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Cite as: [2021] UKUT 212 (LC)

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UPPER TRIBUNAL (LANDS CHAMBER)

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

UT Neutral citation number: [2021] UKUT 212 (LC)

UTLC Case No: LC-2019-65

(Formerly BNO-390-2019)

BLIGHT NOTICE - PRELIMINARY ISSUE - HS2 Phase 2(a) - agricultural unit comprising dwellings, buildings and land owned by different family members but farmed by their limited company - whether family members or limited company entitled to a qualifying interest as owner-occupiers of the unit - ss.151(4)(f), s.164 and s.168(2), Town and Country Planning Act 1990

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN:

GEORGE MELLOR

MARGARET JENNIFER MELLOR

LUKE MARTIN GEORGE MELLOR

SUSAN JAYNE MELLOR

LUKE MELLOR FARMS LIMITED

Claimants

and

THE SECRETARY OF STATE FOR TRANSPORT

Respondent

Re: Manor Farm, Blithbury,

and Land at Colton,

Staffordshire

Martin Rodger QC, Deputy Chamber President

Determination on written representations

Mr Barry Denyer-Green, instructed by Ansons Solicitors, for the claimants

Mr Stephen Whale, instructed by the Government Legal Department, for the respondents

The following cases are referred to in this decision:

Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2020] 1 P&CR 15, [2019] EWCA Civ 1755

Graysim Holdings Ltd v P&O Property Holdings Ltd [1996] AC 329

Newnham College v HMRC [2008] UKHL 23

Wheat v E Lacon & Co Ltd [1966] AC 552

Introduction

The Mellor family run an organic dairy farming business at Manor Farm, Blithbury, in Staffordshire across two separate blocks of land. The first block includes Manor Farmhouse, Apple Tree Cottage, farm buildings and approximately 73 hectares of land at Blithbury ("Manor Farm"). The second block comprises 120 hectares of land near the village of Colton to the west of Blithbury ("the Colton land"). The proposed route of Phase 2(a) of the HS2 (West Midlands to Crewe) railway line bisects both blocks of land.

On 12 September 2019 the claimants served a blight notice on the respondent under ss.150 and 158, Town and Country Planning Act 1990 requiring him to purchase the whole of both blocks of land, including the houses and buildings at Manor Farm. The respondent served a counter notice under s.151(1) of the Act, objecting to the blight notice on grounds under s.151(4)(f) and s.159(1). The first ground of objection challenged the claimants' assertion that their interest in the land comprised in the blight notice is a qualifying interest. The second ground of objection takes issue with the claimants' entitlement to rely on s.158 to include unaffected areas of their agricultural unit in the blight notice.

The claimants referred the respondent's objection to the Tribunal which directed that the question of whether the claimants were the owners of a qualifying interest in the land comprised in the blight notice should be determined as a preliminary issue. The parties agreed that the issue should be considered on written representations which were provided on behalf of the claimants by Mr Barry Denyer-Green and on behalf of the respondent by Mr Stephen Whale.

The relevant statutory provisions

Chapter II of Part VI of the 1990 Act is concerned with land adversely affected by the planning proposals of statutory authorities, referred to as blighted land. By s.150(1) a person entitled to a qualifying interest in a hereditament or agricultural unit the whole or part of which is comprised in blighted land has the right, in specified circumstances, to serve a notice requiring the appropriate authority to purchase that interest.

The categories of qualifying interest to which the right applies are identified in s.149(2) and include an interest in an agricultural unit or part of an agricultural unit which, on the relevant date, "is the interest of an owner-occupier".

"Agricultural unit" is defined in s.171(1) and means land which is occupied as a unit for agricultural purposes, including any dwellinghouse or other building occupied by the same person for the purpose of farming the land.

"Owner-occupier" is also a defined expression. By s.168(2), 1990 Act it means, in relation to an agricultural unit, a person who-

"(a) occupies the whole of that unit and has occupied it during the whole of the period of six months ending with the date of service; or

(b) occupied the whole of that unit during the whole of a period of six months ending not more than 12 months before the date of service,

and, at all times material for the purposes of paragraph (a) or, as the case may be, paragraph (b) has been entitled to an owner´s interest in the whole or part of that unit."

The reference in s.168(2) to an owner's interest means a freehold interest or a tenancy with an unexpired term of not less than three years, and the date of service means the date of service of the relevant blight notice (s.168(4)).

It can be seen from s.168(2) that to be an owner-occupier a person must satisfy an occupation condition and an ownership condition. The occupation condition must be satisfied in respect of the whole of the agricultural unit. But the ownership condition need not; it is enough that a claimant should have been entitled to an owner's interest "in the whole or part of that unit".

Special provisions are also made by s.164 where land is occupied for the purposes of a partnership firm, so that occupation for the purposes of the firm is treated as occupation by the firm and not as occupation by the partners individually, and the definition of "owner-occupier" applies in relation to the firm accordingly.

The facts

The relevant facts are recorded in in a witness statement made by Luke Mellor on 9 October 2020.

The first four claimants are two generations of the same family which has farmed Manor Farm since at least 1948. I will refer to George and Margaret Mellor as Mr and Mrs Mellor and to their son Luke Mellor and his wife Jayne Mellor as Luke and Jayne.

For the purpose of the preliminary issue it is agreed that the "agricultural unit" is the land identified in the blight notice comprising Manor Farm, including the two dwellings, and the Colton land. At the date of service of the blight notice the claimants conducted a dairy farming enterprise across the whole agricultural unit.

Manor Farm was held under eight separate registered titles which include Manor Farmhouse and Apple Tree Cottage. The registered proprietors of six of these, including Manor Farmhouse and its farm buildings, were Mr and Mrs Mellor and Luke. A parcel of bare land was owned by Mr and Mrs Mellor alone and Apple Tree Cottage was owned by Luke and Jayne alone; it is not clear from the evidence which couple occupied which house.

The Colton land was held under five registered titles, three of which were in the names of Mr and Mrs Mellor and Luke while the remaining two were in the names of all four members of the family.

The four family members are members of a partnership, Luke Mellor & Son, on the terms of a deed of partnership executed on 5 August 2019.

All four family members are also directors of the fifth claimant, Luke Mellor Farms Limited ("the Company"), which conducts the farming enterprise on the whole of the unit. The income and expenditure of the farming business are received and incurred by the Company, not the partnership.

The deed of partnership stated that the family members had farmed in partnership "for some time past" and had agreed to enter into the deed to record the terms of the partnership with effect from 6 April 2017. The business carried on by the partnership was to be carried on from "the Farm", meaning Manor Farm and such other places as the partners might decide. Mr and Mrs Mellor were referred to in the partnership agreement as the "Landowner Partners" and were said to hold the Farm on trust for all of the partners as a partnership asset. Apple Tree Cottage is also described as a partnership asset, and as held on trust for all the partners by Luke and Jayne. All items used by the partnership for the purpose of its business, including plant and machinery, livestock and dead stock, and entitlements to agricultural subsidies were also said to be partnership assets.

By a licence agreement dated 10 September 2019 all four family members acknowledged that they had granted the Company a licence, in common with them, to occupy the whole of the land and agricultural buildings at Manor Farm, with effect from 6 April 2017. The licence was to continue until terminated by notice and a fee of £45,000 a year was payable. The Company acknowledged that it occupied as licensee only, that no relationship of landlord and tenant had been created, and that the family members retained "control, possession and management" of the property. The licence did not grant the Company any rights over Manor Farmhouse or Apple Tree Cottage.

By an agreement for sale dated 6 April 2017 the business and assets of the partnership were agreed to be sold to the Company, with the specific exclusion of Manor Farmhouse, Apple Tree Cottage, the farm buildings and 179.82 acres of farmland. The effect of the exclusions was to leave only the Colton land within the terms of the agreement for sale. The transfer date was stated in the agreement to be 6 April 2017, but completion has yet to take place. In his witness statement Luke described the Company as occupying the Colton land and being entitled to acquire the freehold from the individual family members who hold it on bare trust for the Company.

The net effect of these arrangements was that the farming of the land was undertaken by the Company, and not by the partnership.

The issue

The blight notice was given by all five claimants. For the notice to be valid s.168(2) requires the claimants to have been, or to be treated as having been, "owner-occupiers" of the agricultural unit throughout one of the specified periods of six months (it is not suggested that the relevant facts changed in the eighteen months during which the alternative periods fall). That is, they must have occupied "the whole of that unit" and have been "entitled to an owner´s interest in the whole or part of that unit". The issue for determination is whether the claimants satisfied those conditions on the facts described.

The parties' submissions

The claimants' case has evolved over time. In the blight notice itself it was said that the whole of the farming enterprise of the Mellor family was run through the Company and personally by the family members in partnership. Manor Farm was said to be split over several titles "however it is all included within the Mellor family farming partnership". The Colton land was also split over a number of titles and was described as being farmed by the Company as beneficial owner. The application of the facts to the statutory conditions was not spelled out clearly and it appeared at that stage to be possible that the partnership was responsible for farming Manor Farm while the Company farmed the Colton land.

The claimants' statement of case was no clearer. Both Manor Farm and the Colton land were described as being farmed by the claimants as part of their dairy farming business, without differentiating between the Company and the family members. It was said to be "self-evident" that the individual claimants were in occupation of both Manor Farm and the Colton land, but in relation to Manor Farm reliance was also placed on deemed occupation by all of the partners by virtue of s.164, which was said to "confirm occupation by all of the individual claimants by providing that where, as here, ... an agricultural unit is occupied for the purposes of a partnership, occupation is deemed to be that of the partnership and not of the individual members". The Company's beneficial ownership of the Colton land was said not to affect the position as far as freehold ownership was concerned. Nor did its licence to occupy the Manor Farm land "affect the claimants' position".

In his submissions on behalf of the claimants Mr Denyer-Green referred first to what it means to be the occupier of land for the purpose of s.168(2). He cited authority in support of the proposition that the meaning of occupation in a statute depends on the factual and legal context in which the expression is used; it involves some degree of both physical presence on and control of land but need not connote exclusive occupation.

Graysim Holdings Ltd v P&O Property Holdings Ltd [1996] AC 329 concerned the qualifying condition in s.23, Landlord and Tenant Act 1954, that business premises must be "occupied by the tenant ... for the purposes of a business carried on by him". Lord Nicholls said (at 334) that the concept of occupation is not a legal term of art and that "like most English words `occupied', and corresponding expressions such as occupier and occupation, have different shades of meaning according to the context in which they are being used."

In Newnham College v HMRC [2008] UKHL 23" court="ukhl" year="2008" jurisdiction="GB" type="case">[2008] UKHL 23 Lord Walker said at [39] that `occupation':

"...is in general taken to import an element of physical presence and some element of control over the presence of others. But these generalities are strongly influenced by the statutory context and purpose."

More recently, in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2020] 1 P&CR 15, having referred to Graysim and to Newnham, Lewison LJ described the words occupier and occupation as "intensely sensitive to context" (at [45]). He also considered that, in an appropriate context, more than one person may simultaneously be an occupier of the same property, depending on their respective degrees of control. He referred to Wheat v E Lacon & Co Ltd HL [1966] AC 552" reportSeries="elr" year="1966" jurisdiction="GB" type="case">[1966] AC 552, a case concerning the Occupiers Liability Act 1957, where Lord Denning said at 581A:

"There is no difficulty in having more than one occupier at the same time."

I did not understand Mr Whale to disagree with any of these propositions. Nor did he dissent from the claimants' general submission that, where a statute is capable of more than one interpretation, the Tribunal should prefer the interpretation which interferes least with private property rights (or which provides the most effective relief where such interference is inevitable). He nevertheless challenged the claimants' ability to satisfy either part of the definition of owner-occupier.

The claimants' primary case on the occupation condition was that all four family members occupied the whole of the agricultural unit. The fact that the business was conducted through the Company, which had a non-exclusive licence to occupy Manor Farm, did not mean that Mr and Mrs Mellor, Luke and Jayne were not also in occupation. Clause 2.1 of the 2019 licence recognised that occupation by granting the Company rights "in common with" the family members. Additionally, the family members were the sole directors and shareholders of the Company which could only occupy land and conduct its business through natural persons, such as its directors and servants, who physically perform the activities which amount to occupation.

Mr Denyer-Green also pointed out that the arrangements adopted by the claimants were not at all unusual. An agricultural unit run by different generations of the same family might typically be expected to occupy land owned by different family members conducting their enterprise through a limited company.

Mr Whale submitted that the occupation condition was not satisfied because none of the five claimants occupied the whole of the unit. In particular, Mr and Mrs Mellor occupied one of the two houses, and Luke and Jayne occupied the other; neither couple occupied the other couple's house, and nor did the Company (whose licence extended only to the land and agricultural buildings).

Mr Whale also questioned whether the Company was in occupation of the Colton land. The claimants' case was that the members of the family hold the legal estate in the Colton land on bare trust for the Company and that it has occupied the land pursuant to the 2017 agreement since 6 April 2017.

In response to the suggestion that each dwelling was occupied by only two of the four individual claimants, and that neither dwelling was occupied by the Company, Mr Denyer-Green made two points.

First, a limited company can only occupy land through its directors and servants. Its directors may reside in two dwellings, but they are all directors of the Company. As with most family farming enterprises, the conduct of the business did not cease at the entrance to the farmhouse. The absence of an express licence in relation to the two dwellings did not prevent the company being the occupier of the whole of the unit for the purpose of the dairy business it carries on through its directors.

Secondly, the effect of the respondent's representations would be that in the common situation of an agricultural unit containing dwellings occupied by agricultural workers, the occupation condition could never be satisfied. That outcome would be avoided if the words "occupier" and "occupation" were given a meaning that has regard to the factual and statutory context. The dwellings may be occupied residentially by the agricultural workers, but they can also be occupied by the owner of the whole unit for the purposes of s.168(2).

It was eventually agreed that occupation by the partnership was irrelevant, although the parties gave different reasons. Initially the claimants had run an alternative case relying on s.164(2) of the Act which treats occupation for the purposes of the partnership firm as occupation by the partnership and not by the individual members of the partnership. But in further submissions Mr Denyer-Green expressly abandoned reliance on s.164(2) and submitted that the partnership was not in occupation for any purpose. The respondent acknowledged that occupation for the purposes of the partnership would fall to be treated as occupation by the firm, and not by any one or more of the partners individually. But it was pointed out that the partnership was not a claimant and it was said that whether or not it met the s.168(2) tests was therefore irrelevant.

As for the ownership condition, in the respondent's statement of case it had been said that because none of the five claimants individually, nor all of them jointly, owned the whole of the agricultural unit they were not owner-occupiers, either individually or jointly, but that suggestion was not pursued. To demonstrate satisfaction of the ownership condition the claimants relied only on the fact that each of the family members has an owner's interest in part of the agricultural unit. It did not make any difference that none of them owned all of the land. That was not disputed by the respondent in submissions.