Rasbridge, Re Cefn Betingau Farm

Factual and Procedural Background

The Appellants, freehold owners of a farm property in The City, applied under section 84 of the Law of Property Act 1925 to discharge restrictive covenants imposed under a 1986 agreement pursuant to the Town and Country Planning Act 1971. The restrictive covenants limited occupation of an agricultural worker's bungalow to persons employed in agriculture and prohibited the erection of new dwellings on the farm land. The application was made on grounds that the occupancy restriction was obsolete due to changes in the character of the property and that the restriction on erecting new dwellings was unnecessary because the local council retained planning control.

The local planning authority objected to the application. Expert witnesses were called by both parties. The Tribunal conducted a site inspection and considered evidence including market testing of the property subject to the agricultural occupancy restriction. The application land had been extended significantly since the original bungalow was built, and other dwellings on the farm had been converted from agricultural buildings without such occupancy restrictions.

Previous planning applications to remove the agricultural occupancy restriction had been refused, and the Planning Inspectorate directed the applicants to seek modification through this Tribunal. The matter was heard at the Magistrates Court in The City in June 2012.

Legal Issues Presented

1. Whether the agricultural occupancy restriction on the bungalow is obsolete under ground (a) of section 84(1) of the Law of Property Act 1925, due to changes in the character of the property or other material circumstances.
2. Whether the restriction prohibiting erection of new dwellings on the farm land is obsolete or should be discharged under ground (c) of section 84(1), namely that its discharge would not injure the objector.
3. Whether the market testing exercise undertaken by the applicants was adequate to demonstrate obsoleteness of the occupancy restriction.

Arguments of the Parties

Appellants' Arguments

• The bungalow has been substantially extended since the original planning permission, transforming it into a large executive dwelling unsuitable or unaffordable for agricultural workers, rendering the occupancy restriction obsolete.
• The agricultural occupancy condition is no longer necessary given changes in the use of the farm and the existence of other dwellings without such restrictions.
• The local planning authority retains full control over new residential development, making the restriction on new dwellings unnecessary.
• A market testing exercise was conducted over more than a year, advertising the property in local press and online, with asking prices discounted by approximately 30% to reflect the occupancy restriction, but no compliant purchasers were found.
• The applicants were not required to offer additional land for sale or to rent the property as part of the market testing exercise.

Objector's Arguments

• The market testing was inadequate and failed to comply with established guidance, lacking systematic valuation, objective analysis of comparables, and proper marketing channels such as specialist farming press.
• The applicants did not offer the property to rent, contrary to explicit policy requirements, and failed to keep detailed records of enquiries.
• Discounts applied to determine the value of the property subject to the occupancy condition were unsupported by evidence and not sufficiently justified.
• The property should have been marketed with additional land to make it more attractive to eligible purchasers.
• The restriction on new dwellings is distinct from planning controls and its removal would injure the objector by removing absolute control over future development.
• The planning system and restrictive covenants operate independently; planning controls do not render the covenant obsolete.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed the original purpose of the occupancy restriction as ensuring occupation by persons employed in agriculture within a defined locality. It noted that the bungalow had been extended significantly beyond the size originally permitted, but the occupancy restriction still applied to the entire dwelling. The extension was not subject to a separate occupancy condition, but this did not imply acceptance of non-agricultural occupancy. The court found that the restriction was not rendered obsolete merely by the extension or by the existence of other unrestricted dwellings on the farm.

The court acknowledged the broader scope of modern planning policies, which include rural enterprise workers and affordable housing needs, but held these policies did not affect the terms of the 1986 agreement.

Regarding market testing, the court gave weight to the applicants' expert's local knowledge and experience but found the market testing exercise insufficiently rigorous. The applicants had failed to offer the property to rent, did not advertise in specialist farming press, and did not provide objective analysis of comparable properties or adjust adequately for market movements. These deficiencies meant the court was not satisfied that there was no demand for the property subject to the occupancy restriction.

On the restriction against erecting new dwellings, the court rejected the applicants' argument that planning controls made the covenant obsolete. It emphasized the separate and independent nature of restrictive covenants and planning regimes. The conversion of farm buildings into dwellings was not a breach of the covenant, and the absolute control over new dwellings was a legitimate interest of the objector. Therefore, discharging this restriction would injure the objector.

Holding and Implications

The court REFUSED the application to discharge both restrictive covenants:

• The agricultural occupancy restriction was not obsolete as it remained capable of fulfilling its original purpose, and the market testing was inadequate to demonstrate otherwise.
• The restriction preventing the erection of new dwellings on the farm land was necessary to preserve the objector's control over development and its discharge would cause injury.

The decision maintains the enforceability of the restrictive covenants as originally imposed. No new precedent was established beyond the application of established legal principles to the facts. The ruling underscores the importance of comprehensive and objective market testing in applications seeking to discharge agricultural occupancy restrictions and affirms the independent operation of restrictive covenants alongside planning controls.