Fridays Ltd v Bunyan (VO)

Non-domestic rates – Exemption – Agricultural buildings – Appellant ratepayer appealing against decision of Valuation Tribunal for England dismissing challenge to entry of buildings in non-domestic rating list – Whether buildings “occupied together with” agricultural land and used solely for agricultural operations on “that or other land” – Whether “or” inclusive or exclusive in paragraph 3 of schedule 5 to Local Government Finance Act 1988 – Appeal allowed The appellant ratepayer was a large producer of free-range eggs. Chequer Tree Farm, Benenden Road, Rolvenden, Cranbrook, Kent, was its headquarters, encompassing some 530 acres. It also owned or operated a number of other farms within a 10-mile radius (the Fridays Farms). It was agreed that much of the land and some of the buildings at Chequer Tree Farm were exempt from non-domestic rating, including 482 acres of agricultural land used to produce barley and wheat, a mill store, a feed mill and chicken houses. An issue arose whether three buildings at the farm (the egg packing centre, egg packaging store and egg warehouse) should also be exempt from rating. If the three buildings were exempt, an assessment of £136,000 was agreed; if they were not, the agreed figure was £352,500 RV. The appellant appealed against a decision of the Valuation Tribunal for England (VTE) in which its challenge to the entry of the three buildings in the 2017 non-domestic rating list was dismissed on the basis that the buildings did not meet the test for exemption from liability. The appellant contended that the three buildings were exempt as agricultural buildings within paragraph 3(a) of schedule 5 to the Local Government Finance Act 1988, which defined a building as an agricultural building if it was not a dwelling and was “occupied together with agricultural land” and used “solely in connection with agricultural operations on that or other agricultural land”. Held: The appeal was allowed. (1) Under paragraph 1(b) of schedule 5 to the 1988 Act, a hereditament was exempt from rating to the extent that it consisted of agricultural buildings, which included buildings used for “keeping or breeding of livestock”, and also buildings occupied together with such buildings. By 1992, a body of case law had built up around the meaning of “occupied together with”. The Lands Tribunal had taken the view that geographical separation did not matter; what mattered was that the functional connection between the building in question and the building or land together with which it was claimed to be occupied. In Farmer (VO) v Buxted Poultry Ltd [1993] 1 EGLR 155; [1993] AC 369, the court held that it was necessary to show that two buildings, or the buildings and agricultural land, were occupied together so as to form in a real sense a single agricultural unit. Contiguity or propinquity might go far to show that they were. Thus, farm buildings surrounded by land farmed with other land nearby though not contiguous or even land in another neighbouring village might well, as a matter of fact, be found to be “occupied together with” each other. Separation might indicate that they were not, and the greater the distance the less likely they were to be one agricultural unit. The important question was whether the two buildings or the buildings and land were worked together so as to form one agricultural unit. (2) In 2003, paragraph 3 of schedule 5 was amended so that the building might now be used in connection with agricultural operations on that or other land. Whereas before 2003, paragraph 3 required the building in question to be occupied together with agricultural land and used solely in connection with agricultural operations on that land, the building might now be used in connection with agricultural operations on that or other land. The amendment saved the exemption where farmer A’s machine shed was occupied by farmer A and was adjacent to agricultural land also occupied by A, but where the machinery in the shed was used on agricultural land elsewhere (whether by A or by other farmers or both). The shed was still in the same occupation as the land next to it, at the same time, but it did not have any functional connection with it. In that situation, the shed had the exemption. It was occupied together with the agricultural land next to it, and its sole use was in connection with agricultural operations, but on other agricultural land. That was identical to the situation in the present appeal, where the three buildings were used in connection with agricultural operations on other land, not on the arable land next to it. (3) When paragraph 3 was amended, occupation and use had been split up by the amendment; occupation no longer required a functional connection, let alone anything closer such as constituting or being part of a farm or unit. Nevertheless, the word “together” was likely to have a meaning beyond occupation by the same person at the same time, and it meant that the building and the land had to be occupied as part of the same enterprise and had to be geographically close if not contiguous. The decision in Farmer v Buxted was no longer relevant to the construction of the words “occupied together with” in paragraph 3. (4) In the present case, there was no difficulty in finding that the three buildings were occupied together with the arable land at Chequer Tree Farm. They were in the same occupation at the same time, were contiguous (the fields were just across the yard behind the buildings) and were part of the same business enterprise: Farmer v Buxted distinguished. Wootton v Gill (VO) [2015] UKUT 548; [2015] PLSCS 294 and Senova Ltd v Sykes (VO) [2019] UKUT 0275 (LC) considered. In those circumstances, the parties agreed that the correct assessment in the rating list was £136,000. (5) If the tribunal was wrong to distinguish Farmer v Buxted, on the understanding of “occupied together with” in that case, the three buildings were not occupied together with the arable land at Chequer Tree Farm. Their operations and management were not connected with each other. However, the three buildings were occupied together with the Fridays Farms, in the sense of forming a single agricultural unit with them. Furthermore, the three buildings had a close functional connection with the agricultural operation of producing eggs on the land at Fridays Farms. Therefore, the second requirement in paragraph 3 of schedule 5 was met; the three buildings were solely used in connection with agricultural operations on agricultural land. Cain Ormondroyd (instructed by Thrings LLP) appeared for the appellant; Guy Williams KC (instructed by HMRC Solicitor’s Office) appeared for the respondent. Eileen O’Grady, barrister Click here to read a transcript of Fridays Ltd v Bunyan (VO)