Agriculture (Miscellaneous Provisions) Act 1976 — Appeal by case stated from decision of agricultural land tribunal — Landlords’ appeal from tribunal’s interim decision in favour of applicant (deceased tenant’s daughter) on the deemed eligibility test in section 21(1)(b) — ‘Satisfied to a material extent’ — ‘That strange, almost weird subsection (1)(b)’ — Applicant and her husband were jointly running the deceased tenant’s holding, the husband doing the heavy work — In determining the extent to which the ‘only or principal livelihood’ test was satisfied, the tribunal had to make a comparison between the value of what the applicant derived from the holding and her total livelihood — Unfortunately, in analysing the relevant information in a complex schedule the tribunal made an incorrect comparison, taking half of pooled gross receipts as representing her livelihood from the holding — Tribunal also misdirected themselves in law by asking the wrong question — It was not whether the payments represented ‘an important contribution towards her livelihood’, but whether the value constituted ‘an important satisfaction of the 51% requirement’ — Judge Fay’s decision in Littlewood v Rolfe followed in principle — Case remitted to tribunal for reconsideration
This was an appeal
by case stated by the Trustees of the Eighth Earl Spencer’s 1968 Settlement,
the landlords, from an interim decision of the Agricultural Land Tribunal for
the Eastern Area that the applicant, Mrs Kathleen Margaret Wilson, should be
treated as eligible under section 21 of the 1976 Act. The holding in respect of
which the application was made was Glassthorpe Hill Farm, Harpole, Northampton,
a holding of 53.40 hectares.
Derek Wood QC
and Edward Cole (instructed by Becke Phipps, of Northampton) appeared on behalf
of the appellant trustees; Joanne Moss (instructed by Toller, Hales &
Collcutt, of Wellingborough) represented the respondent, Mrs Wilson.
Giving
judgment, HODGSON J said: This is an appeal by a landowner by case stated from
the interim decision of an agricultural land tribunal given on May 28 1983. The
agricultural land tribunal were faced with an application by Kathleen Margaret
Wilson under what I might call the inheritance provisions of the Agriculture
(Miscellaneous Provisions) Act 1976.
In issue
before the tribunal was the question whether, as she asserted, the respondent
could satisfy the full eligibility test under
provisions in section 21 of the Act; whether, if she did satisfy deemed
eligibility under section 21 of the Act, it was fair and reasonable for the
tribunal to give a direction; and, if she succeeded on either of those
alternative issues, whether the farming test of suitability under section 20(2)
of the Act was satisfied.
All those were
put in issue by the respondent, and the tribunal decided, sensibly, that they
would divide the application into two and deal first with the questions which
arose under sections 18 and 21, and, if the respondent succeeded on those
issues or one of them, to return at a later date to the suitability issue under
section 20(2). In the event, the tribunal decided in favour of the respondent
on the basis of the deemed eligibility test under section 21(1)(b), and it is
from that interim decision that the landowners now appeal.
The holding
concerned is known as Glassthorpe Hill Farm, and the tenant was a Mr Oakes, who
died on May 17 1982. The respondent is his daughter. The landlords, on the
death of Mr Oakes, gave notice to quit under Case G and the respondent made the
applications to which I have referred for a direction of entitlement.
As is not
uncommon in the farming community, the respondent and her husband had a
patchwork of interests and holdings in the area, and it was contended before
the tribunal that the holding in issue was part of an agricultural unit. But
that contention by the respondent failed and is not now in issue. The tribunal
also held that the respondent did not fulfil the requirements of section 18,
and that decision is in issue no longer.
Before I come
to the facts of this case, I think I ought briefly to sketch the statutory
background. The provisions for succession to a tenancy on the death of a tenant
are contained in sections 18 to 24 of the Act. Section 20(1) provides:
Any eligible
person may within the relevant period apply to the Tribunal for a direction
entitling him to a tenancy of the holding.
The definition
of ‘eligible person’ appears in section 18. That definition reads:
‘eligible
person’ means . . . a survivor of the deceased in whose case the following
conditions are satisfied — (a) he falls within paragraphs (a) to (d) of
subsection (1) above.
Those
subsections detail the relationships, and it is not in dispute that the
respondent here comes within them. Then (b) reads:
in the seven
years ending with the date of death his only or principal source of livelihood
throughout a continuous period of not less than five years . . . derived from
his agricultural work on the holding . . . and (c) he is not the occupier of a
commercial unit of agricultural land . . . .
There is no
suggestion that this respondent came within (c), and she fulfils (a). The first
question before the tribunal turned on whether she could bring herself within
(b).
I have not
heard argument as to the meaning of ‘principal source of livelihood’, but I am
told, and I accept, that tribunals assume that by that phrase Parliament
intended to define a situation in which the source of livelihood from the
holding was at least 50% of the applicant’s total livelihood. If an applicant
is unable to bring himself within the definition of eligible person, there is a
fallback provision in section 21(1), which reads:
This section
applies to any survivor of the deceased who for some part of the seven years
ending with the date of death engaged (whether full-time or part-time) in
agricultural work on the holding, being a person in whose case — (a) the
conditions specified in paragraphs (a) and (c) of the definition of ‘eligible
person’ in section 18(2) of this Act are satisfied; and (b) the condition
specified in paragraph (b) of that definition, though not fully satisfied, is
satisfied to a material extent.
It is that strange,
almost weird, subsection (1)(b) which has caused tribunals and the court great
difficulty in the past. The difficulty largely arises from the use of the word
‘material’ in that subsection. I return to the legal position when I have
outlined the facts of this case.
Looking at the
case stated, first of all, there are set out the various holdings and interests
in the holdings which the respondent and her husband had. Those are shown on
the map, and the financial details of those separate holdings or ventures are
conveniently set out in the schedule to the case stated.
At para (a)
the tribunal found — and this is no longer in dispute — that the holding was
not in fact farmed as part of an agricultural unit with any other land. The
tribunal then went on to make the following important findings of fact:
(9) For many
years the applicant worked on the holding and in particular from 1973 onwards
the holding had been effectively farmed for the deceased by the applicant and
her husband.
(10) The
applicant had spent approximately four hours each day on the holding engaged in
agricultural work milking the cattle and looking after the sheep and she was
responsible for buying and selling, dealing with merchants, rearing the calves
and doing the accounts. The applicant’s husband did the heavy work on the
holding as a contractor.
(11) The
applicant throughout the material period received from the deceased for her
work certain fringe benefits in kind including groceries, petrol and milk.
(12) The
value of these benefits in kind cannot be quantified in cash terms.
(13) In the
view of the majority of the tribunal the sums received from the deceased that
were paid to Mr Wilson did include a payment to Mrs Wilson for the work she did
for the deceased for the years 1973 onwards, when she and her husband were
effectively running the deceased’s holding. She was doing a minimum of four
hours work a day for the deceased, seven days a week. Her husband did the heavy
work. It was a joint effort. It is right to regard half of the payments made by
the deceased to Mr Wilson as representing a payment for the applicant’s
agricultural work.
There, in that
paragraph, is a plain finding of fact that, of the sums paid to Mr Wilson and
included in his own accounts, half represented the wage earned by the
respondent in doing the agricultural work on the holding.
Para (14)
reads:
The deceased
paid the applicant’s husband by monthly cheque and this was used for
housekeeping.
Then, in the
case, one comes to what is in effect the ratio decidendi of the tribunal’s
decision, and it is this paragraph [para (15)] which is at the centre of the
controversy in this case. It reads:
In the view
of the majority of the tribunal half the payments received by the applicant’s
husband, together with the benefits in kind which cannot be quantified, when
set against the applicant’s income from all other sources represented to her an
important contribution to her livelihood and did so from 1975 onwards.
One cannot, I
think, understand that paragraph so far as it consists of a finding of fact
without reference to the schedule. The schedule is in seven columns, and in
each column from April 5 1975 to April 5 1981 is set out a sum in pounds.
Column 1 sets out the net profit from land owned by the respondent herself.
Column 2 shows the profits from land owned jointly by the respondent and her
husband. Column 3 shows the profits from the husband’s own separate farming
venture and also from his contracting venture. The contracting venture
consisted entirely of the heavy work which the respondent’s husband did on the
holding. Leaving out for the moment column 4, column 5 sets out the
respondent’s unearned income. Column 6 shows the total of those four columns.
Those four columns so totalled represent the total income in any one year of
both the respondent and her husband.
Then in column
4 is shown a somewhat different figure. That is the gross contract receipts
paid to the respondent’s husband in respect of the holding. They originated
from the accounts of the late Mr Oakes, and they are the gross payments made to
the husband in respect of his work on the holding and also the respondent’s
work on the holding. It is clear that the tribunal took, and took properly,
half of that sum as representing in any one year the wage earned by the
respondent in her work on the farm.
In column 7
the simple arithmetical calculation is made of halving the total pooled
resources in column 6, and it is clear that it is that figure that the tribunal
took as being the total livelihood of the respondent. Had that not been so,
there would have been no point in having column 7, which, as I have said, is a
piece of simple arithmetic.
What the
tribunal were doing in para (15) was this. They were looking at half column 4
plus the fringe benefits and setting that against what they called the
respondent’s income from all other sources. That, I think, can only mean that
they were looking at half column 4 against the figures in column 7, presumably
after deduction of the figure in column 4, because they speak about ‘all other
sources’, and that must be other sources than those in column 4.
To take the
whole of the halved column 4 figure as representing the livelihood from the
holding of the respondent seems to me to be wrong. It was wrong to apply a
different criterion from all the other figures. That figure was shared equally
between the respondent and her husband just as all the other figures or sums
were.
As I have
said, it was para (15) which is particularly under attack and to which I must
return when I have considered the legal position. But before doing so I should
refer to some further calculations, the mathematical accuracy of which is not
in dispute, which have been provided to me. One of them shows a quarter of
column 4 as a
were, between herself and her husband as a percentage of the total pooled
income. That shows that the percentages for five of the seven relevant years
(and I should say that there are no accounts for the relevant year 1982) varied
between nearly 14% and just over 21%. In 1981, where the schedule shows two
peculiarities, namely, an unexplained and enormous drop in the profit in the
joint account and no figures for unearned income, the percentage was just about
47 1/2.
As I have
said, section 21(1)(b) of the Act has, not particularly surprisingly, caused
tribunals and the court trouble and causes me trouble. However, after various
tribunals up and down the country had struggled with this section, an appeal
was taken to His Honour Judge Fay, sitting as a deputy judge of the High Court,
in the case of Littlewood v Rolfe [1981] 2 All ER 51*. That was a
case (and this, I think, is all I need to say about the facts) where the
applicant had failed to come within section 18 on what I might call the period
factor. The period that could there be established was only one of 44 1/2
months, though during that 44 1/2 months the requirement as to livelihood was
fully satisfied.
*Editor’s
note — Also reported at (1980) 258 EG 168.
Having
referred to the case of Jackson v Hall [1980] AC 854 (a decision
which has been cited to me but from which I do not gain much, if any,
assistance), the learned judge continued and set out the reasoning in the
decisions of four tribunals to which he had been referred. I think it is
worthwhile citing the whole of that passage:
Tribunals
have, however, been wrestling with section 21 and hearing argument on it for
some time.
He then set
out the reasoning in the four decisions. First Judge v Umpleby
(1978) [a Yorkshire/Lancashire Area Tribunal decision]:
It was
accepted by Mr Maguire that the provision in s 21(1)(b) of the Act that this
condition need only be satisfied to a material extent applied not only to the period
during which the applicant’s source of livelihood had derived from her work on
the holding, but also to the extent to which her livelihood had so
derived. In other words, he accepted that it would be sufficient for the
applicant to show that throughout the period in question, or some material part
thereof, a material source of her livelihood had derived from her agricultural
work on the holding, although it fell short of being her only or principal
source of livelihood. In making this concession, Mr Maguire said that he did so
in the light of section 21(6) of the Act. In the view of the tribunal this
concession was rightly and properly made, and represented a correct
interpretation of the relevant law.
Pausing there
for a moment, I am deeply envious of Mr Maguire in that he could see some light
in section 21(6) of the Act. I have looked at it a number of times and had such
assistance as counsel could give me on it. Frankly, I simply do not know what
it is meant to achieve and I do not refer to it again in this judgment.
The learned
judge went on citing from the tribunal’s decision in Judge v Umpleby:
In para 31:
‘The tribunal did not consider it possible or realistic to make any precise
mathematical calculations of the extent to which any of these other benefits
could be said to have been attributable to the applicant’s work on the holding.
Accordingly it was in our view impossible to say that we were satisfied that
for at least five out of seven years ending with her father’s death the
applicant had derived her principal source of livelihood from her
agricultural work in the holding. However, we were quite satisfied that for at
least five of these years she had derived a material source of
livelihood from her agricultural work on the holding or (to put it in a
slightly different way) had derived her livelihood from such work to a material
extent. In other words, but for the rewards in cash and kind that she received
for her agricultural work on the holding, she would have been materially worse
off throughout this period.’
Next he cited
a passage from another case, Dagg v Lovett (1979): [a Northern
Area Tribunal decision]:
This section
that is
section 21(2)
of the 1976
Act provides for applicants to be treated as eligible where they cannot show
that they fully satisfy the requirements of
para (b) of
the definition of ‘eligible person’ in section 18(2)
but can show
that they satisfy these requirements to a material extent. What then is to be
taken to be the interpretation of the word ‘material’ in this context? Mr Price
suggested that it was to be taken to mean ‘more than minimal’; ‘there was,’ he
said, ‘salt in seawater to a material extent in the ordinary meaning of the
word.’ The tribunal did not take this view. It surely could not be the
intention of the Act that applicants who clearly failed to pass the first
hurdle should be admitted under this section. If it were, what would be the
value of the test at
para (b)?
Its effect
would be stultified. This tribunal take the view that the meaning to be given
to the word ‘material’ in this section is ‘substantial in terms of time and
important in terms of value’.
That is the
definition of ‘material’ which in fact, as we shall see later, Judge Fay
adopted. But it is important to notice that in that decision the tribunal were
applying a test as to the extent to which the applicant had failed to pass, as
they called it, the hurdle in section 18 and to that extent it forms, I think,
an important part of Mr Wood’s argument.
Next the learned
judge cited a passage from Colson v Midwood (1979) in which the
Eastern Area Tribunal said:
‘ . . . the
conditions . . ., though not fully satisfied, [are] satisfied to a material
extent’ (s21(1)(b)). This provision is applicable both to cases where there is
a failure to satisfy
para (b) of
the definition of ‘eligible person’ in s 18(2)
as to
proportion of livelihood coming from agricultural work and to the period. There
have been conflicting decisions but in our opinion s 21(6) makes the matter
clear. As to what is a material extent, either as to amount or period, we do
not think that this means that the source of livelihood must be shown to be
only just below 51% or the period to be very nearly 60 months. But on the other
hand we do not think it is enough for an applicant to show merely that a
‘substantial’ proportion of his (or her) livelihood has come from agricultural
work or, as the case may be, that such has been the position for a substantial
part of the full five-year period. If this had been all that was required the
section could, and indeed surely would, have been quite differently and much
more simply worded. Again hard and fast lines cannot be drawn but in our
opinion though an applicant need not show that he (or she) has come ‘within a hair’s
breadth’ of full compliance it must be shown on the facts that there has not
been a really large failure.
Once again,
pausing there, whether or not the test as to materiality is correctly stated by
the tribunal, they are once again looking at it, and in my judgment looking at
it properly, in the context of the extent of failure.
Finally the
learned judge cited a passage from a South-Eastern Area Tribunal decision [Clark
v Bernard (1980)]:
The personal
aspects of hardship that may ensue from the decision were not, in the
tribunal’s view, relevant to this application and therefore attention was
devoted to deciding whether the conditions specified in
para (b) of
the definition of ‘eligible person’ in s 18(2)
of the Act
were satisfied to a material extent. This was not easy. It was felt that it
should not be done solely on the basis of any mathematical percentage or
proportion. It was also felt that it would be unwise to do anything other than
to consider the meaning of the word ‘material’. That is the word in the Act and
if Parliament had wished to substitute some other words it would have done so.
It is not proposed to enter into any lengthy discussion on what ‘material’, in
the context in which it is used, could otherwise mean. Certainly other meanings
could be attempted. Definitions in the Oxford Dictionary include ‘of much
consequence’ and ‘important’. If this is the right approach, it has to be
considered, on the facts of this case, whether Mr Clark has brought himself, to
the tribunal’s satisfaction, within the conditions of
para (b),
to a
material extent.
The learned
judge then went on:
There has
thus been a whole gamut of interpretation, from the strict ‘only just failing’
view of the tribunal in the present case, to the wide interpretation accorded
in Dagg v Lovett. This underlines the difficulty of the task of
interpretation, and, when I find Viscount Dilhorne saying in Jackson v Hall
. . . ‘My Lords, it is to be regretted that this lengthy and no doubt expensive
litigation has been brought about by the inadequacy of the drafting of this
Act’, I feel disposed, respectfully, to echo his sentiments.
Pausing there
for a moment, I, too, would echo those sentiments vehemently.
The learned
judge went on:
‘Satisfied to
a material extent.’ It is a strange phrase. ‘Extent’ presents no difficulty;
nor does ‘satisfied’ in the context, although it is a misuse of the word to
apply it to a condition which, ex hypothesi, is not satisfied. The crux
of the question is the word ‘material’. It is an adjective frequently used by
lawyers: they speak of material facts, of material considerations. In this
sense it means relevant to the matter in hand, but it can hardly mean relevant
here. It has another sense: of something substantial, more than minimal; that
seems to have been the path followed by the Northern and Yorkshire/Lancashire
tribunals.
Counsel for
the respondents argues that because this litigation takes away a landlord’s
right to possession it ought to be narrowly construed. On the other hand the
policy of Part II of the 1976 Act is clearly to create new rights in deserving
persons with a view, I would think, to preserving that family continuity which
has long been a feature of English farming life. It can equally
of the Act.
I do not find
either of these approaches compelling.
Once again,
pausing there, I agree with the learned judge on that point.
He continued:
I do,
however, find some assistance in s 21(3)(b), the paragraph setting up the
further hurdle to the successor tenant of whether the order is fair and
reasonable. I think this points to a wide interpretation of the words ‘material
extent’. If the ‘not quite’ view were right and the let-out consisted of what may
be called ‘the hard luck cases’ (where the applicant has 59 months instead of
60, or 49% in livelihood instead of the 51% which would make it the principal
source) then it is difficult to see how any tribunal could find that it was not
fair and reasonable to make the order bearing in mind that the applicant still
has the final hurdle of suitability to surmount. On the other hand, if
jurisdiction is given over a wide spectrum of facts by a beneficial
interpretation of the word ‘material’, the tribunal will have a real task in
deciding where lies fairness and reasonableness.
Pausing there,
so far as it goes, I would agree with that paragraph, and certainly I think it
helps, if it were ever argued, that it was only in what might be called ‘the
hard luck’ cases or the ‘bare miss’ cases in which the jurisdiction lay.
He continued:
I therefore
find that the tribunal erred in law in following the narrow interpretation. But
I must go beyond this and endeavour to afford some guidance for those who have
to solve these difficult problems. I agree wholeheartedly with the view that no
mathematical formula can be laid down. Percentages of fulfilment, when worked
out, are a useful guide to put the facts of finance or of time in perspective
and to help judge their weight, but I would think it wrong to try to impose a
mathematical cut-off point to what is material.
Pausing there,
I entirely agree with that attitude taken by the learned judge.
He went on:
After
considerable casting about I do not feel that I can do better by way of
definition than to adopt what the Northern Area tribunal said, in Dagg v
Lovett, namely that ‘material’ means ‘substantial in terms of time and
important in terms of value.’
He then went on
to consider the facts of the particular case which he was trying.
I do not
myself know why either the tribunal or the learned judge thought it necessary
to have different words ‘substantial’ and ‘important’ in that definition, but I
would not be disposed to quarrel with it for that or indeed any other reason. I
am happy to adopt it as the best one can do to give meaning to a word which, in
its context, is a very peculiar one. But it is very important not to take that
judicial definition out of context.
The relevant
condition in section 18(2)(b) (and these are not the words of the Act) is that
more than 50% of the applicant’s source of livelihood derived from his
agricultural work on the holding.
Section
21(1)(b) provides that there shall be deemed eligibility if that condition,
though not fully satisfied (that is, not satisfied to 51%), is satisfied to an
important extent, using the judicial definition of the word ‘important’ instead
of ‘material’.
What the
tribunal have to consider is the extent to which the condition is not
satisfied, or, put another way, the extent of failure. If on the facts it is
shown that there has been, in the words of one of the tribunal decisions, ‘a
really large failure’, then the applicant cannot bring himself within the
section. Clearly the test requires a comparison between the value of what the
applicant derives from the holding and her total livelihood. It is not the
importance of the ‘holding value’ to her which is relevant, but whether the
‘holding value’ is an important satisfaction of the requirements of 51%. This,
I think, clearly follows from the wording of section 21(1)(b) itself, which
begins with the postulate that the condition, namely 51%, was not fully
satisfied.
With these
considerations in mind, I return to paragraph (15) of the case. I have already
said that, in my judgment, the wrong comparison was made. I think it is equally
clear that the tribunal misdirected themselves in law when they said that half
the payments to the husband, together with the fringe benefits, represented to
her an ‘important contribution to her livelihood’. As Mr Wood points out, all
financial rewards are to a greater or lesser extent important. The question
should be: whether the holding value constitutes an important satisfaction of
the 51% requirement.
Being
satisfied that the tribunal have misdirected themselves in those two ways, what
should I do? Mr Wood says that I have all the facts upon which I could
substitute my own findings. I certainly have all the financial facts, but I do
not know what weight the tribunal placed upon the fringe benefits which are
specifically mentioned in paragraph (15), and which, for all I know, may have
played or will play a considerable part in the tribunal’s decision.
I do not think
it would be right for me to reverse the tribunal’s decision. The correct
course, it seems to me, would be to allow the appeal and remit the case to the
tribunal for reconsideration in the light of my judgment.
I therefore do
not answer the questions posed in the case.
