Wallace v C Brian Barratt & Son Ltd & Anor

A covenant by an agricultural tenant not to share occupation is construed in the factual context of the holding. On an arable farm without buildings or livestock, the court examines the activities actually carried on and by whom they are carried on. Farming operations performed by an independent contractor within the tenant’s authority are ordinarily the tenant’s occupation, just as if performed by an employee. The contractor’s presence does not become shared occupation merely because it performs all sequential operations, finances the tenant, or receives management charges. Something more is required.

The appellant landlord granted C Brian Barratt & Son Ltd a yearly tenancy of an arable farm containing a covenant against assigning, underletting, parting with or sharing occupation. The landlord served a notice to quit, alleging that the tenant had shared occupation with the MMB Partnership, which carried out the farming operations. The tenant referred the matter to arbitration under Article 9 of the Agricultural Holdings (Arbitration on Notice) Order 1987. The arbitrator found no breach. The Peterborough County Court, exercising jurisdiction under Schedule 11 paragraph 27(2) of the Agricultural Holdings Act 1986, dismissed the landlord’s application. The central issue on appeal was whether the partnership’s activities amounted to shared occupation.

Lord Justice Morritt gave the principal judgment and the Vice-Chancellor agreed. The appeal was dismissed with costs.

1. The covenant was a matter of contractual construction in the factual context known to the parties. Its provisos did not enlarge the ordinary meaning of occupation. The third proviso simply confirmed that a seasonal sporting licence would not breach the covenant.
2. A limited-company tenant can operate only through servants or agents. No relevant distinction exists between an employee and an agent. In the ordinary case, activities carried out by an agent within the scope of authority are the activities, and therefore the occupation, of the principal.
3. On an arable holding without buildings, livestock or human habitation, there may be no permanent physical presence. The court must examine the activities physically carried on and determine whether they are carried on for the tenant or on the contractor’s own account. The common use of contractors for farming operations means that the covenant cannot ordinarily prevent such arrangements.
4. Pegler v Craven [1952] 2 QB 69 and Hills (Patents) Ltd v University College Hospital Board of Governors [1956] 1 QB 90 supported the ordinary agency principle. Hills was distinguishable because the Board of Governors had an exceptional statutory position, including responsibility for managing the hospital and appointing its staff.
5. Willis v Association of Universities of the British Commonwealth [1966] 1 QB 140 did not govern the case. It concerned two bodies carrying on distinct activities at the same premises. Here the partnership’s services were provided elsewhere and there was only one activity on the holding: farming carried out as the tenant’s agent.
6. The partnership’s financing of the tenant, management charges and benefit from the farming profits did not alter that physical and legal relationship. The only proper conclusion was that the holding was occupied by the tenant alone. There was no breach of covenant and no error of law on the face of the award.

• Court of Appeal (Civil Division): dismissed the landlord’s appeal with costs.
• Peterborough County Court: dismissed the landlord’s application under Schedule 11 paragraph 27(2) of the Agricultural Holdings Act 1986, holding that there was no error of law on the face of the award.
• Arbitration: the arbitrator determined that the notice to quit should not have effect.