Son working on farm as partner with father — On father’s death son wishing to succeed tenancy — Landlord challenging son on ground that he did not derive principal source of livelihood from work on holding under Agricultural Holdings Act 1986 — Tribunal finding for son — High Court allowing landlord’s appeal — Court of Appeal allowing appeal against that decision — Judgment for appellant tenant
The appellant, C, began working on Casthorpe Farm, Barrowby, Grantham, Lincolnshire, a farm of 147 ha in 1980. He had been a partner with his late father in the farming business since 1981. The father died in 1988 and the son applied to the tribunal for a tenancy in succession under section 39 of the Agricultural Holdings Act 1986. The landlord resisted the application on the ground that the decision did not satisfy the “livelihood condition” in that the capital deployed in the farm business during the relevant periods came from outside sources and included loans from family members and increases in bank overdraft.
In order to qualify as tenant the applicant had to show that he had made sufficient net farming profits to constitute the principal source of his living expenses for a “continuous period of not less than five years or two or more discontinuous periods together amounting to not less than five years” in the seven years ending with the date of the death: see section 36(3)(a) of the 1986 Act. The tribunal made a determination in the son’s favour. It found that it was sufficient for the applicant to show that he was engaged in agricultural work on the holding and that his principal source of livelihood was his drawings from the farm business, whether or not there had been any profits to which he had been entitled and which had been generated by the business to fund drawings. All the money from outside sources had been paid into a farm account. The landlord argued that once C could not attribute his principal source of livelihood to agricultural work if the farm did not generate the necessary income to provide that principal source, he was no longer eligible under the Act. The High Court allowed the landlord’s appeal: see [1994] 2 EGLR 4. The son appealed.
Held The appeal was allowed.
1. Section 36(3)(a) should be construed in a purposive manner and in the way a jury would do, without adopting too legalistic an approach. As a matter of ordinary language a person who had no sufficient source of income other than his drawings from a partnership account, and was entitled to make those drawings because he was engaged full-time in agricultural work on the holding, “derived” his livelihood from that work.
2. The subsection was not concerned with whether an applicant for a new tenancy was living beyond his means or with how the excess was funded. It required him to establish his economic dependence on the holding by showing that his work on the holding provided his main means of livelihood. In the present case it provided his only means of livelihood.
3. The net profits from the farming business were not enough to support the appellant, and in so far as they were not, his living expenses were financed by the bank, by other creditors or from his own capital. That did not prevent his work on the holding from being the sole source from which he derived his livelihood.
Derek Wood QC and Martin Rodger (instructed by Palmer Wheeldon, of Cambridge) appeared for the tenant; Paul Morgan QC (instructed by Burges Salmon, of Bristol) appeared for the landlords.
