Close relatives of tenants who occupy an agricultural holding under an Agricultural Holdings Act 1986 (“the 1986 Act”) tenancy, granted before 12 July 1984, enjoy rights of succession on death and on retirement after the tenant has reached the age of 65.
If the landlord will not consent to a proposed tenant’s application for succession, the proposed tenant may apply to the First Tier Tribunal Agricultural Land and Drainage Disputes (‘the Property Chamber’). However, in most cases, the question of succession is resolved by agreement between the retiring tenant, the landlord and the proposed tenant. The process is first triggered by the serving of a “retirement notice” under section 49 of the 1986 Act.
Suitable - but also eligible?
Although Part IV of the 1986 Act deals generally with succession, to be entitled to succession the proposed tenant must satisfy the Property Chamber that, at the date of the retirement notice, the proposed tenant was “eligible” within the meaning of section 50 and “suitable” within the meaning of section 53(5) of the 1986 Act.
The definition of an “eligible person” is describe under section 50(2)(a) as:
“a close relative of the retiring tenant in whose case the following conditions are satisfied-- in the last seven years his only or principal source of livelihood throughout a continuous period of not less than five years, or two or more discontinuous periods together amounting to not less than five years, derived from his agricultural work on the holding or on an agricultural unit of which the holding forms part, and, he is not the occupier of a commercial unit of agricultural land.”
This is often referred to as the “livelihood test”.
Eligibility test: Shirley Hall Farm, Derbyshire
The interpretation of section 50(2)(a) was considered in the 2007 case Trustees of the Shirley Children's Settlement v Crabtree. The case concerned a small holding in Derbyshire known as Shirley Hall Farm that was let in 1963. The tenant and his daughter, Ms Crabtree, entered into a farming partnership in 1997. In March 2004, the tenant served a retirement notice indicating he wished to retire and shortly thereafter, Ms Crabtree applied to the Agricultural Property Tribunal (as it was known then) for a declaration that Ms Crabtree was entitled to succeed the tenancy of Shirley Hall Farm.
The Tribunal was satisfied that Ms Crabtree was a “suitable person” within the meaning of section 53(5), but could not agree that she was “eligible” under section 50(2)(a). The issue was whether Ms Crabtree had derived her “only or principal source of livelihood” for the relevant periods from agricultural work on Shirley Hall Farm. The Tribunal found in Ms Crabtree’s favour, but the landlord appealed the decision to the High Court.
The High Court had to consider whether, to be eligible within the meaning of section 50, the proposed tenant must satisfy the livelihood test under section 50(2)(a) not only by reference to the last seven years ending on the date of the retirement notice, but also by reference to the seven years ending with the date of the tribunal hearing.
The landlord argued that since the livelihood test was drafted under section 50(2)(a) in the present tense, the proposed tenant was required to establish eligibility up to the date of the hearing. Under this approach, Ms Crabtree would not have been able to fulfil the livelihood test and would not be determined eligible to succeed the tenancy.
Ms Crabtree argued that the requirement to establish a rolling eligibility was unfair because hearing dates could be postponed and delayed which would unfairly burden a proposed tenant.
The High Court agreed with Ms Crabtree and that the livelihood condition must be satisfied with respect for the period of seven years preceding the retirement notice.
This decision clarified how the livelihood test should be applied when considering whether a proposed tenant was eligible to succeed a tenancy. The case is still relevant now and should be considered by tenants and landlords when assessing a proposed tenant’s eligibility.