Procter v Procter

The Court of Appeal considered whether siblings who were both freeholders (in one capacity) and occupiers/partners (in another capacity) could be tenants protected by the Agricultural Holdings Act 1986. Key legal principles were: (i) the possibility of creating a tenancy where there is partial overlap between putative landlords and putative tenants, (ii) the effect of the Law of Property Act 1925 (notably ss.72 and 82) on such transactions, (iii) whether a tenancy inferred from conduct could be a tenancy at will or a tenancy from year to year under s.54(2) LPA 1925, and (iv) whether a tenancy at will falls within s.2 of the Agricultural Holdings Act 1986 and thus is converted into a yearly tenancy.

The court held that there was no absolute common law bar to a grant of a tenancy by A and B to A, B and C, and that section 82 LPA 1925 validates agreements entered into by a person with himself and others. On the judge's factual findings the putative tenancy, if created, was not within s.54(2) LPA 1925 (the best rent requirement) and so would be a tenancy at will, and a tenancy at will which is a true letting for agricultural use falls within s.2 AHA 1986 and is converted into a yearly tenancy. The Court allowed the appeal and reinstated protection under the Agricultural Holdings Act in respect of the trial judge's alternative reasoning that the arrangement could not create a tenancy.

Background and procedural posture

• The appeal arose from a complex family dispute over a Yorkshire farm comprising arable land, houses and a golf course. At first instance the claim for a tenancy protected by the Agricultural Holdings Act 1986 failed. The High Court judgment is at [2019] EWHC 1199 (Ch). The Court of Appeal heard the appeal from that decision.

Nature of the claim and relief sought

The appellants sought a declaration that Philip and James Procter (with their sister Suzanne) held a tenancy protected by the Agricultural Holdings Act 1986 in respect of land occupied by the partnership, thereby obtaining statutory security of tenure.

Key issues framed

1. Whether at common law a tenancy can be created where there is partial overlap between the freeholders (putative landlords) and the occupants/partners (putative tenants).
2. Whether agreements or conduct giving rise to a tenancy were validated by the Law of Property Act 1925, in particular ss.72 and 82, or whether lack of formalities and the best-rent requirement in s.54(2) LPA 1925 rendered any right a tenancy at will.
3. Whether a tenancy at will falls within s.2 of the Agricultural Holdings Act 1986 and is treated as a tenancy from year to year for the purposes of agricultural security of tenure.
4. Whether part of the land (notably a golf course occupying a substantial acreage) prevented the holding being characterised as an agricultural holding for the purposes of the 1986 Act.

Court’s reasoning and conclusions

The court analysed historical and modern authorities on merger, co-ownership and the two-party rule. It concluded that there was no insuperable common law obstacle to a grant of a tenancy by co-owners in one capacity to themselves and others in another capacity; equitable principles and modern statutory provisions (notably ss.72 and 82 LPA 1925) allow such arrangements to be effective, subject to formalities. The judge’s factual finding that any putative tenancy did not meet the best-rent test in s.54(2) LPA 1925 was left intact, so the interest would be a tenancy at will. The Court held that a tenancy at will created as a true letting for agricultural use is a letting of an interest less than a yearly tenancy and therefore falls within s.2 AHA 1986 and is converted into a tenancy from year to year. Finally, the Court rejected the respondent’s challenge on whether the inclusion of a golf course in the land destroyed the agricultural character of the holding: the judge’s evaluative factual conclusions were entitled to deference and were upheld.

Wider context: the court emphasised the public policy underlying agricultural security of tenure and the need not to frustrate sensible commercial arrangements by rigid application of old formalities where modern statutory law permits validation.

The Court of Appeal allowed the appeal. It concluded there was no absolute common law bar to a tenancy being created where there is partial overlap between putative landlords and tenants; section 82 Law of Property Act 1925 can validate agreements by a person with himself and others; on the judge’s factual findings the putative grant would have produced a tenancy at will which, being a true letting for agricultural use, falls within s.2 Agricultural Holdings Act 1986 and is converted into a tenancy from year to year; and the trial judge’s conclusion that the holding retained sufficient agricultural character (despite a golf course) was upheld.

Appeal from High Court of Justice, Business and Property Courts in Leeds, Property Trust and Probate List, His Honour Judge Davis-White QC (sitting as a High Court judge). First instance judgment reported at [2019] EWHC 1199 (Ch). Appeal determined in the Court of Appeal [2021] EWCA Civ 167.