3 Express covenants: statutory variation

6.24 Covenants are commonly taken to prevent the tenant ploughing permanent pasture, restricting the mode of farming the holding, and restricting the tenant’s right to dispose of crops and produce.

(a)Variation of terms as to permanent pasture

6.25 Section 14 of the 1986 Act gives either party the right, where the tenancy provides for the maintenance of specified land or a proportion of the holding as permanent pasture, to demand arbitration as to whether the amount of land required to be maintained as pasture should be reduced. The arbitrator is directed to consider whether a reduction would be ‘expedient in order to secure the full and efficient farming of the holding’.³⁸ His award may specify that the contract of tenancy should be modified as to the land which is to be maintained as permanent pasture, or treated as arable land, and as to cropping in the manner stipulated in the tenancy. If the award reduces the area of land which under the contract of tenancy was to be maintained as permanent pasture, then he may specify that on quitting the tenant should leave as permanent or temporary pasture an additional specified area of land, but only in so far as the total area of permanent pasture provided for does not exceed that originally provided for in the tenancy³⁹ viz. he can order reinstatement of the reduction on termination of the tenancy.

(b)Freedom of cropping and disposal of produce

6.26 Section 15 of the 1986 Act confers on the tenant the full right, without incurring ‘any penalty, forfeiture or liability’, and notwithstanding the terms of the tenancy or custom:

(a)to dispose of the produce of the holding (other than manure) and

(b)to practise any system of cropping of the arable land on the holding.

6.27 The tenant must make ‘suitable and adequate’ provision to return to the holding the full equivalent manurial value of all crops sold off or removed from the holding in contravention of custom or the tenancy agreement. In the case of cropping he must protect the holding from injury or deterioration. If the tenant does not make suitable and adequate provision to return the manurial value of crops, or exercises his rights under s 15 so as to injure or deteriorate the holding, then the landlord is entitled to seek an injunction to restrain the exercise of those rights, and on the tenant quitting can claim compensation for any deterioration in the holding.⁴⁰ Where proceedings are brought for an injunction, the issue of whether the tenant has, or is likely, to exercise his rights in such a way as to cause injury or deterioration to the holding must be determined by arbitration under the Act. The arbitrator’s award is to be conclusive proof of the facts alleged for the purposes of injunction proceedings.⁴¹ It will also be conclusive in a subsequent arbitration on termination of the tenancy, although an arbitrator’s award is not a prerequisite for an arbitration on quitting, as it is under s 15(5) for injunction proceedings.

6.28 The tenant’s rights under s 15 do not apply (see s 15(2)):

(i)In the case of a yearly tenancy, in the year before the tenant quits the holding, or during any period after he has received notice to quit. As notice to quit will normally be of at least 12 months’ duration ending on a term date, the freedom will be excluded for the whole of the notice period, ie potentially for up to 23 months. If short notice is validly given, the freedom will be excluded for the 12 months prior to the end of the tenancy.

(ii)In the case of any other tenancy, eg a fixed term, s 15 is excluded for the year before its termination.

(iii)Section 15(1) does not apply to a tenancy of land let as a smallholding pursuant to a scheme for the farming of smallholdings on a co-operative basis, or a scheme which provides for the disposal of the produce of such holdings, or provides other centralised services for such smallholding tenants.

(iv)In the case of cropping s 15(1) only confers rights in respect of arable land. The phrase ‘arable land’ does not include land in grass that by the terms of the tenancy is to be retained in the same condition throughout the tenancy.⁴³

6.29 Where it applies, s 15(1) overrides any contrary provision in the contract of tenancy.

(c)Prohibition of removal of manure

6.30 The disposal of manure produced on the holding is expressly excluded from the scope of s 15(1).⁴⁴ A covenant preventing its disposal will be enforceable notwithstanding the general freedom of cropping conferred on the tenant. Section 15(3) of the 1986 Act provides, in any event, that once a notice to quit has been given, the tenant shall not, subject to any agreement in writing to the contrary, at any time after that date, sell or remove any manure, compost, hay, straw or roots grown on the holding in the last year of the tenancy. Unlike s 15(1), this provision can be varied or excluded by the tenancy agreement, provided the latter is in writing. ‘Roots’ included in the prohibition are further defined by s 15(7) to mean the produce of any root crop normally grown for consumption on the holding.

(d)Penal rents

6.31 It was not uncommon in the past for tenancies to include a provision providing for the payment of an additional (‘penal’) rental in the event of the tenant committing a breach of one of the terms of the tenancy. Such covenants were enforceable at law. Moreover, a covenant of this nature was treated in equity as an agreed provision for liquidated damages for breach of the agreement, and not a penalty. Consequently, to protect the tenant, s 24 of the 1986 Act provides that, notwithstanding any provision in the contract of tenancy making the tenant liable to pay a higher rent or liquidated damages in the event of breach of the agreement, the landlord shall not be able to recover for a breach any sum in excess of the damage actually suffered by him in consequence thereof. Section 24 applies to all breaches of tenancy (and not just breaches of covenants as to cultivation or repairs) and limits the landlord’s right to recover damages to his actual loss. It cannot be excluded or varied by agreement of the parties.