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SECOND DIVISION, INNER HOUSE, COURT OF SESSION |
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Lord Justice ClerkLady PatonLord
Clarke |
[2009] CSIH 15XA157/07 OPINION OF THE LORD
JUSTICE CLERK in the appeal against the
decision of the THE TRUSTEES OF THE Landlords and Appellants; against JAMES B MILLER &
COMPANY Tenants and Respondents: _______ |
For the Landlords and Appellants: Sir Crispin Agnew, QC; Gillespie Macandrew
For the Tenants and Respondents:
Introduction
[1] The
parties are landlords and tenants of a holding of 103 acres forming part of North
Berwick Mains,
The
statutory framework
(1) Notices
to quit
[2] The tenant of an agricultural
holding is, in general, entitled to contest a notice to quit by means of a
counter notice requiring that the operation of the notice should be subject to
the consent of the
"the carrying out [of the purpose for which the
landlord proposes to terminate the tenancy] is desirable in the interests of
sound management of the estate of which [the land to which the notice relates] consists
or forms part" (1991 Act, s 24(1)(b)).
In its decision in this case the
"the landlord proposes to terminate the tenancy for
the purpose of the land being used for a use, other than for agriculture, not
falling within section 22(2)(b) of this Act" (1991 Act, s 24(1)(e)).
The tenant's right to serve a counter notice is
excluded if the notice to quit is served on one of the grounds specified in
section 22(2) (cf s 22(1)). If the
ground on which such a notice is based is well-founded, the notice is
incontestable. The ground specified in
section 22(2)(b) is that
"the land is required for use, other than agriculture,
for which permission requires to be obtained, and has been obtained, under the
enactments relating to town and country planning."
The present wording of section 22(2)(b) results from
an amendment made by the Agricultural Holdings (
(2) The
right to buy
[3] Part 2
of the 2003 Act gives the tenant what is loosely referred to in the Act as the "right
to buy," but is no more than a contingent right of pre-emption. The right is conditional on the tenant's having
first registered his interest in acquiring the land (2003 Act, s 25). It arises
only if the owner of the land, or a standard security creditor having the right
to sell, proposes to make a transfer of the land or of any part of it, other
than in an excepted case, to another person.
In that event the owner or the creditor must give the tenant notice in
writing of the proposal (ibid, s
26(1)(a)). The giving of the notice
triggers the right to buy (ibid, s 28(1)(a)).
The owner or the creditor also triggers
the right when he takes any action with a view to the transfer of the land or
any part of it and (i) the transfer is one of which notice to the tenant is
required under section 26 and (ii) such notice has not been given (ibid, s 28(1)(b)). I need not go into further detail.
[4] Part 2
of the 2003 Act applies only during the subsistence of the tenancy. It does not restrict any right that the landlord
may have to terminate the tenancy on any ground available to him and thereafter
sell the land with vacant possession.
The background
to the application
[5] In
February 2004 the landlords entered into a development agreement with the
Walker Group (Walker). The agreement gives
[6] The
holding is proposed for housing in the draft Local Plan. The landlords understand that, as a condition
of any permission that it might grant, the planning authority would require them
to enter into an agreement under section 75 of the Town and Country Planning (
[7] The
tenants own Ferrygate Farm which is nearby.
They propose that it should be the preferred site for residential
development in the Local Plan. On
[8] If it
were not for the right to buy provisions, the obvious strategy for the landlords
would be to secure planning permission for development of the holding; to serve
an incontestable notice to quit under section 22(2)(b) (supra) and, having recovered vacant possession, to realise the
development value of the site. On that
strategy, there would be no need for proceedings in the
[9] The landlords
fear that if they negotiate with the planning authority for the transfer of any part of the land under a section 75
agreement, or negotiate to sell any part of it to another prospective developer,
they will trigger the right to buy the relevant part; and that, even if they
can obtain planning permission without doing so, and can then serve notice
under section 22(2)(b) (supra), they will
be unable to negotiate for the sale of any part of the holding while the notice
is outstanding. They aver that the
exercise of the right to buy part of the holding will give the tenants a ransom
strip. They also fear that if the tenants
exercise the right to buy any part of the land before planning permission is
obtained, the price will reflect only hope value (cf Lowe v IRC, 1985
[10] The
landlords therefore seek to terminate the tenancy on the ground that to pursue their
proposals is desirable in the interests of sound management of the estate which
the holding constitutes. Termination on
that ground requires the consent of the
Conclusions
The relevancy of the application
[11] The
short question in this appeal is whether the application is relevant. In my opinion, it is not. In applications under section 24(1)(b) the
question is usually whether the landlord's professed purpose would constitute
sound management of the estate. This
case raises the question whether the landlords' purpose would constitute
management at all.
[12] In my
opinion, "management" in the context of this provision implies that if the
landlord recovers vacant possession, he will make continued use of the estate (NCB v
Naylor [1972] 1 WLR 908, Ashworth J at p 913F-G; Gemmell v Andrew 1975
[13] Counsel
for the landlords submitted that the landlords would be engaged in management
of the estate by taking the steps necessary to obtain planning permission and, having
obtained it, by taking the steps leading to the sale of the estate. I do not agree. All such steps would merely be preparatory
and incidental to the object of the exercise, which is to sell off the whole of
the holding for development. That would
not constitute a change in the management of the estate. The landlords would no longer have an estate
to manage.
[14] For
this reason, I conclude that the application is irrelevant. If I am right, that is sufficient to dispose
of the appeal.
Other issues raised in connection
with the 1991 Act
The effect of the amended
section 22(2)(b) of the 1991 Act on section 24(1)(e)
[15] At the
request of the
[16] The
amended wording of section 22(2)(b) is more straightforward. It entitles the landlord to terminate the
tenancy where planning permission for the proposed non-agricultural use
requires to be obtained and has been obtained.
Section 24(1)(e) remains unamended.
It entitles the landlord to terminate the tenancy, with the consent of
the
[17] The
Land Court came to the surprising conclusion that, in consequence of the
amendment to section 22(2)(b), the landlord could invoke section 24(1)(e) where
he required to obtain planning permission for the proposed non-agricultural use
but had not yet obtained it.
[18] In my
opinion, section 24(1)(e) is of no relevance to this case; but I should say
that I do not agree with the
[19] If the
The effect of the amended
wording of section 22(2)(b) of the 1991 Act
[20] The Land Court also considered whether it
is sufficient for the now amended section 22(2)(b) that the planning permission
should be in outline only. A doubt has
arisen on that question because of the Explanatory Notes to the 2003 Act which
comment on the amendment as follows.
"[As amended], section 22(2)(b) of the 1991 Act is
only complied with where the land is required for use, other than agriculture,
for which [planning] permission both requires to be, and has been, obtained
under the Town and Country Planning Acts.
In short, it is only complied with where the proposed development has
been scrutinised, and permission has been granted, by the planning
authorities. Consequently, neither
outline planning permission nor permitted developments, which do not require
full planning permission, comply with section 22(2)(b) as amended. In these situations, the tenant will always
be able to serve a counter notice and thus require the notice to quit to be
scrutinised by the
The same interpretation was given by the Minister in a
statement to the Rural Development Committee of the Scottish Parliament during
the passage of the 2003 Act. He said
that the amendment would "ensure that a landlord would be unable to use outline
planning permission as a ground for terminating a tenancy."
[21] In my
opinion, that interpretation of the amendment is misconceived. In its previous wording section 22(2)(b)
applied to a permission "granted on an application made under the [planning
acts]." In its present wording it
applies to a permission that "requires to be obtained, and has been obtained,
under the [planning acts]." There is nothing
in the amended wording to suggest that the nature of the permission to which
paragraph (b) refers has changed in any way.
[22] In my
opinion, an outline planning permission was, and still is, a permission within
the meaning of section 22(2)(b). The wording
of the equivalent English provision, so far as it relates to a permission
granted on a planning application (Agricultural Holdings Act 1986, s 26(2);
Sched 3, Case B(a)), is the same as the original wording of section
22(2)(b). The English writers have taken
the view that for the purposes of that provision, an outline permission suffices
(cf Muir Watt and Moss, op cit, para
12.50; Scammell and Densham, Law of
Agricultural Holdings, 9th ed, para 32.19). They have generally cited the decisions of the
county court in Dow Agrochemicals v
[23] I
cannot understand why a planning permission in outline should not be regarded
as a permission under the planning acts.
Because of the implications that it may have for his tenancy, the tenant
of an agricultural holding is entitled to notice of a planning application
relating to any part of the holding (Town and Country Planning (Scotland) Act
1997 (the 1997 Act), s 35) and has the opportunity to object to it. That, in my view, is the tenant's only means
of resisting a development proposal of that kind. If the planning authority grants the
application in outline (ibid, s 59),
it does so subject to any particular conditions that it may impose and to a
general condition that subsequent approval must be obtained from it in relation
to reserved matters. But a permission in
outline establishes outright the principle of the proposed development and it
runs with the land. Once it grants it,
the planning authority cannot go back on it other than by the process of formal
revocation or modification, which may entitle the developer to compensation
(1997 Act, ss 65, 76). A subsequent
approval of reserved matters does not constitute a planning permission under
the 1997 Act. It is merely an ancillary
procedure by which the outline permission is made effective (Inverclyde DC v Secretary of State for Scotland, 1980 SLT 200 (HL), Lord Keith of
Kinkel at p 203). I can see no reason
why section 22(2)(b) should apply only where the landlord has obtained a full
or detailed planning permission or, having obtained permission in outline, has
satisfied the planning authority on matters such as layouts, external finishes,
accesses and the like.
[24] The
view that an outline permission suffices for section 22(2)(b) also makes sense
if one has regard to practice in the world of property development. Except in the case of a minor development,
the making of an application in detail is rare.
In a development proposal on a site such as the present holding, it
would, I think, be unheard of. In a case
like this, landowners would not normally propose to develop the site
themselves. They would apply for outline
permission only, leaving it to the eventual developers to make their own
detailed proposals on reserved matters.
[25] I
conclude therefore that section 22(2)(b) in its amended form continues to
reflect a legislative policy that where the planning authority, in granting an
outline permission, has decided that a proposed development of agricultural
land would be an appropriate form of land use, the tenant cannot rely on his
security of tenure as a means of frustrating the proposal.
The human rights point
[26] Before
the Land Court the landlords took a human rights point to the effect that a
landlord who can self-fund a development to the stage of planning consent can
recover possession under section 22(2)(b); whereas a landlord who requires
developer funding cannot do so because he triggers the right to buy. On the view that I have taken in this case, I
need not consider that question.
Interpretation
of Part 2 of the 2003 Act
[27] In its Note
the
Disposal
[28] I
propose to your Ladyship and your Lordship that we should refuse the appeal.
|
SECOND DIVISION, INNER HOUSE, COURT OF SESSION |
|
Lord Justice ClerkLady PatonLord
Clarke |
[2009] CSIH 15XA157/07 OPINION OF LADY PATON in the appeal against the
decision of the THE TRUSTEES OF THE Landlords and Appellants; against JAMES B MILLER &
COMPANY Tenants and Respondents: _______ |
For the Landlords and Appellants: Sir Crispin Agnew, QC; Gillespie Macandrew
For the Tenants and Respondents:
[29] I
agree with your Lordship in the Chair, and have nothing to add.
|
SECOND DIVISION, INNER HOUSE, COURT OF SESSION |
|
Lord Justice ClerkLady PatonLord Clarke |
[2009] CSIH 15
XA157/07 OPINION OF LORD CLARKE in the appeal against the
decision of the THE TRUSTEES OF THE Landlords and Appellants; against JAMES B MILLER &
COMPANY Tenants and Respondents: _______ |
For the Landlords
and Appellants: Sir Crispin Agnew, Q.C.; Gillespie Macandrew
For the Tenants and Respondents: Reid, Q.C.;
Turcan Connell
[30] I have
had the advantage of reading the opinion prepared by your Lordship in the
Chair. I agree with everything said in
it and that, for the reasons given by your Lordship, the appeal should be
refused.