Peter Williams
Posted on 26 Apr 2019

Case B or not to B?

One of the most challenging issues facing many agricultural advisers is how to handle the recovery of land where development is in prospect, and even more so where the land is subject to tenancies governed by the Agricultural Holdings Act 1986. For decades there has been uncertainty regarding the extent to which reservations entitle the landlord to carry out necessary works. However last week the High Court handed down its decision in the case of The Earl of Plymouth v Rees [2019] which, for the first time, provides guidance on this issue in an agricultural context.

Background

Having been a contributor to two previous editions, it is now some 14 years since I took over the authorship of Scammell, Densham & Williams Law of Agricultural Holdings ("Scammell"). In passing, assuming that the DEFRA and Welsh Assembly consultation papers that have just been published result in legislative change, alongside the impact of Brexit and the current proposed Agriculture Act, the 11th Edition of Scammell may appear in 2020.

One of the things that I have discovered over the years is that it is not always comfortable to have an opinion expressed by me in Scammell cited against me in argument at an arbitration or before the Tribunal.  That, together with a desire not to share everything from one's "street craft", explains why some areas are not fully developed in Scammell. An illustration of this is that I deal with the question of a landlord's entitlement to access to an agricultural holding in chapter 28 in respect of "standard covenants".  I do not make reference to it in the chapter dealing with the recovery of possession of land for non-agricultural use.  However, there is a close connection.

In chapter 28 I comment with regard to the issue of access in the following terms:

"One area which gives rise to disputes is the landlord's reservations of the right to access.  In the Scottish case of Possfund Custodial Trustee Ltd v Kwik-Fit Properties Ltd, the court held on appeal, reversing the court at first instance, that a landlord was not entitled to access to dig boreholes to test for environmental contamination in reliance upon a clause which provided that the tenant was to 'permit the landlord and its agents at all reasonable times with or without workmen . . . to enter upon the premises generally to inspect and examine the same, to view the state of repair and condition thereof and to take a schedule of the landlord's fixtures and of any wants of compliance by the tenant with its obligations hereunder' "

The footnote to that passage also refers to the case of Heronslea (Mill Hill) Ltd v Kwik-Fit Properties Ltd [2009]. What linkage does that have with the recovery of land for non-agricultural use?  The answer lies in one of the central tenets of Case B.

Case B

Last year I was privileged to meet Lord Goff.  Aside from being the author of a seminal legal textbook, it was his judgment in the Court of Appeal, as long ago as 1978, in the case of Paddock Investments Limited v Lory, that established one of the main requirements of a landlord who is relying upon Case B, having obtained planning permission, to recover possession of agricultural land protected under the Agricultural Holdings Act 1986.

Drawing upon an earlier decision in Jones v Gates in 1954, in Paddock Investments, Lord Goff said: "In my judgment, the test is, has the landlord a bona fides intention, and has he a reasonable prospect of carrying it out?".  That decision has highlighted that a landlord must be able to establish that he has a reasonable prospect of carrying out his settled intention to develop for non-agricultural use in accordance with a planning permission obtained.

Historically that raised the question as to whether a planning permission which was outline only was sufficient to found a Case B notice to quit.  However, the world of planning has moved on very considerably so that nowadays planning permissions are couched in conditional terms, invariably involving environmental requirements including, for example, archaeological aspects. In order to comply with a condition of a planning permission, a landlord may be required to enter onto the holding to drill bore holes and the like.

Plainly the propositions set out above as to a landlord's right to access become relevant.  The two cases referred to in relation to the above extract from Scammell both relate to commercial properties. One is a High Court case in England and Wales: Heronslea.  The other is a Scottish case: Possfund Limited v Kwik Fit Properties Limited, also reported in 2009.

The Earl of Plymouth v Rees

Now we have a High Court case authority in relation to this dealing with an agricultural holding: The Earl of Plymouth v Rees.  Although the High Court decision is in respect of the interpretation of the Exceptions and Reservations in the tenancy agreements, it arises in the context of a myriad of Case B notices to quit having been served and which are the subject of arbitration.

In this article it is not possible to comment upon the arbitrations because those are confidential.  Neverthless, the existence of them is referred to in the High Court decision.

As to the High Court dispute, the background is that the Earl of Plymouth and two other members of his family (acting as trustees of family trusts) sought and obtained planning permission, subject to conditions, in relation to the development of the so-called garden city to the north of Cardiff, Plasdŵr.  The overall project involves building some 7000 houses.

I act for the tenant, Mr Jenkin Rees, aged 86, having been the tenant of the Holding since the mid-1960s.  The tenancy is subject to succession provisions.  There are two generations of successors waiting in the wings.

The Landlords sought and obtained (unopposed) an interim injunction in the High Court in Cardiff on 29 September 2016 to gain access to the Holding.  In order to satisfy the planning conditions, the Landlords required extensive access to the farm, including digging bore holes and the like.

The trial of the High Court proceedings involved considering the construction of two tenancy agreements.  The Landlords sought the widest interpretation of the provisions and the relief sought from the Court was a permanent injunction to prevent the Tenants from obstructing access to the Holding.

The relevant provisions

The first tenancy agreement of 1965 contained the following relevant provisions:-

"3. All mines minerals substances of every description stones flints chalk gravel sand peat earth and clay whatsoever in upon or under the premises with full and free liberty and power (including power and right to let down the surface without compensation) to enter upon the farm or authorise others to enter upon the farm in order to search for win dress make merchantable and carry away the same and to execute all work incidental thereto doing as little damage as the nature of the case may admit making the Tenant reasonable compensation for loss of crops (if any) for the current year and allowing the Tenant a proportionate reduction in rent for all land so permanently taken or damaged. 

4. All timber and other trees pollards heirs saplings underwoods and woodlands with right of entry for himself and others authorised by him to plant mark fell cut and carry away the same over any part of the holding or lands hereby demised making the Tenant reasonable compensation for any loss or damaged sustained thereby any claim for loss or damage to be rendered within two calendar months of the date of the occurrence of such damage.

5. Subject to the provisions of the Ground Game Acts of 1880 and 1906 all game ground or otherwise (including nests and eggs) fish wild fowl snipe landrail and plover together with a right for the Landlord and all persons authorised by him to preserve hunt shoot fish course and sport and the Tenant undertakes to assist in the preservation of game and the prosecution of poachers on the premises.

6. Power to take possession at any time of any portion of the holding (except house buildings or gardens) for building development or any purpose mentioned in Section 31 of the Agricultural Holdings Act 1948 on giving the Tenant three months' notice in writing paying the Tenant compensation for his interest therein and allowing a proportionate reduction in the rent of the Farm.

7. Right for the Landlord and his Consultant and all others authorised by him with or without horses carriages and other vehicles to enter on any part of the Farm lands and premises at all reasonable times for all reasonable purposes."  

The second tenancy agreement of 1968 contained the following relevant provisions:-

"PROVIDED ALWAYS AND IT IS HEREBY AGREED [X] that the Landlord shall have the right and power to resume possession of the land hereby let or any part thereof on the expiration of three calendar months' notice in writing … if the said land is required for any of the following purposes namely Building, the addition ot [sic] [?] the said land to any Building leasehold plot, Mining, Quarrying, Sewering, Draining, Road Making, Planting or other Estate Development, the laying of Gas, Water or Electric Mains or for any other easement approved by the Landlord or required by a Local Authority.

AND FURTHER [Y] that the Landlord may at any time and at all times during the said tenancy enter upon the said premises with Agents Servants Workmen and others for the purpose of inspecting the same or for making roads sewers or drains or for any other purpose connected with this estate".

The Decision

Most of the hard work on behalf of Mr Rees in preparation for the trial was undertaken by Tom Williams, who has recently moved to join a London firm.  It is mentioned here because Mr Rees wanted it mentioned.  Stephen Jourdan QC was briefed to appear for Mr Rees at the Trial and succeeded.

In essence His Honour Judge Keyser QC, in a detailed and highly readable Judgment, decided:

  • The Landlords are not entitled to a permanent injunction.
  • The Landlords were not entitled to the interim injunction that they obtained in September 2016.
  • The exceptions and reservations contained in the two tenancy agreements should be construed restrictively.

As regards the latter, the Judge quoted with approval the two Kwik Fit Properties cases.  He also drew upon the decision in Timothy Taylor Limited v Mayfair Housing Corpn [2016], where the Deputy Judge held that: "Rights reserved to a landlord under the terms of a lease are to be construed narrowly against the landlord – see William Hill (Southern) Limited v Cabras (1986)".

Further, the Judge quoted with approval the passage of Lord Neuberger in Platt v London Underground Limited [2001], in support of the proposition that a reservation of rights to a landlord will, if possible, be construed so as to be consistent with the irreducible minimum consistent with the grant of the tenancy itself; but, if it cannot be so construed, it will be rejected as being repugnant to the demise.

Impact of the Decision

The practical effect of the Judgment is that there is a wide range of activities which the Landlords are not permitted to undertake in relation to the farm, including the digging of excavations, the sinking of boreholes and the erection of structures.  They all fall outside the reservations to the Landlords.

Plainly, this is a very important decision for those of us who practise in the area of dealing with the recovery of possession of land for non-agricultural use.