Access for development part II

Case: Rees v Windsor-Clive [2020] EWCA Civ 816

1. The saga of the Earl of Plymouth and Others (Landlords) v Jenkin Rees (Tenant), now aged 87, continues. The Landlords seek possession of the entirety of Maesllech Farm, Radyr, outside Cardiff for development. Mr Rees opposes that until he is paid what he regards as fair compensation for giving up the farm. The tenancy carries with it rights to succession. There are two more generations who were lined up to succeed.

1. The latest stage is a decision of the Court of Appeal delivered on 1 July 2020. This time Mr Rees lost. The decision will again be of a great interest to those advising landlords and tenants in relation to development and, in particular, where a landlord wants to serve a Case B Notice to Quit in relation to an Agricultural Holdings Act letting.

1. In the High Court in April 2019 Mr Rees succeeded in achieving the discharge of an Injunction that the Landlords had obtained to allow them unrestricted access to the farm. The Judge also ordered the Landlords to compensate Mr Rees for the unlawful entry where there was physical interference with the land, in particular, the digging of excavations, the sinking of boreholes or the erection of structures. The compensation claim is yet to come to Court. Mr Rees will seek a share in the development profit unlocked by the unlawful entry.

1. The Judge did find for the Landlords on one point. He decided that the entry onto the farm for purposes which did not involve physical intervention was permitted, in particular, for bat surveys. Mr Rees appealed that issue to the Court of Appeal. Lord Justice Henderson gave permission to do so. The Landlords also sought permission to appeal. That application failed.

1. In June 2020 the Appeal of Mr Rees was heard by the Court of Appeal. The senior Judge was Lord Justice Lewison, who delivered the only Judgment.

1. One of the privileges that I have enjoyed over the last forty years is to work with the country’s best property barristers. Mr Rees was represented by Stephen Jourdan QC (who succeeded in the High Court). Those who have been lucky enough to work with him will know that he is outstanding. It has been my good fortune to instruct him on many occasions over the last thirty years or so.

1. I mention this because on this occasion he was effectively against Lord Justice Lewison. Before he went to the Bench, it was my privilege to instruct Kim Lewison regularly, including in the House of Lords in our success in Pye v Graham. In passing, we won that case in the High Court. We lost three-nil in the Court of Appeal. We won five-nil in the House of Lords. It reinforces how hard it is to predict what a court will decide.

1. Returning to the Rees case, it was scant comfort for Mr Rees that none of the Landlords’ arguments were adopted by Lord Justice Lewison in his Judgment. However, he disagreed with the case which was advanced for Mr Rees.

1. Mr Rees has farmed Maesllech Farm since the mid-1960s. There are two written Tenancy Agreements: one entered into in 1965 the second in 1968.

1. Clause 7 in the 1965 Tenancy Agreement provides: ‘Right for Landlord and his Consultant and others authorised by him with or without horses, carriages and other vehicles to enter on any part of the Farm lands and premises at all reasonable times for all reasonable purposes’.

1. What the Judge called Clause Y in the 1968 Tenancy Agreement provides: ‘the Landlord may at any time and at all times during the said tenancy enter upon the said premises with Agents Servants Workmen and others for the purpose of inspecting the same and for making roads sewers or drains or for any other purpose connected with his estate’.

1. It was argued for Mr Rees that the correct approach to interpreting clauses of this kind is stated in the textbook Hill and Redman, ‘Clauses which expressly reserve rights of entry to the landlord for particular purposes will be strictly construed…’. The proposition was adopted in the case of Timothy Taylor Limited v Mayfair House Corporation [2016] : ‘Rights reserved to a landlord under the terms of a lease are to be construed narrowly against the landlord’. It was put on behalf of Mr Rees that this is because of the long established principle imposed on a landlord that the grant of an estate or interest in land obliges the grantor not to derogate from the grant.

1. In Johnston & Sons v Holland [1988] Nicholls LJ explained that the principle ‘is not based on some ancient technicality of real property’ but rather ‘it is a principle which merely embodies in a legal maxim a rule of common honesty. It was imposed in the interest of fair dealing’ namely that ‘… if one man agrees to confer a particular benefit on another, he must not do anything which substantially deprives the other of the enjoyment of that benefit: because that would be to take away for one hand what is given with the other’.

1. Extending the debate into the world of Agricultural Holdings, in Paddock Investments Limited v Lory [1975], the Court of Appeal held that ‘power to the landlord if he obtains the necessary planning permission’ to resume possession did not apply where the planning permission was obtained by the beneficial owner of the land, for whom the landlord held the land on bare trust. Lord Justice Goff said: ‘It is a power or privilege granted to the landlord, and in my judgment, in the event of ambiguity, it must be construed against the landlord…’.

1. In the key passage in the Judgment of Lewison LJ in this case, he says that ‘…where the derogation principle does apply, all it does it to militate against an interpretation which would result in a substantial or serious interference with the tenants use and enjoyment of the leased property; or frustrate the purpose of the letting. It does not require the court to give a right of entry the narrowest possible interpretation. In my judgment it is in every case a question of interpreting the clause in question in its context. Part of that context will be the fact that the purpose of the contract is to confer on the tenant the right to exclusive possession of the subject matter of the letting on the terms of the lease or tenancy for the contractual term’.

1. He continues that: ‘The right of entry is not a right to enter for entries sake. It is a right to enter for a particular purpose. So if a purpose is a reasonable purpose for which the landlords wish to enter the land, the proper interpretation of the right must surely enable them to do what is reasonably necessary to achieve that purpose. ‘Reasonably necessary’ is not the same as ‘convenient’ or ‘desirable’. Conversely, if what they want to do ‘or what is reasonably necessary to do’ in order to achieve a particular purpose is highly intrusive, then the purpose itself may be held not to be a reasonable one. By the same token, the time of which the Landlords wish to do something may or may not be reasonable, depending on what it is that they wish to do. Something which might be reasonable to do in the daytime might be unreasonable if done at night. Conversely, something that cannot be properly done in the daytime (like counting bats) might be reasonable to do at night’.

1. The effect of this Judgment is one which will no doubt play out in very many cases involving, in particular, the development of agricultural property. All such clauses will require careful evaluation. More work for professional advisers.

7 July 2020

P R Williams, Ebery Williams – author of Scammell, Densham and Williams Law of Agricultural Holdings