Farm tenancy update

Anita Symington and Duncan Sigournay

Farm tenancy update

• Use of assignment to circumvent succession application

• Case B notices to quit – role of supporting planning documents

• Surrenders and regrants – uses and pitfalls

Case study - background

• Tenant in occupation since 1960s

• No obvious written agreement

• Land had been used for both grazing and arable production

• Tenant died

• Potentially protected 1986 Act tenancy with succession rights

Case study - issues

• Case G notice to quit – what if no ‘relevant notice’ received?

• Succession application

• Lack of written agreement – is assignment possible?

• ALT or Court?

Case study - remember

From Landlord’s perspective

• Serve Case G notice to quit ASAP

• If in doubt about existence of written agreement always serve Section 6 notice ASAP

• Comply with statutory timescales

Case study - remember

From Tenant’s perspective

• Act quickly

• If in doubt re ability to assign also lodge succession application

• Comply with statutory timescales

Case B notices to quit

• Outline permission can be used

• Watch out for any supporting planning documents – they could be fatal

• Settled intention is required

100% APR Tenanted Land: A “new tenancy”

• FBT. ATA 1995

• Surrender and regrant 4(i)(f) ATA 1995

• New succession tenancy on death or retirement AHA 1986

• New succession tenancy 4(i)(g) ATA 1995

Conditions for a 4(i)(g) tenancy

• Tenant must be same• Land in original holding to form substantial part

of the land in the new holding• Original tenancy protected by AHA 1986• New tenancy must be in writing• New tenancy must indicate AHA 1986 to apply

SDLT issues: Section 4(i)g

• Prima facie SDLT payable on new tenancy

• HMRC attitude if parties same

• Dangers if not

• Indemnities

• SDLT a small price to pay for 100% APR?

Combining Surrender and Regrant with Succession

• Mutual interest for Landlord & Tenant• New tenancy for Landlord for IHT• Succession accelerated or clarified for Tenant• Beware mechanics• Surrender and Regrant have to be to same

parties for 4(i)(g) and SDLT• Scenarios which can go wrong

Scenario 1• Tenant (Father) surrenders• Landlord regrants to Father – 4(i)g satisfied

100% IHT• Father assigns to Son or Father and Son jointly

with Landlord’s consent purported succession• But arguably invalid succession: breaks the

chain of occasions for succession purposes Section 37(i) AHA 1986

Scenario 2

• Father assigns to Father and Son with Landlord’s consent as agreed succession

• Father and Son surrender

• Landlord regrants to Father and Son

• Works for 4(i)(g) but as joint tenancy only valid succession if tenancy post 12 September 1984 Section 37(8) AHA 1986

Scenario 3

• Father assigns to Son with Landlord’s consent as agreed succession

• Son surrenders to Landlord

• Landlord regrants to Son

• [Son assigns to Father and son if Father wants to stay involved]PROBABLY OK

Private Rights of Way: Guidance from the Courts

Michael Tatters and Adam Levy

Property Dispute Resolution

Interpretation of Private Rights of Way

• Rights of way generally

• What do the words really mean?

• Case law reported in 2010:– Bee & Bee v Thompson [November 2009]– Davill v Pull & Sanderson [December 2009]

• Key points to take away

Rights of Way Generally

• Type of easement

• Can be express or implied

• Often the subject of disputes

• Is the wording sufficient to accommodate a change of use?

What do the words really mean?• Investors Compensation Scheme Limited

v West Bromwich Society – Reasonable person– Consider background facts– Reasonable meaning given the context– Meaning should not contradict a common

sense view

• Consider the matrix of fact and potential excessive user

Bee & Bee -v- Thompson

• Pear Tree Cottage -v- The Garth

- the facts

- the issues in dispute

• High Court decision

• Court of Appeal decision

Bee & Bee -v- Thompson• Summary of decision and lessons: - residential development of agricultural land

- restricting an ‘all purposes’ right of way- wording of the express grant- excessive user, unreasonable interference- background context and physical layout of the land- importance of alternative arguments before a court

Excessive User

Davill v Pull & Sanderson

• Change of use from agricultural to residential

• Is a right of way for ‘all reasonable and usual purposes’ more limited than a right of way for ‘all purposes’.

• Consider the matrix of fact

Diversifying?

• Considering diversification / change of use?– Look to wording of any rights of way before

taking any steps towards the change– Is the wording sufficient to cover your

proposed use?– Take advice

Farm Energy from Waste Schemes: Planning &

Environmental Considerations

By Alex Madden and Sarah Nsouli

Anaerobic Digestion

Composting

Farm Layout

PUBLIC

FOOTPATH

Wind Direction

1

2

3

Farm Access

Planning Considerations

• The Application– Pre-application advice– Community Consultation

• Planning Policy & Government Guidance – PPS7– PPS22

• Material Considerations – Visual Amenity – Effect on Neighbouring Properties

• Appeals

Environmental Considerations

• Environmental Impact Assessment

• Environmental Permits & Exemptions

• Nuisance – Odour– Noise– Interrelationship with Permitting Regime

• Code of Practice & NVZ Requirements

Beware of the bull

Key issues in renewable energy plant contracts

Insurance underwriters key considerations for

biomass and biogas installations • Poor workmanship and deficient

materials – the main risk exposure

• Fire risk• Third party liability for emissions

and pollution • Design risk for innovative

technology • Lack of operational experience• Availability and security of supply

Additional Funder Concerns

• Proper distribution of risk to both supplier and client

• Ensure documentation in place to control commercial risk for client

• Obtain unfettered ability to step-in • Arrangements for performance

guarantees and maintenance/service of equipment

• Long term power purchase agreements

Key message for farmers, estate managers and agents

• Set out stall of minimum requirements early in tender process

• Be led by insurance requirements, banks requirements, planning guidance and good practice

• Do not simply accept proffered terms – they may be standard to the supplier but they are unlikely to be institutionally acceptable or up to industry standard

Obligations under construction legislation

Construction/installation and maintenance contracts will be subject to:

• Housing Grants, Construction and Regeneration Act 1996be aware of:

> of specific payment obligations> dispute resolution forum

• Construction (Design and Management) Regulations 2007be aware of obligations on a client in terms of key obligations to:

> manage site safety> allow for production of

construction phase plan> check competencies

Civil liability and potentially criminal liability if certain regulations are breached

Construction Contract Provisions

• Beware needless separation of design and workmanship obligations

• Manage risk of delay> only allow sensible compensation events> restrict period within which

claims can be made> provide all information you have

and manage your responses professionally

• Beware short limitation periods> differentiate between mechanical plant and civil/structural/building works if necessary> overlap with maintenance

contract> how is the contract signed?

Construction Contract Provisions continued

• Limitation of liability provisions• Foreign jurisdiction enforcement

issues• Advance payment issues:

> deposits with attorneys > security documentation

• Insurance and carriage provisions • Performance Guarantees and

Maintenance contracts – hold performance promises to account, set achievable but challenging key performance indicators (and not too many)

• Training and maintenance manuals

Standing out from the Herd

Graeme Fearon

What is a brand?

Kelsmor

Kelsmor

Class 29:Meat and meat products and dairy products (including milk and milk products).

Class 30:Ices, ice creams and confectionery.

Kelsmor

Kelsmor

Good Oil

Good Oil

BRAHAM & MURRAY GOOD

Class 29:Food supplements, edible oils and fats, edible seeds, prepared meals and snacksClass 30:Chocolate bars, salad dressings, snack bars

Class 32:Beers; mineral waters; fruit drinks

Riverford

Riverford

Spudmuckers

Spudmuckers

Agricultural Employment Law Update

Kerrie Hunt

Agricultural Wages Order

• Defines grades and categories of workers

• Sets minimum rates of (pay grades 1 to 6,flexible workers, trainees and apprentices)

• Sets allowances and maximum deductions in respect of housing

• Sets minimum entitlement to rest breaks

• Sets entitlements to holidays, holiday pay and other leave

• Sets entitlement to agricultural wages sick pay

Without the AWO

• Pay – NMW (21+ £5.93, 18-20 £4.92, 16-17 £2.64, apprentices £2.50)

• Holidays – WTR(5.6 weeks which can include bank holidays)

• Sick pay – SSP (£79.15 up to 28 weeks)• Accommodation – NMW• Rest breaks – WTR (20 minutes in 6 hours, Daily rest 11

hours in 24, weekly rest 24 hours in 7 days or 48 hours in 14 days)

Discrepancies and Issues Arising

WO more generous

• NMW – flat rate no grades or overtime rates

• Holiday – fixed from day 1, no overtime for bank hols, notice provisions

• Sick pay – SSP flat rate

• No Miscellaneous allowances – night work rates, standby duty allowance, dog allowance

Practical Consideration

• Review statements of terms/contracts

• Consider any implied terms

• Beware being found in breach of contract

• Consult over any changes

• Decide on terms to be offered to new employees going forward

• Maintain records

• Be alive to possible increased union activity on behalf of farm workers

Equality Act

• 1 October 2010

• Consolidation

• New Rights

• Simplification or Extension?

What has changed?

• ‘because of a [not his or her] protected characteristic, A treats B less favourably than A treats or would treat others’

• Discrimination or harrassment by perception and association• Treatment ‘arising in consequence of disability’• Justification ‘proportionate means of achieving legitimate aim’

Still to come

• Dual discrimination• Gender pay gap reporting• Positive action

When I’m 64………

• End to default retirement age of 65• No forced retirement after 1st October 2011• No notices after 6th April 2011• ‘objective justification’ for any contractual

retirement age• Transitional arrangements

What should you do?

• Make no assumptions• Review contract and ‘normal retirement age’• Consider justification• Plan ahead

Family Farming Partnerships-Inheritance Tax on Death

Jim Sawer

The Partnership Act 1890Section 1

• Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.

• A popular business structure for families involved in partnership-though, frankly, a Company might be a better structure. Limited Liability. Retained profits.Lower corporation tax rates. More flexibility on share transfer etc

• Accidental creation – not a bad thing for families- unlimited liability.

• Flexible uses. As an alternative to a trust or a tenancy.

• Important to have a written partnership agreement containing terms specific and peculiar to the business and to oust or amend the less workable provisions of the partnership act.

Death-Section 33

• Subject to any agreement between the partners, every partnership is dissolved as regards all the partners by the death or bankruptcy of any partner.

• Most partnership agreements will exclude Section 33 so that death of a partner will not terminate.

• Will specify sums due to the estate and timetable for payment of income to date of death and any capital

Partnership Property- Section 20

• All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement.

• Important; determines what’s governed by will and by partnership agreement and the IHT business relief available.

Section 104 IHTA 1984.

• Business assets 100%. Assets used in business 50%. Individually owned farmland occupied by partnership 100% Agricultural relief. Agricultural relief takes precedence.

Section 105

• Property consisting of a business or interest in a business;

Section 106

• Property is not relevant business property in relation to a transfer of value unless it was owned by the transferor throughout the two years immediately preceding the transfer.

Section 112

• Excepted assets

Section 113

• Where any property would be relevant business property in relation to a transfer of value but a binding contract for its sale has been entered into at the time of transfer.

Land, Farmhouses and Partnership Capital

Section 116• 100% relief

• Vacant possession

• Post 1995 tenancies

• Pre 1981 tenancies – double discount

Section 117Minimum period of occupation or

ownership• Subject to the following provisions of this Chapter,

section 116 above does not apply to any agricultural property unless

(a) It was occupied by the transferor for the purposes of agriculture throughout the period of two years ending with the date of the transfer, or(b) It was owned by him throughout the period of seven years ending with that date and was throughout that period occupied (by him or another) for the purposes of agriculture.

• Occupation by a partnership is occupation by individual partner

• SO partnership Capital V Partnership Loan

• Occupation of the farmhouse

Atkinson Case

• Whether agricultural property relief was available to reduce an Inheritance Tax liability on the basis that the property in question was 'occupied for the purposes of agriculture'.

• The deceased had been a partner in a partnership carrying on a farming business under an agricultural tenancy and lived in a bungalow on that farm.  For the four years prior to his death, he was in hospital or in a care home. However he remained a partner in the partnership and his belongings remained in the bungalow and no one else resided in it.

 

• HMRC argued that the deceased could not be said to be in occupation of the bungalow and still less could the bungalow be said to be in use for the purpose of agriculture.

• The Tribunal found that the occupation in question was by the partnership and that the entire holding was occupied for the purposes of the partnership's farming activities. The residential buildings were used to accommodate the partners. In the last four years of the deceased's life he remained a partner and his possessions remained in the bungalow.  Occupation of the bungalow by the partnership continued up to the deceased's death and that occupation was used for the purposes of agriculture as the bungalow was still used to accommodate the needs (albeit much reduced) of one of the partners. Nothing had been done to terminate occupation.

Conclusion

• Partnership Agreement

• Excluded assets

• Partnership property

• Occupation for agriculture – watch out for retirements and occupation of farmhouses

• Section 113

• Insurance