Case No. UKUT-0237-(LC)-UTLC-No:-LC-2021-261

14.The appellant owns and runs the farming business conducted from the Sternberg family estate across 3,500 acres in East Sussex and Kent. The Court Lodge Estate is an 800 acre block of farm land which includes the Oast House and equestrian buildings at Court Lodge Farm, in East Sussex, together with further houses and buildings at Old Place Farm, in Kent. A mile-long track through the estate connects the two farm centres, crossing the Kent Ditch which forms the county boundary. The equestrian centre and associated paddocks and facilities at Court Lodge Farm extend to approximately 3.5 acres. The Oast House is a five-bedroom detached house in the personal ownership and occupation of a member of the Sternberg family.15.At 1 April 2010 the directors of the appellant were Francesca and her sister The Honourable Rosanne Sternberg, together with Mr James Corrin and Mr Stephen Harlow in their roles as advisers to the family. Rosanne’s daughter, Jessica Sternberg became a director on 25 March 2013.16.The Sternberg family are keen equestrians who specialise, and compete internationally for Great Britain, in the Western riding sport of reining. To be eligible to compete, individuals must be non-professionals who earn no income from training or showing astride in any equestrian discipline. Therefore, no commercial enterprise is run at Court Lodge Farm and the only family member who has worked commercially in the sport is Francesca’s husband, Mr Douglas Allen. All the family horses are kept in the two stable blocks at Court Lodge Farm, although a few loose boxes are available at Old Place for isolation or to keep a horse overnight if someone has chosen to ride home rather than drive.17.It was agreed that the layout of the site on the date of my inspection, which was unchanged from the photograph provided by Mr Stearn in his written evidence, should be taken as representative of the layout at the material day, being 1 April 2010. The buildings at Court Lodge Farm are shown on the plan below, with coloured lines indicating separate titles but not necessarily hard boundaries on the ground. The buildings remaining in dispute between the parties are labelled Stables 1, Stables 2, Hay store and Mess room. Originally the Barn was also treated by the respondent as non-domestic, but that point was conceded before the hearing. The VO accepts that it is now domestic property and at the material day was either domestic or agricultural. The appellant accepts that the indoor arena complex (“the arena”) and other facilities on the north side of the track are non-domestic.18.The parties helpfully provided an agreed chronology of ownership and occupation, which I now summarise. The appellant acquired Court Lodge Farm in 1983 (through its subsidiary Court Lodge Farm Ltd) and shortly afterwards transferred ownership of the Oast House (outlined red and comprising the Oast House, the cloister and two out buildings) to Rosanne. The appellant acquired the adjoining Old Place Farm on 30 April 1991, whereupon Francesca moved into the farmhouse at Old Place, where she has remained, although with no formal agreement for occupation. On 13 May 2009 Rosanne transferred ownership of the Oast House to Jessica and moved overseas. The transfer was subject to a restriction preventing disposal without the consent of Rosanne, care of the appellant, and subject to an option to purchase in Rosanne’s favour. On 13 December 2010 the appellant transferred ownership of the land outlined green ( a courtyard with the Barn and Mess room) to Jessica, subject to a right of pre-emption in its favour. Land and buildings remaining in the ownership of the appellant are outlined blue and include Stables 1, Stables 2, the hay store, indoor arena and land to the north. At the material day the appellant owned the stables, together with the area outlined green, and Rosanne owned the Oast House.19.When Court Lodge Farm was acquired, there was a range of stables and open storage buildings in the grounds of the Oast House, which are now a cloister feature of the garden. There was also a dilapidated stable building on the site of Stables 1. Stables 1 is a steel portal frame building housing 10 loose boxes, a tack room and grooms’ rest room. Its exact date of construction is not available, but is assumed to be in the mid-1980s. Stables 2 is similar in construction to Stables 1 but simply houses 10 loose boxes. It was constructed in 1991, after Francesca had moved to Old Place and needed provision for her horses also to be stabled at Court Lodge Farm. At that time only a small indoor arena, some stalls and a grain store existed on the site of the current arena.20.Francesca confirmed that it was the intention of the family to buy back the Oast House and the courtyard should Jessica decide to sell her the freehold interest in them. Both titles are subject to rights of pre-emption, but for the Oast House the right is in favour of Rosanne, who lives overseas. However, she remains a director of the appellant and has obligations to it. The appellant company would always wish to have a house at Court Lodge Farm.21.The enlargement below shows the layout of the area between the disputed buildings and the Oast House. Where there is no hard boundary on the ground, title boundary lines have been removed. The courtyard area between Stables 1, the Mess room, the Barn and the back of the cloister in the Oast House garden, can be closed off from the access track by two gates as indicated. Otherwise there are no barriers within that area, which is open through to the Oast House with a common brick surface. The access doors to the two stables buildings are indicated on the plan in red, at points A to E, with no direct access from one building to the other. Doorways A to D have sliding doors and doorway E is a roller shutter. Doorway A provides access into the courtyard. Doorways B and C give access to a small area which is part enclosed with rails and can be closed off when necessary with a chain across the gap. Beyond that is the large open concrete yard in front of the arena, through which access to the remainder of the property passes. Doorway D opens out to a concrete area next to the Hay store and is accessible by tractors.22.In 2006 planning consent was granted for the arena as it stands today, labelled on Google maps as Bodiam International Arena. In 2010 consent was granted for minor amendments to the original design, subject to conditions which included a restriction on the number of events which could be held annually, based on historic use. This amounted to 17 events per year, each lasting three to four days. The arena building is of steel portal frame construction measuring 74.46m long by 36.58m wide. The majority of the space is dedicated to a riding arena with a special deep sand surface suitable for reigning. Riders enter the arena half way down the long east side, through an area fenced off to allow space for six demountable loose boxes and for storage. An area the full width of the building on its south side is dedicated to administrative use, with a viewing gallery above it.23.The building described as the Mess room was used between 2010 and 2015 for a grooms’ mess room, tack room and hay store, with one room also used as a farm office. The farm office was relocated to the arena in 2011. In 2013 planning consent was granted for residential conversion for a holiday let, but work on the conversion did not commence until 2021.24.The two stables buildings and the arena were erected at the cost of the appellant. As at 1 April 2010 both sets of stables were full with horses used for competing by Francesca, her husband and Jessica, together with a pony or two for use by Francesca’s children. The horses were owned by and registered in the names of the various family members. Some horses were bought in but many were bred by the family specifically for the sport of reining. The individual stalls were allocated as necessary between the family’s horses without permanent allocation to any family member. The keep of the horses, including feed, bedding, farrier and vet bills were all paid by the appellant. Grooms were paid by the appellant but hiring was done by Francesca and Jessica, who also gave directions to the head groom and allocated horses to individual stalls within the stables.25.An extract from the appellant’s accounts for 2009 to 2013 shows income and expenditure for the family’s equestrian activities, conducted under the name of Sterling Quarter Horses. Income was received from livery, training, horse sales, breeding and arena hire. Commercial income included arena hire, livery and training, all of which was generated at the arena, with liveries only ever stabled in the six stables within that building. Income from horse sales and breeding was not considered to be commercial income.26.Electricity and water at Court Lodge Farm have always been shared between all the equestrian buildings and the Oast House, with only one meter on site for each service. The cost of both services is paid by the appellant and then apportioned in the accounts between the arena, the stables, and the Oast House using an agreed formula.