Rating — General Rate Act 1967, section 26(3) and (4) — Rating Act 1971, sections 1 and 2 — Exemptions from rating — Whether premises occupied and used by the appellant ratepayers for the breeding and rearing of thoroughbred horses were entitled to the benefit of agricultural derating — The hereditaments in question were situated within, or attached to, land which was conceded to be agricultural land within the meaning of the rating legislation — The hereditaments comprised the usual kind of buildings found on stud farms, in particular stable blocks, loose boxes, covering yards and sheds, foaling boxes, veterinary rooms, hay stores and feed stores — The local valuation court had decided that the hereditaments in question were entitled to derating, but the Lands Tribunal (Mr V G Wellings QC) and the Court of Appeal decided that they were not — The issue turned on whether the buildings qualified either under the 1967 Act or the 1971 Act — Appellant ratepayers argued that, as the use of the land as pasture land admittedly made it agricultural land, the activity of pasturing the thoroughbred horses was necessarily an agricultural operation — That operation was part of the activity of raising and keeping thoroughbreds and, as the buildings were used for the same activity, the buildings were used (and solely used) in connection with agricultural operations on the land — In rejecting this line of argument the House of Lords (with the exception of Lord Goff of Chieveley, who reached the same ultimate conclusion in the appeal, but through a different course of reasoning: see below) held that ‘in connection with’ in section 26(4)(b) of the 1967 Act meant ‘ancillary to’ the agricultural operations on the pasture land — In the present case, however, the position was the reverse; the use of the pasture land served the purpose for which the buildings were used, namely, the breeding, rearing and keeping of thoroughbreds — Hence the buildings were not used ‘in connection with’ agricultural operations on the pasture land — As regards the argument under the 1971 Act, the buildings would qualify as agricultural buildings if they were ‘used for the keeping or breeding of livestock’ within the meaning of section 2(1)(a) of that Act — ‘Livestock’ as defined in section 1(3) ‘includes any mammal or bird kept for the production of food or wool or for the purpose of its use in the farming of land’ — The appellant ratepayers argued that this ‘inclusive’ definition covered thoroughbred horses — The House (including Lord Goff) held on this point that it was unlikely that Parliament in this context would have intended to cover animals which were not normally regarded as ordinary farm creatures — The reasoning of Lord Parker CJ in Belmont Farm Ltd v Minister of Housing and Local Government, although in a planning context, was equally applicable here — Lord Goff of Chieveley, agreeing on the result under section 26 of the General Rate Act 1967, preferred to rest his conclusion, as did the Court of Appeal, on the view that the operations performed on the land were not agricultural operations. The operation of breeding and rearing thoroughbred horses for the purpose of recreation was not an agricultural operation. He questioned the view that the expression ‘in connection with’ was equivalent to ‘ancillary to’, as it may include cases where the uses of the land and buildings are complementary — Appeal dismissed
The following
cases are referred to in this report.
Belmont
Farm Ltd v Minister of Housing and Local
Government (1962) 13 P&CR 417; 60 LGR 319, DC
Dilworth v Commissioner of Stamps [1899] AC 99
Eastwood
(W & JB) Ltd v Herrod [1971] AC 160;
[1970] 2 WLR 775; [1970] 1 All ER 774, HL
Forth
Stud Ltd v East Lothian Assessor 1969 SC1;
1969 SLT 75; [1969] RA 35
Gilmore v Baker-Carr [1962] 1 WLR 1165; [1962] 3 All ER 230; [1962]
RVR 486; (1962) 9 RRC 240; [1962] RA 379, CA
Glanely
(Lord) v Wightman [1933] AC 618
Hardie v Assessor for West Lothian 1940 SC 329
This was an
appeal by Whitsbury Farm & Stud Ltd from the decision of the Court of
Appeal (reported at [1987] QB 390; [1987] 1 EGLR 172) dismissing an appeal from
the decision of the Lands Tribunal (reported at [1985] 1 EGLR 227) in regard to
the rating of the appellants’ hereditaments at Whitsbury, Hampshire.
William Glover
QC and Alan Alesbury (instructed by Penningtons Ward Bowie) appeared on behalf
of the appellants; Robert Carnwath QC and David Mole (instructed by the
Solicitor of Inland Revenue) represented the respondent valuation officer.
In his speech,
LORD KEITH OF KINKEL said: The question at issue in this appeal is whether or
not premises occupied and used by the appellant ratepayers for the breeding and
rearing of thoroughbred horses are entitled to the benefit of agricultural
derating.
Four separate
hereditaments, situated at Fordingbridge in Hampshire, are involved. Each of
them is situated within or is attached to land which is conceded by the
respondent valuation officer to be agricultural within the meaning of the
relevant legislation, and each comprises buildings of the sort usually to be
found on stud farms, in particular stable blocks, loose boxes, covering yards
and sheds, foaling boxes, veterinary rooms, hay stores and feed stores.
The local
valuation court held that the hereditaments were entitled to derating, but the
Lands Tribunal and the Court of Appeal (Lawton, Lloyd and Balcombe LJJ) [1987]
QB 390 decided that they were not.
The principal
enactment concerned with the derating of agricultural premises in England and
Wales is section 26 of the General Rate Act 1967, which provides:
(1) No agricultural land or agricultural
buildings shall be liable to be rated or be included in any valuation list or
in any rate.
(2) The gross value for the purposes of section
19(2) of this Act of a house occupied in connection with agricultural land and
used as the dwelling of a person who (a) is primarily engaged in
carrying on or directing agricultural operations on that land; or (b) is
employed in agricultural operations on that land in the service of the occupier
thereof and is entitled, whether as tenant or otherwise, so to use the house only
while so employed, shall, so long as the house is so occupied and used, be
estimated by reference to the rent at which the house might reasonably be
expected to let from year to year if it could not be occupied and used
otherwise than as aforesaid.
(3) In this section the expression ‘agricultural
land’ — (a) means any land used as arable meadow or pasture ground only,
land used for a plantation or a wood or for the growth of saleable underwood,
land exceeding 0.10 hectare used for the purposes of poultry farming, cottage
gardens exceeding 0.10 hectare, market gardens, nursery grounds, orchards or
allotments, including allotment gardens within the meaning of the Allotments
Act 1922, but does not include land occupied together with a house as a park, gardens
(other than as aforesaid), pleasure grounds, or land kept or preserved mainly
or exclusively for purposes of sport or recreation, or land used as a
race-course; and for the purposes of this paragraph the expression ‘cottage
garden’ means a garden attached to a house occupied as a dwelling by a person
of the labouring classes; and (b) includes land occupied with, and used
solely in connection with the use of, such a building as is mentioned in
subsection (4)(b) of this section.
(4) In this
section, the expression ‘agricultural buildings’ — (a) means buildings
(other than dwellings) occupied together with agricultural land or being or
forming part of a market garden, and in either case used solely in connection
with agricultural operations thereon; and (b) includes a building which
is used solely in connection with agricultural operations carried on on
agricultural land and which is occupied either — (i) by the occupiers of all
that land; or (ii) by individuals who are appointed by the said occupiers for the
time being to manage the use of the building and of whom each is an occupier of
some of the land or a member of the board of directors or other governing body
of such an occupier who is a body corporate, where the number of occupiers of
all the said land does not exceed 24 (two or more persons occupying jointly
being counted as one, but as a separate person from any of them who are
occupying any of the land severally).
The scope of
this enactment was extended by sections 1 to 4 of the Rating Act 1971. It is
sufficient for present purposes to quote section 1(1)(a) and (3) and
section 2(1) and (4):
1(1) In section 26 of the General Rate Act 1967
(in this Part of this Act referred to as ‘the principal section’) — (a)
the expression ‘agricultural buildings’ shall include any building which is an
agricultural building by virtue of section 2, 3 or 4 of this Act; . . .
(3) In this Part of this Act ‘livestock’ includes
any mammal or bird kept for the production of food or wool or for the purpose
of its use in the farming of land . . .
2(1) Subject to subsections (2) to (4) of this
section, each of the following is an agricultural building by virtue of this
section — (a) any building used for the keeping or breeding of
livestock; and (b) any building (other than a dwelling) which is
occupied together with one or more buildings falling within paragraph (a)
above and is used in connection with the operations carried on in that building
or those buildings . . .
(4) A
building is not an agricultural building by virtue of this section unless it is
surrounded by or contiguous to an area of agricultural land (as defined in the
principal section) which amounts to not less than two hectares; . . .
The basis of
the valuation officer’s concession that the land occupied along with the stud
farm buildings is agricultural is that the land is used for grazing by horses.
He accepts that the land is used as ‘pasture ground only,’ within the meaning
of that expression in section 26(3)(a) of the Act of 1967,
notwithstanding that the horses put to pasture there are thoroughbreds which
have nothing to do with farming in the ordinarily understood sense of the word.
I am of opinion that the concession is rightly made. There is nothing in
section 26(3)(a) or elsewhere which expressly limits use as pasture
ground so as to exclude the pasturing of animals which are not reared as food
or for use in the farming of the land, and I do not think that such an
exclusion can be implied.
It follows
that the buildings with which the appeal is concerned are occupied together
with agricultural land, which is one of the relevant requirements of section
26(4)(a) if a building is to qualify as an agricultural building. The
other requirement is that the building should be used solely in connection with
agricultural operations on the land. Is that requirement satisfied? The expression ‘agricultural operations’ is
nowhere defined. In its ordinary meaning it indicates operations concerned with
the raising of crops or the rearing of animals so as to produce or contribute
to the production of ‘the means of human subsistence,’ to quote the words of
Lord Robertson in Hardie v Assessor for West Lothian 1940 SC 329
at p334. In the present context, however, I think it must bear a meaning to
some extent wider than that. Included in the meaning of agricultural land under
subsection (3)(a) is land used for a plantation or a wood, and also
certain cottage gardens and nursery grounds, where no doubt flowers and not any
foodstuffs may be grown. No operations which are agricultural in the ordinary
sense of the word would be carried out on such land, but one would not readily
impute to Parliament an intention to exclude from the benefit of derating
buildings used solely in connection with the carrying out of silvicultural or
horticultural activities on these categories of ‘agricultural’ land. Likewise,
the special treatment for rating purposes of certain dwelling-houses, provided
for by section 26(2), would, considering that a wood is to be treated as
agricultural land, seem no less appropriate for a house occupied by a forestry
worker than for one occupied by a farm worker.
The argument
for the ratepayers proceeded on the lines that since the use of the land as
pasture for thoroughbreds admittedly made it agricultural land, the activity of
pasturing these horses was necessarily an agricultural operation; that
operation was part of the activity of raising and keeping thoroughbreds; the
same activity was what the buildings were used for; and hence the buildings
were used, and solely used, in connection with an agricultural operation on the
land.
It is
necessary to give some consideration to the meaning of the words ‘in connection
with’. In Gilmore v Baker-Carr [1962] 1 WLR 1165 (a case under
section 2(2) of the Rating and Valuation (Apportionment) Act 1928, the terms of
which did not differ materially from those of section 26(3) and (4) of the Act
of 1967) Donovan LJ said, at p 1175:
But the clear
impression which I receive from the statutory language is that the buildings
exempted were to be ancillary or complementary to the agricultural purpose of
the land, and not vice versa.
This passage
was approved by Viscount Dilhorne in W&JB Eastwood Ltd v Herrod [1971]
AC 160, at p 181, who said that to come within the statutory definition the buildings
must be used as adjuncts to the agricultural operations on the land, and that
it was wrong to consider whether the enterprise as a whole, the land and the
buildings taken together, was ‘a combined agricultural operation’. In the same
case Lord Reid said, at p 168:
Ordinary
usage of the English language suggests that the buildings must be subsidiary or
ancillary to the agricultural operations . . . I do not foresee serious
difficulty if ‘used in connection with’ is held to mean consequential on or ancillary
to the agricultural operations on the land which is occupied together with the
buildings.
Lord Morris of
Borth-y-Gest expressed the view, at p 174, that the buildings must be such as
were needed as an adjunct or necessary aid for agricultural operations taking
place on agricultural land. The concept is thus that of principal and
accessory. The use of the agricultural land is contemplated as being the
principal use and that of the buildings as being an accessory use.
In the present
case the use of the buildings is for all the most important operations
concerned with the breeding and rearing and keeping of thoroughbreds. The use
of the agricultural land is for the pasturing of the same horses. It is that
use and nothing else which makes the land agricultural within the definition.
The use of the pasture land serves the purposes for which the buildings are
used, namely the breeding, rearing and keeping of thoroughbreds. The use of the
buildings does not serve the purpose for which the pasture land is used. It is
not ancillary to it. It is an end and purpose in itself. I would therefore hold
that the buildings are not used in connection with agricultural operations on
the pasture land and are certainly not used solely in connection with such
operations.
Counsel for
the valuation officer relied strongly on the Scottish case of Forth Stud Ltd
v East Lothian Assessor 1969 SC 1, where under the Scottish
provisions corresponding to section 26 of the Act of 1967 premises occupied and
used as a commercial stud were held by the Lands Valuation Appeal Court not to
be entitled to agricultural derating. These provisions, contained in section 7
of the Valuation and Rating (Scotland) Act 1956, differ in certain respects
from those of section 26. No distinction is made between agricultural land and
agricultural buildings. The whole hereditament, ‘land and heritage’ in Scottish
terminology, is treated as one. Derating is accorded to ‘agricultural lands and
heritages,’ and the opening words of the definition of that expression, in
section 7(2) of the Act of 1956, are: ‘In this section — ‘agricultural lands
and heritages’ means any lands and heritages used for agricultural or pastoral
purposes only . . .’. The subjects of appeal comprised 25 acres of grazing
land, where the horses were grazed and exercised, and also steadings and an
office. The court held that the subjects were not used for agricultural
purposes only, in respect that racehorses were not associated with an ordinary
farm and did not produce or contribute to the means of human subsistence. In
relation to a subsidiary argument that the subjects were used for pastoral
purposes only, Lord Hunter said, at p9:
Let it be
assumed in the appellants’ favour that the use of the fields for grazing
bullocks would, in appropriate circumstances and regarded by itself, be a use
for pastoral purposes. Let it also be assumed, though it is unnecessary for the
purposes of the present case so to decide, that the use of the fields for the
grazing of stallions, brood mares and the progeny of mares would also, in
appropriate circumstances and regarded by itself, be a use for pastoral
purposes. Even, however, upon these assumptions it is in my opinion clear that
the subjects of appeal are not used for pastoral purposes only. They are used
as a commercial stud in the manner described in the findings, and upon any view
they are used in part, and indeed primarily, for that purpose.
Lord Fraser, at
p 11, rejected the argument on the ground that the fields were used not only
for grazing but also partly for exercising the horses and for growing hay which
was cut and fed to the horses in the buildings. Lord Avonside, at p 13, took
the view that ‘pastoral purposes’ were limited to the grazing of animals used
to produce the means of human subsistence.
The
differences in terminology between the relevant English and Scottish provisions
have the result that the reasoning in Forth Stud is not capable of
application to the present case, apart perhaps from the view of Lord Hunter
that the subjects as a whole were used primarily for a purpose which was not
pastoral. If the subjects as a whole were primarily used for a non-pastoral
purpose, then the same was true of the buildings on their own.
The
ratepayers, for their part, relied on Lord Glanely v Wightman [1933]
AC 618, a decision of this House which appears to have resulted in English stud
farms being derated for nearly 50 years. The only issue in that case, however,
was whether or not fees received for the services of stallions kept on a stud
farm in covering visiting mares
land, so as to be chargeable to income tax under Schedule B rather than
Schedule D to the Income Tax Act 1918. It was held that they were. So the case
is no authority on the proper construction of a statute concerned with
agricultural derating.
Having reached
the conclusion that the buildings here do not qualify as ‘agricultural
buildings’ under section 26(4) of the Act of 1967, it is necessary to consider
whether or not they do so under section 2(1)(a) of the Act of 1971, as
being buildings ‘used for the keeping or breeding of livestock’. The answer to
that question turns upon the meaning of ‘livestock’. Does that word include
thoroughbred horses? The word is defined
by section 1(3) as including ‘any mammal or bird kept for the production of
food or wool or for the purpose of its use in the farming of land’. The
definition is introduced by the word ‘includes’. So it was argued for the
ratepayers that the ordinary meaning of ‘livestock’ is not thereby cut down,
and that the ordinary meaning of the word is wide enough to embrace any animal
which gains its sustenance from the land, in particular a thoroughbred horse.
It is true
that what may be termed an inclusive definition is normally intended to widen
the ordinary natural meaning of the word defined or at least to remove doubts
as to the extent of that meaning. However, in Dilworth v Commissioner
of Stamps [1899] AC 99 Lord Watson said, at p 106:
But the word
‘include’ is susceptible of another construction, which may become imperative,
if the context of the Act is sufficient to show that it was not merely employed
for the purpose of adding to the natural significance of the words or
expressions defined. It may be equivalent to ‘mean and include,’ and in that
case it may afford an exhaustive explanation of the meaning which, for the
purposes of the Act, must invariably be attached to these words or expressions.
It is fair to
say that it is hard to find any instance of such an exhaustive meaning being
attributed to a definition which starts with the word ‘includes’. Nevertheless,
I think there can be no doubt that in some cases the language of an ‘inclusive’
definition, considered with the general context, can have the effect that the
ordinary natural meaning of a word or expression is to some extent cut down.
The context here is agricultural, and the kinds of mammals and birds mentioned
in section 1(3) of the Act of 1971 are those which one would expect to find on an
ordinary farm. The Act was passed, as is well known, to overcome the effect of
the decision in W & J B Eastwood Ltd v Herrod [1971] AC 160,
where chicken broiler houses were held not to be agricultural buildings. Its
provisions would also apply to buildings in which pigs or cattle beasts are
permanently kept and fattened. An intention to cover animals not normally
regarded as ordinary farm creatures is not readily to be inferred. On the other
hand, the words ‘any mammal or bird’ may well have been intended to
cover the case where some unconventional type of mammal or bird came to be kept
for food production, for example a deer. If ‘livestock’ were to retain its full
ordinary meaning, it would seem apt to include animals kept or bred as pets,
for example dogs, cats and mice, so that, provided the building where that was
done was surrounded by or contiguous to at least 2 hectares of agricultural
land (see section 2(4)), that building would qualify for agricultural derating.
That is unlikely to have been intended.
In Belmont
Farm Ltd v Minister of Housing and Local Government (1962) 13
P&CR 417, a Divisional Court in construing the definition of ‘agriculture’
contained in section 119(1) of the Town and Country Planning Act 1947 held that
the words:
the breeding
and keeping of livestock (including any creature kept for the production of
food, wool, skins or fur, or for the purpose of its use in the farming of the
land)
did not cover
the breeding and keeping of horses for show jumping. Lord Parker CJ said, at pp
421-422:
It may be
that this is rather a matter of first impression, but I confess that I approach
it in this way: Of course, on one view ‘livestock’ can be said to be used in
contradiction to dead stock, and to include any animal whatsoever. In some
contexts that might be so, but it seems to me that in the context of
agriculture, as here, it has some less extensive meaning. What exact meaning
should be given to it if it stood alone in this agricultural context, I do not
propose to determine. I think that it is sufficient to say that there must be a
limitation in that context on what I may call the wide dictionary meaning. I
find it unnecessary to decide what it would mean if it stood alone because it
does not stand alone, and the words in brackets that follow assist in
determining what is meant by ‘livestock.’
The words are ‘including any creature kept for the production of food,
wool, skins or fur.’ Pausing there, that
is clearly an extension to cover, no doubt, an argument that, for instance,
bees, possibly pheasants and fish are not livestock. It covers any creature
kept for this purpose, and it then goes on to say ‘including any creature kept
for the purpose of its use in the farming of land.’ Granting that the word ‘including’ has been
used in an extensive sense, it seems to me nonsense for the draftsman to use
those words ‘any creature kept for the production of food, wool, skins or fur,
or for the purpose of its use in the farming of land,’ if the word ‘livestock’
was intended to cover the keeping of any creature whether for its use in
farming land or not. It seems to me that those words show a clear intention
that ‘livestock,’ however it is interpreted, does not extend to the breeding
and keeping of horses unless it is for the purpose of their use in the farming
of land.
In my opinion,
that reasoning is equally applicable to section 1(3) of the Act of 1971, and I
conclude that thoroughbred horses do not fall within the term ‘livestock.’
My lords, for
these reasons I would dismiss the appeal.
LORDS BRANDON
OF OAKBROOK, GRIFFITHS and OLIVER OF AYLMERTON agreed that the appeal should be
dismissed for the reasons given by Lord Keith of Kinkel and did not add anything
of their own.
LORD GOFF OF
CHIEVELEY in his speech said: I, too, agree that the appeal should be
dismissed; but since I have reached that conclusion by a rather different route
from that chosen by my noble and learned friend, Lord Keith of Kinkel, and (I
understand) the remainder of your lordships, I propose very briefly to set out
my own reasoning.
I agree that
it was rightly conceded by the valuation officer that the land in question is
‘agricultural land’ within the definition in section 26(3)(a) of the Act
of 1967. This conclusion seems to me to be inescapable on the simple wording of
the subsection. It leads, however, to what appears to me to be the main issue
in the case, which is whether the buildings in question are ‘agricultural
buildings’ within the definition of section 26(4), and that in turn raises the
question whether the buildings are used ‘solely in connection with agricultural
operations’ on agricultural land.
The argument
before your lordships concentrated on the question whether the operations on
the land are agricultural operations, the question whether (if they are
agricultural operations) the buildings are used solely in connection with them
being treated as a subsidiary question. I have come to the conclusion, in
agreement with the Court of Appeal, that the operations in question are not
agricultural operations.
Mr Glover, for
the ratepayers, advanced the attractive argument that, since the land is
agricultural land by virtue of a definition which characterises the land as
agricultural by reference to its use, it must follow that the operations being
performed on the land are agricultural operations. I find myself unable to
accept this argument. I am not persuaded that the definition of agricultural
land in section 26(3)(a) of the Act, which consists of a list of items
not all of which are defined with reference to use, requires me to give to the
word ‘agricultural’ in the expression ‘agricultural operations’ in section
26(4)(a) any other than its ordinary meaning in the broad sense of embracing
both horticulture and forestry. On the contrary, it is the definition of
‘agricultural land’ which seems to me to be artificial in the sense that it may
require that land be classified as agricultural when one would not ordinarily
describe its use as such — as in the case, posed in argument, of land used as
pasture ground for exotic animals from a zoo; and if it was intended that this
artificial meaning (for which there may be some good practical explanation) is
to be imposed upon the words ‘agricultural’ in the expression ‘agricultural
operations,’ express provision could have been made to that effect.
If I turn to
the operations being performed on the land in the present case, I accept Mr
Carnwath’s submission that those operations were the grazing of thoroughbred
horses in the course of breeding and rearing. I do not think that, in
describing these operations, it is sensible simply to focus upon the grazing,
to the exclusion of the overall nature of the operation which was being
performed on the land. If I then ask myself the question whether such
operations are agricultural operations within the ordinary meaning of that
expression, I would answer that question, in agreement with the Court of
Appeal, in the negative. Like Balcombe LJ, I do not regard the operation of
breeding and rearing of thoroughbred horses for the purposes of what can
broadly be called recreation as an agricultural operation. Nobody would, I
think, describe it as such in ordinary speech. On this part of the argument, I
would for my part be content to adopt in its entirety the reasoning of Balcombe
LJ.
On this
approach the subsidiary question whether the buildings are
arise, but I have to confess that I feel considerable doubt whether, if that
question did arise, I would answer it in the negative. This is because I feel
that it may not be right to restrict the expression ‘in connection with’ to
mean ‘ancillary to,’ for it may be appropriate to understand it as including
cases where the use of the buildings and the land are complementary, both being
used together in an agricultural operation, and neither being ancillary to the
other. Mr Glover gave in argument the example of land and buildings being used
together for the breeding and rearing of pedigree cattle. For such an
operation, it may be that the land and the buildings are equally important: and
I would have thought that, in such circumstances, it could properly be said
that the buildings were used solely in connection with agricultural operations
on the land. It is not to be forgotten that dairy farming has progressed
considerably since the day of Tess of the d’Urbervilles, when the milkmaids
went out to milk in the fields; it is difficult to imagine a modern dairy farm
without a substantial building which acts not only as a mechanised milking
parlour but also as a place in which the cattle may spend a substantial part of
their time, especially in winter. Again, land and buildings may be regarded as
equally important; and yet I would have thought that the buildings were
agricultural buildings within the definition in section 26(4) of the Act.
However, those cases are very different from the present case, for the simple
reason, as I see it, that the operations here being performed on the land are
not agricultural operations at all.
On the second
limb of the argument, I agree, for the reasons given by Lord Keith of Kinkel,
that the buildings in question do not qualify as agricultural buildings under
section 2(1)(a) of the Act of 1971.
For these
reasons, I, too, would dismiss the appeal.
