Greenbank v Pickles

Open-market valuation of a non-assignable agricultural tenancy requires a hypothetical sale to a willing purchaser, with the tenancy’s restrictions continuing to apply. The valuation is the price which the hypothetical purchaser would pay, not the highest sum that a sitting tenant might demand to surrender the tenancy.

A special purchaser may be taken into account only where evidence shows that the person wanted to acquire the tenancy and had the ability to pay at the valuation date. A later offer to surrender is insufficient evidence of that position. Without evidence of a special purchaser, valuation should proceed on the existing-use or profit-rent basis.

The parties had entered into a partnership to farm land under a protected agricultural tenancy. Following dissolution of the partnership, a consent order required the tenancy to be assigned to the appellant, with the sum payable calculated by reference to its value as at 28 July 1993.

The Bradford County Court preferred the respondent’s valuation evidence and assessed the tenancy at £100,000. The appellant challenged both the valuation methodology and the judge’s reliance on a later offer to surrender the tenancy. The central issue was the proper basis for valuing the tenancy in the assumed open market.

1. Appeal allowed. The figure payable was reduced from £10,000 to £2,350, with interest.
2. Per Latham LJ and Peter Gibson LJ, the consent order required a conventional open-market valuation. The court had to assume a hypothetical sale by a willing vendor to a willing purchaser, even though the tenancy was non-assignable and the hypothetical purchaser would remain subject to its restrictions.
3. The evidence could justify taking account of a special purchaser, including the landlord or tenant, but only if it showed that the person both wished to acquire the tenancy and had the ability to pay more than its ordinary existing-use value at the valuation date. The open-market value was not the highest sum that a special purchaser might have paid.
4. The appellant’s refusal of a £90,000 surrender offer in 1996 was irrelevant to the 1993 valuation. A tenant’s demand for compensation to surrender possession is distinct from the price that the tenant would be willing and able to pay to acquire the tenancy.
5. The respondent’s later offer did not establish that he had the desire or financial ability to purchase the surrender in 1993. There was therefore insufficient evidence of any special purchaser. The appropriate approach was the profit-rent or existing-use approach adopted and approved in Walton's Executors v Commissioners of Inland Revenue [1996] 1 EGLR 159.
6. Peter Gibson LJ held that the respondent’s valuation evidence was confused, illogical and inconsistent. The court accepted the appellant’s valuation of £23,500, including the assessed value of succession rights, and substituted ten per cent of that sum.

• Court of Appeal (Civil Division): Allowed the appeal from the Bradford County Court. The valuation was substituted at £23,500, making the sum payable £2,350 plus interest. Costs were awarded to the appellant.
• Bradford County Court: HHJ Altman assessed the tenancy at £100,000 and ordered payment of £10,000 plus interest.