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Jean-Yves Gilg

Editor, Solicitors Journal

Update | Agriculture: Shirt v Shirt, taxing mineral wealth

Update | Agriculture: Shirt v Shirt, taxing mineral wealth


is a reminder of the importance of 'written agreements in family farming partnerships

It seems that irrespective of developments in farm business structures and the inexorable rise of precision farming, by far the most frequent agricultural issues which come before the courts are rights of way and proprietary estoppel cases. Many of them (coincidentally) involve the dispossessed party spending at least some of his or her life in a caravan on the farm. Shirt v Shirt [2012] EWCA (Civ) 1029 merits some exploration because it deals with the question of what happens when one farmer either loses an Agricultural Holdings Act tenancy or ruins a successor's right to statutory succession (in this case both). Shirt is also a salutary lesson in the importance of written agreements in family farming partnerships.

Stanley and Marie Shirt owned and worked a 100 acre dairy farm in Derbyshire known as 'Syda Farm'. They had three sons and a daughter. In the mid-1960s one of their sons, Alan, expressed an interest in farming; when he left school he remained at Syda Farm and worked alongside his parents.

In the 1970s Stanley took agricultural tenancy of a neighbouring farm, Rufford House, from the Chatsworth Estate. Stanley, Marie and Alan worked Syda Farm and Rufford House together as a single farming unit. Alan resided at Rufford House and Stanley and Marie remained at Syda Farm. As a result of these changes, the parties attempted to formalise their business relationship and agreed terms for a partnership.
Unfortunately, after Marie's death in 2006, Stanley and Alan's relationship quickly deteriorated. Although the partnership continued, they had effectively stopped farming together: Alan was farming Rufford House Farm and Stanley Syda Farm.

In 2007, The Chatsworth Estate served a notice to quit under case (d) of Part I of Schedule 3 to the Agricultural Holdings Act 1986. Any succession rights that Alan might have expected to exercise were lost. Having lost their home, Virginia and Alan moved their caravan onto land at Syda Farm together with what remained of their livestock. By this time relations between Alan and Stanley were so strained that Stanley began eviction proceedings against Alan and Virginia.
Alan met his father's claim for possession with claims of his own for:

1. a declaration, based on proprietary estoppel, that he was legally and beneficially entitled to Syda Farm; alternatively

2. a declaration (again relying on proprietary estoppel) that Stanley held the legal estate of Syda Farm on trust for Alan absolutely upon 'such terms as the court may expect'; and

3. damages for the loss of Alan's succession rights of the protected Rufford House tenancy.

The High Court found little sympathy for Alan's contentions and made an early and clear distinction between the business of the farming partnership and the land which the partnership farmed. He held that any statements that Stanley made suggesting that Alan would be given the farm at a later date referred only to the business of farming the land and not to the land itself. The judge found persuasive evidence to support this view in various wills drawn up by Stanley which gave Alan a life interest in the land with ownership being divided equally between Alan and his three siblings.

As for the damages claim for loss of succession rights, the Court of Appeal overturned the High Court's finding that as the tenancy belonged only to Stanley it was not a partnership asset at all.
It took the view that the original ?tenancy was a partnership asset, which meant that Alan could have applied to succeed to it and Stanley was in breach of his partnership duties by not protecting the succession rights. Consequently, Alan was entitled to damages to be quantified at a?separate hearing.