Scottish Court of Session Decisions

The Agricultural Holdings (Scotland) Act 1908 (8 Edw. VII, cap. 64) enacts—Sec. 1 (1)—“When a tenant of a holding has made thereon any improvement comprised in the First Schedule to this Act he shall … be entitled at the determination of a tenancy, on quitting his holding, to obtain from the landlord, as compensation under this Act for the improvement, such sum as fairly represents the value of the improvement to an incoming tenant. (2) In the ascertainment of the amount of the compensation payable to a tenant under this section there shall be taken into account—( a) Any benefit which the landlord has given or allowed to the tenant in consideration of the tenant executing the improvement.…” First Schedule, Part III—“ Improvements in respect of which consent of or notice to landlord is not required—… (26) Laying down temporary pastures with clover, grass, lucerne, sainfoin, or other seeds sown more than two years prior to the determination of the tenancy.”

An arbitration having been held under the Agricultural Holdings (Scotland) Act 1908 between Sir Hugh Thomas Munro, Bart., of Lindertis, proprietor of the farm of Kirkton of Kingoldrum, respondent, and Charles Findlay, Glenhill, Kirriemuir, formerly tenant of the farm, appellant, the arbiter (Mr Peter Purdie Campbell, Edinburgh) at the request of the proprietor stated a Case under the statute for the opinion of the Sheriff of Forfarshire as to whether the tenant was entitled to claim compensation for the large amount of temporary pasture on the farm at the outgoing.

The Case stated—“2. By lease, dated 9th and 14th days of October 1882, entered into between the now deceased Sir Thomas Munro, Baronet, then of Lindertis, and the said Charles Findlay, there was let to the said Charles Findlay all and whole the farm and lands of Kirkton of Kingoldrum, in the parish of Kingoldrum and county of Forfar, as then possessed by Thomas Newton as tenant therein, with the exception of a small field next the Glebe, and that for the period of 19 years from and after the term of Martinmas 1882. The lease contained mutual breaks at Martinmas 1889 and 1896. The rent stipulated under the lease was £525 sterling.

3. The said lease, in addition to the ordinary clauses common in the agricultural leases in the district, contains the following clause with reference to cropping—‘The tenant binds and obliges himself and his foresaids to cultivate, manage, and manure the lands hereby let in a skilful manner according to the most approved rules of good husbandry, and so as not to wear out or deteriorate but to improve the same, and without prejudice to the said generality the tenant binds himself and his foresaids as regards the whole arable land of the farm other than the fields known as the Bog and Bogleys, to cultivate the same according to the following five-course rotation, viz.—( first) grass which may be cut or pastured, ( second) grass which shall be pastured only, ( third) white crop, ( fourth) green crop properly laboured and manured,

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and ( fifth) barley sown down with grass and clover seeds of the proper quantities and kinds; declaring, however, that the tenant may, if he prefers it, allow any portion of the said land to lie in grass for a longer period than two years, but on his breaking it up he shall be bound to adhere to the rotation above prescribed, with this exception, that he shall be entitled to take two white crops in succession after grass which has lain for not less than four years, but in no other case shall he be so entitled; and declaring further that he shall never have less than two-fifths of the said land, other than as aforesaid, under grass, and shall not at any time plough up first year's grass, and as regards the said Bog and Bogleys the tenant may either allow the same to lie in permanent pasture or cultivate the same in the rotation and manner above prescribed.’

4. The tenant took advantage of the 1889 break, and by an agreement dated 22nd and 24th days of June 1889 the proprietor resumed possession of a strip of 7 acres. The remaining subjects were let to the tenant for the unexpired period of the lease ( i.e. the lease of 1882) at a rent of £385 sterling, and the cropping clause under said agreement provided that ‘with reference to the cropping clause in said lease it is hereby agreed that the following portions of the farm, in so far as not already laid down to permanent pasture, shall as soon as practicable be laid down to permanent pasture, and shall so remain during the whole of the tenant's occupancy thereof, viz.—( first) the Saddler Field, extending to about nineteen acres; ( second) the North Dams Field, extending to about twenty-five acres; ( third) the East Dams Field, extending to about nine acres; ( fourth) the two fields lying to the south of the Bog and Bogleys, and the Bog and Bogleys themselves; and ( fifth) the high arable ground lying between the fields called the Smithy Park and Back of Hill Park and the Kirkton Hill Plantation, extending to about twelve acres, and the whole of the remaining arable land of the farm shall be cultivated by the tenant as he hereby binds and obliges himself to cultivate it during the currency of the lease according to the following five-course rotation, viz.—( first) grass which may be cut or pastured, ( second) grass which shall not be cut but pastured only, ( third) white crop, ( fourth) green crop properly laboured and manured, and ( fifth) barley sown down with grass and clover seeds of the proper quantities and kinds; declaring, however, that the tenant may, if he prefers it, allow any portion of the said land specified to be cultivated in a five-shift rotation to lie in grass for a longer period than two years, but on his breaking it up he shall be bound to adhere to the rotation above prescribed, with this exception, that he shall be entitled to take two white crops in succession after grass which has lain not less than three years, but in no other case shall he be so entitled, and on no account shall he plough up any of the above land specified to lie in permanent grass.’

5. Advantage was taken of the break in 1896 to readjust the contract, and by an agreement, dated 4th and 6th May 1896, entered into between the said Sir Hugh Thomas Munro (who had become proprietor of the estate) and the tenant, the proprietor resumed (1) two portions of the hill grazing extending to forty-six acres or thereby, and (2) a piece of ground near the public road which had been planted in 1889. The rent for the remainder of said lands was fixed at £350 for crop 1897 and subsequent crops.

6. By lease, dated 15th and 28th days of April 1901, a new lease of the said farm of Kirkton of Kingoldrum as then possessed by the tenant was entered into between the said Sir Hugh Thomas Munro, Baronet, and the said Charles Findlay for the period of nineteen years as from Martinmas 1901, with mutual breaks at Martinmas 1908 and 1915, at a rent of £350 sterling. The tenant took advantage of the latter break and left the farm at Martinmas 1915.

7. The cropping clause in the last-mentioned lease is in the following terms:—‘And the tenant binds and obliges himself and his foresaids to cultivate, manage, and manure the lands hereby let in a skilful manner according to the most approved rules of good husbandry, and so as not to wear out or deteriorate but to improve the same, and in no event shall he at any time take two white crops in immediate succession, and without prejudice to the said generality the tenant binds himself and his foresaids never to break up the following portions of the farm, but to allow them to remain in permanent pasture during the whole currency of the lease, viz.—( first) the Scurroch Field, ( second) the North Dams Field, ( third) the East Dams Field, ( fourth) the two fields lying to the south of the Bog and Bogleys, and the Bog and Bogleys themselves, and the whole of the remaining arable land of the farm shall be cultivated by the tenant as he hereby binds and obliges himself to cultivate it during the currency of the lease according to the following five-course rotation, viz.—( first) grass which may be cut or pastured, ( second) grass which shall not be cut but pastured only, ( third) white crop, ( fourth) green crop properly laboured and manured, and ( fifth) barley or oats sown down with grass and clover seeds of the proper quantities and kinds; declaring, however, that the tenant may, if he prefers it, allow any portion of the said lands specified to be cultivated in a five-shift rotation to lie in grass for a longer period than two years, but on his breaking it up he shall be bound to adhere to the rotation above prescribed, with this exception, that he shall be entitled to take two white crops in succession after grass which has lain not less than three years, but in no other case shall he be so entitled, and on no account shall he plough up any of the above land specified to lie in permanent grass.’

9. On 9th November 1915 the said Charles Findlay as waygoing tenant duly intimated to the said Sir Hugh Thomas Munro a claim for compensation for improvements made by him upon the holding of Kirkton of Kingoldrum. The claim bore to be made

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under the Agricultural Holdings (Scotland) Act 1908, and amounted in all to £468, 0s. 3d., including a claim of £222, 13s. 6d. as compensation for laying down of temporary pasture more than two years prior to the determination of the tenancy

12. The following facts are held by the arbiter to be established:—( a) That the total area of the farm of Kirkton of Kingoldrum, exclusive of buildings, yards, &c., is 469·610 acres, and the land to remain in permanent pasture under the lease of 1901 extends to 125·091 acres, thus leaving as arable land 344·519 acres. The arable portion of the farm left by the claimant was in the following state:—

Under grain crop	115·358 acres.
Under green crop	49·188 acres.
Under rotation grass	91·205 acres.
Under temporary pasture (being the temporary pasture claimed for)	88·768 acres.
	344·519acres.

( b) That there is an obligation in his lease of the farm of Kirkton of Kingoldrum binding the claimant generally to crop and cultivate the arable land of the farm according to the most approved rules of good husbandry, and in particular to crop and cultivate it according to the five-course rotation prescribed by the lease, but with this declaration however, ‘that the tenant may, if he prefers it, allow any portion of the said lands specified to be cultivated in a five-shift rotation to lie in grass for a longer period than two years, but on his breaking it up he shall be bound to adhere to the rotation above prescribed, with this exception, that he shall be entitled to take two white crops in succession after grass which has lain not less than three years.’ ( c) That the claimant was in the habit of sowing down to and allowing to lie in temporary pasture for a longer period than two years certain of the fields, and this system was continued to the end of his tenancy. ( d) That more than two years prior to the determination of the tenancy the claimant laid down to temporary pasture the Culhawk Upper Bank Field (sown out in 1909), Upper Bank Field (sown out in 1910), Upper Saddler Field (sown out in 1911), Culhawk Mid bank Field (sown out in 1912), and Sandy Hillock Field (sown out in 1912), on the farm of Kirkton of Kingoldrum, and left them in temporary pasture; that these fields extend to 88·768 acres, and that upon 64·129 acres thereof the claimant had executed an improvement upon the holding in the sense of the Agricultural Holdings Act….( g) That the value of the foresaid improvements to an incoming tenant in the laying down of temporary pasture (1) on the farm of Kirkton of Kingoldrum was £143, 13s.… ( h) That the claimant received very little grass on his entry to the farm of Kirkton of Kingoldrum at Martinmas 1882. The extent of grass then on the farm was not established with any precision, the only available evidence being that of the claimant himself, which the arbiter accepted, and which was as follows ‘When I entered in 1882 I found very little grass on the farm. It was nearly all under crop. The previous tenant was Mr Newton. (Q) Had he practically all the farm under crop?—(A) There might have been some reservations in his lease in consequence of which he could not have it all, but he had as much as he possibly could have. I found the state of the farm at my entry such that during the first year of my tenancy I could not break up any lea, there was so much of it broken up before. After I entered the farm I made it my business to put as much of it under grass as I could. I always kept a big part of it under grass. I did so irrespective of the rotations.’ (i) That the question whether the claimant received ‘benefit’ in the sense of the Act in respect of the execution of the said improvements did not arise, and that no benefit was given or allowed by the proprietor to the claimant in respect of the execution of the said improvements, which the arbiter could, in the view which he took of the case, take into account in assessing compensation had he found it necessary to do so…. The arbiter on 17th August 1916 issued a note of his proposed findings, in which he proposed to find, inter alia, that the claimant was entitled to the sum of £143. 13s. as compensation for laying down 64·129 acres of the said farm of Kirkton of Kingoldrum to temporary pasture, and a sum of £12 as compensation for laying down eight acres of the farm of Broad muir to temporary pasture, being the value of the improvements thereon to an incoming tenant.

13. The proprietor lodged representations against the arbiter's proposed findings, in which he maintained (1) that the claim for the laying down of temporary pasture ought to be disallowed altogether as incompetent, and (2) that the arbiter must set against the claim any benefit which the claimant had received ( a) under the provision of the lease which authorised him to take two white crops in succession from land that had lain not less than three years in grass, and ( b) from the temporary pasture which he received at the commencement of his lease, and called upon the arbiter, in the event of him being unable to give effect to these representations, to state a case for the opinion of the court. The arbiter held that the representations introduced no new facts or arguments, and adhered to his proposed findings. The proprietor thereupon renewed his request to the arbiter to state a case under the statute. The arbiter considered the request fair and reasonable, and states this Case accordingly in terms of section 9 of the Second Schedule appended to the Act of 1908.”

The following questions of law were submitted for the opinion of the Court—“1. Did the laying down of the said temporary pasture in the circumstances stated constitute an improvement for which the tenant is entitled to compensation under the Agricultural Holdings (Scotland) Act 1908. If so, 2. Was the provision in the said lease allowing two white crops in succession to be taken on the conditions therein set forth a benefit falling to be taken into account by the arbiter in ascertaining the amount of such compensation. And 3. If ‘benefit’ falls to be taken into account by the arbiter in

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assessing compensation, does it fall to be considered at (1) Martinmas 1882, or (2) at Martinmas 1901.”

On 4th January 1917 the Sheriff ( Ferguson) pronounced an interlocutor containing the following findings—“Finds (1) In answer to question one that the laying down of the said temporary pasture constituted an improvement to the extent, if any, to which the land left in temporary pasture when the claimant quitted the farm, exceeded the extent to which the land was in temporary pasture at the commencement of the lease; (2) that question two falls to be answered in the affirmative; (3) that in answer to question three benefit falls to be considered as at and from Martinmas 1901.”

Note.—“The first and principal question submitted is in view of the terms of the Act and of the decision in the case of Earl of Galloway v. M'Clelland, 1915 S.C. 1062, 52 S.L.R. 822, one of considerable difficulty. That case lays down that the mere fulfilling of contractual obligations in regard to cropping cannot constitute an improvement for which independent compensation can be claimed under the Agricultural Holdings Act. It was sought to assimilate this case to that by an argument that the permission given to depart from the ordinary rotation Prescribed, to keep part of the land in grass beyond two years and to take a second year's corn crop, constituted an alternative system of rotation. This does not seem to me to be well founded, because the terms of the exception do not lay down a rotation as they do not specify a definite period in which the land may be kept in grass, and the natural way to read the clause is that a specified rotation is laid down and permission is given to modify it. The clause from its phraseology appears to be inserted in the interest of the tenant. He may if he prefers it allow any portion to lie in grass for a longer period, and if he does, upon return to the rotation after three years may take two white crops. The clause gives an optional modification or relaxation of the cropping stipulation.

It was also argued that compensation under the Act was given not for leaving but for laying down land in temporary pasture, and that in laying down in grass the tenant was merely fulfilling his contractual obligation, as in the course of the lease the whole ground would fall to be laid down at some time or other in grass under the rotation. This appears to me to be too narrow and technical a construction, and practically to result in rendering the provision of the statute nugatory under the normal conditions of Scottish agriculture. It may be a consequence of importing into Scotland provisions originally directed to a different and possibly less advanced system of agriculture and unsuited to Scottish conditions, but it is not one to be lightly accepted. It does not appear from the case whether special grasses were actually sown with an express view to greater permanency, which I think is the sort of thing contemplated by the framers of the statute from the use of the words ‘laying down,’ but it seems to me that the requirement of the statute is satisfied if the land has been laid down and at the waygo the land is left with an enhanced value because it is in grass of an abiding, though not permanent, value. A stronger way of putting the landlord's case appears to be that under the lease the question of temporary pasture was fully considered and a code of permission and compensation satisfactory to both parties substituted for the statutory privileges, which became a contractual obligation. This view receives some support from the terms of sec. 4 of the Act, and I think the arbiter is bound to consider whether the clause in a broad view affords fair and reasonable compensation by giving the power of taking two white crops. It is to be observed that by this arrangement the tenant is relieved from the statutory obligation of restoring the rotation before quitting. But then there is no provision that the right to take an additional white crop is to be regarded as a waiver of any claims at the way go, and as this clause of the schedule was in existence from 1900, parties must be assumed to have contracted with the statutory rights in view. I think it quite probable that in fact the option to depart from the rotation was intended as a concession to the tenant in the management of the farm, and not to lay a foundation for future compensation, but the right given by the Act is unqualified to the extent that improvement has been effected and not compensated, and the tenant having been left a free option and having in fact left in grass a larger quantity than he was bound to leave under the rotation, and, I assume, than he received, is entitled to compensation to the extent provided.

Upon the second question it appears to me that the right to take two white crops was a benefit granted by the landlord with specific reference to a departure from the ordinary course of cropping, and must be taken into account in estimating what is due to the tenant. The thing to be arrived at is not mere value of the grass on the ground, but the extent to which the farm has been benefited by the method of cultivation adopted, and if the tenant has been, in fact, enriched by getting additional white crops, he has to that extent got his compensation already.

The third question relates, it was explained, to the benefit the tenant received from the temporary pasture he received at the commencement of his lease. In contradiction to what occurred on previous occasions when breaks in a previous lease were taken advantage of, a new bargain was made in 1901, and a new and separate tenancy entered on. That was the time when any claim for permanent pasture, if such existed in respect of previous operations, should have been settled, and there had, in fact, been a large reduction of rent, both in 1889, when the cropping clause was altered, and in 1896. It must, I think, be assumed, in the absence of any reservation (and in this case in view of the fact that the lease was after 1900), that the period with which the way go falls to be compared is the commencement of the actual tenancy which has just terminated.

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In regard to this class of improvement, which obviously differs from buildings, the facts as to which are easy of ascertainment and the settlement for which is often carried on from lease to lease, this seems to me to be the natural and safe rule, and the burden of proof lies upon the claimant to show that he has, in fact, left a greater area in grass than existed at the commencement of the lease. An investigation of the profit from second white crops throughout two or three tenancies would be impracticable. The amount of grass existing at entry is in one sense a benefit received by the tenant. I think, however, the more accurate conception is that there is, in fact, no improvement, and therefore no room for the application of the statute, unless more land has been laid down and left in grass at the ish than existed at the entry.”

The tenant appealed, and argued—The first question ought to be answered in the affirmative. The tenant was entitled to compensation for everything which he left in a better condition than he was bound to leave it. The second question ought to be answered in the negative. It was impossible to separate this benefit from the whole cropping scheme. Two white crops in succession did not constitute a benefit in the sense of the statute—Agricultural Holdings (Scotland) Act 1908 (8 Edw. VII, cap. 64), sec. 1. The improvement here consisted in the laying down of temporary pasture, but the tenant derived no benefit therefrom. On the contrary, by his refraining from cropping he was a loser, but the soil became more fertile. The answer to the first part of the third question should be in the affirmative. It was impossible to assess the improvement in 1901 because the tenant was not at that date quitting the farm, and therefore 1882 was the only other date to be looked to. The true comparison to be drawn was between the actual condition of the farm and its condition if the tenant had only done what he was by the lease bound to do, not that he left it better than he found it. Counsel cited Earl of Galloway v.M'Clelland, 1915 S.C. 1062, 52 S.L.R. 822.

The respondent argued—The first question should be answered in the negative. All the pasture that was laid down was laid down in accordance with the stipulations of the lease. What had been compensated for was pasture left, not laid down. In England it was the pasture itself that was of value, not the rest given to the land—Johnston on Agricultural Holdings Act, p. 73; Jackson on the Agricultural Holdings Act, p. 125. The English view that it was the unexhausted value of seeds that was valuable was right. On exhaustion of artificial manures counsel cited Brown v. Mitchell, 1910 S.C. 369, per Lord President Dunedin at p. 379, 47 S.L.R. 216. Every acre had sooner or later to be laid down in grass as provided in the lease, and thus the laying down was not voluntary and therefore no compensation would arise. There ought to have been evidence that year by year something more than was contractual had been laid down. Every improvement had to be voluntary to entitle the tenant to compensation. Mere maintenance did not constitute an improvement. The second question ought to be answered in the affirmative, as also the second part of the third question. The grass in existence at the beginning of the lease had to be taken into account. In 1901 there was not merely a renewal of a tenancy but a new bargain was made in the new lease, and it was that period that should be looked to in making a comparison. Counsel also referred to Earl of Galloway v. M'Clelland, 1915 S.C. 1062, per Lord Johnston at p. 1082, 52 S.L.R. 822.

At advising—