Lands Tribunal for Scotland

OPINION

Glenmore v Transco

Introduction

By the BG Transco PLC (St Fergus. Aberdeen) (Ellon) (No. 31) Compulsory Purchase Order 2000 (the “CPO”) approved on 9 August 2002 the respondents (“Transco”) acquired a servitude right to construct a gas pipe of an external diameter not exceeding 1220mm within a strip of land extending to 380 by 24.4 metres within the land owned by the claimants at Inverebrie, near Ellon (the “subjects”). In their written pleadings the claimants seek compensation only for loss of development value of the retained land and for fees incurred. However, they understood that their claim included a right to compensation for the servitude right itself. As this had not been disputed they had not made express reference to it.

Prior to the hearing, Mrs Strathdee had asked permission to represent the claimants at the hearing. She was a director of the company. She was warned of the potential difficulty of attempting to present a claim of this size without proper legal assistance but the tribunal was prepared to allow her to act on behalf of the company if so advised. At the hearing Mrs Strathdee did not attempt to conceal the fact that she was acting largely on the advice and instruction of Mr Graham, a chartered surveyor who had acted for the company as land agent and who was to give evidence on their behalf. She opened proceedings by starting to read a formal statement of claim. However we were told that, in essence, this was to cover the material already set out in the written pleadings. We accordingly proceeded to hear evidence from Mr Graham. He gave his evidence without intervention by Mrs Strathdee although she put some questions to him at the prompting of her husband. Although there had been no intimation of her husband as a potential witness it appeared appropriate that he should give evidence after Mr Graham. He duly did so. When the respondents’ witnesses were led it became clear that Mrs Strathdee intended to act simply as a mouthpiece for questions formulated for her by Mr Graham. We accordingly invited the claimants to consider whether there should be a formal change in representation and she was plainly relieved to allow this to be done. In effect, we have treated Mr Graham as representing the claimants throughout. It may be noted that we did not understand Mr Graham, at any stage, to purport to act as an expert witness. He was the land agent who had been directly involved on behalf of the claimants throughout the whole relevant period.

The respondents were represented by Mr Gavin MacColl, Advocate, instructed by Tods Murray Solicitors, Edinburgh. He led evidence from Mr Stuart B McDonald, the Project Manager in overall control of the pipeline project and from Mr Peter Annand MRICS an Associate Director of FPD Savills, a land agent who acted for the respondents throughout the whole material period.

We heard evidence on 7 and 8 October 2003 at Edinburgh. We did not consider it necessary to carry out a site inspection.

The relevant statutory provisions are contained in the Gas Act 1986 at schedule 3, paragraph 24. This inserts a new section 61 in the Lands Clauses Consolidation (Scotland) Act 1845 for the relevant purposes. Nothing turned on the detail of this and it is unnecessary for us to set this out. No direct reference was made to case authority. Mr MacColl cited J Rowan-Robinson, Compulsory Purchase and Compensation, 2nd Edition.

The following facts were either admitted or were not seriously in dispute.

  1. The claimants are a company which operates by purchasing farms with a view development on the land.
  2. As part of their business they purchased the subjects with entry at 20 March 1998.
  3. At the time of the purchase a 36 inch gas pipe ran through the subjects.
  4. At the time of purchase Mr Strathdee was aware that there was a pipe running through the land. He had seen markers. However he completed the purchase without checking any detail of the pipe, either in relation to its precise route or its dimensions.
  5. The previous proprietor had in hand preparations to use the land for forestry purposes. A Woodland Grant Scheme (“WGS”) was being considered.
  6. Prior to purchase the claimants had identified various sites on the subjects where they thought that there was a possibility of obtaining planning permission for development for housing although they recognised that development for housing in the countryside was contrary to the general policy of the then current local plan.
  7. This was in accordance with the claimants’ normal practice. Mr Strathdee had a good record of having identified potential sites for building dwelling houses on land where such development would appear to be contrary to planning policy. By identifying various special features of the sites he had been able to obtain planning permission. He used various methods with a view to increasing the chance of obtaining planning permission. He would proceed by making changes within the scope of the consent available for agricultural developments. These developments could be made with a view to being adapted to domestic use. For example, he might introduce a water supply for a cattle trough which could later be used for domestic purposes. A particular permitted development which could have an important bearing on the likelihood of obtaining planning consent was afforestation. An open site in the countryside which did not fall within the permitted exceptions under the local plan would be unlikely to obtain planning consent. Where such a site was well screened by trees, different considerations would arise. He had frequently proceeded in face of opposition of planning officials. He had on occasions appealed adverse decisions of planning committees. He had a high percentage record of success in relation to sites where he had actively sought planning permission.
  8. The potential sites he had identified at Inverebrie had features such as proximity to existing boundaries, existing access, or proximity to existing features such as other buildings or developments of some sort.
  9. After obtaining entry to the farm Mr Strathdee revised the detail of the proposed WGS. The proposal had covered the entire subjects. His revision excluded planting on some eight sites which he had identified as potentially suitable for housing. The application for WGS was made in about November 1998.
  10. In November 1999 the claimants received notification that it was intended that the St. Fergus to Aberdeen 1220mm gas pipe line would run through the subjects.
  11. The documents sent with the intimation (the “Dear Farmer” pack) invited proprietors to enter an agreement permitting the land to be used for the pipeline and, in particular, permitting it to be used for the “transmission or storage of gas”. If agreement was reached, owners would be expected to enter a deed of servitude setting out the whole terms and conditions of the arrangement.
  12. The claimants were concerned about the effect the pipeline would have on the prospects of developing sites for housing. They reasonably sought to make the best of their position by following a number of different avenues. They offered to make a payment of £20,000 towards the cost of re-routing the line of the pipe to avoid their land. This was an offer made in good faith in the hope that it might prove persuasive. It was considered on behalf of Transco but it was thought that the figure was unrealistic and in any event it proved impractical to change the line. The claimants were advised that for the purposes of the Gas Act there was a distinction to be drawn between transmission and storage of gas. They accordingly sought, in negotiation, to share in what they perceived to be the extra value from use of a pipe for storage of gas as opposed to use of it for transmission.
  13. With a large capacity gas pipe the question of distinguishing use for “storage” as opposed “transmission” within the meaning of the Gas Act potentially raised difficult questions of mixed fact and law. The claimants took advice on this matter from Boreas, technical consultants, and from senior counsel. They were advised that there was a question of whether the use of compulsory powers by a company such as Transco raised questions under the European Convention on Human Rights. They took expert advice on these questions.
  14. The claimants sought to persuade the representatives of Transco that the site had development value for housing. They referred to their experience and to the identified potential sites. They sought some recognition of this. Alternatively they sought to have the terms of the standard deed of servitude varied to give them a right to compensation where the presence of the gas line was referred to as a reason for refusal of planning permission. It is appropriate to note at this point that we heard some discussion as to the proper use of terms such as “hope value” and “development value”. We use the latter term in a broad sense.
  15. The claimants recognised that to obtain a grant of planning permission for any of the sites identified by them would not be a straightforward process. They expected opposition from planning officials. They recognised that they might have to go to appeal. Their strategy would be to take one site at a time. If permission was granted for the first site they would then seek another. In some circumstances they might proceed with two applications at once. Their view was that, although they might be able to overcome objections to planning on many policy grounds, either by adjusting the nature of their development or by persuasion, they would not be able to effect any change where planning permission was refused because of the pipe. This was a reasonable view for them to take.
  16. Mr Graham attended several meetings with representatives of Transco when these various matters were discussed. However it became plain that Transco would be unlikely to be persuaded to vary the standard deed of servitude. They would not accept that there was any potential development value in the identified sites. It was recognised that the only avenue available for resolution of the various issues was to force Transco to proceed by way of compulsory purchase order. This would have two consequences. In the first place it would mean that the rights taken would exclude all reference to use of the pipe for “storage” because the statutory authority was limited to ‘conveyance of gas’. It would also allow all questions of compensation to be determined formally by application to the tribunal.
  17. The claimants opposed the CPO until a late stage. Parties had meetings, correspondence and telephone discussions about the CPO. Eventually by letter and acceptance of 19 February 2002 and 7 March 2002 it was agreed that no objection would be made to the CPO and that “all matters relating only to the compensation and recompense of fees incurred as a result of this process may be referred to the Lands Tribunal for Scotland for determination”.
  18. Parties were agreed that this letter did not fall to be treated as an agreement to refer issues of expenses in the CPO procedure to the Tribunal under section 1(5) of the Lands Tribunal Act 1949
  19. The claimants in fact permitted Transco to enter their land to lay the pipe. They took entry on 17 April 2002. They laid 380 metres of pipe near the north-west boundary of the land. It was all “heavy wall” pipe.
  20. Mr Graham believed that the nature of the pipe was such that the Health and Safety Executive (the “HSE”) operated a “consultation zone” policy on each side of the pipe. As a result of an article in “Scottish Farmer” in November 1999 he had understood that the implication of this was that no house could be built within 435 metres of the pipeline.
  21. However, by letter of 20 March 2000 Mr Annand wrote to point out that this was incorrect. He explained that there was a consultation distance within which the planning authority would refer to the HSE. By March 2000 Mr Graham had possession of a document dealing with this matter. The provenance of this was not established. However it was a document which described the consultation distance as being 524 metres. It explained that within this distance the authority would have to identify the nature of the type of use and “having established which category is most applicable and having regard also to the size, nature, number and type of occupants etc (which is also relevant to the assessment) the authority by reference to a risk matrix would then – allow, consult with HSE, refer to Transco, or refuse development”.
  22. After the present proceedings were raised, Mr Graham and Mr Annand had some further discussion about proposals for agreement of some sort in relation to the claim. In course of discussion in July 2003 it was disclosed that part of the pipe within the subjects was laid in heavy wall piping because of proximity to an existing dwelling house. Both Mr Annand and Mr Graham recognised that use of heavy wall pipe instead of standard thickness pipe would have implications for potential development. Mr Graham asked for precise detail of the parts of the pipe installed using heavy wall pipe. Mr Annand obtained information in August showing that the entire pipe laid within the subjects was heavy wall. He did not tell Mr Graham. The existence of heavy wall pipe throughout the 380 metres was disclosed to Mr Graham in course of his giving evidence.
  23. Mr Graham had made no attempt to investigate the detail of the implications of the consultation zone.
  24. In 2003 the HSE published a document, the “PADHI” Guidance, which set out full detail of the implications of the consultation zone. In particular, it explained the implications of the “risk matrix”. This guidance was in preparation in April 2002 and details of a similar policy would have been disclosed to enquirers at that time.
  25. Any application for planning consent within the consultation zone would be passed to the HSE and to Transco for their comment. Mr MacColl, for the respondents, said that as there had been some confusion as to figures he was content that the larger figure be taken in each case. On that basis it could be assumed that the consultation distance was in fact 380 metres. Any application for planning permission for development within that distance from the pipe would require consideration by the HSE.
  26. When applications are notified to the HSE they determine whether or not to advise against the granting of permission by reference to the PADHI Guidance. This discloses three zones which, for present purposes are accepted as an inner zone of 115 metres, a middle zone lying between 115 and 250 metres and an outer zone between 250 and 380 metres, all from the centre line of the pipe.
  27. Had the HSE been asked to advise on an application for development of a single dwelling house they would not have advised against planning consent even for a house falling within the inner zone.
  28. Only one of the sites identified by the claimants as potential house sites lies within 115 metres of the pipe. No evidence was led to show where the building itself would be situated within the site. Parts of the site were outside that distance.
  29. The compulsory purchase order allows for a distance of 12.2 metres on either side of the centre line of the pipe to be reserved. This would be required to allow Transco to have access to the pipe for maintenance or alteration. Accordingly no housing development would be permitted within the 12.2 metres of the pipeline.
  30. Local planning policy includes a presumption against housing development at the subjects. This could be seen from the local plan in force at 17 April 2002.
  31. At 17 April 2002 the open market value of the subjects for agricultural purpose was £4,100 per hectare.
  32. Proprietors who entered a deed of servitude were paid for the servitude right at a rate based on a figure of £7,500 per hectare. This was recognised to be a rate in excess of the open market value. It was an incentive to agreement. The agreed rate was 80% of that figure.

Submissions

Submission for Claimants

It was agreed that the submission would be presented by Mr Graham. He referred to the written pleadings. He said the claim was for “injurious affection” in terms of the Gas Act 1986. He made no further submissions on matters of law and we have endeavoured to give weight to submissions on the factual detail of the claim in our discussion below. He had not understood that there might be a distinction between fees incurred in course of negotiation and fees incurred as part of the present process. He was advised that these latter would fall to be dealt with under the usual procedures for expenses.

Submission for Respondents

Mr MacColl made detailed submissions as to the nature of the evidence and the reliability of witnesses. We have again tried to give appropriate weight to submissions on factual issues when considering the contentious factual material. It may be said that in this case we gained little assistance from any comparison between the supposed reliability of witnesses. We accepted that all the witnesses were acting honestly.

Mr MacColl accepted that the basis of assessment was set out in the said third schedule. He referred to Rowan Robertson para. 15.03 for a convenient summary of the matter. He submitted that normal rules for compensation were to be applied. Although he accepted that the real issue was whether or not hope value had been established at the valuation date of 17 April 2002, he submitted that on a proper analysis this fell to be seen as part of loss of value of the land.

The issue was whether loss of hope value had been established in relation to any of the three sites which could be seen to fall within the consultation zone. His prime submission was that there was no evidence upon which it could properly be concluded that there was a hope value in relation to any of the sites, let alone for the specific sites falling within the zone. He submitted that the claimants had three hurdles to cross. In the first place it was necessary to show that there was a realistic expectation of development of the type contended for on the particular sites at the relevant date. However, the second hurdle was of greater significance. Even if there was some quantifiable hope value in respect of any site, it was for the claimants to show that this had been lost because of the pipeline. There was no evidence to support this. The effect of the evidence was simply that no house could be built within 12.2 metres of the pipe. There was no suggestion that any house was planned within this distance. Mr MacColl suggested that there was a third hurdle in that the claimants required to show not only that the land was blighted for development, but that there would have been demand for such development. He did not press a submission that this was not established.

He pointed out that the claim was based entirely on the loss of hope value. No claim had been stated in respect of the servitude right itself. He accepted, however, that on one view of the evidence it might be said 80% of market value was an appropriate rate.

In relation to the claim for fees he submitted that as the claimants were registered for VAT they would be able to reclaim it and this should not be part of a claim. He accepted that if the tribunal were satisfied that any fees were reasonable in relation to the claim for compensation they could be allowed. However the evidence was entirely vague. Most of the expenses would relate to the CPO and to other items which, properly analysed, did not fall within the scope of assessment of compensation for disturbance. He made various submissions as to the detail of the invoices and we consider these below.

He accepted that the tribunal would be able to take a broad approach to the fees and that if they were satisfied that some fees must have been incurred a broad approach would be appropriate.

Discussion

It was not disputed that the claimant would be entitled to compensation for loss of potential development value of the subjects if any such loss was established at 17 April 2002. There was a question as to whether such loss fell properly within the first or second part of said Section 61 but it was accepted that it could be dealt with by reference to the alleged loss of individual house sites. Accordingly, there are three questions. Has it been established that there was any development value in respect of any of the eight sites? If so, has that been lost? If there has been an identifiable loss what is the proper measure of it?

Although it is appropriate for us to look at the whole evidence it is relevant in assessing the weight of that evidence to have regard to the way in which it emerged. This was indicative of an approach based on generalities rather than detailed assessment. As will be seen, we attempted to bring out aspects of the evidence but, at the end of the day did not find it of adequate weight. We are satisfied that this was a characteristic of the nature of the claim rather than simply a technical failure of presentation.

The written claim proceeded on a bald narrative that seven (sic) potential house sites had been identified, “five of which will be affected by the gas pipeline”. It was said that “an article in the Scottish Farmer in November 1999 confirmed that the HSE proposed to prevent development within 435 metres of either side of oil or gas pipelines” and that “the impact of this would be to completely destroy …. proposals for …. development of five plots”. The claim, initially said to total £265,000, corrected arithmetically to £225,000 at the hearing, was set out in tabular form for loss of “five building plots” at £65,000 each, less “development costs” of £20,000 each. No further detail relevant to this loss was provided. This contrasted with an elaborate narrative of attempts at negotiation with Transco including reference to the proposed re-routing and reference made to the propriety of the CPO having regard to the European Court of Human Rights legislation. The wealth of detail provided on matters extraneous to loss of development was, we understand, intended to support the claim for fees which we deal with below.

Transco provided detailed answers to all points. They did not accept that seven sites were identified or that five would be affected by the pipeline. They pointed out that the land had not been designated for development by the local planning authority. They contended that what had taken place on other farms and with respect to other planning permission was irrelevant. One particular assertion gave us concern. It was said that: “the gas pipeline development by the Respondent would be a material consideration in any planning application for housing development by the Claimant which would in consequence have been likely to have been refused”. They further asserted that : “The current development plan does not specify the site as developable for housing and the Claimant’s assertions thereon are therefore wholly speculative and irrelevant and should not be taken into consideration in assessing any compensation which may be payable.”

In response the claimants set out, in careful detail, examples of their history of purchasing farms which were not designated by local planning authorities for development but in respect of which they had been able to obtain certain planning permissions for housing. These farms did not lie within the same planning jurisdiction as the subjects. They asserted that the installation of a gas pipe had removed the opportunity for this development and referred to the document described as a ‘planning brief’ which referred to a consultation zone for planning purposes of 524 metres from the pipeline. Although this response contained a great deal of detail of this planning history and further detail of the claimants’ reasons for thinking that no meaningful negotiation had taken place, it did not add to the detail of the claim for compensation. However, the response did add assertions of which the following are representative: “Our argument in this matter is that by the very purchase of the farm by Glenmore Properties the actions they took in establishing a Woodland Grant Scheme and in having already made claim for two planning consents accepted ……. my clients have shown that the value of the land was increased on the day immediately before the proposed pipeline plan was announced. It is this loss my clients are claiming over and above the loss of agricultural land value”. “My clients believe that by showing other developments on similar properties that land in their ownership has an increased value”.

It may be said that the respondents seemed to latch on to this latter proposition as representing a flaw at the heart of the claimant’s case. Land would not have potential merely because it happened to be owned by Glenmore Properties, however skilled they might have been in obtaining planning permission. We are satisfied, however, that this challenge is over simplistic. Glenmore selected the land because they thought it had development potential. The pleadings sought to show that they had a proven eye for development potential. We accept this. Some weight can be given to it. However, the substance of the challenge is that it is not enough to say that an experienced person thought he would get planning permission. Both the tribunal and the acquiring body must be put in a position to examine the reasoning behind that view in relation to specific sites. The claimants made no positive attempt to do so.

Mr Graham gave evidence, which we accepted, of Mr Strathdee’s track record as a developer. He had been very successful in finding agricultural land with features which allowed him to persuade the planning authorities to give consent to development which was not in accord with general policy. The company had purchased some 27 farms. They had received planning permission for 211 houses on sites where such development was against the presumptions of planning policy. Some 56 applications for such development had not been successful but we understood that in respect of about 25 of these the appeal process had not been concluded. The reference in the pleadings to two planning consents at the subjects related to acceptances by the planning authority that proposals for agricultural development were within the general permission available for such development.

Mr Graham was the only witness intimated by the claimants. When giving his own evidence he made no attempt to justify the value of the loss claimed by reference to anything other than his clients’ experience. He did make passing reference to the WGS as creating an environment relevant to planning. Planning permission was more likely, he thought, to be granted when there was forestry screening. He gave some evidence in support of his plot value of £65,000 by reference to a site at Troves Farm near Elgin. However his other evidence in relation to quantification was limited to telling us that he had made a deduction of £20,000 for “the costs of getting planning permission and development of the sites”.

In cross examination, Mr Graham was invited to accept that, by reference to planning policy as set out in the local plan extant at 17 April 2002, planning permission for housing would have had to be refused. However, when referred to the text of the local plan he raised, for the first time, the argument that the proposed developments might possibly fall within one or other of the specific exceptions to the presumption against housing in the countryside: Policy AC/H7 (e) and (f). The former, (e), was in the following terms: “a single house closely related to an existing small compact group of at least three houses”. When pressed on the detail he sought to take refuge in the proposition that there was in any event a realistic expectation of more liberal planning policy. This was challenged by Mr MacColl under reference to the new structure plan and local plan. The relevant policies appeared to be in terms substantially the same as the earlier version but the particular exemption founded on now makes reference to a site “within an existing cohesive group of at least five houses”. It was put to Mr Graham that the increase from three to five pointed away from any relaxation. He countered by saying that this depended upon what was meant by “a cohesive group” as opposed to “a small compact group”

However, there was nothing in the evidence led and no inference we might reasonably have drawn from the small scale maps produced, to suggest that any site on the subjects fell within the exception (e) either as applicable in April 2002 or under the current development plan. Another suggestion which emerged in course of cross examination was that one site might be able to be covered by exception (f). This provided for; “cases where limited new-build housing development forms an integral part of a scheme to sympathetically convert a complex of existing vacant traditional rural buildings worthy of retention, to create a cohesive and satisfactory small group, and this would not adversely affect the character or setting of the original building.” Policy 12 (d) in the structure plan also provided for, “conversion of an existing non-residential vernacular building to a single house”. Mr Graham said that the claimants could use the available permission to erect a general purpose agricultural shed. They could build “in vernacular style” and, in due course, seek to convert this to a dwelling house.

Whatever we might have made of such proposals as part of a detailed exposition of intended development on the sites, we cannot accept this evidence as being of sufficient quality to satisfy us that development on any of the proposed sites would have fallen within the exceptions. It is, in any event, to be noted that these suggestions, emerging in cross examination, pointed away from the broad thrust of the case made in the pleadings and in evidence in chief, that the claimants’ particular skills would allow them to get permission in situations which were contrary to general planning policy.

Mr Graham is a surveyor and he did not purport to give evidence as a planning expert. However, he did express the view that planning permission would have been granted for all five sites within a fairly short period of years. Pressed by the tribunal to explain the basis of this he repeatedly referred to the skill and experience of his clients. It was only when asked to confirm that he could say nothing about the planning prospects for particular sites, that he explained that certain sites were near existing buildings and services, that certain others had existing access, and that one site could be fitted into the natural shape of a hillside. All sites would benefit from the screening of the WGS. This was evidence in the most general of terms.

In light of the apparent limitation of the evidence from Mr Graham, Mrs Strathdee was encouraged, if she saw fit, to lead evidence from her husband. She was given an opportunity to consider her position in discussion with her husband and Mr Graham but she indicated that she had no reservation about leading him. He sought to start by giving evidence that he did have experience of obtaining planning permission from sites in the local area. This was objected to as having no basis in the pleadings. We sustained the objection. Such evidence came too late.

Mr Strathdee then explained his broad policy of taking every opportunity to improve prospects of obtaining planning permission. When considering a farm for purchase he would look at all its potential. He would look at what had been said at meetings of the planning committee. He applied various general tests. For example he would seek a site with existing services; one that was not on a trunk road; one that had appropriate hilly backdrop or one where development could take place near existing boundaries. He would seek sites where there was no likelihood of neighbour objection. He would choose land which was not of great agricultural value. He would use his knowledge of comparable permitted housing development and accompany any application with suitable photographs. He stressed that local plans were not cast in stone. He thought the sites at Inverebrie fitted all the appropriate criteria. They had not bought the farm with a view to farming it. They had, however cropped it until the WGS Scheme was approved. It was some time after that that he first learned of the intended pipeline.

He told us that in relation to his intimation of an intention to build a general purpose agricultural shed, there had been a good deal of discussion with planning officers. There had been a lot of changes to the application before they had indicated that it was acceptable. There was no suggestion that the proposal which had been approved had been for construction of a stone shed in vernacular style. This evidence of difficulties in getting clearance for a shed – which was, in principle, a permitted development in the countyside - might have been thought to justify an inference adverse to his chances of obtaining consent for housing. But Mr Graham evidently did not see it in that way. He thought the planners’ main concern was with size and design rather than location.

Mr Graham’s evidence that the claimants were either the sole or in any event one of few aspiring developers in relation to farmland in Aberdeenshire, seemed to us to indicate that the market did not recognise a realistic development value of the type he described. This is not conclusive but indicates a need for the claim to be supported by persuasive evidence.

Mr Strathdee did not give evidence of the detailed features of any of the particular sites. His evidence must be taken as directed to the proposition that all eight sites would be likely to obtain planning permission. The evidence can, again, be described as expressed in the most general terms. It must be noted that the claimants had been prepared to lead evidence, from Mr Graham, of the detail of Mr Strathdee’s experience under the planning authorities of Highland and Moray. We declined to hear that evidence: (a) because it was not disputed that he had a successful record of obtaining planning consents which were not consistent with normal planning policy; and (b) it was not appropriate to take time to examine the detail of collateral transactions involving different planning jurisdictions, particularly when there was no notice of how such transactions bore on any sites at Inverebrie. There was no attempt to give detailed evidence of the development potential of specific sites within the appeal subjects and, accordingly, the question of supporting such evidence by reference to experience either in the Aberdeen area or elsewhere did not arise.

Against this evidence was the evidence of Mr Annand. However, his reasoning was also expressed in very broad terms. He had assessed the situation in April 2000. He did not think any housing development would be permitted. He had considered the sites but had not assessed them by reference to the effects of maturing woodland. He did not think it would make any difference. He placed great reliance on the planning policy documents. However, he accepted from Mr Graham the proposition that housing development was allowed by the relevant Aberdeen planning authority, from time to time, in circumstances which were contrary to the normal policy. He accepted that the presumption against development was only a presumption. It was not rigid. We did not find that the evidence of this witness took us much beyond the presumption against housing development established from the development plan.

We are entirely satisfied that hope value can exist in respect of potential development contrary to existing planning policy. For example, this might arise where there was some justification for thinking that planning restrictions would change. It might also arise where there was evidence of special features of a site which might reasonably be expected to justify relaxation. However, we did not find persuasive the various vague and disjointed attempts to bring the circumstances of the present case into the latter category. Proximity of a site to an existing building is not a special feature in the countryside. Access roads and tracks are common. Any site in proximity to an existing building is likely to be close to existing services. If weight was to be given to these assertions, every farm with existing buildings would have development potential. If the market recognises such potential then it can be assumed to be an element in current valuation of agricultural land.

We have, however, some sympathy for the claimants. We do not doubt that they had a genuine expectation of being able to profit from their investment in the land by realising some housing value in addition to the added value derived from the WGS Scheme. Mr Graham did not dispute that their position was that obtaining planning permission would not be easy although this was accepted in the context of the proposition that the existence of the pipe would make it impossible. Plainly, however, the claimants had the confidence of their experience that they would in fact be successful. There was, perhaps, little more to be said because there appeared in the circumstances no point in attempting to develop planning proposals for any particular site. At the end of the day, although we have considerable reservation as to the quality of evidence, we are prepared to proceed on the basis that our acceptance of Mr Strathdee’s skill and experience allows a conclusion that there was a reasonable expectation that he would eventually gain some form of planning consent for some housing development at the subjects.

But, in accepting that there might have been a prospect of obtaining planning permission for one or more sites at the subjects, we have found entirely unconvincing the underlying contention that all eight sites would get permission. Of course, it was not expressly contended that they would. Mr Graham limited himself to the five sites which he initially took to be affected by the pipe. But the strategy would be to apply for one at a time. There was no suggestion that there was any characteristic which would make a group of houses more likely than a single house. We heard nothing to suggest that if one site was allowed at Inverebrie, planners would be more likely to allow two, or that if two were permitted this was more likely to lead to a further one. In light of the presumption against building in the countryside, the normal inference must be that the contrary would be true. Each extra house would be more difficult. In short, there was nothing in the evidence which would support the view that consent for a proliferation of houses would ever be obtained at this location.

We can deal with the second question, accepting on balance of probabilities that there was a reasonable expectation of consent for two house sites at the subjects. As we have seen, the claim that the pipeline removed any such expectation was said in the pleadings to be based on an article in the ‘Scottish Farmer’ in November 1999 to the effect that development within 435 metres of the pipe would be prevented. However, the claimants were plainly aware, long before the application to us, that this was not so. Indeed in the response they referred to the document, described at finding in fact No.21, which made it clear that the question was not clear cut. They had been told this by Mr Annand. The evidence was that they had made no attempt to find out the true position.

We are satisfied on the evidence that housing would not be permitted within the 24.4 metres strip in respect of which the respondents were given rights by the CPO. There was, however, no suggestion that any of the proposed development would have come within such a distance. We are satisfied that if application was made for up to two houses within 115 metres of the pipeline, the HSE would not have advised against development. If application had been for three houses within 115 metres of the pipeline, the HSE would have had to consider the implications of the difference between standard and heavy wall pipe at the location. The zones set out in finding in fact No.26 were calculated as applying to the whole length of the pipe and were based on standard wall thickness. Although there was some confusion as to precisely how the HSE would approach the matter of heavy wall pipe, it was clear that the distances involved with such pipe would be significantly less than with standard pipe. We heard, for example, that when such heavy pipe was used the pipeline could pass safely within 3 metres of existing buildings.

In any event, only one site was shown on plan to lie within 115 metres of the pipe. That was shown as an extensive site with an apparent road boundary in excess of 300 metres. Parts of the site were shown to lie over 200 metres from the pipe. We had no evidence of the proposed position of houses within any of the indicated sites. Accordingly the evidence did not positively establish that any house would be within the inner zone for standard wall pipes. It tended to suggest that the pipe would not be a significant consideration in relation to any of the possible house sites when heavy walled pipe had been used. In other words, it has not been established that the pipeline will adversely affect development value whatever the real prospects of this.

It must be said that we considered that the respondents’ pleadings were misleading in appearing to concede explicitly that any planning application for housing development would have been likely to be refused because of the pipeline. We had approached the hearing on that understanding. However, the evidence showed that the claimants were or should have been aware that the matter was indeed one which required assessment of detail. For example they knew that not all sites were affected. Their own production lodged in April 2003 as part of the response to the Transco Answers, bore to show only four sites within “the Pipeline Consultation Zone”. They lodged the “planning document”, see finding No.21, which showed the need for assessment. Mr Graham was seeking detail of pipe wall thickness in July 2003.

The respondents relied on the PADHI Guidance. Although nothing was made of this by the claimants, that document referred to revision on 7 March 2003 and contained a narrative that the guidance had been “fully introduced in November 2002”. It would not have been available in April 2002. However, it was introduced as a result of work started in 2001. There was nothing to suggest that there had been any substantive change of HSE policy. In any event we conclude on the evidence that if enquiry had been made in April 2002 as to the attitude the HSE would be likely to take to future proposals, reference would have been made to the same type of guidance. The document accordingly provides an adequate basis for determination of loss of development value as at April 2002.

The claimants, faced with the realisation that the existence of the pipeline would not have prevented the development proposed, sought belated refuge in the assertion that there would be no point in attempting to develop housing in the general vicinity of the pipe because of the public perception of risk from pipelines. When it was pointed out that there was an existing pipeline running through the subjects, Mr Graham stressed the importance of the size of the pipe. He had thought the existing pipe was only 24 inches. His contention was that as the new pipe was a very big pipe, the public would not be prepared to buy plots in the vicinity of it.

Mr Strathdee told us that although some pipes were not a problem he himself was particularly scared of gas pipes. He thought that other people might be put off. He accepted, however, that he had bought the land knowing of the existence of the original pipeline but making no enquiry about it.

On this matter, it is sufficient to say that we accept the evidence of Mr Annand that if planning permission was given for a site, the existence of the pipeline would not significantly affect the market price. Any potential purchasers would be able to satisfy themselves on enquiry that the pipe was safe. There was no significant difference in this respect between a 36-inch pipe, such as that already running through the subjects, and the 48-inch pipe. Although, of course, the capacity was significantly greater there was no evidence as to why that fact would radically affect public perception of risk.

It should be said that, although we have not placed any positive reliance on the existence of this pipe in reaching our conclusion on the essentials of the claim, we think the lack of any positive attempt by the claimants to examine the implications of the existence of the 36in pipe when they bought the site or to address its presence explicitly when seeking to make a claim for loss of value, justifies various inferences adverse to their claim. The pipe ran through one of the five claimed sites and four of them were closer to it than to the 48in. pipe. If there was an assumption that the development would be precluded within the consultation zone of a pipe, there could have been no serious thought that these sites could be developed. The consultation zone for a 36in. pipe might well have been less than for the 48in. one but any enquiry would have shown the need to assess matters specifically. There was no suggestion in the evidence led that the claimants had at any time made enquiry about that pipe and its implications for development. Quite apart from the planning aspect there was no acknowledgement that the pipe might present any physical difficulty for the site through which it actually ran. Further, Mr Graham’s attempt to deal with this problem on the simple basis that the 36in. pipe was in some sense an ordinary pipe and the 48in. one a “heck of a big one” simply emphasised the unsophisticated nature of the claimants’ approach. For completeness it may be added that seven of the original suggested sites are nearer the smaller pipe than the new one.

It may be added that if we had thought that there was an element of loss which required compensation we would have had difficulty with Mr Graham’s approach to the calculation. Of this, perhaps the less said the better. Even if a top price of £65,000 might have been achieved for a prime site we were surprised to find that no allowance was made in the written claim or, in the explanation in his evidence in chief, for risk or for the implications of deferred receipt of payment. We did not find entirely persuasive the response to the tribunal that these elements were intended to be covered by the flat £20,000 deduction allowed as “development costs”.

In sum, on the most favourable view of the prospects of the development of the subjects for housing, we are not persuaded that more than two or three sites would ultimately have been allowed but, in any event, conclude that the claimants have not discharged the onus of showing that the pipeline would prevent development on any of the indicated sites. Further, the claim was presented on the basis that the sites had equal prospects of success. Even if the pipeline might have had an adverse effect on some of the potential sites, any development value the subjects may have had for two or three sites could still be realised.

Although there was no claim in respect of loss attributable to the grant of a servitude itself, it was not seriously disputed that some award should be made. We did not hear evidence of the proper approach to this but we accept that where land has not been taken but simply made subject to a servitude some discount on full value is appropriate. We heard evidence of agreement at 80% and we heard nothing to justify a higher rate. We shall apply that to the open market rate which parties agreed to be reasonably stated at £4100 per hectare at the relevant date. Converting that to apply to a strip 24.4 metres wide at 80% gives a metre rate of £8. Accordingly our award under this head for the 380 metre run will be £3040.

Fees

The issue of professional fees does cause occasional confusion in relation to claims for compensation. Although the reasonable cost or expense of professional advisors assisting in matters related directly to “disturbance” or to the formulation of an appropriate claim can properly be taken into account as an element of compensation, there is no doubt that this falls to be distinguished from the professional fees incurred in relation to the application to the tribunal which will be dealt with as part of the “expenses” of the process. In this case the question also arose as to the right to recover professional fees incurred in relation to the compulsory purchase procedures.

A claim for recovery of fees has no explicit statutory basis but is accepted as a proper head of claim for disturbance. Courts and tribunals have tried, where possible, to give effect to the principle that a claimant is to be properly compensated for loss caused by the taking of his land or of rights in his land. That is not the same as being compensated for loss arising from unsuccessful attempts to prevent or limit the extent of that taking. In the present case no specific legal basis was advanced to support the claim for fees. Reference was made to the “Dear Farmer” documents sent to occupiers of farms on the line of the pipe at the outset. However, the passages which dealt with ‘Payments’, (“All reasonable professional fees incurred in relation to the pipeline will be met by Transco”), were admitted by Mr Graham to be expressed in the context of an expected agreement. It is entirely consistent with the principle of compensation for loss of land that such reasonable outlays should be recovered. This does not extend to fees incurred with a view to preventing or limiting the extent of rights taken.

In the absence of any argument to the contrary, we must proceed in this case on the basis that a claim for recovery of fees and time expended is based on a causal relationship with the compulsory taking itself. In other words, loss arising directly from the exercise of statutory powers. In so far as expense was incurred in successfully limiting what was taken, the claimants have had value. For example, work done with a view to preventing Transco from taking rights to storage of gas has been successful. In any event, that expense was in challenging the extent of the powers, and was not due to exercise of the powers.

Similarly, the expenses of the CPO process were not caused by the taking of the land or rights in land. They were caused by an attempt to resist. The basis upon which awards of expenses of such proceedings is made is a matter for the reporter in the CPO process. It is not a matter falling within our jurisdiction.

The vouchers lodged by the claimant provided little or no basis for assessment of amounts properly incurred. The explanation provided by Mr Graham made it clear that most, if not all, the work done by Boreas and by senior counsel related to attempts to challenge all or part of the CPO. (Although, of course, the expenditure was incurred before there was an attempt to resort to formal procedures.) The solicitor’s fees appear to have been directly involved in the same enterprise. Although Mr MacColl fairly conceded that the tribunal would be entitled, in the exercise of its discretion, to take a very broad approach, we cannot do so without some basis. While we have a good deal of sympathy for the claimants who have, no doubt, acted reasonably to protect their interest in face of compulsory expropriation, it is not clear that any part of these fees was aimed at assessment of compensation or at mitigation of loss. Further, having regard to the nature of the claim now presented, it is difficult to see that there would be any basis for this type of expertise to be involved.

It is clear that Mr Graham’s fees covered the whole spectrum of activity. We have no doubt that he was involved in meetings with his clients about the claim and that he made several attempts to persuade Mr Annand to accept that an element of development value existed. Although we have rejected his approach we do not consider that it was an unreasonable one to take in negotiation. We have little doubt that Mr Annand’s reaction was on too narrow a basis. As the respondents’ pleadings show, great reliance was placed on the formal planning material and the failure to take advantage of alleged rights under Section 25 of the 1963 Act. We are not satisfied that these factors met the thrust of the contention that some planning consent could realistically be expected despite adverse general policy. Proper presentation of evidence to justify this approach might have been expected to produce some compromise. However, the nature of the evidence actually led does not justify a conclusion that any significant time was incurred on matters of compensation.

It is, of course, up to claimants to state their claims for adjudication by us. They have to support them by adequate evidence. We recognise that there might be circumstances in which it would be appropriate to allow a continuation to let a party present further evidence. However, such circumstances would be rare. We see no justification for this course in the present case. In any event Mr Graham’s evidence gave no basis for thinking that this would simply be a matter of looking at records. It seemed clear that there was no separate chapter of negotiation dealing purely with quantification. Any attempt now to present a claim for time spent solely on compensation for disturbance would be likely to require broad assessments without any realistic prospect of a method of accurate checking. We do, however, accept that the evidence establishes that time was taken by Mr Graham on this. We must do the best we can with the material available.

Two fee notes were presented. The first, dated 27 October 2000 contained no specification of the work but was headed “Transco v Glenmore Properties Ltd”. It was for “35½ hours @ £75/hour = £2662.50” and expenses including mileage of £191.04. The second one, dated 4 October 2002, had the same heading but detailed the work as “Time spent negotiating with Transco since November 2000.” This was stated at 29 hours, again at £75 per hour, totalling £2175. A claim for mileage at £81 and a colour copy of the Record of State and Condition £4 was added. The total claim to 4th October 2002 was accordingly £5113.54 – excluding VAT.

We accept the fees as moderately stated and see no reason to doubt that they properly reflect work done. As we have seen, however, Mr Graham’s work included obtaining material as a basis for attempts to negotiate on the storage element and active involvement in the CPO procedures. The claim cannot be allowed in full.

However, we are satisfied that discussions up to November 2000 were essentially about compensation. Mr Graham attended a meeting with other agents on 23 May when the problems of making proper provision for loss of development value were discussed. Correspondence thereafter up to at least the letter of 12 December 2000 from Mr Annand tends to suggest that the parties were in no doubt that what Mr Graham was trying to do on behalf of his clients was to persuade Transco that the claim had a value beyond agricultural value and that this would not be protected by the terms of the deed of servitude on offer. We are satisfied that this was a reasonable argument, reasonably presented.

Greater difficulty arises in the period thereafter. In hindsight it can be seen that the point had been reached where further negotiation was not going to be fruitful. Indeed, it seemed that there followed an attempt to find material to challenge the basis of the attempt to acquire the servitude. We do not have detail of the timetables but we see senior counsel’s fee for revisals to note of objection to the CPO dated 31 January 2001. Mr Graham’s work must have turned to that matter some time before that date. We had no evidence of detail of continuing attempts to negotiate development value after that time. It may also be noted that Mr Graham was at pains to establish, both in his own evidence and in his questions to Mr Annand, that there had never been any real “negotiation”. Transco were not prepared to come and go in any way. We think that the lack of evidence of negotiation on quantum after about December 2000, probably reflects the reality that time after that was largely connected with the CPO process.

We must take a broad approach. We think that although the work to November plainly included some work on the merits of the compulsory acquisition, including the preparation of a memorial by solicitors for counsel’s opinion, it is reasonable to approach the matter by allowing the claim in full to that date and rejecting the claim for the following period. The sum allowed is accordingly £2853.54, rounded to £2900.

For the limited purpose of providing a very rough check on this level of surveyor’s fee in the circumstances of the present case we can look at the matter on the basis that a surveyor might well have been able to present a case of lost development value in respect of two or three sites. He might well have thought that he could show a total selling price of at least £130,000. Mr Graham gave evidence of sales at over £60,000 per site and his evidence of an average of over £40,000 was not challenged. His deduction of £20,000 per site for “development costs” is reasonable. We are satisfied, however, that a substantial additional allowance was needed to account for the element of risk and for the deferred expectation of payment. Very broadly, for present purposes, we take 50%. In short, although the claim has, in the event, failed, time might reasonably have been expended setting up a claim of the order of £35,000. If the respondents’ answers reflect the position taken in negotiation, Mr Graham could reasonably have assumed that, for the purposes of negotiation, it was not seriously disputed that development value, if it existed, would be lost due to the pipeline. In round figures, including the agreed levels of compensation for the land occupied by the pipeline a claim for £40000 might reasonably have been presented. The former Rydes’ scale would have allowed fees on such a figure at about £2000. This scale has fallen out of favour. It has been criticised as too low. It is out of date. However, on the broadest of bases it satisfies us that to allow the claim under this head at £2900 is not out of line.

We heard no evidence of any particular service supplied to the company by Mr Strathdee. No report was lodged. Nothing was said in evidence. Mr MacColl pointed out that the only voucher lodged was a claim made by Mr Strathdee, not as a director, but as a separate business entity registered for VAT as such. It was a bill addressed not to the claimants but to Transco. There was no evidence that it related in any way to outlays by the claimants.

It was accepted that we might have to make some allowance for the time necessarily spent by Mr Strathdee as a director in attempts to quantify appropriate compensation. He must have spent time advising Mr Graham of the possible bases of claim. However, we can only make an assessment if it can be justified by reference to the evidence before us. We must, in particular, have regard to the nature of the evidence advanced in support of the compensation claim. There was nothing to suggest that the work involved any particular difficulty or special investigation. Although Mr Strathdee may have attended meetings we heard nothing to justify any assumption that it was necessary for the company to incur the expense of his attendance at all such meetings. Mr Graham was the negotiator. We accept in the normal course of things that a party involved in such a claim would be likely to spend at least as much time on it as his professional adviser although it seemed very clear that Mr Graham was “running the show”. Taken very broadly we consider that it would be reasonable to allow Mr Strathdee 40 hours work. There was no dispute as to the proposed rate of £30 per hour. We allow him £50 for travel which must inevitably have been incurred. The appropriate total is accordingly £1250.

Our award is accordingly:-

£
Compensation for the wayleave3040
Surveyor’s fees and expenses2900
Director’s time and expenses1250
Total7190

The question of the expenses of the hearing was reserved.