Farm business tenancy — Clause restricting use of land to pasture for livestock — Construction of clause — Whether milk and dairy business permitted — Factual background to agreement — Appeal allowed
The appellants owned a 71 acre farm, upon which they ran a dairy herd and a flock of sheep. In January 1997, they entered into an agreement to sell the land to the respondents, conditional upon the grant of planning permission for residential development. The agreement also provided that, upon completion, the respondents would grant a farm business tenancy (FBT) to the appellants, allowing them to continue to occupy the farm for a limited time. The necessary planning permission was obtained and the sale was completed. In June 1997, the parties entered into the FBT. Under this agreement, the farmland was let to the appellants until June 1999 and the farm buildings until mid-July 1997, although this was later extended to the end of November. Clause 4.1(a) restricted the defendants’ use of the land to “agricultural purposes”, while clause 4.1(b) provided that the appellants should use the holding for “permanent pasture for livestock only”.
The appellants failed to vacate the farm buildings on the stipulated day, and the respondents brought possession proceedings, in which both parties also claimed damages. Preliminary issues were tried, inter alia, as to whether the term “livestock” in clause 4.1(b) included a dairy herd. The judge found that the FBT did not provide for the running of a milking and dairy enterprise on the holding. The appellants appealed.
Held: The appeal was allowed.
The FBT did allow for the appellants’ milk and dairy business. The case depended upon the true construction of the FBT when read against the material background of facts of which both parties had had knowledge at the time at which the terms of the FBT had been agreed, namely January 1997. The most important background fact was that, immediately before that date, the appellants had been carrying on a milking and dairy business. There was no positive indication, either in the material provisions of the FBT or in the material facts known to the parties in January 1997, that they had contemplated that the appellants would cease to carry on their milking and dairy business during their two-year period of possession.
John Blackmore (instructed by Stephens & Scown, of Exeter) appeared for the appellants; Richard Mawhinney (instructed by Clarke Willmott, of Taunton) appeared for the respondents.
Sally Dobson, barrister
