Smyth-Tyrrell & Anor v Bowden

A tenancy is an agricultural holding only where, viewing the letting as a whole, its substantial purpose is agricultural. Past farming use, the landlord’s farming activities and incidental woodland work do not alter the character of a letting made for restoring buildings and operating holiday accommodation.

For proprietary estoppel, the claimant must establish a sufficiently clear assurance or expectation, reliance and detriment, assessed in the context of the parties’ whole course of dealing. Mere hope, uncommunicated expectation, or a landlord’s passive acceptance of works undertaken under the original bargain is insufficient. In an encouragement case, knowledge of the precise detriment is not invariably required, but some act or conduct encouraging the belief remains necessary.

The claimants occupied approximately 9.51 acres at Boswidjack Farm under an arrangement made in 1993 for a proposed 15-year tenancy. They restored a cottage and barn and operated holiday lettings. The written agreement was not signed by the landlords, so the court treated the legal tenancy as periodic.

After the 15-year period expired, the claimants continued in occupation and paid rent. The defendant later served notice to quit. The claimants sought protection under the Agricultural Holdings Act 1986, a new tenancy under Part II of the Landlord and Tenant Act 1954, or relief based on proprietary estoppel. The central issues were the character of the tenancy, the scope of any business-tenancy protection, and whether the defendant or his father had encouraged an expectation of indefinite occupation or eventual purchase.

1. Agricultural holding. The claimants’ tenancy was not an agricultural tenancy under the Agricultural Holdings Act 1986. The substantial purpose of the letting was determined from the terms of the bargain, the contemplated and actual use, and the surrounding circumstances. The land was unfarmable when let, no agricultural use was required or contemplated, and the restoration works and woodland management supported holiday lettings rather than an agricultural business. The historical use of the land, the parties’ farming connections and incidental references to agricultural purposes were immaterial.

2. Business tenancy. The claimants could not rely on section 23(1A) of the Landlord and Tenant Act 1954 in relation to the cottage. That provision could treat a company’s occupation or business as the tenant’s where the company occupied the tenant’s premises, but it did not treat the tenant as occupying premises which had been sublet to the company and were occupied as the company’s own premises. The remaining land was capable in principle of being a protected holding, but the defendant established the ground in section 30(1)(g): he had a settled intention and reasonable prospect of carrying on his own holiday-lettings business there. The claim to a new tenancy therefore failed.

3. Proprietary estoppel. The court applied the established requirements of assurance or expectation, reliance and detriment. The claimants’ belief that they could remain indefinitely and eventually buy the property was neither communicated nor encouraged. The whole course of conduct was consistent with the original 15-year arrangement followed by a periodic tenancy. The works were undertaken within the original business plan and did not demonstrate detrimental reliance on any wider promise.

4. The court accepted that proprietary estoppel may arise through encouragement and that knowledge of the precise detriment is not invariably required in such a case. However, the landlord must still do something which encourages the claimant’s belief or expectation. The court declined to treat as sufficient a case where the landlord merely ought to have realised the claimant’s belief and did nothing to encourage the relevant acts.

5. Even if there had been sufficient encouragement and detriment, it would not have been unconscionable for the defendant to rely on his legal rights. The claimants had received the term for which they had bargained, together with a further period of occupation. The claim was dismissed. Declarations were to be made on the counterclaim in terms to be settled.

First-instance decision. The judgment states that the claim and counterclaim were tried in the High Court, Chancery Division. No appellate decision is stated.