Agricultural holding — Whether a garden centre was an agricultural holding or the subject of a business tenancy under Part II of the Landlord and Tenant Act 1954 — Whether tenancy substantially a tenancy of an agricultural holding — Whether question had to be decided under the Agricultural Holdings Act 1948 or the Agricultural Holdings Act 1986 — Whether substantiality should be determined by proportion of turnover — Whether nature of tenancy had changed from being in its origin clearly a tenancy of an agricultural holding to being a business tenancy — Appeal by landlord from decision of county court judge that the property had remained an agricultural holding — The tenancy, which began in 1982, was of a horticultural enterprise, a garden centre laid out in a familiar pattern, with the front part of a greenhouse used for retail sales and a display area round it — There were rows of roses, wallflowers, primulas and some conifers and equipment such as garden paving and sheds — Between 1982 and 1985 an increasing number of articles were brought on to the land from elsewhere for sale, such as garden seats, bags of peat, paving, earthenware pots for plants, a much larger number of garden sheds, bird tables, wooden half-tubs, produce such as eggs and potatoes, electric propagators, chemical sprays and applicators, hanging baskets and even garden gnomes — The county court judge found that the bought-in produce had come to represent more than half the turnover and put the proportions at roughly 40 per cent home-grown produce and 60 per cent bought-in produce — Although the appellant challenged this calculation, the Court of Appeal saw no basis on which they could interfere with it — The history of the litigation was that the appellant had given the respondent tenant a section 25 notice under the Landlord and Tenant Act 1954, dated October 3 1984, purporting to terminate the tenancy on April 8 1985 and indicating that a new grant would not be opposed — The respondent applied for a new tenancy without prejudice to his contention that the land was an agricultural holding — The relevant date for determining the nature of the tenancy was either October 3 1984 or April 8 1985 (it was immaterial which one it was) — The parties were agreed that the matter fell to be determined under the Agricultural Holdings Act 1986, not the Agricultural Holdings Act 1948, although Dillon LJ, in the light of Schedule 13 to the 1986 Act, had considerable reservations — However, here again, having regard to Howkins v Jardine, it made no real difference — Held, affirming the decision of the county court judge, that the turnover figures were in no way conclusive — The judge was justified, looking at the circumstances as a whole, in concluding that this was an agricultural holding at the relevant date — A ‘not insubstantial part’ of the business consisted of horticulture — A court is not lightly to treat a tenancy as having ceased to be within the protection of the agricultural holdings code — There was evidence to support the judge’s finding that the character of the tenancy had not changed — Appeal dismissed
The following
cases are referred to in this report.
Howkins v Jardine [1951] 1 KB 614; [1951] 1 All ER 320; [1951] 1 TLR
135, CA
Wetherall v Smith [1980] 1 WLR 1290; [1980] 2 All ER 530; (1980) 40 P
& CR 205; [1980] EGD 62; 256 EG 163, CA, [1980] 2 EGLR 6
This was an
appeal by the landlord, Mrs Rosemary Joan Greeves, against a decision of Judge
Figgis, at Kingston County Court, holding that the tenant, Robert William
Short, was the tenant of an agricultural holding at Ditton Hill Garden Centre,
Ditton Hill, near Surbiton, Surrey.
Simon
Buckhaven (instructed by R H Speechley & Owen) appeared on behalf of the
appellant; T Hugh Berry (instructed by Woodhouse Russell & Mitchell) represented
the respondent.
Giving
judgment, DILLON LJ said: This is an appeal by the respondent in the
proceedings, Mrs Greeves, against an order of His Honour Judge Figgis made in
the Kingston County Court on April 27 1987. The appellant is the landlord and the
respondent to this appeal, Mr Short, is the tenant of a property known as the
Ditton Hill Garden Centre, Ditton Hill, near Surbiton in Surrey, which is close
to the Esher bypass. The question which the judge had to decide was whether
that property at the relevant dates — and I will come in a moment to what they
were — was an agricultural holding or business premises; in other words,
whether it was at the relevant dates subject to the Agricultural Holdings Act
or subject to Part II of the Landlord and Tenant Act 1954.
The Landlord
and Tenant Act 1954 provides by section 25 that the landlord may terminate a
tenancy to which Part II of the Act applies by notice in the prescribed form,
and by section 24 that a tenant under a tenancy to which that Part of the Act
applies might apply to the court for a new tenancy if the landlord has given
notice to terminate the tenancy. But Part II of the 1954 Act provides by
section 43 that it does not apply to a tenancy of an agricultural holding, and
the definition section provides that ‘agricultural holding’ has the same
meaning as in the Agricultural Holdings Act.
In the present
case the appellant gave the respondent a notice in the prescribed form under
Part II of the 1954 Act, which is dated October 3 1984, purporting to terminate
the tenancy on April 8 1985 and stating that an application to the court under
Part II of the 1954 Act for the grant of a new tenancy would not be opposed.
The tenant then on January 9 1985 applied to the court under Part II for the
grant of a new tenancy. However, that was without prejudice to the contention
that the land was an agricultural holding. The judge had to decide whether it
was an agricultural holding or a tenancy of business premises within Part II.
In view of the wording of sections 24 and 25, it is plain that the relevant
date is October 1984 or January 1985, the dates of the notice to terminate the
tenancy and of the tenant’s application. There is no distinction on the facts
between the two.
Counsel were
agreed in the county court, and are agreed in this court, that the question
whether in October 1984 or January 1985 the land was an agricultural holding
has to be decided under the Agricultural Holdings Act 1986. For my part I have
very
provides that the Act applies in relation to tenancies of agricultural holdings
whenever created, agreements whenever made and other things whenever done. But
Schedule 13 to the Act provides that nothing in the Act shall apply in relation
to a notice to quit an agricultural holding or part of an agricultural holding
given before the commencement of the Act. It seems to me, therefore, that the
natural approach may well be to say that the question the judge had to decide —
whether or not the land was an agricultural holding at the time of the
landlord’s notice to terminate any business tenancy of the land — fell to be
decided under the Agricultural Holdings Act 1948, which was then in force.
Be that as it
may, I do not think that it makes any real difference in substance to the
outcome. Under section 1 of the 1986 Act an agricultural holding is defined as
meaning:
the aggregate
of the land (whether agricultural land or not) comprised in a contract of
tenancy which is a contract for an agricultural tenancy.
Then a
contract of tenancy relating to land is said to be a contract for an
agricultural tenancy if, having regard to all relevant circumstances,
the whole of
the land comprised in the contract, subject to such exceptions only as do not
substantially affect the character of the tenancy, is let for use as
agricultural land.
Under the 1948
Act, section 1 provided that an agricultural holding meant the aggregate of the
agricultural land comprised in a contract of tenancy. The courts, interpreting
that where part of the land was and part was not used for agriculture, laid
down the general approach in a decision of this court in Howkins v Jardine
[1951] 1 KB 614. There Somervell LJ said at p 623, after referring to various
authorities:
I have
therefore come to the conclusion, this being in substance an agricultural
tenancy, and the definition not providing for severance, that the tenant
succeeds.
In that case
the question arose because there were certain cottages included in the letting
which were not occupied for the time being by agricultural workers, and the
claim was that the tenancy could be severed and the agricultural protection
could continue with the agricultural land but not for the cottages. The court
held that severance was not possible, and they regarded it as absurd to treat
cottages contained in what was in substance an agricultural tenancy as coming
in and going out of the Act according to the occupation of the tenants at the
moment. Jenkins LJ said at p 628:
. . . one
must look at the substance of the matter and see whether, as a matter of
substance, the land comprised in the tenancy, taken as a whole, is an
agricultural holding. If it is, then the whole of it is entitled to the
protection of the Act. If it is not, then none of it is so entitled.
He rejected as
unworkable a literal construction of the word ‘used’ as requiring actual use of
every inch of the holding for agriculture or for the purposes of an
agricultural trade or business and said that the letting of the cottages to
other persons, because they were not required for agricultural tenants, should
not affect the result.
The statutory
definition of ‘agriculture’ both in the 1948 Act and in the 1986 Act includes
‘horticulture’ and ‘use of land as market gardens and nursery grounds’.
As a matter of
history, the land with which we are concerned, the Ditton Hill Garden Centre,
consists of some 6.2 acres, and it was let to a Mr Stone in 1973 on a yearly
tenancy. In April 1980 that tenancy was assigned to Mr Short, who paid a price
of £4,000 for the plants and stock. He was granted a new tenancy agreement of
the property on July 21 1982 by the appellant. That agreement was for a period
of five years commencing from April 1 1980. It provided:
THE Landlord
agrees to let as a Garden Centre and the Tenant agrees to take on the terms and
conditions following:
ALL THAT land
at Ditton Hill Summerfield Lane Surbiton Surrey heretofore used as a Garden
Centre together with the shop or store erected thereon or on some part thereof
which for the purpose of identification only is shown edged red on the Plan
annexed hereto . . .
It is, of
course, not in dispute that a garden centre may be an agricultural holding or
may be merely a retail shop which is a business premises subject to Part II of
the 1954 Act. One can easily think of garden centres which are plainly within
Part II of the 1954 Act and are not agricultural holdings at all and other
garden centres which are equally plainly agricultural holdings where retail
sales are predominantly sales of plants grown on the same land.
This tenancy
agreement included, among many usual covenants, a covenant by the tenant ‘to
manage the property in accordance with the rules of Good Husbandry so as to
preserve the fertility of the soil and to keep the land free from weeds and in
good order’. That is, of course, a standard covenant in tenancies of
agricultural holdings. Then there was an arbitration clause which provided:
ALL disputes
and differences which may hereafter arise between the parties hereto under or
in connection with this agreement not being disputes or differences
compulsorily referred to Arbitration under the Agricultural Holdings Act 1948 .
. . shall be referred in accordance with the Arbitration Act 1950 or any
statutory modification or re-enactment thereof for the time being in force to a
single Arbitrator to be appointed in default of agreement by a member of [a
particular firm]. No award made under this sub-clause shall include any matters
compulsorily referred to Arbitration under the Act of 1948.
Mr Short grows
roses on parts of the land, also plants such as wallflowers and primulas and
some conifers. We have been supplied with an aerial photograph of the garden
centre taken in 1980 or 1982. There is a greenhouse at right angles to the road
with a display area round it. That is in the centre of the road frontage of the
garden centre. The front part of the greenhouse was used for retail sales. To
the east and west ends of the land plants are grown in the open, but near the
greenhouse there are plants in containers for sale. One can see relatively near
the greenhouse rows of roses; there are also some containerised conifers,
relatively small amounts of what looks like garden paving, and four small
garden sheds, and a parking area. The conclusion, I apprehend without any
hesitation, would be that at the time of the aerial photograph and at the time
of the grant of the tenancy, it was a tenancy of an agricultural holding. The
roses sold are now put into containers or pots for sale, but they are still all
roses which have been grown by Mr Short on his land.
What has
happened since is that parts of the land to the east and west have become
somewhat derelict, but they are not really put to any other use except
horticulture. Part of the land at the west end is not particularly good land.
But, much more significantly, the display area has been devoted to a very much
greater extent to the sale of garden sundries, which are brought on to the land
from elsewhere for sale. We have a number of photographs which show in 1984 and
1985 garden seats, gnomes, bags of peat, paving, earthenware pots for plants
and matters of that sort, and also a very much larger number than before of
timber garden sheds which are sold, in effect, by a concession granted to the
makers of the sheds, who pay Mr Short a percentage on each shed sold.
There is a
list of bought-in goods for resale among the documents. They include, apart
from matters which I have mentioned, turves, bird tables, wooden half-tubs,
decorative concrete lions, eggs, potatoes, electric propagators, chemical
garden sprays and applicators, hanging baskets and all sorts of matters of that
kind, and greenhouses as well as garden sheds.
What is
submitted for the landlord (the appellant) is that there is now, on an area
which it is agreed is about 1.2 acres, a thriving shop selling predominantly
goods which have not been grown on the land — indeed, a large part of which are
not even plants at all — and therefore a substantial part of the land is used
for non-agricultural purposes. It is not ancillary to the use of the rest of
the land for growing roses and the other plants I have mentioned as grown on
the land. Therefore, applying either test, you cannot say that the land as a
whole is substantially an agricultural holding.
On the other
side, we have been referred to the decision of this court in Wetherall v
Smith [1980] 2 All ER 530, where Sir David Cairns, in giving the leading
judgment in this court, pointed out that there was no doubt that land could
cease to be an agricultural holding if the agricultural use were abandoned, but
he also said (p 537G):
. . . the
cases show that the tenancy is not to be regarded as alternating between being
within and outside the 1948 Act as minor changes of user take place, and that,
when the tenancy is clearly an agricultural one to start with, strong evidence
is needed to show that agricultural user has been abandoned.
The learned
judge had the advantage of a visit to the site, albeit in 1987 rather than at
the dates which are relevant for the decision of the case. He also had a
certain amount of evidence as to the takings of Mr Short from his business in
the garden centre. The judge commented that Mr Short’s records and his
discovery had been hopeless. The landlord had tried to recalculate the figures.
The judge went on to say that the other side’s recalculation of the figures he
regarded as equally hopeless. He said that he could not accept either of the
figures in relation to the proportion which the trade had assumed. He then
said:
I am prepared
to find on a balance of probabilities that a greater proportion of
present trade arises from the sale of bought-in plants and garden requisites and
the sale on commission of certain garden sheds and things of that kind. On a
balance of probabilities I am prepared to find that that represents more than
half the turnover on the premises, but I find that the home-grown produce is a
substantial part. If I were to have to give a proportion, I would say that
approximately 40% of the turnover is related to home-grown produce and 60% from
garden requisites and bought-in produce.
Over the
years the garden requisites and bought-in produce has increased in relation to
the other.
The appellant
has challenged that rough-and-ready computation of 40% of the turnover and has
said that it should be something much less, say 20%, attributable to home-grown
produce. I see no basis on which this court should interfere with the figure
which the judge has given, doing the best he could, as he was compelled to,
with the inadequate figures that have been produced by Mr Short. In fairness to
Mr Short, whose accounting system seems to have been rather rudimentary, it may
be said that he was not very much concerned, for any of the purposes for which
he was keeping accounts, to distinguish between home-grown produce and
bought-in produce. He was merely concerned with the overall result.
The question
then is whether at the relevant dates the tenancy was still a tenancy of an
agricultural holding. The turnover figures, of course, are not in any way
conclusive as to that. The holding and all the circumstances have to be
regarded as a whole. The judge took the view that it was a pretty borderline
case, but he concluded at the end that it was an agricultural holding at the
relevant dates. Then he made the declaration which I have indicated.
We have had
some discussion whether the judge misdirected himself. At one point he said
that he found that genuinely a part of the business, a not insubstantial part,
consisted of horticulture. That might well have been a misdirection if that was
all he meant and if he was entirely disregarding what was done in the display
area, but it is plain that he was not disregarding that. He was looking at the
matter as a whole. He was not putting out of his mind what was done in the
display area and considering that it was enough if a not insubstantial part of
the business still consisted of horticulture.
Viewing the
matter afresh, I can see no basis for differing from the judge’s conclusion.
This is still the business of a garden centre that it always was. Although the
sales of bought-in plants and other goods have increased, it is still based on
the sale also of Mr Short’s roses. The court is not lightly to treat a tenancy
as having ceased to be within the protection of the Agricultural Holdings Act.
With horticulture of this nature, reasons of husbandry may dictate the number
of plants that are grown and the amount of land that is used for growing them
at any particular time as well as reasons of commerce. I do not doubt that the
judge was right in concluding that the bulk of the turnover now comes from
bought-in goods, but I would not differ from his view that this was still at
the relevant dates a tenancy of an agricultural holding.
Accordingly I
would dismiss this appeal.
Agreeing,
CROOM-JOHNSON LJ said: It was common ground both before the learned judge and
in this court that the test to be applied, or the definition to be applied, of
what is an agricultural holding is that to be found in the Agricultural
Holdings Act 1986 and not in the 1948 Act. It was opened to us that this
tenancy had originally been an agricultural holding, but that from 1984 onwards
it changed radically by selling bought-in goods and what can be described as
the ancillary garden items like sheds and things of that kind instead of the
home-grown produce with which Mr Short had begun. It was urged that, if the
original agricultural use had been wholly or substantially abandoned, that
meant that the terms of the tenancy agreement were no longer applicable and
that the protection of the Agricultural Holdings Act was no longer available to
Mr Short.
The learned
judge eventually came to the conclusion, to which Dillon LJ has referred, that
he thought it was a borderline case, and he said: ‘Some of the land to look at
it now as shown in the photographs appears in rather a derelict condition. But
none the less I find that genuinely a part of this business, a not
insubstantial part consists of horticulture. The greater part of the land is
used for this purpose.’ I interpret that
finding, if one eliminates the double negative in the sentence ‘a not
insubstantial part consists of horticulture’, that he was in fact finding that
there was a substantial part of the use of the land which consisted of
horticulture. It was not really advanced to this court that what Mr Short had
done was to abandon the horticultural use of the land so much as that the development
of the bought-in materials and goods in the shop had changed the character of
the tenancy.
One can, of
course, radically change the nature of a tenancy by increasing the bought-in
side even if the production and sale of the home-grown plants remains quite a
substantial part of the trade which is carried on on the premises. But I did
not understand the learned judge to be finding that this is what happened in
the present case. On the facts as they were deployed, and on the facts as they
were found by the judge, it did not seem to me that this could possibly be
described as an abandonment by Mr Short of the agricultural activities which he
had carried on before the shop developed. It is quite clear that the shop
turnover has overtaken the value of the home-grown sales.
The turnover
is not the conclusive matter, however. It is an indication which one can use in
order to see if the nature of the tenancy has in fact changed. The learned
judge came to the conclusion that the nature of the tenancy had not altered. In
my view, there was evidence to support his finding and, having come to the
conclusions which he did, I, too, would dismiss this appeal.
The appeal
was dismissed with costs; legal aid taxation of respondent’s costs ordered.
