Scottish Court of Session Decisions

The Agricultural Holdings (Scotland) Act 1908 (8 Edw. VII, cap. 64) enacts—Section 3—“(1) Compensation under this Act shall not be payable in respect of any improvement comprised in Part II of the First Schedule hereto, unless the tenant of the holding has, not more than three nor less than two months before beginning to execute the improvement, given to the landlord notice in writing of his intention so to do, … and upon such notice being given, the landlord and tenant may agree on the terms as to compensation or otherwise on which the improvement is to be executed.… (4) The landlord and the tenant may by the lease or otherwise agree to dispense with any notice under this section, and any such agreement may provide for anything for which an agreement after notice under this section may provide, and in such case shall be of the same validity and effect as such last-mentioned agreement.” Part II of the First Schedule refers to “Drainage.”

Section 10 is quoted supra in rubric.

On 10th December 1913 John Miller Hannah, the arbiter in a reference under the Agricultural Holdings (Scotland) Act 1908 (8 Edw. VII, cap. 64), between Andrew Kenneth M'Douall of Logan, Kirkmaiden (the landlord), and John Barbour and Robert Barbour, formerly tenants of the holding of Balgowan, on the estate of Logan (the tenants), stated a Case for the opinion of the Sheriff-Substitute at Stranraer ( Watson) with reference to certain claims for compensation by the tenants under the said Act on the determination of their tenancy.

The Case stated—“The deceased Robert Barbour (father of the claimants) entered into the occupancy of the farm of Balgowan at Whitsunday 1887 on a nineteen years' lease, but no formal lease was ever executed. From the date of his death, about three years later, the farm was carried on by his testamentary trustees until Martinmas 1900, when the claimants were accepted as tenants, and continued as such until Whitsunday 1906. From that date the farm was held by them by tacit relocation until Whitsunday 1913, at which date their tenancy was brought to an end by notice to quit given by the respondent on 29th April 1912.

The claim included a claim in respect of improvements made by the tenants by drainage. It was admitted that the claimants did not on any of the occasions on which such improvements were executed give notice in writing to the landlord in compliance with the requirements of section 3 (subsection 1) of the Act. It was, however, admitted or proved to the arbiter's satisfaction that on each of these occasions when drainage improvements were executed, the claimants had interviews with the former factor Mr D. A. M'Clew, at which the nature of the work proposed was brought fully under his notice. Orders for the tiles necessary for carrying out the work, to the Tirally Brick and Tile Works, were given by the said factor to the claimants, and the tiles so supplied were charged against and paid for by the estate. No additional rent or interest was charged against the claimants in respect of such drainage; the cartage and laying of the drains were done by the claimants at their own expense, and that this was and is the custom on the estate. It was further admitted that at none of these meetings was the subject of compensation mentioned, or the question of written notice specifically raised.

It was proved that the tenancy of the said John Barbour and Robert Barbour of said holding was terminated by notice to quit given by the landlord without good and sufficient cause, and for reasons inconsistent with good estate management. Notice of intention to claim for loss under section 10 was given by the claimants to respondent's factor on 24th May 1912, and the claimants did not dispose of any of their effects until 13th February 1913, on which date the main part of their dairy stock was sold at the farm by public auction, the remainder of the stock, together with the implements and utensils of husbandry, being sold by public auction at the farm on 17th May 1913. These two sales were duly advertised by posters displayed in the district and also by advertisements in the various local newspapers for some considerable time before the sales actually took place. It was admitted by the factor that he saw the advertisements but that he took no steps to have a valuation made. The claimants gave the following written notice on 26th April 1913 to the respondent—‘Balgowan, Ardwell, Stranraer, 26th April 1913. To Andrew Kenneth M'Douall, Esq., of Logan, per Henry Michie, Esq., Logan Estate Office, Ardwell, Stranraer. Dear Sir,—In terms of section 10 of the Agricultural Holdings (Scotland) Act 1908 we hereby give you notice that you can now have an opportunity of inspecting the goods, implements, and stock on the farm of Balgowan.—Yours faithfully, Robert Barbour; John Barbour.’

It was proved that the sale of the dairy stock was a good sale so far as public displenishing sales go, and that at least fair values were obtained for the various animals so far as such sales go. It was, however, proved to the arbiter's satisfaction that during the tenancy the claimants had built up by selection and breeding a good milking herd, the value of which as a herd to the tenants was greater than the cumulo value of the component units sold at a displenishing public sale to individual purchasers.

“It was further found proved that the implements

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and dairy utensils were sold at break-up prices, and did not realise anything approaching their value. It was also proved that the tenants did not receive at the public sale the full values of the horses and brood mares sold.”

On 5th November 1913 the arbiter issued proposed findings in which he, inter alia, proposed to find—“(1) That on the claim for drainage improvements, from the facts and circumstances proved as above, there existed by implication such an agreement to dispense with formal written notice as is contemplated in and provided for by sub-section 4 of section 3 of the said Act. I therefore proposed to award compensation to the claimants in respect of drainage improvements executed by them, and in assessing the amount of the compensation, to have taken into account the benefit derived by the tenant from the landlord's expenditure on tiles, in accordance with the provisions of section 1 (2) of said Act. (2) That a reasonable opportunity was given by the tenants to the landlord of making a valuation of the whole goods, implements, produce, and stock in respect of which a claim is made under section 10 of the Act. (3) That the claimants sustained loss or expense directly attributable to their quitting the holding, unavoidably incurred by them in connection with the sale of their stock, implements, and dairy utensils; that from the evidence led and my own knowledge I assess the loss sustained on these sales as follows:—Dairy stock, £100; horses and brood mares, £30; implements, £65.”

The questions of law were—“1. On the facts found by me to be admitted or proved, am I entitled to hold that there was an agreement to dispense with written notice to execute drainage in terms of section 3 (4) of the Agricultural Holdings (Scotland) Act 1908, and to award compensation in respect of such improvements? 2. In respect of the terms of the notice, dated 26th April 1913, given by the claimants to the respondent, are the claimants barred from founding on any other alleged previous circumstances to supersede a similar notice prior to the sale of 13th February? 3. On the facts found by me to be admitted or proved, am I entitled to find that a reasonable opportunity was given to the landlord by the tenants of making a valuation prior to the sale of 13th February 1913, in terms of section 10, proviso ( a)? 4. On the facts found by me to be admitted or proved, am I entitled to find that the sums proposed to be awarded as loss in connection with the sales of dairy stock and implements are loss or expense unavoidably incurred by the tenants upon or in connection with said sales, and directly attributable to their quitting the holding?”

On 4th February 1914 the Sheriff-Substitute answered the first and second questions of law in the negative and the third and fourth in the affirmative.

The claimants appealed, and argued—(1) It was clear from the circumstances of the case that the landlord and tenant had agreed to dispense with notice under section 3 of the Agricultural Holdings (Scotland) Act 1908 (8 Edw. VII, cap. 64). It was not necessary that such an agreement should be in writing— Ogilvy v. Elliot, November 3, 1904, 7 F. 1115, per Lord Ordinary (Kincairney) at p. 1124, 42 S.L.R. 41. Under sections 2 and 4 writing was specifically required, but not under the present section. It was competent, therefore, to prove dispensation with notice prout de jure. In any event, if writing were necessary, it need not be formal, but only such as was necessary to found a good contract of lease or loan, and that in the present case was satisfied by the written orders for tiles which the landlord supplied— Hope v. Derwent Rolling Mills Company, Limited, June 27, 1905, 7 F. 837, 42 S.L.R. 794; Sellar v. Aiton, January 26, 1875, 2 R. 381, 12 S.L.R. 272. (2 and 3) The claimants were not barred by their letter of 26th April 1913 from proving that prior to 13th February 1913 a reasonable opportunity had been given to the landlord of making a valuation of the stock. Reasonable opportunity was a question of fact, and did not require any written notice. (4) The Sheriff was right in upholding the arbiter's award for loss incurred in removing under section 10. Compensation was properly due for depreciation due to a forced sale.

Argued for the respondent—(1) There was an express finding by the arbiter that all that was done in respect of drainage was done in accordance with the custom of the estate. Where there was such a custom there was no room for an inference such as the claimants asked in the present case, that compensation had in fact been claimed. Written notice was necessary in such cases, and its object was to certiorate the landlord that his tenants intended to proceed under the Act. Where there was no such custom as existed here it might be that without a written notice compensation might be found due, but that was not the case here. (2 and 3) The letter of 26th April 1913 showed that the tenants had not previously to February 1913 given the landlord a “reasonable opportunity” of valuing, and they were therefore barred from maintaining that they had. Further, it was the tenant who under the Act was bound to make the first move in giving such an opportunity— Brown v. Mitchell, 1910 S.C. 369, per L.P. Dunedin at p. 384, 47 S.L.R. 216. (4) The arbiter was not entitled to award compensation for mere speculative loss, as he had done in the present case.