National Trust for Places of Historic Interest v Birden

A contractual entitlement to share agricultural subsidies depends on the proper construction and temporal scope of the agreement. A payment made after termination, calculated partly by reference to historic farming activity, is not necessarily a payment made in respect of production during the agreement. An entire agreement clause may prevent the implication of a term extending the parties’ obligations to a materially different subsidy scheme. Express provisions excluding agency and partnership are not conclusive, but the parties’ actual contractual arrangement may show that no agency arose. A constructive trust requires circumstances making it unconscionable for the recipient to deny the claimant’s beneficial interest; a former contractual sharing arrangement does not, without more, create such a trust over payments arising from later farming activity.

The claimant owned Hardwick Park Farm and entered into a share-farm agreement with the defendant for a fixed period ending on 1 April 2004. The agreement required the parties to share production grants and subsidies, regulated quota on termination, excluded any tenancy, partnership or agency, and stated that it contained the whole agreement.

After the defendant became tenant of another farm, he received payments under the Single Payment Scheme. The historic element was calculated partly by reference to subsidy claims made during the share-farming period. The claimant sought 32 per cent of that element, relying on the agreement, an implied term, agency and constructive trust. The central issue was whether the agreement gave the claimant an entitlement to payments received after termination.

1. The claim was dismissed. Judgment was entered for the defendant.

2. Clause 13 had to be construed as a whole. Clauses 13(c) and 13(d) dealt with premium quota rights on termination, while clause 13(e) provided the remedy for breach. No claim was made under clause 13(e). In any event, the defendant had made no claim to retain the claimant’s quota. He had attempted to transfer it back, but the transfer was not permitted under the new scheme.

3. Clause 15 applied to production grants or subsidies paid during the agreement, or on termination and consequential upon it. The payments in dispute were made in respect of the defendant’s agricultural activity on a different farm after termination. The historic reference to the earlier farm did not alter that characterisation.

4. No term could be implied requiring the parties to share payments under the new scheme. The scheme was materially different from the previous subsidy system. The proposed term was neither obvious nor necessary to give business efficacy. The agreement was expressly complete, and any implied term could not extend beyond its subsistence.

5. Although a contractual exclusion of agency is not conclusive, the principle stated in Garnac v Faure and Fairclough [1968] AC 1130 required consideration of whether the parties had consented to a relationship amounting in law to agency. They had instead agreed to operate separate businesses, with the defendant claiming quota in his own right and accounting through the joint account. The arrangement avoided agency.

6. The constructive-trust claim also failed. The share-farm agreement was not a joint venture, and the disputed payments arose from the defendant’s later occupation of another farm. The defendant had not acted unconscionably or held the historic element on trust for the claimant.