Judgment handed down in The Executors of Major Michael Wills v Holder [2026] UKUT 409 (LC)
This was an appeal from a decision of the First-tier Tribunal, Property Chamber (the FTT) under the succession provisions in Part IV of the Agricultural Holdings Act 1986 (the 1986 Act). Part IV makes provision for certain close relatives of the tenant of an agricultural holding to apply for a direction entitling them to succeed to a new tenancy of the holding following the death or retirement of the tenant.
The first issue in the appeal was whether the FTT was entitled to find that the Applicant was eligible to apply for a direction. To be eligible to apply for a direction an applicant must satisfy the “livelihood” condition in section 36(3)(a) of the 1986 Act, which requires them to prove that:
“in the seven years ending with the date of death 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, …”
The Applicant’s ability to meet the livelihood condition depended on whether the income from his contracting work away from the Holding “derived from his agricultural work on the holding”. The Applicant’s evidence was that he spent 70% of his working time on the Holding (including the time spent on maintaining the machinery used for the contracting business) and 30% away from the Holding undertaking contracting work.
The FTT considered that the contribution to the Applicant’s livelihood made by contracting work done for other farmers on land away from the Holding should count towards the satisfaction of the condition. It asked itself “from where” the contracting business was carried on. The business could not have been carried on in the absence of the Holding and the facilities it offered: control of the business resided there as did the essential resources provided by the sheds, repair shop and fuel storage. The contracts with the customers were made on the Holding.
The Upper Tribunal reversed this aspect of the FTT’s decision. The language of section 36(3)(a) was not open to the interpretation put on it by the FTT. The proper focus was not on where the business is conducted from, or what connection exists between the holding and different parts of the business; the correct focus was on where the applicant undertakes his agricultural work.
This interpretation of section 36(3)(a) was consistent with section 36(6), added to the 1986 Act by amendment in 2006. This allows agricultural work carried out by the applicant “from the holding” to be counted towards satisfaction of the livelihood condition under certain conditions. This provision was introduced following a report by the Tenancy Reform Industry Group (TRIG), which had expressed concern that the prospects of succession for the younger generation might be undermined by “so basic an action as the son taking a tractor to do contract work in the evenings to supplement his income”. TRIG proposed the new Section 36(3)(a), which amendment was obviously made on the understanding that, without it, such work could not count towards satisfaction of the condition
The FTT was also wrong to treat the cases of Caswell v Welby (1996) 71 P&CR 137 and Bailey v Sitwell [1986] 2 EGLR 7 as useful guidance. In both of those cases, all of the applicant’s work was on the holding and the tribunal was satisfied that his work was the sole reason for his ability to make the drawings which funded his livelihood. In this case, part of the reason the Applicant was able to make the drawings he did was that the business was engaged in contracting work off the Holding in which he participated. It was therefore necessary to apportion the Applicant’s sources of livelihood between the different income streams to which his status as a partner gave him access.
The FTT had been wrong to hold that the Applicant was eligible for a new tenancy on the basis that he satisfied the livelihood condition in full, and that aspect of its decision would be reversed.
The second aspect of the appeal related to the FTT’s alternative findings in relation to Section 41 of the 1986 Act.
Under this provision, an applicant who does not satisfy the livelihood condition may nevertheless be treated as if they were eligible, if the test is satisfied to a “material extent”. “Material” means “substantial in terms of time and important in terms of value”: Littlewood v Rolfe [1981] 2 All ER 51.
The Applicant had asked the FTT to apportion his qualifying and non-qualifying income by reference to either: (a) a 70:30 split based on the time spent by the Applicant in work on and off the Holding; or (b) a 80:20 split based on the time spent plus additional factors such as the connection between the contracting business and the Holding, and the fact that the contracting work could not have been carried on in the absence of the Holding. On either basis, the Applicant contended that the livelihood condition would be satisfied to a material extent.
The FTT had held that the 70:30 split “most accurately reflects the Applicant’s agricultural work off the Unit”, and that this produced figures which were insufficient for the Applicant’s case to succeed.
The Applicant challenged the reasons given by the FTT for not accepting an 80:20 apportionment. The FTT had said it could not accept an 80:20 split because “the extra factors we are urged to take into account are ones which have led us to our conclusion that the contracting enterprise is, with the arable farming, the agricultural work carried on at the Holding”.
The Upper Tribunal said that it struggled to make sense of this reasoning. The Applicant argued that the alternative case was only relevant if his primary case for full satisfaction of the livelihood condition failed, so that the factors which led the FTT to accept his primary case would be available and relevant if it were considering his alternative case. The Upper Tribunal considered that the FTT had not explained its reasoning in a way which enabled the parties to understand what that reasoning was, nor did it allow the Upper Tribunal to consider whether it disclosed some error of approach.
Accordingly, the Section 41 application would be remitted to the FTT for further consideration. Nothing in the decision obliged the FTT to reach a different conclusion on the section 41 application; it would be free to maintain its original view or to change it.
Read the judgment in full here.
Emily Windsor, instructed by Loxley, acted for the Landlord. Jamie Sutherland, instructed by Carbon Law Partners, acted for the Applicant.
Back to news listing
