5 Compensation for disturbance
9.43 The tenant’s right to compensation for disturbance is of considerable importance, and is payable in addition to any compensation to which the tenant may otherwise be entitled under the 1986 Act.90
(a)Qualifying conditions
9.44 By virtue of s 60(1), disturbance compensation is only payable where the tenancy terminates by reason of a notice to quit given by the landlord, or following a counter-notice by the tenant enlarging a landlord’s notice to quit part of the holding.91 Furthermore, the tenant must ‘quit the holding in consequence of the notice or counter-notice’.
It follows that compensation for disturbance is not payable where the tenancy is terminated by surrender, by a tenants notice to quit or by forfeiture proceedings taken by the landlord under the general law.92 In the case of a fixed term of two years or more, granted on or after 12 September 1984, which terminates following the tenant’s death, s 4(3) deems termination to be by landlord’s notice to quit, thus preserving the right to compensation for disturbance.9.45 ‘In consequence of the notice’. Whether the tenant has quit in consequence of a notice to quit (or counter notice enlarging the landlord’s notice to quit part) is to be decided not by whether there is an interval of time between the expiration of the notice and the tenant’s departure, but rather whether there was any break in the causation or sequence between the giving of notice and the tenant’s quitting the holding.93 So, if the tenant remains in possession pending the outcome of tribunal or arbitration proceedings to establish the validity of a notice to quit, and then quits later when the notice is upheld, he will have quit ‘in consequence of’ the notice and disturbance compensation will be payable.94 If the landlord’s notice to quit is bad in law (for instance for ambiguity or uncertainty) then provided the tenant accepts the notice as good and quits compensation will be payable.95 The same principle has been applied where a notice to quit is bad for failure to meet statutory requirements.96 Although the question is not free of doubt, it is thought that a notice to quit that fails to give the statutory minimum notice of 12 months, and is therefore rendered ‘invalid’ by s 25(1) of the 1986 Act, will engage liability for disturbance compensation if the tenant subsequently quits.
Section 25(1) renders the notice to quit ‘invalid’, ie of no effect to terminate the tenancy, and not a nullity per se. If the tenant acts on it to his detriment by quitting the principle in Westlake v Page97 dictates that compensation should be payable. It would indeed be strange were the landlord’s culpability in serving an invalid notice to have the effect of depriving the tenant of his statutory right to compensation for disturbance.98 The true meaning of s 60(1) is that compensation is payable where the tenant quits ‘by reason of this document, good, bad or indifferent, namely the notice to quit served by the landlord’.999.46 The claim for disturbance compensation has two elements; the 1986 Act distinguishes between ‘basic compensation’ and ‘additional’ compensation.100
(b)‘Basic’ compensation for disturbance
9.47 By virtue of s 60(3) the tenant’s claim for ‘basic’ compensation entitles him to:
•an amount equal to one year’s rent of the holding, at the rate at which rent was payable immediately before the termination of the tenancy; or
•a greater amount, reflecting the tenant’s actual loss or two years’ rent of the holding, whichever is less.
9.48 One year’s rent is payable as of right, without proof of loss. If the tenant wishes to claim compensation for loss exceeding this amount, subject to the maximum of two years’ rent, the requirements of s 60(6) must be complied with. These are:
(a)Not less than one month before the termination of the tenancy the tenant must give the landlord notice of his intention to make the claim. The corresponding date rule will apply to determine whether notice has been given ‘not less than one month’ before the termination of the tenancy: in calculating the period the day on which the notice is served will be excluded and the notice period will end on the corresponding day of the appropriate month.101 It has been held that notice of claim can be validly served by one out of joint tenants.102 Prudence dictates, however, that all joint tenants join in serving the appropriate notice.
(b)The tenant must, before their sale, give the landlord a reasonable opportunity of making a valuation of any goods, stock, implements, fixtures or produce in respect of which compensation for disturbance is being claimed.103
(i)Measure of basic compensation
9.49 Where more than one year’s rent is claimed, the measure of compensation is prima facie ‘the amount of the tenants actual loss’.104 This is defined more closely by s 60(5) to mean ‘the amount of the loss or expense directly attributable to the quitting of the holding which is unavoidably incurred by the tenant upon or in connection with the sale or removal of his household goods, implements of husbandry, fixtures, farm produce or farm stock on or used in connection with the holding, and includes any expenses reasonably incurred by him in the preparation of his claim for basic compensation.’ Costs of an arbitration to determine liability for compensation are not, however, recoverable as basic compensation. Losses incurred on the forced sale of stock and implements will be recoverable. Valuers fees incurred in preparing a claim for compensation are also recoverable, provided they are reasonably incurred by the tenant in the preparation of his claim – even if a claim for compensation is not subsequently made.105 Whether a loss is too remote to be properly ‘directly attributable’ to the tenant’s quitting the holding is a question of fact. Valuer’s fees for the valuation of stock prior to the sale is not, for instance, an unavoidable expense of the sale and is prima facie not recoverable.106
(ii)Exclusion of basic compensation
9.50 By virtue of s 61(1) neither basic nor ‘additional’ compensation are payable where the tenant’s right to serve a counter-notice under s 26(1) is excluded by Cases C, D, E, F or G. This refers to the situation where the landlord’s notice to quit is expressly given pursuant to one of the specified Cases for Possession in Sch 3 to the 1986 Act (for instance for failure to pay rent, irremediable breach of the tenancy or following the tenant’s death), thus excluding the tenant’s right to serve a counter notice and subject the notice to the requirement of tribunal consent. Basic compensation will be payable if the landlord’s notice to quit is a plain notice, or if it is served pursuant to Cases A, B or H in Sch 3 to the 1986 Act.
Further restrictions apply to the availability of ‘additional’ compensation for disturbance.107 Query it would appear that the right to claim both basic and additional compensation will be excluded where the tenancy is terminated not by notice to quit, but instead by forfeiture proceedings taken by the landlord in reliance on a proviso for re-entry in the lease – in this event, as noted above, the basic requirements of s 60(1) will not have been satisfied. This will not, it is thought, work an injustice. Compensation is excluded by s 61 where notice to quit is given for non-payment of rent or other breaches of covenant. There would appear to be no valid reason why either basic or additional compensation should be available in the event of the landlord choosing to proceed, instead, by way of forfeiture for breach of covenant under the general law.108 It has already been noted that neither basic nor additional compensation can be claimed under the 1986 Act on a surrender of the tenant’s interest.109(c)‘Additional’ compensation for disturbance
9.51 By virtue of s 60(2)(b) and (4) the tenant may be entitled to an amount of additional compensation equal to four year’s rent of the holding, at the rate at which rent was payable immediately prior to termination of the tenancy, provided certain requirements are met. Additional compensation is only payable in the following cases:
•If the landlord’s notice to quit was given pursuant to Case B in Sch 3 to the 1986 Act, ie where land is required for a non-agricultural use for which planning permission has been obtained.
•Where the notice to quit is a plain notice, rather than one specifying one of the cases for possession, then additional compensation is payable if the notice purports to terminate the tenancy for the purpose of a non- agricultural use not falling within Case B (ie one which does not require planning permission by virtue of some provision in the Planning legislation itself) or that the carrying out of the landlord’s purposes is desirable for the purposes of the enactments relating to allotments.
Note however that, if it is to exclude compensation for disturbance, s 61(3) requires the notice to quit to contain a statement to the effect that the carrying out of the purpose for which the landlord proposes to terminate the tenancy is desirable on one of the enumerated grounds in s 27(3). It follows that a notice to quit which fails to specify the grounds on which tribunal consent under s 27 will be sought could lead to a claim for additional (as well as basic) compensation for disturbance. Additional compensation is, in any event, only excluded if an application for consent to the operation of the notice is made to an agricultural land tribunal, and the tribunal grant consent on the grounds in s 27(3) enumerated above.110 If the tribunal’s reasons for giving consent include a statement, however, that they are also satisfied that the land is required for a non-agricultural use for which planning permission is not required111 additional compensation is payable.112 By virtue of s 61(5) additional compensation is similarly available if the landlord’s notice specifies sound management113 as a ground for consent, and the tribunal, although satisfied as to that ground, would also have been satisfied (had it been pleaded) as to the non-agricultural use ground.114 The tribunal must include a statement to that effect in the reasons for their decision if additional compensation is to be payable.•The complex provisions now found in s 61 are intended to provide additional compensation where the tenant is displaced to enable the land to be used for development, forestry or other non-agricultural purposes. The additional sum of disturbance compensation of four years’ rent is payable without proof of loss (cf the basic compensation payable under s 60(3)). The complex entitlement rules reflect this general policy, albeit imperfectly.
(d)Consequential provisions
(i)Sub-tenancies.
Where a sub-tenancy of an agricultural holding terminates by operation of law115 s 63(1) preserves the sub-tenant’s right to claim compensation for disturbance – notwithstanding the technical objection that he has not quit pursuant to a notice to quit as otherwise would be required by s 60.
Similarly, s 63(2) preserves the mesne tenant’s right to compensation as against his immediate landlord notwithstanding the technical objection that he (not being in occupation of the holding) does not quit the holding in the required sense.(ii)Notice to quit part.
The tenant’s right to claim compensation for disturbance is limited, in some instances, where the landlord serves notice to quit part of the holding and the tenant elects to treat it as a notice to quit the whole holding. If the part subject to notice to quit, taken with any other part of the holding affected by a previous notice to quit, is less than one fourth part of the original holding, and the holding as diminished would be reasonably capable of being farmed as a separate holding, then compensation is only payable in respect of that part of the holding to which the notice to quit itself relates.116
(iii)Agreed compensation.
The parties cannot contract out of the tenant’s right to claim compensation for disturbance on the statutory basis.117 They are free, however, to agree that additional compensation exceeding the statutory quantum shall be payable, whether in the contract of tenancy itself or a supplementary agreement. The courts will construe a term giving additional relief in very general and wide terms, and going beyond the statutory provisions, as intended to give a greater measure of relief, for instance where a clause in a tenancy agreement gave the tenant the right to claim compensation for ‘any loss or damage he may sustain through... disturbance’.118