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LORMOR LIMITED AGAINST GLASGOW CITY COUNCIL


Submitted: 26 September 2014

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

[2014] CSIH 80

XA137/13

 

Lady Paton

Lord Menzies

Lady Clark of Calton

OPINION OF THE COURT

delivered by LORD MENZIES

in the APPEAL FROM THE SHERIFFDOM OF GLASGOW & STRATHKELVIN

AT GLASGOW

by

LORMOR LIMITED

Pursuers and Appellants;

against

GLASGOW CITY COUNCIL

Defenders and Respondents:

Act:  Clark QC , J T Young; Pinsent Masons LLP

Alt:  Moynihan QC;  Glasgow City Council

26 September 2014

The issue
[1]        There is but one short issue raised in this appeal – whether, in order to prevent tacit relocation, the tenant of lands exceeding two acres in extent which are let from year to year (including lands occupied by tacit relocation) requires to give not less than 6 months’ notice of termination, or whether not less than forty days’ notice will suffice for that purpose.

The background

[2]        The appellants are the landlords and the respondents the tenants of urban lands at 145 Kelvinhaugh Street, Glasgow.  The lands are greater than two acres in extent and are the subject of a probative lease.  The natural term of the lease expired on 27 February 2012 and it was continued by tacit relocation to 27 February 2013.  By letters dated 3 and 16 January 2013, the respondents gave notice to the appellants that the lease was to terminate as at 27 February 2013.  The appellants contest the validity of the notice given by the respondents, contending that section 34 of the Sheriff Courts (Scotland) Act 1907 applies and requires a minimum of 6 months’ notice to avoid the lease being continued again for a further year by tacit relocation.  The respondents’ position is that section 34 is not applicable and that the matter is regulated by the common law requirement for forty days clear notice, which was satisfied.

[3]        Parties are agreed that a lease is continued by tacit relocation unless brought to an end by notice, and further that the common law requires notice of forty clear days.  The question is whether section 34 has displaced that common law rule and substituted a period of 6 months’ notice.

 

Section 34 of the 1907 Act
[4]        Section 34 is so central to the present dispute that it is convenient to set it out here in full.  As amended (and applicable at the relevant date) it is in the following terms:

“34.      Removings

 

Where lands exceeding two acres in extent are held under a probative lease specifying a term of endurance, and whether such lease contains an obligation upon the tenant to remove without warning or not, such lease, or an extract thereof from the books of any court of record, shall have the same force and effect as an extract decree of removing obtained in an ordinary action at the instance of the lessor, or any one in his right, against the lessee or any party in possession, and such lease or extract shall, along with authority in writing signed by the lessor or any one in his right or by his factor or law agent, be sufficient warrant to any sheriff officer or messenger-at-arms of the sheriffdom within which such lands or heritages are situated to eject such party in possession, his family, sub-tenants, cottars, and dependants, with their goods, gear and effects, at the expiry of the term or terms of endurance of the lease:

 

Provided that previous notice in writing to remove shall have been given—

 

(A)       When the lease is for three years and upwards not less than one year and not more than two years before the termination of the lease;  and

 

(B)        In the case of leases from year to year (including lands occupied by tacit relocation) or for any other period less than three years, not less than six months before the termination of the lease (or where there is a separate ish as regards land and houses or otherwise before that ish which is first in date):

 

Provided that if such written notice as aforesaid shall not be given the lease shall be held to be renewed by tacit relocation for another year, and thereafter from year to year:

 

Provided further that nothing contained in this section shall affect the right of the landlord to remove a tenant who has been sequestrated under the Bankruptcy (Scotland) Act 1856, or against whom a decree of cessio has been pronounced under the Debtors (Scotland) Act 1880, or who by failure to pay rent has incurred any irritancy of his lease or other liability to removal:

 

Provided further that removal or ejectment in virtue of this section shall not be competent after six weeks from the date of the ish last in date:

 

Provided further that nothing herein contained shall be construed to prevent proceedings under any lease in common form;   and that the foregoing provisions as to notice shall not apply to any stipulations in a lease entitling the landlord to resume land for building, planting, feuing, or other purposes or to subjects let for any period less than a year.”

 

History of the case
[5]        The pursuers and appellants raised an action in Glasgow Sheriff Court seeking payment from the defenders of sums which they claimed were due in terms of the lease by way of rent and insurance premiums.  The defenders answered this by averring that the lease was not continued by tacit relocation on or after 27 February 2013, and accordingly no sums were due.  The defenders’ first plea-in-law was a general plea to relevancy and specification and sought dismissal.  Their second plea in law was in the following terms:

“The pursuers’ averments anent section 34 of the 1907 (Act) being fundamentally irrelevant, the said averments should not be remitted to any probation et separatim this action should be dismissed.”

 

[6]        After hearing parties at debate, by interlocutor dated 19 September 2013 the sheriff upheld the defenders’ first and second pleas-in-law to the extent of deleting the first crave, and excluding from probation certain averments relating to section 34 of the Sheriff Courts (Scotland) Act 1907.  It is against this interlocutor that the pursuers and appellants now appeal.

[7]        Before this court, senior counsel for each party agreed that, depending upon our answer to the issue identified above, we should either grant decree in favour of the pursuers in terms of the first, second and third craves, or grant decree of dismissal.

 

Submissions for the pursuers and appellants
[8]        Senior counsel for the pursuers submitted (1) that the language of section 34 of the 1907 Act should be given its ordinary and natural meaning, and (2) that the tenant requires to give the same period of notice as in law is required by the landlord.  He suggested that the law on this matter was in a state of some uncertainty – Campbell’s Trustees v O’Neill 1911 SC 188 at 192; Scottish Law Commission research paper on Actions of Ejection and Removing by A G M Duncan, January 1984.

[9]        Did the 1907 Act introduce a distinction between the period of notice required of a landlord and that required of a tenant?  There was no such distinction before the 1907 Act, and there is no such distinction in other contexts in the law of leases.  Why should Parliament have intended to introduce such a distinction in section 34, when there is no such distinction in other sections of the 1907 Act relating to removings, such as section 36?  Section 36 requires that parties must give the same period of notice, ie not less than six months.  It makes no sense that a tenant should require to give 6 months’ notice if there is no written lease, but only 40 days if there is a written lease.  In every other context, the tenant’s notice is intended to be the counterpart as regards time of the landlord’s – Johnston on the Agricultural Holdings (Scotland) Act 1908 at 161/2;  Rankine on Leases 564/7, 571 and 597;  Agricultural Holdings (Scotland) Act 1883 section 28;  McIntyre v McNab’s Trustees (1829) 8 S 237.  Although senior counsel accepted that it was possible that Parliament intended by section 34 of the 1907 Act to introduce a distinction between the period of notice required for a tenant and that for a landlord, this was unlikely.  Although part of the purpose of section 34 was to create an expedited procedure, it went beyond this and expressly affected tacit relocation and the termination of the lease.

[10]      Senior counsel told us that there was no material in the parliamentary debates on the 1907 Act which might shed light on the intention of Parliament.  However, it was the case that before the 1907 Act, the same notice in respect of time must be given by the lessee as by the lessor, on the “principle of equal dealing between lessor and lessee” – Hunter on Landlord and Tenant 525;  see also Lord Lyndhurst’s speech in McIntyre v McNab’s Trustees when that case reached the House of Lords, (1831) 5 W and S 299.  No commentator since the 1907 Act has suggested that Parliament intended to make such a distinction – eg Paton and Cameron on the Law of Landlord and Tenant in Scotland, 223 and 262/3.

[11]      Senior counsel accepted that the words in section 28 of the 1883 Act “unless written notice has been given by either party” are not replicated in section 34 of the 1907 Act, but they are to be found in the Agricultural Holdings (Scotland) Act 1908, and section 36 of the 1907 Act provides for the same period of notice for the proprietor and the tenant.  Bell’s Principles states (at para 12.78, page 494) “the same term of warning must be given by the tenant to the landlord in order to put an end to the lease on his part.”  Counsel found support for his proposition that section 34 went beyond the details of an expedited procedure and affected the substantive law as to termination of leases in the observations of the Lord Ordinary in Duguid v Muirhead 1926 SC 1078, and some support from the observations of the sheriff in Gillies v Fairlie (1920) 36 Sh Ct Rep 6.  The relevant rule is rule 110 of the schedule to the 1907 Act;  forms H and I are different and section 34 is directed at a notice to remove, as in form H.  Looking to the provisions together, and having regard to the principle of mutuality in the provisions surrounding section 34, senior counsel submitted that section 34 should be given a purposive construction.  Equality of period of notice as between landlord and tenant has practical benefits;  each party knows where they stand at a given time.  It is not fair to a landlord if he does not know whether the tenant will remain until 40 days before the lease would otherwise continue by tacit relocation.

 

Submissions for the defenders and respondents
[12]      The 1907 Act draws a distinction between termination of a lease on the initiative of (a) the landlord and (b) the tenant.  Section 34 applied to the former, section 35 to the latter.  This distinction is also reflected in the relevant forms – form H is a “notice” by a landlord, and form I is a “letter of removal” by the tenant.  This distinction survives in modern practice in rule 34.6 and forms 42 and 43.

[13]      The sole reference to tacit relocation is in section 34.  The amendment of the common law was confined to those instances in which the landlord was taking the initiative to terminate the lease.  Since 1916, section 34 has been recognised as affording “a drastic remedy” to the landlord - Rankine on Leases 571.  The qualification of the notice period is one of the conditions attached to the exercise of this drastic remedy afforded by section 34;  there is no corresponding qualification of the common law applicable to termination at the instance of the tenant, which is regulated by section 35.

[14]      Senior counsel did not suggest that the provisions of the 1907 Act are easy to interpret;  however, Parliament showed a discriminating attitude to landlords and tenants in section 34.  The section afforded a drastic new remedy to a landlord, namely ejection without independent judicial termination.  The first proviso to the section, with which this case is concerned, qualified this drastic new remedy with a degree of protection of the tenant.  Where the tenant initiates the termination, it is not necessary to provide him with such protection.  It is not correct to suggest that the common law has always provided for the same period of notice by the landlord and by the tenant;  a different approach to the notice required for voluntary termination by the tenant is to be found in Paxton v Slack (1803) Hume 568.  Section 35 of the 1907 Act, which relates to cases in which the tenant initiates the termination, preserves this common law position, and the proviso to section 35 accurately reflects the decision in Paxton v Slack.

[15]      As a matter of legal policy since 1803, if the tenant within one year of the date of termination volunteers to leave, this can be enforced by the landlord without any notice.  It is presumed that the tenant will know what he is doing, and requires no notice.  However, if the tenant volunteers to leave more than one year before the date of termination, he does require such notice.  This is reflected in rule 110 in the first schedule to the 1907 Act, which by virtue of section 39 of that Act is to be construed and given effect as part of the Act.

[16]      As is observed in Rankine on Leases (at 549/50 and 571), sections 34-38 of the 1907 Act do not form a complete code, and the position is much more complicated than that suggested by the pursuers and appellants.  What is however clear is that the 1907 Act preserves the former distinction between the situation in which the tenant initiates termination by means of a letter of removal, and that in which the landlord initiates termination by means of a notice to remove.  When the tenant takes the initiative, the requirement for a 6 month period of notice does not apply.  This conclusion is supported by three factors:

(i)         The last proviso to section 34;

(ii)        the contrast between the provisions of section 35, which relate to the tenant initiating termination, and those of section 34, which relate to the landlord initiating termination and utilising the drastic new remedy;  and

(iii)       the terms of rule 110 of the first schedule to the 1907 Act, which reinforces the distinction between a tenant initiating termination and a landlord initiating termination (which distinction is still maintained today, by rule 34.5 of the Ordinary Cause Rules).

This is consistent with the Scottish Law Commission research paper of January 1984 (particularly at paragraph 3.33).

[17]      In any event, the 1907 Act is a provision of procedure, and one would not expect a procedural statute to alter parties’ substantive rights:  Portobello Park Action Group Association v Edinburgh City Council 2013 SC 184.  This is consistent with the views expressed in the Scottish Law Commission research paper of January 1984 at paragraph 3.6.  It is also consistent with the analysis of the sheriff in Gillies v Fairlie, which was approved by the First Division in Craighall Cast-Stone Co v Wood Brothers 1931 SC 66.  The court in Craighall Cast-Stone Co was unanimously of the view that the 1907 Act was a procedure Act;  it should be given a narrow or restrictive interpretation, and should not be given a purposive interpretation.  It follows that one cannot read section 34, which is directed at a notice served by the landlord, as if it applied to a letter by the tenant.

[18]      For these reasons the court should refuse this appeal and grant decree of dismissal.

 

Decision
[19]      We agree with the analysis and conclusions of the sheriff – if we may borrow a phrase used by Lord President Clyde in Craighall Cast-Stone Co, her judgment was “admirably reasoned and admirably expressed.”  We do not consider that she has fallen into any error of law, and we accordingly refuse this appeal.

[20]      Sections 34-37 of the 1907 Act cannot be regarded as the finest example of the Parliamentary draftsman’s art.  Both senior counsel accepted that these sections are not a model of clarity.  It was observed in Rankine on Leases at page 571 that:

“It is no unfair criticism to say that these sections bear evidence of hasty legislation, looking to the state of the law at the time they were enacted, and that the subsequent Agricultural Holdings Act, as to the subjects to which it applies, only added to the perplexity.”

 

However, the 1907 Act has been characterised as a procedure Act.  The sheriff in Gillies v Fairlie so characterised it, and the Inner House in Craighall Cast-Stone Co unanimously agreed with him.  The author of the Scottish Law Commission research paper expressed the following view in January 1984 (at paragraph 3.6):

“The main source of statutory provisions affecting the period of notice for termination of tenancies is the Sheriff Courts (Scotland) Act 1907.  There has been considerable, although not universal, support for a view that this being an Act dealing primarily with courts and their procedure, the rules which it prescribes in relation to such matters as notices to quit apply only where a form of process for which it makes provision is being adopted, and that its provisions should not be regarded as altering the substantive law on matters such as the period and form of notice for termination of tenancies.”

 

[21]      A contrary view was expressed by the Lord Ordinary in Duguid v Muirhead, in which he held that the language of section 34 was quite unequivocal, and that even although it appeared in an Act which regulates sheriff court procedure, it changed parties’ substantive rights.  However, it does not appear that he was referred to the sheriff’s analysis in Gillies v Fairlie, and his observations are difficult to support in light of the more recent dicta of the Inner House in Craighall Cast-Stone Co v Wood Brothers and Portobello Park Action Group v City of Edinburgh Council.  We consider that the 1907 Act is properly categorised as a procedure Act.  One would not understand a procedure Act to alter parties’ substantive rights.  Even if there were material before us to enable us to adopt a purposive interpretation of the 1907 Act – and neither party has laid before us any such material – we are not persuaded that a purposive interpretation is appropriate when construing section 34.

[22]      In any event, as the sheriff observed in Gillies v Fairlie (at page 9) with regard to sections 34 and 35,

“I think it is clear that the purpose of these sections is to provide a short and convenient method for effecting the removal of tenants in the cases to which the sections refer, without the necessity of the landlord resorting to an action of removal”.

 

Senior counsel for the pursuers and appellants expressly accepted that this was the purpose of the section.  We consider that it is entirely understandable that Parliament, having created what Rankine describes as “a drastic remedy”, should provide specific protection to a tenant by way of a 6 month period of notice.  Section 34 is directed at the situation in which the landlord initiates termination and wishes to utilise the new remedy created by the section.  We see no justification for reading into these provisions a requirement that in the different situation of a tenant who wishes to initiate a termination there is a requirement to give the same period of notice.  Section 35 makes provision for a letter of removal in which the tenant initiates the termination;  there is no provision in that section requiring equal notice by a tenant.  Indeed, the proviso to section 35 makes it clear that if a letter of removal is dated and signed within 12 months before the date of removal, it is not necessary for any notice of any kind to be given by either party to the other.

[23]      It seems to us to be clear that Parliament intended to make a distinction between the period of notice required of a landlord utilising the new remedy created by section 34, and the period of notice required of a tenant wishing to terminate the lease.  Such a distinction is neither unfair nor unintelligible.  If it had been Parliament’s intention that not less than 6 months’ notice of termination was required by either party in order to prevent tacit relocation, this could have been easily and shortly provided.  Parliament adopted this very course in section 28 of the Agricultural Holdings (Scotland) Act 1883, using the simple formulation:

“Notwithstanding the expiration of the stipulated endurance of any lease, the tenancy shall not come to an end unless written notice has been given by either party to the other of his intention to bring the tenancy to an end ...”

 

If Parliament had intended to introduce a requirement to give not less than 6 months’ notice of termination both on the landlord and on the tenant, it could easily have done so.  That it did not do so is telling.

[24]      It appears to be the case that the common law rule as to the period of notice to be given by tenants was understood as being the same period as that required by the landlord.  The principal authority relied on in support of this proposition is McIntyre v McNab’s Trustees.  In the Inner House, however, the ratio of the case was simply that intimation by a tenant of his intention to leave his farm at the expiry of his lease must be given 40 days before the Whitsunday preceding the ish.  Observations that the period of notice was the same for the tenant as for the landlord were strictly obiter.  Lord Glenlee observed:

“No doubt, less formality is necessary to sustain a renunciation by the tenant, than warning by the landlord;  yet I never heard any dispute as to the time within which intimation by the tenant is to be given;  and I always understood that it must, just like the warning, be given 40 days before the Whitsunday preceding the ish.”

 

Lord Pitmilly remarked:

“…it is scarcely necessary to decide the point of law as to whether the time is the same in regard to the tenant as to the landlord, though I never heard it doubted but that it was the same, otherwise the landlord might be bound, and the tenant free, for the greater part of the year.”

 

The Lord Justice Clerk agreed that:

“... in regard to the time of intimation or warning, the landlord and tenant are in the same situation, though it is not necessary to decide this”.

 

In the same case in the House of Lords, Lord Lyndhurst stated that the law with regard to the period of notice required of the landlord is perfectly clear, but

“the same degree of certainty does not, undoubtedly, exist with respect to the necessity of a notice on the part of the tenant.

 

We accept that McIntyre v McNab’s Trustees is authority for the proposition that, in the circumstances of that case, 40 days’ notice was required by both the landlord and the tenant.  However, as Lord Glenlee observed in the Inner House, even in that case “less formality is necessary to sustain a renunciation by the tenant, than warning by the landlord”.  It is clear from Paxton v Slack that the common law has not always treated termination at the instance of the tenant in the same way as termination at the instance of the landlord.

[25]      For these reasons we have reached the view that the submissions for the defenders and respondents are sound, and that the sheriff’s analysis and conclusions were correct.  The structure of sections 34-37 of the 1907 Act makes a clear distinction between a landlord’s notice in writing to remove and a tenant’s letter of removal.  The first proviso to section 34, which requires not less than 6 months’ notice before the termination of the lease, relates to a notice in writing to remove.  It relates to termination initiated by the landlord, and not termination initiated by the tenant.  Moreover, it relates to the drastic new remedy given to the landlord in that section, and operates as an element of protection for the tenant.

[26]      Returning to the issue identified at the outset of this opinion, we consider that not less than 40 days’ notice of termination by a tenant will suffice to prevent tacit relocation.  In this regard, we do not consider that section 34 of the 1907 Act has innovated on the requirements of the common law.  We shall accordingly refuse this appeal and grant decree of dismissal.