NOTE

Edinburgh and Lothians Greenspace Trust v Network Rail Infrastructure Limited

[1] The Glenesk Viaduct, just north of Dalkeith, was built in 1831 to carry the Edinburgh and Dalkeith railway over the River North Esk.

[2] In 1969 that stretch of railway together with its extension to the Borders was closed as part of the “Beeching” cuts. But it continued to be owned by the British Railways Property Board. By 1990 it was in a state of disrepair and what was to happen to it was the subject of discussion among said Board, Midlothian Council, Historic Scotland and other organisations.

[3] Edinburgh and Lothians Greenspace Trust, the applicants in this case, are a charity whose objects include the conservation of the natural and built environment, including historic buildings and artefacts. They were previously named Edinburgh Green Belt Trust and under that name became involved in the discussions to which we have referred.

[4] In 1991 Midlothian Council asked Edinburgh Green Belt Trust to take ownership of the viaduct and responsibility for its restoration. A disposition by the British Railways Property Board followed.

[5] Edinburgh Green Belt Trust set about fundraising for the project and they raised and spent £315,000. The result was a well restored viaduct which carried pedestrian and cycle paths across the river and was a very considerable recreational asset for the surrounding area.

[6] By the mid-2000s, however, the viaduct had been earmarked for a return to its original purpose as part of the Waverley Railway Project and in 2008 it became vest in Scottish Borders Council under the provisions of the Waverley Railway (Scotland) Act 2006. In other words, it was compulsorily acquired.

[7] In this application, the applicants, as successors to Edinburgh Green Belt Trust, seek compensation in the sum of £566,865 in respect of that acquisition under and in terms of the Land Compensation (Scotland) Act 1963 (“the 1963 Act”). The application as raised was directed against Scottish Borders Council but since rights in the viaduct have now become vested in Network Rail Infrastructure Limited, they are the present respondents.

[8] The respondents having taken a plea to the relevancy of the application we heard counsel on the matter, first on 25 November 2015 and again, following an opportunity given to the applicants to amend their case, on 17 February 2016. On both occasions the applicants were represented by Mr John Campbell QC and the respondents by Mr Ross McClelland, advocate. We gave our decision, ex tempore, following the second hearing but the respondents have asked us to write on the matter.

[9] Section 12 of the 1963 Act contains rules for assessing the compensation payable on compulsory purchase. So far as relevant for present purposes it reads as follows:-

“Compensation in respect of any compulsory acquisition shall be assessed in accordance with the following rules:-

(2) The value of land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise:

(5) Where land is, and but for the compulsory acquisition would continue to be, devoted to a purpose of such a nature that there is no general demand or market for land for that purpose, the compensation may, if the official arbiter is satisfied that reinstatement in some other place is bona fide intended, be assessed on the basis of the reasonable cost of equivalent reinstatement: …”.

[10] The sum sought by the applicants is made up of the costs incurred in restoring the viaduct indexed-linked to rises in engineering costs over the period between expenditure and the relevant date (8 April 2008) together with certain other professional costs, such as surveyors’ and legal fees. The claim relies on the two rules of Section 12 set out above.

[11] Reliance on the first of these came to be abandoned by the time of the second hearing. In short that was because, quite obviously, the amount which land, if sold in the open market by a willing seller, might be expected to realise bears no necessary relationship to the sums invested in the land to get it into its present condition, far less sums historically spent. Mr McClelland gave the example of two houses in identical condition, one having been restored as a hobby by its owner and the other having been the subject of substantial expenditure. It was clear that they might be expected to fetch the same price without any reference to what the sellers had spent.

[12] By the time of the second hearing, therefore, the applicants had come to rely only on rule (5). The applicability of that Rule, in principle, is obvious: there is no general demand or market for viaducts and for compensation purposes the fact that it was required by the new Borders Railway has to be left out of account in terms of sec 13(1) of the Act. The applicants’ difficulty, however, arises with the second part of the rule: clearly there is no intention to reinstate the viaduct in another place.

[13] In those circumstances it was not surprising that Mr Campbell contended for a “wide and generous” interpretation of the words “reinstatement in some other place”. Having been persuaded of the need to give further specification of the applicants’ intentions in terms of reinstatement in the course of the first hearing, the Minute of Amendment tendered at the second hearing listed 12 projects in the (loosely) Dalkeith area on which the applicants would, or may, spend the sum which was being claimed in this application. This was under cover of a proposed amendment in the following terms:-

“The applicant has considered whether there are other projects sufficiently cognate with the reinstatement of the viaduct to its purpose at the time of acquisition to which compensation money might be devoted on land within the control of the applicant or within the control of one or more of their sponsoring local authorities. Broad descriptions of those projects and their approximate cost are shown in the schedule hereto. The applicant will conduct a priority exercise in the event that it is awarded compensation for the compulsory acquisition of the viaduct, and therefore devote funds to such of those projects as are readily available for completion.”

[14] At the second hearing the respondents opposed that proposed amendment. Mr McClelland’s attack was in three parts:-

(1) That the proposed amendment persisted in the misconceived approach of seeking to recover historic repair costs;

(2) that it was unspecific in terms of fair notice; and

(3) that, if allowed, it would put the respondents to substantial expense for no purpose.

[15] Mr McClelland’s argument was as follows. Rule 5 was about reinstatement of land use somewhere else and it involved two steps; (i) identification of a proposed reinstatement and consideration of whether it was equivalent to what had been lost, and (ii) asking what it would reasonably cost to carry out the proposed reinstatement. The valuation exercise only arose if the Tribunal was satisfied that there was to be equivalent reinstatement in terms of the first stage of this process.

[16] Despite the proposed amendment, it remained the applicants’ case that its basis for valuation was the amount of its investment in the reinstatement of the viaduct. That was not a valuation of what it would cost to reinstate the purpose elsewhere. The applicants had listed 12 separate projects with a breakdown in cost totalling the sum being claimed for in this application. So their case could be summarised as saying “here are 12 projects on which we might spend what we get by way of compensation”. That was plainly not the right way of making a claim under rule 5. It was back to front. It started with the compensation the applicants wanted and then gathered together 12 projects on which they might spend it. If one asked why there were only 12 projects listed, it was because they added up to the costs the applicants were seeking in this application. That was not a legally relevant claim and we should reject it.

[17] In terms of lack of fair notice, it was not said which projects would go ahead. The applicants were not offering to prove, which, if any, of the 12 projects, would actually materialise: it could be all, it could be none. That posed substantial difficulty for the respondents in attempting to answer the Minute. Which of the proposed projects was the equivalent of the viaduct? There was no way of knowing. Nor was there any way of knowing what the cost might be and therefore assessing its reasonableness.

[18] If the respondents were required to answer this Minute, they would have to consider each of the 12 projects, asking if they constituted equivalent reinstatement and then, if so, addressing their cost. That may turn out to be a complete waste of time, effort and expense because there was no certainty, in terms of the applicants’ proposed pleadings, that any of them would eventuate. That was why the respondents were asking for dismissal at this stage.

[19] Mr Campbell, in reply, submitted that there was sufficient to allow matters to go to enquiry. In terms of the requirement for equivalent reinstatement, we had on the last occasion looked at the cases of Zoar Independent Church Trustees v Rochester Corporation [1975] QB 246 and Edge Hill Light Railway Company v Secretary of State for War (1956) 6 P & CR 211. It was clear from these cases that what was required in the way of reinstatement was not something precisely identical to what was being lost but something broadly equivalent.

[20] The question for us was whether the proposed amendment contained sufficient to justify enquiry. The Jamieson v Jamieson 1952 SC (HL) 44 test applied. The question was whether the application must necessarily fail even if the applicants proved all their averments. That was not the case here. That was not an inevitable conclusion. The flaw in Mr McClelland’s approach was that it was too literal. We were dealing here with a public charitable trust, devoted to public purposes, a public body respondent and a public location so the Tribunal should take a wide and purposive interpretation to rule 5. It should interpret rule 5 so as to allow a just conclusion. The claimants had put in play the only valuation they had. It was clear that there could be no physical reinstatement of the viaduct, so it had to be something else. It was sufficient that what was proposed were purposes reasonably cognate in terms of locality and function. What had been lost was a recreational asset and what was proposed, by way of reinstatement, was also of that general nature.

[21] Furthering enquiry, on the basis of the amended pleadings, need not be as difficult as Mr McClelland had suggested. The schedule of proposed alternative projects was not merely a wish list: all the information as to costs etc was available or could readily be made available.

[22] In summary it was not possible to say that this was a case which was bound to fail. On the contrary it at least deserved enquiry. The respondents’ motion should be refused, a period of adjustment allowed and thereafter a proof fixed.

Decision

[23] We are entirely satisfied that the proposed amendment does not meet the criticism of the relevancy of the applicants’ pleadings in relation to rule 5. It starts at the wrong end. It starts with the compensation the applicants think they should have and then works backwards towards finding a way of justifying it. Moreover, it does not identify a particular, clear, tangible project which it advances as reasonable reinstatement of the viaduct, viewed as a recreational asset. Instead it is a list of possibilities. Consequently there are no averments as to reasonable costs of reinstatement, only a global sum equal to the compensation sought but not the source of it. Instead what we have is an attempt to recover historic investment in the viaduct, index linked. We are satisfied that that bears no necessary relationship to the cost of acquiring any equivalent recreational asset. The applicants’ case is, therefore, bound to fail. We therefore dismissed the application in terms of our Order of 17 February 2016.

[24] We were concerned as to whether this produces an unfair result. The applicants have raised and spent a very considerable sum of money on the viaduct, all to very good purpose. It may seem unfair that they are not allowed to recoup it. However we think Mr McClelland was right to submit that those costs have been “sunk” and their value already realised. The purpose of the investment was to conserve the structure and to create a recreational asset. That purpose has been served and has now been replaced by use of the viaduct for another public good. Their entitlement is restricted to what the 1963 Act allows and this application cannot succeed under any of its provisions. One imagines, however, that the respondents would wish to pay something to the applicants for the acquisition of a viaduct which, otherwise, they would have had to construct anew or very substantially restore, but that is a matter between the parties.

Expenses

[25] The applicants conceded a motion for expenses. This has been dealt with in our Order of 17 February 2016.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated ex tempore on 17 February 2016 and in writing to the parties on 25 May 2016

Neil M Tainsh – Clerk to the Tribunal