Rating — Poultry processing factory — Hereditaments used for processing feed and slaughtered birds — Ratepayer owning many poultry breeding and rearing farms — Whether subject hereditament ‘occupied together with’ and ‘used solely in connection with’ operations in an agricultural building — Whether buildings rateable — Appeal by respondent rating authority dismissed
respondent, Buxted Poultry Ltd (‘Buxted’), occupied a provender mill and
poultry processing factory — Buxted made proposals to delete buildings from
valuation list for rating purposes on ground that they were agricultural
buildings within the meaning of the Rating Act 1971 — Local valuation court
deleted entries from the valuation list — Lands Tribunal dismissed appeals by
valuation officer and rating authority — Rating authority appealed by way of
case stated against decision of tribunal — Section 26 of the General Rate Act
1967 derates agricultural buildings — ‘Agricultural buildings’ defined as
buildings ‘occupied together with agricultural land . . . used solely in
connection with agricultural operations carried on on agricultural land’ —
Effect of decision of House of Lords in W&JB Eastwood Ltd v Herrod (VO)
abrogated by Rating Act 1971 — Rating Act 1971 defines agricultural building as
including any building ‘which is occupied together with one or more buildings
[used for the keeping or breeding of livestock] and is used in connection with
the operations carried on in that building or those buildings’ — Buxted submitted
that the provender mill and chicken processing factory are buildings occupied
together with buildings used for the keeping or breeding of livestock and used
in connection with the operations carried on in those buildings — Buxted must
satisfy qualification in section 2(3)(a) of the 1971 Act that a building is not
an agricultural building unless ‘it is solely so used’
and occupied 67 farms of which 48 were rearing and the other 19 were breeding
farms for poultry — The farms were situated between a quarter of a mile and 120
miles from the subject hereditaments — The provender mill produced pelleted
feed for consumption by the poultry on the 67 farms — Some 6% to 8% of feed
delivered to farms not owned or occupied by Buxted — Live poultry delivered to
processing factory from the 48 poultry rearing farms for slaughter, plucking,
cleaning and processing — Buxted submitted that the provender mill and/or the
processing factory were occupied together with buildings used for the keeping
or breeding of livestock and solely used in connection with the operations
carried on in those buildings
of the phrase ‘occupied together with’ in relation to either a building and
land or a building and other buildings has definitively been considered — Two
areas of land, or a building and land, can be said to be ‘occupied together
with’ if, even though they are a considerable distance apart, the operations on
the land are carried out under the control of the same farmer with men and
machinery sent out from the building or other land — But distance must be a
relevant factor in deciding whether a building and other land, or two buildings
in the present case, are occupied together with each other — Tribunal falling
into error in holding that the geographical test, that is to say the distance
between the hereditaments the subject of the appeal and the buildings used for
the breeding and rearing of livestock, was not a relevant consideration — A
building can be said to be occupied together with another building used for the
breeding or keeping of livestock, provided, first, that they have a single
occupier; second, that the activities carried on in both are jointly controlled
or managed; and third, that the physical communication between the two
buildings is, by reason either of physical nearness or of some other factor, so
close and convenient that they can properly be regarded as being occupied as
parts of the same enterprise — Tribunal erred in law in adopting the wrong test
mill was not ‘solely used’ in connection with the operations carried on in the
chicken breeding and rearing buildings — The 6% to 8% of processed feed going
to farms not owned by Buxted was not de minimis — In any event there is
no need or room to import the concept of de minimis — The poultry
processing buildings were solely used in connection with the operations carried
on at the 48 broiler rearing houses — It was a question of fact and degree for
the tribunal to decide whether the sales office, canteen, shop and vehicle
maintenance workshops were part of the processing factory — Appeal allowed in
relation to the provender mill — The question of the relative geographical
positions of the buildings is a question of fact and must be remitted to the
tribunal for determination
The following
cases are referred to in this report.
Eastwood
(W & JB) Ltd v Herrod (VO) [1971] AC
160; [1970] 2 WLR 775; [1970] 1 All ER 774; [1970] RA 63, HL
Handley
(VO) v Bernard Matthews plc [1989] 1 EGLR
215; [1989] 14 EG 67; [1988] RA 222
Hilleshog
Sugar Beet Breeding Co Ltd v Wilkes (VO)
(1971) 17 RRC 275; [1971] RA 275
In this appeal
the Court of Appeal had to determine upon a case stated whether a decision of
the Lands Tribunal (C R Mallett FRICS and T Hoyes FRICS) given on November 24
1989 on appeals to the tribunal against a decision of the North Yorkshire Local
Valuation Court was correct. The second respondent, Buxted Poultry Ltd, had
made proposals to delete a provender mill and poultry processing factory at
Dalton, near Thirsk, North Yorkshire, from the valuation list on the ground
that they were agricultural buildings.
Christopher
Cochrane QC and Simon Bird (instructed by Sharpe Pritchard, for the solicitor
to Hambleton District Council) appeared for the appellant first respondent; Guy
Roots QC and Sebastian Head (instructed by Stephens & Scown) represented
the second respondent, Buxted Poultry Ltd. The valuation officer did not appear
and was not represented.
Giving the
first judgment at the invitation of Purchas LJ, GLIDEWELL LJ said: These
are two appeals by way of case stated against a decision of the Lands Tribunal
given on November 24 1989 on appeals to the tribunal against a decision of the
North Yorkshire Local Valuation Court. Under section 3(4) of the Lands Tribunal
Act 1949 an appeal to this court lies only for error of law. The second
respondents, Buxted Poultry Ltd (‘Buxted’), at all material times owned and
occupied the buildings the subject of these two appeals, namely, a provender
mill and a poultry processing factory at Dalton, near Thirsk, North Yorkshire.
Buxted made proposals to delete both buildings from the valuation list for
rating on the ground that they were agricultural buildings within the meaning
of the Rating Act 1971. The valuation officer objected to both proposals and
Hambleton District Council, the present appellants, objected to one of the
proposals. The local valuation court deleted both entries from the list. The
valuation officer and the district council as rating authority appealed to the
tribunal, which dismissed the appeals. The district council now appeal to this
court.
I start by
saying something about the legislation and its background. The primary section
which deals with the derating of agricultural land and buildings is now section
26 of the General Rate Act 1967. That is a successor to a provision which dates
back originally to the Local Government Act 1929. Section 26(1) provides:
No
agricultural land or agricultural buildings shall be liable to be rated or be
included in any valuation list or in any rate.
Subsection (2)
is not relevant for present purposes.
Subsection (3)
defines ‘agricultural land’ in terms which include:
In this
section the expression ‘agricultural land’ —
(a) means any land . . . used for the purposes of
poultry farming, . . .
Subsection (4)
defines ‘agricultural buildings’ as:
(a) means buildings (other than dwellings)
occupied together with agricultural land . . . used solely in connection with
agricultural operations thereon; and
(b) includes a building which is used solely in
connection with agricultural operations carried on on agricultural land and
which is occupied either —
(i) by the occupiers of all that land; or
(ii) by individuals who are appointed . . .
I need not go
on with that. It is really dealing with a situation in which there is some
co-operative operation on the land.
In W &
JB Eastwood Ltd v Herrod (VO) [1971] AC 160 the House of Lords held
that a number of buildings in which broiler chickens were hatched and reared,
which were occupied together with some 1,150 acres of land, were nevertheless
not agricultural buildings within the definitions to which I have just referred
in section 26 of the 1967 Act.
The Rating Act
1971 abrogated this decision, apart from having other effects.
By section
1(1) of the 1971 Act:
In section 26
of the General Rate Act 1967 (in this Part of this Act referred to as ‘the
principal section’) —
(a) the expression ‘agricultural buildings’ shall
include any building which is an agricultural building by virtue of section 2,
3 or 4 of this Act; and
(b) the expression ‘agricultural land’ shall
include land occupied with, and used solely in connection with the use of, one
or more such buildings.
I shall have to
come back to section 1 later. But for present purposes I go on to section 2.
Section 2(1)
provides as follows:
Subject to
subsections (2) to (4) of this section, each of the following is an
agricultural building by virtue of this section —
(a) any building used for the keeping or breeding
of livestock; . . .
Stopping there,
that had the effect, to which I have already referred, of reversing the House
of Lords decision in the Eastwood case. But the Act went further by the
next subparagraph of subsection (1), which provides:
(b) any building (other than a dwelling) which is
occupied together with one or more buildings falling within paragraph (a)
above and is used in connection with the operations carried on in that building
or those buildings.
That
subparagraph is the battleground on which these appeals have been fought. What
is said by Buxted is that both the provender mill and the chicken processing
factory are buildings occupied together with buildings used for the keeping or
breeding of livestock and used in connection with the operations carried on in
those buildings.
Subsection (1)
refers to the following subsections of section 2 and it is necessary to go to
subsection (3) which provides:
A building
occupied and used as mentioned in subsection (1)(b) of this section is
not an agricultural building by virtue of this section unless either —
(a) it is solely so used; or
(b) it is occupied also together with
agricultural land . . . and used . . . in connection with agricultural
operations on that land, . . .
— (b) does not arise in the present case; (a)
does.
There is
another qualification in subsection (4):
A building is
not an agricultural building by virtue of this section unless it is surrounded
by or contiguous to an area of agricultural land . . . which amounts to not
less than two hectares.
It is conceded
in this case and has always been that that condition is met.
In order to
succeed, Buxted must satisfy both of the requirements in section 2(1)(b)
as qualified by section 2(3)(a). That is to say, they must prove that
the building in question, the provender mill or the processing factory, is
‘occupied together with’ buildings used for the keeping or breeding of
livestock; and ‘solely used in connection with’ the operations carried on in
those buildings in order to succeed.
The tribunal
gave one decision which covered both the appeal in relation to the provender
mill and that in relation to the poultry processing factory. The tribunal
found, from an agreed statement of facts and from evidence put before it, that,
as I have already said, the two hereditaments are situated in the rural village
of Dalton, two miles south of Thirsk, and comprise a provender mill and a
separate processing factory. It found that Buxted owned and occupied 67 farms
of which 48 were rearing and the other 19 were breeding farms. They were
situated between a quarter of a mile and 120 miles from Dalton, that is from
the two relevant hereditaments. On those farms, in broiler houses, turkeys and
chickens were bred and reared. The provender mill produced pelleted feed for
consumption by the turkeys and chickens in the 67 farms. The quantity of feed
produced was approximately 2,700 tons per week. The bulk of this was delivered
to the 67 farms occupied by Buxted. Between 6% and 8%, which came up to 216
tons per week of the pellets, was not delivered to Buxted farms but was
delivered to four other farms occupied by a group of independent turkey
rearers. The tribunal found (and this is relevant to the next issue to which I
have to come and so I cite it because it is one of the facts):
The time spent
in producing the feed is roughly pro-rata to the bulk, so that the 6% to 8% of
feed which goes to the four independent farms takes up about 6% to 8% of the
working time of the mill.
It is admitted
between the parties that the 67 poultry breeding and rearing farms are
‘buildings used for the keeping or breeding of livestock’ within the meaning of
section 2(1)(a) of the Rating Act 1971.
As I have
already said, it is also admitted that both the subject hereditaments are
surrounded by or contiguous to an area of agricultural land of not less than 2
ha.
So far as the
poultry processing factory was concerned, the objects of the company were the
breeding, rearing, slaughtering, processing, packing, selling and distribution
of turkeys and chickens for human consumption. In 1985 a weekly average of
63,000 turkeys and 25,000 chickens were delivered live to the poultry factory
from the 48 poultry rearing farms owned and occupied by Buxted. They were
slaughtered, plucked, cleaned and processed. Some of them were chilled and then
sold as fresh birds. A small number, particularly those which were somewhat
misshapen, were sold after boning. The majority went through a process which
finished with their being frozen and stored in a cold store and then sold in
the frozen state. A proportion of them before they were sold were basted, that
is to say the breast meat of each carcass was injected with liquid butter. The
tribunal described the process and I do not think it is necessary to go into
it. Buxted sold and delivered poultry which had been through this plant to all
the 12 major retailers in the United Kingdom. The plant itself comprised a
number of buildings connected to form a single factory, with integral walls
which had been either demolished or altered in order to achieve the object of
creating a continuous flow
offal-handling equipment, staff service facilities, including staff locker
rooms, a canteen and a shop for use by the employees of the company;
process-management offices and reception area; a small, three-room office
occupied by sales staff; and vehicle maintenance facilities which serviced
lorries and collection vehicles owned by the company and company cars used by
employees in the course of their duties. Those are the essential facts.
I turn to
consider whether on those facts Buxted satisfied both of the requirements in
section 2(1)(b) of the 1971 Act as qualified by section 2(3)(a).
I will deal with each phrase in turn.
Occupied
together with
We were
referred to a number of cases of which the first is the House of Lords
decision, to which I have already referred, in the Eastwood case. The appellant
company, Eastwood, owned and occupied 1,150 acres of land and a
substantial number of broiler houses in some of which chickens were hatched and
in the remainder of which, after their removal from the hatcheries, they were
reared. Most of the birds never went outside the buildings, except for the
short journey from one to the other. The cockerels, however, were from time to
time put out to run on part of the 1,150 acres. The remainder of the land, the
greater part of it, was arable and used for growing barley or other corn which
was fed to the chickens as part of their feedstuff. The issue in that case was
not the issue I am currently considering but the second issue: were the broiler
houses used ‘solely in connection with’ agricultural operations on the 1,150
acres? In that case it was conceded that
the buildings were occupied together with the land. It was held both in this
court and in the House of Lords that the broiler houses were not agricultural
buildings because they were not used solely in connection with the agricultural
operations on the land. However, in the course of his speech Viscount Dilhorne
briefly considered the first test, that is to say: were the buildings occupied
‘together with’ the land? At p 180 he
said:
In this case
the respondent conceded, somewhat surprisingly, that all the buildings were
occupied together with the 1,150 acres. But for this concession I do not think
I should have found it easy to conclude that the packing station in
Gainsborough nine miles or so away was occupied together with the agricultural
land in the sense in which those words are used in the definition, and it may
be that I would have had difficulty in coming to that conclusion in relation to
the five layer houses at Norton Brisney some six miles away and some of the
other buildings.
In its
context ‘occupied together with agricultural land’ may connote more than common
ownership. My impression on reading the definition of ‘agricultural buildings’
is that it was an attempt by the draftsman to define a farm in statutory
language and that it was intended to include buildings used and occupied
together with the land for the purpose of farming the land, not buildings far
distant and not used in connection with an operation on the land, even though
owned by the same person.
That
observation was clearly obiter and nothing similar is to be found in any
of the other speeches in that case. However, the observation has been
recognised as deserving of considerable respect.
There is, it
seems, no authority binding on this court in which the meaning of the phrase
‘occupied together with’ in relation to either a building and land or a
building and other buildings has definitively been considered. There are,
however, relevant decisions of the Lands Tribunal.
In Hilleshog
Sugar Beet Breeding Co Ltd v Wilkes (VO) [1971] RA 275 heard before
Sir Michael E Rowe QC, the then president of the tribunal, one issue was
whether a plant research centre was occupied together with a number of widely
scattered plots of land, some of which were up to 40 miles away from the
centre. The plots of land were used for raising sugar beet plants. The
president held that the research centre was occupied together with the land.
His reasoning on that issue is set out at p 284 of the report. He quoted the
12th ed of Ryde on Rating where the learned editors say:
The buildings
need not be situated upon, or adjoin, the agricultural land; separation by
distance of several miles has not been regarded as fatal to exemption. Nor is
it necessary for land and buildings to be held by the occupier under the same
title. ‘Occupied together with’ seems to imply a functional rather than a
geographical connection.
The president
then quoted the passage from Lord Dilhorne’s speech in the Eastwood’s
case which I have read and, said, as I have, that it was obiter but should
be treated with great respect. He then said at p 285:
. . . I would
readily accept that, even in these days of swift transport, distance might make
it impracticable to ‘occupy together’ buildings in one place and land in
another because it would be quite uneconomic and inefficient for a farmer to
try to control operations in both. But where, as in the present case,
ratepayers can and do send out from the centre machines and men to carry out
agricultural operations on the land and do it not merely occasionally but
regularly year after year I think it is very difficult to deny the
‘togetherness’ of the centre and all these plots and in so far as it is a
question of fact, I find that the centre is occupied together with all and each
of the plots.
He then gave an
illustration from his own personal experience, which I think perhaps does not
carry the matter much further.
Clearly that
was a case very much on its own facts. The togetherness which the president
found arose not merely from the fact that the centre and the pieces of land
were all occupied by the appellant company, and thus had one occupier, but from
the fact that the fields were all worked by men and machines sent out from the
centre.
For my part, I
agree with this approach. In my view, two areas of land, or a building and
land, can be said to be ‘occupied together’ if, even though they are a
considerable distance apart, the operations on the land are carried out under
the control of the same farmer with men and machinery sent out from the
building or other land. So two farms at some distance from each may
nevertheless be occupied together. But, in my view, distance must be a relevant
factor, and how great a distance is relevant must depend upon the nature of the
operation. It may well be practicable to send men and machinery 40 miles to
plant out or fertilise some seed beds. It may be practicable for one farmer
operating two farms several miles from each other to use the same tractors and
the same combine harvesters driven by the same operatives at each. But if the
two farms are 100 miles apart then it might well not be practicable to farm
them in that way, in other words to use the same men and equipment to farm them
both. In the latter case the president’s test would not be satisfied. So, in my
view, distance must be a relevant factor in deciding whether a building and
other land, or two buildings in this case, are occupied together with each
other.
We were
referred to two decisions of the Scottish land valuation appeal court. I do not
refer to them, not out of lack of respect but because the decisions relate to
differently worded legislation, the difference between the Scottish and English
statutes being explained as part of the reasons for the decisions.
So far, the
cases to which I have referred were cases of a building or buildings on the one
hand and land on the other. The concept of sending out men and equipment to
carry out farming operations does not normally apply to the relationship
between two buildings or one building and a series of other buildings. I
therefore now come to the only decision which was cited to us in which two or
more buildings were under consideration and the question considered was whether
they were occupied together with each other. That was a decision of the Lands
Tribunal in Handley (VO) v Bernard Matthews plc [1988] RA 222*.
The member of the tribunal in that case was the president, Mr V G Wellings QC.
The headnote reads as follows:
A mill and
premises, Gayton Road, Bawsey, King’s Lynn, Norfolk, was held by the local
valuation court to be exempt from rating under s 2 of the Rating Act 1971. The
hereditament was used by the company for the production of pelleted food fed to
turkeys on 29 farms owned and occupied by the company and situated between nine
and 74 miles from the hereditament. The valuation officer appealed and said
that the exemption did not apply because the requirement of s 2 that the
hereditament must be ‘occupied together with’ one or more livestock buildings
was not satisfied. He said that regard must be had to a geographical test and
the hereditament and the farms were too far apart sensibly to be regarded as
occupied together.
*Editor’s
note: Also reported at [1989] 1 EGLR 215.
The tribunal
dismissed the appeal. It will be seen that the facts were very close to the
facts of the present case in relation to the provender mill. The learned
president, at the bottom of p 227 of his decision, said:
Counsel for
the valuation officer, in addressing me, conceded that the appeal hereditament
was used in connection with the operations carried out in the livestock
buildings on the 29 farms but he did not concede that it was solely so used nor
that it was occupied together with buildings used for the keeping or breeding
of livestock. He said that the words ‘occupied together with’ required
investigation not just of the functions of the various different buildings on
the 29 farms but their geography as well. Thus even though the appeal
hereditament and the livestock buildings were functionally connected with the
business carried on by the company there came a point at which they
were too far apart sensibly to be regarded as occupied together. He was
prepared to accept that the appeal hereditament was occupied together with some
of the livestock buildings but he did not identify them. His point was that as
a matter of fact livestock buildings so far distant as 74 miles from the appeal
hereditament were on the wrong side of the line. Accordingly, it could not be
said that the appeal hereditament was occupied together with all the livestock
buildings. On the assumption that that submission was correct, counsel for the
valuation officer further contended that the appeal hereditament could not be
said to be solely used in connection with operations in livestock buildings
with which it was occupied together, for the reason that it was also used in
connection with buildings with which it was not occupied (because they were too
far away). On this subsidiary question, counsel for the company was in
agreement with counsel for the valuation officer. Accordingly there is but one
question for me to decide and that is whether the appeal hereditament, at the
relevant date, was occupied together with the livestock buildings on all the 29
farms.
Counsel for
the respondent company said that there was a danger, in attempting to devise
tests, functional or geographical, to ascertain the meaning of the words
‘occupied together with’, of putting a gloss on them. He did not wish to
suggest that geography was irrelevant but the element of distance was subsumed
in the functional test. He asked rhetorically: ‘What is the distance beyond
which is too far?’
Counsel for
the company in that case was Mr Guy Roots, leading counsel for the respondent
company in the present case. During the course of argument in the present case
I asked Mr Roots what he meant, if he was accurately reported, by saying that
the ‘element of distance was subsumed in the functional test’. I regret to say
that I found his answer unclear.
The president,
in his decision, concluded as follows [at p 229]:
On the facts,
I find that the appeal hereditament at all material times was and is occupied
together with the livestock buildings on all the 29 farms. I am not impressed
by any geographical test, at all events in the present case. If it is desired
to ascribe a specific meaning to the words ‘occupied together with’, it appears
to me that the most likely meaning is ‘occupied at the same time as’: see
Stroud, Judicial Dictionary (5th edn) . . . For these reasons the local
valuation court came to the right decision, the appeal hereditament is exempt
from rating and the appeal is dismissed.
In the present
case it seems that the tribunal and counsel who appeared before them may well
have considered (and I do not suggest incorrectly) that they were bound to
follow the decision of the tribunal in the Bernard Matthews case.
The tribunal
in the present case, at p 14 of their decision, said:
. . . If we
were to follow the narrow meaning of ‘occupied together with’ it would appear
that the buildings, if not contiguous with agricultural land, should be in the
same neighbourhood, valley or hill side, so that labour, stock and machinery
could readily be transferred from one to the other.
We were not
referred to any subsequent occasions where this narrow interpretation has been
followed.
The tribunal
then referred to the Hilleshog Sugar Beet Breeding case and to Bernard
Matthews, quoted the conclusion of the president which I have just quoted,
and then said:
We agree with
those views.
In the
instant cases, counsel for the valuation officer and for the rating authority
accept that separate distances of 20, 40 or even 74 miles are not detrimental
to the concept of ‘occupied together with’ but, they say, 100 miles is too
much.
I interpolate
that Mr Cochrane, counsel for the valuation officer before us and before the
tribunal, has explained that he made that concession in the sense that he was
conceding that the tribunal in the present case were bound by the decision of
the president in the Bernard Matthews case and thus before the tribunal
he felt obliged to make the concession. But it was not one that he made in this
court at all.
In other
words
— the
valuation officer and the district council —
do not seek
to show that occupation within the same valley, hill side or neighbourhood,
which we would term the narrow interpretation, has to be followed.
But Mr
Cochrane has sought to show that in this case. Indeed, at one stage he
propounded an even narrower test. The tribunal continued:
On the
evidence in these two cases there is no difference in the functional link
between either of the hereditaments and the farms they serve, whether they are
20 or 120 miles apart. Distance does not appear to weaken this link nor deter
the company from occupying those distant farms together with their buildings at
Dalton.
For these
reasons we do not think that a geographical test has merit in these cases and
we find that the provender mill and the factory are, as a matter of fact
‘occupied together with’ the farms in the occupation of the company.
The president
in the Bernard Matthews case and the tribunal in the present case were
thus saying that the geographical test, that is to say the distance between the
hereditaments the subject of the appeal and the buildings used for the breeding
and rearing of livestock (the broiler houses), was not a relevant
consideration. That, in my judgment, was the basis of both decisions. In so
holding, in my view, both tribunals fell into an error which was an error of
law. If the present tribunal’s approach and that of the president were correct,
all that is necessary to show that a building comes within section 2(1)(b)
is to prove, first, that it and the building or buildings used for the breeding
or keeping of livestock are both occupied by the same person or company and,
second, that the second building is used in connection with the operations
carried out in the livestock building.
This
interpretation makes the phrase ‘together with’ in the total phrase ‘occupied
together with’ otiose and in my view, therefore, cannot be correct. ‘Occupied
together with’ must be given some meaning. In my view, a building can be said
to be occupied together with another building used for the breeding or keeping
of livestock, provided, first, that they have a single occupier; second, that
the activities carried on in both are jointly controlled or managed; and,
third, that the physical communication between the two buildings is, by reason
either of physical nearness or of some other factor, so close and convenient
that they can properly be regarded as being occupied as parts of the same
enterprise. I therefore conclude that the tribunal erred in law in adopting the
wrong test to decide whether each of the buildings was ‘occupied together with’
broiler houses.
It follows
that I would allow both appeals. But, before considering what orders should
follow from that, it is desirable to consider the other issue because different
considerations here apply to the two different buildings. For the moment I
content myself by saying that in the case stated the tribunal have posed two
questions of which the second is:
Was the
Tribunal correct in holding on the facts and agreed and found by the Tribunal
that the hereditament was occupied together with agricultural land?
Solely
used
It follows that
I would answer that question ‘No’.
I turn to the
second issue, whether each of these buildings in turn can be said to have been
‘solely used’ in connection with the operations carried on in the
chicken breeding and rearing buildings. I consider first the provender mill.
The argument here turns upon the facts to which I have already referred, that
6% to 8% of the output of the provender mill was delivered to four farms not
occupied by Buxted. It follows, therefore, that unless 6% to 8% of the output
can be disregarded as being de minimis, on the face of it the mill was
not used solely in connection with the operations at Buxted’s poultry farms.
However, by section 1(2) of the 1971 Act, in determining whether a building
used in any way is solely so used, ‘no account shall be taken of any time
during which it is used in any other way, if that time does not amount to a
substantial part of the time during which the building is used’.
The tribunal
have found that producing the 6% to 8% of feed which goes to other farms ‘takes
up about 6% to 8% of the working time of the mill’ and that this is not a
substantial part of the total production time of the mill. The flaw in this
reasoning is that when section 1(2) refers to ‘any time during which [the mill]
is used in any other way’ it is clearly referring to a definable period of
time. If a building is normally used for one purpose but, a let us say, on
Friday afternoons or on the first Monday in each month is used for some other
purpose, that is the sort of concept which, in my view, falls within section
1(2). But it is not suggested here that there was any definable period of time
when the mill was being used to produce pellets for the other four farms. It
was used to produce pellets the whole time and 6% to 8% of those pellets went
to the other four farms. The ‘6% to 8% of the working time’ was merely the
consequence of the fact that the production process was continuous, and
presumably at a constant rate, so that any proportion of the total production
must occupy the same proportion of the working time of the mill. In my
judgment, section 1(2) has no application at all to the question here under
consideration.
That takes me
back to section 2(3). As I have already said, since 6% to 8% of the produce of
the mill was going to enterprises other than that of Buxted, the mill was not
solely used in connection with the operations carried on in the 67 broiler
houses unless the 6% to 8% can be disregarded as de minimis. There are
two points here. First of all, does this concept apply at all to this
particular part of the legislation?
‘substantial part of the time’ provisions in section 1(2). There is no need or
room to import the analogous concept of de minimis. But, even if that be
wrong, I do not see how 6% to 8% of the production could be regarded as de
minimis. Apart from my general view, I am supported by the fact that
clearly Buxted do not and did not regard it as de minimis, because they
would not have continued to supply the four other farms with about 200 tons per
week of pellets if they had. I think that this is conclusive and, so far as the
provender mill is concerned, on that ground also I would allow the appeal. In
respect of the provender mill and to the first question asked by the tribunal,
namely ‘was the Tribunal correct in holding on the facts agreed and found by
the Tribunal that the hereditament was used solely in connection with
agricultural operations?’ I would answer
also ‘No’.
Different considerations
apply to the factory. The question here was: ‘Was the factory solely used in
connection with the operations carried on at the 48 broiler rearing
houses?’ I have already set out the
description of the various buildings and activities at the factory. Before the
tribunal counsel for the valuation officer and the rating authority contended
that the use of the canteen and shop provided for the employees, the use of the
sales office and Mr Cochrane before us added, ‘the use of the vehicle servicing
facilities’ were not uses in connection with agricultural operations on the 48
farms, though they conceded that those parts could be separately assessed if
they did not qualify for exemption. Indeed, Mr Cochrane widened the argument
also to comprehend the basting operation.
The tribunal
found that the basting operation was ‘reasonably necessary to render the
product marketable’ and, so far as a number of the other buildings were
concerned, they said:
As to the
offices occupied by the sales staff, we find that the size, type and degree of
use are in keeping with the scale of operations at the factory and that they
are ancillary thereto.
In a similar
manner we find that the staff facilities, such as staff canteen and staff shop,
are ancillary to the factory and in keeping with the scale of the operations at
the factory.
For these
reasons we find on the facts that the whole of the factory is an agricultural
building or buildings used in connection with agricultural operations on the 48
farms and that is the sole use.
Mr Cochrane
before us contended that in applying the ancillary test to some of these
buildings the tribunal were applying the wrong test and this was a concept not
relevant here. On this aspect of the matter, for my part I do not agree with
him. Given that the main part of the factory was solely used to slaughter and
process birds from the 48 farms, the only issue was whether the sales office,
the canteen, the shop and the vehicle maintenance workshop were so much part of
the factory that it could properly be said that they were used for those
purposes also. To decide whether those various areas were properly to be
considered part of the factory, the ancillary test was, in my view, a proper
one. It thus became a question of fact and degree for the tribunal with which,
in my view, this court cannot properly interfere. If this point were the sole
issue, I would therefore find in favour of Buxted as regards the factory. But
in the light of my view as regards the question of ‘occupied together with’
and, so far as the provender mill is concerned, my conclusion on the ‘solely so
used’ issue, it follows, in my judgment, that in relation to the provender mill
the proper course is to allow the appeal and reinstate the provender mill to
the valuation list with the value which has already been agreed between the
parties for that purpose. Differing considerations may apply as regards the
factory because, although I think it right that the appeal should be allowed on
the ‘occupied together with’ test, it may be that Buxted may seek to argue that
it would be right to send the factory appeal back to the Lands Tribunal for the
finding of further facts. That, if my lords agree with my judgment, is a matter
that maybe will have to be considered further.
For those
reasons, I would allow both these appeals.
SIR JOHN
MEGAW agreed and did not add anything.
Agreeing, PURCHAS
LJ said: The appeal relating to the provender mill should be allowed on the
grounds that the tribunal misdirected itself as to the effect of section 1(2)
and section 2(3)(a) of the Rating Act 1971 in coming to the conclusion
that the mill was ‘solely used’ and I agree with Glidewell LJ that this
hereditament should be restored to the valuation list. It is not necessary, in
my view, for the purposes of this judgment, to consider the question whether
the mill was occupied together with a building used for agricultural purposes.
I further agree that the appeal relating to the poultry processing factory
should be allowed on the ground that the tribunal misdirected itself in so far
as it ignored the geographical relationship between the factory and the
agricultural buildings. In coming to the conclusion that it was occupied
‘together with’ those buildings I agree with Glidewell LJ that the relative
geographical positions of the buildings falling for consideration under section
2(1)(b) of the 1971 Act is a factor which, together with other relevant
matters, must all be considered in assessing as a question of fact whether the
buildings are or are not within section 2(1)(b). This is not a matter
which, in my view, and with respect to Glidewell LJ, can be determined by this
court and the matter must, unless conceded by the respondents, be sent back for
determination by the tribunal.
As to the
second ground on which Mr Cochrane attacked the tribunal’s finding, that the
factory was ‘solely used’ in the agricultural operation, I would not disturb
the decision of the tribunal on this aspect. In my judgment, this was purely a
question of fact for the tribunal and, therefore, not a matter upon which this
court should interfere.
I would
accordingly answer the questions in the same manner as Glidewell LJ has
proposed and I also agree with the course that he has indicated in relation to
the two hereditaments.
Appeal
allowed, with costs of appeal and below: leave to appeal to House of Lords
refused.
