unenforceable. The first part because it offends against section 3 of the Act and the third part because it is contrary to public policy. It has however been strongly argued that the second part of clause 27 of the lease which prohibits the service of a counter-notice is enforceable. It, of course, does not always necessarily follow that, because one can see that most of an apple is rotten, there is no part of it which may be sound and severable from the rest.

14

The first point taken on behalf of the landlords is that what I have called the second part of clause 27 is sound because there is nothing in the Act of 1948 which expressly prohibits an agreement between a landlord and tenant that the tenant shall not serve a counter-notice under section 24(1). It has been pointed out that sections 3, 11, 15, 23, 65 and 77 of the Act have expressly excluded contracting out by some such words as "this section shall have effect notwithstanding any agreement to the contrary". The argument is that if that had been the intention of the legislature in relation to section 24(1), why had similar words been omitted from that section?

15

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