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Downloadable guides are available for many topics. See below.
Impending changes to direct support following Brexit
The timetable according to the Agriculture Bill passing through Parliament is as follows1:
| 2019 | Basic Payment claims to be as “normal” |
| 2020 | It is intended that the payment structure will fundamentally be the same as the Basic payment. However, assuming Brexit has been implemented, the scheme will be funded by the UK. |
| 2021-2027 | Direct land based payments (ie the Basic Payment) are to be gradually phased out over this period. Farmers are to be rewarded in future for providing “public goods” through the Environmental Land Management Scheme. |
The above is, of course, subject to change under political influences.
The “public goods” in the Environmental Land Management Scheme, which is due to commence in 2025, will include2:
• Managing land or water in a way that protects or improves the environment;
• Supporting public access to and enjoyment of the countryside, farmland or woodland and better understanding o the environmental;
• Managing land or water in a way that maintains, restores or enhances cultural heritage or natural heritage;
• Mitigating or adapting to climate change;
• Preventing, reducing or protecting from environmental hazards;
• Protecting or improving the health or welfare of livestock; and
• Protecting or improving the health of plants.
Much of the detail with regard to claiming and the anticipated level of payments is currently unknown.
Whilst the Agriculture Bill does not set out fully the level of the reductions to support it would appear that the largest claimants will initially suffer the largest reductions. The reduction for 2021 is currently proposed to be up to:
| Claim size | Reduction |
| Up to £30,000 | 5% |
| £30,000-50,000 | 10% |
| £50,000-150,000 | 20% |
| £150,000 plus | 25% |
Support is an intrinsic part of the agricultural economy.
83% of net farm business income for tenanted farms from 2014 to 2017 was attributable to the Basic Payment3. This reduces to 62% for owner occupied farms.
Whilst some sectors within agriculture, such as intensive livestock and horticulture are less dependent upon support, for those in LFA4 grazing livestock support is vital in order to record a profit.
We would urge all those currently claiming Basic Payments to consider undertaking an exercise to determine the break even point of their business without receiving support.
1 The Agriculture Bill introduced into Parliament on 12 September 2018.
2 As mooted in the Department for Environment, Food & Rural Affairs’ Health & Harmony consultation in 2018 and Part 1 of the Agriculture Bill.
3 Department for Environment, Food & Rural Affairs: Farm Business Income by type of farm in England.
4 Less Favoured Area, meaning mountainous and hill farming.
Levels of farm debt rising
The Department for Environment, Food & Rural Affairs has published its latest Balance Sheet Analysis and Farming Performance report for 2017/2018.
The average level of debt across all farms has increased to £227,500 per farm. 15% of farms have debt over £400,000.
The report reveals reasonable health in the sector, however, as ever when analysing averages there are winners and losers at the extremes of the sample. 17% of farms potentially face problems as their liquidity ratio is less than 100% ie they cannot meet their current liabilities from their current assets.
8% had a negative Farm Business Income before interest and, therefore, would not have been able to meet their interest commitments without further borrowing or by selling an asset.
Taking early professional advice, from an agricultural specialist, on hard core debt is essential before assets are put up for sale, or borrowing is increased. Act now if you have clients who are in this situation. We can help.
Renewable energy: Feed-in Tariff scheme closure and consultation
The Government has confirmed that the Feed-in Tariff scheme, which was introduced in April 2010, will close from 31 March 2019.
Therefore, from 1 April 2019, new small scale generators will not be paid for exporting energy to the national grid. The Government recognises that this is unreasonable and is consulting on a new scheme, however, in the meantime this market is likely to be closed.
Moore v Moore re proprietary estoppel
Background
Described by the Judge as “ruinous in human and financial terms”, this case involves a family farm and a breakdown in relations between family members.
Mr & Mrs Roger Moore were both aged 76 in 2018 and were the third generation of the Moore family to have farmed at Manor Farm, near Salisbury, which extended to 650 acres of arable land. Roger had traded in partnership with his brother Geoffrey since 1966 and, latterly, since 2004, with the addition of his son, Stephen. In 2008 Geoffrey retired and gave his share of the partnership, worth approximately £3 million, to Stephen in return for £500,000.
Following the breakdown in the relationship between Stephen and his parents in 2009, the partnership was dissolved and Roger applied for the winding up of the partnership in 2013. Stephen entered a defence and counterclaim.
Proprietary estoppel
Following a nine day trial in 2016, Stephen succeeded in his claim for proprietary estoppel. ie that he had relied upon promises made to him by his father that he would inherit the farm one day, upon his father’s death or retirement. The Court heard that Stephen had worked long hours for minimal wages since returning to the farm from agricultural college in the 1990s.
It was accepted that Stephen had suffered detriment in:
• Committing himself to the farm without regard to his own position or that of his wife and daughters;
• Taking no steps to explore other career opportunities;
• Not seeking alternative employment within agriculture;
• Working at rates of pay below what he could have earned on an employed basis; and
• Not securing a property in his own name, whilst living in a property in the joint ownership of Geoffrey and Roger.
The Court’s decision
It was decided that Stephen should take over the business immediately and that the business assets should be transferred into his sole name, including three properties, one of which was the home of Mr & Mrs Roger Moore.
It was provided that Roger would continue to live on the farm and that he and his wife would be paid a weekly allowance from partnership funds.
The Appeal
Roger challenged the Court’s decision and the Appeal was heard in October 2018. At this time the professional costs of both sides had risen to £2.5 million, in the context of Roger’s half share of the partnership being valued at £5 million.
The Court upheld Stephen’s proprietary estoppel claim, but found that the original judgement was too generous to him. He was ordered to pay a lump sum to his mother, to allow her to live independently, of £1-2 million. Roger was, by this time, said to be suffering from dementia and now lived in a care home. He had been represented by his wife, who was his litigation friend, as he lacked legal capacity.
Stephen was also to be responsible for the tax liabilities which would arise from the transfer of assets and the lump sum payment.
Conclusions
This sad case highlights how costs can escalate when relationships break down. Settlement, possibly through mediation, should have been thoroughly explored at the earliest possible opportunity. Joint expert witness evidence could also have assisted the Court rather than delaying matters unnecessarily.
1 Moore v Moore and another [2018] EWCA Civ 2669
Wild v Wild re partnership assets
Background
This case centred upon a dispute between two brothers over whether farmland was a partnership asset.
Ben Wild owned the relevant land, having inherited it from his parents in 1975. A partnership between Ben and his son, Malcolm, commenced in 1978. At the time of the dispute arising, Ben had already died in 2003 and Malcolm had been joined in the partnership by his brother, Gregory.
When the partnership was dissolved in 2016 Gregory claimed that the farmland was a partnership asset. Malcolm and his mother claimed that the land had remained in the ownership of Ben throughout and that it should be dealt as part of his estate.
Not unusually, there was no written partnership agreement. There were, however, partnership accounts including “property” with a value of £40,750.
The Court’s decision
The Court ordered that the land, which included the farmhouse, outbuildings and a bungalow were all owned by the brother’s mother, having passed to her on the death of Ben.
The Judge’s comments
It was noted that:
• The mere fact that there is a partnership and profits produced by a particular asset does not indicate that the asset itself is a partnership asset; and
• A property owned by a partner will only become a partnership asset if this is agreed between the partners.
Whilst the Judge confirmed that if an asset appears in partnership accounts, as may have been the case in this matter, this is strong evidence of it being a partnership asset, it is not conclusive.
If there is no evidence of a clear express agreement then the Court will look at whether such an agreement to introduce property into a partnership can be implied.
Conclusions
There is a very clear message to farmers trading within a partnership:
• Do not assume that an asset is a partnership asset;
• If that is what is intended then ensure that the asset is transferred into joint names;
• Describe the asset clearly in the partnership’s accounts; and
• The value of the asset introduced into the partnership can be reflected in the transferring partner’s capital account.
1 Wild v Wild and others [2018] EWHC 2197
Plant nurseries continue to benefit from business rates exemption
The Non-Domestic Rating (Nursery Grounds) Act 2018 became law on 1 November 2018.
The Act affects plant nurseries, defined as "establishments where plants or trees are grown in the early stages of their lives" and does not include garden centres.
Plant nursery grounds have usually been treated as exempt from paying National Non-Domestic Rates, however, following a decision of the Court in March 2018, the Valuation Office Agency began charging those businesses. The Act reverses this approach and returns the position to how it has been for nearly 100 years.
Gee v Gee re proprietary estoppel
Background
This case concerned a dispute over a 600 acre farm near Oxford, worth approximately £8 million.
The claimant was John Michael Gee, son of John Richard Gee. John Michael was supported by his mother in his claim against his father and his brother, Robert. The matter had split the family.
John Michael had worked on the farm from the 1970s to 2016, when he was dismissed by his father. During that time John Michael had undertaken long hours for the minimum wage set by the Agricultural Wages Board and lived in a caravan until 1982 when his father built him a house to live in. Robert, John Michael’s brother, was a builder and property developer.
The farm operated through a company in which John Richard was the majority shareholder, holding 23,999 shares out of a total of 24,000. The property was owned by John Richard, his wife and the company.
In 2014 John Richard transferred all his shares and property to Robert.
John Michael claimed six specific incidences of there having been representation made to him by his father, including a conversation in 1988 and a discussion at a shoot in 1993. The Court heard evidence from a number of witnesses who included a priest, farm workers, friends and John Michael’s mother. John Richard accused John Michael of being a poor farmer.
Proprietary estoppel
To bring a successful proprietary estoppel claim the following must be proved:
• The claimant has a reasonable expectation of being given an interest in land and property, having been assured or had representations of the gift;
• The claimant has relied on the representation or assurance;
• The claimant has suffered a detriment having relied on the representation or assurance; and
• It would be unconscionable for the person making the promise to not now make the gift.
The Court’s decision
The Judge found that, over a 20 year period, there had been representations made to John Michael by his father. He did, however, make some provision for both Robert and his sister.
Whilst the representations were not frequently repeated or a stock phrase, they were held to have been a material consideration in John Michael staying on the farm. John Michael was constantly on call and received no overtime payments.
John Michael was ordered to receive 52% of the shareholding in the company and 46% of the property.
The Appeal
It is understood that an appeal may be lodged by John Richard and Robert on the basis that the award will result in the unwinding of a number of property transfers that have already taken place and the Court, therefore, does not have the jurisdiction to make the order.
Conclusions
The Court is never afraid to award the entirety of a family farm to one party, however, it has a broad discretion to make any order that is deemed appropriate in the particular circumstances of the case.
1 Gee v Gee & another [2018] EWHC 1393