Non-domestic rating – Exemption – Agriculture – Schedule 5 to Local Government Finance Act 1988 – Land used as plant for production of mushroom compost containing mushroom mycelium – That product sold on to mushroom farmers for final stage of growing and harvesting mushrooms – Whether hereditament consisting of agricultural land or agricultural buildings qualifying for exemption from rates as market garden – Paras 1, 2(1)(d) and 3(b) of Schedule 5 – Exemption granted – Appeal allowed
The respondent was the occupier of 10ha of land, located in the countryside at Leckford, Hampshire, on which it operated a plant for the production of mushroom compost containing mushroom mycelium. The process involved three phases, beginning with the creation of compost from locally supplied wheat straw, deep litter poultry compost and agricultural gypsum, followed by the addition of mushroom spawn and ending with the growth of mycelium strands. That material was then broken up and sold on to mushroom farms, where the mushrooms were finally grown and harvested. As part of its operation, the respondent had constructed a reservoir, buildings, hardstanding, plant and other structures on the land; the most recent, dating from November 2010, was a large building containing nine insulated polytunnels, a filling hall and an emptying and dispatch hall, which enabled a high degree of atmospheric control of the building and automation of the processes.
From 2007 onwards, the respondent made a number of proposals to alter the entry for the property in the 2005 and 2010 non-domestic rating lists, contending that it was entitled to agricultural exemption from rates. The Valuation Tribunal accepted that contention and held that the premises qualified for exemption as a “market garden” within the meaning of Schedule 5 to the Local Government Finance Act 1988.
The appellant valuation officer appealed. The issue on appeal was whether the respondent’s premises were exempt from non-domestic rates as either: (i) “agricultural land” consisting of “anything which consists of a market garden, nuhttp://bit.ly/1org5JRrsery ground, orchard or allotment”, within paras 1(a) ad 2(1)(d) of Schedule 5; or (ii) “agricultural buildings” that were or formed “part of a market garden” and were “used solely in connection with agricultural operations at the market garden”, within paras 1(b) and 3(b).
Held: The appeal was allowed.
It was important to read the definitions of “agricultural land” and “agricultural buildings” in their context. Para 2(1)(d) specified a market garden, nursery ground, orchard or allotment as falling within the definition of “agricultural land” and, while those things might overlap and the distinctions between them might be difficult to discern, they were recognisably different concepts which parliament had thought it worthwhile to list individually. By contrast, parliament had taken one of those items, namely a market garden, and treated it individually when listing the categories of “agricultural buildings”; it must therefore had intended that the function of a market garden did not include the function of a nursery ground.
The essential element of a market garden was the production of an article, such as fruit, vegetables, flowers, or mushrooms, which would be sold directly or indirectly to a member of the public for consumption: Grewar v Moncur’s Curator Bonis 1916 SC 764, Watters v Hunter 1927 SC 310 and Twygen v Assessor for Tayside Region 1991 SC 98, dealing with similarly-worded Scottish legislation, applied. That essential element had to take into account changing methods of production and sale and changing public tastes. The botanical maturity of the produce was not part of the test, nor was proximity. Produce could be sold from a market garden before it could actually be consumed, such as unripe fruit that would ripen during the journey or on the shelves. Further, the fact that operations were technically controlled and used large and sophisticated machinery did not preclude a hereditament from being a market garden. Agriculture had developed almost beyond recognition. Both a market garden and a nursery ground would be regarded as agricultural and entitled to exemption; there was nothing in the statute to rule them out on the grounds of the degree of technicality or machinery that they employed. Each case had to be decided on its own facts.
However, as a matter of fact and degree, the respondent’s operation was properly characterised as a nursery ground rather than a market garden. A nursery ground was a recognisably distinct operation, in which small plants or trees were propagated or sown with a view to selling them to someone else for another purpose, such as the production of timer, fruit or vegetables, or possibly landscaping or decoration. The respondent’s operation was indistinguishable from a nursery that supplied trees and plants bred to be sold to others who would produce fruit and vegetables. It followed that the hereditament did not qualify for exemption as agricultural buildings used for a market garden, within para 3(b) of Schedule 5 to the 1988 Act.
Nor did the respondent’s hereditament qualify as “agricultural land” within para 2(1)(d). The reference in the 1988 Act to “anything” that consisted of a market garden could not be read as encompassing buildings; otherwise, the mutually exclusive distinction between land and buildings that had long been recognised in the rating legislation would be swept away. The addition of that one word, while retaining the structure of the rest of the schedule and the different definitions of “agricultural land” and “agricultural buildings”, was not intended to make a fundamental change to the legislation.
The effect of the foregoing was that, while both a market garden and a nursery ground might in practice be carried on entirely under cover, the 1988 Act gave agricultural exemption to the market garden as “agricultural buildings” but not to the nursery. It was difficult to see why there should be a special exemption for market garden buildings but none for nursery ground buildings, when both were defined as agriculture and he buildings might be almost identical. None the less, that was the effect of the statute and any change was for parliament to make.
Sarabjit Singh (instructed by the legal department of HM Revenue and Customs) appeared for the appellant; Gordon Nardell QC and James Burton (instructed by Michelmores LLP, of Exeter) appeared for the respondent.
Sally Dobson, barrister
