3 Obligations as to Husbandry
(a)Contractual Standards
3.41 Rules of Good Husbandry and Good Estate Management were laid down in the Agriculture Act 1947, ss 10 and 11. The sanctions for breach of the rules were repealed by the Agriculture Act 195884.
The rules of good estate management set out in the 1947 Act are, as a consequence, unenforceable by a tenant unless incorporated in the tenancy agreement. The rules of good husbandry, on the other hand, have retained considerable importance since 1958, notwithstanding their lack of direct enforceability.85 The rules are enforceable indirectly against a tenant with a 1986 Act tenancy through the notice to quit procedures of the 1986 Act, and are relevant in (for example) rent reviews and disputes as to repairs under the 1986 Act. They have also commonly been incorporated into tenancies of agricultural holdings, thereby making compliance with the husbandry standards they set out an express term of the tenancy. The rules of good husbandry and good estate management are considered further below, Chapter 6, para 6.19 ff.3.42 The Agriculture Act 1947 was a product of the post-war period, when the emphasis was on improving production and producing food as cheaply and efficiently as possible. The rules of good husbandry therefore reflect the agricultural imperative, and stress the need to maintain optimum levels of efficient production on tenanted holdings. Priorities for public policy have since changed, and the emphasis now is on environmental protection, ‘stewardship’ of the countryside, and on reducing structural surpluses within the Common Agricultural Policy of the EU. The Agricultural Tenancies Act 1995 reflects this changed set of priorities. The 1995 Act does not incorporate the ‘rules of good husbandry’ into the agreement. The parties will want, however, to incorporate some yardstick against which to assess the tenant’s husbandry and to determine when bad husbandry amounts to a breach of contract.
To do this they may want either to incorporate the statutory 1947 rules into the agreement, or incorporate a variation of them that meets the particular circumstances of the proposed letting. Variation of the 1947 rules will be important, for example, where participation in set aside or agri-environmental schemes is in prospect, as a tenant changing his farming system under one of these schemes may find himself in breach of his tenancy if the rules of good husbandry have been incorporated in unamended form.86 Where a farm business tenancy is created using the notice provisions (above) the parties will often have diversification of the farm enterprise in prospect. In this case, the rules (if incorporated by the tenancy at all) will need to be amended to reflect the intended use of the holding. If they are incorporated in an unamended form, diversification could still raise problems of breach of tenancy – notwithstanding that the tenancy was granted under the notice facility in the 1995 Act.3.43 Where a farm business tenancy is created under the agriculture condition, on the other hand, it will be important to expressly incorporate either the rules of good husbandry (or some other appropriate management criteria) into the tenancy agreement if an appropriate standard of management is to be enforceable. The 1995 Act does not provide, unlike the 1986 Act, for the enforcement of the rules independently of the tenancy agreement.87 Under the 1986 Act, the rules could be enforced through the agricultural land tribunal by an application for a certificate of bad husbandry. This, if granted, would give the landlord a right to serve notice to quit.88 The 1995 Act makes no provision for enforcement of the rules independently of the tenancy agreement, and their incorporation as a term of the tenancy will be essential if they are to be enforceable by the landlord as a yardstick of farming standards.
(b)Implied Covenant at common law
3.44 In the absence of express provision in the tenancy agreement, the common law imposes on a tenant of agricultural land a minimal duty to cultivate according to the custom of the country in a good and husband like manner.
There is no corresponding obligation at common law, however, as to the manner in which the estate is managed. The duty on a tenant to farm in a good and husband like manner was stated by the Court of Appeal in Wedd v Porter89 in these terms:‘A tenant from year to year of a farm and buildings at a fixed rent, who has not entered into any other express covenant with the landlord than as to the amount of rent, is under an obligation implied by law to use and cultivate the lands in a husband like manner according to the custom of the country... and to keep the buildings wind and water tight.’
3.45 The tenant is not, however, under any duty to ‘sustain and uphold the premises’.90 The minimal nature of this obligation means that there is no duty, as such, to deliver up the land on termination of the tenancy in a clean and proper condition; neither is the tenant under any obligation to leave the land in as good a condition on quitting as when he came into possession. Provided he farms the land properly his implied obligation will be satisfied, and the fact that the land was at the outset in very good condition does not imply an obligation to keep it so. Conversely, where the land is in poor heart on commencement of the tenancy, the tenant is under no obligation to leave it in a clean, and good condition on quitting, provided he has farmed properly throughout the tenancy.
3.46 The implied covenant to cultivate according to the ‘custom of the country’, or an express covenant in these terms, renders a usage obligatory on the tenant if it is universally obligatory in that part of the country where the farm is situated, and is a general usage applying to all farms of that description. The usage, to be applicable, does not need to have been practised from time immemorial. ‘An agricultural custom need not have subsisted from time immemorial, but it must have subsisted for a reasonable length of time and be adequately proved.... The custom must therefore be collected not from what witnesses say they think the custom is, but from what has publicly gone throughout the district’.91 The custom must be ‘reasonable’ in the eyes of the law, but once it has been established as the ordinary custom of the country there must be very strong grounds for holding it to be unreasonable.
Once proved, the custom of the country can only be excluded if the terms of a written tenancy agreement either expressly or impliedly indicate that the parties did not intend to be governed by it. The custom will therefore be excluded where there are express terms in the tenancy agreements that are inconsistent with it. Where the tenancy is silent, however, the custom of the country will operate to fill out the obligations of the parties at common law.923.47 The landlord’s remedy lies in damages to recover the monetary equivalent of the injury to the reversion occasioned by the breach.93 This will normally be the diminution in the rent the landlord will be able to demand on reletting, or the allowance he will have to make to an incoming tenant because of the poor condition of the holding. In practice the common law obligations are of little practical significance. Where the condition of the holding is particularly bad, however, the landlord will have the supplementary remedy of suing to recover the diminution in the value of his reversion. This reinforces the importance of taking express covenants in the tenancy as to good husbandry and management of the holding.
(c)Freedom of Cropping
3.48 Under a farm business tenancy there are no restrictions on the inclusion of terms restricting the tenant’s freedom of cropping or right to dispose of the produce of the holding. Neither is there any restriction on the inclusion of terms preventing the ploughing of permanent pasture. Under the 1986 Act the tenant’s freedom of cropping is guaranteed, and a clause restricting the ploughing of permanent pasture can be modified by arbitration if this is in the interests of the ‘full and efficient farming’ of the holding.94 No provisions of this sort are to be found in the Agricultural Tenancies Act 1995. It follows that the parties to a farm business tenancy have complete freedom to agree the farming system to be practised on the holding, and to make provision for this in the tenancy agreement.
The tenancy agreement can also restrict the farming of certain areas of the holding, such as conservation sites, as the tenant has no redress under the 1995 Act to challenge contractual restrictions on his freedom of arable cropping. The 1995 Act allows for much greater flexibility in shaping the contract of tenancy to meet the planned management needs of the holding and the expectations of landlord and tenant as to how it should be managed during the term of the tenancy. The need to make provision for set aside requirements and other IACS issues is dealt with below.3.49 The parties may want to make a record of the condition of the holding at the commencement of the tenancy, or to make provision for a record to be made during the tenancy, if necessary by an independent third party in default of agreement eg by a person appointed by the President of the RICS. The 1995 Act makes no statutory provision for a record to be made, neither does it provide for the appointment of a third party to mediate in the event of dispute, and these matters will need to be included in the contract of tenancy. Cf. under the 1986 Act the parties had a statutory right to have a record made at any time during the tenancy, and to have a person appointed by the RICS to make a record in cases of dispute.95 No provisions of this nature are included in the 1995 Act. Neither is provision made for compensation to be payable to the tenant for damage caused by game.96 Where sporting rights have been reserved to the landlord, the tenant may wish to included in the farm business tenancy agreement some provision of remedying game damage and for payment of compensation.