I thought I’d tell you a story. A true story. Or as true as a told story can be.
I think it may be a tale about the perennial wrestle between pragmatism and principle, but I may be wrong. If you read on, you can decide for yourself.
The story is about events that took place sometime in the late 1980’s, may be the early the 1990’s. I can’t be any more exact than that, but the date is not really of any consequence. Or, it occurs to me, perhaps it is. The way one thinks about things can be quite time or era-specific.
There once was an Urban Farm in the London Borough of Wandsworth. It was called Elm Farm. I don’t know why it was named that, for I can recall no Elm trees in the vicinity. But I may be wrong. Perhaps there were some Elm trees nearby. But it doesn’t matter, the story is the same with or without Elm trees.
Although on a very small patch of land, it was quite a successful farm. It had goats, a cow, chickens, geese, rabbits. And lots of local, regular human users. Kids loved it, and many busied themselves with farm-type tasks, including smelly, mucky ones.
Animals were born on the farm, and some were killed there: the chickens were for food and eggs, so some got the chop on a regular basis; and some continued to lay eggs – and lived as long as they performed their duty in that regard. The goats were also sent for slaughter, also on a regular basis, their meat coming back to the farm for sale locally. You could say that the circle of life and death was played out here.
The farm was a charity and therefore governed by trustees. The local, Conservative, Wandsworth Council leased it the land, and gave it an annual grant. Like all small, local charities much effort was put into funding applications to this or that grant-giving trust. The farm was quite successful in that regard.
As it happened, the farm occupied land abutting the playground of a relatively new private school. This was no cause of trouble, not initially at least, though some trustees had views about private education not congenial to the school, and likely not to the Conservative council. But that latter point is totally irrelevant to this story since education policy was never discussed with the school or Councillors. I wonder why I thought it worth mentioning.
Well, one day Council decided that it wanted the Elm Farm site back to use for other purposes. I think, in fact I’m almost sure, the plan was to expand the private school’s play/sports’ area. Actually they probably didn’t decide on ‘one day’. They probably deliberated about it for some time. It was the farm that was informed of Council’s intention on ‘one day’. But that detail probably doesn’t really matter either.
Council, in fact, was being very fair and rationale from their perspective. Their intention was to terminate the farm’s tenure on the existing site, and rehouse (and fund) it at a new location, a site about three to four miles away. In terms of formalities, Council intended to issue a termination notice under the Landlord and Tenant Act, a move permitted if the alternative site (or premises) provided the opportunity to ‘trade’ at the same level as before, but on a new site.
Clearly, the farm – which in this case meant the trustees – needed to make some key, difficult decisions. But perhaps you don’t agree. Perhaps you see no difficulty in the decision that needed to be made. After all, Council had made – shall we say? – a generous offer: new site, renewed funding, capital costs covered. Deal done! These were not inducements to be treated lightly.
There was of course another consideration to take into account: if Council’s offer were not accepted, it would be unlikely to continue funding, and would in any case not renew the lease when the time came.
Conclusion: whichever way one looked at it, the case for accepting the move to a new site was compelling – perhaps even cast-iron certain.
Trustees decided that they could not accept the move and rejected Council’s plans.
A tortuous process of negotiation ensued, but led nowhere. In the end, Council issued under the Landlord and Tenant Act a notice to quit, tied to the offer of an alternative site.
Trustees prepared themselves to fight the notice in court.
By now you must be wondering why Trustees rejected Council’s plan.
The trustees’ reasoning was straightforward: the farm was very much a local enterprise, serving a very local, proximate community. The farm had always stressed its active and sustained local connection one, it felt, based on a sense of reciprocal loyalty: Elm Farm to local users and visitors; local users and visitors to Elm Farm. Moving it three to four miles away would mean that the community/people it served could not journey to the new site. In practice it was too far away. Thus those who regularly used and connected to ‘their’ farm would lose it whether it closed or moved to a new area.
Even so, there was a sound case in favour of the farm moving, for the proposed new location undoubtedly had a population profile similar to that of the existing farm. There was no reason to suppose a farm couldn’t prosper there and, over time, develop bonds of reciprocal loyalty similar to those prevailing at Elm Farm. But trustees did not find this line of argument sufficiently compelling to weigh against their decision to oppose Council’s eviction notice.
I suppose trustees thought that if they moved it would in practice mean that all earlier protestations of connection and care to this specific locality, to these particular people, would have the value of dust. Trustees probably conceived of the issue as one of, well, trust and principle.
An interesting feature of this tale is the attitude of two of the Elm Farm’s significant charitable funders. Would they support the farm in what amounted to a suicide mission? Win or lose the court case, the farm would not be able to sustain itself without Council funding and land, and the lease on the current site was due to end in the next couple of years or so.
The answer was ‘yes’, they would continue to fund the farm through the court case and for the duration of the lease were it to win in court. It is not recorded whether the charitable funders questioned trustees as to Outcomes, Performance Indicators or whether a SWOT analysis had been undertaken.
The farm at this time was graced by a particularly fine workforce: knowledgeable, committed, creative. Their livelihoods were clearly at stake, whatever the outcome, though a court win would grant them a definable period of continued employment. However, for trustees, the employment position of staff was an important, but ultimately secondary, consideration. Trustees were clear that their overriding duty of trust was to the intended beneficiaries of the farm, not to staff. As it happens, staff supported trustees’ decision.
The Farm won the court case.
A significant aspect of the case turned on the question of what constituted ‘goodwill’. My recollection is that, under the terms of the Landlord and Tenant Act, Council had to show that the proposed alternative site carried with it the same amount of ‘goodwill’ that the Farm enjoyed at its current location. The Act has mainly in mind commercial enterprises such that, if a business has trade of ‘£x’ in its existing location, then any proposed alternative premises offered by the Landlord must reasonably be expected to generate at a minimum the same ‘£x’ trade or ‘goodwill’ in the proposed new location.
Here’s a section from the Landlord and Tenant Act:
- The landlord has offered and will provide or secure suitable alternative accommodation for the tenant;
- The terms upon which such accommodation is available are reasonable having regard to the terms of the tenancy and all other relevant circumstances; and
- The accommodation and the time at which it becomes available suit the tenant’s requirements (including the requirement to preserve any goodwill), having regard to the nature and class of its business and to the situation and extent of, and facilities afforded by, the holding.
An initial assessment of the Farm’s case would suggest that it had little ground to stand on. As the brief narration offered above makes clear, there was quite a strong case to suggest that, in terms that the Act most usually dealt in – tangible, quantifiable factors, e.g. size and condition of premises, level of costs and income and so forth – it is reasonable to suppose that ‘goodwill’ comparable to that enjoyed by the Farm at its existing location, would be available at the proposed alternative site.
Clearly, the case was going to revolve around the question of ‘goodwill’: Of what was it comprised? How might it be weighed or measured in this particular case? Could it indeed be weighed or measured?
It happens that the Farm had the support of a local businessman. He agreed to give evidence at the court hearing. He saw his task as helping the court consider the questions suggested above, in summary: How, in this particular case, to conceptualise ‘goodwill’?
He took the following line: In terms of his business, any business, such enterprises are squarely and clearly designed to generate income and, above all, profit. ‘Goodwill’ here is quantifiable. The elements of which it is comprised include, for example, number of customers, average spend of customer, cost of rents and services, duration of lease, demographic/economic profile of current trading area compared to proposed new location, and so forth. On this basis, it is a relatively straightforward matter to compare a current trading location, with an alternative one. True, there must be an element of risk in moving to a new, untried location, but a businessperson will know their own trade, so, in general, has grounds for trusting their own judgment as to the viability of any alternative business location.
So far, so conventional. If the Farm’s case remained embedded in these abstract, quantifiable terms, defeat was foreshadowed. A conceptual shift was required, one that displaced the standard way of assessing goodwill.
“But look’, said the businessman in his evidence, ‘when I speak of the ‘goodwill’ of my customers, I don’t mean any particular customer, I don’t mean a real live, unique Mr and Mrs Smith. I mean any person prepared to spend in the same way as Mr and Mrs Smith whomsoever they may be. In commercial terms, the terms that concern a businessman, I care not whether it’s Mr and Mrs Smith or Mr and Mrs Jones that spend on average ‘£x’. I care only that a sufficient number of spending units – Mr and Mrs Anybodies – do. The point being that ‘goodwill’ here means an abstract could-be-anyone person prepared to spend money in my enterprise”.
By way of contrast, he argued, the Elm Farm’s goodwill was not abstract. Rather, goodwill adhered to, was expressed by, unique and particular, flesh and blood individuals not reducible to abstract units or demographic generalisations. If the Farm moved, this real, live non-transferable goodwill would be eradicated beyond the possibility of renewal or replacement.
The Farm won the case. It is told that tears were shed that day.
Two years or so later Elm Farm closed. The private school was able to expand its playground, and no trace of the farm remains today.
You may think this story worth telling, perhaps not. You may think there is a moral here, one floating about somewhere in the liquid area between principle and pragmatism, or perhaps not.
Leave a Reply