Agricultural holdings — Whether a licence within section 2 of the Agricultural Holdings Act 1986 — Whether licence granted for use as agricultural land
plaintiff, Mr Gold, bought land let to Kiln Nurseries Ltd, a company owned by
Gordon Smith, his son Nicholas Smith and Frederick Lloyd-Farrer — Following an
objection that the company’s use of the land as a garden centre was in breach
of covenant, the Smiths and Mr Lloyd-Farrer bought land at Clamp Hill, Harrow
Weald, Middlesex, in equal shares for use as a garden centre — In order to
facilitate the grant of planning permission for use of the Clamp Hill land, in
April 1985 the plaintiff purchased one half-share in the land and in Kiln
Nurseries Ltd — In April 1986, at a meeting attended by the plaintiff, Mr
Lloyd-Farrer and Mr John Amand (a bulb dealer and grower and a shareholder in
the defendant company), it was agreed that the business of the first defendant
company would be transferred to the Clamp Hill land, that the first defendants
would at their own expense erect an agricultural building on the land and that
Mr John Amand would acquire the two one-sixth shares in the land owned by the
Smiths; and there would be other variations in the beneficial ownership of the
land and first defendant company — Shortly afterwards the first defendants
erected at their cost an agricultural building on the Clamp Hill land to which
their business was transferred and, consistent with the agreement of April
1986, they commenced paying rent to Mr Gordon Smith at the rate of £40 per week
— Following a notice from the plaintiff terminating the licence of the first
defendants to occupy the Clamp Hill land, the plaintiff commenced the present
proceedings against the first defendants, the Smiths and Mr Lloyd-Farrer
seeking possession of the land
defendants contended that they were entitled to a licence to occupy the Clamp
Hill land which, by virtue of section 2 of the Agricultural Holdings Act 1986,
was converted into a tenancy from year to year protected under the Act —
Alternatively, that they had expended money on the land and the plaintiff was
estopped from claiming possession or that because the plaintiff was only one of
the three owners of the legal estate he could not by himself, unilaterally and
without the authority of the Smiths, terminate the first defendants’ licence
concluded contract, the first defendants were let into possession in
anticipation of the implementation of the agreed arrangements that they would
erect a building — Having entered the land for that purpose, once they had
started to erect the building the first defendants were bound to complete it —
An implied contract can be inferred that a licence was to be granted for value
in that way and this gave rise to a licence of a kind protected by section 2 of
the 1986 Act — Accordingly, the first defendants were entitled to a contractual
licence to occupy which was converted by section 2 into a tenancy from year to
year — The licence was of land ‘for use as agricultural land’, for, although a
substantial part of the first defendants’ business consisted of buying in bulbs
and selling on as a wholesaler, some 15% to 20% of the trade consisted of
selling plants grown, or grown-on, on the land itself
The following
cases are referred to in this report.
Goldsack v Shore [1950] 1 KB 708; [1950] 1 All ER 276; (1950) 66 TLR
(Pt 1) 636
Mitton v Farrow [1980] EGD 42; (1980) 255 EG 449, [1980] 2 EGLR 1,
CA
This was a
claim for possession of land at Clamp Hill, Harrow Weald, Middlesex, by the
plaintiff, Mr Gold, from the first defendants, Jacques Amand Ltd, and the
second to fourth defendants, Mr Frederick Lloyd-Farrer, Mr Gordon Smith and Mr
Nicholas Smith.
Leolin Price
QC and David Eaton Turner (instructed by Landau & Scanlan) appeared for the
plaintiff; and Richard Wallington (instructed by Terence W Lynch & Co)
represented the first defendants. The second to fourth defendants did not
appear and were not represented.
Giving
judgment, SIR NICOLAS BROWNE-WILKINSON V-C said: These are two
consolidated actions concerning a piece of land, running to just over 6 acres,
at Clamp Hill, Harrow Weald, Middlesex. I will call that ‘the Clamp Hill land’.
The plaintiff is a Mr Gold. He claims possession of the Clamp Hill land from a
Mr John Amand and a company called Jacques Amand Ltd (which I will call ‘JAL’).
The defendants resist the claim in reliance on an agricultural tenancy
protected, so they say, by the Agricultural Holdings Act 1986 or,
alternatively, on the grounds of a proprietary estoppel.
The case turns
on the interaction between two horticultural businessess: the business of JAL
and the business of Kiln Nurseries Ltd. Before 1983 Kiln Nurseries Ltd was a
company owned by Mr Gordon Smith, his son, Mr Nicholas Smith, and Mr Frederick
Lloyd-Farrer, who were the sole shareholders in the company. Kiln Nurseries Ltd
carried on the business of a garden centre on a piece of land of which they
were the tenants at Kiln. In 1983 Mr Gold, the plaintiff, bought a house and
the freehold of the land of which Kiln Nurseries Ltd were the tenants. Very
shortly thereafter Mr Gold raised an objection that Kiln Nurseries Ltd were
acting in breach of covenant in using the land, for the purposes of retail
trade, as a garden centre. That complaint was, apparently, well founded. The
Smiths and Mr Lloyd-Farrer were, therefore, faced with the position whereby
they would have to close down their business of the garden centre on the Kiln
Nurseries’ land unless they could find an alternative set of premises. They
decided to buy the Clamp Hill land, which was only some 200yds or 300yds away
from the Kiln Nurseries. The intention was to apply for planning permission to
use the Clamp Hill land as a garden centre.
The purchase
of the Clamp Hill land, at a price of £55,000, was completed before planning
permission was obtained. Mr Lloyd-
registered land and it was transferred to the three of them and registered in
their names. Beneficially they owned the Clamp Hill land in equal one-third
shares.
The Clamp Hill
land was the site of some disused piggeries and it had lain fallow for many
years. The Smiths and Mr Lloyd-Farrer encountered very great difficulties in
getting planning permission for the Clamp Hill land. It lay within the green
belt, though in an area adjacent to substantial domestic development. The
planning authorities found the possibility of there being two garden centres so
closely adjacent unacceptable. Mr Lloyd-Farrer and the Smiths therefore
proposed that the planning permission for use of the Kiln Nurseries’ land as a
garden centre should be given up and, thereafter, the use of the Clamp Hill
land as a garden centre authorised. However, Mr Gold, having objected to the
use of the Kiln Nurseries’ land as a garden centre, then proceeded to refuse to
give up the established use as a garden centre on the Kiln Nurseries’ land so
as to make it available for the use of Mr Lloyd-Farrer and the Smiths on the
Clamp Hill land. That, of course, he was fully entitled to do, but a slightly
‘dog in the manger’ attitude seems to me to be indicated, showing the hard
businessman that he undoubtedly is.
At that stage
Mr Lloyd-Farrer and the Smiths were accordingly left with the Clamp Hill land,
which they could not use for a garden centre business. They could not go on
with their garden centre business on the Kiln Nurseries’ land. They had
borrowed heavily to purchase the Clamp Hill land. It was in those circumstances
that they turned, perhaps unwisely, to Mr Gold, who, on April 24 1985,
purchased from them a one-half share in the Clamp Hill land. Following that,
the land was registered in the name of Mr Gold, Mr Lloyd-Farrer, Mr Gordon
Smith and Mr Nick Smith. The beneficial interests in the Clamp Hill land
belonged as to one-half to Mr Gold and as to one-sixth each to Mr Lloyd-Farrer,
Mr Gordon Smith and Mr Nick Smith.
Shortly
thereafter, in September 1985, those gentlemen managed to get into an even
closer relationship with Mr Gold, who acquired 50% of the shareholding in Kiln
Nurseries Ltd. It appears objection to the use of Kiln Nurseries’ land as a
garden centre must have gone, because thereafter it was used as a garden
centre, Mr Gold by this stage having acquired one-half of the land and one-half
of the business carried on on it. That was the position which existed in 1985
when Mr John Amand and JAL came on the scene.
There is one
point of central importance that I should mention: although there had been some
doubt as to the established use of the Clamp Hill land, by this stage, as I
understand it, the planning authority had accepted that the Clamp Hill land had
an existing use as agricultural land. In consequence, under the general development
order 1977, no specific planning permission was required for the erection of a
building for agricultural use on the Clamp Hill land provided that its surface
area did not exceed 465 m2.
I turn now to
JAL. JAL is a company in which the shares are held as to 30% by Mr John Amand,
30% by a Mr George Loucaides, 30% by Mr John Amand’s sister, Mrs Nesta Jolliff,
and as to the remaining 10% by Mr John Amand’s wife. The business is
effectively carried on by Mr John Amand and Mr Loucaides. Mr John Amand is the
plants man and leading figure. In 1985 JAL’s business was carried on at a
warehouse and other premises at Beethoven Street, W10. The preponderant part of
its business consisted of buying bulbs and selling them on, either to garden
centres or to nurseries. However, some bulbs and special plants were grown by
Mr John Amand at his home and were then sold through the business of JAL. In
addition to its wholesale customers, which made up the bulk of its business,
JAL had a limited retail business from the Beethoven Street premises. These
premises were too small and Mr John Amand wished to expand. He had known Mr
Lloyd-Farrer for some time. JAL had been the principal supplier of the bulb
requirements of Kiln Nurseries.
It was in
those circumstances that late in 1985 Mr Lloyd-Farrer and Mr John Amand put
together a proposal. In outline the suggestion was that the business of JAL
should be transferred to the Clamp Hill land and that JAL would erect on the
Clamp Hill land an agricultural building for which, as I have indicated, no
planning permission would be required. I have no doubt that Mr Lloyd-Farrer’s
and Mr John Amand’s intention was that the Clamp Hill land was also to be used
by JAL for propagating and growing plants and for growing on plants brought in
with a view to later sale. They foresaw economies in operation: the Clamp Hill
land and Kiln Nurseries were closely adjacent and the Clamp Hill site could be
used for the provision of stock for Kiln Nurseries. The business of JAL was
primarily a winter trade, being primarily in bulbs, whereas the Kiln Nurseries
business, as a garden centre, peaked in the spring and summer. It was therefore
foreseen that labour and transport could be shared between the two enterprises.
A plan along
these lines must have been mooted in outline to Mr Gold in late 1985 or early
1986, because it was at that stage that he made a visit to Beethoven Street to
see the business of JAL and Mr John Amand. However, nothing crystallised until
a meeting which took place at the La Villa Restaurant some time in April 1986.
It is that meeting and what occurred at that meeting which is central to the
case. It was attended by Mr Gold, Mr Lloyd-Farrer and Mr John Amand. There is
no written record of that meeting or what was said at it. Unhappily, Mr Lloyd-Farrer
died early in 1989. Therefore the evidence as to what occurred can be derived
only from the oral evidence of Mr Gold and Mr John Amand. In fact, there is
little dispute as to the matters discussed at the La Villa meeting. There are
limited areas of dispute, to which I will come. But it is agreed, for the most
part, that the following matters were discussed and agreement in principle,
though not legal agreement, reached. The proposals were these:
(1) that the business of JAL was to be transferred
to the Clamp Hill land.
(2) that JAL, at its own expense, was to erect
the agricultural building on the Clamp Hill land.
(3) that Mr John Amand personally was to acquire
the two one-sixth shares in the Clamp Hill land which belonged to Mr Gordon
Smith and Mr Nick Smith; the price at which he was to acquire those one-sixth
shares was £10,000 each, making a total of £20,000. The purchase was to be
effected by Mr John Amand having an option for five years to buy the Smiths’
respective shares at the figure on £20,000. In the meantime Mr John Amand or
JAL was to pay £40 per week — that is to say, 10% pa of £20,000 — to Mr Gordon
Smith alone, who was on the brink of retiring.
(4) that Mr Gold was to transfer part of his
interests in the Clamp Hill land to Mr Lloyd-Farrer at a reasonable price, so
that the end result would be that the Clamp Hill land belonged beneficially to
Mr Gold, Mr Lloyd-Farrer and Mr John Amand in one-third equal shares.
(5) that Mr Lloyd-Farrer and Mr Gold were each to
acquire 25% of the shares in JAL and to become directors of JAL. This proposal
subsequently gave rise to difficulties with Kiln Nurseries’ bank, because in
some way the common shareholding or common directorships was going to prejudice
the borrowing limits which the bank was prepared to permit. In consequence the
agreement was varied so that, instead of buying 25% of the shares, Mr Gold and
Mr Lloyd-Farrer were to get 25% of the profits of JAL. I am satisfied that such
a variation was agreed.
Mr Gold says
that what took place at the La Villa meeting were mere preliminary discussions
as to the principle of the deal which was under discussion; more had to be
worked out before it could become a legally binding agreement; he would have
foreseen heads of agreement, followed by documents drawn up by lawyers. Mr John
Amand tells me, on the other hand, that he understood that the arrangements
made at the La Villa meeting constituted a firm and concluded agreement, though
he anticipated that in due course that agreement might be incorporated in legal
documents.
Shortly
thereafter — that is to say, in July 1986 — JAL and Mr John Amand, having made
arrangements through Mr Lloyd-Farrer for the purchase of an agricultural
building, went on to the Clamp Hill site, laid the foundations for it and
erected it. The total cost of the building and construction work done on the
Clamp Hill site amounted to some £37,000. (The exact figures have not been
proved and I am making no exact finding on them.) Much of the labour was done by Kiln
Nurseries’ labour, for which Kiln Nurseries were paid. Mr Gold was well aware
of what was happening and indeed, in some ways, assisted in the work.
Mr Gold’s
evidence is that, before the erection of the agricultural building was started
at all, he was separately approached by Mr John Amand for approval to the work
going ahead. Mr Gold’s evidence was that he expressly warned Mr John Amand
that, since there was no concluded agreement or arrangement, Mr John Amand and
JAL would be entering on the land and incurring the expense in the erection of
the building at their own risk. Mr John Amand denies that any such statement
was made.
However that
may be, the building was erected and at the beginning of August 1986 JAL’s
business was transferred from Beethoven Street to the Clamp Hill land, from
where trading started at the beginning of August. Mr John Amand told me that
part of the land surrounding the agricultural building — that is to say, part
of the Clamp Hill land — was from the outset used for growing and growing-on plants.
For example, he told me that 0.75m snowdrops were planted in the land in the
first few months in which JAL was carrying on business from the Clamp Hill
land. Mr Gold denied any knowledge of the use of the Clamp Hill land for
agriculture. His understanding was, so he told me, that all that was happening
was that the agricultural building was being used as a warehouse and office for
JAL’s bulb business; buying in bulbs and selling them on.
Certain
payments were made to Mr Gordon Smith. On October 1 1986 a cheque for £320 was
paid by JAL to Mr Gordon Smith. It was entered in the books of JAL as being
rent and the cheque was endorsed as being for the months of August and
September. On December 16 there was a further cheque for £320, endorsed as
being rent for October and November. On February 11 1987 there was a further
cheque for £320, endorsed as being in respect of the months December and
January. One therefore has, initially, regular payments of £40 a week,
consistent with the arrangement reached at the La Villa meeting, to Mr Gordon
Smith. Thereafter there was a blank until August 12 1987, when two cheques (one
of them postdated) for £320 were drawn by JAL in favour of Mr Gordon Smith.
There was a further cheque on August 27 1987 for £320. Finally, there was a
balancing cheque at some stage in September for £440. Thereafter, from October
1987, a monthly standing order of £200 a month was made by JAL in favour of Mr
Gordon Smith. I was told that the uplift in the amount was due to rounding-up.
However, as will emerge, in the summer of 1987 acute difficulties had arisen
between Mr Gold on the one hand and Mr Lloyd-Farrer and the Smiths on the
other, which renders any actions taken after the summer of 1987 difficult to
interpret. Mr Gold told me, and I accept, that he was at this stage not aware
that these payments were being made by JAL to Mr Gordon Smith. The cheques
were, in each case, collected either by Mr Nicholas Smith or by Mr Lloyd-Farrer
and taken to Mr Gordon Smith.
As to payments
made by JAL or Mr John Amand to Mr Gold and Mr Lloyd-Farrer on account of the
share of profits, the evidence is far less clear. It is common ground that in
April 1987 Mr John Amand paid to Mr Gold £500 in cash. Mr John Amand says that
that was a payment on account of profits for the year, though, in fact, when
the accounts were drawn it proved that no profits had been made by JAL. Mr
Gold, on the other hand, says that the £500 was a gift pressed on him by Mr
John Amand in appreciation of the valuable financial advice that Mr Gold had
given to Mr John Amand. In November 1988 Mr John Amand offered Mr Lloyd-Farrer
£1,000, which Mr Lloyd-Farrer refused. I am not satisfied that this payment was
a payment made or offered on account of profits. By that stage the financial
position as between Mr Lloyd-Farrer and Mr John Amand was complicated by the
fact that they were each, in their different ways, facing a common enemy,
namely Mr Gold.
As I have
said, in the early summer of 1987 serious disagreements broke out between Mr
Gold on the one hand and Mr Lloyd-Farrer and the Smiths on the other relating
to the affairs of Kiln Nurseries. Those disagreements led, I believe, to
litigation in this division. It is plain that feelings ran quite high. Those
disagreements were concluded by an agreement entered into in January 1988,
under which Mr Gold acquired all the interests of Mr Lloyd-Farrer and the
Smiths in Kiln Nurseries.
In the summer
of 1987 there was a meeting, when Mr Gold, Mr Lloyd-Farrer and Mr Nick Smith
came to JAL’s premises and saw Mr Loucaides. They were complaining about retail
sales being made by JAL. In the course of that meeting Mr Gold told Mr
Loucaides that JAL had no right to be on the land at all and should get off.
That was confirmed by a formal letter on August 16 1987, whereby Mr Gold alone
gave formal notice to JAL and Mr John Amand that the premises on the Clamp Hill
land had to be vacated. Shortly thereafter, on October 14 1987, Mr Gold issued
a writ against Mr John Amand, the Smiths and Mr Lloyd-Farrer, claiming possession
of the Clamp Hill land. In response, Mr John Amand said that in any event it
was the company, JAL, not him who was in possession. That gave rise to the
second writ, in which Mr Gold took proceedings for possession against JAL, the
Smiths and Mr Lloyd-Farrer. The Smiths and Mr Lloyd-Farrer, until his death —
and his widow since his death — have played no part in the trial of the action
before me, save that Mr Nick Smith gave evidence. The two actions have been
consolidated.
The final
twist in this network of relationships is that on December 21 1989 JAL acquired
from Mr Lloyd-Farrer’s widow and the Smiths their interests in the Clamp Hill
land. As a result, the legal estate in the Clamp Hill land is now vested in the
registered proprietors, Mr Gold, Mr Gordon Smith and Mr Nick Smith, in trust
for Mr Gold and JAL in equal shares. So the beneficial interest in the Clamp
Hill land is now shared between plaintiff and defendants. That gave rise to an
amendment, for which I gave leave in the course of the hearing, whereby Mr
Gold, faced with the possible difficulty of being entitled to only half the
beneficial interest and therefore unable to get possession of the land as
against the other beneficial owner, amended to seek an order for the sale of
the land with vacant possession, thereby realising his interest in the land.
I must now say
a word about the principal protagonists. Mr John Amand is a plants man and a
nurseryman. I have no doubt that he is an efficient trader in bulbs and a good
horticulturist. But in terms of finance and property dealings, I fear he is
rather an innocent at large. On any view of the case it was almost unbelievably
naive that he should have transferred the business of JAL to the Clamp Hill
land and expected some £37,000 on the erection of a building on that land on
the faith of a meeting at a restaurant of which there was not even a written
record, let alone any legal document, evidencing and providing what was to
happen. However, I accept that he is an honest and accurate witness.
Mr Gold is
quite different. As I understand it, his primary business has been in the
clothing industry and he is also a director or owner of a property company. He
told me he did not know much about plants or horticulture and he left that to
the others. I have no doubt that his prime interest in both the Kiln Nurseries
land and the Clamp Hill land was its potential development value; he was
interested in the property aspects of the matter. As green belt land, with a
lively hope of obtaining planning permission in the future, the land could be
of very substantial value indeed. Mr Gold has both financial acumen and
know-how. He gave me certain evidence of a rather confusing nature, which was
certainly fluent in its financial language though not always clear in its
purport. Mr Gold knows very well what he is doing. On a number of points I did
not find him a very convincing witness. His evidence was well tailored to the
requirements of his case and to facts which were verifiable from other sources.
But, in a case of conflict between the evidence of Mr John Amand and Mr
Loucaides on the one hand and Mr Gold on the other, I prefer the evidence of Mr
John Amand and Mr Loucaides to that of Mr Gold.
As to the La
Villa meeting, I accept Mr Gold’s evidence that he did not think that he had
entered into a concluded contract at that meeting. He is not the sort of man
knowingly to expose himself to liability without a properly drawn legal
document. I am equally satisfied that Mr John Amand and, from his actions, Mr
Lloyd-Farrer both thought that they had an agreement and acted on that basis.
Mr John Amand had obtained the authority from Mr Loucaides and the other
shareholders in JAL to make the agreement and Mr Lloyd-Farrer had likewise
obtained the necessary authority from the Smiths. Mr John Amand and Mr
Lloyd-Farrer thenceforward, as I see it, proceeded on the basis that there was
an agreement in principle which was in force and which justified the things
they did thereafter.
As to the
circumstances in which the agricultural building was erected, I reject Mr
Gold’s evidence that there was a separate approach to him asking for specific
authority to erect the building. I also reject his evidence that he made it
clear to Mr John Amand that he would be proceeding at his own risk if he put it
up. I think that Mr Gold’s attitude was that as there was no agreement in
existence he could, at any time, get JAL and Mr John Amand off the land if he
wanted to; and indeed he would have been quite right in that, apart from the
provisions of the Agricultural Holdings Act 1986 and any possible doctrine of
proprietary estoppel.
I also reject
Mr Gold’s evidence that the £500 in cash was paid to him as a gift in
recognition of his services. Mr John Amand told me, and I accept, that there
were no such services. Mr Gold appears to be a wealthy man; there is talk of
his having both a Rolls-Royce and a Range Rover. Mr John Amand appears to be in
a small way of business; certainly his company was not, in those days at least,
very prosperous. I find it most improbable that, in those circumstances, Mr
John Amand would be found making gifts of £500 that he could
proffered on the basis that it was towards the share of profits in JAL.
As to Mr
Gold’s knowledge of the intended use of the land surrounding the agricultural
building, I think it quite likely that, as he told me, at the La Villa meeting
Mr Gold was not unduly interested in things horticultural which were being
discussed between Mr Lloyd-Farrer and Mr John Amand. However, it seems to me
that he was a party to whatever was agreed, involving as it did the
co-operation between JAL and Kiln Nurseries Ltd on the horticultural front. I
think the arrangement to which he was a party included the use of the land at
Clamp Hill for growing and growing-on plants. Certainly it should have been
apparent, and I find was apparent, to him within a short time thereafter that
the Clamp Hill land was being used for horticultural purposes. It will be
recalled that Mr Gold lived only 200 yds or 300 yds away from the Clamp Hill
land.
Finally, there
was evidence from Mr John Amand that there was an express agreement that the
Clamp Hill land could continue to be used by JAL until the time had come for it
to be sold, planning permission for residential or other development having
been obtained. I find it difficult to accept, and do not accept, that evidence.
It seems to me that the matter was allowed simply to go on the basis that all
three were to be in this together, everybody would want to make a profit when
and if the land became capable of development and in the meantime JAL was to be
there.
Turning then
to the defences to the claim for possession. JAL’s defence is threefold. First,
it claims that JAL was entitled to a licence to occupy the Clamp Hill land and
that that licence, by virtue of section 2 of the Agricultural Holdings Act
1986, is converted into a tenancy from year to year protected under the Act.
Alternatively, it says, that by reason of Mr Gold having stood by and
encouraged the expenditure of money on the Clamp Hill land by JAL, Mr Gold is
estopped now from claiming possession of the land; that is to say, a claim
based on proprietary estoppel. Third, JAL says that Mr Gold, as only one of the
three — and, during Mr Lloyd-Farrer’s lifetime, four — owners of the legal
estate in the land and as only one of the parties to the licence under which
JAL was in occupation of the land, could not by himself, unilaterally and
without the authority from the Smiths, at least, terminate the licence of JAL
as he purported to do in August 1987.
I will deal
first with the claim under the Agricultural Holdings Act. Section 2 (1)
provides as follows:
An agreement
to which this section applies shall take effect, with the necessary
modifications, as if it were an agreement for the letting of land for a tenancy
from year to year unless the agreement was approved by the Minister before it
was entered into.
(2) Subject to subsection (3) below . . .
— which does
not touch this case —
this section
applies to an agreement under which —
. . .
(b) a person is granted a licence to occupy land
for use as agricultural land, if the circumstances are such that if his
interest were a tenancy from year to year he would in respect of that land be
the tenant of an agricultural holding.
What is said
is that JAL, having been let into possession of the Clamp Hill land, is a
licensee; that the licence is indefinite; that the land is agricultural, and
that, accordingly, JAL’s licence in the Clamp Hill land is converted into an
agricultural holding by way of a tenancy from year to year. It is common ground
that none of the steps necessary to terminate such an agricultural tenancy has
been taken. Accordingly, if that argument is a good one, JAL has a good defence
to these proceedings.
It is
established by authority that section 2 of the Act does not apply to a
voluntary gratuitous licence: see Goldsack v Shore [1950] 1 KB
708. On behalf of Mr Gold, Mr Price’s main contention is that JAL’s licence in
the present case was not a contractual licence at all but was purely
gratuitous. Mr Price accepts, to my mind quite rightly, that the circumstances
in which JAL went into occupation of the Clamp Hill land can be accounted for only
on the footing that there is a licence; it was not a trespasser and it was not
a tenant. But Mr Price’s point is that there was no concluded agreement at the
La Villa meeting, nor is there any other consideration given by JAL for its
right to go on to the land. I accept Mr Price’s submission that the La Villa
meeting did not give rise to any legally enforceable contract. The arrangements
sought to be made were complicated, involving, among other things, transfers of
interests in land. The agreements by the Smiths to grant options to buy their
respective interests in the Clamp Hill land would have had to be in writing in
order to be enforceable; so would the agreement by Mr Gold to transfer part of
his interest in the Clamp Hill land to Mr Lloyd-Farrer. The terms on which that
transfer was to be made were not, so far as I can see, agreed. Moreover, the
agreement that Mr Gold and Mr Lloyd-Farrer were each to receive 25% of the
profits of JAL was an agreement redolent with uncertainty. How were such
profits to be calculated? For example,
since there were to be two working directors of JAL — namely Mr John Amand and
Mr Loucaides — were they to receive salaries for their work before profits were
struck or were they to be remunerated only by way of themselves sharing profits
as shareholders? In my judgment, the La
Villa discussions did produce an agreement in principle but lacked many of
those elements of certainty which were necessary to make such a complicated
agreement legally enforceable.
However, in my
view, that is not the end of the matter. Even though the La Villa meeting did
not give rise to a concluded contract, it was the background against which
everything that was done took place. It was anticipated that JAL was to erect a
building on the land; it was in pursuance of that anticipated obligation to
erect the building that JAL went on to the land and was allowed on to the land
to erect the building; it was on those terms that JAL was admitted to the land
and on no other terms. The case, to my mind, bears a very considerable
similarity to that decided by the Court of Appeal in Mitton v Farrow
[1980] EGD 42*. In that case the defendant was in possession of agricultural
land. He claimed he was there as tenant under an oral agreement he had made
with the freeholder. Under that oral agreement he was to have a three-year
tenancy, there being no rent for the first year, a rent of £5 per acre for the
second year and £10 per acre for the third year. There was to be no rent for
the first year because he was to undertake the clearance of the land, which was
derelict. The trial judge found that no concluded oral agreement to that effect
had been established. Yet it was common ground that the intention had been that
the defendant would, during the first year, clear the land at his own expense
and then, having done that clearance, would obtain some interest in the land.
In pursuance of that non-enforceable agreement the defendant had entered on to
the land, to the knowledge of the owner, and had incurred expenditure in clearing
it. The Court of Appeal held that the defendant did have a licence of a kind to
which section 2 of the Act applied. Buckley LJ, having held that the Act did
not apply unless the defendant was in occupation as a licensee under an
agreement supported by a valuable consideration, held that in the circumstances
the only possible inference was that if the defendant agreed to and did clear
the land, he was to enjoy some beneficial enjoyment of the land. The court
inferred in that case an agreement that, in anticipation of the tenancy to be
granted, the defendant was let into possession as a licensee in consideration
of his agreeing to reclaim the land at his own expense; that is to say, it was
not a gratuitous licence.
*Editor’s note:
Also reported at (1980) 255 EG 449, [1980] 2 EGLR 1.
So, in my
judgment, here JAL was let into possession in anticipation of the
implementation of the La Villa arrangements on the terms that JAL was to erect
the building. Having entered the land for that purpose, in my judgment, once
JAL had started to erect the building it was bound to complete it. In my
judgment, it is open to me to infer, and I do infer, an implied contract that
the licence was to be granted for value in that way and gave rise to a licence
of a kind protected by section 2 of the Act. I therefore hold that JAL was
entitled to a contractual licence to occupy until that licence was terminated.
As such, that licence was converted by section 2 into a tenancy from year to
year, provided that the land in question is properly to be treated as
agricultural land.
That leads me
to Mr Price’s second point. He contends that the Clamp Hill land was not a
licence ‘for use as agricultural land’. I have no hesitation in rejecting that
argument. ‘Agricultural land’ is defined by section 1 (4) of the Act as being
‘(a) land used for agriculture which is so used for the purposes of a
trade or business’, and ‘(b) any other land which, by virtue of a
designation under section 109(1) of the Agriculture Act 1947, is agricultural
land within the meaning of that Act’. ‘Agriculture’ is defined by section 96 as
including:
horticulture .
. . the use of land as . . . market gardens and nursery grounds . . . and
‘agricultural’ shall be construed accordingly.
The question,
therefore, is whether the Clamp Hill land generally was used for horticultural
purposes or as market gardens and nursery grounds. I am satisfied that the land
was intended to be used and was
not to conduct retail sales on the land, save as to certain specialist plants
and bulbs that Mr John Amand dealt in. It is true that a substantial part of
JAL’s business consisted of buying in bulbs and selling on as wholesalers. But
on the evidence before me some 15% to 20% of the trade consisted of selling
plants grown, or grown-on, on the 6 acres of the Clamp Hill land. I find that
all parties knew and intended that JAL was to use the land as well as the building
for the purposes of carrying on its business, which included the business of
growing and growing-on plants. That was the only permitted use of the land and
that was what was intended should happen. Therefore, I find that the licence
was a licence to use the Clamp Hill land as agricultural land, being the only
permitted planning user.
Accordingly,
for those reasons, I hold that JAL is entitled under section 2 of the Act to an
agricultural tenancy from year to year of the Clamp Hill land. The terms of such
tenancy will fall to be fixed by an arbitrator under sections 2 (4) and 6 of
the Act. It is, therefore, unnecessary for me to decide the other two points
relied on by JAL by way of defence. I have, I think, made the necessary
findings of fact to enable the Court of Appeal, if necessary, to decide such
points if occasion requires. For myself I will simply dismiss both claims.
Judgment for
the defendants with costs.
