Milk quota — Compensation — Amount payable to outgoing tenant at end of tenancy — Agriculture Act 1986, section 13 and Schedule 1 — Calculation of standard quota — Arbitrator’s award remitted to him by county court judge — Appeal by landlords against judge’s direction — Important case on quota compensation — Whether additional milk production attributable to feeding concentrates to cows should be excluded in calculating the standard quota — Where allocated quota exceeds the standard quota the tenant is entitled to be paid the sum due to the excess plus the value of the ‘tenant’s fraction’ of the standard quota — Thus in the present case it was in the landlords’ interest to argue in favour of a larger standard quota and the tenant’s interest to argue for a smaller — Court of Appeal, restoring the arbitrator’s award, decided in favour of landlords’ case
arbitrator had decided that in calculating ‘the reasonable amount’ of litres
within the meaning of para 6(2) of Schedule 1, in order to arrive at the true
standard quota, it was correct to include the effect of concentrates fed to the
cows in accordance with normal practice, in addition to grass grown on the
relevant hectares — The judge, however, on the landlords’ application to set
aside the award for error of law, decided instead to remit it to the arbitrator
with a direction that the assessment of standard quota within para 6(2) should
exclude the additional production generated by the feeding of concentrates — This
ruling, if it had stood, would have increased, in some cases substantially,
milk quota compensation payable to outgoing tenants, with consequential effects
upon incomers — The landlords appealed
judgment of Glidewell LJ is likely to be quoted as a guide through this
technical area — After explaining the general background and mentioning the
conceptions found in paras 5-7 of Schedule 1, he first dismissed an argument
for the tenant based on para 6(1)(a) in regard to the relevant number of hectares
and then proceeded to the main point, which arose under para 6(2) — This is the
provision that the quality of the land or climatic conditions may justify a
variation of the prescribed quota per hectare as a factor in the standard quota
calculation — The variation involves taking the proportion of the prescribed
quota which the reasonably expected yield bears to the prescribed average yield
set out in the statutory instrument — It had been argued that as a matter of
law the specific exclusion (in para 6(5)) of ‘land used for growing cereal
crops in the form of loose grain’ meant that in calculating ‘the reasonable
amount’ in para 6(2) there must also be excluded any concentrated feedingstuffs
processed
decisively rejected this suggestion as illogical and without foundation — There
was nothing in the statute which required the arbitrator to disregard the
actual practice of reasonably skilled and successful farmers in normally feeding
concentrated foodstuffs to their animals — Glidewell LJ’s explanation of the
mysterious phrase ‘feeding to dairy cows in the form of loose grain’ will be
noted — Dairy cows are not in fact fed loose grain in the way that hens are
fed, so that the phrase must refer to grain grown on the land when it is
processed and fed to the animals — Thus land on which barley is grown is not
‘land used for the feeding of dairy cows kept on the land’, but that does not
mean that dairy cows on grassland are to be treated as abstaining from
concentrates — Appeal allowed
No cases are
referred to in this report.
This was an
appeal by the Duchy of Lancaster from the decision of Judge Northcote, at
Shrewsbury County Court, in which he remitted to the arbitrator, Mr Graham Ewart
Holmes FRICS FAAV his award and gave a direction as to the calculation of
standard quota in respect of the dairy farm at New Farm, New Woodhouses, near
Whitchurch, Shropshire. The first respondent was the tenant, Mr William John
Grounds. The second respondent, the arbitrator, was not represented and took no
part in the appeal.
Derek Wood QC
and Joanne Moss (instructed by Farrer & Co) appeared on behalf of the
appellant. Paul Morgan (instructed by Burges Salmon, of Bristol) represented
the first respondent.
Giving the
first judgment at the invitation of Dillon LJ, GLIDEWELL LJ said: On June 25
1976 the Duchy of Lancaster and Mr William John Grounds entered into a tenancy
agreement by which the Duchy as landlord (the present appellant) let to Mr
Grounds (the present respondent, whom I will call ‘the tenant’) the farm
holding, New Farm, New Woodhouses, near Whitchurch in Shropshire, and the
tenant there and then carried on a business of dairy farming.
On March 16
1987 the tenant gave the landlord notice which terminated his tenancy on
September 29 1987. On the termination of the tenancy the tenant was entitled to
claim compensation from the landlord under the provisions of the Agricultural
Holdings Act 1986 for improvements or additions to buildings which he had made,
residual manurial values, tenant right and a number of other matters.
The tenant
also had a further claim to compensation under the Agriculture Act 1986 in
respect of the milk quota which attached to the holding.
There was a
disagreement between the landlord and the tenant as to the amount of
compensation, both that due under the Agricultural Holdings Act and that in
respect of the milk quota. Those disagreements were referred to arbitration.*
*Editor’s
note: Under section 83 of the Agricultural Holdings Act 1986 and Schedule 1,
para 11, to the Agriculture Act 1986 respectively.
On August 31
1987 Mr G E Holmes FRICS FAAV was appointed as arbitrator. He heard the
parties’ representatives and issued his award with the most commendable
promptitude on September 24 1987. The total compensation he assessed for the
milk quota was £45,099.84.
The tenant was
dissatisfied with the basis on which the arbitrator had arrived at that figure.
He therefore applied to the county court to set aside the award. The statutory
route which entitled him to make that application is para 11(5) of Schedule 1
to the Agriculture Act 1986, which applies section 84 of and Schedule 11 to the
Agricultural Holdings Act 1986.
Para 27(2) of
Schedule 11 to the latter Act provides:
Where . . .
there is an error of law on the face of the award, the county court may set the
award aside.
Under para
28(1):
The county
court may from time to time remit the award, or any part of the award, to the
reconsideration of the arbitrator.
On May 17 1988
Judge Northcote at the Shrewsbury County Court heard the application to set
aside the award and directed that:
this matter
be remitted to the arbitrator with the direction that he arrive at the figure
for standard quota on the basis that paragraph 6(2) required the assessment to
be by reference to what could be produced without the additional production
generated by additional feeding in the form of concentrates.
The landlord
now appeals to this court against that decision.
The issue
arises out of the imposition on dairy farmers of milk quotas which in effect
place a maximum figure on the quantity of milk they can economically produce.
Those quotas derive from the decision of the European Community to limit the
production of cows’ milk to seek to limit or reduce the size of what had
become, in the common parlance, known as ‘the milk lake and the butter
mountain’. The method required by Community legislation for the governments and
member states to bring into effect by legislation in their own countries is
that there should be a quota for the production of milk by each producer of
milk and that the producer should be surcharged a levy on any quantity of milk
he produces in any one year over and above the quota. In effect, we are told,
the levy is pitched at a rate which means that the producer might as well throw
away what he produces over and above that amount or reduce his production to
the quota figure.
The
requirement of the Common Market legislation was incorporated into United
Kingdom national law by the Dairy Produce Quotas Regulations 1984, which came
into force on July 24 of that year. The basis of the regulations was to
allocate to a milk producer a quota based on a proportion of his production of
milk in the preceding year, 1983. The original proportion, we are told, was
something like 91%. The 1984 regulations have been repealed and replaced by
similar regulations in 1986, which are the relevant regulations for the
purposes of this case. There are now 1989 regulations, but one need not take
any account of them.
The actual
amount of the quota has been gradually reduced and now stands, if my
mathematics are correct, at something like 87% of 1983 production. The quota
being based upon 1983 production obviously means that the more efficient and
productive a farmer was in 1983, or a farm was in 1983, the higher the quota,
and although in realistic terms the quota is a limitation, in a sense it has
become a right with a value. That is of course particularly true of a quota
which is above average. The effect of the legislation is that the quota
attaches to the holding and when the holding changes hands the quota passes to
the hands of the farmer who is newly in possession. If the original farmer was
a freehold owner and he sells his freehold there is no particular difficulty
about this. The price the purchaser pays can no doubt reflect to an extent the
value which it is thought the quota has.
If, on the
other hand, the farmer was a tenant, which of course is much commoner in the
United Kingdom than it is in other parts of the European Community, problems
arise. Originally when the 1984 regulations were introduced there was no provision
by which, when tenants went out of occupation of dairy farms, they were
compensated for the quota which fell into the hands of the landlord and thus
could be handed on to any new tenant. That compensation was introduced by the
Act with which we are principally concerned — that is to say, the Agriculture
Act 1986. Section 13 of that Act provides:
Schedule 1 to
this Act shall have effect in connection with the payment to certain
agricultural tenants on the termination of their enancies of compensation in
respect of milk quota (within the meaning of that Schedule).
So we come to
Schedule 1. That provides that a tenant who has a registered milk quota,
registered as his in relation to a holding, who quits the land forming the
holding is entitled to compensation from his landlord. However, it is apparent
that the production of milk is dependent upon a number of factors for some of
which the landlord is responsible and for some of which the tenant is
responsible. Obviously a major part of the factors which go to produce a good
yield include the quality of the land itself, the nature of the original
buildings, and matters of that sort. But part is due to the tenant’s dairy
improvements and to the fixed equipment which he has brought into the carrying
on of his business, and the Schedule therefore provides that the tenant is
entitled to compensation calculated initially in relation to what is called the
‘tenant’s fraction’. The tenant’s fraction, according to para 7 of Schedule 1,
is calculated as being, broadly speaking, that proportion of the total of the
factors which go into milk production which the tenant’s dairy improvements and
fixed equipment contribute. I am sure that in putting it in that way I am
oversimplifying it, but it is sufficient for present purposes because
fortunately it was agreed before the arbitrator in this case, though it was not
agreed until after the arbitrator had opened matters, that the tenant’s
fraction to be applied in this particular case was 15.12%.
The way in
which compensation is to be calculated is to be found in Part II of Schedule 1.
On the way through this part of the Schedule
other, which to the newcomer, such as myself, is confusing. Nevertheless, once
one begins to recognise the different features that each concept has one can I
think make a certain amount of sense of it.
Para 5(1) of
the Schedule provides:
The amount of
the payment to which the tenant of any land is entitled under paragraph 1 above
on the termination of his tenancy shall be determined in accordance with the
following provisions of this paragraph.
Subpara (2):
The amount of
the payment to which the tenant is entitled under paragraph 1 above in respect
of allocated quota shall be an amount equal —
(a) in a case where the allocated quota exceeds
the standard quota for the land, to the value of the sum of —
(i) the tenant’s fraction of the standard quota;
and
(ii) the amount of the excess;
(b) in a case where the allocated quota is equal
to the standard quota, to the value of the tenant’s fraction of the allocated
quota; and
(c) in a case where the allocated quota is less
than the standard quota . . .
I need not
concern myself with that because it does not arise here.
That refers to
two different concepts: the standard quota and the allocated quota. The
allocated quota is that which is allocated by means of statutory instrument;
the standard quota is one which is to be calculated in relation to the
particular holding. I will come to the method of calculation which is the
battlefield upon which this contest rages, but it is apparent that since the
allocated quota is a fixed amount, fixed each year, the lower the standard
quota the greater the amount of compensation to which the tenant is entitled
and of course vice versa. What the tenant in this case claimed was that the
arbitrator had made a mistake in the way in which he based the standard quota
and had pitched it too high. The landlord says the arbitrator had got it right.
Before I go on
to deal with the argument generally, I must first of all deal with the
definition of ‘standard quota’. Initially that is to be found in para 6(1) of
the Schedule:
Subject to
the following provisions of this paragraph the standard quota for any land for
the purposes of this Schedule shall be calculated by multiplying the relevant
number of hectares by the prescribed quota per hectare; and for the purposes of
this paragraph:
(a) ‘the relevant number of hectares’ means the
average number of hectares of the land in question used during the relevant
period for the feeding of dairy cows kept on the land or, if different, the
average number of hectares of the land which could reasonably be expected to
have been so used (having regard to the number of grazing animals other than
dairy cows kept on the land during that period); and
(b) ‘the prescribed quota per hectare’ means such
number of litres as the Minister may from time to time by order prescribe for
the purposes of this sub-paragraph.
The prescribed
quota per hectare is, as I have already said, prescribed by an order made each
year. The relevant order for this purpose was the Milk Quota (Calculation of
Standard Quota) (Amendment) Order 1987. That order has a schedule which
categorises land into three categories: severely disadvantaged, disadvantaged
and other land. ‘Other land’ of course is a very broad category. Then it
characterises cattle into three groups. It is agreed that this farm holding
came under the heading ‘Other land’ and that the cattle kept on the farm by the
tenant were in the third group, which is ‘Other cattle’. That is not an insult.
It merely means all others than those described in the first two groups.
Accordingly the quota per hectare was 7,830 litres. It is interesting, though
of no great relevance, to note that that was a reduction on the quota per
hectare for the preceding year, which was 8,000 litres.
If that
subparagraph stood alone the process would really be very simple. All one would
have to do would be to find out the relevant number of hectares and then to
multiply that by the prescribed quota which one gets by looking at the order.
The only complication or difficulty would be in deciding what is the relevant
number of hectares. Fortunately, in this case that was agreed as being very
nearly 60 hectares, 59.29 to be precise.
Mr Morgan for
the tenant advanced before us an argument based upon the second part of para
6(1)(a). I must go back to 6(1)(a) for a moment. It will be
remembered that the first part of 6(1)(a) defines the relevant number of
hectares as ‘the average number of hectares of the land in question used during
the relevant period for the feeding of dairy cows kept on the land’. In other
words, if part of the holding is woodland, to take a simple example, you
obviously do not count that part.
Then it goes
on:
. . . or, if
different, the average number of hectares of the land which could reasonably be
expected to have been so used (having regard to the number of grazing animals other
than dairy cows kept on the land during that period);
That introduces
a qualification which would no doubt catch the farmer, or be relevant to the
farmer, who decided to use part of this land for grazing horses.
Mr Morgan
advanced to us an argument based upon that second part of the subparagraph. He
was, I think, casting doubt upon the validity of the agreement of the relevant
number of hectares, but his argument also extended to the interpretation of
para 6(2), to which I shall come in a moment. I mean no disrespect to him when
I say quite shortly that in my view his argument in that respect does not
assist. The second part of para 6(1)(a) in my view has really no
application to the circumstances of the present case whatsoever, and this is a
straight forward case in this respect where the average number of hectares was
the land used during the relevant period for the feeding of dairy cows kept on
the land. The arbitrator so treated it and the agreement was the figure I have
already described.
One other figure
which is not in issue which was necessary for the arbitrator to determine was
the value of the milk produced. He determined that at 32p a litre and that, of
course, is not a matter which is or can be the subject of challenge before the
county court judge or before us.
Basically,
therefore, the standard quota in this case would be 59.29 hectares X 7,830
litres per hectare. But there is a qualification to be found in para 6(2),
which reads:
Where by
virtue of the quality of the land in question or climatic conditions in the
area the amount of milk which could reasonably be expected to have been
produced from one hectare of the land during the relevant period (‘the
reasonable amount’) is greater or less than the prescribed average yield per
hectare, then sub-paragraph (1) above shall not apply and the standard quota
shall be calculated by multiplying the relevant number of hectares by such
proportion of the prescribed quota per hectare as the reasonable amount bears
to the prescribed average yield per hectare; and the Minister shall by order
prescribe the amount of milk to be taken as the average yield per hectare for
the purposes of this sub-paragraph.
Read at speed
it does not sound very clear. But what it means is that if, by reason of the
quality of the land or the particular climatic conditions, the land is more
than averagely productive for dairy farming purposes and if, as a result, the
amount of milk which could reasonably be expected to have been produced from
one hectare of the land during the relevant period — that is to say, 1983 — was
greater than that which the minister prescribes as being the prescribed average
yield, then the quota is to be taken not by the simple process of multiplying
hectares by the prescribed quota but by determining a fraction — that is to
say, a multiplier — which is to be derived from dividing the reasonable amount
by the prescribed average yield and putting that multiplier into the total sum.
Take an
illustration from the figures of the award in this case. The quota, as I have
already said, for this land was 7,830 litres a hectare; the average yield
prescribed was 9,000 litres — the difference between the two being, of course,
an achievement of the very purpose for which the original legislation came into
force, to ensure that the farmer did not produce as much on his land as on
average he could. The problem the arbitrator had was to decide whether this
land was better than average in terms of other land or whether, because it was
south facing or something like that — climatically it had some advantages — in
consequence it was land on which it could reasonably be expected that more milk
than 9,000 litres per hectare might have been produced in 1983. He decided that
it was and in his award he concluded that the reasonable amount was 10,800
litres. The proportion which 10,800 bears to 9,000 is 1.2:1, and therefore what
he did was to multiply the prescribed quota by 1.2 and then to multiply the
hectares and the result was the figure to which he came, standard quota being
557,088 litres. His sum is set out slightly differently from that, but that is
the effect of it.
In the
originating application to the county court the tenant, who was dissatisfied
with that decision, because of course it meant that he had a higher quota and thus
less compensation than if the matter had been assessed under para 6(1), raised
the following issue. He said:
The statement
of reasons referred to discloses that in calculating the standard Quota for the
purpose of the Agriculture Act 1986 Schedule 1 paragraph 6(2) the arbitrator:
(a) wrongfully rejected the submission made on my
behalf that for the purpose of calculating the amount of milk that could
reasonably be expected to have been produced from one hectare of land during
the relevant period
yield from grass and forage and should exclude any concentrates used;
(b)
wrongfully held that the calculation of ‘the reasonable amount’ as aforesaid
should reflect the use of concentrates.
That the
arbitrator did indeed take that matter into account in arriving at his decision
was made clear, if it was not clear already from the statement of reasons which
he put out, from some correspondence which followed and which can be treated
for this purpose, and was treated by the parties before the county court judge,
as in effect a part of his award.
After the
arbitrator had issued his award the valuers for the tenant wrote to him on
October 15 1987, saying:
Could you
please confirm that when you worked out the reasonable amount of litres could
you please state that you have determined the reasonable amount upon the
assumption that the cows kept on the land were fed concentrates in addition to
the grass grown on the relevant hectares?
and the arbitrator
replied as helpfully on October 20:
I confirm
that, in my view, the Prescribed Average Yields in accordance with the Milk
Quota (Calculation of Standard Quota) Order . . . 1987 . . . do not exclude
concentrates, as I stated on page 5 of the statement of reasons.
Similarly, I
consider that the ‘reasonable amount’ should be calculated the same way, and my
figures do include concentrates fed to the cows in addition to the grass grown
on the relevant hectares.
This is, I
think, a consistent approach because, almost without exception, Allocated Quota
will include milk produced from concentrates.
The tenant
claimed that that was wrong in law; the judge so held.
I must say something
about the matter that was there being referred to. Clearly on a dairy farm the
cows graze on the grass grown in the meadows and that is the, or a, principal
source of food for them. Some of the grass is no doubt turned into hay or
silage and in the winter that is a source of food, but other foodstuffs may be
brought in from outside. The farmer may buy hay from outside if he has not
enough in store for his own purposes, and he may buy concentrated cattle food
which, or some of which, is produced from grain. What he may also do is use
part of his own land for growing grain and he may then (either directly with
his own grain or indirectly) have that turned into concentrated cattle food and
feed it back to his own cattle.
That latter
possibility is specifically dealt with in another subpara of para 6. It will be
remembered, going back to para 6(1)(a), that the relevant number of
hectares means ‘the average number of hectares of the land in question used
during the relevant period for the feeding of dairy cows kept on the land’. Now
if for the purposes of illustration the farmer has 60 hectares of grass and
every year he puts another 20 hectares down to barley and then feeds the barley
to the cattle, and he does not just, as it were, feed the barley out of a pail
(he has to have it concentrated first), is that additional 20 acres of land
used for the feeding of dairy cows kept on the land? Well, in one sense, it patently is.
Para 6(5)(a)
provides that:
references to
land used for the feeding of dairy cows kept on the land do not include land
used for growing cereal crops for feeding to dairy cows in the form of loose
grain.
Everybody is
agreed that that wording is not very apt because, as I have just said, dairy
cows are not actually fed loose grain in the way that hens are fed loose grain,
but the parties are agreed that that can only be a reference to grain grown on
the land which is then processed and fed to the cattle. So in the illustration
I have given, the 20 acres put down to barley would not be part of the relevant
number of hectares.
The argument
advanced for the tenant before the judge and before us was that there was a
specific exclusion in that subparagraph in relation to the relevant number of
hectares of land used for the growing of grain, and thus it must be assumed
that there was to be excluded also the effect of the grain so grown or of any
concentrated foodstuff brought in from outside. What must be assumed, it is
argued, is, in calculating the reasonable amount, that the cattle in the relevant
period (1983) were fed only that which could be produced on the land in
question in the form of grass and hay and perhaps hay brought in from outside
(Mr Morgan did not necessarily accept that), but certainly not any concentrated
foodstuff. He asked us to uphold the judge, who had concluded that the
reasonable amount could only properly, under the statutory provisions, be
calculated on the assumption that no concentrates had been fed to the cattle on
the holding in the relevant period, 1983. The judge, as I have said, accepted
that argument. The arbitrator, as is clear from the paragraphs of the
correspondence I have read, did not, and therefore the judge referred the
matter back to the arbitrator.
Going back to
para 6(2), if one gets to the para 6(2) situation, there are the two concepts:
the amount of milk which could reasonably be expected to have been produced
from one hectare of the land during the relevant period — that is the
reasonable amount — and the amount prescribed by the minister. Since one is
enjoined in para 6(2) to compare one with the other in order to obtain a
multiplier, it is obvious that both must share the same characteristics. If the
county court judge were right in his view that the Act requires it to be
assumed that no concentrated feedstuffs were fed to the cattle during the
relevant period, then it is apparent that the minister in his prescribed
prescription of the average yield must proceed on the same basis. The
arbitrator is confident that the minister has not proceeded on that basis.
Counsel are agreed that if we uphold the county court judge, then the minister
is going to have to reconsider his prescription, because everybody is agreed
that the two considerations arising out of para 6(2) must be on the same basis.
The county court
judge in his judgment made the point, in the note we have of his judgment, that
the Act does not use the word ‘concentrate’. He said:
The nearest
approach to anything that would fall under that head is to be found in para
6(5) which provides that in arriving at the area of land to be regarded for use
of feeding of dairy cows kept on the land one does not include land used for
growing cereal crops for feeding the dairy cows in the form of loose grain. So
the draftsman was specifically excluding acreage used for growing grain as
opposed to silage for feeding to the dairy cows kept on other parts of the
land. That is as near as one can get to finding any specific reference to the
use of concentrates.
Later he said
that it was a pure matter of construction, that he had no evidence of what
constituted normal farming practice, and he concluded that the arbitrator was
wrong to have taken into account the likelihood that concentrates would have
been fed to the cattle to some extent or during some periods in the relevant
period, 1983.
I go back to
the issue posed in the application to the county court judge, namely whether
the arbitrator was wrong to reject the submission that he should disregard
concentrates. In my judgment, that issue does not itself raise a question of
law at all. The only question of law is: in arriving at his decision as to the
amount of milk which could reasonably be expected to be produced from one
hectare of land on this farm in 1983, was the arbitrator required, as a matter
of law, to assume that the farmer would feed his cattle in the manner and with
the foodstuffs which a reasonably skilful and successful farmer in that
locality would have fed his cows at that time?
Or was he required to make a theoretical assumption that whatever a reasonably
successful and skilful farmer actually did, certain elements were to be
excluded, namely concentrated foodstuffs brought in from outside? That is a question of law. I can find nothing
in the statute of relevance which requires the arbitrator to make any
theoretical assumptions at all. I can find nothing which requires him to
disregard the actual practice, as he would know it was — being a skilled and
experienced gentleman — of reasonably skilful and successful farmers at the
time, and if, as he obviously concluded they did, such farmers would normally
feed concentrated foodstuffs to their animals, then he was entitled to take
that into account in his decision as to what yield was likely.
Mr Morgan, as
I have indicated, argued that para 6(5) in effect required that where a farmer
used part of his land for the growing of grain which was fed to his cattle not
merely was the area of land on which the grain was grown to be excluded in the
calculation of the relevant number of hectares but it followed logically that
the effect of feeding the grain to the cattle was also to be excluded; in other
words it was to be assumed that they had not been fed the grain. With the
greatest respect to him, that is an illogicality and it is not to be found in
the statute, and if that was — as it was — part of the basis of his argument
that concentrates whether produced on the land or not were to be disregarded,
then since, in my view, that argument fails, that buttress of his general
argument also fails.
In my view,
the arbitrator was, as a matter of law, perfectly entitled to decide, from his
knowledge and experience, what a reasonably skilful and successful farmer at
the relevant time would do, and thus to calculate upon that basis in using the
shorthand in para 6(2): ‘. . . the reasonable amount of milk which would have
been likely to have been produced per hectare . . .’ It is then a question for his judgment and
expertise, and at that stage to make a comparison with what the ministry took
into account in prescribing average yield became relevant. It was not relevant
obviously in relation to the matter of
For myself, I
find no fault in the arbitrator’s approach.
The judge,
with respect to him, was wrong not to uphold it. I would therefore allow this
appeal and restore the arbitrator’s award.
RUSSELL LJ
agreed and did not add anything.
Also agreeing,
DILLON LJ said: The findings of an arbitrator on an arbitration under the
Agriculture Act 1986 are essentially on matters within his professional
expertise. The arbitrator’s decision can only be challenged in the county court
on grounds of law.
Mr Morgan for
the tenant has put forward a ground of law. He has latched on to certain
phrases in Schedule 1 to the Act, particularly the phrase in para 6(2): ‘. . .
the amount of milk which could reasonably be expected to have been produced
from’ — and I stress the word ‘from’ — ‘one hectare of the land during the
relevant period’; the phrase in para 6(1)(a): ‘. . . the average number
of hectares of the land in question used . . . for the feeding of dairy cows
kept on the land’, and the provision in para 6(5)(a) that ‘references to
land used for the feeding of dairy cows kept on the land do not include land
used for growing cereal crops for feeding to dairy cows in the form of loose
grain’, and he has sought to deduce from those phrases that the dairy cows that
the arbitrator has to consider in reaching his findings are to be assumed to
have been fed only from the grass growing on the land in question, either by
grazing or when it has been made into hay, but to my mind the passages he
relies on do not support that conclusion. I do not think the arbitrator was
constrained to adopt any such artificial approach to his task in considering,
for instance, the amount of milk which could reasonably be expected to have
been produced from one hectare of the land.
Accordingly, I
see no ground of law available to support the appeal from the county court. I
would allow this appeal also, set aside the order of the judge, and restore the
award of the arbitrator.
The appeal
was allowed; respondent’s application to the county court dismissed with costs
in the Court of Appeal and below; costs below to be on Scale III. The
application for leave to appeal to the House of Lords was refused.
