UPPER TRIBUNAL (LANDS CHAMBER)

	
UT Neutral citation number: [2012] UKUT 246 (LC)
UTLC Case Number: LP/40/2010

	TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

RESTRICTIVE COVENANT – discharge – agricultural occupancy condition imposed on bungalow under section 52 of Town and Country Planning Act 1971 – restriction against erection of further dwellings – whether  extension of bungalow and/or conversion of other farm buildings into dwellings means restrictions obsolete – whether market testing exercise adequate to demonstrate that occupancy restriction otiose and therefore obsolete – held that market testing was inadequate – grounds (a) and (c) not established – application refused  

	IN THE MATTER OF AN APPLICATION UNDER SECTION 84
OF THE LAW OF PROPERTY ACT 1925

	by 

	PETER RASBRIDGE AND ELEANOR RASBRIDGE	

Re: 2 Cefn Betingau Farm
Rhydypandy Road
	Morriston
	Swansea
	SA6 6NX

	Before: A J Trott FRICS

	Sitting at:
Swansea Magistrates Court, Grove Place, Swansea SA1 5DB
on
                  15 June 2012	Sitting at:

Graham Carlisle, Chartered Town Planner of CDN Planning, for the applicants
Hugh Flanagan, instructed by City and County of Swansea Legal Services Department, for the objector.
© CROWN COPYRIGHT 2012
The following cases are referred to in this decision:

Re Truman, Hanbury, Buxton and Co Ltd’s Application [1956] 1 QB 261
Re Martins’ Application [1989] 57 P&CR 119
The following cases were referred to in argument:
Re Abbey Homesteads (Developments) Application (1986) 53 P&CR 1
Re Quartleys’ Application (1989) 58 P&CR 518

	DECISION
Introduction
1.	The applicants, Mr Peter Rasbridge and Mrs Eleanor Rasbridge, are the freehold owners of 2 Cefn Betingau Farm, Rhydypandy Road, Morriston, Swansea, SA6 6NX (the application land).
2.	The application land is subject to two restrictive covenants imposed under an agreement made on 17 September 1986 under section 52 of the Town and Country Planning Act 1971 between Lliw Valley Borough Council and Cynwen Rasbridge and Sarah Eunice Rasbridge (the trustees).  Under this agreement the council granted outline planning permission (reference 2/2/86/0021/01) for the erection of an agricultural worker’s dwelling (“the development”) on “the said land”, this being the 152 acres at Cefn Betingau Farm held in trust by the trustees.
3.	The trustees covenanted with the council under the agreement as follows:
“3(a) That occupation of the development shall be limited to persons solely or mainly employed or last employed in the locality in agriculture as defined in section 290 of the Town and Country Planning Act 1971 or a dependant of such a person residing with him or her or a widow or widower of such a person.
(b) That no new dwelling will be erected on the said land.”
4.	On 25 January 2011 the applicants, as successors in title to the trustees, made an application under section 84 of the Law of Property Act 1925 to discharge the restrictive covenants.  The grounds for the application were:
“As a result of the changes in the character of the property and other circumstances, the occupancy restriction is now obsolete.  The restriction on the building of new dwellings on the farm is also not required because the council retains full control over such building via the planning system.”
5.	On 29 March 2011 the City and County of Swansea, as successor authority to Lliw Valley Borough Council, objected to the application.
6.	Mr Graham Carlisle BA, MSc, MRTPI, of CDN Planning, appeared on behalf of the applicants and called Mr Howell Edwards BSc, FRICS, FAAV, a partner in the firm of Herbert R Thomas, Chartered Surveyors, as an expert witness.
7.	Mr Hugh Flanagan of counsel appeared for the objector and called Mr Richard Anstis, proprietor of Richard Anstis Consultants, as an expert witness. 
8.	I made an accompanied site inspection of the application land on 22 June 2012. 
Facts
9.	I find the following facts from the statement of agreed facts, the evidence and my site inspection.
10.	Cefn Betingau Farm is located in open countryside on the western side of Rhydypandy Road, some 2.5 miles north of Morriston.  The farm comprises 152 acres of land.  It is jointly owned by Mr Peter Rasbridge and his mother, Ceinwen Rasbridge in divided shares.  Mr Rasbridge owns 38 acres and Mrs Ceinwen Rasbridge owns the remainder.  The farm land is rented to a neighbouring farmer for six months each year and is used for grazing and the production of silage.  For the remainder of the year, apart from basic ground maintenance, it is unused.
11.	The application land is one of six dwellings on the farm, including the original farmhouse.  The other four dwellings were converted from various agricultural buildings and barns.  Outline planning permission for the erection of an agricultural worker’s dwelling (a bungalow) on the application land was granted on 17 September 1986, subject to the section 52 agreement of that date.  One of the conditions attached to the planning permission was that the dwelling be limited to a maximum floor area of 150 m2 .  Approval of the reserved matters followed on 23 September 1986 and the bungalow was built immediately thereafter.
12.	On 9 July 2002 planning permission was granted for a single-storey side and rear extension to the bungalow on the application land.  This permission was not subject to the agricultural occupancy condition that applied to the original dwelling under the 1986 section 52 agreement.  The extension more than doubled the area of the bungalow and was built immediately. 
13.	2 Cefn Betingau Farm is now a large detached bungalow measuring 377m2 (including    72 m2 of garage space) set in grounds of half an acre.  It comprises 4/5 bedrooms, 2/3 reception rooms, study, kitchen/diner, utility room, reception hall and a conservatory containing a Jacuzzi. 
14.	The other dwellings on the Cefn Betingau complex are the original farmhouse (No.1), a two bedroom flat (No.3), a detached four bedroom barn conversion (No.4), and a pair of three bedroom semi-detached houses (Nos. 5 & 6) converted from agricultural buildings.  Various planning permissions for these conversions (Nos. 3-6) were granted, the last of which was in July 1999.  The conversions were completed in 2001.  Mrs Ceinwen Rasbridge now lives in No.3 and the remaining houses are let out by the applicants, who occupy No.2.
15.	A planning application to remove the agricultural occupancy restriction imposed under the section 52 agreement was refused on 7 June 2007.  An identical planning application was submitted in November 2009 and refused on 12 April 2010.  The applicants appealed in August 2010.  The Planning Inspectorate declined to accept jurisdiction for the appeal pointing out that a planning agreement under section 52 of the 1971 Act could only be modified or discharged upon application to this Tribunal under section 84 of the 1925 Act.  This led to the making of the current application in January 2011.
Planning Policy
16.	The relevant development plan is the City and County of Swansea Development Plan which was adopted in November 2008.  Policy EV20 deals with new dwellings in the countryside:
“In the countryside new dwellings will only be permitted where:
(i)	The dwelling is required to accommodate a full-time worker solely or primarily employed in agriculture, forestry or an appropriate use to serve the rural economy who needs to live on the premises rather than a nearby settlement, and
(ii)	There is no alternative existing dwelling available in nearby settlements and there are no existing buildings on the farm or forestry unit suitable for conversion to residential use, and
(iii)	The proposed dwelling is located as close as possible to the existing farm buildings, forestry complex or place of work.”
Paragraph 1.6.19 of the notes amplifying this policy states:
	“Removal of an agricultural occupancy condition will only be permitted where it can be demonstrated that the agricultural need advanced at the time of the original permission no longer applies and there is no need for the dwelling to meet the long term needs of the local agricultural community or those employed in associated agricultural services.  Evidence will be required of the property having been offered for sale and to rent with the occupancy condition at a realistic ‘affordable’ price to the agricultural community and associated agricultural services, over an acceptable period of appropriately targeted marketing.”
17.	The relevant Welsh national planning policy comprises “Planning Policy Wales”, Edition 4, February 2011, which sets out the land use policies of the Welsh Assembly Government; Technical Advice Note (TAN) 6: Planning for Sustainable Rural Communities, July 2010; Practice Guidance: Rural Enterprise Dwellings, December 2011 which provides further information about TAN 6; and Welsh Office Circular 35/95: the Use of Conditions in Planning Permissions.
18.	Chapter 9 of Planning Policy Wales deals with housing.  It repeats the development plan’s emphasis upon the strict control of new house building in the open countryside.  Isolated new houses require special justification; for instance where a rural enterprise worker needs to live at or near to their place of work.  Such isolated development should be kept available for this need by the use of an occupancy condition.  It should also be classified as affordable housing as defined in TAN 2:  Planning and Affordable Housing.
19.	TAN 6 (paragraph 4.3.2) defines qualifying rural enterprises as comprising:
“… land related businesses including agriculture, forestry and other activities which obtain their primary inputs from the site, such as the processing of agricultural, forestry and mineral products together with land management activities and support services (including agricultural contracting), tourism and leisure enterprises …”
TAN 6 also defines the standard occupancy condition which is appropriate to ensure that isolated houses in the countryside remain available to rural enterprise workers.  This occupancy condition was replaced by the following wording contained in paragraph 8.12 of the Practice Guidance dated December 2011: 
	“The occupancy of the dwelling shall be restricted to:
(a)	a person solely or mainly working or last working on a rural enterprise in the locality, or a widow, widower or surviving civil partner of such a person, and to any resident dependants; or, if it can be demonstrated that there are no such eligible occupiers, 
(b)	a person or persons who would be eligible for consideration for affordable housing under the local authority’s housing policies, or a widow, widower or civil partner of such a person and to any resident dependants.”
TAN 6 recognises that the broadening of the traditional agricultural occupancy condition to embrace a wider range of rural enterprises significantly increases the number of eligible occupiers for rural enterprise dwellings.  Where an appropriate rural enterprise worker cannot be found to occupy the rural enterprise dwelling, TAN 6 states that eligibility should be extended to persons who would be eligible for consideration for affordable housing under the local authority’s housing policies.  Where planning applications are received to lift existing agricultural occupancy conditions, the planning authority should consider replacing the existing agricultural occupancy condition with the rural enterprise dwelling condition. 
20.	The Practice Guidelines regarding rural enterprise dwellings published in December 2011 explains that there is now a policy allowing a controlled extension to the existing policy of restraint that recognises that there is a wider concern to ensure access to appropriate and affordable housing in rural areas.  It states that it is intended that new rural enterprise dwellings can be continually re-cycled between rural enterprise workers and those in eligible affordable housing need and their respective dependants.  The guidance says that the widening of the range of qualifying rural enterprise occupants and the addition of the local affordable housing requirement means that the scope for the removal of the new occupancy condition (see paragraph 19 above) is very much reduced.  
21.	Any proposal to remove the new occupancy condition will need to demonstrate, with supporting evidence, that there is no longer a rural enterprise need for the dwelling or a local affordable housing need in the area.  The Practice Guidance states that:
“The long-standing mechanism for demonstrating the absence of need has been market testing.”
It goes on to explain what is meant by such market testing;
“8.27	Evidence of effective market testing will be required over a reasonable period, usually at least 12 months.  The critical aspects of market testing are that:
•	The availability of a property is advertised in such a manner that compliant purchasers or tenants are likely to be made aware of it; and
•	The price or rent attached to a property reflects the restrictive occupancy requirement.
8.28	The value of any property subject to an occupancy restriction will be less than its value on the open market.  Traditionally agricultural dwellings have been marketed at prices generally between 70% and 75% of their open market value.  With the wider range of compliant rural enterprise workers and local affordability constraints, this will continue to be the case. …”
Evidence
22.	Both parties treated the present application as though it was analogous to an application under section 106A of the Town and Country Planning Act 1990 to discharge a planning obligation.  The emphasis throughout was upon market testing and the need to demonstrate that the agricultural occupancy condition was, or was not, capable of fulfilling its original purpose.
23.	For the applicants Mr Edwards said that he had been personally responsible for marketing the application land between June 2008 and September 2009.  Following the receipt of his instructions Mr Edwards visited the property and prepared sales particulars.  These referred to the occupancy condition under the section 52 agreement.  He explained that he formed his own opinion about the value of the application land based upon his 40 years of experience in dealing with the sale and valuation of properties in this locality.  This opinion was informed by reference to comparables, most of which were taken from his own firm’s database.  He considered that the value of the application land without the occupancy restriction was £450,000 but he had agreed with the applicants that the property would be placed on the market with an asking price of £325,000, a discount of 28%.
24.	The property was advertised in the South Wales Evening Post thirteen times between July 2008 and August 2009.  Details were also placed on four websites: Rightmove, Find a Property, Prime Location and his firm’s own website.
25.	No interest was shown in the property and in October 2008 the price was reduced to £300,000 (a discount of 33%) and again in July 2009 to £275,000 (39%).  There was still no interest in the property despite the price reductions.  There had been a number of telephone enquiries but none of these was followed by a request to view.  Mr Edwards explained that he did not have details of the enquiries received because it was his firm’s practice only to record any interest if the enquirer wanted to view the property, and nobody did.
26.	Mr Edwards referred to two sales of properties that were fettered by an agricultural condition.  The first was Broadland Farm, Cheriton, Llanmadoc, Swansea which sold for £580,000 in July 2007 against an unfettered open market value of £750,000.  The sale represented a 23% discount.  The property was a 4 bedroom detached house with a large agricultural building and 29 acres of land.  The second property was Old Walls, Llanrhidian, Swansea which was subject to an agricultural occupancy condition.  It had been valued by two other valuers (unfettered) at £400,000 and was offered at £280,000 (a 30% discount) and then £250,000 (37.5%).  There had only been one (local) viewer and the restriction had subsequently been lifted.  
27.	Mr Edwards acknowledged that the application land had not been advertised in the specialist farming press such as Farmer’s Weekly and Farmer’s Guardian.  In his opinion such advertising would not have improved the chances of a sale of the application land.  He said that his Cowbridge office had advertised Old Walls in the specialist press but this had not produced any interest.  In his opinion the local press and the internet were the best advertising channels.
28.	Mr Edwards had not been instructed to offer the application land to rent.  He explained that the applicants had obtained advice from two local letting agents about the rental value of the application land.  They had valued the property at £795 pcm and £800 pcm respectively, both figures being as agricultural lets.  Mr Edwards said that these figures would have reflected a 30% discount to allow for the agricultural tenancy and that the equivalent open market rents were £1,200 pcm.  In his opinion a more realistic rent for the unfettered application land would be £900 pcm, giving a rent subject to the agricultural occupancy condition of between £500-£600 pcm.  In his experience such a rent would be too expensive for agricultural workers to afford.  A retired farmer or someone previously employed in agriculture would be unlikely to want to rent a property unless it were on a long term basis.  Most properties were rented on assured shorthold tenancies.
29.	The application land included half an acre of land.  Mr Edwards said that if, say, 10 acres of land had been offered with the bungalow then at £6,000 -£7,000 per acre, this would have increased the open market value by £60,000 - £70,000 to £510,000 to £520,000.
30.	Mr Edwards said that the drop in the price of the application land over the marketing period reflected both the discount for the agricultural occupancy condition and a fall in the market.  He said the unfettered market value may have fallen by £25,000 over that period.  But even against this reduced value the asking prices of £325,000 and £275,000 represented substantial discounts of 24% and 35%.
31.	In November 2009 Mr Edwards sent an email to the objector containing a list of nine (unfettered) comparables and giving the month of sale, the sale price and brief details of the accommodation.  He denied that of these properties only Broadlands Farm (which was a sale fettered by an agricultural occupancy condition) was comparable.  He conceded that the comparables all had more land than the application land but said that they were all located in rural areas within ten miles of the subject property.  Mr Edwards explained that although the email did not contain a detailed analysis of the comparables he was satisfied, relying on his experience and knowledge, that the appropriate asking price for the unfettered application land was £450,000.  He said that he had been asked to undertake a marketing exercise and that all of his figures were asking prices rather than valuations.  
32.	In May 2012 Mr Edwards produced a further list of unfettered rural properties that had been sold between March 2009 and December 2011.  The prices obtained did not appear to support Mr Edwards’ asking price of £450,000 for the unfettered application land, but he explained that the subject property was very well located and was superior to virtually all of the properties on the list.
33.	Mr Edwards said that he was aware that the marketing exercise had been undertaken in order to test the market for the purposes of removing the agricultural occupancy restriction rather than to effect a sale.  But he denied that he had artificially inflated the asking price in order to prevent such a sale.
34.	For the objector Mr Anstis rejected the application of a fixed discount to the unfettered value to give the value of a property that was fettered by an agricultural occupancy condition.  He said that every property was different and had to be considered according to its individual circumstances.  The appropriate percentage discount in each case was dependent upon the evidence of the sales of both fettered and unfettered comparable properties.  The list of comparables produced by Mr Edwards contained no details of the properties concerned and it was difficult to know whether they were comparable or not.  Mr Edwards had produced no analysis of the comparables showing the adjustments he had made in coming to his assessment of the unfettered asking price.  In any event it was necessary for estate agency purposes to produce a valuation showing the value that the property was actually expected to realise.  It was not sufficient for Mr Edwards to rely upon an asking price. 
35.	Mr Edwards had produced copies of his firm’s advertisements in the local newspaper in which the application land had been advertised for sale.  Mr Anstis said that there were other properties shown in those advertisements which looked from their description as if they were equivalent to the application land.  Mr Edwards had offered no comment as to why these other properties had not been looked at.  Mr Anstis stressed that he was not presenting these other properties as comparables, indeed he know little or nothing about them but, he said, you would “scratch your head as a valuer as to why these were not analysed as part of the process.”  It was necessary to undertake a proper analysis of the sale of fettered properties.  Since there were fewer sales of these than of unfettered properties it would probably be necessary to look at a wider geographical area.  One had to compare actual sales of equivalent fettered and unfettered properties to be able to determine the appropriate level of discount.  A full explanation was required at each step and that had not been forthcoming from Mr Edwards.
36.	Mr Anstis said that in order to expose the application land to as wide a market as possible it should have been advertised in the specialist farming press, including the internet versions.  This was a well-trodden path to demonstrating that a property had been properly market tested.  The specialist farming press was where qualified people would look for accommodation for sale or to rent.  Agricultural tied properties were included in these publications every week.
37.	It was wrong to assume that there was nobody qualified to buy the application land just because it was a large property and relatively expensive.  Farm owners were not in the same financial position as agricultural workers.  The only way to test the position was to place the property onto the market.  Nor should it be assumed that a purchaser would necessarily comply with the agricultural occupancy condition.  There was nothing to prevent a non-qualifying purchaser from buying the property if he so wanted.
38.	Mr Anstis considered that in order to expose the application land to as wide a market as possible it should have been offered with extra land, either as part of the sale or as a separate lot.  The potential purchaser might find additional land attractive.  There was an obligation to look at the property as a whole (including all of the applicants’ land if necessary) to make it more appealing to the market.
39.	There was nothing wrong in undertaking a market testing exercise to establish whether there was demand for a fettered property and, if so, at what discount to the unfettered value.  But such an exercise required details to be kept of every enquiry about the property.  It was incumbent on the applicants to keep such a record to avoid adding to the difficulties in a process where there was a conflict between ostensibly putting the property up for sale but in reality only undertaking a market testing exercise.
40.	Mr Anstis acknowledged that he had not visited the application land, or talked to the applicants, or valued the property.  He acknowledged that Mr Edwards had considerably more experience of the local market.  But he stressed that his role was to receive and consider the evidence of market testing; he was assessing evidence, not adducing it.  In order to show that market testing had been satisfactorily carried out it was necessary for the evidence to be properly detailed and analysed.  It was not sufficient to provide a list of comparable properties.  There had to be an explanation of their relevance.  Unless an objective analysis of the evidence could be undertaken the Tribunal was being asked to judge the applicant’s valuer rather than his valuation.
41.	Neither party gave evidence in respect of the application to discharge the second restrictive covenant, namely that no new dwelling will be erected on “the said land” (the 152 acres of the Cefn Betingau Farm complex). 
Submissions
42.	Mr Flanagan for the objector submitted that the provisions of paragraph 1.6.19 of the UDP required adequate evidence of appropriate market testing before removal of an agricultural occupancy condition would be permitted.  Planning Policy Wales emphasised the need for new house building in the open countryside to be strictly controlled.  Permission for a new unfettered residential dwelling on the application land would not be in accordance with policy and would be refused.  It was therefore necessary to treat the present application with great care since if it were successful it would achieve what would normally be prohibited.  There were six reasons why the applicants had failed to satisfy these policy tests:
(1)	The applicants had not undertaken a systematic valuation exercise in accordance with RICS Guidance.  The evidence to support Mr Edwards’ unfettered valuation of £450,000 was lacking and it was not enough just to rely upon Mr Edwards’ experience.  He had accepted in cross-examination that the discounts in asking price partly reflected the fall in market values during the marketing period.  Nor was Mr Edwards’ fettered valuation supported by evidence.  It was not appropriate to apply a 30% discount as a standard adjustment.  Different percentage discounts were applicable to different geographical areas and what was required, but was absent in this application, was an objective justification of the discount and proper fettered and unfettered valuations of the application land based upon a detailed analysis of relevant comparables.  
(2)	The UDP contained an express requirement in paragraph 1.6.19 that the property should be “offered for sale and to rent.”  But the applicants had not marketed the application land to rent.  Mr Edwards had not been instructed to undertake any market rental testing.  That failure alone should be fatal to the application.  Mr Edwards said that the rental quotes were unachievable but that was untested and contradicted by the evidence of the other letting agents.  A fettered dwelling should be marketed below the amount realised on the letting of the converted (unfettered) dwellings elsewhere on the Cefn Betingau Farm complex.
(3)	The market testing exercise was targeted too narrowly.  The applicants had failed to advertise in the national specialist farming press.  Local prospective purchasers would look at such publications as well as persons from around England and Wales who were looking to more into the area.
(4)	The applicants had failed to offer land in addition to the 0.5 acres that formed part of the application land.  Such additional land, as Mr Edwards conceded, would make the property more appealing to the qualifying sector.  The land ownership arrangements, which now provided for joint ownership of Cefn Betingau Farm in divided rather than undivided shares, meant that the applicants were able to sell more land.  Their failure to do so meant that the application land had not been delivered to the market to its best advantage.
(5)	Mr Edwards did not keep adequate records of the results of the market testing exercise.  He knew that this was the purpose of placing the application land on the market rather than seeking an actual sale; he should therefore have been alert to the need to produce objective evidence of the interest shown.  But he was unable to give any details of the identity or number of enquirers. 
(6)	The applicants wrongly assumed that the persons who would satisfy the restriction could only afford a small property.  That ignored a large part of the agricultural community.  Mr Anstis’ evidence was that the lowest paid agricultural workers would be able to afford accommodation measuring 200m2.  There was no evidence that labourers would be unable to afford the application land.  The income of those engaged in agriculture varied considerably and it was wrong to make assumptions about affordability.  The market had to be properly tested.
43.	Mr Flanagan submitted that the applicants had produced very limited evidence about restriction 3(b).  They appeared to be arguing for its discharge on ground (c), namely on the basis that its removal would not injure the objector and that the council’s control of land use under the planning system was sufficient to protect the public interest.  But it was trite law that the planning system was a separate and distinct system of control to that dealing with restrictive covenants under the 1925 Act.  The fact that the council had planning controls available to them in respect of future development proposals did not render the restriction under the section 52 agreement obsolete.
44.	Mr Carlisle submitted that following the grant of planning permission in 2002 to extend the bungalow on the application land the building had increased in size by almost 150%.  It had been transformed from a modest dwelling to a 4/5 bedroom executive property that was beyond the means of agricultural workers.  This significant extension of the subject property severely restricted the size of the market for it as fettered by restriction 3(a).  There were other examples, produced in the trial bundle, of appeals against agricultural occupancy conditions that had been allowed because of the size and value of the properties involved.  Restriction 3(a) had become obsolete once the bungalow on the application land had been extended.  The applicants were no longer engaged in agriculture and the buildings at the Cefn Betingau Farm complex were no longer used for agricultural purposes.  The application land was not required, or suitable, for agricultural workers.
45.	The property had been extensively advertised over a long period of time but it had proved impossible to find a compliant, or any, purchaser.  Mr Edwards was a very experienced local valuer and his estimate of the unfettered market value of the application land had been supported by other independent local valuers.  This value had been discounted by approximately 30% which was in line with the traditional range of discounts (25%-30%) referred to in the Practice Guidance to TAN 6.
46.	Mr Anstis said that the applicants had not produced sufficient evidence of market testing.  Unlike him Mr Edwards knew the area and the comparable properties to which he referred.  His local knowledge and experience was important in this case.  He had twice reduced the asking price of the application land during the marketing exercise.  The applicants had properly market tested the property but had failed to find anybody who was interested in purchasing it.  Mr Edwards had not been instructed to market the property to rent but the evidence suggested that it would not have been affordable on this basis also.
47.	Additional land had not been included in the particulars of sale because, firstly, the section 52 agreement only covered the 0.5 acres of land that formed part of the application land and, secondly, the applicants did not intend to sell any further land for family reasons.
48.	The issue in respect of restriction 3(a) was, and remained, simple.  There had been a change in the nature, size and design of the bungalow on the application land which had rendered the covenant obsolete in its own right.  A proper market testing exercise had failed to find any qualifying person who had even expressed interest in viewing the property let alone buying it.  
49.	The discharge of restriction 3(c) would not injure the objector because the council had every control that it needed to prevent further residential development under the planning regime.  There were six dwellings on the Cefn Betingau Farm complex and it would be difficult to argue that there should be any more.  Mr Carlisle submitted that this part of the legal agreement should not have been included and was not necessary under present and foreseeable circumstances.  This issue was not of concern to the local planning authority when the application to discharge the restrictions was originally considered by them.
Conclusions
50.	I treat the application to discharge restriction 3(a) of the section 52 agreement as having been made on ground (a) of section 84(1) of the 1925 Act.  Ground (a) states:
“That by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Lands Tribunal may deem material, the restriction ought to be deemed obsolete.”
The test for obsoleteness is whether the restriction is still capable of fulfilling its original purpose; see Re Truman, Hanbury, Buxton and Co Ltd’s Application [1956] 1 QB 261, per Romer LJ at 272.
51.	In my opinion the original purpose of restriction 3(a) was to ensure that the development permitted under outline planning permission reference 2/2/86/0021/01 (an agricultural workers dwelling) was occupied by persons solely or mainly employed, or last employed, in the locality in agriculture (including dependants, widows and/or widowers).  “Locality” in this context was agreed by the parties to mean the area within a 30 mile radius from the application land.
52.	“The development” is defined under the section 52 agreement by reference to the 1986 planning permission.  Condition 5 of that permission states:
“The dwelling shall be of either house or bungalow and shall have an external floor area no greater than 150 m2 (excluding any garage).”
The reason for this condition is stated to be:
	“In order that a reasonable size dwelling is constructed.  Not out of character with this rural location.”
53.	Since 1986 there have been significant changes to the character of the property and to its neighbourhood, namely the Cefn Betingau Farm complex.  Firstly, the bungalow on the application land has doubled in size to 305m2 (net of garage space) following the grant of planning permission in 2002.  That planning permission was not subject to an agricultural occupancy condition.  Secondly, since 1986 four further dwellings have been developed by the conversion of former farm buildings on part of the “said land”.  None of those new dwellings is subject to an agricultural occupancy condition.
54.	The applicants argue that restriction 3(a) is obsolete because the building to which it applies no longer exists in its original form.  But the building constructed under the 1986 planning permission has been extended rather than replaced.  The original floor space remains identifiable, albeit the layout has changed.  The reason for the restriction on the amount of floor space under condition 5 of the 1986 permission does not refer to any aspect of the agricultural occupancy condition; it does not state that the purpose of the size restriction was to ensure its affordability and/or suitability for occupation by agricultural workers.  Instead the reason for the condition relates specifically to the need to ensure that the building is not out of keeping with the character of its rural location.  The lack of an agricultural occupancy condition on the extension does not, in my opinion, seem to imply any acceptance of non-agricultural occupancy.  It was simply unnecessary, given the occupancy condition in the original agreement.  A restriction over part is, in practice, a restriction over the whole.  In my opinion the purpose of the restriction was not rendered incapable of fulfilment by the extension of the bungalow.  Nor is this purpose rendered obsolete by the fact that the local planning authority have granted permission to convert redundant farm buildings at Cefn Betingau into dwellings without being subject to an agricultural occupancy condition. 
55.	The extended bungalow is different in character to the original building.  It is now a large dwelling and serves a different sector of the market than the smaller building erected in 1986.  But restriction 3(a) does not limit the category or grade of agricultural worker who can occupy the bungalow.  While the extended bungalow may not be affordable by a lower grade worker it may be affordable by, for instance, a farm management grade worker or a farm owner.  The occupation of the property is limited only by reference to the definition of agriculture contained in section 290 of the Town and Country Planning Act 1971:
“Horticulture, fruit growing, seed growing, dairy farming, the breeding and keeping of livestock (including any creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of land), the use of land as grazing land, meadow land, osier land, market gardens and nursery grounds, and the use of land for woodlands where that use is ancillary to the farming of land for other agricultural purposes, and ‘agricultural’ shall be construed accordingly.”
56.	Recent planning policy such as TAN 6 has broadened the traditional agricultural occupancy condition to include persons working in rural enterprises and those in need of affordable housing.  This change of policy has expanded the number of eligible occupiers.  In my opinion this broadening of eligibility under present planning policy is not relevant to this application.  The limitation of occupation under restriction 3(a) is not extended by these policies to include rural enterprise workers or those in need of affordable housing.  It is possible that a prospective purchaser who does not satisfy the occupational requirements of restriction 3(a) but who does satisfy the broader qualification of a rural enterprise worker might wish to buy the subject property in the hope and expectation that the objector would modify the restriction in line with current planning policy.  But it is no part of the objector’s case in this application that they would accept such a modification.  In any event I consider it to be unlikely that the subject property, as extended, would constitute affordable housing for the purposes of such policy.
57.	Both parties rely upon market testing as the best indicator of whether the restriction is capable of fulfilling a demonstrable need to house agricultural workers.  If there is no demand for the application land by persons qualifying to occupy it under the restriction then the restriction will be otiose.  Under those circumstances the restriction would not limit occupation to a defined class of person; it would merely prevent any occupation and would serve no practical purpose.
58.	The applicants undertook such market testing from July 2008 to September 2009.  The objector criticised this exercise for the reasons summarised in paragraph 42 above.  Mr Anstis expressed the view that it is the objective evidence of value and not the subjective opinion of the valuer that is important when considering the results of such a market testing exercise.  In my opinion that distinction is too stark; a valuation inevitably needs to be informed by judgment in the application of comparable evidence.  I am satisfied that Mr Edwards has substantial knowledge and experience of the residential market in this area and that expertise should be given weight.
59.	Mr Anstis’ evidence comprised a critique of Mr Edwards’ approach to market testing.  That critique was an entirely passive exercise in which Mr Anstis offered no expert opinion about the relevant values.  He expected the applicants to demonstrate strict adherence to his approach which he put forward as though it was a model of best practice.  His evidence made few concessions to the practical difficulties faced by the applicants in obtaining relevant evidence of the sale of comparable fettered and unfettered properties in the locality.  His suggestion that, in the absence of local comparables, the applicants should have looked further afield ran counter to the objector’s submission that the discount for fettered properties may vary geographically.  Mr Anstis was unable to assist the Tribunal by making considered comparisons of his own.  Instead he described what he took to be the appropriate procedural requirements and then explained where and how the applicants had failed to meet them.  Some of his comments, and especially those about the newspaper advertisements (see paragraph 35 above), I consider to be trivial and pedantic.  They did not sit well with an expert witness who did not think it necessary to see the subject property and who acknowledged, in terms, that he had very little knowledge of the local market.  His evidence largely comprised a lengthy list of faults in the way Mr Edwards had conducted his market testing but it gave me no assistance or insight in determining whether Mr Edwards’ figures were correct. 
60.	I consider that Mr Anstis’ approach was too theoretical and failed to recognise the pragmatic constraints that such a market testing exercise entails.  But I accept that the applicants need to demonstrate that they have properly and thoroughly tested the market if they are to show that restriction 3(a) is no longer capable of fulfilling its original purpose.  Whereas I reject some of the objector’s criticisms of the applicants’ market testing exercise I accept that other such criticisms are valid.   
61.	I do not accept that Mr Edwards failed to keep proper records of the interest shown by prospective purchasers.  It is reasonable for him to have restricted such records to people asking to view the property.  Nobody made such a request during the period of marketing and it was, in my opinion unnecessary for Mr Edwards to keep a record of persons asking for property details or visiting the relevant web pages.
62.	Nor do I accept that the appellants should have marketed the subject property with additional land which was not subject to the restriction.  Mr Anstis said that the applicants should make the property as attractive as possible and, if necessary, should include all the additional land that they owned.  I see no justification for doing this.  However I do accept that the comparables listed in Mr Edwards’ email dated 25 November 2009 all had more land than the subject property and that therefore it was necessary for him to explain how that difference had been reflected in his asking price for the unfettered application land.
63.	I consider that there are four valid criticisms of the appellants’ market testing exercise.  Firstly, the applicants failed to offer the application land to rent.  Mr Edwards acknowledged that although there was evidence before the Tribunal about rental values for agricultural lets the only way to establish whether there was a rental market for this property was actually to offer it to rent.    Secondly, although I place weight on Mr Edwards’ evidence it lacks any objective analysis of the comparables that he referred to when determining the unfettered asking price of the application land.  Thirdly, the applicants did not advertise in the specialist farming press.  I think that this would have ensured the site reached its maximum potential market.  Finally, Mr Edwards did not make any explicit adjustments to reflect general market movements and he did not distinguish these in terms from the discount allowed to reflect the effect of the agricultural occupancy condition.
64.	For these reasons I am not satisfied that the market testing exercise was sufficiently rigorous to establish that there is no demand for the application land subject to the agricultural occupancy condition even at a substantial discount to its unfettered value or at all.  I am therefore not satisfied that restriction 3(a) is obsolete under ground (a) and I refuse the application to discharge it.
65.	I accept the objector’s submission that the application to discharge restriction 3(b) of the section 52 agreement was made on ground (c) of section 84(1) of the 1925 Act.  Ground (c) states:
“That the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction.”
66.	I do not accept the applicants’ argument that the availability of development control powers to the council under the planning regime means that the discharge of restriction 3(b) would not injure the objector.  The statutory regimes for planning and restrictive covenants are separate and distinct.  In Re Martins’ Application [1989] 57 P&CR 119, Fox LJ said at 124:
“Nobody was obliged to enter into a section [52] agreement.  If an appellant for planning permission was offered permission upon terms that he entered into a section [52] agreement he could appeal to the Secretary of State.  But if he chose to enter into the agreement he (and his successors in title) must accept that he can only avoid its effect through the statutory procedure under section 84.  But it seems to me that while the two regimes impinge upon each other to some extent, they constitute different systems of control and each has, and retains, an independent existence.”
67.	The objector acts as a custodian of the public interest under the section 52 agreement.  The purpose of restriction 3(b) of the agreement was to ensure that no new dwellings would be erected on the “said land”.  In his closing submissions Mr Carlisle said that the conversion of the former buildings into four dwellings was a change of use requiring some structural works but that it did not constitute the erection of new dwellings.  I accept that view and I do not consider that the conversion of those buildings into dwellings amounted to a breach of restriction 3(b).
68.	Restriction 3(b) enables the council to retain absolute control over the residential development of the Cefn Betingau Farm complex.  There is no right of appeal to the Secretary of State which there would be were the restriction to be discharged and the council were to rely upon its planning powers in respect of all future proposed residential development on this site.  The discharge of restriction 3(b) would, in my opinion, injure the council by removing the absolute control over development which the original parties to the section 52 agreement agreed to in 1986.  I am not satisfied that the proposed discharge of restriction 3(b) will not injure the objector and I therefore refuse the application.
69.	The applicant has not succeeded in establishing any of the grounds relied upon in respect of covenants 3(a) and 3(b) and the application is therefore refused.  A letter on costs accompanies this decision, which will take effect when, but not until, the question of costs is decided.  The attention of the parties is drawn to paragraph 12.5 of the Practice Directions of the Lands Chamber of the Upper Tribunal dated 29 November 2010.

Dated:  25 July 2012

A J Trott FRICS

Addendum on costs
70.	I have now received submissions on costs from both parties.
71.	The objector says that it has succeeded in its objection and should therefore receive its costs.  It does not seek to recover its own internal costs or the costs of its expert Mr Anstis.  Its application for costs is limited to counsel’s fees in the sum of £2,739 net of VAT.
72.	The applicants argue that the objector’s application for costs has been submitted out of time and should be refused.  The letter on costs from the Tribunal which accompanied the decision was dated 25 July 2012 and stated that any submission on costs must be filed with the Tribunal within 14 days of that date.  The objector’s submissions were dated 17 August 2012.  They were therefore made out of time.
73.	Practice Direction 12.5(3) provides that a successful objector will usually be awarded their costs unless they have acted unreasonably.  The objector has succeeded in its objection and, in my opinion, did not act unreasonably in respect of the costs which it is claiming.  
74.	I do not consider that the overriding objective to deal with this application fairly and justly would be served by denying the objector its costs because, notwithstanding the success of its objection, it was nine days late in submitting its application for costs.  That short delay did not, in my opinion, prejudice the applicants.  I therefore direct on my own initiative that the time for complying with the directions in the Tribunal’s letter dated 25 July 2012 on the submission of an application for costs be extended until 28 days from the date of the Tribunal’s letter.  I do so under the Tribunal’s powers contained in rules 5(3) and 6(1) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010.
75.	I consider the objector’s claim for costs in the sum of £2,739 to be reasonable and proportionate and I make a summary assessment of that amount in favour of the objector.

Dated 23 August 2012

A J Trott FRICS