England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		17 July 2009

Mr Justice Henderson :

Introduction and background

1. By this application the claimant, The National Trust for Places of Historic Interest or Natural Beauty ("the National Trust"), seeks the leave of the court under section 69 of the Arbitration Act 1996 to appeal against an interim award ("the Award") delivered to the parties on 7 November 2008 concerning a dispute about the construction of a caravan site for the housing of migrant farm workers at South End Farm, Donnington, Chichester, West Sussex.
2. The National Trust is empowered by section 8 of The National Trust Act 1937 to accept and enforce restrictive covenants in respect of any land, notwithstanding that it may not own adjacent land. In exercise of that power, the National Trust entered into a Deed of Covenant dated 5 April 1969 ("the 1966 Deed") with Mr Arthur Leslie Harris, who lived at the Old Manor House, Donnington, and was the freehold owner of an estate extending to approximately 846.5 acres. The Award records that he wished to protect the land which he owned from the expansion of the towns of Chichester and Bognor Regis into the area south of Chichester, and onto his land in particular. He wanted protection in perpetuity. He sought the agreement of the National Trust, and entered into the 1966 Deed as a result.
3. South End Farm has an area of about 456 acres (184 hectares) and forms part of the land subject to the 1966 Deed. Since 2005 the freehold of South End Farm has been vested in the trustees of a family trust, the Fleming Trust, and they are the respondents to the application. One of the trustees, Mr Hugh Fleming, was the agricultural tenant of Mr Harris at the date of the 1966 Deed. After the death of Mr Harris in 1990, Mr Hugh Fleming and his son Mr William Fleming purchased the land from Mr Harris' estate.
4. South End Farm itself is now let by the trustees to a farming partnership carried on by Mr William Fleming and his wife, Mrs Cornelia Fleming. Approximately half of the farm (221 acres, or 89.5 hectares) was sub-let in October 2007 to a company which grows salad crops, Goodend Produce Ltd. This company had been formed by Mr William Fleming and his wife in 1995, and they are its directors. Apart from South End Farm, Goodend Produce Ltd also farms land at Colworth and Boxgrove.
5. In the 1960s South End Farm was a mixed farm, part arable and part dairy. By the 1990s, however, the dairy farming had ceased and the farm was all arable. Shortly thereafter, the farming operations were changed to the production of salad crops, and (as I have already said) Goodend Produce Ltd was established.
6. I can now pick up the story from the background section of the Award, none of which is controversial:

"5.9 The land capable of growing such crops is referred to on the Agricultural Land Classification Maps as Grade 1 and Grade 2. Such classification is a small percentage of agricultural land in Sussex and nationally. The particular location has high quality daylight and enjoys a longer growing season than elsewhere in the UK. It is said to be ideal for growing salad crops, field scale vegetables and similar crops. These are grown mostly for national supermarkets.

5.10 Migrant labour is used, so far as South End Farm is concerned, to plant, irrigate and harvest salad crops. The demand for and usage of migrant workers in the Chichester area is high. As a consequence Chichester College provide training courses for migrant workers in this sector of farming.

5.11 The centre of this dispute is at Coopers Barn which is part of South End Farm. Coopers Barn is close to and east of the B2201 road which runs from Chichester to Selsey Bill. It is the site of former farm buildings of which there remains part of a brick and flint barn. On the eastern boundary of the farm buildings is a ditch. An area to the east of this ditch has been taken for siting caravans in addition to the site of the farm buildings. An electricity supply and water supply has been laid on.

5.12 Caravans, washing facilities, waste repository and parking areas occupy an area surrounded by a bund. There is also an amenity area.

5.13 In February and early March 2007, Dr David Chai, who resides to the north of the Coopers Barn site, noticed works were being carried out around Coopers Barn. He met Mr William Fleming who explained that the site was to house seasonal workers. Dr Chai contacted Chichester District Council and the National Trust. No planning permission had been granted for the site but on 7 November 2007 retrospective planning consent was issued by Chichester District Council subject to certain conditions.

5.14 The National Trust, mindful of their responsibilities, wrote to Mr William Fleming on 20 March 2007, requesting that he cease all works at the Coopers Barn site immediately. On 16 April 2007 the National Trust again wrote to William Fleming to the effect that they were of the opinion that the site constituted a breach of the Covenant which the National Trust held over the land. They asked for his proposals to remove the caravans and hard standing within 7 days.

5.15 Mr William Fleming completed the works to the site and migrant workers occupied the caravans and worked at the farm."

7. The dispute between the National Trust and the Flemings centres on the true construction of the restrictions in the 1966 Deed, and in particular on the question whether the construction of the caravan site, and its use to house migrant workers, fall within the scope of a proviso ("the Proviso") which says that

"nothing in the foregoing stipulations shall prevent the cultivation of the said land or any part thereof in the ordinary course of agriculture or husbandry in accordance with the custom of the country."

8. The 1966 Deed contains an arbitration clause, and in due course the dispute was submitted for resolution to Mr Edwin Handley, FRICS, MCIArb, FAAV. In January 2008 he gave directions for the exchange of statements of case and witness statements, for disclosure of documents, and for expert evidence. On 2 June 2008 he carried out a site inspection, and then conducted an oral hearing in Chichester at which both sides were represented by counsel. Mr Wayne Clark, instructed by Morgan Cole, appeared for the National Trust, and Mr Timothy Cowen, instructed by Burley & Geach, appeared for the respondents. The arbitrator heard oral evidence on behalf of the National Trust from Mr Mark Knight, who is the Trust's senior rural surveyor. For the respondents, he heard oral evidence of fact from Mr William Fleming, from a local farmer, Mr Gavin Brown, and from Mr David Kay, who is the general manager of a soft fruit farming business which operates in Sussex, Berkshire and Surrey. He also heard expert evidence on behalf of the respondents from Mr Keith Leddington-Hill, who is the managing director of an agricultural consultancy company.
9. In the Award the arbitrator found that the Flemings were entitled to rely upon the Proviso, with the consequence that there was no breach of any of the restrictions in the 1966 Deed. In the light of that conclusion it was unnecessary for him to resolve the other disputed questions of construction, but he dealt with the main points comparatively briefly and also decided them in the respondents' favour.

Section 69 of the Arbitration Act 1996

10. An appeal to the court by a party to an arbitration lies only "on a question of law arising out of an award made in the proceedings": section 69(1). By virtue of subsection (2), an appeal shall not be brought under the section except with the agreement of all the other parties to the proceedings, or with the leave of the court.
11. Subsections (3) to (5) then provide as follows:

"(3) Leave to appeal shall be given only if the court is satisfied –

(a) that the determination of the question will substantially affect the rights of one or more of the parties,

(b) that the question is one which the tribunal was asked to determine,

(c) that, on the basis of the findings of fact in the award –

(i) the decision of the tribunal on the question is obviously wrong, or

(ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and

(d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question.

(4) An application for leave to appeal under this section shall identify the question of law to be determined and state the ground on which it is alleged that leave to appeal should be granted.

(5) The court shall determine an application for leave to appeal under this section without a hearing unless it appears to the court that a hearing is required."

12. It follows from the above provisions that the court only has jurisdiction to grant leave to appeal if it is satisfied, among other matters, that on the basis of the findings of fact in the award the decision of the arbitrator on the question of law identified by the applicant is "obviously wrong". There is no suggestion in the present case that the question is one of general public importance, in which case the court would only have to be satisfied that the decision of the arbitrator is "at least open to serious doubt". The "obviously wrong" test is, self-evidently, a stringent one which will seldom be satisfied. It carries with it the implication that the error should normally be demonstrable on the face of the award itself, and that it should not require too close a scrutiny to expose it. The threshold is very much higher than the usual test of "a real prospect of success" which the court applies to applications for permission to appeal under CPR Rule 52.3(6)(a). The reason for this, of course, is that arbitration is essentially an alternative method of dispute resolution which the parties have agreed to choose in preference to litigation in court. Moreover, in most cases, including the present one, they will have agreed to submit resolution of the dispute to an arbitrator who is not a trained lawyer. The court should therefore be very sparing in its interventions in the arbitral process, and this philosophy is reflected in the provisions of sections 69.
13. It is a curiosity of the present case that the application was listed before me for an oral hearing, without it being apparent from the papers that any judge had declined to deal with the application on paper and decided that an oral hearing was required. However, I was told by Mr Jonathan Gaunt QC, who appeared for the National Trust leading Mr Wayne Clark, that he thought such a direction had been given at an earlier stage, although he could not say by whom. In any event, both sides were content for me to hear the application, and I proceeded to do so.
14. There was an unfortunate sequel, which I should briefly mention. After I had reserved judgment, the same application for leave to appeal was dealt with by Norris J as a paper application, in ignorance of the fact that an oral hearing had already taken place before me. This should obviously not have occurred, and must have resulted from an administrative error. When it came to light, Norris J directed that his order (which refused permission to appeal) should be withdrawn. As will appear, I have independently come to the same conclusion as Norris J, but I emphasise that I have done so solely on the basis of the submissions that were addressed to me and my consideration of the papers, and I have no knowledge of the reasoning which led Norris J to his conclusion.
15. It is also convenient to record at this stage that it is common ground that the conditions in paragraphs (a) and (b) of section 69(3) are satisfied: the proposed grounds of appeal are questions which the arbitrator was asked to determine, and determination of the questions will substantially affect the rights of, at least, the respondents. The further condition in paragraph (d), however, is in issue, so even if I were satisfied that the decision of the arbitrator was obviously wrong, I would still need to go on to consider whether it is just and proper in all the circumstances for the court to determine the question.

The 1966 Deed

16. I now turn to the relevant provisions of the 1966 Deed. It was made between Mr Harris of the first part, the Agricultural Mortgage Corporation Ltd as mortgagee of the second part, and the National Trust of the third part. It recited that Mr Harris ("the Covenantor") was seised for an estate in fee simple, subject to a legal charge in favour of the mortgagee but otherwise free from encumbrances,

"of all those pieces or parcels of land at Donnington in the county of Sussex containing in the whole 846.543 acres or thereabouts (hereinafter called "the said land") and for the purpose of identification only delineated on the plan annexed hereto and thereon coloured pink."

The Deed went on to recite the power of the National Trust under section 8 of the 1937 Act to accept restrictive covenants, and the agreement between Mr Harris and the Trust

"that the said land shall be made permanently subject to the restrictions and stipulations hereinafter mentioned."

17. Clause 1 of the operative part of the 1966 Deed then provided as follows:

"In pursuance of the said Agreement and by virtue of Section 8 of [the 1937 Act] the Covenantor with intent and so as to bind the said land into whosesoever hands the same may come … HEREBY COVENANTS with the Trust … that he will at all times hereafter observe and perform the restrictions and stipulations contained in the Schedule hereto."

Clause 2 provided that any dispute or question which might arise between the Covenantor or his successors in title and the Trust as to the construction of the Deed or the covenants therein contained should be referred to a single arbitrator to be appointed by the President for the time being of the Land Agents' Society. The Land Agents' Society no longer exists, having merged with the Royal Institution of Chartered Surveyors, and the parties therefore agreed that the arbitrator should be appointed by the President of the latter institution.

18. The restrictions and stipulations set out in the schedule read as follows:

"1. No act or thing shall be done or placed or permitted to remain upon the said land which in the opinion of the Trust shall materially alter the natural appearance or condition of the said land or which in the opinion of the Trust shall be prejudicial to the amenities of the said land or of the neighbourhood or to the Trust.

2. No caravan house on wheels tent or similar object shall be permitted to be or remain on the said land.

3. No new building or other erection shall without the previous written consent of the Trust at any time be erected or allowed to remain upon any part of the said land.

4. No mine or quarry shall be opened or worked upon any part of the said land without the previous written consent of the Trust.

5. No timber or timberlike trees shall without the previous written consent of the Trust be felled … PROVIDED ALWAYS that nothing in the foregoing stipulations shall prevent the cultivation of the said land or any part thereof in the ordinary course of agriculture or husbandry in accordance with the custom of the country."

19. Although the Proviso appears to form part of paragraph 5 of the schedule, it has throughout been common ground, and was accepted by Mr Gaunt QC for the National Trust, that it was intended to apply to all of the restrictions and stipulations set out in the schedule.

The Decision of the Arbitrator on the Proviso

20. Having set out the background facts, and the issues identified by counsel, the arbitrator began his consideration of the issues by dealing with the Proviso. He rightly recognised that, if he decided this issue in the respondents' favour, there could be no breach of any of the restrictions or stipulations in the schedule to the 1966 Deed.
21. He began his consideration by accepting a submission for the respondents that the Proviso should be interpreted in the light of current agricultural practices, and not those of 1966. He said that over the forty years since the covenant was entered into there have been dramatic changes in farming practices, growing techniques and movement of produce. He then continued, in an important passage:

"7.4 Mr Leddington-Hill was the only expert witness called. In 2007 he advised over 35 producer organisations on their structure and operation including salad, vegetable, soft fruit, top fruit and glasshouse production in various parts of the country. He states that migrant labour is vital to current and future operations of many UK businesses. Mr David Kay also states that it is a necessity to have seasonal migrant labour for the continued existence and operation of the business. Mr Kay is a general manager with a farming company operating in Sussex, Berkshire and Surrey. He refers to a caravan site for workers in Surrey.

7.5 Mr Fleming referred to caravans located on other farms for migrant workers to enable them to work on these farms. Mr Brown confirmed that there are caravans on his farm for migrant workers.

…

7.8 The evidence supports the Respondents' contention that the local agricultural usage, customs and practice are to grow salad crops and in order to produce those salad crops there is a necessity for migrant labour. Migrant labour needs to be housed. It is custom and practice not only in the parish but also over a much wider area that those seasonal migrant workers are housed on the farms.

7.9 The evidence from all the Respondents' witnesses is, and they were not challenged over the necessity to use migrant workers, that to successfully grow these crops, in such a way that makes it attractive to the supermarkets, then migrant workers are an essential part of that growing process. They plant or sow the crop and they harvest the crop."

22. The arbitrator then went on to discuss what was meant by the custom of the country, and referred to the changes which had taken place since the 1960s in the way South End Farm was cultivated. In paragraph 7.16 he concluded that

"… the ordinary course of agriculture must be taken to mean that which is necessary to carry out agriculture."

He then continued:

"7.17 It follows from the evidence of witnesses that, if migrant workers are not available to South End Farm, then the farm will not be farmed in the most efficient and economical way, that is growing crops to which it is best suited, in a similar way to others in the general area. The migrant workers are part of the process of cultivating the land. I hesitate to use the expression but they are human machines, used as part of the cultivation process.

…

7.18 If the migrant workers were not on site then the farm would unlikely be farmed in the same way; there would be a different system [of] farming. This would be a misuse, a waste, of a very valuable asset. It would not be " … the cultivation of the said land or any part thereof in the ordinary course of agriculture or husbandry in accordance with the custom of the country."

7.19 I therefore conclude that, the land upon which the caravans and ancillary offices stand at Coopers Barn, whether the site of former buildings or the newly created site, do form part of the land which is in the ordinary course of agriculture. Also, that both the land on which they stand and the caravans are necessary and benefit the proper cultivation of the land. Without them the land would not be farmed to its best potential with salad crops and consequently that would prevent cultivation of the land in the ordinary course of agriculture in accordance with the custom of the country.

7.20 The Respondents' case is proven so far as the Proviso is concerned."

23. The key steps in the reasoning which led the arbitrator to this conclusion were in my judgment the following:

(1) On the true construction of the Proviso, the question of what constitutes the ordinary course of agriculture in accordance with the custom of the country is a question of fact to be determined in the light of changing circumstances, and is not to be answered solely by reference to the circumstances which existed at the time of the 1966 Deed (paragraph 7.2).

(2) By 2007, the cultivation of salad crops on South End Farm was an activity undertaken in the ordinary course of agriculture and in accordance with the custom of the country (paragraphs 7.3 to 7.16, and in particular paragraph 7.8).

(3) The use of seasonal migrant labour is a necessity (my emphasis) for the cultivation of such salad crops, and it is the custom and practice in the area for such workers to be housed on the farms (again my emphasis) (paragraphs 7.8 and 7.9, and see also paragraph 7.17: "The migrant workers are part of the process of cultivating the land").

(4) The sole purpose of the disputed caravan site is to house seasonal migrant workers on South End Farm (paragraph 5.15; no other use for the site has ever been suggested).

(5) Accordingly, removal of the caravan site would prevent the cultivation of South End Farm (or at any rate the part of it which is used for growing salad crops) in the ordinary course of agriculture in accordance with the custom of the country (paragraph 7.19, and in particular the two final sentences thereof).

24. Counsel for the National Trust sought to attack the reasoning of the arbitrator in various ways, but in my judgment he was unable to establish that the basic steps in the reasoning which I have outlined above display any error of law, and still less that the arbitrator's decision on this question is obviously wrong. Counsel was able to point to some infelicities of expression, particularly in paragraph 7.17, and to some arguably irrelevant digressions or logical fallacies in points of detail; but in my judgment a fair and not over-critical reading of the award as a whole makes it quite clear why the arbitrator decided the question as he did. In my view there was ample evidence to justify his findings of fact, including the critical findings in paragraph 7.8, and the correctness of his conclusion on the only real issue of law (see paragraph 23 (1) above) was not even challenged by the National Trust.
25. So, for example, it was submitted for the National Trust:

(a) that to place a caravan on a piece of land is not to cultivate that piece of land;

(b) that a vehicle on wheels plays no part in the cultivation of a lettuce;

(c) that the removal of the caravan site would, in any event, not prevent the cultivation of the land, but only make it less profitable;

(d) that cultivation of salad crops would not be impossible unless migrant workers were housed in caravans on South End Farm or other land subject to the 1966 Deed (for example, they could be housed in a nearby village); and

(e) that the arbitrator "took his eye off the ball" by failing to appreciate that the Proviso is concerned only with not preventing the cultivation of the land in accordance with the custom of the country, so a custom which does not prevent cultivation, but merely makes it less convenient or more expensive, is not within the scope of the Proviso.

26. In my judgment there are two main answers to these submissions. The first answer is that they ignore, or at least do not give enough weight to, the strong findings of fact in paragraphs 7.8 and 7.9 of the Award. Whatever the position may be in other parts of the country, in the Chichester area cultivation of salad crops depends on the availability of migrant labour, and the local custom is to house such workers on the farm, not in a neighbouring village. The second answer is that the concept of cultivation of the land "in the ordinary course of agriculture … in accordance with the custom of the country" must, or at the very least should arguably, include any ancillary activities or uses of the land which are necessary for such cultivation. In the light of the findings of fact in paragraphs 7.8 and 7.9, use of part of the restricted land to house migrant workers is an ancillary use of this nature, and therefore falls within the scope of the Proviso.

Conclusion

27. For the reasons which I have given, I am not satisfied that the arbitrator's decision on the Proviso was obviously wrong. On the contrary, I think that it was probably right on the basis of his findings of fact. This conclusion makes it unnecessary for me to consider his decision on the other disputed questions of construction, because it is common ground that the Proviso applies to all of the restrictions and stipulations in the schedule to the 1966 Deed, with the result that there cannot be a breach if the conditions in the Proviso are satisfied.
28. The application for permission to appeal will therefore be dismissed.