Jeremy's Blog 7th June 2024: Statutory Powers and Business Agreements

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 6th June 2024

It may be an obvious point when it is put directly that statutory powers override contractual rights and obligations, even those under an agreement with the state, while actions under a contract can change the legal status of land. Equally, an Act of Parliament and legislation under it only creates the powers that it creates; the state cannot just assume it has powers. While it clearly does not feel as intuitively simple as that on the ground, these principles will matter as we navigate through the competing pressures for change and public bodies strive to meet their government-imposed targets, from water quality to SSSIs or housing.

They were central in the recent painstaking High Court judgment in Natural England v Cooper which pulled together the threads of a long and complex tangle of actions between a tenant farmer and Natural England (see webnote) – though there may yet be an appeal.

At the heart of this:

• an agreement, whether with the state or anyone else but in this case a Countryside Stewardship agreement, is simply an agreement and can have consequences that are not protected from the law by being an agreement with the government
• Natural England is not an autonomous power but has a remit defined now by the Natural Environment and Rural Communities Act 2006 (NERC) under which Parliament most recently granted it a remit and powers. Here it could be concerned with archaeological issues but not seek a civil injunction.

Fields identified in the tenancy agreement as arable had been put to pasture under successive CS agreements, bringing money and the EIA rules. When they ended, the farmer had to apply for a screening decision as the land had not been cultivated for over 15 years – that it had been in an agreement was no more a shield than the tenancy agreement description. With substantial evidence of Mesolithic flint working, Natural England saw re-conversion as a “significant project” requiring an environmental statement. The farmer ploughed anyway.

While one line of action led to his criminal conviction for breach of a Stop notice, Natural England also pursued a civil injunction to prevent further cultivation, looking for an archaeological assessment. The Judge found that, on analysis of Natural England’s statutory powers, “the language of … the NERC Act does not support a power in NE to bring these proceedings” as a civil action but was clear that was an issue of powers, not of the merits of the matter.

The farmer still has his tenancy. In Cruse v Snook, committing all the tenancy to wild flowers cost the tenancy, a risk now eased for tenants by capping the use of non-production SFI actions. In other situations, such agreements could cost statutory tax reliefs taken for granted.

Similarly, the use of powers for compulsory acquisition is not restricted by land being in an environmental scheme agreement - or in any other agreement as for bio-diversity net gain. Where Code powers are used to impose a mast on a site already within an environmental agreement, it is then for the parties to work out the consequences under their agreement. The agreement might have force majeure provisions but could require re-payment. Where a mast is imposed by a Tribunal, the Code’s paragraph 25 enables claims for compensation for losses, otherwise a matter for negotiation with the operator.

In a regulated world, a farm is no longer the farmer’s castle, The exercise of statutory enforcement powers, here for nutrient spreading, was the subject of River Action v Environment Agency over the application of the Farming Rules for Water in the Wye Valley, The court held that EA had not acted unlawfully in tempering its enforcement, even if only meeting the immediate nutrients needs of a crop might be the better interpretation of the legal Rules than DEFRA’s whole crop cycle guidance (described as an “unfortunate” difference). Like the police, the EA has practical discretion in how it fulfills its duties.

With both important public objectives and significant private value at stake, the proper use of statutory powers and a clear understanding of their consequences will increasingly matter to professional advice and the drafting of agreements.