OPINION

David Strang Steel and Richard Strang Steel v Scottish Ministers

[1] This is an application for determination of appropriate compensation in respect of the compulsory purchase of a field, “Field 52”, near Stonehaven. The parties were agreed as to the development value of the field as a supermarket and the main issue was whether the field would have planning permission for such a development. An important underlying issue was the legal effect of a negative certificate of appropriate alternative development certifying that in the opinion of the respondents such permission would not have been granted. Two other factors were said to have a significant bearing on value. The initial proposal had been to acquire only part of the field. This would have left over two thirds of it landlocked. The applicants took advantage of notice of severance procedure to compel the respondents to acquire the severed land. The respondents argued that the special statutory provisions applying in such circumstances meant that this land fell to be valued at its existing agricultural value only. The other factor affecting value related to the possible existence of a ransom strip. The respondents contended that allowance had to be made for the cost of acquisition of this and that the gross sum would fall to be discounted by one third.

[2] At the hearing in July 2014, the applicants, David and Richard Strang Steel, were represented by Mr Roy Martin QC and the Scottish Ministers by Mr David Sheldon QC. Mr Martin led evidence from Mr David Strang Steel; Ms Rachel Gee, a planning consultant; Mr Alex Sneddon, a traffic consultant and Mr Robert Fisher a surveyor and property specialist. Mr Sheldon led evidence from Gillian Nisbet, a planning consultant, Euan Barr and James Mark Leishman, traffic experts, all employed by Jacobs Uk Ltd consultants involved in the AWPR scheme described below; and Archie Rintoul, FRICS Chief Valuer for the Valuation Office Agency, Scotland.

Authorities cited

British Railways Board v Glass [1965] Ch. 538
City of Edinburgh Council v Secretary of State for Scotland 1998 S.C. (H.L.) 33
Corrin and others (Trustees of Northampton (Municipal) Church Charities) v Northampton Borough Council [1980] 1 EGLR 148
The Danzan Trust v City of Edinburgh Council (Case reference LTS/COMP/2005/3)
Elmford Limited v Glasgow City Council (No 2) 2001 SC 267
Emslie v The Scottish Ministers LTS/COMP/2013/13
Fifield v Commissioners of Inland Revenue (Case reference DET/1/1972)
Grampian Regional Council v Secretary of State for Scotland 1984 S.C. (HL) 1
Hallam Land Management Ltd v Scottish Ministers 2009 SC 347
Hamilton v Nairn 2011 SC 49; 2010 SLT 399
Harringay Meat Traders Ltd v Secretary of State for Communities and Local Government [2013] PTSR 436
Honeychurch v McKenna (Inspector of Taxes) [1997] RVR 270
Hoveringham Gravels Ltd v Chiltern District Council (1978) 35 P&CR 295
Jelson v Blaby District Council [1977] 1 WLR 1020
Johnson v North Yorkshire County Council (1992) 65 P & CR 65
Kirkwood (Inspector of Taxes) v Boland (Case reference TMA/15/2001)
Lowe v Commissioners of Inland Revenue 1985 SLT (Lands Tr) 12
Moncrieffe v Lord Provost of Perth (1842) 5 D 298
Monro (deceased) v Inland Revenue Commissioners [2000] RVR 81
Morston Whitecross Ltd v Falkirk Council 2012 SLT 899
McRobert v Reid 1914 SC 633
Persimmon Homes (Midlands) Ltd v Secretary of State for Transport [2010] UKUT 126 (LC); [2010] RVR 11
Porter and another v Secretary of State for Transport [1996] 3 All ER
Prosser v Commissioners of Inland Revenue (Case reference DET/1/2000) [2001] R.V.R. 170; [2002] W.T.L.R.
Runciman v Scottish Borders Council 2003 SLT 1405
South Lanarkshire Council v Lord Advocate 2002 S.C. 88
Spence (Inspector of Taxes) v Cobrin (Case reference TMA/110/2003)
Spirerose Ltd (In administration) v Transport for London, Lands Tribunal ACQ/41/2005
Spirerose Ltd (In administration) v Transport for London [2008] EWCA Civ 1230
Stokes v Cambridge Corporation (1962) 13 P&CR 77
Thomas Newall v Lancaster City Council [2010] UKUT 2 (LC)
Transport for London v Spirerose Ltd (in administration) [2009] 1 WLR 1797
Waters v Welsh Development Agency [2004] 1 WLR 1304
Williamson’s Execs v Cambridgeshire [1977] 1 EGLR 165
Young v City of Edinburgh Council (Case reference LTS/COMP/2000/2) [2002] RVR 36
Young v Lothian Regional Council 1992 SLT (Lands Tr) 18

Statutory material

Acquisition of Land (Authorisation Procedure) (Scotland) Act 1947
Lands Clauses Consolidation (Scotland) Act 1845
Land Compensation Act 1961
Lands Compensation (Scotland) Act 1963
Land Compensation (Scotland) Act 1973
Land Compensation Act 1973
Railways Clauses Consolidation (Scotland) Act 1845
Roads (Scotland) Act 1984
Town and Country Planning (Scotland) Act 1997

Relevant provisions

We need not set out all the provisions to which reference was made but the following provisions relating to certificates of alternative development (“CAAD”s) were at the heart of the matter:

Section 22 of the 1963 Act as amended provides inter alia that:

(3) “Nothing in these provisions shall be construed as requiring it to be assumed that planning permission would necessarily be refused for any development which is not development for which, in accordance with those provisions, the granting of planning permission is to be assumed …”

“(3A) In determining – (a) for the purposes referred to in subsection (1) of this section [viz. assessing compensation] whether planning permission for any development could in any particular circumstances reasonably have been expected to be granted in respect of any land; or (b) whether any of the assumptions mentioned in section 24 of this Act (but not section 23) are applicable to the relevant land or any part thereof, regard shall be had to any contrary opinion expressed in relation to that land in any certificate issued under Part IV of this Act.” …

Section 23(5) provides that:

“Where a certificate is issued under the provisions of Part IV of this Act, it shall be assumed that any planning permission which, according to the certificate, [would have been] granted in respect of the relevant land or part thereof [if it were not proposed to be acquired by any authority possessing compulsory purchase powers] would be so granted, but, where any conditions are, in accordance with those provisions, specified in the certificate, only subject to those conditions and, if any future time is so specified, only at that time.”

Section 25 (1) provides that where the land in question is not covered by certain specific proposals in a development plan either of the parties concerned may apply to the local planning authority for a certificate under the section. The restrictions in subsec (2) are not relevant. Subsection (3) was amended. The history of amendment was set out by Lord Dunpark in Grampian R.C. v Secy. of State (at p2). The subsection now provides:

“(3) An application for a certificate under this section:– (a) shall state whether or not there are, in the applicant’s opinion, any classes of development which, either immediately or at a future time, would be appropriate for the land in question if it were not proposed to be acquired by any authority possessing compulsory purchase powers and, if so, shall specify the classes of development and the times at which they would be so appropriate; and (b) … (not relevant to the present case)”

Subsection (4) is in the following terms: “4. Where an application is made to the planning authority for a certificate under this section in respect of an interest in land, the planning authority shall, not earlier than twenty-one days after the date specified in the statement mentioned in subsection (3)(c) of this section, issue to the applicant a certificate stating that, in the opinion of the planning authority in respect of the land in question, either – (a) planning permission would have been granted for development of one or more classes specified in the certificate (whether specified in the application or not) and for any development for which the land is to be acquired, but would not have been granted for any other development. (b) planning permission would have been granted for any development for which the land is to be acquired, but would not have been granted for any other development”

Subsection (9A) provides: “(9A) In assessing the compensation payable to any person in respect of any compulsory acquisition, there shall be taken into account any expenses reasonably incurred by him in connection with the issue of a certificate under this section (including expenses incurred in connection with an appeal under section 26 of this Act where any of the issues on the appeal are determined in his favour).

Section 26 provides inter alia that:-

“On any appeal under this section against a certificate the Secretary of State shall consider the matters to which the certificate relates as if the application for a certificate under section 25 of this Act had been made to him in the first instance, and shall either confirm the certificate, or vary it, or cancel it and issue a different certificate in its place, as he may consider appropriate.”

The terms of various provisions relating to roads may be found in our narrative of Mr Sheldon’s submissions at paras [42] and [43] below.

Valuation date

[3] The parties were agreed that the date for assessment of valuation was 13 January 2013. The effective date of the CAAD procedures did not give rise to any difficulty in the present case. We merely note the full discussion of this issue by Lord Dunpark in Grampian Regional Council v Secy. of State at pages 15-18. This was approved by the House of Lords: p33. A practical approach is necessary. The purpose of the certificate is solely as an aid to indicate what planning permission would have been granted at or before the date when compensation comes to be assessed or at some future time specified in the certificate: Lord Bridge p 33½. It was not disputed that we were free to look at the actual dates of the CAAD and at events thereafter. In the CAAD proceedings it appeared to have been agreed that the decision should be based on matters as they stood at 25 September 2007. This was taken to be the “relevant date of the CAAD”.

[4] The parties sensibly were able to agree certain figures. They agreed that the valuation for retail development would be £9,000,000 subject to deduction of development costs of £430,000: giving a resultant figure of £8,570,000. Except where the context is otherwise clear we use “planning permission” to refer to that type of development. However, the parties also agreed that the value for residential development would be £5,850,000 subject to development costs of £145,000: a figure of £5,705,000. They also agreed that the existing use value as agricultural land was £70,525. There was little express reference to the potential claim made at 3(m) of the pleadings in respect of access to the adjacent site 2 and no discussion of value.

Background

[5] In the discussion below we have to look in some detail at aspects of the planning background. For present purposes we simply set out the background necessary to give the context in which the dispute arose.

Geographical location

[6] The subjects, Field 52, consist of about 4.7 hectares of good farmland and are located to the north of Stonehaven. The initial compulsory purchase order (“CPO”) related to only part of Field 52 extending to 1.3 hectares and known as Plot 3803. Under the severance procedure described below, the applicants served notice that they required the remaining portion of the field to be taken as well. It would have been landlocked and useless for agricultural purposes. The subjects are bounded on the north by the A90, on the east by the B979 and on the south by a railway line. To the west is a landlocked field referred to as “site 2”. To the west of that field lies the Cowie burn in a steep wooded glen. To the south of Field 52 and on the other side of the railway lies a small isolated residential development.

[7] For a full understanding of the planning issues reference can be made to a map but a brief description will give an indication of the main difficulties. Leaving aside the harbour area to the south east of the town, the main street of Stonehaven can be said to run parallel to the shore. There are shops and houses on the seaward side but the bulk of the town lies to the west of it. In the broadest of terms, the station can be said to lie in the centre of the residential part of the town. The main street at its north end is called David Street. This is part of the B979. The obvious edge of the built up area is marked at the end of David Street by the Cowie burn. From the bridge over this burn the road runs north to a small roundabout, referred to as the Golf Course Road roundabout. The B979 takes a right angled turn to the west from the roundabout and then bends to run north past and to the east of Field 52. The field is about 800 m from the roundabout. It is about 1.3 km from the main shopping area of Stonehaven. The shortest distance from the railway station to the field by road is about 2 km.

[8] Golf Course Road runs north from the roundabout and up through the golf course. There is no access to the A90 from that road for traffic going north but there is a slip from the A90 for southbound traffic.

Other potential sites

[9] There was an admitted need for a large supermarket in Stonehaven. A large supermarket would be one between 3500 and 5,500 sq m. This might also be referred to as a small superstore. Although Field 52 had the greatest public support, several possible sites had been considered. East Newtonleys farm lies well to the south of the town. A section of the road to it twisted through a wooded glen. It was agreed that before this site could be considered a new road would have been required to avoid that section. Plans for such a road had been shelved. Permission for this site had been refused by the local planning authority and the refusal upheld after appeal by the developers. Another out of town site was Loop Road to the south west of the town and on the west of the A90. It too had been rejected by the planners.

[10] On the respondents’ pleadings it appeared to be accepted that the main potential alternative to Field 52 was an area known as Spurryhillock. It lies to the immediate north west of the railway. It is quite close to the station and to the south of it. It currently has a number of occupiers who were likely to be unwilling to move. It was, accordingly, unlikely to be available for a big supermarket but part of the site is owned by the local council. It was contended that a site could probably be assembled for a small supermarket. It was not disputed that no other site could be identified within the town itself although a site near the Golf Course Road roundabout, known as “the Recreation Ground” had been considered. This ground is well placed for its present purposes, including tennis courts and bowling green. It is a tourist amenity. The local council gave evidence to the local plan reporter to the effect that it was undesirable to move the caravan park and the other leisure facilities. The current occupiers were said to have set their faces against moving.

[11] More recently there had been some discussion of a site at Mains of Cowie. It was was also on the B979 but nearer the roundabout than Field 52. It appeared that this proposal was tied to a proposal for housing and that this had run into environmental or landscaping difficulties. This site is no longer being considered for a supermarket. We also heard that a new residential township is to be developed at Chapelton of Elsick. This lies some 9km north of Stonehaven. It has been suggested that this would be a suitable place for a supermarket. Mr Strang Steel thought the idea of a supermarket there a “bizarre” solution to Stonehaven’s requirements. We need not express a view as it was not suggested that any relevant consideration had been given to such a site at the valuation date.

The AWPR Scheme

[12] Proposals for the Aberdeen Western Peripheral Road (“AWPR”) have been under discussion for over 20 years. However it was not until about December 2005 that a direct link, now known as the Fastlink was proposed which would join the A 90 at Stonehaven. The original plans for this, Option 1, did not involve Field 52. At a meeting on 28 August 2006 the applicants were involved in discussion about some of the implications of Option 1 without knowing that Transport Scotland engineers had also been considering an Option 2 which was the scheme eventually adopted. This required use of Field 52. The applicants first learned of this on 4 September 2006. The draft CPO involving the field was published on 25 September 2007.

[13] The applicants were upset by what they saw as a lack of courtesy in warning them of the risk of involvement of Field 52. It is unnecessary for us to express any view on that matter. What did happen after they learned of Option 2 was that they devoted a great deal of time and money to proposals for an alternative junction which would not lead to loss of the field. There was unchallenged evidence that they spent something of the order of £500,000. In the present context nothing turns on this although it can be said that such expenditure was a clear indication that they themselves attached a significant hope value to Field 52.

[14] A public inquiry into the objections to the relevant orders was held between 9 September and 10 December 2008 with closing submissions being lodged by 16 February 2009. The report was submitted to Scottish Ministers on 30 June 2009. They announced the decision to proceed with the scheme on 21 December 2009. They concluded that Option 2 was preferable to the applicants’ alternative and the CPO was made in 2010 with land vesting in the Ministers on 11 January 2013, the agreed valuation date.

[15] Although we heard various submissions in relation to the public benefit of the applicants’ proposals, we are satisfied that the ins and outs of the compulsory purchase procedure have no bearing on the valuation exercise with which we are now concerned. There was no suggestion of any difficulty in identifying the “no scheme world”. This assumed the existing layout of the A90 and B979 and did not turn on any comparison between different stages of development of the AWPR.

Planning history of Field 52

[16] The applicants submitted a planning application for erection of a Class 1 retail store and petrol filling station on Field 52 on 18 October 2007, in other words after the date of the publication of the draft CPO in September of that year. However, this had been under discussion since before March 2007 when public consultation on the proposed application started. A meeting to outline the proposals took place with the Community Council on 10 April 2007 and a public exhibition was held on 12 July 2007. At these times the applicants were actively opposing the idea of a junction using Field 52. The application was effectively sisted to await the outcome of the CPO inquiry on that issue. The CPO was made in March 2010. However, for reasons which were not explored there was a gap between the Order and the land being taken. The planning application was not formally withdrawn until February 2013. In January 2009 the applicants applied for a CAAD in terms of the provisions of sec 25 of the 1973 Act, as amended, set out above. This was in respect of a supermarket and petrol station. They did not set out any proposal for residential development. On 14 July 2009, the Aberdeenshire Council granted a positive CAAD and added an observation on the possibility of use of site 2 for residential development. The respondents appealed against that decision. The appeal was considered at a hearing on 3 and 4 August 2012. On 21 October 2010, the Reporter submitted his findings to the respondents. On 24 January 2011, the respondents issued their decision accepting the Reporter’s findings and cancelling the initial CAAD in terms of sec 26 of the 1973 Act. For completeness it should be said that there was no suggestion before us that the apparent conflict of interest had any bearing on the matter. Governments may be taken to operate in distinct compartments. However, our understanding is that in England such appeals would now be heard by the Upper Tribunal and this would avoid the obvious potential difficulty. For present purposes it is enough to note that the respondents, as Transport Scotland, made a vigorous case before the reporter which would not have happened in the no scheme world.

Submissions

[17] Both counsel provided written submissions addressing both the facts and their contentions as to the relevant law. We need not repeat the material bearing on the facts although we found this very helpful and have taken account of it in our Discussion of the issues below. We summarise their main contentions on issues of law.

Submissions for the applicants

[18] Mr Martin submitted that the assessment of compensation had to be undertaken in the “no-scheme world” and required the Tribunal to identify what would have happened if there had been no AWPR scheme requiring the compulsory acquisition of land at Field 52. There had been many cases on how this notional or hypothetical or counter-factual exercise was to be carried out. It was generally accepted that at its most extreme the scheme in question was to be assumed to have been cancelled on the valuation date but nothing turned on precise dates in the present case.

[19] The 1963 Act provided certain planning assumptions for the purposes of valuation. A formal assumption would follow a positive CAAD but after the appeal by the respondents a negative certificate of appropriate development simply meant that no relevant assumption could be made in the present case as to planning permission for retail development as at 25th September 2007. The critical valuation date was 11th January 2013. He referred to Transport for London (formerly London Underground Ltd) v Spirerose Ltd. He pointed out that following Spirerose there had been a statutory change in the law in England and Wales but not Scotland.

[20] He accepted that the decision in Spirerose was effectively binding in the present case but submitted that the language used did not actually go as far as prevent the Tribunal from making a positive finding that before or by the valuation date planning permission would have been granted for retail development (as well as for residential development). The granting of the CAAD was appealed by the respondents but this could not have happened in the no-scheme world where the Council had granted planning permission because no party other than the person who has applied for planning permission has a right of appeal under section 47 of the 1997 Act. In any event, even if the Tribunal was not positively persuaded that there would have been planning permission, the evidence demonstrated that it was very likely that there would have been planning permission. His fall back submission was that the Tribunal should make an assessment of hope value.

[21] In relation to the respondents’ contention that hope value should be reduced to take account of a ransom strip he submitted that there was no clear evidence of the existence of any such strip. He referred to the Roads (Scotland) Act 1984 and the definitions it contained. An adjoining proprietor had the right to take access from a public road. Such a road included the carriageway and any footway and verge. When a road was a public road, all elements of the road, including the verge, were vested in the local roads authority, and so long as it remained a public road the owner of the underlying solum had no control over the road. The B979 was a public road being included in the list of public roads kept by the Council. The Council were the local roads authority for the B979 and their entitlement to manage and maintain the road overrode any right of the respondents as the heritable proprietor.

[22] This meant that the applicants would have been entitled to carry out access works within the limits of the B979 and without any ransom arising. The respondents’ averment that the Respondents owned land “forming part of the B979” at the location of the access to the proposed development was plainly irrelevant. The applicants had a right to take access over any land which formed part of a road.

[23] Mr Martin referred to Elmford Limited v Glasgow City Council (No 2) as confirmation of the right to take access from a public road and for the proposition that the physical extent of a public road at a particular location was a matter of fact not defined by details in the local roads authority’s listing. He referred also to Morston Whitecross Ltd v Falkirk Council where it was accepted that the extent of a road would include an embankment upon which it was constructed. That was consistent with section 28(d) of the 1984 Act. The respondents had not established that any part of a proposed access would have required to be constructed on land which was not part of the B979 public road.

[24] There were two separate legal issues which might have an effect on valuation. The first was the status or weight to be attached to the CAAD and the significance if any of the absence of any formal challenge to it by way of appeal. He submitted that the effect of the decision in Spirerose was that where a CAAD had been issued, any planning permission referred to could be assumed to exist for the purposes of compensation. But where no CAAD had been issued or where a negative one had been issued, that did not prevent the tribunal of fact from making its own assessment of the prospects of planning permission having been granted by reference to the valuation date. This was emphasised by the fact that in such a situation section 22(3A) provided that “In determining (a) for the purposes of subsection (1) of this section whether planning permission for any development could in any particular circumstances reasonably have been expected to be granted in respect of any land … regard shall be had to any contrary opinion expressed in relation to that land in any certificate issued under Part IV of this Act” (that was to say a CAAD). The equivalent of this subsection was not addressed in Spirerose but it suggested that in a situation such as the present what was said in a CAAD was not definitive but merely required to be taken into account. In this case, the CAAD Report demonstrated that the Reporter would have refused planning permission for retail development only because of his own judgment (which was contrary to that of the Council) that the location was not suitable.

[25] The fact that the applicants did not submit a statutory appeal against the outcome of the CAAD Appeal Inquiry was of no significance. Section 29 of the 1963 Act related to proceedings for challenging the validity of a decision made on an appeal under section 26. This was a form of judicial scrutiny equivalent to judicial review: see sec 239 of the 1997 Act. It could not go to the merits.

[26] Another question was whether the value of the land which had been acquired as a result of the service by the applicants of a counter-notice under the severance procedure was restricted to agricultural value. The mechanism by which a person whose land was severed by compulsory purchase could require the acquiring authority to take also the severed land was provided in sections 49 and 50 of the Land Compensation (Scotland) Act 1973. It appeared that where a counter-notice was accepted, the compensation payable was to be assessed on the assumptions mentioned in sec 5(2), (3) and (4) of that Act. He accepted that the effect of these provisions was that the severed land taken as a result of the service of a counter-notice was to be valued at agricultural value only.

[27] But, the critical issue was what effect, if any, this had on the value of the land originally taken, Plot 3803. He submitted that the full development value could be recovered because of the concept of injurious affection. Where land was acquired by compulsory purchase, the person deprived was entitled not only to the value of that land in its own right but also to injurious affection for land otherwise affected. That, he submitted, was the effect of section 61 of the 1845 Act which was endorsed in section 41 of the 1973 Act. He suggested that there was no dispute that the applicants were entitled to injurious affection in respect of the compulsory acquisition of Plot 3803. The injurious affection fell to be measured by the reduction in value of the applicants’ property as a result of their inability to develop Field 52 either for retail or residential purposes. In each case, that development would have taken place not only on Plot 3803 but also on remaining parts of Field 52 and it was not disputed that, in the absence of the severance procedure, and compensation including injurious affection would potentially be payable.

[28] Mr Martin pointed out that the respondents’ contention was, in effect, that a counter-notice under section 49 of the 1973 Act, resulted in the dis-application of section 61 of the 1845 Act and section 41 of the 1973 Act to the land which was the subject of the original compulsory purchase. There was no justification for this. There was nothing in section 49 or in section 50 which suggested that section 61 of the 1845 Act (nor section 41 of the 1973 Act itself) was to be dis-applied. The result was that notwithstanding the severance, the value of compensation payable as injurious affection on the original land was unaffected.

[29] He argued that the severance provisions were quite logical. But for the provisions the applicants would have remained heritable proprietors of the balance of Field 52 with whatever value that had as agricultural land. As a result of severance, they were giving up that proprietorship and it was right that they be paid agricultural value in return. It would not be right in such a situation that they be entitled to anything more than existing use value on the severance land because that could give rise to the possibility of the double counting of injurious affection. No authority had been identified which would support the proposition for the respondents. He referred to the case of Johnson v North Yorkshire County Council. He accepted that it was not directly in point but argued that it appeared to suggest that the concept of injurious affection was something which could exist on the land originally taken. The possibility of severance had been seen as a separate step. Further, the ability to withdraw a counter-notice was more consistent with the fact that the right to injurious affection was unaffected all along.

[30] In relation to valuation of any ransom strip, counsel submitted that there was no justification for a blanket one-third. This was not justified by Stokes v Cambridge Corporation which was a decision on its own facts. The factors which would have been relevant in any real world negotiation had not been addressed by the respondents. The Tribunal had no valuation evidence upon which to justify any ransom value and no evidence to support any substantial reduction.

[31] Mr Martin submitted that the applicants were entitled to the expenses of their preparation for and participation in the current process. These should be payable on the Court of Session scale. Employment of senior counsel should be certified. Ms Gee, Mr Sneddon and Mr Fisher should all be certified as expert witnesses. The respondents should also be found liable to pay to the applicants the expenses incurred in connection with the application for the CAAD and the CAAD Appeal Inquiry.

Submissions for the Scottish Ministers

[32] Mr Sheldon submitted that the Tribunal was not entitled to have regard to the CAAD certificate issued on 14th July 2009, or to the views of Aberdeenshire Council expressed in the Kincardine and Mearns Committee Report dated 28th April 2009. It was entitled only to have regard to the negative CAAD certificate issued by the Scottish Ministers on 24th January 2011 and the views expressed by the Reporter in respect of the CAAD and adopted by the Scottish Ministers. The negative certificate was decisive of the issue of whether there was any development or hope value. But in any event, even if that was not decisive, it was highly likely that, in the no scheme world, planning permission for any proposed development at Field 52 would have been refused.

[33] He set out the statutory provisions governing CAAD certificates and the assessment of compensation. These did not support the applicants’ position nor did the limited amount of case-law on the topic. It was clear that in terms of section 22(3A) the Tribunal was obliged to have regard to the “contrary views” in considering whether planning permission could reasonably have been expected to be granted. It was not entitled to pay any regard to the positive CAAD issued by Aberdeenshire Council, since that certificate had been cancelled and no longer existed for the purposes of assessing compensation. In terms of sec 26(1) the relevant planning authority for these purposes was the Scottish Ministers, not Aberdeenshire Council; the relevant views were those of Ministers and not the Council. The CAAD certificate existed for the purposes of assessing compensation in the “no-scheme” world, as the terms of section 22(7)(b) made clear. In that world, the views of Aberdeenshire Council were no longer extant.

[34] Section 29(2) further reinforced that conclusion. It provided that apart from an application to the Court of Session under sec 29(1) “the validity of a decision on an appeal under section 26 of this Act shall not be questioned in any legal proceedings whatsoever”. The grounds on which the “validity” of a certificate issued under sec 26 could be challenged were broadly akin to the grounds for judicial review. Counsel referred to Harringay Meat Traders Ltd v Secretary of State for Communities and Local Government, at paras 80, 85, and Hallam Land Management Ltd v Scottish Ministers at para 41. An application under sec 29 could have been made and would have succeeded if the applicants had been able to persuade the court that the Reporter had misconstrued or misapplied the relevant planning considerations, failed to take relevant considerations into account (or vice versa) or failed to give adequate reasons for his recommendation.

[35] The present proceedings amounted to an impermissible attempt to call into question the validity of the Ministers’ decision by “reviving” the effect of Aberdeenshire Council’s original CAAD certificate, and inviting the Tribunal to have regard to it. But in any event, sec 29 set out the extent of any right of appeal against the issue of a CAAD certificate. Where it was maintained that planning permission could reasonably have been expected to be granted for a particular development, the appropriate course was to apply for a CAAD certificate, and he submitted that clearly any planning issues relevant to compensation should not be litigated twice.

[36] Counsel did not suggest that there was any authority directly in point. He cited Williamson and Stevens v Cambridgeshire County Council and Grampian Regional Council v Secretary of State for Scotland. In the latter case, Lord Bridge had acknowledged that although a negative certificate was not conclusive it was difficult to envisage a situation where the Lands Tribunal could be persuaded to act on a contrary opinion. He submitted that this should be read as saying in effect that the issue of a negative certificate was decisive of the question whether it might reasonably have been expected that planning permission would be granted for the development.

[37] In Porter and another v Secretary of State for Transport it was conceded before the Court of Appeal that a certificate issued under an equivalent provision did not give rise to an estoppel per rem judicatem. He submitted that this was of limited assistance since it dealt with a speciality of English law, and proceeded on the basis of a concession. The Tribunal was not bound by House of Lords authority on the nature of issue estoppel.

[38] The applicants’ approach to the CAAD certificates contained a fundamental contradiction. They suggested that any traffic and engineering issues arising from the development had been decided by the Reporter in the applicants’ favour and that it was not open to the Respondents to revisit those issues while inviting the Tribunal to revisit and depart from the Reporter’s principal finding in relation to the CAAD. The Reporter’s findings and the Scottish Ministers’ certificate had to be accepted as governing the likelihood of planning permission having been granted and there was therefore no need to revisit traffic or other issues arising from the CAAD Report. If the Tribunal was to look behind the Reporter’s findings it could not be prevented from looking behind all the other issues ventilated before the Reporter, including issues of traffic management and engineering issues in relation to the site access. In any event the Reporter did not conclusively decide the traffic management issues.

[39] Mr Sheldon submitted that a discount had to be applied to any development value because of restrictions on the applicants’ right of access to Field 52. This was because of the existence of a “ransom strip”. He submitted that it was clear that the embankments on the east and west sides of the B979 adjacent to Field 52 were included in a 1982 CPO by which the then Secretary of State for Scotland acquired land for the purposes of the A92 Stonehaven Bypass. There was a track to the applicants’ subjects. It would not be sufficient for the development. More of the respondents’ land would be required and that was land which was not part of the road.

[40] He accepted that it appeared to be established that a landowner whose property is bounded by a public road is entitled to take access to and from it: Moncrieffe v Lord Provost of Perth and others and McRobert v Reid, both considered in Elmsford v City of Glasgow Council. For the purposes of such a right of access, the road included the verge: Hamilton v Nairn. However, dicta in that case, at paras 14 and 15, suggested that the road and verge extended only as far as the roads authority’s duty to maintain the roads and verges as contained in the authority’s list of public roads i.e. to the extent that the road has been adopted as a public road. In the present case, the “road” as adopted extended only 2.5 m. from the metalled surface of the carriageway. He accepted that there was also authority that a public road could include more than merely the metalled surface of the road, the footway and the immediate verge. The question whether a frontager could take access to the road over intervening land might depend on the question whether that land could be said to have been “dedicated to public passage” : Perth & Kinross County Council v Magistrates of Crieff; and Elmsford v City of Glasgow Council. That question was fundamentally one of fact, to be determined on the particular facts and circumstances of the case. He also referred to Morston Whitecross Ltd v Falkirk Council and David Runcieman v Scottish Borders Council. In the present case, the onus of proof lay upon the applicants to show that land in the ownership of the respondents was really part of a public road.

[41] No point had been taken in Elmsford as to the use to which the access could be put. However, Hamilton v Nairn indicated that a frontager’s right is subject to the roads authority’s power to regulate the manner in which access is taken, including the nature and configuration of any access route. In this context, it was worth noting the terms of sec 56(1) of the 1984 Act which provided that “no works shall be executed in, or excavation made under, a public road except with the roads authority's consent in writing and in accordance with any reasonable conditions which they think fit to attach to the consent.” This brought back the planning argument that such consent would have been unlikely on the facts.

[42] The present case was complicated by the fact that the access track appeared to have been built as part of the accommodation works accompanying the 1982 CPO. Such works were governed not by the common law relating to servitudes and rights of access but by the Railways Clauses Consolidation (Scotland) Act 1845 sec 60 (as incorporated by, inter alia, the Acquisition of Land (Authorisation Procedure)(Scotland) Act 1947, Sch 2, and the Roads (Scotland) Act 1984 sec 110 and its predecessor, the 1970 Act, sec 35). Section 60 of the 1845 Act provided that the promoter of the undertaking had to all carry out works for the “accommodation of the owners and occupiers adjoining the railway” including “such … convenient gates, bridges, arches, culverts, and passages, over, under, or by the sides of or leading to or from the railway, as shall be necessary for the purpose of making good any interruptions caused by the railway to the use of the lands through which the railway shall be made”. Section 63 provided in addition that: “If any of the owners or occupiers of lands affected by such railway shall consider the accommodation works made by the company, or directed by such sheriff or justices to be made by the company, insufficient for the commodious use of their respective lands, it shall be lawful for any such owner or occupier, at his own expense, to make such further works for that purpose as he shall think necessary, and as shall be agreed to by the company, or, in case of difference, as shall be authorized by the sheriff or two justices”.

[43] However, the promoter could not be compelled to carry out any further or additional accommodation works after 5 years of “the opening of the railway for public use”: sec 65. Section 66 confered a right on an affected owner “to pass and repass, with carriages, horses, and other animals, directly (but not otherwise) across the part of the railway made in or through their respective lands, solely for the purpose of occupying the same lands, or for the exercise of such right of way, and so as not to obstruct the passage along the railway” constructed until accommodation works have been completed.

[44] These provisions provided a strong basis for saying the applicants would not have an unrestricted right to alter the accommodation works. First, in the absence of agreement by the promoter/owner of the land over which access is to be taken, the applicants would require to apply under sec 63 to the Sheriff for authority to carry out such works. Second, the terms of sec 65 of the 1845 Act suggested that no further accommodation works could be carried out without the promoters’ consent after five years from the opening of the railway or road. Third, the accommodation works were carried out in order to accommodate farming the land, and has now reverted to the respondents as landowners in terms of the receipt by the Sluie Trust. The access track constructed had sufficed the applicants for a considerable period. There could be no obligation now to “accommodate” further, greater access to the subjects. The argument in this respect was close to one of personal bar, the respondents having acted to their detriment in financing the construction of the access track in the 1980s, and acquiesced in the applicants taking access to their land over that track for agricultural purposes only. The right of access could not now automatically be so as to go beyond the grant implied by construction of the accommodation works. The whole point of accommodation works was to allow the landowner to continue to enjoy the land in the way that he had been doing hitherto. Reference was made to British Railways Board v Glass.

[45] Even if not holding a “classic” ransom strip, the respondents were effectively in an equivalent position, as they controlled the extent of any right of access to Field 52. At the very least there was considerable uncertainty over the access position. It would accordingly be appropriate to deduct at least a third from any valuation, on the familiar basis of Stokes v Cambridge Corporation

[46] The second main legal issue arising was the valuation of the severance land. The applicants had had the benefit of the provisions of the 1973 Act in relation to severance, by asserting in their counter notice that the severed land was “not reasonably capable of being farmed”. Section 50(5) of the 1973 Act provided that the compensation payable in respect of severance land following the acceptance by an acquiring authority of a counter-notice under sec 49, was to be assessed on the assumptions mentioned in secs 5(2), (3) and (4) of the 1973 Act. Sections 5(2) and (3) did not apply. The effect of sec 5(4) was that, in the assessment of compensation for severance land, it was to be assumed that planning permission would not be granted in respect of the land or any part thereof for any development and, if planning permission had been granted for development it was to be assumed that planning permission had not been granted in so far as it related to development that had not been carried out. It was clear that compensation in respect of agricultural severance land was to be assessed on the basis that there was no permission for development.

[47] In terms of sec 50(3) it appeared to be open to a landowner to withdraw a sec 49 counter notice up to six weeks after the determination of any compensation. Mr Sheldon referred to the general discussion in “Compulsory Purchase and Compensation; the Law in Scotland” Rowan Robinson and Farquharson-Black (3rd Ed) Chapter 11).

[48] There was no room for a claim for injurious affection in the present application. The applicants’ case proceeded on the basis that the whole of Field 52 would have received planning permission for development, but the severance land was to be treated as agricultural land for the purposes of the provisions of the 1973 Act. The only claim for injurious affection had to proceed on the basis that the loss of the subjects, namely, Field 52, had affected land held by the Applicants. That was how it was pled. There was no other land affected. Field 52 was the only land to the south of the A90.

[49] If there was any development value to be taken into account in assessing compensation any such value would attach only to the original land amounting to around 27.7% pro rata of the total to which the present application relates. The value of the severance land was restricted to its agricultural value.

[50] In assessing and making offers of compensation, the respondents followed the advice of the District Valuer, who acted independently of the Scottish Ministers. Counsel submitted that Mr Rintoul’s view was soundly based having regard to his submissions in relation to the CAAD.

[51] Counsel discussed the Spirerose case. He referred to Prosser v Commissioners of Inland Revenue where there was thought to be a 50% chance of obtaining planning permission but the view was taken that a 75% discount was appropriate. There was no hope value in the present case because of the issue of the negative CAAD and the current planning status of the subjects. If that was not accepted the available material indicated that the chances of obtaining planning permission for development in this case were significantly less than 50%. He further submitted that the approach taken in Prosser v Commissioners of Inland Revenue of existing use plus any hope value, rather than by applying a discount to the full development value was the correct way to look at things.

[52] Mr Sheldon submitted that the expenses of the present proceedings should not be awarded to the applicants because their application to the Tribunal was presented without any discussion or negotiation in respect of the compensation offered or sought. They had until recently maintained a position that the appropriate compensation was the full ripe development value of the subjects. They only appointed an expert in the valuation of commercial development property at a late stage and the principal conclusion appeared to be that, at best for the applicants, there is some hope value, very much lower than the full amount of the sum sought.

[53] The expenses of the CAAD process as sought should not be awarded to the applicants. Their application for a CAAD was made before the application for planning permission was withdrawn or compensation applied for. It did not form part of any negotiation process in respect of the compensation sought. He compared The Danzan Trust v City of Edinburgh Council. In any event, 50% of the CAAD application costs were paid by KEEL.

[54] The applicants appeared to be making a claim for expenses of working up an alternative junction design and seeking its approval at the public local inquiry in relation to the AWPR. They did so in the full knowledge of the risk that their alternative proposal would not be accepted. The outcome of the PLI was reported in June 2009, while the application for the CAAD was made on 19th January 2009. At best for the applicant the application for the CAAD was premature. In any event, it seemed that the whole of the costs of the application for planning permission were met by KEEL.

[55] Both the initial date of submission of the planning application, and its “valid date” were after the date on which the applicants were informed of the preferred layout for the Fastlink junction. Both dates were after the dates on which the draft Schemes and Orders were published (initially in December 2006 and again in September 2007). The “valid date” post-dated the publication of the CPO in September 2007. As Option 2 was advanced by Transport Scotland on grounds of efficiency and cost the applicants ought to have known that their alternative was unlikely to be accepted. They accordingly ought to have known that there was a very substantial risk that planning permission would not be granted and any expense incurred by the applicants in working up alternative junction proposals was done at their own risk. The Reporters at the AWPR PLI confirmed that Transport Scotland’s preferred junction layout was preferable in terms of its operational superiority and lower cost.

Response

[56] Mr Martin repeated his position on the effect of the negative CAAD. In relation to the ranson strip he resisted the contention that there was an onus on the applicants. It was for the respondents to establish that there should be a discount on this head. The presumption was that adjacent proprietors could have access to a road. On the face of it, the applicants appeared to be entitled to this. This was an issue to be determined on the evidence. There was no need for a site visit. In relation to the access track he submitted that there was no basis for the contention that it was limited to existing use. He referred to sec 60 of the 1845 Act. In relation to the severance issue, he invited the Tribunal to set out its figures on both bases as the applicants would be entitled to withdraw the notice if that suited them. He made submissions in relation to expenses and concluded by observing that if we were considering hope value all the various uncertainties should be factored in as part of that assessment.

Discussion

[57] We start by considering the broad legal issues in dispute in the present case and then look at the facts in light of our conclusions on these issues. Our references to “planning permission” can be taken as meaning permission for the relevant supermarket development unless the context is otherwise.

The effect of the negative CAAD

[58] Although Mr Sheldon submitted that the negative certificate was “decisive” of the question of whether there was any development or hope value, we are satisfied that this argument is inconsistent with the provisions of sec 22 (3) of the 1963 Act. As Lord Dunpark said in the Grampian Regional Council case: “Section 22 (3) demonstrates that the Lands Tribunal is not bound by the negative terms of a [CAAD] certificate.” This, he said, was to be contrasted with the effect of a positive or valuable certificate. In the House of Lords in that case, Lord Bridge was to the same effect: “If a negative certificate is issued, “regard is to be had” to the negative opinion certified: section 22(3). Although this is not conclusive, it is difficult to envisage a situation in practice in which the Lands Tribunal, when assessing compensation, could be persuaded to act on a contrary opinion to that certified by the planning authority or the Secretary of State on appeal.”

[59] It is plain from the contrast with a positive certificate that Parliament cannot have intended that a negative certificate should be conclusive. Regard must be had to the certificate but the Tribunal must be entitled to reach a contrary view when it is persuaded to do so. There are no statutory restraints on the circumstances which might lead to its being so persuaded. To the extent that the comments of Lord Bridge can be read as meaning that the Tribunal should regard itself as bound in practice, it must be said that that is not what Parliament has enacted. We note that Jelson v Blaby District Council provides an example of the court feeling free to ignore a negative CAAD completely – plainly regarding it as irrelevant to the particular planning issue they had to address in that case. Our discussion, below, of the problems of the standard of proof supports the view that Parliament cannot have intended that a negative CAAD be the dominant factor in a tribunal’s assessment. It must be for the Tribunal to determine each case on the whole material presented giving appropriate weight to the terms of the negative CAAD.

[60] Although Mr Martin resisted the view that a negative CAAD was conclusive, he put to the respondents’ experts the proposition that the evidence they were giving was essentially the same as evidence given to the Reporter and that as the reporter had reached a conclusion on the issue they were addressing, that was the end of it. However, we are satisfied that we must look at the whole evidence. Section 22 (3A)(b) provides that regard should be had to “the opinion” expressed in any negative CAAD. We are in no doubt that the reference is to such opinions as are provided for in sec 25(4)(b). Statutory weight is given to the formal opinion given under that subsection but no special status is given to the findings of fact upon which any such opinion might appear to be based. On any view, the findings of the reporter on individual aspects of fact cannot be treated as decisive. We can consider evidence of the views of the reporter but see no basis for giving his views or findings any special weight. In particular, we are satisfied that there is no justification for Mr Martin’s attempts to treat favourable material from the report as decisive, while seeking to qualify or explain unhelpful findings or doubts.

[61] Although there are statutory provisions, in sec 26, about the effects of the appeal as well as the provisions of sec 22 in respect of the effect of a negative certificate, there is nothing to suggest that evidence of what actually happened course of the CAAD procedures is inadmissible. Plainly we must give effect to the negative CAAD as expressing the opinion of the relevant planning authority that planning permission would not have been granted. But the aim of the procedure was to provide assistance for the Tribunal. Where the Reporter has expressed a view on the basis of evidence, we need not go over that evidence again. But we do not regard ourselves as precluded from doing so. For example, we are satisfied that we can consider the evidence of what the planning officers thought at the time, while recognising that their evidence was not all accepted and consider the reporter’s view that a supermarket would not have unacceptable long term effects on the vitality and viability of the town centre while testing that against other contrary views.

[62] The question of the status of findings of fact in a CAAD process were discussed in Porter and another v Secretary of State for Transport in relation to the English concept of an issue estopel. Mr Sheldon submitted that this turned on specialities of English law and we accept that much of the discussion did address the estopel principle. However, the parties accepted that a nil certificate would not prevent the claimants from contending before the Lands Tribunal that planning permission would have been granted. The contention was that the findings of fact could not be challenged. The point there was a sharp one. There had been a specific finding as to the route of an alternative road. The argument was that the Tribunal had to accept that finding. This was said to be based on an issue estopel but the Court noted that no authority had been cited to support use of that concept and it appears, accordingly, that there was no wider principle which might have been to the same effect. The outcome was that the Court of Appeal concluded that the findings implicit in the negative certificate were not binding on the parties in the compensation proceedings before the Lands Tribunal.

[63] We heard submissions on the applicant’s failure to appeal the negative CAAD. Provision for appeal is made in sec 29. Essentially appeal is on grounds similar to those of a judicial review. There is no scope for appeal on fact. We recognise that in some circumstances appeal on grounds of law will allow issues of fact to be opened but there are obvious limitations to the scope of such appeals as a means of challenging the merits of decisions based on the weighing of evidence of fact. We are not persuaded that failure to appeal the negative CAAD has any bearing on the proper approach to that CAAD.

[64] However, as will become apparent from our assessment of the evidence below, our view as to the proper approach to the CAAD material is not critical to our decision in this case. In light of the decision in Spirerose, we are satisfied that the focus of attention is the situation at 11 January 2013. It was not disputed that we had to consider evidence of events after 25 September 2007.

Balance of probabilities at valuation date

[65] We are satisfied that we must accept the decision in Spirerose as determining the proper approach to this question. Although it dealt with the equivalent English legislation, the provisions currently in force in Scotland were in identical terms to those discussed in that case. The effect of the decision is that where there has been no actual planning permission and no relevant statutory assumptions are to be made, we should not attempt to decide the question of whether planning permission would have been granted on the normal civil standard of balance of probabilities. Unless the tribunal can find that at some relevant stage planning permission would as a matter of undisputed fact have been granted, the chances of getting such permission are to be weighed at the valuation date and taken into account as part of the assessment of how the open market would value the subjects at that date. It follows, inevitably, that in such a situation the task of the tribunal is to assess any hope value.

[66] We are satisfied that the above reflects the essence of the decision and we understood parties to approach it on that basis. Mr Martin attempted to persuade us that their Lordships’ views were expressed in terms which allowed a finding as to what would in fact have happened in the no scheme world to be made on balance of probabilities if it would have happened before the valuation date in respect of an actual application. He stressed that in the no scheme world there would have been no appeal and the evidence of the original CAAD showed clearly that the planning permission for which the applicants had applied would have been given in or before 2009. However, we cannot accept such an approach as consistent with the Spirerose decision.Although there had been no live planning application in that case, such an approach appeared to lie at the heart of the Lands Tribunal’s decision. This was clarified in the Court of Appeal where Lord Carnwath expressly drew attention to the confusion in the way the issue was presented. He pointed out that the claimant was actually contending that in the no scheme world there would have been “an actual permission”. That was on the basis that the owner would inevitably have sought planning permission in the no scheme world had he been free to do so. In this context we see no relevant difference between that and the situation here where the applicants had actually started the process. It would have to be assumed that in the no scheme world they would have pressed on with it and done their best to persuade the planners that the application should be granted. That was essentially what the court was considering in Spirerose. Lord Carnwath expressed the critical issue in terms of a potential finding of fact: “When the tribunal finds on balance of probability that in the no scheme world planning permission would have been in existence .” : see paras 30 to 34.

[67] Although it is difficult to isolate an explicit passage the discussion in the House of Lords was clearly to the effect that such an approach was not justified. To get a proper understanding of the effect of the decision it is necessary to examine the various speeches in some detail.

[68] The question initially posed by Lord Scott was the narrow one of the basis of assessment at the valuation date when the land had unrealised potential for development but where the success of a planning application though probable was not a certainty: para [1]. However, the issue he came to address appears to have been the wider one of whether the Tribunal was correct to assess compensation on the basis that planning consent “would have been granted”: para [6]. As we have seen, the court below had been looking at the probable history in the no scheme world and there can be little doubt that this was the problem their Lordships were addressing. Although at para [8] Lord Scott distinguished proof of historical fact from issues of valuation he expressed his conclusion in broad terms: “To transform the probability of planning permission on the footing that the civil standard of proof, the balance of probabilities , has been satisfied misunderstands … the nature of the valuation exercise that rule 2 of section 5 requires.” He dismissed the possibility of a different result following from application of the Pointe Gourde principle, expressing his agreement with Lord Walker and Lord Collins.

[69] Lord Walker started his speech by examining the statutory background and the Pointe Gourde principle. He also addressed the essential question in terms of the prospects of obtaining permission at the valuation date. In that case the prospects of success on that date appeared to have been as good as they ever were and better than at one point in the past when some attempt had been made to obtain an appropriate certificate. In other words, the issue did not arise sharply. However, Lord Walker appeared to approach the question in a broad way. Where a claimant had not been able to take advantage of the assumptions provided in the statutory code it could not be assumed that there was an anomaly. Parliament had enacted a code of some complexity and for the court to try to correct it, in accordance with its perception of what was fair, would amount to judicial legislation: para [41]. Put broadly, Lord Walker saw the matter as purely one of statutory construction. Valuing the subjects on the day, they had no permission and the market would have to take them on that basis.

[70] Lord Neuberger agreed with Lord Walker and Lord Collins but also added some reasons of his own: para [64]. His starting point was the basic statutory formula requiring an open market value at the valuation date. He plainly considered that there was no scope for a judge-made assumption into the statutory formula: para [50].

[71] At paragraph [55] he said: “ The only way the Pointe Gourde principle could be relied on as a matter of logic, appears to me on the basis that if the scheme in question had not been in existence, then at some time before the valuation date the respondent landowner would have applied for and, on the balance of probabilities, obtained permission [ for appropriate development].” We think this, in essence, is the argument which Mr Martin sought to assert in the present case. His Lordship went on to say that he did not consider that this would be a legitimate invocation of the Pointe Gourde principle. He added that “when assessing compensation it is, at least generally, inappropriate to invoke the principle for the purpose of speculating what might have happened.” He went on to say that the court could not effectively arrogate to itself an extra-statutory power to grant what amounted to a CAAD: [60].

[72] The most detailed analysis of the problem came in the speech of Lord Collins. He expressed the issue on the broader basis. If it was probable in the no scheme world that planning permission would have been granted by the valuation date was such permission to be treated as a certainty or was valuation to be a “hope value” discounting for the chance that permission would not be granted? : [66].

[73] His Lordship carried out a careful examination of the relevant statutory provisions and the previous decisions relied on by the lower courts. He was able to distinguish both Jelson Ltd and Melwood on the basis that in each there had been a finding that planning permission would have been obtained. He did not find it necessary to examine the standard of proof which underlay these findings saying simply that they did not proceed on a balance of probabilities: para [114]. Lord Collins plainly recognised that the approach taken of finding that planning permission would have been granted as matter of fact involved treating the matter as part of the history of what would have happened in the no scheme world. He considered whether this could be justified by the Pointe Gourde principle but concluded that it could not: paras [127] and [128]. He further concluded that there was, accordingly, no basis in authority or in principle for the conclusion that it was open to the court in effect to establish an assumption that planning permission would be obtained by analogy with specific statutory rules which created that assumption: para [129].

[74] In short, their Lordships concluded that in absence of any positive statutory assumption bearing on the issues, matters had to be considered as they stood on the valuation date. If had there been any thought that there could be a critical distinction between what the planning history might have been assuming a claimant seeking planning permission and one where the claimant had actually taken some steps to seek planning permission, this would plainly have required comment. We think it a distinction quite inconsistent with the thrust of their reasoning. It would not be a distinction based on fairness nor on any other broad principle which we have been able to identify. One can easily figure a case where the claimants had had no immediate intention of developing but had the prospect of realising the development value in their minds as part of a positive retirement plan. They might have taken expert advice. They might have gone a stage further and been on the point of applying when the CPO was announced. In the context of proper compensation for loss of development value we see no basis for a distinction based on the fact that the claimants in this case managed to get an application in. There is nothing in the dicta to point to such a distinction. Mr Martin could only base his argument on the absence of any language explicitly excluding it. We might note for completeness that we do not think anything turns on the fact that the application was made after they learned of the proposal to take Field 52 and before any formal steps had been taken in relation to a CPO.

[75] It was not contended that there was any explicit statutory provision which might allow the claimants to succeed and we need not address such a possibility. For completeness, reference might be made to the analysis of the speeches in Spirerose by the Lands Tribunal in the Persimmon Homes case and their consideration of thepossibility of a claim under sec 9 of the English legislation: paras. 112 to 131. The equivalent Scottish provision would appear to be sec 16 of the 1963 Act. The Tribunal took the view that the decision of the House of Lords was inconsistent with the reservation of any application of such provisions in the circumstances. We are of the same view.

[76] At first sight the Spirerose approach appears to introduce a new and undefined standard of proof in a civil context. Their Lordships did not explain by what standard a tribunal would be entitled to make a finding that planning permission “would” have been obtained: see p 182 [39] or “would actually” have been obtained: p 1827 [109]. It cannot be imagined that the court was blind to the issue of standard of proof although appeared to take such findings in the previous cases referred to as being different from findings on the normal standard of balance of probabilities. The House proceeded on the basis that the question of whether land had planning permission was a quality of the land to be valued and accordingly something to be determined on the valuation day assuming no scheme rather than by reference to the probable history of events in a no scheme world. On this approach the issue of standard of proof does not arise. It cannot be thought that their Lordship intended by implication to impose a standard equivalent to that of beyond reasonable doubt. We are driven to assume that the court had in mind only a situation where it was either admitted or could not be disputed that planning permission would have been obtained. It can be said at this point that, on any view of the present case, it was far from a certainty that planning permission would ever have been granted.

[77] The Spirerose approach can plainly create a potential unfairness. In broad terms the present case provides an example of a situation which might be common enough in practice. A tribunal could find that in the no scheme world planning permission for a supermarket would have been given for the subjects at some point before the valuation date. Such permission would remain in place for at least five years even if subsequent planning policy changed. A tribunal might have thought this was highly likely but in a normal civil context would not have required to do more than make a finding. It would be implicit that it was made on balance of probabilities. In light of such a finding, valuation at the valuation date would have been on a full value basis as the subjects would be taken to have had planning permission as at that date. But where no planning permission has actually been given and matters have to be viewed solely at the valuation date, the valuation can only be on what is known as a hope value basis. Even if hopes were high there would almost inevitably be some discount on full value and changes in planning policies could very well have led to a very significant reduction in value compared with what would have been likely in the no scheme world. In short, in such a case, valuation on the basis of a hope value at the valuation date would inevitably be lower than the probable value to the claimants in the no scheme world.

[78] The potential unfairness of this appears to have been recognised by changes in legislation affecting England and Wales. But the Scottish legislation has not yet been changed and we cannot ignore the authority of the House of Lords on the basis that the law has been changed in England nor on the view that we might have been attracted by the views of Lord Carnwath in the Court of Appeal. It was not suggested that we could.

[79] The parties in Spirerose had been agreed that in deciding whether planning permission would have been granted, the planning authority would be applying the civil standard of proof on balance of probabilities: see 2008 report at para 27. In practice it may be assumed that planners attempt to make a direct decision on the material before them rather than by reference to standards of proof. Plainly issues of policy and discretion arise. There is a certain robust attraction in the idea that as an applicant succeeds in total if he goes for a positive CAAD and gets it, he should fail in total if he gets a negative certificate. But plainly the aim of Parliament must have been to provide a fair system and not just a gambler’s throw. As expressed by Lord Bridge in the Grampian case, the statutory provisions for certificates formed “part of the overall scheme of the Act to secure the payment of fair compensation to landowners who are compulsorily expropriated”.

[80] Consideration of standards of proof does support the view that in directing the Tribunal to have regard to a negative certificate Parliament cannot have intended the Tribunal to treat it as decisive, or near decisive. Although the task of the Tribunal may be similar to that of the planning authority their functions are different. In a CAAD application the planners require to follow the provisions of sec 25. The advice properly given to the Council in relation to the CAAD application in the present case was to the effect that the same approach should be taken to a CAAD as to a live application. It is clear that they are entitled to make their decision on a balancing exercise. In Porter, the Court of Appeal pointed out that it would be unnecessary in a CAAD application for the planning authority to make any specific evaluation of the chances provided the chances were more than 50% and went on to say, “but the Lands Tribunal would be concerned in assessing value to evaluate the chances of this happening more precisely”: p704. There is a plain recognition that if the planning authority thought the chances less than 50% it would have to make a negative finding. It would be reasonable to instruct the Tribunal to have regard to that finding. The Tribunal would be entitled to give it weight as a refusal of planning permission but there would be no need to require it to take such a finding as definitive of the view of the market. It is well established that even where planning consent may be improbable the market may attach a value to a possibility: Spirerose, 2008 report, para [63].

Ransom

[81] It appeared that there was no real dispute about the law other than in respect of the extent of use which might be made of an access provided by way of the “accommodation works”. It was agreed that a contiguous property has a right to take access to a public road. If there is a gap between adjacent property and the road, the proprietor of the intervening property can prevent movement across his property. Such proprietor would be entitled to a payment in exchange for a grant of a right to cross. That is conveniently referred to as a “ransom” though no pejorative sense is intended. What that payment would be would be a matter for negotiation. The decision in Stokes does not fix a specific amount but is accepted as giving guidance to the likely outcome of such negotiation. The extent of land involved is not directly relevant.

[82] It was agreed that the question of whether there was a ransom strip was essentially a question of fact and this ultimately appeared to be focused on whether the relevant land could be said to be part of the verge. However, when we came to consider the specific facts it became apparent that there was a wider issue than the extent of a verge. The right to connect to a public road is a common law right. It does not depend on the definition of a road for the purposes of the Roads Acts. Authorities discussing roads in the context of such Acts or related legislation must be approached with caution.

[83] Both parties made reference to dicta in Morston v Whitecross Ltd. It was not suggested that there was any reason to doubt the soundness of the approach taken by Lord Malcolm. Mr Sheldon founded on certain observations in that case and did not attempt to challenge his Lordship’s approach, encapsulated in the fundamental question: “What is the extent of the land which is dedicated to the purposes of the public road?” The common law right does not depend on the statutory definition of a road. We see no need to approach the matter by considering whether the land in question is properly to be described as a verge within the meaning of the Roads legislation – although it can be said that, on any view, we are satisfied that the so-called “embankment” on the west could not properly be regarded as part of the verge and it plainly was not capable of use for physical passage in any sensible way. Where land is held by the roads authority because it is needed for the purposes of the road and for no other purpose, we have found no sound reason why an adjacent proprietor should not be entitled to use it for access. We were not directed to any reason of reason of principle or authority to that effect. The point is well illustrated by the circumstances of the Morston Whitecross case. The road had been built, as part of an intended dual carriageway, on an embankment. The embankment itself was not used for public passage but in so far as it was a necessary part of the road it could properly be said to be dedicated to public passage. This was conceded in relation to the embankment on the side which had actually been used for the road - although it must be recognised that the status of that embankment did not appear to have any bearing on the substantive issue in the case. The problem in Morston arose from the fact that although land had been reserved for a dual carriageway, the other carriageway had not been built. It seemed that the reserved level part was used for other purposes, such as a picnic ground. The dispute related to the right to use the embankment supporting that part. It could not properly be regarded as part of the functioning road. The circumstances were quite special and the discussion of the disputed issue in that case does not appear to us to have any bearing on the present. The question of whether the land is dedicated to the purposes of a road is essentially one of fact.

[84] This is a broader approach than that taken by Mr Martin. We can see that it is similar to an approach for which he contended in Elmford Ltd v City of Glasgow Council and it is fair to say that, on the face of it, his argument was not accepted by the court. However, Lord Clarke at p 272 did put the question in terms of “whether the land in question can be said to be dedicated as part of the highway” and the discussion of the matter in that case was complicated by the fact that in addition to the embankment there was a strip of land which plainly was not part of the road. The court expressly used the reference to “the strip” to include both the embankment and the land at the top of it. It was necessary for the petitioners to succeed in respect of the bit at the top as well as the embankment.

[85] It appears that, accordingly, much of the discussion turned on the wider proposition that where land had been taken for the purposes of building a road it should be regarded as dedicated to public passage. The question of whether land could only be said to be dedicated to public passage if the public could actually use the land for passage or whether it was sufficient that the land was used solely in connection with the purposes of use of the road was not explicitly asked and was not explicitly answered in that case. It can be said that Lord Clarke dealt with the matter on the basis that the petitioners had not shown that the land in dispute had ever been dedicated by respondents “in any way” as an area dedicated to public passage. There is no doubt that land required physically for the purposes of building and maintaining a road can be said in a broad sense to be dedicated to public passage. The question was implicitly answered in Morston and we prefer that answer. We see no need for a narrower approach.

[86] There was an issue about onus. We are satisfied that in the circumstances of this case the evidential onus is on the respondents. Although the fact that land has been taken in connection with road building may not mean that as matter of law it falls to be regarded as dedicated to public passage, the fact that it was overtly taken for that purpose justifies an inference of fact. The CPO plans in the present case show that they have been authorised to take land from the applicants extending to the metalled surface of the road. On the face of these plans there is no relevant gap between the applicants’ land and the road. The respondents’ averments are to the same effect. The argument is based on an averment that they “own land forming part of the B979 at the location of the proposed development.” If the land in question was indeed part of the B979, there would be no ransom strip. We return below to deal with the evidence bearing on this issue.

[87] The question of the nature of the use which could be made of the access track was not of great significance in relation to the supermarket development because it was recognised that, on any view, greater or different access would be required. If this necessitated any use of the respondents’ land other than land forming part of the road, in the sense just discussed, a ransom element would arise. Allowance for a ransom is not dependent on the extent of the land required where the land has no relevant use value to the owner. However, as discussed below, the extent of land required could potentially have been of importance in relation to any housing development. It is accordingly necessary to deal with the argument that the applicants were limited to their existing agricultural use of the track.

[88] Mr Sheldon referred in some detail to the statutory provisions placing an obligation on an acquiring authority to carry out accommodation works. We do not think these provisions have any bearing on the question of the extent to which the benefited proprietor is entitled to make use of such works once in place. It is not disputed that the applicants – or the trust which was then vested in the land ­ – had a right to seek to reserve an access to the retained land. The quality of access which the acquiring authority required to provide might have been dependant on the probable use of the land at the time but there is, in our view, no justification for the proposition that the right to take access was restricted to such use.

[89] In terms of sec 63 of the 1845 Act, if any of the owners consider the accommodation works “insufficient for the commodious use” of their lands, they are entitled at their own expense to carry out such further work as they think necessary. The section goes on to provide for resolution of disputes by the Sheriff or two justices. We do not accept that the appeal procedure can be seen as being in any way a relevant obstacle. It simply shows that the need for the company’s consent cannot be used as a ransom. The main importance of the section is that the option is given to the owner to execute such works as he considers necessary to provide for his “commodious use”. We consider that this expression points away from any attempt to restrict the owner to existing use. The work is to be done at his expense and Mr Sheldon made no attempt to advance any reason of policy or principle to support the view that Parliament might have intended that a proprietor be restricted in the use he would otherwise have been free to make of his land, simply because he had had to suffer compulsory acquisition another part. We think it can fairly be said that the underlying intention of the provisions for accommodation works must have been to minimise injurious affection to the retained land. The respondents’ argument in the present case would mean that even where adequate access to the retained land could be provided the land was deemed to be restricted to current use. There seems to us no warrant for this.

[90] In short we are satisfied that if the extent of the access track is sufficient for use for purposes other than agricultural, the applicants are entitled to upgrade it to a standard adequate for any permissible use of the subjects.

Severance

[91] We are satisfied that Mr Sheldon’s submissions were well founded and that compensation in respect of agricultural severance land is to be assessed on the basis that there is no permission for development. This result is explicit in terms of sec 50(5) of the 1973 Act which provides that the compensation payable in respect of severance land following the acceptance by an acquiring authority of a counter-notice under sec 49, is to be assessed on the assumptions mentioned in sec 5(2), (3) and (4) of the 1973 Act. Section 5 (3) does not apply in the present case. Section 5(4) is in the following terms: “It shall be assumed that planning permission would not be granted in respect of the relevant land or any part thereof for any development other than such development as is mentioned in subsection (2) above; …” Subsection (2) assumes planning permission for a specified class which has no bearing on the present case. We did not understand it to be disputed that applying these provisions to the severed land in this case, it had to be valued at existing use value.

[92] Mr Martin contended that the severed land could continue to be viewed as not having been acquired for the purposes of sec 61 of the 1845 Act and sec 41 of the 1973 Act. He suggested that there was nothing to suggest that Parliament had intended these provisions to be dis-applied. The problem, however, is not that the sections were dis-applied but that there is no longer any land to which the provisions are applicable.

[93] It is clear that when land is to be taken, the proprietor is entitled to compensation for loss of value of the land and this normally includes any established development value. No issue of injurious affection can arise. The claimant will have no land which can be said to be affected. He will have received the value of the land taken. We are satisfied that claims for injurious affection relate to the impact of the compulsory purchase on land which is retained. The concept is expressed in sec 61 of the 1845 Act in terms of “other land” - that is, land other than land taken – and in sec 41 of 1973 Act by reference to land “retained”. Where all the relevant land has been taken there is no remaining land to be affected. Where an owner has exercised the right to compel acquisition of land, there is no justification for treating it as retained land. That right is a statutory creation with specific provisions for assessment.

[94] It appears that the risk of an outcome unexpected by a claimant were foreseen by Parliament. Provision is made in terms of sec 50(3) for recall of the notice: “at any time before the compensation payable … has been determined by the Lands Tribunal or at any time before the end of six weeks beginning with the date on which compensation is so determined”.

Circumstances of present case

[95] It was not disputed that the critical issue was the question of whether or not there would have been planning permission for development of the subjects as a supermarket if there had been no scheme requiring the field. It was admitted that there was “a sustained need for a large scale supermarket in Stonehaven”: Answer 3(t). It was established that a supermarket of suitable size could have been built on the site and that there was a demand by supermarket operators for such a site. It was not disputed that Field 52 was not an ideal site. Development would have been contrary to the development plan and contrary to various planning policies. But it was not disputed that the need for a supermarket was a material consideration. Essentially the question was whether the relevant planning authority might have been expected to allow that consideration to dominate in the apparent absence of any better site.

[96] We look first at the material bearing on the contention that planning permission would in fact have been granted in the assumed no scheme world before the valuation date. The need for a large supermarket to satisfy an acknowledged retail deficiency had been identified in the 1999 Aberdeenshire Towns Shopping Study and was confirmed by the 2004 Aberdeen and Aberdeenshire Shopping Study and the 2006 Imagine Stonehaven Capacity Study. Such a need was admitted by the respondents in their pleadings. There were a number of sites other than Field 52 potentially available to accommodate such a supermarket but each such site had its deficiencies. The reporter to the CAAD appeal found that the East Newtonleys and Loop Road sites could be discounted. Although he considered that there was a possibility of use of the Recreation Park, there was no live proposal for this site and the evidence was that it was never likely to be available. It is significant that at the date of the hearing none of the alternative sites had been chosen and, indeed, it appeared that all had been discarded. We understand that there is still a proposal to have a smaller supermarket at Spurryhill but the problems over assembling a suitable site may not have been resolved. The admitted longstanding need for a large supermarket continues to be met by a journey to Aberdeen or Portlethen.

[97] Field 52 had been identified by the applicants as a possible location for development as early as 1995 and steps were taken over the period to ensure that it remained available and known to the Council. An application for planning permission, made along with a developer, Kensington and Edinburgh Estates Limited, (“KEEL”), was submitted to Aberdeenshire Council as planning authority on 18th October 2007. That application was never determined solely because of the AWPR proposal. In the no-scheme world, the Council would have had the opportunity to determine the application for planning permission for retail development in or before the end of 2009 and we accept that it would probably have determined the matter by that time. As Ms Gee explained, the matter had passed the stage of consultation with interested bodies such as Environmental Health, SEPA and the like. The main technical objection to it was by the respondents because of the AWPR. In the no-scheme world it would have been very unlikely that they would have been objectors. As trunk roads authority they would have had no interest to object unless a development had a potential effect on a trunk road network. It was not positively contended that they would have been objectors in the no scheme world although we recognise that in their evidence about the traffic difficulties of the scheme they did refer to the risk of traffic backing up onto the A90. Whether they would have identified such a risk in the no scheme world or thought it of sufficient materiality to necessitate their direct involvement in the planning process is, in our view, extremely doubtful.

[98] There was evidence of general support from the Stonehaven Community Council and positive discussions with the planning officers. Although the proposal could not go ahead until the extent of land take had been determined in the CPO process, there had been a good deal of discussion with the planning officers. We saw no reason to doubt the direct evidence that in discussions the planning officers had been broadly supportive. This would have been consistent with their report for the CAAD. The matter did not reach the stage of consideration by the Council.

[99] The interest by both Sainsbury and Tesco showed that they were satisfied, as experienced operators, that there were substantial prospects of obtaining planning permission. The agreement between Sainsbury and KEEL in 2009 was conditional on planning permission being granted for retail development at an agreed sum of £10.25 million but, as part of this agreement, Sainsbury paid a non-returnable deposit of £50,000. This also supported the view that Field 52 was judged by the market to be likely to gain planning permission for retail development.

[100] Prior to the publication of Option 2, there was local support for the development at Field 52. Mr Strang Steel spoke to support within the community. It was ranked as first preference following a public meeting of 23 November 2006. It had been supported by the Stonehaven and District Community Council in a 2007 publication. In an email of 27 June 2008, Mr Wheater of the Planning and Environmental Services Office in Aberdeen confirmed that “the field 52 site has gained more public support than any other supermarket location”. At a meeting on 12 May 2009 the Community Council had voted to oppose the claimants’ planning application but this was noted as being on the basis that they expected a further round of consultation on the site. The Community then embarked on a widespread consultation process with a publication, “The Search for Supermarket Locations”, in 2010. In an introductory description of various sites the reference to Field 52 said: “This location has scored highly in both surveys undertaken by [the Community Council] and can claim to be a ‘preferred choice’ for local residents”. After going through a sequential analysis the publication looked at Field 52. It said: “ This site has long been the preferred choice of the Stonehaven community and although at the northern end of the town and consequently not so medially located as the Loop road site it is only 0.8 miles from the market square. There are two major disadvantages” The first disadvantage referred to was about traffic management and the second was in the scheme word, the problems of the AWPR. Only first is relevant to our present consideration and we return to it below.

[101] As discussed above, we accept that the CAAD procedures can be referred to as evidence of what would have happened in an assumed no scheme world. The relevant planning authority received a report from the local officials supporting the grant of a CAAD. In that report all aspects of the proposed development were considered in the same way as would have been done in a report on an actual application for planning permission. The officials’ advice was that there was no available site closer to the town centre which did not have a physical impediment to its development; that despite the difficulties with location it was likely that public transport would be able to access the Field 52 site; and that although some junction improvements might be needed, there was no suggestion that practical or engineering solutions could not be found to the identified traffic concerns. Their view was that existing outlets would not be so affected that overall vitality and viability of the town centre would be at risk. The report also dealt with alternative developments and expressed the view that there was no reason to consider that the subjects were wholly unsuitable for residential development.

[102] The Council granted the CAAD for retail development and they did so after a debate in which the material considerations were discussed. We see no reason to doubt that the Council would have reached the same conclusion on the actual application for planning permission in a no scheme world. Eleven out of the twelve councillors supported the CAAD application. The grant would have been subject to conditions as to traffic arrangements but, as discussed below, we are satisfied that this would not have presented an insuperable obstacle. The grant was subject to various other conditions indicative of the care taken by the council to treat it as an actual application. It was not suggested that any of the other conditions would have presented any difficulty to the applicants.

[103] The respondents’ primary answer was essentially based on the proposition that as the CAAD issued by the Council had been cancelled, evidence of the views of the Council were inadmissible or irrelevant. As discussed above we do not accept that contention although we recognise the need for great care in assessing the weight to be given to such material in light of the final negative certificate.

[104] However, quite apart from the negative CAAD, it is clear that there was a body of evidence casting doubt on the prospects of getting planning permission for Field 52 at that time. Aberdeenshire Council had refused planning permission for the two analogous retail developments, namely Loop Road and East Newtonleys. Loop Road was refused permission on appeal on 13th March 2007 very shortly before the claimants’ application was made. East Newtonleys was subsequently refused planning permission on 14th June 2010. Neither accorded with the development plan. Both were greenfield sites, out of centre, and not well related to the settlement. Both had access issues and were likely to encourage, rather than limit the use of private cars, particularly the use of cars for short journeys, which was said to be of particular environmental concern. Permission was refused for East Newtonleys in spite of the deficiency of retail provision in Stonehaven, and in spite of an acceptance by the reporters in that case that there were no available sequentially preferable sites. Mr Sheldon contended that those failed proposals could not reasonably be distinguished from the proposed development at Field 52 and there is plainly some force in that submission. However, the Reporter accepted that they were properly to be excluded from consideration and we consider it too simplistic to say that they were directly comparable as being out of centre sites. Much depends on a view as to local geography and the refusal of planning permission for these sites would have left Field 52 as the only site of adequate size being discussed. Mr Sheldon also noted that Aberdeenshire Council had also decided not to proceed with retail development at Mains of Cowie, a site similar to Field 52 but closer to the town centre. However, we did not hear the detailed reasons for that decision other than that it was tied in some way to a proposed residential development. We do not think reference to it is of assistance.

[105] It was also pointed out that that the attempt to place reliance on the Council’s view of the CAAD ignored the fact that the Council’s consent would have been conditional on resolution of traffic issues. Mr Sheldon contended that these had never been resolved. However, we are satisfied that in practice a solution would have been found. The respondents did not require to develop a complete solution as the traffic issues were no longer live in light of the proposals for acquisition of the field. We are persuaded that the applicants’ estimate of the number of trips to Field 52 which represent trips that would otherwise have been made to supermarkets further north is preferable to the statistics relied upon by Mr Barr. Ultimately this came to be a matter of judgement. National statistics were available but allowance had to be made for the specific circumstances at Stonehaven. A large proportion of the working population of Stonehaven worked in Aberdeen. The contention was that a significant number of these people would currently do their supermarket shopping in Aberdeen or Porthlethen on their way home. If, instead they chose to make a special trip to a new supermarket at Field 52, this would be an addition to traffic on the road system rather than a substitute destination for traffic already on the roads. It was also suggested that the new supermarket would attract customers from further south. Such customers would admittedly be on the road network in any event as they would probably be using Aberdeen or Portlethen stores but they would be an additional burden on the immediate Stonehaven network. No evidence was available to show how many Stonehaven workers did choose to do their shopping on their way home from work as opposed to treating shopping as a separate activity. The Porthlethen store was only a 10 minute drive up the A90 and there would be no compelling need for commuters to shop on their way home. In any event, people who had that habit might continue to do so. Use of a Stonehaven supermarket by people from further south would undoubtedly have the benefit of reducing the total road useage by shortening their trips. We were not persuaded that the numbers would have any significant adverse effect on the Stonehaven network. Indeed, Mr Barr, himself, conceded in cross-examination that he did not disagree with the views of the CAAD reporter that an adequate traffic solution could be found.

[106] The main traffic issues related to the need for a controlled junction at the Field itself; the capacity of Golf Course Road roundabout; and queuing at Belmont Brae. We are satisfied that all these problems could have been overcome. Either a roundabout or a traffic light system could have been provided at the field exit. Parties were ultimately agreed that all the work including and the traffic systems nearer town could have been done for something of the order of £430,000. Although there was some suggestion of a risk of traffic possibly tailing back to the A90 itself, we are satisfied that, if not indeed fanciful, it was not a significant risk. Shoppers would quickly get to know busy periods and spread out use to avoid creating or being involved in serious traffic holdups.

[107] The Golf Course Road roundabout would undoubtedly have become busier. Traffic flow on the B979 itself to or from the roundabout would have been modest in the no scheme world and the need to use this road to access the supermarket would undoubtedly produce a very significant increase in use. Some control of flow priorities would be needed, particularly in evening when traffic from Aberdeen was coming back into town. But there is no doubt that traffic lights could have been installed. It was agreed that suitable traffic controls at the Golf Course Road roundabout and better arrangements at Belmont Brae could be provided within the overall £305,000 agreed for off-site improvements.

[108] In relation to the problems of tailbacks caused by traffic queuing to turn right up Belmont Brae, we preferred the evidence of Mr Sneddon to that of the respondents. The latter had relied to some extent on examination of the existing junction. Drivers waiting to turn right did not always position themselves efficiently and this often blocked traffic wishing to go straight ahead. But we are satisfied that road marking could allow a designated right turn lane with room to hold several queuing cars. If on occasion that produced too long a queue, traffic could, in practice, go on to Barclay Street with a choice of routes west from there.

[109] Another argument against the site was the fact its integration was not ideal because of walking distance and slope up to the site. However, we do not consider these to be major factors. On any view, Field 52 would be more attractive to walkers and cyclists from Stonehaven than the alternatives in Portlethen and Aberdeen. The Council supported the development on the basis that there was nothing closer to the town centre and that it was likely to be accessible to public transport. The most powerful factor pointing against the likelihood of a grant of planning permission by 2009 is the negative CAAD. However, we are satisfied that the whole evidence available to us would have justified a finding on balance of probabilities that relevant planning permission would have been granted in or before 2009. In reaching that conclusion we have given some weight to the evidence of the views of the local planning officials at the time of the original CAAD as disclosed in their reports and as spoken to by Mr Stang Steel. In the absence of such evidence, we would have had more difficulty making such a finding although it may be noted that Mr Nisbet did concede that it was “a real possibility” that planning permission would have been granted but for the AWPR. In any event, for reasons discussed above, we do not think that a finding of what might have happened in 2007, or before the end of 2009, can be a proper basis for our assessment.

Planning policy after CAAD

[110] Mr Martin contended that even if the negative CAAD was decisive as to matters at its date, the evidence of changes thereafter favoured the view that, at the valuation date, it was likely that planning permission would be granted. We do not think this submission well founded. We recognise, of course, that when Field 52 ceased to be available, this might have had an effect on the thinking of the planners. Comments as to policy made thereafter would have to be read with that in mind. But, as Ms Gee freely accepted, there had been a change in policy by 2013 and viewing matters broadly we conclude that the market would have been less optimistic about obtaining consent by 2013 than it might have been in 2007 or 2009.

[111] Mr Sneddon spoke to changes in transport policy which would make the Field 52 proposal more attractive. There was an increasing emphasis on environmental sustainability, specifically the need to reduce travel by car by reducing the length of trips. A development at Field 52 would make a significant reduction in the length of car journeys by comparison with present facilities. However, against that, we accept that there was evidence of a growing concern about the possible impact of out of centre retail developments on the viability and vitality of Stonehaven town centre. The minutes of the meeting of Kincardine & Mearns Area Committee of 9 and 10 March 2010 indicated agreement by that Committee that while there was a requirement for supermarket provision in Stonehaven that should not be to the detriment of existing shops. They considered that the size of any supermarket provision should accordingly be limited as well as being subject to retail and traffic assessments.

[112] The Council’s Statement for the Hearing Session on Stonehaven Retail proposals made reference to the findings of the Aberdeenshire Review of Retail Requirements and included express reference to the proposals for Field 52 : “The development of a foodstore in the middle of this size range [namely. 3500 – 5500 sq m ] would result in adverse retail impacts … and impacts on smaller settlements. Despite the views of the Reporter at the Field 52 appeal no conclusion can be drawn about the acceptability of this scale of impact …”

[113] The Statement for the Hearing Session referred to the findings of the Hargest Planning retail impact assessment in 2011 that “the development of a small superstore would have a significant adverse impact which would undermine the vitality and viability of the town centre: the town centre is not sufficiently robust to withstand the level of adverse impacts that would arise from this scale of foodstore, proposed in this type of location. The decision letter of the Reporter at the East Newtonleys appeal … supports the conclusions of the [Hargest] RIA in terms of both the magnitude of impact expected to occur and its effect on the vitality and viability of the town centre.”

[114] However, the Committee appeared to do no more than conclude that: “The extent to which the town centre is robust enough to withstand an adverse retail impact will depend upon the scale of the proposed foodstore development and its location”. It did not express a concluded view that a large supermarket would necessarily be inappropriate and indeed it went on the discuss various sites proposed for large supermarkets, including Field 52.

[115] The Committee took the view that the Field 52 site “fails the sequential approach as it is an out of centre site that cannot be made easily accessible by a choice of transport modes. The constraints provided by the railway track and the trunk road provide little or no walking catchment.” They discussed the concept of an “edge of town centre” site. This was considered to be a “location within easy walking distance of the town centre, and usually adjacent to the town centre, and providing parking facilities that serve the centre as well as the store, thus enabling one trip to serve several purposes”. The Spurryhillock site was plainly preferable as an edge of centre site. As well as easy access for pedestrians and cyclists from surrounding housing, it was convenient for the railway station and other public transport.

[116] It is unnecessary to examine all the detail of that Statement. The general tenor was not supportive of the development at Field 52 although it may be said that the aspirations of the Committee in relation to edge of centre sites were clearly hard to match in Stonehaven. The essential change was to an acceptance that the continuing need for a large supermarket could not be met. Had Field 52 actually been available the apparent decision to abandon the attempt to meet the local need for a large store would have been a harder one to make.

[117] The Report on the Examination of the Local Plan in 2012 recognised “the strong desire on the part of many members of the community … to secure a large supermarket to improve shopping facilities in the town” but concluded that: “The alternative sites suggested for a superstore lie on the periphery of the town, and would not be suitable for major retail development in isolation. They would also be likely to harm the vitality and viability of the town centre. I have therefore concluded that the more modest proposal for a small supermarket … at Spurryhillock should be pursued at this stage.” By this stage Field 52 was not available as a site and although the thrust of the finding was plainly against development there, it cannot be said to give a definitive view of the position in the no scheme world.

[118] The applicants’ planning witness, Ms Gee, accepted that by the valuation date consent for a supermarket was less likely. We understood her to say that this was because of an increasing concern for protection of the existing centre. The authoritative references tending to that effect were the new Structure Plan (2009), and the new Aberdeenshire Local Development Plan (2102) ( ADLP).

[119] In the new Structure Plan there was some change of emphasis with particular regard to sustainability, climate change, integrating residential and commercial development , and travel reduction. These can be interpreted as pointing to a move away from single use, out of town, retail developments. This change was to some extent reflected in the subsequent Local Plan although there was no expression of any explicit change from the previous Local Plan, under which the Council initially supported retail development at Field 52. We are not persuaded that these documents point to any very dramatic change in the prospects of planning permission for the site. The greater emphasis on the need to protect the town centre did not represent a conclusion that development of Field 52 would necessarily have an unacceptably detrimental impact.

[120] Ms Gee’s evidence was to the effect that the issues had not really changed and she was satisfied that there would be no serious long-term impact on the viability and vitality of the town centre. She accepted that there might be a serious impact on the existing Co-op store. Ms Nisbet referred to contrary opinion, which appeared to be based on the reports by Mr Hargest. It is clear that the reporter on the CAAD did not accept the view that there would be serious long term impact. Mr Hargest’s subsequent report put the matter in stronger terms and this no doubt influenced the Councils view. It is not for us in the present context to attempt to resolve the question of whether there would, or would not, have been serious impact on the viability and vitality of the centre as a whole had Field 52 been allowed to develop as a supermarket. It is plain that there would be a serious impact on the Co-op and it is not a straightforward matter to sort out that impact from opinions as to overall impact. The planning authority would have had to take a view. The demand for a supermarket was clear. The predictions of impact were no more than predictions with a wide variety of variables to be assessed.

[121] The main identifiable difference was that the ADLP allocated a site for retail development at Spurryhillock. The Plan recognised the need, and demand, for a supermarket but limited this to a store of 2,500 sq. m. The reporter to the Plan had supported Spurryhillock. He described it as a development of 1750 sq. m. gross floor area. The Plan did refer to the effect on the town centre of anything significantly larger - but by that time Field 52 was not available. In the consultation for the new ADLP, the Applicants had considered Field 52 for retail. It was ultimately discounted in the following terms: “A site for a supermarket has been identified … there is no need to allocate a further supermarket site , and in any case this site is required for construction of the AWPR. It is reasonable to draw the inference thatif it had been available the question would have been thought to merit further consideration.

[122] We accept the evidence from Mr Fisher that even if there was a small supermarket at Spurryhillock this would not in itself affect the demand for a larger store at Field 52. Typically smaller stores are more attractive to operators such as Aldi or Lidl. Such stores often sit near larger stores. However, the Spurryhillock site was at the value date “undeliverable” for development as a large supermarket due to multiple ownership, and existing use as a waste centre. Officials had said in 2008 it could not be delivered without market intervention by the council. Ms Gee was unchallenged in her evidence that she had never come across use of compulsory purchase powers to assemble a retail site.

[123] We had evidence of a letter of 30 May 2013 from Aberdeenshire Council to the local Community Council which recognised that the supermarket requirement for the town remained un-satisfied, that the site at Spurryhillock might not be available for development and was not large enough for the community’s aspirations”. It included the following: “For the next LDP, we have invited bids for development from the industry and anticipate a number of options for supermarket sites to be put forward. However, there are very limited sites within the town itself, and therefore, an alternative option may be to promote a supermarket with associated housing on the periphery of the town. These options will be put forward for consideration in the Main Issues Report.”

[124] We heard opposed opinions on the potential impact of a supermarket at Field 52 on the town centre. For the Applicants, Ms Gee’s view was that any effect would be temporary only. She cited the existing leakage figures (c 70%) in support. She contended that as Stonehaven was losing a large spend already, the effect of bringing the supermarket closer, with less drive time etc., would not have a permanent effect on the town centre. For the respondents, Ms Nisbet while agreeing there was a demand for a 3,500 - 5,500 sq. m. store, took the view that this would be a significant detriment to the town centre. There was some evidence, in the Hargest assessment of 2011, that the impact would be greater than previously assumed. By far the greatest impact would be on the the Co-op shop in the town centre. It would not be a function of a planning authority to protect one small store from competition although a complicating factor for the decision makers would be the evidence that the presence of the Co-op brought people into the town centre. This would be an important factor to make a decision about. It had not been accurately quantified. Both the 2008 and 2011 reports confirmed that much of the spend on a new supermarket would be a transfer from the existing leakage to Portlethen and Aberdeen. Having regard to the scale of this leakage, there is plainly some justification for Ms Gee’s view. That was consistent with the conclusion of the reporter in the CAAD enquiry and with the evidence of the Aberdeen Council at that inquiry to the effect that although there would be an impact on the existing small supermarket in the town centre, the other retail outlets would not be so adversely affected that the overall vitality and viability of the centre was at risk. It was also consistent with the views of planning officials in relation to the East Newtonleys proposal.

[125] In weighing up the various adminicles of evidence, it is fair to say that we start by placing considerable weight on the respondents’ admission that Stonehaven has had an identified need for a large supermarket since the 1999 Aberdeenshire Towns Shopping Study”. Whatever the finer points of planning or the desirability of avoiding traffic queues where possible, we are satisfied that a perceived public need for a supermarket would have been recognised by the market as likely to be a powerful persuasive influence on an elected local planning authority.

[126] It is plain that the weight to be given to that factor would have been assessed in light of local policies and politics. The demand for a supermarket was clear. Throughout Britain, examples can be found of permission for supermarkets being granted despite a probable adverse impact on traditional shops. Part of the recognition of need was based on the fact that Stonehaven residents currently used supermarkets further north. Although we recognise the desire to protect the existing town centre, the market might well have been expected to take the view that the argument that a new supermarket in Stonehaven would have moved shoppers from existing supermarkets rather than from the local shops, would have been attractive to the planners. Concern about policies of accessibility on foot might well have been over ridden by recognition that the dominant target was use by motorists and an assumption that a local bus service could be made available for the small minority of non-car users. A local committee might well have felt able to conclude that cyclists using a supermarket would be unlikely to be deterred by an extra kilometre or so - although the steep slope up to the site would plainly have been likely influence them in favour of taking the car if possible. The policy of avoiding short car trips would have been outweighed by recognition that, all else being equal a short trip was preferable to a long one. In any event, from the viewpoint of the residents of Stonehaven and indeed in considering the planning policies in relation to Stonehaven, a development at Field 52 was preferable to a supermarket in Portlethen or Aberdeen.

[127] We accept that the market would have been likely to conclude that the prospects of a grant of planning permission had diminished since 2009. Ms Gee conceded that prospects had moved from 85% in favour to about 70%. Ms Nisbet did not attempt an assessment of prospects in percentage terms but firmly expressed the view that planning permission would not have been granted for relevant retail development or for residential development.

[128] We have referred to the letter from the planning officials in May 2013. That was, of course, some months after the valuation date. However, it was not suggested that they were saying anything radically new. It can reasonably be inferred that they would have expressed similar views in February had they been required to do so. What the letter does show is that even after the relevant date the officials were still considering the need for a big supermarket to serve the needs of Stonehaven despite the proposals for Spurryhillock.

[129] However, looking broadly at the position as a whole we do not think that the market would have been confident that the prospects of getting planning permission for a supermarket at the valuation date were better than 50:50. We go on to consider the implications of that in assessing hope value below.

Prospects for residential development

[130] We have been discussing planning permission in the context of the proposed supermarket. The alternative contended for was the possibility of obtaining consent for residential development. An application for such consent had been refused in November 2003 and a second application refused in May 2005. The officials’ report for the initial CAAD dealt with alternative developments and expressed the view that there was no reason to consider that the subjects were wholly unsuitable for residential development. However, the negative CAAD was effectively another refusal as at 25 September 2007.

[131] Ms Gee explained her view that although the demand for housing had slackened because of the availability of other sites there would, at the valuation date, have seemed to be reasonably good prospects of obtaining planning consent for residential development. She spoke to the evidence bearing on the potential for consent for this. There was an identified need for housing at the valuation date although she recognised that this had been lessened by the time of the hearing because of the identification of potential for a large development at Chapelton of Elsick. She assessed the prospects of success at the valuation date as about 60%. She commented that although the housing land supply figures discussed in the local development plan were on the face of it satisfactory, in reality the overall required numbers were not being met.

[132] Although the site was outside the defined Stonehaven boundary, which was defined by reference to the railway line at that point, and accordingly outside the area appropriate for housing in terms of the local development plan, the A90 provided another clear boundary. Permission had been granted for a housing development west of the A90 at Mains of Ury. That was described as an “enabling development”. It was to provide funding for restoration of a historic house. However, it demonstrated the flexibility of the planning system. Sympathetic consideration had been given to a proposed development of “affordable housing” at site 2 and it was not suggested that there was any significant distinction between that site and Field 52. It did not present any environmental drawbacks although attention would be required in relation to noise. The Council were sympathetic to such development in the CAAD application.

[133] Although we can understand the basis of the respondents’ arguments on this matter, we find the evidence of Ms Nisbet more consistent with our experience of such issues. Ms Nisbet stressed the importance of land allocation in the Local Development Plan. We accept that use of Field 52 for housing would not have been consistent with the Plan. It would have been contrary to several policies. We are satisfied that there was no clearly identified material consideration which might have been thought likely to justify departure from the Plan. The housing development market is likely to place substantial reliance on the Plan. Although there might be a some expectation that, in the long term, the land would eventually be needed for housing, this would have been likely to lead to the type of bottom up valuation we refer to in the following paragraph. It would not have been based on a discount from potential full value. In the context of the present case, any such value can be disregarded by comparison with the potential hope value for supermarket development.

Hope value

[134] The term “hope value” may be used in different ways by surveyors and valuers. There may be contexts where it is used to deal simply with the hope that at some stage in the future there may be a possibility of some development of the land giving it a value beyond its current use. In that situation a bottom up valuation might well be appropriate. However, such an approach would, in our view, be appropriate only where the purchaser had an interest in the existing use but was prepared to offer more on the view that in the long term there might be some development. The current use value would be the dominant factor. But, in the present case, we use the term “hope value” in the sense contemplated in the Spirerose case. Where the dominant contention is that the subjects have an ascertainable value for a specific development and the problem is one of assessing the chances of such development it is clear that a “top down” assessment is appropriate; that is, assessment by considering the potential full value and determining an appropriate discount.

[135] We note that Mr Fisher cited various Lands Tribunal decisions in support of the top down approach: Lowe v Commissioners of Inland Revenue; Honeychurch v McKenna; Fifield v Commissioners of Inland Revenue; Kirkwood v Boland; Spence v Cobrin and Prosser v Commissioners of Inland Revenue. Some of these were Revenue cases where a full development value had actually been realised but a valuation at an earlier date was required for tax purposes. As Mr Rintoul pointed out there is a clear danger in relying on such cases as a guide to the proper approach where there is no identifiable ultimate outcome. However, we are satisfied that a top down approach would have been taken in the circumstances of the present case by any seriously interested purchaser. It is fanciful to think that Sainsbury would have had any interest in the agricultural value of the land as their start point. They would, in short, have had no interest in whether the land was grade 1 or grade 5. Their concern would solely have been with the prospects of establishing a supermarket.

[136] The parties agreed the full development value at £9,000,000 less “abnormal” costs of £430,000, in other words the starting figure for a top down assessment is agreed to be £8,570,000. In the present case the existing use figure is so low by comparison that any discount can effectively be assessed as a discount on the full potential value. However, we entirely accept Mr Rintoul’s evidence to the effect that the discount is properly to be applied to the “hope” element of the valuation. When seeking guidance from previous cases, it is misleading to calculate the discounts without regard to the existing use values. Mr Fisher suggested that in the cases he cited, the discounts ranged from a 10% discount where there was a “strong likelihood of planning consent being granted”, to a 75% discount where there was a “50% chance”. It is not easy to identify the reasons for the specific figures and we get little assistance from the detail of his cases. It may be added that we did not understand Mr Fisher’s own assessment to be based on the cases he cited. He expressed his view as to what a developer would have paid based on his experience in the local market and said that would represent a discount factor of 65%.

[137] The Lands Tribunal had to deal with the specific question of hope value in the Spirerose case. The matter is discussed at para [134] of the Lands Tribunal report. The full value of £608,000 was apparently on the basis of a mixed use development and the tribunal described the prospects in terms of a “good chance” of getting permission for this. However, in that case there was also a “very good chance” of getting permission for some lesser development and the tribunal plainly took that into account. They dealt with the matter in a very broad way, concluding that the purchaser would have been prepared to pay substantially more than existing use value but much less than full development value. Although the discount calculated only by reference to the potential full value was about one third, the Tribunal’s conclusion was, in effect, that the potential gain should be a discounted by about half.

[138] Before us, the evidence was that in modern times it was rare to find examples of a discount for uncertainty about planning permission for development because the practice was to make the purchase conditional on the grant of suitable permission. This is reflected in the observations of Lord Collins in Spirerose, where he quotes from a standard textbook to that effect: para [72]. In short, we were not surprised to have no reliable evidence of actual open market transactions with any bearing on a situation like the present.

[139] Mr Fisher did refer to a number of examples of unconditional site purchases but was unable to demonstrate either that a hope value was necessarily involved or the level of any discount there might have been. In Forfar, Asda was said to have paid a top up figure on receipt of food consent, but the site already had the benefit of permission for non-food retailing or residential purposes. We think it likely that the initial price of £3,800,000 reflected that existing consent rather than a discount to reflect risk of not getting full food consent. We heard no contrary analysis. There was insufficient evidence for us to make anything of the figures in relation to Halbeath, Dunfermline and we accept Mr Rintoul’s contention that it did not allow a conclusion that hope value had been paid. The site had consent as a single use employment location. We heard no evidence to show that the price paid was inflated in the expectation of a future planning consent.

[140] The same can be said of the examples of Mugiemoss Mill, Aberdeen and Stoneywood, Aberdeen. There was no analysis to support Mr Fisher’s belief that a hope value had been paid and nothing to show the amount. Mr Rintoul explained his view that the price at Mugiemoss was simply the market value for its existing use. The subjects at Stoneywood were in an area allocated in the local development plan for residential use. The purchase price of St Leonards Hotel, Stonehaven without actual planning permission for residential development appeared close to full ripe value. At best this last may show that where there is certainty as to the obtaining of consent any discount is very low but we do not think it is an example which provides useful guidance. We have no difficulty in accepting that there are circumstances where there is never any doubt about the planning position even where no actual permission exists. The court plainly was of that view in Spirerose. The present case is quite different.

[141] These examples do not demonstrate that there is any open market for sales with purchasers taking the risk of the uncertainties of getting permission for future development. In any event, they do not deal with the particular circumstances of supermarket purchase. Mr Rintoul’s evidence was that in practice there was no open market for potential supermarket sites. Unconditional purchase of such sites was unknown in modern times. This accords with our experience and the applicant’s attempts to refute it are not of any assistance. In short, there was no relevant open market evidence in the present case and we would not have expected such evidence to be available.

[142] For assessment in the present context we must attempt to find an open market value based on a rational assessment of the evidence and our understanding of how the market might work in a particular situation. We are satisfied that it would be wrong to approach the matter on the basis that, because the market might not in fact be prepared to purchase other than by way of conditional agreement, the subjects must be taken to have no value where the constraints of the legislation make it impossible to use such a conditional arrangement. We must simply attempt to identify the value which would be paid in the open market if a conditional arrangement was not possible.

[143] The purchaser is not to be viewed as a gambler taking a chance on a one-off bet but is properly to be treated as an investor looking at the market as a whole. In other words, “we must assume an investor who will consider the available evidence and reach a rational conclusion”: Young v City of Edinburgh Council.

[144] Where the potential purchasers are very large companies in competition with each other and with an interest in a number of sites throughout the country, a rational approach to assessment of their offer price would be to determine the gross hope value – that is the potential uplift from existing use value - and the percentage chance of obtaining planning permission (all other matters being equal). In Young the Tribunal spoke of an investor with sufficient funds to diversify the risk. That is plainly the position in the case of supermarket operators where the risk is likely to be spread over a number of potential purchases. In some they will be successful and obtain planning consent. In others they will not. If their assessments of the prospects have been accurate in relation to each, their overall investment should balance out at the end of the day. To succeed against competitors any purchaser would need to make an offer based on their best assessment of the probabilities of getting permission and would not have the luxury of making any other significant discount to allow for the risk of failure. In the present case we heard that Tesco had been actively involved in discussion with the applicants. Mr Fisher said that Morrisons and Asda were also interested. It may be added that by buying a site the purchaser would also have the comfort that even if he did not succeed in getting planning permission, he would have reduced the options for competitors. There would be no real justification for a further deduction to reflect the risk element in the individual case.

[145] However, we cannot press logic too far. Without having any direct evidence that such an approach would be taken we have to accept that in the real market a more conservative approach would be likely. This is consistent with such guidance as we derive from the English Tribunal’s approach in Spirerose. In relation to subjects such as the present, we consider that hope value can properly be based on a fairly conservative assessment of the chances of obtaining planning permission. This seems to us to be consistent with the views of the House of Lords in Spirerose although, as we have seen, the Court in that case was dealing with the concept of hope value rather than the present question of how hope value might be assessed. At paragraph 94, Lord Collins cited with approval a passage from Lord Romer in the Indian case to the effect that an arbitrator would assess the development value and: “He would then have to deduct from [that value] such a sum as he would think proper by reason of the degree of possibility that the land might never [be capable of development]”.

[146] The evidence of the parties on this issue was poles apart. Mr Rintoul thought there was no hope value. He founded strongly on the negative CAAD. Putting matters another way he accepted that he would have advised the claimants to sell at current use value if he had been advising them. We did not find this evidence persuasive. It is plain that Sainsburys were prepared to pay substantially more than the current value in addition to the protection they had from their conditional contract. The applicants and KEEL, with a full knowledge of all relevant local circumstances, were each prepared to expend considerable sums in hope of the development going ahead. However, Mr Rintoul’s evidence was expressly said to be based on the planning advice he had been given. He did not purport to be able to give evidence about that. As we take a different view of the planning prospects his evidence on hope value falls to be disregarded. Mr Fisher’s opposing view did not draw on any particular comparison. He said he relied on his experience, his market knowledge, and his view of strong competition for sites in the Aberdeen area. He proposed a 65% discount for a supermarket , and 80% for residential. Mr Martin did stress that his evidence had not been challenged on this issue but it as it depended in part on factors which were challenged, we require to make our own assessment.

[147] Planning permission was far from a certainty. Although we are satisfied that the chances of permission having being granted by 2009 had there been no AWPR scheme might conservatively be put at two to one, the tenor of the evidence discussed above was that it was less likely by the valuation date. But this evidence derived from the real world. In the no scheme world such evidence would never have emerged if the development of Field 52 had proceeded in 2009.

[148] Proper application of the Spirerose approach is not free from difficulty. Ultimately it may be a matter of impression for an expert Tribunal. The exercise of weighing and balancing the whole evidence does not lend itself to any helpful detailed explanation. However, we conclude, for the reasons discussed broadly above, that on the open market a buyer would have considered that there were identifiable prospects of obtaining planning permission in the present case but that the identified difficulties merited a discount of about 80% giving a figure of about £1,720,000 in relation to the potential for a supermarket.

[149] The prospect of development for housing might have helped underpin that figure. The potential risk of loss if no permission for a supermarket could be obtained would be lessened if there was a realistic possibility of being able to get permission for residential development. However, in the circumstance of the present case we do not consider that any weight can be attached to that and see no reason for any enhancement of the above figure.

[150] As will be seen, we consider that no ransom element arises. Had there been such an element, it would have been appropriate to regard it as a cost to be taken into account by way of deduction from the full value before attempting to assess hope value. If we are wrong in our view of the proper approach to land used for the purposes of a road, there would have been a ransom element in relation to the supermarket but not, on our view of the evidence, in relation to the residential possibilities. Applying a 20% ransom element to the development uplift of £8,500,000, the amount to be deducted from the full figure would be £1,700,000, to produce a figure of £6,800,000. A discount of 80% would leave £1,360,200.

Ransom

[151] The embankments on the east and west sides of the B979 adjacent to Field 52 were included in a 1982 CPO by which the Secretary of State for Scotland acquired land for the purposes of the A92 Stonehaven Bypass. Title to land on both sides of the metalled surface of the B979 has since then been held by the Scottish Ministers. Plans of the 1982 land-take show that a wide strip was taken to the west of the road itself. A track exists, providing access from the B979 to Field 52. The track was constructed at the expense of the Scottish Office as part of accommodation works carried out following the 1982 CPO. These accommodation works were referred to in a 1984 receipt by the Sluie Trust in favour of the Secretary of State. Until the valuation date the access track had been used only for agricultural purposes i.e. to allow the field to be farmed. It was big enough for substantial agricultural vehicles.

[152] The embankment on the west side of the B979 is very steep and overgrown with vegetation, trees and shrubs. There was no suggestion that it had ever been used for public passage in any physical sense. It is unlikely to have been used because there is a footpath on that side of the road. Mr Sheldon described the embankment in terms of being essentially dedicated to the purpose of providing support for the field. But that is to turn matters upside down. Although described as “embankments” the construction appears more clearly to be a cutting. We did not hear detail of the history of the construction of the road. The suggestion was that in 1982 more land was taken than was needed for the purposes of the road. But this was not spoken to in evidence. Clearly a road ran under the railway prior to the 1982 CPO. But considerations of topography plainly support the inference that the whole cutting was needed to facilitate the road. The dominant purpose of the banking is to allow the road to run at a lower level than the field.

[153] In the present case there is no speciality such as the reserve carriageway in the Morston case. We are satisfied that the western slope or embankment falls to be described as dedicated to the purposes of the road. This appears consistent with the approach taken to the embankment on the west of the carriageway in that case. In any event, it was not suggested in the present case that any part of the land was held by the respondents for any positive purpose other than in connection with the road. We are satisfied that the adjacent proprietor is entitled to take access across it and that no ransom strip has been established.

[154] Although the evidence on this was confused by the absence of specific averment, clear plan, or direct evidence on behalf of the respondents, we understood it to have been assumed by them that they had acquired title to an area to the west of the top of the embankment. It appears that this contention was based on the assumption that the applicants’ fence marked the east boundary of their property. We are satisfied that there is no warrant for this. Mr Strang Steel explained that the fence was erected where it was purely as a matter of topographical convenience. It was not established that the respondents owned any land west of the embankment. Although the scale of the 1982 plan does not make it possible to define a line with any great confidence what is shown is limited to land depicted as cutting or embankment. The natural assumption would be that the respondents limited their land-take at that time to land necessary for the purposes of the road. In any event, there was no positive attempt to show that the respondents in fact held title to any other land.

[155] We accept that if the respondents had established a title to any land at the top of the embankment it would be likely to have been a ransom strip in relation to the proposed supermarket. It was not disputed that the existing access route would not be sufficient for the purposes of a supermarket. The project would require use of some part or parts of the embankment and of the land between the embankment and the applicants’ fence.

[156] It may be added that we heard no positive evidence to satisfy us that there would be any necessary ransom strip in relation to the possibility of a residential development. There was no evidence that that the existing access route would necessarily be inadequate for domestic traffic. If it could cope with such large vehicles as pea harvesters - as was spoken to by Mr Strang Steel - it would be adequate for normal domestic traffic and for the occasional large vehicle such as furniture lorries and emergency services. In short, we are not persuaded that there would be any need for additional land in relation to housing although there would, of course, have been a need to upgrade the nature of the road itself. However, as we are satisfied that the hope of residential development was too remote to be a significant element in the market’s assessment of the situation, no more need be said.

[157] As we are satisfied that the evidence in this case did not establish a strip at the top, it is not necessary to deal with the valuation implications of such a strip. However, in case we are wrong in our approach to “the purposes of a road” and it is necessary to have regard to actual passage by members of the public or the statutory definition, we confirm our view that the banks of the cutting were not used for passage and could not properly be described as verge. On that view, the cutting would in whole or part fall to be regarded as a ransom strip. It is necessary to express our view of the valuation consequences.

[158] We accept Mr Martin’s contention that this would not be a matter of slavishly adopting the percentage chosen in Stokes. Negotiation with the proprietor of the ransom strip would be required. That proprietor was a public authority. Such authority would be entitled to have regard to its own commercial interests but it would not be expected to act capriciously. We heard no evidence of how Transport Scotland as a public body would approach a ransom situation in a case like the present nor evidence of the view the market would take of the need for such a negotiation. Some factors can be identified which take this out of the normal commercial sphere. It would be an element in any negotiation that the respondents' would need to be mindful of the wider public implications of their attitude to the negotiation. In particular they would have to consider how their approach might affect future CPO schemes. At present we would not expect landowners to be greatly concerned about the precise extent of proposed land-take for road works. A certain latitude would be expected and this would ease the task of roads engineers. But if any excess was liable to create a ransom to be used against the owner in future that attitude might be expected to change. We need not explore the implications of this other than to say that the market would be likely to expect a lower ransom to be agreed in the circumstances than might have been agreed in a one-off commercial deal. Further, in the negotiation account must be taken of the options open to the developer. In a commercial negotiation the ransom holder would have to allow for the risk that there might come a point at which the claimants would decide to settle for development for housing free of the need to share profit.

[159] There was little direct evidence on this whole issue. But in all the circumstances we think it would have been reasonable to take 20% as the share of the profit which the developers might have expected to negotiate for any ransom ground that had been proved to exist in the present case. An appropriate sum would have fallen to be deducted as part of the cost of development.

Expenses of CAAD

[160] The applicants claimed an award to include the expenses incurred in relation to the CAAD application and the Appeal inquiry. They had succeeded in the initial process and it had never been suggested that they had acted in any way unreasonably in resisting the appeal. There had been no challenge to Mr Strang Steel’s evidence that the total expense had been £130,233 of which the applicants had borne half. This expense had been incurred as part of the consequences of properly establishing the compensation due as a result of the CPO. He referred to sec 25 (9A) of the 1963 Act as amended. The respondents' resisted this claim on the ground that it had been initiated before any compensation had been applied for. It was not properly to be viewed as part of the negotiation process. Mr Sheldon contrasted this with the decision in The Danzan Trust v City of Edinburgh Council.

[161] We have some sympathy for the respondents' contention that attempts to negotiate should precede any type of litigation whenever possible. Had there been no CAAD procedure neither side would have been in a position to make any categorical assertions about value. Assessment of hope value would have been necessary and this exercise might have been expected to bring the parties somewhat closer to each other than they were at the start of the litigation.

[162] However, we do not consider that the applicants’ conduct in seeking a CAAD could possibly be described as unreasonable. The procedures are designed to assist the process of assessment. They were entitled to seek to show that planning permission would have been given and they were initially successful in that exercise. It is entirely clear that this would not have been conceded. As can be seen from the figures in this case, the difference between a claim based on a positive CAAD and one based on hope value can be very substantial.

[163] The question of expenses must be resolved by reference to the statutory provisions. We accept that the reference to “expenses reasonably incurred” covers the whole CAAD exercise as well as allowing challenge to individual items. We are satisfied that, in the broad sense, the expense was reasonably incurred. There has not yet been a challenge to any individual item. In the context of assessment of compensation the plain meaning of the expression “shall be taken into account” is that expenses reasonably incurred shall be included as part of the compensation. We are satisfied that the applicants would have been entitled to recover the expenses of the initial application had they presented a claim for these. But they simply advanced a composite claim. This may well have been because the bulk of their expense related to the appeal procedure. The Act makes explicit provision for recovery of expenses of appeal. They are to be recoverable by an applicant “where any of the issues on the appeal are determined in his favour”. This express provision must be taken to exclude the alternative. We do not read it as giving the Tribunal a discretion to allow recovery where issues are not determined in his favour. It may be added that we are satisfied that the “issues” referred to in this context do not cover every question of fact or opinion raised as part of the evidence in the appeal. The expression “issues on the appeal” can be taken as equivalent to “issues in the appeal”. The issues in this context are the substantive questions specified in subsec (4) of sec 25. In the present case the applicants were unsuccessful on the substantive issues. We can make no award in respect of the appeal stage and accordingly, as matters stand make no award under this head. However, various invoices were lodged. We were not directed to them in course of evidence but material lodged might allow a calculation of the expense involved in the initial application. We do not think that the respondents' would be prejudiced by our giving the applicants a chance to restate their claim in terms of the first stage if they think it worthwhile to do so. We would hope this figure might be agreed.

Other claims

[164] The applicants advanced certain other claims in their pleadings. One such claim was for the expenses incurred in pursuing the claim. This claim must be taken to relate to stages before the application to the Tribunal. It appears to have a matter of agreement that such a claim would be admissible as properly based on Rydes scale. The dispute related to the appropriate uplift. The applicants claimed 40% and the respondents asserted that 25% was appropriate. They said this had been accepted as appropriate in relation to other similar claims. In absence of evidence or submission in support of the higher figure, we can do no more than conclude that allowance should be made for such expenses on Rydes scale with the 25% accepted by the respondents. We assume that the appropriate figure, calculated on that basis, will be capable of being agreed but if not we would allow further submissions on the evidence bearing on the matter.

[165] The other heads of claim were not pressed by counsel. This seems to have been the exercise of a wise discretion and it is unnecessary to say much about them. We are satisfied that the cost of unsuccessfully opposing the CPO on the basis of an alternative junction were not proper parts of a claim for compensation. There is a separate expenses regime for CPO procedures. The loss due to the need to abandon the application for planning permission was not an aspect of calculation of the value of the land to be taken, it was an attempt made to obtain an actual permission. We are not persuaded that it is good head of claim. The same can be said of the claim for bank overdraft. There are statutory provisions for interest designed to meet the consequences of delay in payment.

[166] We had some concern about the claim for loss of access to the adjacent land. This was effectively a ransom strip claim at the instance of the applicants. The reasons advanced in relation to their prospects of obtaining planning consent for residential use of their subjects, can also be applied to site 2. However, this would have been a matter for the purchaser of their site. Parties were agreed on the full value. We heard nothing of the effect on such value of a reservation of a right of access across the site. A separate claim under this head would be inconsistent with the claim based on the full value of the subjects.

[167] It is hoped that parties will be able to agree interest in accordance with usual practice.

Conclusion

[168] We understood it to be agreed that if we were against the applicants on the severance issue, any award should be made on the basis of an appropriate proportion of the development value attributable to the 1.3 hectares acres originally to be acquired. Accordingly if we were making an award in light of the material discussed above, we would apportion our figure for hope value 1.3 : 3.4. We would apply a similar apportionment in reverse to determine the agricultural value of the severed land. However, it is plain that the figures discussed above would be likely to lead to a withdrawal of the counter-notice in terms of sec 50(3) of the 1973 Act. Although Mr Sheldon reserved his pleas it was not disputed that the applicants should have an opportunity to consider this. We shall make no formal determination at this stage but continue the cause for further procedure.

[169] We are entirely satisfied that the cause merited the use of senior counsel and we were grateful for their assistance and for the extremely efficient way in which they dealt with the hearing. Their written closing submissions with full annotated reference to relevant productions greatly eased our task of reviewing the voluminous folders of productions. The use of a joint bundle of authorities was also helpful. We have no doubt that expenses should be taxed on the Court of Session scale. We heard no objection to the proposed certification of all the expert witnesses and accordingly certify them as skilled witnesses for the purposes of taxation.

[170] We shall continue for further submissions on expenses.

[171] If a further hearing is needed, we shall invite parties to discuss with our Clerk the precise detail of the outstanding issues and would expect to require intimation of heads of argument in advance of any hearing.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 13 October 2014

Neil M Tainsh – Clerk to the Tribunal