Trustees of St John's Hospital v Keevil and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ROBERT WALKER,LORD JUSTICE PILL,MR JUSTICE LADDIE |
| Judgment Date | 15 November 2001 |
| Neutral Citation | [2001] EWCA Civ 1730 |
| Docket Number | Case No: C/2000/3700 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 November 2001 |
[2001] EWCA Civ 1730
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
LANDS TRIBUNAL (HH JUDGE RICH QC)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Pill
Lord Justice Robert Walker
Mr Justice Laddie
Case No: C/2000/3700
Miss Ann McAllister (instructed by Thring Townsend for the appellants)
Mr Anthony de Freitas (instructed by Forrester & Forrester for the respondents)
Introduction
This is an appeal from a decision dated 27 November 2000 of the Lands Tribunal (His Honour Judge Rich QC) on a reference raising issues as between landlord and tenant. The issues arose on the compulsory acquisition of land by the Highways Agency for the construction of the Batheaston Bypass.
The compulsory purchase order was made on 17 June 1993. The relevant land was a piece of pasture of no more than about 1.3 hectares. But because a certificate of appropriate alternative development (for residential purposes) had been issued under s.17 of the Land Compensation Act 1961 in respect of the northern part of the land, the total compensation payable on compulsory acquisition is likely to be in excess of three-quarters of a million pounds. The issues before the Lands Tribunal concerned the division of the compensation between the landlord, a charity whose full name is the Hospital of St John the Baptist with the Chapel of St Michael ("the Hospital") and the Hospital's tenant farmer.
The facts are reasonably simple and were for the most part not in dispute (there were some disputed issues of fact on which the judge made findings, and his findings are not challenged on appeal). Nevertheless the appeal has raised questions of real difficulty.
The facts
The Hospital is an ancient charity based in the City of Bath. Its substantial endowments included about 2.1 hectares of pastureland near Batheaston, which is to the north- east of the city. Part of this land lies between the River Avon and the London Road (the A4) and the remainder (the land which was compulsorily acquired) is on the other side (that is the north side) of the A4.
This land was on 4 October 1961 let by the trustees of the Hospital to Mr Frederick Keevil ("the father"). There was a conventional written tenancy agreement providing for an initial rent of £25 a year, payable half-yearly at Lady Day and Michaelmas. The tenancy agreement contained an unqualified prohibition on assignment, underletting or parting with possession during the tenancy. It did not contain any provision enabling the landlords to resume possession of part of the holding for any non-agricultural use (a "part resumption clause"). The rent was reviewed at three-year intervals and was increased from time to time.
Apart from the land comprised in the tenancy, the father owned a small farm at Bathford and he had a tenancy of some other agricultural land. He used the land for dairy farming. His son, Mr Ross Keevil ("the son"), lived at home and was also a farmer, but not a dairy farmer, and there was no partnership between them. The son had other livestock of his own, and father and son used the available land for their separate enterprises, accounting for expenses on what the judge called a family basis.
On 6 September 1989 there was a meeting between the Keevils and Mr Timothy Gray ARICS of Smith Woolley. Mr Gray was the chartered surveyor who acted as the Hospital's agent. At this meeting an increase of rent to £140 a year was provisionally agreed. Also there was discussion of the father's wish to pass on his tenancy to his son. The father was 66 at that time and the son was 29. Mr Gray noted down details of the son's training and experience and undertook to raise this question with the Hospital's trustees. On the same day Mr Gray wrote to Mr Christopher Couchman, a solicitor who acted as the clerk to the trustees. His letter recommended the rent increase for approval and referred to the proposal for a transfer to the son. The letter continued:
"Keevil fully accepts that the proposal for his Son to succeed to the tenancy by negotiation is one which the Trustees will want to consider carefully. He would like to know the Trustees reaction but has in his mind that nothing could really be achieved until the next term day in a year's time.
My own view is that there could be some advantage to the Trustees in agreeing to a succession. It would be an opportunity to revise the rent again and also an opportunity to modernise the Tenancy Agreement so that, for example, a resumption clause in the case of development could be included. It is of course recognised that in context of the Bypass proposals the land to the North of the A4 may not be available in practical terms for agriculture for very much longer."
On 25 September 1989 Mr Gray wrote a fairly encouraging letter to the father. There matters rested until 1992, except that in 1991 the father took steps to dispose of his milk quota. In April 1992 the cheque for the half-yearly rent was paid by the son. This was accepted, but expressly as paid on behalf of the father. In the same letter (dated 7 April 1992) Mr Couchman wrote to the son,
"The Trustees are minded to agree to your succession to your father's tenancy if that is what is intended. However, formal letters need to be exchanged to take effect at Michaelmas (the term date of the tenancy) and the question of the rent payable needs also to be considered.
As you know, Mr Gray of Smith-Woolley acts for the Trustees, and I have asked him to be in touch with you."
There had been some discussions between Mr Couchman and Mr Gray as to whether the son would, in the absence of a permitted assignment, be entitled on his father's death to succeed to the tenancy under Part IV of the Agricultural Holdings Act 1986 ("the 1986 Act"). Mr Gray thought that the son might not have a claim, because of paragraph (b) in the definition of "eligible person" in s.36(3) of the 1986 Act. It is unnecessary to decide whether Mr Gray was right; but that, like the impending compulsory purchase order, was part of the commercial context to the negotiations which took place later in 1992.
On 27 April 1992 Mr Gray wrote to the son. The letter was marked 'without prejudice' but neither side took any point on that. It was an important letter which needs to be set out in full:
"I think you may have heard recently from Christopher Couchman about the future of your father's tenancy of the Hospital's land at Bailbrook. Of course we discussed your possible succession to the tenancy in 1989 and my clients have since considered, and in principle, approved you as a successor to your father provided we can reach agreement on terms and subject to my preparing formal documents for exchange in order to evidence the succession and the terms which relate to it.
I think it would be a good idea for you and I to meet so that we can have a discussion about matters and be sure that we have taken account of the aspirations of both sides in evidencing the succession.
You will know that the term date of the tenancy is Michaelmas and the Trustees would be working towards a succession at that date. As I explained in 1989 they would also be looking for a rent review and the inclusion of a resumption clause in the present tenancy agreement.
There is a general wish to keep things simple both because the tenancy is over a small acreage and because of the threat posed by the bypass.
It might be prudent for you to take advice on this matter but on the other hand I imagine that costs need to be kept in proportion and we may find when we meet that there is unlikely to be any real difficulty.
If you are agreeable to a meeting then perhaps you could telephone me in order to arrange a convenient time."
Three points should be made about this letter. First, Mr Gray referred to "my preparing formal documents for exchange in order to evidence the succession". Second, he referred to the inclusion of a "resumption clause" as well as a rent review, but he did not explain its significance (the judge accepted the son's evidence that he did not know what it meant). Third, he mentioned the possibility of the son taking separate advice, but he certainly cannot be said to have pressed the point.
The son seems not to have been good at answering letters but eventually Mr Gray arranged a meeting which was held on the land on 17 September 1992. Mr Gray brought with him a document which he left with the son. He and his father signed it on or before 29 September 1992, and it was approved and signed on behalf of the trustees on the day after a trustees' meeting held on 15 October 1992. It was therefore dated 16 October 1992.
The document ("the 1992 agreement") begins, without any heading, "It is agreed between … " and then identifies the parties: the trustees (defined as the landlords), the father (defined as the tenant) and the son (defined as the successor). It contains recitals (introduced by the word 'whereby') referring to the 1986 Act and to the prohibition on assignment in the original tenancy agreement. The operative part must be set out in full:
"NOW THIS MEMORANDUM WITNESSETH AS FOLLOWS:-
a. PROVIDED and on the basis that (as the Tenant and the Successor hereby respectively acknowledge) the assignment hereby permitted shall constitute an 'occasion' for the purposes of Section 37(1) and 37(2) of the 1986 Act the Landlords hereby permit the Tenant (notwithstanding the provisions of Clause 7 of the Tenancy Agreement) to assign the benefit of the Tenancy Agreement to the Successor on the 29...
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