1 Joint tenancies: some problems defined
7.135 Most agricultural tenancies are periodic yearly tenancies. It is therefore necessary to consider the position where the property has been let to joint tenants, or where the landlord’s reversion is held by joint tenants under a trust of land, and the effect of the common law rules of joint tenancy in this situation.
7.136 The doctrine of joint tenancy was stated in the following terms by Lord Tenterden CJ in Doe d Aslin v Summersett:300
‘Upon a joint demise by Joint Tenants, upon a joint tenancy from year to year, the true character of the tenancy is this... that [each tenant] holds the whole of all so long as he and each shall please, and as soon as any one of the joint tenants gives a notice to quit he effectively puts an end to that tenancy.’
7.137 A periodic agricultural tenancy can therefore only be continued into the next period if all holders of a joint interest in the reversion or in the tenancy so desire, and if one such joint tenant does not agree he can unilaterally determine the tenancy. The position is, however, complicated by the requirements of the Agricultural Holdings legislation as to the giving of notices to quit and counter notices.
(a)Notice to quit by tenant
7.138 A notice to quit given by one of several joint tenants is effective to terminate the tenancy of all, as the consent of all is required to continue the tenancy into another period.301 On the other hand, the concurrence of all joint tenants is required to exercise a break clause in a fixed term lease.302 One out of joint tenants serving notice to quit a periodic tenancy is not therefore committing a breach of trust.303 This should be compared with the position of a joint tenant failing to serve a counter notice following notice to quit from the landlord, where there may be a breach of the implied trust arising from co-ownership of the tenancy and which can therefore be problematic.304 It should also be noted that if a joint tenant of a periodic tenancy is induced by fraud to give a notice to quit to the landlord, the notice will be binding, unless it is unequivocally withdrawn in its entirety by the tenant.305
7.139 Where the landlord makes a claim for possession in these circumstances, it must be proportionate.
Article 1 of the Protocol to the European Convention of Human Rights protects an individual’s ‘peaceful enjoyment of his possessions’ and provides that s/he ‘must not be deprived of his possessions except in the public interest and subject to conditions provided for by law’. Article 8.1 of the Convention, further, confers on each citizen the right ‘to respect for his private life [and] his home’, and Article 8.2 states that there should be ‘no interference by a public authority with the exercise of this right’ unless it is ‘in accordance with the law’, ‘necessary in a democratic society’, and ‘in the interests of … the economic well-being of the country … or for the protection of the rights or freedoms of others’. Where the tenancy includes the joint tenant’s principal home – the farmhouse or a farm cottage, for example – then Article 8 may also be applicable in possession proceedings following the giving of a notice to quit by one of several joint tenants. In this case, the court must consider the proportionality of the landlord’s case for possession on the facts of each case before it can make an order for possession.306(b)Surrender of tenancy
7.140 To surrender a tenancy before its expiry date, all joint lessees must concur, with the result that no single joint tenant can validly surrender the tenancy before the contractual term date.307 This principle was reaffirmed by the Court of Appeal in Greenwich London Borough Council v McGrady:308
‘It is clear law that if there is to be a surrender of a joint tenancy, ie a surrender before the natural termination date, then all must agree to the surrender. If there is to be a renewal, which is the position at the end of each period of a periodic tenancy, then again all must concur.’
(c)Notice to quit by landlord
7.141 Where the freehold reversion is held by joint tenants, a notice to quit served by one such joint tenant is effective to terminate the tenancy.309 Note, however, that if service of notice to quit by one of several joint trustees results in expense which is greater than the benefit accruing, the trustee responsible may be liable for breach of trust.
Service by the landlord on one of the joint lessees of the property is effective provided it is addressed to all.310(d)Tenant’s counter-notice
7.142 The Agricultural Holdings Act 1986311 requires that a counter-notice referring the landlord’s notice to quit to an agricultural land tribunal must be served by ‘the tenant’. It was originally considered that a counter-notice would only be good if served by (or on behalf of) all joint tenants, for all must (according to the joint tenancy rule) agree if the tenancy is to continue into a new period beyond the termination date in the notice to quit.312 The issue can be important where (as is not uncommon) the landlord has let land to a partnership comprising of himself and others (either a third party or other members of his family). For some time it was thought that partnership tenancies could be used to avoid conferring security of tenure; having served notice to quit, the landlord qua partner and tenant could refuse to join with his co-tenants in serving a counter-notice claiming the protection of the 1986 Act. Two decisions of the Court of Appeal – Sykes v Land313 and in Featherstone v Staples314 – have decided, however, that this type of arrangement cannot be used as an avoidance technique to deny the tenant security of tenure under the 1986 Act. The cases turn on two separate issues:
(i) Counter Notice: Service by one out of Joint Tenants
7.143 In Featherstone v Staples, a clear case of statutory avoidance, land was let to a partnership comprising the tenants (who managed the holding) and a company controlled by the landlord. Under a collateral partnership agreement the tenancy was to be partnership property, and the Company was to take a small share of partnership profits. The partnership agreement also provided that no partners would serve a counter-notice315 without the consent of the Company tenant (effectively the landlord’s nominee). When the landlord subsequently served notice to quit, the Company refused to join in serving the requisite counter-notice.
This scenario squarely raised the question whether the other tenants could claim the protection of the 1986 Act by serving a counter notice without its concurrence. At first instance, Nourse J resolved the issue in the tenant’s favour by dispensing with the joint tenancy rule altogether.316 The Court of Appeal, eschewing this radical approach, reaffirmed the strict application of the joint tenancy rule. As a matter of statutory interpretation the phrase ‘the tenant’ in the 1986 Act,317 in relation to any joint tenancy, must mean ‘the joint tenants’ and not ‘the joint tenants or any one or more of them’.318 This approach accords with similar decisions elsewhere in the law of landlord and tenant, which have stressed that the renewal of a periodic tenancy requires the concurrence of all joint tenants.319 In most cases the concurrence of all joint tenant will, therefore, be necessary. In Featherstone, however, the issue of statutory avoidance was dealt with by applying principles of the law of partnership. The principle in Johnson v Moreton320 – that a restrictive clause in the tenancy agreement preventing the service of a counter-notice is void as contrary to public policy – applied here to void the clause in the partnership agreement. Being void, it could not limit the scope of the actual or usual authority of partners to bind the firm. Applying the wider rationale of Johnson v Moreton it was therefore held that:‘if a landowner chooses to grant other persons a tenancy of agricultural land (whether or not including himself as a tenant) public policy affirmatively requires that those other tenants should have authority, or be treated as having authority, to serve an effective counter-notice under [section 26(1) of the 1986 Act] on behalf of all the tenants without his concurrence’.321
7.144 Those tenants not connected with the landlord are clothed with partnership authority to serve valid counter-notices on behalf of the whole partnership.
It follows that where there is a farming partnership, the use of a ‘nominee’ joint tenant will be ineffective to preclude the service of the requisite notices claiming security of tenure under the 1986 Act. An approach based on notions of partnership authority does, however, have inherent limitations. Consider for example the position where an agricultural tenancy is vested in joint tenants who have no partnership relationship inter se. The Partnership Act 1890 imposes a partnership wherever parties are carrying on a business in common with a view to profit, and participation in net profits of the farming business will be prima facie evidence of the existence of a partnership.322 Where there is a joint tenancy whose members do not share net farming profits, Featherstone v Staples may not be of assistance, and no question of partnership authority will arise. In this event reliance may have to be placed on equitable principles if the tenancy is to be preserved (below) following notice to quit by the landlord. Problems may also arise if a partner is a limited partner under the terms of the Limited Partnerships Act 1907.7.145 Quite apart from issues of statutory avoidance, a counter- notice given by one out of joint tenants can be saved from invalidity in two circumstances. The first is where there is a general agency vested in one joint tenant to serve the requisite counter notice. A general agency of this kind may be found where a court order in matrimonial proceedings has given sole and full power to conduct the farming business to the joint tenant concerned.323 On the other hand general agency authority would not normally be found, if the other joint tenant(s) has been ordered to assign his whole interest in the tenancy to the person giving the notice, but the assignment has not taken place. The second situation is where a servant or agent is responsible for the control of the management or farming of the agricultural holding on behalf of the tenants; s 93(3) of the 1986 Act deems a notice given to the landlord by the agent in these circumstances to be valid.324
7.146 Finally, it should be noted that Featherstone v Staples has been distinguished in cases where there is no issue of statutory avoidance.
In Fitzhugh v Fitzhugh325 a licence was granted to two brothers, collectively defined as ‘the licensor’ in the agreement, who were administrators of their deceased father’s estate. One of the brothers was (with his partner) also the licensee of the farmland and farm buildings, at a peppercorn rent of £1 per annum. Notice to terminate the licence was served by the non-licensee brother. There was no issue of statutory avoidance in this case,326 and the notice to terminate was held to be ineffective. The Court of Appeal, distinguishing the decision in Featherstone (above), held that there was no need to construe a licence agreement that was ‘short, simple and professionally drawn’ to mean something different from what it said. The appropriate remedy, if needed, was for the licensor wishing to terminate the arrangement to apply to the Court for an order removing the recalcitrant Licensor; he would then be in a position to serve a valid notice of termination without the latter’s participation.(ii) Potential Liability for Breach of trust
7.147 Difficult issues of liability for breach of trust can also arise in cases of joint tenancy. Where there is co-ownership of the tenancy, then the joint tenants hold the tenancy on an implied trust.327 Where (as is commonly the case) there is also a partnership, they will owe their co-partners an equitable duty to preserve the partnership assets, including the tenancy. The fact that the landlord is also one of the joint tenants cannot fetter his right to claim possession, and the courts will not generally interfere with his ability to do so.328 The court can in some cases, however, exercise it’s equitable jurisdiction to compel the landlord to join with his co-tenants in serving a counter-notice in order to preserve the tenancy eg where the tenancy is being held on trust for third party beneficiaries.329
7.148 Where the landlord is also himself a joint tenant and partner, Featherstone v Staples (above) indicates that his compliance will be dispensed with altogether so that no issue of breach of trust can arise. When the joint tenancy rule does apply, so that all the tenants must join in serving a counter-notice to engage the security of tenure provisions, equity can in appropriate circumstances intervene to compel compliance by a reluctant joint tenant. The Court of Appeal held in Harris v Black,330 that where joint tenants hold the tenancy solely for themselves then the equitable jurisdiction will not normally be exercised so as to compel a reluctant tenant to assume continuing obligations under the tenancy. The equitable jurisdiction can be invoked, however, where the lease is on special terms, for instance as to how the partnership is to be dissolved. In Sykes v Land331 agricultural land was let by the landlord to a partnership of himself and S, the partnership agreement providing that on dissolution of the partnership S should have the right to purchase the landlord’s share of the partnership assets. The Court of Appeal accepted that on the facts any counter-notice would have to be served by both joint tenants, but exercised its equitable jurisdiction to compel the landlord to join with S in serving a counter-notice so as to preserve the tenancy (the main trust asset). Section 11 of the Trusts of Land and Appointment of Trustees Act 1996 requires that trustees of land must consult those beneficially entitled to trust property and, consistent with the trust and within certain limits, give effect to their wishes. S, having exercised his option to acquire the partnership assets, could require the landlord to join in serving a counter-notice to preserve the tenancy. Similarly, in Cork v Cork332 the court granted an interlocutory injunction to compel one joint tenant to join in the service of a counter notice. The reluctant joint tenant there had entered into a family arrangement under which it was agreed to leave his beneficial interest intact, so that he remained a party to the tenancy and its obligations – even though he had ceased farming himself and left the running of the farm to his brother (the other joint tenant). This was sufficient to merit the intervention of the equitable jurisdiction to compel the service of a counter notice, and the preservation of the trust assets (the tenancy) pending a full hearing.
7.149 Even where equity will not intervene to compel compliance, a joint tenant who fails to serve a counter-notice will in principle be liable for breach of trust – a point recognised in Harris v Black. As Fox LJ commented in Sykes v Land, ‘in general it must be the duty of the trustees to preserve the trust property for the benefit of the ultimate beneficiaries and not let it be destroyed.’333 The recalcitrant tenant will prima facie incur a pecuniary liability to make good the lost value of the tenancy to the partnership. As agricultural tenancies invariably include an absolute bar on assignment, this will be the surrender value of the tenancy. If the tenancy does not include a covenant against alienation, it may also be a breach of trust for the joint tenant to serve notice under s 6 of the 1986 Act securing the application of the statutory bar on assignment pending arbitration on the terms of the tenancy, as this will substantially reduce the value of the tenancy.334 The trust assets include not only the tenancy itself, however, but also the statutory rights to security of tenure and continuation of the lease.335 Liability for breach of trust could therefore, in principle, extend to future loss of profits, as the tenancy will usually be the chief asset of the partnership, without which it cannot continue. Where the recalcitrant tenant is acting in good faith, therefore, and simply wants the tenancy to end, Featherstone v Staples indicates that continuing obligations under the tenancy will not be imposed – but this may be at the expense of a potential pecuniary liability for breach of trust.
7.150 The trust issues are somewhat different where one out of Joint Tenants serves an upwards notice to quit on the landlord, rather than simply abstaining in the service of the requisite counter notice to claim statutory protection, following service of a landlord’s notice to quit. Where one joint tenant serves an upwards notice to quit this will not engage liability for breach of trust; it is treated as a withdrawal of consent to the continuation of the tenancy into another period, rather than as an exercise of the trustees ‘functions’ requiring consultation with the other beneficiaries.336 Query, however, the position where a joint tenant connected with the landlord, and acting as his agent, serves an upward notice to quit. If allowed to stand, the notice will have the same effect as the landlord’s course of action in Featherstone v. Staples viz to deprive the ‘true’ tenant of statutory security of tenure. The argument based on partnership authority – used in Featherstone to justify service of counter notice by the ‘true’ tenant acting alone – is of no assistance in this context. It has already been noted that notice to quit given by one out of joint tenants is effective to end the tenancy.337 Should the fact that the tenant serving notice to quit is acting on behalf of the landlord invalidate the notice? There is no direct authority, but by parity of reasoning with the House of Lords ruling in Barrett v Morgan,338 discussed below, it is suggested that the court is unlikely to impugn the notice simply because it has been given collusively by arrangement with the landlord. In Barrett v Morgan the facts were different, in that the issue there was the effect of non-service of a counter notice by a mesne tenant, acting collusively, and the impact of this on a subtenacy carved out of the mesne tenancy. The court refused to colour the tenant’s actions simply because they were collusive, however, and it is difficult to see how this reasoning could be ignored in the similar context where the tenant instead serves an upwards notice to quit collusively.