Son working on farm as partner with father — On father’s decease son wishing to succeed tenancy — Landlord challenging son on ground that he did not derive principal source of livelihood from his work on holding under Agricultural Holdings Act 1986 — Tribunal finding for son but stating case for High Court — Judgment for landlord
The applicant, C, had worked on Casthorpe Farm, Barrowby, Grantham, Lincolnshire, a farm of 147.88 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 son did not satisfy the “livelihood condition” in that the capital deployed in the farm business during the relevant period came from outside sources and included loans from family members and increases in the 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 Act.
The tribunal 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 drawing from the farm business, whether or not there had been net profits to which he had been entitled and which had been generated by the business to fund the 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. There was a real distinction between an employee of an unprofitable business from which he was paid wages and an applicant who was a partner of a farming business which did not generate profits, but who nevertheless drew from the business. An employee’s wages were paid regardless of the business profitability for work done whereas a partner whose business generated losses did not derive his livelihood from the work which resulted in those losses.
Held The landlord’s appeal was allowed.
1. The sums in the bank account were not profit from the previous years’ work; the landlord argued that it was not enough to show full time work on the holding and that the applicant had devoted his life to it, while the tenant submitted that if the money was in a farm account provided it went into the business and was drawn from it, it did not matter where it came from. There had been no decision on that point.
2. Parliament had wished to establish under the terms of the Act that a successor should have a link with the holding and have worked on it; it did not deal with a situation where the tenant made no profit from it.
3. The nature of the account and what it was called was not relevant. While the court conceded that there were anomalies between an employee and a partner that was not a good reason for not giving expression to the clear words of the Act. In so far as Bailey v Sitwell [1986] 2 EGLR 7 might have expressed a different view, his lordship differed from that decision.
Paul Morgan QC (instructed by Burges Salmon, of Bristol) appeared for the landlord; Edward Cole (instructed by Mills & Reeve, of Cambridge) appeared for the tenant.
