Can an Agricultural Tenancy be Inferred from Conduct?

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Can an Agricultural Tenancy be Inferred from Conduct?

Posted by Jennie Loynes, on March 5, 2021. Tags:

The case of Proctor v Proctor considered whether a tenancy can be inferred from conduct, despite a partial overlap between the persons constituting the landlord and the tenant.

Previous Case Law

The case of Rye v Rye [1962] established that if a person is the owner of a piece of land, they cannot grant themselves a lease over that land under section 72(3) of the Law of Property Act 1925 (LPA 1925). Under Rye v Rye the House of Lords further established that no section within the LPA 1925 would allow a person to enforce contractual obligations against themselves, and that an oral tenancy is not considered a lease under the definition of ‘conveyance’ in section 205(1) LPA 1925.

Agricultural Holdings Act 1986

Under section 2(1) of the Agricultural Holdings Act 1986 (AHA 1986), a licence to occupy land is taken to be a formal agreement if certain conditions are satisfied. The licence must be a contractual licence, give exclusive occupation rights and must not fall under any of the exceptions.

The case of Proctor v Proctor

Proctor v Proctor involved a family farm in Yorkshire which consisted of a mixture of agricultural buildings as well as agricultural land and a golf course. The majority of the freehold land was held on trust by the trustees, which by 1994, consisted of A, B and C. The majority of the farming was conducted by a partnership consisting of A, B, C, D and E.

Due to the partnership consisting of A, B, C, D and E, there was considered to be an overlap between the identity of the freeholder of the property. When A and B died, leaving C as the sole trustee, C, D and E formed a partnership. Although there had been several written tenancies regarding the land, all had ended by 1994. Thus, leaving C, D and E to claim that a tenancy had been created through conduct and was protected by the AHA 1986.

Although the House of Lords ruled against there being a tenancy, the Court of Appeal held on appeal that a tenancy had been created under the protection of the AHA 1986. The Court came to this conclusion due to the following reasons:

  1. Possession may be exercised by several people, and this includes an instance where there are overlapping parties. The parties, as joint landlords, are permitted to physical possession of the land as well as receipts of any profits.
  2. A tenancy can be assumed from conduct or created orally at common law and does not need to be in writing or rely upon section 72 LPA 1925. This can be assumed where there is an overlap between the identity of the freeholder.  Although there was only a partial overlap in this case, the Court of Appeal held that there was not an absolute rule that prevented a tenancy forming where the parties only partially overlapped.
  3. The tenancy fell under the meaning held in section 2 of the AHA 1986 due to it being land “let…for an interest less than a tenancy from year to year”. Subsequently, this meant that the tenancy fell under the protection of the AHA 1986.
  4.  A tenancy such as the one in Proctor v Proctor can include any ‘interest at will’ created by section 54 of the LPA 1925. In this case, it was due to the rent not being “the best rent reasonably obtainable”.
  5. Although the Yorkshire Farm had both agricultural and non-agriculture activities on the freehold property, the Court of Appeal held that the “character” of the holding remained agricultural.

Conclusion

The Court of Appeal overruled Rye v Rye, subsequently meaning that in instances of overlapping parties, even where there is only a partial overlap, a valid tenancy can be inferred from conduct and fall under the protection of the AHA 1986.

Next Steps

If you are affected by the subject of this article and would like to discuss a matter of agricultural property law with a member of our team, please contact Jennie Loynes, Associate Solcitor, at jloynes@se-law.co.uk

*Disclaimer: While everything has been done to ensure the accuracy of the contents of this article, it is a general guide only. It is not comprehensive and does not constitute legal advice. Specific legal advice should be sought in relation to the particular facts of a given situation. The information is accurate at date of publication, 5th of March 2021

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