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Abandonment: whose use counts?

18 June 18

Agriculture briefing: can a tenant be said to have abandoned agricultural activity on a farm where they carry on a separate business, allowing others to use the land? Yes, the Land Court has ruled

by Adèle Nicol

In Fyffe v Esslemont, Scottish Land Court, 28 March 2018 the applicant landlord sought declarator that the lease with the respondent tenant was no longer a 1991 Act tenancy on account of the respondent having wholly or substantially abandoned agricultural activity on the farm. Since around 1996, the tenant had used the farm to run a successful home improvement, conservatory and double glazing business. He had wound down his own agricultural activities, but had contracted with others for use of the farmland. In 2003, the business was incorporated as Monarch Conservatories Scotland Ltd. It occupied the whole farm steading.

The court found in favour of the applicant and awarded the declarator sought.

This decision followed “one of the longest hearings before the Land Court in recent times” (para 8). It spanned 12 days in court, the first of which was adjourned for (unsuccessful) settlement talks.

The issues at proof were: “(i) the impact of the non-agricultural activities of Monarch activities on the farm and on the applicant’s Corsindae estate of which it formed part; (ii) the extent of the residual agricultural activity that continued upon the farmland over the years from after Monarch’s incorporation in 1996; and (iii) whether that residual agricultural activity was properly attributable to the respondent as tenant of the farm” (para 21). A brief note on each point follows.

Impact of non-agricultural activities

The court concluded that the character of the farm had been changed, and that the respondent had “substantially abandoned use of the farm for agriculture for the purposes of a trade or business” (para 126). But what constitutes whole or substantial abandonment of agricultural activity by a tenant? This was a matter of “fact and degree” (para 18). In particular, the length of the period to be examined when considering whether there had been such abandonment was case-specific (para 106). The parties were agreed that the test “was essentially impressionistic rather than strictly empirical” (para 104), and that the approach in English case law on the equivalent English legislation could be broadly adopted. A simple comparison of hectares used for, to hectares diverted from, agricultural use was insufficiently nuanced, and “other factors” such as turnover and profits generated by the different uses also fell to be considered. 

Extent of residual agricultural activity

The evidence indicated that any agricultural activity on the farm had been “‘petering out’ in recent years” (para 119). The court held that it fell to the respondent to show that “he had used the farmland on the farm for agriculture for the purposes of a trade or business over [the recent] period”, but that he had failed to do so.

Part of the respondent’s assertion of agricultural activity related to work done under purported contract farming agreements. This was roundly rejected. The first of these agreements was put in place after the fact. “It was a sham… that had as its principal object making it look as if the respondent was using the farmland for agriculture” (para 115).

There had been a few years during which the arrangement appeared to conform in form, but in substance it failed because “the use of the land was not ‘primarily directed towards an economic end and a profitable return taking one year with another’” (para 116, quoting McGill v Bichan 1982 SLCR 33).

Attribution to the tenant

Between the incorporation of Monarch in 2003 and 2015 when proceedings were raised, the agricultural activity on the farm “was conducted on a day-to-day basis almost entirely by others” (para 111). How much of this activity could be attributed to the respondent?

On his behalf it was argued that any agricultural activity on the farm could be so attributed, even if in breach of the lease (such as a potato crop sublease in 2005). The court disagreed. Only agricultural activity lawful in terms of the lease could be taken into consideration.

Evidence was led of seasonal grazing lets. Assuming these lets were lawful without express provision in the lease (on which the court reserved its judgment), these did not assist him.

They were not evidence of use of land “for agriculture for the purposes of a trade or business” (s 1(2), Agricultural Holdings (Scotland) Act 1991), as on the facts the respondent’s role in recent years had been little more “than ceding occupation of the land, impromptu, to such third parties as happened to approach him from to time looking for available grazing” (para 124).

Remedy

In these proceedings, the applicant only sought declarator. The court decision narrates that concurrent sheriff court proceedings resulted in the removal of Monarch from the farm.

Adèle Nicol, partner, Anderson Strathern LLP

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