Factual and Procedural Background
The appeal concerns the scope of the agricultural exemption from business rates relating to three buildings known as the Egg Packing Centre, the Egg Packaging Store, and the Egg Warehouse, all located at Chequer Tree Farm in Kent. The farm is owned by Company A, a major producer of free-range eggs operating multiple farms within a ten-mile radius. Chequer Tree Farm itself is primarily an arable farm producing barley and wheat used as chicken feed, but no free-range eggs are produced there. The three buildings in question are used for weighing, grading, and packaging eggs sourced from other farms within Company A's operations and some independent farms.
It was agreed that much of the land and certain buildings at Chequer Tree Farm benefit from agricultural exemption from non-domestic rating, but the status of the three buildings was disputed. The Valuation Tribunal for England initially ruled against exemption, but the Upper Tribunal (UT) allowed an appeal, holding the buildings were exempt. The UT granted permission to appeal to the current court, which is limited to points of law arising from the UT's decision.
Legal Issues Presented
- Whether the 2003 amendment to paragraph 3(a) of Schedule 5 to the Local Government Finance Act 1988 altered the meaning of the phrase "occupied together with" in the agricultural exemption test, specifically whether it broke the link between occupation and use of agricultural land and buildings.
- Whether the three buildings at Chequer Tree Farm are "occupied together with" agricultural land so as to form a single agricultural unit under the established legal test.
- Whether the three buildings are used solely in connection with agricultural operations on that or other agricultural land, satisfying the use test for exemption.
Arguments of the Parties
Appellant's Arguments
- The longstanding legal position requires two tests for exemption: the occupation test (the building is occupied together with agricultural land) and the use test (the building is used solely in connection with agricultural operations on that land or other agricultural land).
- The 2003 amendment changed only the use test, broadening it to include use on other agricultural land, but did not alter the occupation test.
- The occupation test, as established by case law, requires a functional connection and that the building and agricultural land form a single agricultural unit under common occupation and management.
- The three buildings are occupied together only with the arable land at Chequer Tree Farm, but not as part of a single agricultural unit, so the occupation test is not met.
- The UT erred in concluding that the occupation test no longer requires a functional connection, which would improperly convert a tax on land into a tax on businesses.
Appellee's Arguments
- The 2003 amendment to the legislation introduced a broader interpretation of the exemption, allowing a building to be occupied together with agricultural land but used solely in connection with agricultural operations on other agricultural land.
- The phrase "occupied together with" should be read in the context of the whole paragraph, meaning it does not require the building and land to be part of a single agricultural unit.
- The previous case law defining occupation as requiring a single agricultural unit is a judge-made concept not reflected in the statutory language and was effectively superseded by the amendment.
- The three buildings are occupied together with agricultural land and used solely in connection with agricultural operations on other land owned or occupied by Company A and independent farms, satisfying the exemption.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Farmers' Machinery Syndicate (11th Hampshire) v Shaw (VO) [1961] 1 WLR 393 |
Established that occupation must be by the same person and solely in connection with agricultural operations on the land occupied. |
Referenced to explain the occupation test and the necessity of a functional connection between building and land. |
| W & JB Eastwood Ltd v Herrod (VO) [1971] AC 160 |
Clarified the occupation and use tests, emphasizing that buildings must be ancillary to agricultural operations on the land occupied. |
Applied to confirm the requirement that buildings be used "solely in connection with" agricultural operations on the land with which they are occupied. |
| Hambleton DC v Buxted Poultry Ltd [1992] 1 WLR 330; Farmer (VO) v Buxted Poultry Ltd [1993] AC 369 |
Defined the occupation test requiring joint control, common occupation, and functional unity forming a single agricultural unit. |
Central to the court's analysis of whether the buildings and land formed a single agricultural unit under the occupation test. |
| Hilleshog Sugar Beet Breeding Co Ltd v Wilkes (VO) [1971] RA 275 |
Supported the functional unity test for occupation of buildings and land. |
Used to reinforce the principle that buildings and land must be worked together as one agricultural unit. |
| R (O) v Secretary of State for the Home Department [2022] UKSC 3, [2023] AC 255 |
Outlined principles of statutory interpretation focusing on context and the meaning of words chosen by Parliament. |
Guided the court's approach to interpreting the amended legislation. |
| For Women Scotland Ltd v The Scottish Ministers [2025] UKSC 16, [2025] 2 WLR 879 |
Confirmed the presumption that words have the same meaning throughout an Act unless context indicates otherwise. |
Applied to reject the UT's interpretation that the same phrase had different meanings in different paragraphs. |
| R (ZH and CN) v London Borough of Newham [2014] UKSC 62, [2015] AC 1259 |
Confirmed that re-enacted statutory provisions are presumed to bear the same judicially established meaning. |
Supported the argument that the occupation test meaning remained unchanged by the 2003 amendment. |
| Nuffield Health v Merton LBC [2023] UKSC 18, [2024] AC 653 |
Confirmed the application of statutory interpretation principles in rating law. |
Reinforced the presumption that the occupation test meaning remains consistent. |
| Woolway (VO) v Mazars LLP [2015] UKSC 53, [2015] AC 1862 |
Explained that business rates are a tax on property, not on businesses, and the hereditament is the unit of assessment. |
Informed the court’s understanding that the exemption applies to the hereditament as a parcel of land or functional unit. |
Court's Reasoning and Analysis
The court examined the statutory language of Schedule 5 to the Local Government Finance Act 1988, particularly paragraph 3(a), and the effect of the 2003 amendment substituting "on that or other agricultural land" for "on the land." The core question was whether this amendment altered the established occupation test requiring a functional connection and joint occupation forming a single agricultural unit.
The court reviewed the legislative history and relevant case law, notably the House of Lords decision in Farmer v Buxted, which had established the occupation test as requiring buildings and land to be jointly occupied and managed as a single agricultural unit. The court emphasized the presumption that identical statutory phrases have consistent meanings unless Parliament clearly indicates otherwise.
It was concluded that the 2003 amendment broadened the use test but did not change the occupation test. The phrase "occupied together with" retains its established meaning requiring a functional connection and common occupation forming a single agricultural unit.
The court considered the UT's reasoning that the occupation test no longer required a functional connection, noting this interpretation led to inconsistent meanings of the same phrase within the same Schedule and would transform a tax on land into a tax on businesses. The court rejected this approach as contrary to principles of statutory interpretation and legislative intent.
Applying the established occupation test, the court found that the three buildings and the arable land at Chequer Tree Farm did not form a single agricultural unit due to lack of functional connection. However, the UT had also found that the buildings and the other farms producing free-range eggs (the Fridays Farms) did form a single agricultural unit, being under common ownership, joint management, and sufficiently proximate.
The court accepted that the use test was satisfied, as the buildings were used solely in connection with agricultural operations on the other agricultural land, including independent farms, in line with the broadened 2003 amendment.
Overall, the court found the UT correctly applied the legal tests to the facts, except for its erroneous interpretation of the occupation test’s meaning post-amendment.
Holding and Implications
The court DISMISSED THE APPEAL, upholding the Upper Tribunal's decision that the three buildings fall within the agricultural exemption from business rates.
The court held that the occupation test remains unchanged by the 2003 amendment and requires a functional connection and joint occupation forming a single agricultural unit. Although the buildings and the arable land at Chequer Tree Farm do not satisfy this test, the buildings and the other farms producing free-range eggs do form a single agricultural unit.
This decision confirms that the agricultural exemption requires both occupation and use tests to be satisfied as historically understood, with the 2003 amendment broadening only the use test. The ruling maintains consistency in statutory interpretation and avoids converting a tax on land into a tax on business enterprises. No new precedent altering the occupation test was established.