Farming Partnerships and Tenancies

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Case: Procter v Procter [2021] EWCA Civ 167

1.     Almost exactly 20 years ago, at its 10th Annual Conference, the members of the Property Litigation Association decided that J A Pye (Oxford) Limited v Graham [2002] was considered to be “the case with the greatest significance for and impact on property law in the previous decade”. I was pleased to receive the Certificate, but rather more pleased 8 years earlier when we won 5 nil in the House of Lords, having lost 3 nil in the Court of Appeal, after winning in the High Court, where the Judge was Neuberger J (as he then was). The speeches in the House of Lords were a fascinating read, but I think that they are dwarfed in terms of property law content by the Judgment delivered by Lord Justice Lewison in the Court of Appeal in the case of Procter v Procter on 12 February 2021. The Judgment was the unanimous view of the Court of Appeal, Lord Justices Arnold and Nugee both agreeing.

2.     The main issue that arose was whether a tenancy created by conduct between family members gave security of tenure under the Agricultural Holdings Act 1986 (“the AHA 1986”). It is the age old question about what happens in family farming partnerships: is the occupation protected? 

3.     In the High Court, the Judge had decided that a farming partnership would have been entitled to a tenancy because:

(a)    there was an intention to create legal relations, 

(b)   rent was treated as having been paid by various accounting adjustments and;

(c)    the partnership was in exclusive possession of the land.

4.    However, because the freehold was held (for the most part) by three family members, as the trustees of a will trust, and all three were also partners in the family farming partnership, together with two other family members, the claim for protection failed because:

(a)    At common law, it was not possible to create a tenancy where there was an overlap between putative landlords and putative tenants.

(b)   There was no lease in writing, with the consequence that the grant was not validated by section 72 of the Law of Property Act 1925.

(c)    If, contrary to the Judge’s view, there was a tenancy, it was not a tenancy granted for the best rent reasonably obtainable; and therefore took effect as a tenancy at will under sections 53 and 54 of the Law of Property Act 1925. The Judge did not find it necessary to decide whether a tenancy at will attracted protection under the AHA 1986.

(d)   If the arrangements amounted only to a licence, then because of the overlap in identity between licensors and licensees, the latter could not have had exclusive occupation as against the former. Since that is an essential ingredient in order for a licence to attract protection under the AHA 1986, the claim to protection failed.

5.    The first question posed for the Court of Appeal was whether A, B and C can grant a lease to A, B, C, D and E. In his 40 page Judgment (delivered in less than one week after the Hearing), Lord Justice Lewison concluded that the answer is yes.

6.    Submissions to the contrary, primarily in reliance upon the earlier House of Lords decision in Rye v Rye in 1962, were dismissed in a Judgment which all lawyers who enjoy the law will relish. This article cannot hope to do justice to the analysis contained in the Judgment. The Judgment can be found at [2021] EWCA Civ 167.

7.     The Judgment starts with a reference to the comments of Lord Tomlin in Hillas and Co Limited v Arcos Limited (1932):

“… the problem for a court of construction must always be so to balance matters that, without violation of essential principle, the dealings of men may as far as possible be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains.”

8.     Lord Justice Lewison then observes:


“I do not think that that general principle is confined to questions of construction. As a broad and over-simplified generalisation, the courts try to oil the wheels of commerce, rather than throw grit into the engine.”


I might add that if only that was always true of the Courts generally, but it is the correct principle which has been applied in this particular Judgment.


9.     Lord Justice Lewison’s opening remark sets the tone for the analysis that follows, concluding that:


 “… there is no conceptual problem in the express grant of a tenancy by A and B to A, B and C, even if the grant is not a written one. In such a case the grant will necessarily entail that A, B and C have exclusive possession as against A and B. That cannot be a legal impossibility, not least because it is precisely what section 72 [of the Law of Property Act 1925] contemplates.”


10.  The Judgment places reliance on a case in the Court of Common Pleas in 1858, Rogers v Harvey. The case concerned entitlement to vote. In order to be entitled to vote it was necessary (at least) to be a tenant. In that case A was the lessee of a mill. He formed a partnership with his three sons, B, C and D, in which all four were partners. There was no written partnership agreement, but the partnership paid rent to A. B, C and D claimed to be tenants and hence entitled to vote. The Court of Common Pleas upheld their claim. In this case, it was recognised that this underpinned the analysis of the common law position.

11.  In answer to the question as to why it is not a legal impossibility for A and B to grant a lease to A, B and C, Lord Justice Lewison makes two points. First, possession is a single possession, although it may be exercised by several persons jointly. The case quoted as authority for that proposition is Pye v Graham. Thus, as against A and B, A, B and C are in a position of a single owner.

12.  Secondly, following the grant of the tenancy, A and B are entitled to possession in two capacities; and two different types of possession. As joint landlords they are entitled to possession in the sense of receipt of rents and profits; and as joint tenants they are entitled, together with C, to physical possession of the land. Put another way, they have exchanged their right to physical possession of the land for symbolic possession in the shape of receipt of rents and profits.

13.  In passing, Lord Justice Lewison dismissed observations of Lord Denning in the Rye v Rye case concerning the ability of joint landlords to serve notices to quit. Lord Justice Lewison said that, in his respectful opinion, the comments made by Lord Denning were “simply wrong”. He observed that they were inconsistent with the House of Lords decision in Hammersmith LBC v Monk [1992].

14.  Having decided that the trial Judge was wrong to conclude that the alleged tenancy was incapable of being created, Lord Justice Lewison went on to consider whether a tenancy at will has protection under the AHA 1986. The answer is yes it does. Lord Justice Lewison endorsed the views expressed in the agricultural law textbooks.

15.  A tenancy at will is of indefinite duration, but in all other respects it shares the characteristics of a tenancy: see comments of Lord Millett in Ramnarace v Lutchman [2001], a decision of the Privy Council. Such a tenancy provides exclusive possession. There is also a right to recover rent. A tenancy at will is a letting for an interest of less than a tenancy from year to year. As such it is protected by section 2 of the AHA 1986.

16.  Because of the Court of Appeal’s conclusion in this case (set out above), it was unnecessary to consider the further argument under appeal as to whether the arrangements constituted a licence which was converted into statutory protection under the AHA 1986.

17.  The case also addressed a different issue as a consequence of the cross appeal. The trial Judge had decided that the diversification to include a golf course within the tenancy did not affect the “character” of the tenancy and that it remained protected under the AHA 1986. The trial Judge only decided that the AHA 1986 did not apply for the reasons set out above at paragraph 4.

18.  It was argued that because the golf course represented some 27% of the total land, it could no longer be characterised as an agricultural holding.

19.  The Judgment of Lord Justice Lewison dismissed that appeal. The statutory test requires the trial Judge to evaluate the “character” of the tenancy. That is a very broad inquiry. The Judge carried out that inquiry taking into account a number of reasons for reaching his conclusion, which included the fact that the golf course was developed as being ancillary to the farmland and as a diversification of the farm business; it was operated as part of the Partnership’s business; the Partnership profit was substantially derived from agricultural activity, and that the vast majority of the land was used for farming.

20.  Weight was placed on the fact that the golf course had been built following a study by the Agricultural Development and Advisory Service and the land which was used for the golf course was to a substantial degree land which had been in set aside.

21.  This case has great significance in the agricultural sector in relation to historic farming arrangements predating the Agricultural Tenancies Act 1995 coming into force.

© P R Williams

15 February 2021

P R Williams, Ebery Williams – Author of Scammell, Densham & Williams Law of Agricultural Holdings

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