Land

Rent for agricultural holding referred to arbitrator - subsequent agreement to add small piece of land to tenancy and increase rent accordingly - reference not rendered ineffective and arbitrator retaining jurisdiction

Secretary of State for Defence v Spencer and another: CA (Lords Justice Peter Gibson, Tuckey and Buxton): 22 May 2003

In September 1998, the tenants of a farm demanded that the rent payable with effect from September 1999 be referred to arbitration under section 12 of the Agricultural Holdings Act 1986, and an arbitrator was appointed.

Before any revised rent would take effect the landlord agreed with the tenant to incorporate a small parcel of land into the tenancy, necessitating a small increase in rent with effect from September 1998.

Therefore, there having been an increase of rent less than three years before the demand took effect, the arbitrator sought the opinion of the county court as to whether he had jurisdiction to decide the rent payable.

The recorder decided that the rent increase rendered the demand ineffective and so the arbitrator did not have jurisdiction.

Mr Justice Neuberger [2002] EWHC 2116 (Ch); [2002] Gazette, 14 November, 33; [2003] 1 WLR 75, allowed the landlord's appeal.

The tenants appealed.

Paul Morgan QC and Anthony Tanney (instructed by Burges Salmon, Bristol) for the tenants; Caroline Hutton (instructed by Bircham Dyson Bell) for the landlord.

Held, dismissing the appeal, that, since for the purpose of paragraph 6 of schedule 2 to the 1986 Act the property comprised in a tenancy could be one of the 'terms of the tenancy', the variation of an agricultural tenancy by the addition of a small parcel of land, leading to a small rent increase reflecting merely the value of that additional land, did not serve to postpone the entitlement to a three-yearly rent review by an arbitrator; and that, accordingly, paragraph 4(1) of schedule 2 did not apply and the arbitrator consequently had jurisdiction to conduct the review.

(WLR)