Palmer's Executors v Shaw
| Jurisdiction | Scotland |
| Judgment Date | 17 December 2003 |
| Date | 17 December 2003 |
| Docket Number | No 30 |
| Court | Court of Session (Inner House - Second Division) |
SECOND DIVISION
Agricultural law - Lease - Irritancy clause allowing for immediate termination on non-payment of rent for three months - Whether irritancy clause valid - Agricultural Holdings (Scotland) Act 1923 (cap 10), sec 45
Section 9 of the Agricultural Holdings (Scotland) Act 1923 provided for compensation for high farming to be paid to an outgoing tenant provided that the tenant prior to the termination of the tenancy gave written notice of his intention to claim compensation. Section 45 provided that any contract by which the tenant's right to claim compensation under the Act was taken away or limited was to that extent void.
A lease of agricultural subjects provided that if the tenant allowed rent to remain unpaid for three months the landlord could by notice put the lease to an end and resume possession. The lease was governed by the 1923 Act. The tenant failed to pay the rent which was due at Whitsunday 2000 and the landlord served a notice of irritancy on 30 August 2000. The Land Court held that the irritancy clause was valid and enforceable.
The Scottish Land Court stated a special case at the request of the tenant submitting the following questions of law for the opinion of the Inner House: (1) whether the Land Court erred in concluding that the irritancy clause was valid and enforceable and (conversely) whether it erred in failing to dismiss the landlord's case on the basis that the clause was neither valid nor enforceable; and (2) whether the Land Court erred in refusing from probation the averments in ans 4(b). The tenant argued that the irritancy clause contravened sec 45 of the 1923 Act because in allowing for instant termination of the lease it purported to deprive the tenant of his right to compensation under sec 9. The landlord argued that the irritancy clause did not deprive the tenant of any statutory rights and therefore was not void.
Held that: (1) the irritancy was valid (para 14); (2) an irritancy clause that provided for termination of a tenancy without prior warning contravened the statutory provision if its operation could have the indirect effect of abridging the tenant's rights to compensation (para 19); (3) the fact that ex hypothesi the tenant was in default when the irritancy was enforced had no bearing on its validity (para 20); (4) although the clause in question allowed the landlord to irritate the lease without notice, he could do so for non-payment of rent only after the tenant had been in default for a period of three months and the clause was not invalidated by sec 45 as the tenant could give notice of a claim for compensation during that period (para 21); and first question answered by saying that the irritancy clause was valid and enforceable and second questionanswered in the negative.
J L PALMER'S EXECUTORS raised proceedings in the Scottish Land Court against William Whitton Shaw. After debate, the court refused the tenant's first crave, excluded probation on certain others and quoad ultra allowed proof before answer (2002 SLCR 1). The tenant asked the court to state a special case to the Court of Session.
The cause called before the Second Division comprising the Lord Justice-Clerk (Gill), Lord Kirkwood and Lord Osborne for a hearing on the summar roll.
Cases referred to:
Brodie-Innes v Brown (1916) 54 SLR 170; (1917) 1 SLT 49
Cathcart v ChalmersENR (1911) SC 292 affd 1911 SC (HL) 38
Chalmers' Tr v Dick's TrENR 1909 SC 761
Coates v DimentUNK [1951] 1 All ER 890
Disraeli Agreement (Re)ELR [1939] Ch 382
Grant v Broadland Properties Estates Ltd 1997 SLT 1030
HMV Fields Properties Ltd v Bracken Self Selection Fabrics Ltd 1991 SLT 31
Parry v Million Pigs LtdUNK (1981) 260 EG 281
Textbooks etc referred to:
Sir Isaac Connell, The Agricultural Holdings (Scotland) Act 1923 (W Hodge, Edinburgh, 1923), pp 33, 283-286
Hon Lord Gill, The Law of Agricultural Holdings in Scotland (3rd ed, W Green, Edinburgh, 1997), para 15.10
D Marshall, Agricultural Outgoing Claims (1929), pp 104-106, 251
J Muir Watt and J R Moss, The Law of Agricultural Holdings (14th ed, Sweet & Maxwell, London, 1998), para 13.02
At advising, on 17 December 2003 -
LORD JUSTICE-CLERK (GILL) -
[1] This is a special case stated by the Scottish Land Court at the request of the tenant. It arises from a joint application made by the now deceased landlord and the tenant of the farm of Newton of Ballunie, near Blairgowrie.
[2] The cause of the dispute is the tenant's failure to pay the half-year's rent that was due at Whitsunday 2000. The landlord served on the tenant a notice of irritancy dated 30 August 2000. The notice stated, inter alia: 'In respect that you have allowed one half year's rent of the holding to remain unpaid for three months after the same became due I put an end hereby to the Lease and will forthwith resume possession of the said holding.' The tenant thereafter made two attempts to pay the rent; but if the notice of irritancy was valid, these attempts came too late.
[3] In the joint application the landlord craved a declarator that the tenant had incurred a conventional irritancy of the lease and that the tenancy had been brought to an end by the landlord's notice. The tenant craved declarators (1) that the irritancy clause was void andseparatim unenforceable, and accordingly that the notice was invalid; and (2) that as at Whitsunday 2000 and as at the date of service of the notice, the rent was not due because the tenant was entitled to retain it by reason of the landlord's breaches of the lease.
[4] The Land Court heard a debate on preliminary questions of law relating to the tenant's craves. By Order dated 22 May 2002 the court refused the tenant's first crave, in effect sustaining the landlord's position on the validity and enforceability of the irritancy clause. The court also excluded...
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Robert L. Downie (ap) V. The Trustees Of The Earl Of Stairs 1970 Trust
...be entitled to compensation except under that provision ... " Section 53(1) applied at the date of the lease. III Palmer's Exrs v Shaw, 2004 SC 408 [12] In this case an irritancy clause in a lease entered into in 1939, and therefore governed by the 1923 Act, provided that if the tenant allo......