3PLR – TUSTIAN V JOHNSTON AND ANOTHER

POLICY, PRACTICE AND PUBLISHING, 3PLR, LAW REPORTS

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TUSTIAN

V

JOHNSTON AND ANOTHER

CHANCERY DIVISION

[1993] 2 ALL E.R. 673

12, 13 MARCH 1992

3PLR/1993/97  (CH.D)

 

BEFORE

KNOX J

 

MAIN ISSUES

AGRICULTURE: LANDLORD AND TENANT; Tenancies: ADMINISTRATION OF JUSTICE; Arbitration

Agricultural holding – Arbitration – Compulsory submission to arbitration – Incorporation by statute of model clauses into tenancy agreement – Repairing obligations – Arbitration clause – Claim by tenants for damages for breach and specific performance of landlords obligation – Whether claim required to be submitted to arbitration – Whether tenants action could be stayed by court – Arbitration Act 1950, s 4 – Agricultural Holdings Act 1986, s 84(1) – Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973, Sch, para 15.

The plaintiffs, who were or had formerly been the tenants of a farm, brought two actions against the defendant landlords, claiming damages for breach and specific performance of repairing obligations imposed on the landlords by model clauses incorporated into the tenancy under the Agricultural Holdings Act 1986 and para 3a of the schedule to the Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973.  The master granted the defendants a stay of both actions pending compulsory arbitration pursuant to para 15b of the schedule to the 1973 regulations, which provided that ‘any claim, question or difference … between the landlord and the tenant under the foregoing provisions hereof … shall be determined, in default of agreement, by arbitration under the [1986] Act’.  Under s 84(1)c of the 1986 Act any such arbitration was to be determined in accordance with that Act and not the Arbitration Act 1950.  The plaintiffs appealed against the stay, contending that notwithstanding s 84(1) of the 1986 Act the court retained a discretion under s 4 of the Arbitration Act 1950 with respect to staying court proceedings.

 

________________________________________

a    Paragraph 3 is set out at p 675 d, post

b    Paragraph 15 is set out at p 676 d e, post

c    Section 84(1) is set out at p 678 j to p 679 a, post

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Held

 

The effect of para 15 of the schedule to the 1973 regulations was to refer to compulsory arbitration under s 84 of the 1986 Act any dispute as to (i) the extent of the repairing obligations of a landlord and a tenant under Pts I and II of the schedule to the 1973 regulations respectively and (ii) the extent to which either the landlord or the tenant was in breach of those obligations.  Those questions had to be answered before a claim to either damages or specific performance could succeed.  However, since an arbitrator had no power to award specific performance the claimant was then obliged, having obtained a ruling from the arbitrator on the dispute as to the extent or breach of repairing obligations, to resort to the court to obtain a decree of specific performance.  In any event, on its true construction s 84(1) of the 1986 Act excluded the whole of the 1950 Act, including s 4, from applying to arbitration under the 1986 Act, with the result that the court had no discretion under the 1950 Act to permit the actions to continue and they had therefore been correctly stayed pending arbitration (see pp 681 d to f, p 682 e to j and p 683 b, post).

 

Kent v Conniff [1953] 1 All ER 155 distinguished.

Grayless v Watkinson [1990] 1 EGLR 6 considered.

 

Notes

 

For maintenance and repairing obligations under agricultural holdings, see 1(2) Halsburys Laws (4th edn reissue) paras 319–320, and for a case on the subject, see 2 Digest (Reissue) 13, 28.

 

For the Arbitration Act 1950, s 4, see 2 Halsbury’s Statutes (4th edn)(1992 reissue) 575.

 

For the Agricultural Holdings Act 1986, s 84, see 1 Halsburys Statutes (4th edn)(1989 reissue) 813.

 

For the Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1973, Sch, paras 3, 15, see 1 Halsburys Statutory Instruments 270, 273.

 

Cases referred to in judgment

 

Goodman v Winchester and Alton Rly plc [1984] 3 All ER 594,[1985] 1 WLR 141,[1984] ICR 842, CA.

 

Grayless v Watkinson [1990] 1 EGLR 6, CA.

 

Hill v Barclay (1810) 16 Ves 402,[1803–13] All ER Rep 379, 33 ER 1037, LC.

Jeune v Queens Cross Properties Ltd [1973] 3 All ER 97,[1974] Ch 97,[1973] 3 WLR 378.

 

Kent v Conniff [1953] 1 All ER 155,[1953] 1 QB 361,[1953] 2 WLR 41, CA.

Roper v Prudential Assurance Co Ltd [1992] 1 EGLR 5.

 

Appeals

 

Oscar Thomas Tustian and James Edgar Tustian, the plaintiffs in an action brought against the defendants, J M Johnston and the personal representative of Major E Robb deceased, and Mark Andrew Tustian, the plaintiff in an action brought against the defendants, James Middlemas Johnston and Anastasia Johnston, the trustees of the Eustace Robb Will Trust, appealed from the orders of Mr R A Bowman sitting as a deputy master of the Chancery Division on 17 September 1991 whereby he stayed all further proceedings in their actions against the defendants for relief in respect of claimed breaches of repairing obligations imposed on the defendants as landlords of Leys Farm, Great Tew, North Oxfordshire, of which the plaintiffs had been or were the tenants.  The appeal was heard in chambers but judgment was given by Knox J in open court.  The facts are set out in the judgment.

 

David Neuberger QC and Stephen Rubin (instructed by Burgess Salmon, Bristol) for the plaintiffs.

 

Guy Fetherstonhaugh (instructed by Hewitson Becke & Shaw, Northampton) for the defendants.

 

Cur adv vult

 

13 March 1992.  The following judgment was delivered.

 

KNOX J.  These are two appeals from orders made by Mr R A Bowman sitting as a deputy master on 17 September 1991 staying two actions brought by successive tenants of Leys Farm, Great Tew, North Oxfordshire against their landlords for relief in respect of claimed breaches by the landlords of their repairing obligations.

 

I am giving judgment in open court although the hearing was in chambers because a point of some importance has been argued before me and it is a point upon which there is no direct authority.

 

The factual background is as follows: the first of the two actions arises in respect of a tenancy agreement granted on 28 December 1961 whereby a normal  agricultural tenancy from year to year of Leys Farm was granted from Michaelmas 1959.  That tenancy agreement incorporated the provisions governing the liabilities of landlord and tenant in relation to maintenance, repairs and insurance of fixed equipment contained in the schedule to the Agriculture (Maintenance, Repair and Insurance of Fixed Equipment) Regulations 1948, SI 1948/184.  Those regulations were replaced at Michaelmas 1984 by similarly named 1972 regulations (SI 1973/1473), which the statement of claim in the first action claims thereafter governed the parties’ respective repairing and replacement obligations.

 

There was during the hearing an intimation of an intention to withdraw the statement that the 1973 regulations replaced the 1948 regulations so as to regulate the parties’ repairing liabilities, but no such amendment had yet been applied for.  I therefore deal with this matter on the footing that the 1973 regulations are the ones which are to be assumed to govern the matter.

 

The 1973 regulations were made basically under the Agricultural Holdings Act 1948, subsequently replaced by the similarly named 1986 Act.  Paragraph 3 of the schedule to these regulations provides:

 

‘The provisions set forth in the Schedule hereto relating to the maintenance, repair and insurance of fixed equipment shall be deemed to be incorporated in every contract of tenancy of an agricultural holding, whether made before or after the commencement of the Agricultural Holdings Act 1948, except in so far as they would impose on one of the parties to an agreement in writing a liability which under the agreement is imposed on the other …’

 

There is a proviso that I need not read because it has no effect on this case.

 

The schedule is divided into three parts.  Part I headed ‘Rights and Liabilities of the Landlord’ defines his liabilities to execute repairs and replacements under para 1 with a very long enumeration of the items of property that it is his obligation to repair.  Paragraph 2 governs insurance liability and para 3 a liability ‘to paint or gas-tar, creosote or otherwise effectively treat’ a variety of structures and other items of property.

 

Paragraph 4 contains in favour of the landlord a right to serve a written notice if the tenant does not comply with his repairing or replacing obligations under subsequent paragraphs of the schedule.  There is a scheme set forth for the service of a notice by the landlord specifying the necessary repairs or replacements and calling on the tenant to execute them in default of which the landlord is permitted to enter and execute the repairs or replacements himself and recover the reasonable costs from the tenant forthwith.  There is then provision for a counternotice to be served by the tenant if he wishes to contest his liability to execute any repairs or replacements specified in such a notice and requiring the question of liability in respect thereof to be determined by arbitration under the Act.  Once such a counternotice is served in due time, the operation of the notice is suspended until determination of the arbitration.

 

Part II of the schedule contains the rights and liabilities of the tenant and they reflect, but, of course, are mutually exclusive with, the rights and liabilities of the landlord.  I need not read the details of the repairing obligations that are imposed.  There is a corresponding provision governing failure by a landlord to execute repairs to what I have read from para 4, which, deals with the tenant’s failure to repair.  Paragraph 12(1) provides:

 

‘If the landlord fails to execute repairs which are his liability within three months of receiving from the tenant a written notice specifying the necessary repairs and calling on him to execute them, the tenant may execute such repairs and, except to the extent to which under the terms of Part I hereof the tenant is liable to bear the cost, recover the reasonable cost from the landlord forthwith.’

 

Sub-paragraph (2) deals in a somewhat more complex manner with the landlord’s failure to execute any replacements as opposed to repairs.  In that case the tenant again is given a power to ‘execute such replacements and … recover the reasonable cost …’; but there is a proviso imposed that the tenant ‘shall not be entitled to recover in respect of the aggregate of the replacements so executed by him in any year of the tenancy any sum in excess of …’ and then there are further figures given.  That is a provision which has in fact subsequently been amended, but nothing turns on the precise terms of those amendments.

 

The landlord in parallel with the situation that governs a tenant’s failure is given a power to contest his liability to execute any repairs or replacements specified in a notice served on him by the tenant by a counternotice and if that requires the question of liability to be determined by arbitration then the operation of the original notice is suspended until the termination of the arbitration in question.

 

There are then some general provisions in Pt III which are incorporated by reg 3 of the 1973 regulations and one in particular is of great importance to this case and that is para 15, which reads:

 

‘If any claim, question or difference shall arise between the landlord and the tenant under the foregoing provisions hereof, not being a matter which, otherwise than under the provisions of this paragraph, is required by or by virtue of the Act or section 19 of the Agriculture (Miscellaneous Provisions) Act 1963 (notice to remedy breach of tenancy agreement) or regulations or orders made thereunder or the foregoing provisions hereof to be determined by arbitration under the Act, such claim, question or difference shall be determined, in default of agreement, by arbitration under the Act.’

 

The ‘Act’ means the Agricultural Holdings Act 1948.  There is thus a general provision for determination by arbitration of any claim, question or difference between the landlord and the tenant under the foregoing provisions, that is to say of the foregoing provisions in Pts I and II and potentially the earlier parts of Pt III of the schedule to the 1973 regulations.

 

To return to the facts of this case, the reversion on the first tenancy vested in the defendants to both the actions before me who are the personal representatives of a Major Robb in whom the reversion was vested at the date of his death in August 1985.  The plaintiffs in the first action (Oscar and James Tustian) gave notice of intention to retire by a notice dated 18 September 1986 to take effect at Michaelmas 1987 with the plaintiff in the second action (Mark Tustian, who is the son of James Tustian, one of the plaintiffs in the first action) as the nominated successor.  That right was disputed by the defendants and decided in favour of the plaintiffs by the Agricultural Lands Tribunal, south eastern area, by a decision that was sent to the parties on 8 January 1988.  In the course of that decision the tribunal said:

 

‘It is accepted on behalf of the landlord … that no substantial works of repair have been done by the landlord to the buildings on the holding between the granting of the original tenancy and the present day.  This was borne out by our inspection of the holding which revealed the farm buildings to be in a lamentable state of disrepair.’

 

It goes on to describe some of that disrepair and to mention that the tribunal was informed that the landlord had received insurance moneys in respect of a fire but as was apparent on inspection, the roof (which was the subject of the fire) had not been replaced.

 

There is therefore strong prima facie evidence of a long period of disregard of the defendants and their predecessors’ repairing obligations in respect of the farm.

 

The first action brought by Oscar and James Tustian was started by writ not long after the date of the succession, that is to say on 19 November 1987.  The statement of claim was not in fact served until 27 November 1990.  Nothing turns on that because it was at any rate for a long period during that period a matter of non-objection.  The relief that is sought in the first action is based on the breaches of repairing obligations, both by the late Major Robb and after his death by his personal representatives, of which details are given to which I need not refer.  It is pleaded that the plaintiffs have suffered loss and damage and the value of the farm to the plaintiffs has been greatly diminished as a result of those claimed breaches of repairing obligations.  In particular, it is claimed that the dilapidated state of the farm made it unnecessarily difficult to run the farming business, that the defendants had failed to carry out maintenance repairs and replacements to the value of £456,021 or thereabouts and that the plaintiffs in that action had been unable to provide accommodation for their herdsman and, therefore, had discontinued with their milk production.

 

On that the claims of the plaintiffs are limited to damages and interest under s 35A of the Supreme Court Act 1981.

 

The second action concerns the tenancy agreement that was granted pursuant to the agricultural lands tribunal’s finding regarding succession, by an agreement dated 24 February 1989 in favour of the plaintiff in the second action, Mark Tustian.  That is a lengthy form of agricultural tenancy agreement which includes obligations on the tenant and the landlord by reference to the repairing obligations in the 1973 regulations.  Clause 33(a) contained a covenant by the tenant—

 

‘Except where varied by or inconsistent with other provisions hereof to comply with the liabilities of a tenant to maintain, repair and replace the fixed equipment of the holding in accordance with [the 1973 regulations]…’

 

Similarly, cl 55(a) contains an agreement by the landlord to perform and observe an obligation to comply with the liabilities of a landlord under the 1973 regulations.

 

Clause 69 contains a separate arbitration provision which reads:

 

‘Any question difference or dispute which may arise between the Landlord and Tenant hereunder not being a matter compulsorily referred to arbitration under the Agricultural Holdings Act 1986 shall if the parties cannot settle it by agreement be referred to a single arbitrator to be appointed under the Arbitration Acts 1950 and 1979 by the parties or in default of agreement on such appointment by the President for the time being of the Royal Institution of Chartered Surveyors on the application of the Landlord or Tenant.’

 

There is set out for convenience in the second schedule to the tenancy agreement Pts I, II and III of the 1973 regulations.  The latter, of course, includes para 15, which I have already read in the context of the first tenancy agreement and need not repeat at this stage.

 

Here again, continuing disrepair is alleged in the statement of claim which was served at the same time as the statement of claim in the first action, the writ having been served in the second action on 21 September 1990.  The claim here is not limited to damages, although there is a claim to damages and interest as in the first action, but in the second action there is also a claim to an order ‘that the defendant remedy all the wants of repair and make the replacements set forth in a schedule of landlords wants of repair’.  The ‘wants of repair’ are effectively the same as those relied upon in the first action.

 

In both actions the defendants, who have not, it is accepted, taken a step in the action and therefore have not served a defence, have put in evidence to show that they put in issue the disrepair and also the extent of loss that may have been  suffered by the respective plaintiffs in respect of any breach by the defendants or their predecessors.  It is evident that there may be more doubt about the second, that is to say the loss, than about the existence of a substantial amount of disrepair in respect of which the findings of the agricultural lands tribunal need not be repeated.

 

A further factual matter which needs recording is that there is positive evidence of considerable impecuniosity on the part of one of the plaintiffs in the first action (James Tustian) and of the plaintiff in the second action.  James Tustian bought out Oscar Tustian’s interest in the tenancy in September 1975, so that the other plaintiff in the first action, Oscar Tustian, has no beneficial interest; but since he was a party to the tenancy agreement he has been joined as a party to the action.  In relation to James Tustian, who is the effective plaintiff in that action, there is evidence before me that he and his wife have no savings and that their impecuniosity has been caused or contributed to by the defendants’ breaches of their obligations in that the failures to repair have reduced the earning capacity of the farm.

 

Closely similar evidence is before me regarding Mark Tustian, the son of James Tustian, although it is said there that he has some savings.  The actual evidence is that he has savings of no more than £550.  In both cases there is evidence that there is no third party support from, in particular, the National Farmers Union to be obtained by either plaintiff.  Some details are given of that, but I need not go into that aspect of the matter.  There is also evidence that arbitration would, in the particular circumstances of this case, be likely to be expensive.  The obvious factor is that arbitrators have to be paid for and so do legal assessors if, as is at least possible, such assistance is needed by the arbitrator.  It is not in doubt that there would have to be a substantial hearing to decide the issues, whether it be an arbitration or litigation.  The estimate before me is one of three weeks and in that context one is not surprised to find evidence (as there is) of the costs of the hearing on any arbitration alone possibly amounting to some £12,000 to £14,400 for the arbitrator and legal assessor.  That, of course, does not include the parties’ own and separate costs.

 

The defendants issued a summons for stay in both actions and it is the decision of the deputy master granting such a stay on 17 September last that is the basis of this appeal.

 

It will be convenient to deal with the second action first.  The Agricultural Holdings Act 1986, which now governs the position, is the Act that makes provision for what are called model clauses in s 7 and makes the provision for regulations to be made that replaces the earlier provision under the 1948 Act to a similar effect.  There are provisions for arbitration in relation to both aspects, that is to say disputes concerning the model clauses’ applicability and in relation to the right that tenants have to a written tenancy agreement.  Under s 6 there is provision for the terms of a tenancy to be submitted to arbitration under the Act in case of disagreement.  Under s 8 there is provision for reference of the terms of the tenancy to arbitration if either the landlord or the tenant of the holding has requested the other to vary the terms so as to bring them into conformity with the model clauses.  No agreement has been reached on that request.

 

It was pointed out in argument that the ambit of the arbitration and what the arbitrator has to consider is quite closely defined in the provisions of ss 6 and 8.  I do not think it is necessary for me to read those sections in detail.

 

Section 84 of the 1986 Act deals with arbitrations under the Act.  Subsection (1) says:

 

‘Any matter which by or by virtue of this Act or regulations made under this Act is required to be determined by arbitration under the Act shall, notwithstanding any agreement (under a contract of tenancy or otherwise)  providing for a different method of arbitration, be determined by the arbitration of a single arbitrator in accordance with the provisions of any order under this section, together with the provisions of Schedule 11 to this Act (as for the time being in force); and the Arbitration Act 1950 shall not apply to any such arbitration.’

 

Although that is an Act which is subsequent to the first tenancy agreement, because of the transitional provisions in s 99 that provision in s 84 is to be treated as operative in relation to both the actions.

 

Schedule 11 contains (as one would expect) the provisions for the conduct of the arbitrations under the Act.

 

Section 97 was relied on by the plaintiffs in the action.  It provides:

 

‘Subject to sections 15(5) and 83(1) above in particular, and to any other provision of this Act which otherwise expressly provides, nothing in this Act shall prejudicially affect any power, right or remedy of a landlord, tenant or other person vested in or exercisable by him by virtue of any other Act or law or under any custom of the country or otherwise, in respect of a contract of tenancy or other contract, or of any improvements, deteriorations, waste, emblements, tillages, away-going crops, fixtures, tax, rate, tithe rentcharge, rent or other thing.’

 

What is insisted upon is the remedy of a tenant as being preserved unless expressly removed by a provision of the 1986 Act.

 

The question which arises is how far the claims in the second action in particular are the subject of the compulsory arbitration provision which, as a result of s 84(1) of the 1986 Act, para 15 may require to be under the Act rather than under the Arbitration Act 1950.  That is the first and principal question upon which there is no helpful authority.

 

I was referred to Kent v Conniff [1953] 1 All ER 155,[1953] 1 QB 361, which was a case under the 1948 regulations.  In that case the tenants had committed breaches of their repairing covenants.  The landlords served a schedule of dilapidations and a s 146 notice under the Law of Property Act 1925.  The tenants failed to comply.  The landlord issued a writ claiming forfeiture and damages and the tenants argued that, by reason of s 57 of the 1948 Act (which is now replaced by s 71 of the 1986 Act) which provides for compensation when a tenant quits the holding, the landlord was limited to that right of compensation on quitting the holding and that, therefore, his claim for damages was premature.

 

The Court of Appeal held against that argument and Singleton LJ said ([1953] 1 All ER 155 at 157–158,[1953] 1 QB 361 at 371–372):

 

‘There is nothing in s. 57 which compels a landlord who has a right of action for damages for breaches of covenant in a lease or in a tenancy agreement to resort to arbitration if the breaches of covenant and the right of action arise during the tenancy.  Prima facie, he has a right of action in the courts when the breach takes place.  It is common ground that he might have a right to an injunction, but it is said on behalf of the tenants that by reason of s. 57 he cannot recover damages in an action in which he is granted an injunction.  I do not agree.  I draw attention to the fact that this action, in which forfeiture and damages were claimed, was commenced on May 11, 1951, whereas the tenancy continues until March, 1953.  The effect of s. 65 is to provide that neither tenant nor landlord can have any other remedy than compensation under the Act in any case for which the provisions of the Act provide for compensation, and it avoids any agreement to the contrary.  It does not appear to me to have any bearing on this appeal unless it can be said that s. 57 provides compensation for the breaches of which the landlord complains, breaches which, on the findings of the judge, arose long before  the termination of the tenancy.  And I have expressed my opinion that the landlord’s claim did not arise under s. 57, and certainly he has not exercised the option given to him by sub-s.(3) of that section.  If the legislature had thought fit, it would have been simple to say that there should be no right to recover damages for a breach of covenant in any tenancy agreement in relation to an agricultural holding, but that any such claim should be treated as a claim to compensation (and should be postponed until the termination of the tenancy).’

 

It was accepted by Mr Neuberger QC on behalf of the plaintiffs that that case is distinguishable (as indeed it clearly is) because the regulations there in question, those under the 1948 regulations, did not contain as the 1973 regulations do any provision for arbitration and, in particular, what is now para 15 in the schedule to the 1975 regulations has no counterpart at all in the 1948 regulations.  So that all that one finds in the 1948 regulations is provisions which are parallel to, but a good deal simpler and shorter to those in Pts I and II of the 1973 regulations imposing and conferring rights and liabilities on the landlord and the tenant respectively.

 

For that reason I do not derive any significant assistance from the decision in Kent v Conniff [1953] 1 All ER 155,[1953] 1 QB 361 on the question how far the arbitration provisions, in particular in para 15, exclude resort by either landlord or tenant to the courts.

 

Even less guidance (if possible) is to be derived from another decision to which I was referred, Roper v Prudential Assurance Co Ltd [1992] 1 EGLR 5, where Mr Edward Evans-Lombe QC, sitting as a deputy judge of the High Court in the Queen’s Bench Division, construed in an action the expression ‘electrical wiring’ in a tenant’s repairing obligations under an agreement in respect of a farming tenancy.  There was no suggestion that it was argued there that there was a compulsory submission to arbitration.  The point was not raised and it seems a priori at least possible, if not probable, that the parties had actually agreed that the matter should be determined by the court.  Certainly there is no assistance to be derived on the question of the extent to which the arbitration provisions in para 15 operate to exclude recourse to the courts by either landlord or tenant.

 

It was submitted for the tenant that specific performance of a repairing obligation is not a remedy that an arbitrator acting under para 15 can award.  That was accepted as a proposition, but the parties drew different conclusions from that state of affairs.

 

For the tenant it was argued that this effectively concluded the question whether there should be a stay in favour of there not being a stay because, it was argued, that means that there is thus a remedy which is preserved by s 97 of the 1986 Act (which I have read and need not repeat).  For the landlord it was argued that the effect is that specific performance is not an available remedy for the tenant who is nevertheless bound by para 15 to submit all questions arising under the regulations imposing repairing obligations to arbitration and that the remedy of specific performance thereby is simply not available.  In the alternative it was submitted that at best there would be a two stage operation whereby the questions of extent of liability and breach would be referred to arbitration as a first stage.

 

I assume for present purposes that the remedy of specific performance is available.  This is not an entirely straightforward point.  The Landlord and Tenant Act 1985 by s 17 suggests a certain degree of parliamentary doubt as to the general availability of such a remedy.  Subsection (1) provides:

 

‘In proceedings in which a tenant of a dwelling alleges a breach on the part of his landlord of a repairing covenant relating to any part of the premises in which the dwelling is comprised, the court may order specific performance of the covenant whether or not the breach relates to a part of the premises let to the tenant and notwithstanding any equitable rule restricting the scope of the remedy, whether on the basis of a lack of mutuality or otherwise.’

 

That, of course, is not directly in point here because there is not here a letting of a dwelling and equally that provision does not apply to lettings under Pt II of the Landlord and Tenant Act 1954 because of the specific provisions to that effect in s 32(1) of the 1985 Act.

 

On the other hand, in Jeune v Queens Cross Properties Ltd [1973] 3 All ER 97,[1974] Ch 97 Pennycuick V-C held that there was power to order a landlord to do specific work under a covenant to repair, notwithstanding an old rule which he treated as established by Lord Eldon LC’s decision in Hill v Barclay (1810) 16 Ves 402,[1803–13] All ER Rep 379 that a landlord cannot obtain a decree for specific performance against a tenant to enforce the tenant’s repairing covenant.

 

I do not propose to go further into that question of the availability of specific performance to a tenant in an agricultural tenancy, but to assume for the purposes of my judgment that the remedy is one which is at least arguably available to such a tenant.

 

In my judgment para 15 has at any rate this effect: it refers to compulsory arbitration (a) the extent of a landlord’s and tenant’s repairing obligations under Pts I and II of the schedule to the 1973 regulations respectively,(b) the extent to which either the landlord or the tenant is in breach of those obligations.  It seems to me that these are questions which have to be answered before a claim either to damages or to specific performance can succeed.  That in my view drives me to the conclusion that the compulsory arbitration provisions apply in relation to those proceedings for either damages or specific performance at any rate up to the stage of establishing (a) obligation and (b) breach of the obligation.  It follows from the concession (which in my view was rightly made) that an arbitrator acting under para 15 has no power to award specific performance, that if, as here, the landlords are prepared to fight or, at any rate, to refuse to compromise to the last ditch, there has to be a two stage form or proceedings for an action for specific performance to succeed, the first stage being that of compulsory arbitration, the second stage being resort to the court to obtain a decree of specific performance; and, although this is a somewhat unattractive prospect, it is not an unprecedented one.

 

An example (to which I was referred) was in Grayless v Watkinson [1990] 1 EGLR 6, where the respondent was the tenant and the appellant was the landlord.  The issue was the replacement of a roof which so far as repair was concerned would have been the responsibility of the tenant who had entered into a wide repairing obligation, but was found on the facts not to be in need of repair, but of replacement.  The matter went to arbitration when the landlord served a notice on the tenant requiring the tenant to repair the roof and the arbitrator awarded that the barn roof required renewal and that this was not the liability of the tenant.  That was accepted by the appellant landlord as being binding on him and that, therefore, the replacement liability was his under the 1973 regulations.

 

The next stage was that the tenant by a notice required the landlord to renew the barn roof as being incapable of repair and gave notice that if he failed to do so within the prescribed time the tenant would exercise his right under the 1973 regulations to execute the repairs or replacements and recover the reasonable cost thereof.  The landlord did not do the work, the tenant did, at a cost of some £7,992 and then brought proceedings in the Barrow-in-Furness County Court to recover the full sum of £7,992 by way of damages for breach of contract and/or statutory duty.  The landlord denied liability (which did not arise before the Court of Appeal) but also pleaded a limitation on his liability under the specific provisions in the 1973 regulations, para 12(2) of the schedule to which I have earlier referred to.  The tenant’s answer to that in his reply was that the procedures  under para 12(2) were optional and did not affect his claim for damages.  In those circumstances Dillon LJ said ([1990] 1 EGLR 6 at 7):

 

‘The recorder gave judgment for the respondent for the full amount of £7,992.50 claimed, together with interest.  He accepted an argument from counsel for the respondent—foreshadowed, I apprehend in the reply—that, if the landlord has a liability to the tenant under the 1973 regulations to replace the roof of the barn, the tenant has remedies at common law in addition to his option under para 12(2) and so, having himself done the work, can recover the reasonable cost from the landlord at common law, without having to submit to the restriction on the landlord’s liability in the final proviso in para 12(2).  One of the troubles about that argument, however, is that it would deprive the final proviso in para 12(2) of all effect, except where the tenant, being ill-advised, chose to agree to the landlord’s liability being limited by the proviso.  The true position, as I see it, is that para 12(2) is the sole source of the tenant’s right to recover the cost of replacing the barn roof from the landlord, and the tenant must accept para 12(2) as a whole, including the proviso.  The only liability of the appellant as landlord which is available for the respondent as tenant to enforce where the respondent has carried out works after the appellant had failed to do so is a liability qualified by the proviso.’

 

The Court of Appeal went on to deal with the actual operation of the proviso which is not a matter that is of direct relevance to this case.

 

That decision in my judgment establishes at least two things: first, that there can very well be situations where one has to start with an arbitration award before bringing an action on the basis of what is found in the award.  That is in fact what happened in that case.  There is nothing in the decision to indicate that any point was taken in the action, that it should have been the subject of arbitration, so the decision is neutral on that aspect of the matter.

 

Secondly, the Court of Appeal decision shows that where the regulations (in that case para 12) apply to confer a remedy, there is pro tanto an exclusion of common law remedies that overlap.  It is not conclusive in this case as a decision because the remedy of specific performance is admitted not to be available under para 15 and to that extent Grayless v Watkinson [1990] 1 EGLR 6 is clearly distinguishable.  Nevertheless, the legislative intention which can in my view be discerned behind the regulations seems to be that there should be compulsory arbitration on the issues of the extent of a repairing obligation and the existence of a breach of those obligations. It would in my view be hopelessly unsatisfactory to allow simultaneous court proceedings for specific performance with arbitration on the question whether the obligation had been breached.  For that fundamental reason I have reached the conclusion that the orders staying these actions were correctly made.

 

It follows that I do not in my view have a discretion under s 4 of the Arbitration Act 1950.  I reject the argument that was advanced, that when s 84(1) excludes the 1950 Act it does not exclude s 4 thereof, which deals with arbitration agreements rather than with the mechanics and procedure for arbitration.  That seems to me too subtle for me to apprehend.  The 1950 Act seems to me to be excluded lock, stock and barrel and, in particular, including s 4.

 

Had I had a discretion I should (it was agreed) have been entitled to treat as a relevant factor, but no more, the impecuniosity of one plaintiff in the first action and the only plaintiff in the second action which is claimed to have been caused by the defendant’s breach of obligations.  Goodman v Winchester and Alton Rly plc [1984] 3 All ER 594,[1985] 1 WLR 141 is the authority for that.

 

The situation that I am left with, I freely accept, is not an entirely satisfactory one because there are indications that the defendants have not only blatantly disregarded their repairing obligations in the past, but may well be relying on their financial muscle to avoid consequential liabilities.  But that has not been proved before me and, in any event, is a matter for them to consider.  I have to administer the law and the law seems to me to impose a compulsory arbitration to the extent to which I have indicated.  Whether account has fully been taken of the singular fact produced by the incidence of the legal aid scheme, that litigation is very much cheaper for an impecunious plaintiff than arbitration, is not something with which I am directly concerned.  The appeals will be dismissed.

 

Appeals dismissed.

 

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