Field & Anor v Bryant & Anor

In construing a farm business tenancy, user restrictions must be read together and against the material background known to the parties when the agreement was made. A requirement for permanent pasture for livestock, including permission to make hay and silage, regulates preservation and use of the land. It does not necessarily prohibit an agricultural enterprise such as milking and dairying. The existing farming business and the absence of any positive indication that it was to cease may support continued use. A relocated agricultural building may also be used for purposes ancillary to the permitted farming activity. The Court of Appeal held that the tenancy permitted a milking and dairying enterprise on the farm land.

The defendants sold Meadlands Farm to the claimants under an agreement providing for a farm business tenancy. The tenancy covered the farm land for two years, but the farmhouse and farm buildings only until 31 July 1997. It required agricultural use and permanent pasture for livestock, and provided for relocation of a sheep building. The County Court declared that the tenancy did not permit a milking and dairying enterprise and dismissed the defendants’ counterclaim. The appeal concerned the proper construction of those provisions against the background known to the parties, particularly whether the dairy business could continue on the farm land after the buildings were vacated.

Majority: Sir Martin Nourse and Lord Justice Latham.

1. The appeal was allowed. The County Court’s declarations were discharged, and the Court of Appeal declared that the farm business tenancy permitted the running of a milking and dairying enterprise on the farm land.
2. The agreement had to be construed objectively at the date on which the terms were agreed, namely 8 January 1997, against the material background facts known to both parties. The existing use of the farm for a dairy herd and sheep flock was particularly significant. Nothing in the agreement or the known background positively indicated that the dairy business was to cease during the two-year period for which the defendants retained the farm land.
3. Clauses 4.1(a) and 4.1(b), although expressed as positive obligations, were restrictions on user. Clause 4.1(a) restricted the holding to agricultural purposes. Clause 4.1(b) restricted use to permanent pasture for livestock, subject to the express permission to make hay and silage. Read with clause 4.2, clause 4.1(b) concerned preservation of the land as permanent pasture. It did not determine the agricultural purpose for which the land could be used and therefore did not exclude milking and dairying.
4. The relocated sheep building became part of the holding, but it was unrealistic to treat it as subject to the pasture restriction in the same way as the land. The agreement imposed no specific restriction on its use. It could therefore be used for the dairy operation, including with a bale milker, as an ancillary facility to the permitted agricultural use.
5. Lord Justice Peter Gibson dissented. He accepted that the agreement required objective construction against the known background, but declined to assume that the dairy business would continue. He considered that, after 31 July 1997, clause 4.1(b) permitted permanent pasture and ancillary uses such as shelter or hay and silage storage, but not dairying, which he regarded as a separate activity.
6. The appeal was allowed with costs here and below. A declaration was made in favour of the defendants in the stated form. The formal order recorded that the counterclaim would be dismissed, and permission to appeal was refused.

• Court of Appeal (Civil Division): Allowed the defendants’ appeal by a majority. Discharged the County Court’s declarations and declared that the farm business tenancy permitted a milking and dairying enterprise on the farm land.
• Taunton County Court: Determined the preliminary issues in favour of the claimants, declared that the tenancy did not provide for a milking and dairying enterprise and that the proposed term was not implied, and dismissed the counterclaim.