Starke and Another v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STUART-SMITH,LORD JUSTICE MORRITT,LORD JUSTICE WARD |
| Judgment Date | 19 May 1995 |
| Judgment citation (vLex) | [1995] EWCA Civ J0519-11 |
| Docket Number | CHANF 94/0337/B |
| Court | Court of Appeal (Civil Division) |
| Date | 19 May 1995 |
[1995] EWCA Civ J0519-11
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr Justice Blackburne)
Before: Lord Justice Stuart-smith Lord Justice Morritt and Lord Justice Ward
CHANF 94/0337/B
MR G APSION (instructed by Messrs Hancocks, Banbury) appeared on behalf of THE APPELLANTS
MR M J FURNESS (instructed by the Commissioners of Inland Revenue, London WC2) appeared on behalf of THE RESPONDENTS
Friday 19 May 1995
For the reasons given in the judgment handed down, this appeal will be dismissed.
This appeal of the Appellants from the order dated 4 February 1994 of Blackburne J concerns the proper construction and application of the definition for the purposes of Inheritance Tax of "agricultural property" contained in sub-section (2) of Section 115 Inheritance Tax Act 1984. The text of that sub-section, into which I have inserted numerals to facilitate future references to parts, is as follows:
"In this Chapter "agricultural property" means (1) agricultural land or pasture and includes (2) woodland and any building used in connection with the intensive rearing of livestock or fish if the woodland or building is occupied with agricultural land or pasture and the occupation is ancillary to that of the agricultural land or pasture; and also includes (3) such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property."
Also relevant to this appeal are ss 115(4) and 117 of the Inheritance Tax Act and the definition of "land" contained in the Interpretation Act 1978. They are in the following terms:
S.115 "(4) For the purposes of this Chapter the breeding and rearing of horses on a stud farm and the grazing of horses in connection with those activities shall be taken to be agriculture and any buildings used in connection with those activities to be farm buildings."
S.117 "Subject to the following provisions of this Chapter, section 116 above [which confers the relief] does not apply to any agricultural property unless —
(a) it was occupied by the transferor for the purposes of agriculture throughout the period of two years ending with the date of the transfer, or
(b) it was owned by him throughout the period of seven years ending with that date and was throughout that period occupied (by him or another) for the purposes of agriculture."
Section 5 Interpretation Act
"In any Act, unless the contrary intention appears, words and expressions listed in Schedule 1 to this Act are to be construed according to that Schedule."
Schedule 1 provides, among other definitions, that
"land" includes buildings and other structures, land covered with water, and any estate, interest, easement, servitude or right in or over land.
The question arises in relation to property comprised in the estate of Wilfred Edward Arnold Brown who died on 13 May 1988. The Appellants are his executors. The property comprises some two and a half acres situate and known as Highways Farmhouse, Wigginton Heath, Oxfordshire. The property was bought by the Deceased in 1946 and subsequently formed the nucleus of a farming business carried on by the Deceased and his fourth and youngest son Philip through a family company on land owned by that company or rented as an agricultural holding by the Deceased or his son from others. At the date of the Deceased's death the business farmed 171 acres in all, the tenancies of some 80 further acres having been surrendered shortly before due to a change in farming policy and difficulty concerning milk quotas.
The property was described by the son in paragraphs 7 and 8 of his affidavit sworn in these proceedings on 30 July 1993 in these terms:
"It had upon it buildings which we used for egg production from a battery system, a Danish piggery which was used for producing heavy hogs and a covered yard with loft over for housing cattle and storing corn for feeding to the cattle. In addition to these buildings there was a six standing abreast parlour with dairy, a bull pen, numerous loose boxes for calving, isolation and housing for young stock, a smithy and workshop for maintaining machinery and a large hay barn for storage of winter feed. The 2.5 acre area is screened by hedges…. The house itself was built in 1936 and is a six-bedroomed property. Only a tiny part is laid to lawn. There are many outbuildings, the purpose of which has been set out above. The office and paperwork necessary to run the farm was always carried out from the farmhouse."
Notwithstanding the Executors' claim for the relief from Inheritance Tax allowed to agricultural property and the arguments raised in correspondence on their behalf on 21 May 1993 the Commissioners of Inland Revenue determined that the property was not agricultural property within s.115(2) Inheritance Tax Act 1984. In accordance with s.222 Inheritance Tax Act 1984 the Executors were entitled to appeal to the Special Commissioners under sub-section (2) or, with the consent of the Commissioners of Inland Revenue, or, if the High Court was satisfied that an appeal would be substantially confined to a question of law, with its leave, to the High Court under sub-section (3).
By an Originating Summons issued on 1 July 1993 the Executors sought an order, by way of judicial review, quashing the determination. That application was obviously misconceived. Accordingly the Originating Summons was subsequently amended to seek leave to appeal to the High Court and for an order to the effect that the determination was wrong. But in view of the need to demonstrate that the appeal for which leave was sought was substantially confined to a question of law the Executors undertook to the Court that they would not contend that the property came within the third part of the subsection as being "such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property". On that undertaking Blackburne J gave leave to appeal to the High Court.
On such appeal the Executors did not contend that the property came within the second part of the sub-section as being "woodland and any building used in connection with the intensive rearing of livestock or fish if the woodland or building is occupied with agricultural land or pasture and the occupation is ancillary to that of the agricultural land or pasture". Thus before Blackburne J and this court the only question is whether the property falls within the first part of the definition because it is "agricultural land or pasture".
The contention for the Executors was and is that pursuant to the Interpretation Act 1978 the reference in sub-section (2) of s.115 Inheritance Act 1984 to "land" includes "buildings and other structures"...
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