England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2
		7 March 2005

1. MR JUSTICE RICHARDS: This is an application by Epping Forest District Council under section 288 of the Town and Country Planning Act 1990 to quash a decision of an Inspector appointed by the First Secretary of State. The case relates to a modest bungalow known as The Elms, Pick Hill, Waltham Abbey. When planning permission was granted in 1950 for the erection of the bungalow it was subject to a condition in these terms:

"The dwelling shall be used solely for the accommodation of persons whose employment or latest employment is or was in agriculture as defined by section 119(1) of the Town and Country Planning Act 1947, or in forestry or in an industry mainly dependent on agriculture and also dependants of such persons as aforesaid."

2. That condition was less stringent in its terms than the typical agricultural occupancy condition to be found today. The reason given for the condition was simply that "the site lies within the Green Belt of the Greater London Plan".
3. At that time the bungalow was on an agricultural holding of a few acres operated as a pig farm. There was a further condition that the dwelling should not be sold away or separated from the holding, but the pig farm has since gone and the former farm buildings are now dwellings, and it was agreed at the hearing before the Inspector that the further condition was no longer necessary. The present case is concerned only with the agricultural occupancy condition.
4. When the present owners, Mr and Mrs Emery, bought the property in about 1997 it was still subject to the agricultural occupancy condition which they satisfied because Mrs Emery worked at a horticultural nursery. In June 2003 they applied for removal of the condition, the reason being that they wanted to move closer to local services, and for that purpose wanted to sell the house. Part of their case was that they had been unable to sell the house with the condition attached. The council refused the application. Mr and Mrs Emery appealed under section 78. The appeal was conducted by way of a hearing before the Inspector in June 2004. By his decision dated 2nd July 2004 the Inspector allowed the appeal and varied the planning permission by deleting the disputed agricultural occupancy condition, as well as the other condition about which there was no dispute. That is the decision that the council now challenges.

Policy framework

5. Section 54A of the 1990 Act required the determination to be in accordance with the development plan unless material conditions indicated otherwise. The relevant part of the development plan was the Epping Forest District Local Plan 1998, policy GB17 of which dealt with dwellings for agricultural, horticultural and forestry workers. For the most part the policy related to the grant of planning permission for such dwellings. There was a provision, however, that where an agricultural occupancy condition was imposed:

"... that condition will not normally be removed on a subsequent application unless it is shown that the long-term needs for dwellings for agricultural workers, both on the particular farm or holding and in the locality, no longer warrant its reservation for that purpose."

6. Paragraph 5.96 of the reasoned justification for the policy, though not itself a part of the policy, stated:

"In considering an application for the removal of such a condition the Council will have regard to --

-- the current demand for houses for farmers or farm workers in the locality;

-- whether there are any vacant agricultural dwellings in the neighbourhood;

-- whether there have been recent applications by agricultural workers for council houses;

-- details of efforts to dispose of the dwelling subject to the occupancy condition, eg whether it has been advertised, how frequently and for how long;

-- what the asking price or rent was, and whether this reflected the reduction in value arising from the occupancy condition; and

-- whether there have been other recent applications nearby for agricultural dwellings."

7. Relevant national policy is contained in PPG7, paragraph I21, which reads:

"Changes in the scale and character of farming and forestry in response to market changes may affect the longer-term requirement for dwellings for which permission has been granted subject to an occupancy condition of the type set out above. Such dwellings should not be kept vacant, nor should their present occupants be unnecessarily obliged to remain in occupation simply by virtue of planning conditions restricting occupancy which have outlived their usefulness. Applications for the removal of occupancy conditions should be considered on the basis of realistic assessments of the existing need for them, bearing in mind that it is the need for a dwelling for someone solely, mainly or last working in agriculture in an area as a whole and not just on the particular holding that is relevant."

The decision

8. The Inspector identified the main issue as being whether the condition in dispute remained necessary and reasonable. He said that the main issue could be divided into segments: namely, what changes have there been to the holding since planning permission was granted in 1950; has anything happened in the immediate vicinity to influence the validity of the condition; how should locality be defined in applying an occupancy condition; how does one estimate an appropriate value for a property subject to an occupancy condition; how much weight should be given to the way the property has been marketed?
9. As to the first of those segments, changes at the holding, he pointed to the fact that there was no longer a pig farm and that planning permission has been granted for the conversion of the farm buildings into dwellings. He said that there was certainly no need for a dwelling with an agricultural occupancy condition for the holding or what remained of it. In relation to the second segment, changes in the vicinity, he said that it was not argued that the physical character of the area merited removal of the condition, and that was his view also.
10. In relation to the third segment, definition of locality -- though in fact the matter went somewhat wider -- he said this in paragraphs 9 to 11:

"9. The condition does not tie the dwelling to the holding. Nowadays, an occupancy condition will normally refer to the 'locality', the word used in the model condition recommended in Annex I to PPG7. Appeal decisions in Epping Forest District over the last few years suggest that ten minutes, or even fifteen, represents a reasonable travelling time (off-peak) between a dwelling and a holding. Several appeals relating to proposed dwellings on holdings have been dismissed on the basis that it should have been possible to find a dwelling within such a travelling time.

10. The evidence for and against demand in the locality of The Elms is inconclusive. The Council pointed to areas close to the north and south of Waltham Abbey but it seems to me that the town itself could offer the opportunity of appropriate dwellings in relation to them. The Council also pointed out the importance of the horticultural industry in the vicinity, including the provision made for it in Local Plan Policy E13. Various questions arise, however. DEFRA statistics suggest a decline in both the number of holdings and the area under glass -- but the emerging Local Plan forecasts a likely requirement of 50 hectares over the next ten years. A tendency to amalgamate would explain the fall in the number of holdings but not the area under glass. The appellants suggested that the effect of an industry in overall decline is being counterbalanced by a small number of major operators putting up large areas of glass. The Council's figures showed a number of recent applications for small areas of glass -- but it was not clear whether these were new areas or replacements of existing glass or expansions of existing businesses. In any event, it seems likely that the majority of holdings will already have a dwelling. And the Local Plan itself explains that new dwellings on horticultural holdings are unlikely to be acceptable, especially given the high level of technology typical of modern glasshouses.

11. In short, I conclude that the evidence on agricultural and horticultural activity in the area does not itself indicate sufficient likelihood of demand to warrant retaining the condition."

11. In relation to the fourth segment, market value, the Inspector started by saying this at paragraph 12:

"Put simply, the market value of a property is the price paid by a willing buyer to a willing seller. That must still apply when the property is subject to a condition constraining its occupancy, as here -- the market value must be a price acceptable not only to the buyer but also to the seller, otherwise it will never be sold. The value of the Elms must bear in mind both the unfettered market value and the price that could reasonably be expected to be paid by someone satisfying the occupancy condition."

12. He then said in paragraph 13 that the price that could reasonably be expected to be paid by someone satisfying the occupancy condition is affected by many things. He referred to Nicholson v Secretary of State for the Environment, a case to which I will return later. He stated that the judgment in Nicholson included the conclusion in effect that the price of a property with an agricultural occupancy condition should be reduced to take into account the limited potential buyers and their likely means. He did not, however, believe that that statement could permit a simple interpretation. Price could not, in his opinion, be related purely to the average wage of an agricultural worker multiplied by whatever factor building societies now use to determine the maximum of any loan they might offer. In paragraph 14 he gave various examples in support of that, such as the fact that an agricultural worker may have a partner whose earnings can be added to the equation. At paragraph 15 he stated:

"Also, for someone wishing to buy, the alternative to a house with an occupancy condition is one on the open market. The purchase price is bound, therefore, to reflect to some extent that alternative. The appellants provide evidence of properties selling at discounts of between 5% and 28% of open market value. Applying a discount may, on the face of it, seem simplistic -- but doing so on the basis of evidence is not. The Council suggests, in consultation on the emerging Local Plan, that a 50% reduction on open market value should apply. That does not appear to be based on the evidence of property transactions. Even so, there is some logic in the argument that it discounts the very substantial difference between housing and agricultural land values while recognising that the house does, in fact, exist."

13. In paragraph 16 he made various observations about the enhanced values of properties, not just in the green belt but in the countryside anywhere. Finally, in relation to the market value analysis, he stated in paragraph 17:

"In the end, if there is demand, the house will sell -- and the greater the demand, the nearer to open market value it will sell, because competition will likely push the price up until other properties become attractive. If there is no demand, the property will not sell -- and, if there is no demand, reducing the selling price will not find a buyer. Much, therefore, hinges on the evidence from the marketing exercise and the responses to it."

14. He then turned to the fifth and final segment, concerning the marketing exercise. He began with an expression of understanding as to why the Council had felt unable to give much weight to the marketing exercise at the time it made its decision. He referred to other criticisms by the Council of the marketing exercise which, in his opinion, were answered by the evidence he had heard. He then said this in paragraphs 20 to 24:

"20. The property has now been on the market for over a year more. And it has been advertised in a number of different ways, albeit at different times, in approaching 3½ years since the local agent was first instructed ... and with a targeted questionnaire ... There may have been other possibilities that could have been explored -- but not, in my opinion, ones that would likely have made any material difference.

21. I agree with the view expressed on behalf of the appellants that anyone looking for a house will take positive steps -- buying newspapers and magazines, contacting estate agents (specialist or otherwise) and perhaps appointing their own consultant or agent. Anyone looking for a house with an agricultural occupancy condition in the vicinity would be highly likely to have seen The Elms being advertised in one location or another.

22. The questionnaire brought several expressions of interest but no offers for the property. Otherwise, the evidence is that 'four or five' sets of particulars have been sent out but still there has been no firm interest expressed. If that is the limit of the responses, then it is not surprising that nothing has been said on the matter.

23. Overall, I think that The Elms has, in June 2004, been advertised for sale for a long enough period and in a sufficient variety of places to be able to conclude that there is no demand, at the present time, for someone satisfying the agricultural occupancy condition. The Council says that its own housing list contains some 50 people employed in agriculture. It appears, however, that none of those people has expressed an interest in The Elms. It is always possible, despite my conclusion, that they may not have seen it advertised -- but it is equally possible that they simply do not wish to buy, or do not wish to buy in this location.

24. Looking at Annex I to PPG7 (paragraph I21), the guidance is that changes in the scale and character of farming may affect the longer-term requirement for dwellings subject to occupancy conditions. That may well be what has happened here. It continues that the present occupants of such a dwelling should not be unnecessarily obliged to remain in occupation simply by virtue of a condition that has outlived its usefulness. And it seems to me wrong for such a condition to remain in place just in case a need emerges in the future."

15. The decision letter also referred to other matters, explaining in paragraph 25 that Mr and Mrs Emery had personal reasons for moving, though the Inspector had given no weight to that consideration. He also explained in paragraph 26 that if they could not sell the house they could not move, observing that to reduce the price of the property in an effort to find a qualified buyer might well mean reducing it to a level at which they would be unable to move. That did not influence his decision but did support the argument that the market value of the property, with the constraining condition, was a price acceptable not only to a willing buyer but also to a willing seller. For those various reasons, he concluded that the appeal should succeed and that the relevant condition should be deleted.

Grounds

16. The Council raises two main issues. First, it contends that the Inspector's decision as to the demand for dwellings subject to an agricultural occupancy condition was perverse. Secondly, it makes a series of overlapping points to the effect that the Inspector failed to determine whether the property was reduced in price by an appropriate degree to take account of the occupancy condition.

First issue

17. The focus of this aspect of the challenge is the statement in paragraph 10 of the decision letter that "it seems likely that the majority of holdings will already have a dwelling". It is submitted that read in context this is a reference to horticultural holdings, a proposition which I accept. It is further submitted that there was no evidence upon which the finding could be reached, and that the finding was therefore not reasonably open to the Inspector. The point is said to be important because this finding tips the balance in favour of the conclusion, at the beginning of paragraph 10 and in paragraph 11, that the evidence did not indicate sufficient likelihood of demand.
18. It is to be noted that there is no challenge to what the Inspector said in paragraph 9 about the definition of the locality. Nor, on the face of it, is there a direct challenge to the statement at the beginning of paragraph 10 that the evidence for and against demand in the locality is inconclusive; or the conclusion in paragraph 11 that the evidence does not indicate sufficient likelihood of demand to warrant retaining the condition. What the Council does is focus on the one sentence in paragraph 10 and attribute to it a decisive role in the Inspector's conclusion as to demand, or the inconclusive nature of the relevant evidence as to demand.
19. In my judgment, the sentence simply does not carry the weight the Council seeks to attribute to it. As Mr Strachan submitted in his skeleton argument, this is an additional factor in support of the Inspector's conclusion, but is not necessary for that conclusion. As the opening words of the sentence spell out, it is an "in any event" point. So I would not regard the point as undermining the Inspector's conclusion, even if there were no evidence to support the point. On a fair reading of the decision, the conclusion would have been the same if the sentence were not there. The Inspector would still have regarded the evidence for and against demand as inconclusive and would have still reached the conclusion he did in paragraph 11.
20. But, leaving that on one side, what is the position concerning the evidence for the finding made to the effect that the majority of holdings will already have a dwelling? It is striking that in the original claim the point as to lack of evidence was linked in with a point as to an alleged breach of natural justice, in that it was alleged that the matter was not raised at all at the hearing. In the light of the evidence that has been filed in the present proceedings, that allegation is not pursued. Nevertheless, although the natural justice point has been dropped, it is still contended that the Inspector did not receive any evidence on the issue that had been raised.
21. The Inspector himself has made a short witness statement dealing with the point, as is appropriate in a case where a no evidence challenge is advanced. He states this:

"As to the incorrect factual allegations as to what occurred at the hearing itself, contrary to what is now asserted by the Claimants in these proceedings, the issue of whether the majority of holdings would already have a dwelling was raised, canvassed and discussed as an issue at the hearing. Mr Barrow, who was appearing on behalf of the Second and Third Defendants, stated and contended that the vast majority of holdings would have a dwelling already. In response, Mr Green, the consultant acting for the Council, said that he did not have statistics on the numbers but stated that I had seen (with the Council's statement) the number of applications and appeals dealing with demand. He conceded that there was a tendency for holdings to amalgamate, so that the number of holdings was down, but he also said that a lot of 'smaller men' were concentrating on niche markets. My assessment was that there was no outright dispute by the Council with Mr Barrow's statement, simply an explanation proffered by Mr Green as to what was perceived to be happening in terms of amalgamation of holdings."

22. It seems to me clear from the context that the Inspector is referring here to horticultural holdings, since that is the context in which the Council's reference to amalgamations was put forward.
23. Mr Barrow, who, as the Inspector said, appeared at the hearing before him on behalf of Mr and Mrs Emery, states in his witness statement that significant evidence was provided by both parties as to the extent of the horticultural industry in the area. He provided, amongst other things, oral evidence as to his knowledge of the Lee Valley horticultural industry, including the fact that many businesses typically had dwellings. This, he said, arose in connection with a general discussion about the horticultural industry in the area, and reference was made to another property which his company were also marketing, which included a house and one acre of glass. He said that a list of names and addresses of the main horticultural businesses was provided by the claimant, as were maps showing the location of glass houses in relation to the appeal site, and that the Inspector could have formed an opinion on the likelihood of those holdings having houses from the map.
24. Evidence which Mr Barrow submitted on behalf of Mr and Mrs Emery included a survey of local agricultural businesses. Of the returned surveys, eight out of ten confirmed they had dwellings on their holding. In addition, the Inspector undertook a visit to the area and viewed the surrounding land use and, according to Mr Barrow, was therefore in a position to take a view on agricultural businesses and layout of holdings in the area, and whether it seemed likely that the majority of holdings already had dwellings.
25. Part of Mr Barrow's evidence deals generally with agricultural holdings, but part deals specifically with horticultural holdings. It is true that in relation to horticultural holdings he refers to having given evidence that many holdings typically had dwellings, whereas the Inspector records him as having referred to the vast majority of holdings having dwellings, but that seems to me to be a minor point. There is clear evidence from both of them that the matter was addressed in evidence at the hearing.
26. Mr Green for the Council responds by saying in a recent witness statement that he accepts that there was evidence about dwellings on agricultural holdings; but he adheres to the view that there was no evidence about dwellings on horticultural holdings, and he says that the position in relation to horticultural holdings was simply not known. The Council did not keep statistics on the number of horticultural holdings with a dwelling, as indeed the Inspector's recollection of what was said confirmed. The Inspector pointed out that he had been referred to the number of applications and appeals dealing with demand. Mr Green indicates that those appeal decisions related to dwellings and accommodation, such as caravans, used for the purpose of dwellings on agricultural holdings, and I have been taken to a series of schedules that were before the Inspector at the inquiry, though it is right to emphasise that those schedules do not deal specifically with the question of the number of holdings that have dwellings. Mr Green says in his witness statement that he does not recall Mr Barrow making a statement about many businesses in the Lee Valley horticultural industry typically having dwellings. He also makes a number of other points about Mr Barrow's statement.
27. It seems to me that there is clearly a difference of recollection as to what precisely was said at the hearing before the Inspector. It is sufficient for present purposes that there is no basis upon which I can properly reject what the Inspector himself and Mr Barrow recollect as having been said at the hearing. Having regard to the matters canvassed in the witness statement, it seems to me that the only conclusion I can properly reach is that the Inspector did receive evidence on this subject of the number of horticultural holdings with dwellings. It is true that there was also other evidence before him which was indirectly relevant to the issue, but the totality of the evidence was not such as to render the conclusion on the specific point -- that the majority of holdings will already have a dwelling -- an unreasonable one or one for which, as alleged, there was simply no evidence at all before the Inspector.
28. In my judgment, there was evidence before him and, in the light of it, he could reasonably take the view he did on this issue. I therefore reject the challenge on the first issue.

Second issue

29. The submission made by Mr Watson for the Council on this issue is that under the factors identified in paragraph 5.96 of the reasoned justification for local plan policy GB17, the question whether the asking price reflected the reduction in value arising from the agricultural occupancy condition is separate from details of efforts made to dispose of the dwellings subject to that condition. It is proper and logical for these to be separate considerations. The asking price for a property may or may not be realistic. The marketing exercise may or may not be adequate.
30. It is submitted that the Inspector failed to reach a conclusion on the issue of whether the property was marketed at a realistic price; that is, at a value which reflected a reasonable reduction in value arising from the occupancy condition. It is said that he did not reach a conclusion on it in his section on market value, where he ended up by saying that much hinges on the evidence from the marketing exercise; nor did he reach such a conclusion in the section on the marketing exercise, where he did not refer to the value at which the property was marketed. He thereby failed to determine the appeal in accordance with the development plan and/or failed to take into account a relevant consideration.
31. Specific criticism is made of the Inspector's observation at paragraph 17 of the decision that if there is no demand the property will not sell and, if there is no demand, reducing a selling price will not find a buyer. That is criticised on grounds of perversity in that it is said that the demand for a property is inherently linked to the price as a matter of simple economics. There must be, it is said, a possibility that the reason that people did not express interest in the property was the price at which it was marketed. So a determination of whether the price at which the property was marketed was realistic was an essential part of the decision-making process.
32. Mr Watson refers to Nicholson v Secretary of State for the Environment [1998] JPL 553. In that case, as one sees from pages 562 to 563 of the report, the Inspector had stated in his report that:

"The question is whether the failed marketing campaign demonstrates that the occupancy condition has outlived its usefulness. The asking price was obviously an essential element of the campaign ... The normal rules of thumb about appropriate discounts to reflect the occupancy condition (10% to 30%) cannot, in my view, be applied in this case because the house has been improved to a standard which puts it beyond the means of almost all potential compliers (except possibly a wealthy retired local farmer) and the high profile of an appeal makes purchase too great a risk for a non complier."

33. In fact, he referred to the property in question as a luxury mansion. It is plain that a lot of money had been spent on it, which resulted in what the Inspector described as "the entirely predictable effect of taking the property out of the reach of virtually all potential compliers with the occupancy condition". He agreed with the Council in that case that that undermined its policy of retaining a pool of agricultural dwellings and of protecting the countryside against development, other than that essential for agriculture. He concluded that the marketing campaign, notably the price at which this greatly enlarged and improved property was offered, did not demonstrate that there was no ongoing need for an agricultural dwelling in the area.
34. In the Secretary of State's decision letter a view according with that of the Inspector was expressed. The challenge, so far as was material, to the Secretary of State's decision, was based on an alleged misdirection with regard to policies. The Deputy High Court judge referred without demur to the Inspector's reasoning, including the point that the asking price was an essential element in the marketing campaign. Mr Watson submits that the Inspector in the present case erred by failing to follow the same approach. It is said that the Inspector referred to Nicholson, but failed to follow the guidance to be derived from it.
35. Reliance is also placed on another Inspector's decision in an appeal involving the same local planning authority, a decision concerning Oaklee Farm in November 2002. In that decision the Inspector stated that he considered that the marketing exercise would be compromised if a property were offered for sale at an unrealistic price. In the particular circumstances of the property, he concluded that the normal rule of thumb discount might not be appropriate. He observed that an important characteristic of the property was that it was a small agricultural holding, the size of which would limit the profit that could be generated from an agricultural enterprise and the expected return on capital. The farmhouse was not a splendid mansion, as in the Nicholson case. Nevertheless, the house was large in relation to the agricultural needs of the holding and was not financed by income from the holding. He referred to the Council's evidence, giving an agricultural valuation in a range much lower than that at which the property had been placed on the market. He considered that the Council's approach to valuation, based on the dwelling's connection with the land and the limited number of potential buyers and their needs, was more suited to the circumstances than was the approach that had been adopted in the marketing exercise. The Inspector's approach in that case is contrasted with the approach of the Inspector in the present case.
36. I think it helpful, before considering Mr Strachan's response to those submissions, to look in a little more detail at what material was before the Inspector about the price at which the house was marketed. The Council's position was that the asking price of the property, which originally had been £285,000 and had been reduced to £272,000, made the dwelling unaffordable for an agricultural worker. The desirable location resulted in high residential property values. It was considered that the marketing exercise was invalidated by an unrealistically high price being placed on the dwelling.
37. The evidence put in by Mr Barrow for Mr and Mrs Emery was that The Elms had been independently valued as a property without the occupancy condition at £350,000. It had initially been marketed for two years in 2000 by one firm at a price of £240,000. It was then marketed again, two years later, by Acorus -- which I think is Mr Barrow's company -- at a guide price of £285,000 with the occupancy condition. That represented a discount of approximately 22 per cent from market value. It had generated no interest. It had been further marketed from March 2003 at the lower asking price of £272,000, a discount of approximately 30 per cent from market value, but had still not generated any material interest. Details were given of where the advertisements had been placed. There had been only ten requests for particulars of the property and no requests to view. In addition, there had been a postal survey by way of a questionnaire to 40 holdings in the area to assess the need for an agricultural dwelling by individual agricultural businesses in the locality. Of ten responses received, only three expressed interest in the property and there was only one request to view and no offers in consequence of those expressions of interest.
38. In addition, Acorus submitted a report on the market for and affordability of dwellings with agricultural occupancy conditions. It indicated that a large number of properties with occupancy conditions had been sold in the £200,000 to £400,000 bracket, and expressed the overall conclusion that the market for agricultural dwellings to compliant purchasers was small. Properties were generally available across a wide price range and many of the potential buyers were able to afford properties at the higher end and beyond. It suggested that the fact that many properties did not sell was perhaps a reflection of lack of need in a particular area at the relevant time.
39. I should say that I think it plain from his overall consideration of the issues that the Inspector had regard to all that material, including the actual asking price of the property and the reduction that that represented from an open market price without the occupancy condition. He did not spell out those matters, which were not in dispute and which formed part of the basis upon which the rival arguments were mounted. But what he said about market value must be read against the accepted background of those matters.
40. Turning to Mr Strachan's submissions for the First Secretary of State, he emphasised that the process that the Inspector was required to go through did not involve any exact science of determining a precise realistic price. The Inspector had to consider a range of factors to which plainly he did have regard. He was not required to identify a specific price or to state in terms that a particular price was realistic or unrealistic. He had to consider whether the price at which the property was marketed did reflect a reduction for the occupancy condition and then make a judgment, pulling all the threads together, as to whether there was a continuing need for such property or whether the condition had outlived its usefulness.
41. Mr Strachan submitted, as is plainly right, that the decision letter must be read as a whole and that that also applies to each of its individual sections. He took me through the market value section in some detail. By reference to paragraph 12 of the decision, he submitted that the Inspector clearly had regard both to the unfettered market value and to the price that could reasonably be expected to be paid by someone satisfying the occupancy condition. The Inspector went on to consider that point as to the price that could reasonably be expected to be paid in some detail. That, submits Mr Strachan, is very important for a proper understanding of his decision as a whole.
42. As to the case of Nicholson, referred to by the Inspector in paragraph 13, Mr Strachan submitted that it was on very different facts and did not establish any principles that had to be followed in the present case. Nothing said by the Inspector in relation to it is open to objection. The Inspector was correct, or at least reasonably entitled, to reject the Council's approach that price can be related simply to the average wage of an agricultural worker.
43. Both there and in paragraph 14 it is clear that the Inspector had very much in mind the case that was being advanced by the Council. In paragraph 15 he indicated, consistently with what he had said in paragraph 12, that one has to look both at open market prices and at the reduction in price to reflect the occupancy condition, since open market accommodation and accommodation with an occupancy condition are alternatives for a purchaser. The Inspector addressed some of the relevant evidence in that paragraph, reflecting the undisputed facts, to which I have already referred, about the sale of properties at discounted prices off open market values. He contrasted this with the Council's figure of 50 per cent, which did not appear to be evidence-based.
44. Mr Strachan said that if the relevant test were "Was the price at which this property was marketed a realistic price?", then the answer to be derived from what the Inspector said in paragraph 15 is plainly yes, though the Inspector did not identify it in these terms. That is because the property was marketed at a discount of up to 30 per cent off the open market value and there was actual evidence of properties selling at discounts of between 5 per cent and 28 per cent off open market value. The rule of thumb referred to in Nicholson is also material here.
45. So, as Mr Strachan put it, one sees a process of reasoning whereby the Inspector says, first, it is appropriate to apply a discount to open market value when seeking to sell a property subject to an agricultural occupancy condition. Secondly, the discount should still have regard to the open market value and should be based on evidence as to what discounts have resulted in sales in the past. Thirdly, the evidence from the appellant was that sales at discounts of between 5 per cent and 28 per cent had resulted in sales of properties, subject to conditions. Given that it was accepted that The Elms was marketed initially at 22 per cent and then at 30 per cent discount off open market value, the price for the property was within the range where sales had resulted. Fourthly, the Council was advancing a 50 per cent discount in the context of the emerging local plan. While there was some logic in applying a discount that reflects substantial differences between agricultural land and housing land values, the figure of 50 per cent was not based upon any evidence as to sales. Fifthly, more importantly, ultimately it was important to recognise that if there had been demand for the property, this would be likely to result in a price closer to open market value, whereas if there had not been demand for the property, a reduction in value would still not have been likely to have produced a sale. Sixthly, the overall conclusion on the appropriate value must therefore be assessed against the marketing exercise and the responses to it.
46. The fifth and sixth points there come from paragraph 17 of the decision which, it is submitted, has to be considered in context. What the Inspector said there about the relationship between demand and sale is correct as a matter of logic; hence the importance of considering the question of a willing seller and a willing buyer, as indicated in paragraph 12. Of course, accepted Mr Strachan, if the price was low enough somebody would buy the property. But the Inspector was plainly looking at the matter in terms of what could reasonably be expected to be paid by someone satisfying the occupancy condition, as had been made clear in paragraph 12.
47. The Inspector went on to look at the marketing exercise, reaching the conclusion at paragraph 24 that the occupancy condition had outlived its usefulness. That was very much in line with the policy which he had to apply. What was said in paragraph 23 as to there being no demand from someone satisfying the agricultural occupancy condition must be read, submitted Mr Strachan, as a finding that there is no demand for the property, as revealed by the mortgaging exercise, so that reducing the selling price would not find a buyer, unless one reduced it to a price which no longer reflected the appropriate market value. By that Mr Strachan was referring to a price below that which could reasonably be expected to be paid by someone satisfying the occupancy condition.
48. Having regard to all these considerations, Mr Strachan submitted that looking at the decision fairly, the Inspector could be seen to have approached his task properly and to have given proper consideration both to the question of price and to the reduction in value for which the property was marketed, having regard to the occupancy condition. He engaged in a detailed analysis of the marketing exercise, looking at the actual evidence. He reached a conclusion that was reasonably open to him and there was no error of law of the kind for which the claimants contend.
49. The conclusions I reach are as follows. I accept the thrust of Mr Strachan's submissions on this issue. It does seem to me that some of the things that the Inspector states look a little odd if taken in isolation. But if one reads the decision letter as a whole, and in particular if one reads what he said about market value and the marketing exercise as a whole, I am satisfied that his reasoning was not flawed as the Council contends. It seems to me that the Inspector had careful regard to the relevant factors as contained in PPG7 and paragraph 5.96 of the reasoned justification for local plan policy GB17, and that he expressed his conclusion in terms that accorded with the guidance there given. I accept in particular that the Inspector's reasoning in relation to market value proceeded as Mr Strachan submitted it did. The Inspector went on to consider the actual marketing exercise before reaching his overall conclusion that the occupancy condition had outlived its usefulness and that there was no need for it.
50. An exercise of this kind, where a property subject to a condition has not been sold despite extensive marketing, is not a simple matter. It requires a very considerable degree of judgment. It seems to me that there is no single approach, albeit that rule of thumb discounts may provide help in individual cases. Nicholson and the Inspector's decision in Oaklee were cases decided on their particular facts, and in each case those particular facts were of a somewhat exceptional nature, making rule of thumb discounts inappropriate. But neither of those cases lays down any rule that it is essential to determine a specific realistic price as a necessary step in the reasoning process. The Oaklee decision, as an Inspector's decision, could not have legal force; but equally Nicholson, a decision of the High Court, does not purport to lay down any rules in this area but simply upholds the particular reasoning process of the Inspector and the Secretary of State in that case.
51. In my judgment, the Inspector in this case had in mind from the outset that one factor that must be taken into account -- and indeed taken into account as an important factor -- is the price that could reasonably be expected to be paid by someone satisfying the occupancy condition (see paragraph 12 of the decision). This is not something to be considered in isolation since one must also bear in mind the market price of the property without such a condition and that a house without such a condition remains an alternative, even to a purchaser capable of satisfying an occupancy condition.
52. The Inspector plainly considered that the discount at which this property was marketed to reflect the occupancy condition was within the bracket supported by the evidence before him. Although he did not spell this out, and did not need to, there was nothing in the particular circumstances of the property that would call for it to be treated as an exception from the normal position. But the Inspector did not need to articulate a figure that represented the reasonable or realistic market price with an occupancy condition attached. That is because, in my judgment, his finding in the light of the marketing exercise was that there was no demand for the property at any price that could reasonably be expected to be paid by someone meeting the occupancy condition. It seems to me that that is how his conclusion at paragraph 23 is to be read, even though it requires reading in words about the price that could reasonably be expected to be paid by someone meeting the occupancy condition.
53. Such a reading ties in with his starting point in paragraph 12. He must have had in mind that the guide price at which the property was put on the market was no more than a guide; that it was open to anyone, if interested in the property, to make an offer at a lower price; and the limited expressions of interest and the absence of any offers at all justified the conclusion that there was simply no demand for this particular property with the condition at any reasonable price.
54. So, whilst I accept that demand cannot be divorced from price, the Inspector's decision is not to be read as suggesting otherwise. I reject the submission that he made a fundamental error of logic or economics. More generally, for the reasons I have given, I reject the submission that he failed to have regard to, or properly to apply, the relevant policy and related material.
55. Accordingly, the challenge on the second issue also fails. It follows that the claim must be dismissed.
56. MR STRACHAN: My Lord, I am grateful. In those circumstances I do seek an order that the claimants pay the first defendant's costs.
57. MR JUSTICE RICHARDS: Yes.
58. MR STRACHAN: There is a cost schedule, but there has been further discussion between the parties and, my Lord, there is an agreed sum, if your Lordship is prepared to agree it, of £6,710. It is the sum to be assessed --
59. MR JUSTICE RICHARDS: £6,710?
60. MR STRACHAN: £6,710, my Lord, which is slightly below that which appears in the schedule that your Lordship may have in front of you, the original sum.
61. MR JUSTICE RICHARDS: If I had a schedule in front of me I have lost it. But if that is the agreed figure, that is fine.
62. MR STRACHAN: I can hand in a fresh one.
63. MR JUSTICE RICHARDS: It sounds well within the reasonable limits that one would expect.
64. MR STRACHAN: The other matter I raise, not on my behalf but I know that Mr and Mrs Emery also have an application, and they now wish to say something about that. It may be that that is also agreed to and will not take your Lordship too long.
65. MR JUSTICE RICHARDS: Yes. Let me hear from Mr and Mrs Emery. What is the figure that you are claiming by way of costs?
66. MR WATSON: Maybe I can abbreviate that. There has been an agreed figure, as I understand it, between those instructing me and Mr and Mrs Emery of £1,233.75.
67. MR JUSTICE RICHARDS: That relates to the costs of filing the evidence?
68. MR WATSON: My Lord, yes. Preparation and filing of the evidence in relation to issue 1 essentially.
69. MR JUSTICE RICHARDS: Yes, I see.
70. MR WATSON: That figure, £1,233.75, has been agreed, as I understand it.
71. MR JUSTICE RICHARDS: Thank you very much. What do you say about your paying both those sets of costs?
72. MR WATSON: I cannot resist those applications.
73. MR JUSTICE RICHARDS: In the ordinary course one looks carefully at an application for a second set of costs, but it seems to me that where, as here, the contention was that there was no evidence on the point, and evidence therefore had to be filed in this court in order to show what was before the Inspector, that it was entirely appropriate that Mr and Mrs Emery should file that evidence and that the claimants should therefore pay the costs of Mr and Mrs Emery as well as the costs of the First Secretary of State.
74. The costs of the First Secretary of State will be summarily assessed in the agreed sum of £6,710 and those of Mr and Mrs Emery will be summarily assessed in the agreed sum of £1,233.75. Is there anything else?
75. MR WATSON: No. I am grateful.
76. MR JUSTICE RICHARDS: Thank you very much.