Scottish Court of Session Decisions

[1] In this action the pursuers seek payment of £31,000,000 from the defenders on the basis that they have been prevented from developing their land by reason, only of the defenders' pipeline which passes through it.

[2] At the procedure roll, the defenders sought dismissal of the action on the ground that there was no relevant liability. They also sought dismissal on the basis that there were no relevant averments of loss and finally, sought deletion of certain averments from probation in the event of an enquiry being allowed. The pursuers argued their plea to the effect that there were insufficient averments to discharge what they claimed was an onus upon the defenders to establish facts in order to avoid liability. Failing proof being restricted to quantum, however, they sought proof before answer on the whole case.

[3] In 1975 Mrs Margaret Carnegie or Miller owned, amongst other lands, the farms of Farrochie and Nether Cheyne near Stonehaven. She granted a Deed of Servitude to the defenders and their successors and assignees so that a line of steel pipe, not exceeding 36 inches in internal diameter, could be laid in and through the lands. That Deed of Servitude is the central document in the case.

[4] In 1987 the pursuers acquired, as two separate items of property, part of the farm and lands of Nether Cheyne amounting to 98.04 acres and part of the farm and lands of Farrochie extending to 103.21 acres. For those 201.25 acres they paid £176,000 i.e. about £875 per acre. In the disposition which constitutes their title, dated 22 January 1987 and recorded in the General Register of Sasines for County of Kincardine on 20 February 1987, the pursuers became owners of the servient tenement. From that recorded disposition it is apparent that the whole lands they purchased are traversed by no fewer than three pipelines, namely those of the defenders, of Shell UK Ltd and of British Gas Plc granted under subsequent Deeds of Servitude in 1983. The extent to which development of the pursuers' lands is inhibited by these other pipelines, in any event, was not the subject of averment.

[5] That Deed envisaged the construction of the 36 inch diameter pipeline and contained the following obligation:

Accordingly, the pursuers were in terms of the Deed of Servitude prevented from undertaking any development on a 23 feet band of land traversing their property.

[6] The Deed of Servitude contained a standard schedule of conditions, the relevant portions of which are at Clause 25(A) and (F):

[7] Not long after their purchase of the lands, the pursuers began a series of planning applications seeking to develop their lands. The first application in 1992 related to 49 hectares (120 acres) for commercial and industrial purposes. It was refused, was appealed and the appeal was dismissed on 17 May 1993. A second appeal to develop for industrial and business development on 10 hectares was also dismissed on 5 October 1995. The first application was for virtually the same site as that in the present application. Another application was made dated 24 January 1995. According to a report later referred to, the indicative layout showed construction directly over the oil pipeline. (That would have been precluded by the pursuers' title). That application was for 51 hectares. Grampian Regional Council called in that application from Kincardine District Council to whom it had been made. A report was made to the planning committee dated 22 August 1995 as a result of which the application was refused. The refusal is 6/6 of process and gives four reasons for refusal. These were set out thus:

[8] An appeal against that refusal was made on 4 October 1995. A different development plan modified the original indicative layout illustrated. It omitted development at a scheduled ancient monument (a modification which plainly indicates that the whole area might not be suitable for development).

[9] On 6 June 1996 the pursuers had applied to Aberdeen District Council for outline permission for a pedestrian footbridge to connect Stonehaven to the mixed development proposal at West Farrochie. The council failed to determine the application within the prescribed period and an appeal was lodged. A further plan dated November 1996, called Industry Option, indicated a reduced proposal for industry and profile planting on an area approximating to the second previously unsuccessful scheme.

[10] By 1996 there were various other planning applications by different developers in and around the area. These were all considered by a reporter who made recommendations to the Secretary of State; not all of these recommendations were adopted. However, in relation to the particular site in issue in this case, the reporter, having considered the written submissions of the pursuers in relation to West Farrochie noted the following:

He then proceeded to recommend refusal of the appeals and, specifically, recommended refusal for the limited industrial application and footbridge because the development was an undesirable breach of the obvious physical definition of the town at the by-pass and had access limitations. He noted that the constraints of the adjacent oil pipeline on the marketability and possible industrial uses of the land would reduce the potential contribution of the site to prosperity and employment. The Secretary of State accordingly rejected all the pursuers' proposals.

[11] The pursuers pled that they had been precluded from developing their land as a consequence of a refusal of planning permission by reason only of the existence of a pipeline or, alternatively, on grounds not unrelated to the existence of a pipeline. It is a matter of admission that the major hazards assessment unit of the Health and Safety Executive, having carried out risk assessments, have advised planning authorities about appropriate consultation zones for proposed development near pipelines. In 1995 the distances of their inner middle and outer consultation zones were 110 metres, 380 metres and 435 metres respectively. Four classes of development in descending order of vulnerability were categorised as follows, (1) institutional accommodation and educational establishments; (2) residential accommodation; (3) retail outlets and leisure facilities; and (4) commercial and industrial development below a certain size. The 435 metre consultation zone precludes development of the first three types on the site apart from a small area to the north-west of the A90 trunk road.

[12] The pursuers plead the planning processes, consultations and proposals made by the local authorities. A document entitled "Choices for Growth" was published in February 1995, which it was hoped would provide interim guidance on policy. There was no structure plan other than that approved in January 1988. Kincardine suburban area local plan had been adopted in August 1983. There were various drafts and submissions thereafter to the Local Authorities and the Secretary Of State, but no later approved plan.

[13] In Condesendence 6 the pursuers make averments (p. 32, A-C) about the defenders' actings in relation to appeals against refusal of planning permission, which actings are said to be inconsistent with their refusal to accept that the presence of the pipeline precludes any development of the pursuers' land. The defenders moved that these averments be deleted and I refer to their argument below.

[14] The pursuers' averments of loss simply state that they have been denied the opportunity to develop 125 acres being 25 acres for industry and 100 acres for housing, claiming that the development value of industrial and residential land is £120,000 per acre and £280,000 per acre respectively. On that basis they claim £31,000,000.

[15] Both the Dean of Faculty for the defenders and Mr Martin for the pursuers adopted their respective junior's entire argument. It is therefore only necessary to record the arguments for the parties once.

[16] For the defenders it was argued that the pursuers must aver themselves within Clause 25A, quoted above, properly construed and applied to those facts that appear from the pleadings and documents. The pursuers had proposed a mixed use development on 51 hectares and lodged a planning application seeking planning consent which was refused. They were thereby prevented from pursuing the development sought by that application. That application was refused for a variety of reasons of which only one was the existence of the pipeline. The defenders founded upon the reasons for refusal given in 6/6 of process, and upon various other passages in 7/1 of process. In 7/1 the Secretary of State's reporter deals with various issues which have nothing to do with the pipeline and which would apply regardless of a pipeline. From a consideration of the pleadings, it can be determined now that paragraph 25A is not satisfied. To the pursuers' averment that the other constraints could be overcome, at 25D-E of the Closed Record, it was argued that that was not a relevant consideration at this time. Paragraph 25A contains a "but for" test. It dovetails with paragraph 25F which provides that, even if there was a refusal by reason only of the pipeline, the defenders could prove that there were other reasons which would have applied had they been considered. It is also significant that 25F does not deal with a conditional grant but only with refusal. It therefore has no application to the present set of circumstances.

[17] There being no plea directed towards personal bar, the averments relating to certain statements made by the defenders in relation to safety matters and the like, cannot assist as a matter of relevancy in determining the present issue.

[18] So far as quantification is concerned, there is no fair notice of how the sum sued for is arrived at. The 125 acres (51 hectares) mentioned were not all owned by the pursuers; there are other proprietors. It was not said how much was owned by the pursuers. It was not pacified what part of the land could have been developed, and what would be subject to constraints. The averments are too broad to give any fair notice of the amount of the quantification by the pursuers.

[19] When the document is read as a whole, the only reasonable interpretation of Clause 25 is that if the owner is wishing to develop and the development is prevented in whole or in part, then the proposed developer has the right to compensation. The crucial issue should be whether in fact the proposed development is prevented by the existence of the pipeline. The defenders were not entitled to equate "prevented" with refusal of planning permission. The only reasonable construction of Clause 25, is that there needs to be an enquiry into whether the development was in fact prevented by the pipeline. That is not determined solely by reference to a reason for refusal. 25A properly construed envisages a wider enquiry than simple refusal, because if it were not so paragraph F is redundant. A planning application could be looked at as a starting point and reasons for refusal of the grant would provide relevant evidence, but the defenders' approach is artificial because it does not bear any relation to the reality of a process which the company must pursue in the planning system to get planning permission for 51 hectares. There should be an enquiry into the strategy which underlay the decision, not restricted to the decision of the planning authority. If it can be established, say via the document "Choices for Growth", that there was some likelihood of development west of the by-pass, but that all such development could not take place because of the pipeline, then compensation would be due.

[20] In relation to the proposed deletions, the defenders' actings were relevant to the pursuers' construction of the documents and also in respect of the issue of compatibility of development and pipeline.

[21] So far as quantum is concerned, losses of development value are envisaged in 25A and the averments are sufficient to give notice about what is claimed.

[22] Senior Counsel challenging the reliance solely upon the determination of the application for planning permission by the defenders, pointed out that the pursuers were relying upon the whole facts and circumstances which include, but are not restricted to, that refusal. Determination of the issue of whether or not development is prevented, does not solely depend on refusal of planning permission. There can be permitted or prescribed developments, for example.

[23] In my view, it is critical that the pursuers, if they seek to found upon Clause 25, are able to establish that proposed development of a specific nature is prevented, in whole or in part, by reason only of the existence of the pipeline. It is considered that Clause 25 deals with a specific proposed development and not development in general. The proper question is, therefore, whether the proposed development is prevented by reason only of the pipeline. The Clause only envisages that there should be a refusal or conditional grant of planning permission following upon an application. The notice which is to be given to the company has to include details of "the application for" planning permission. That is an essential prerequisite and an essential safeguard for the defenders against any claim that some form of development however fanciful would be prevented and said to be the result of the existence of the pipeline. Had the condition been intended to encompass the wide ranging contention of the pursuers, the Clause might have read any application for planning permission instead of "the" application. Accordingly, the parties are tied to the specific application for specific planning permission.

[24] The averred refusal of planning permission indicates quite clearly that the existence of the pipeline was not the only reason given by the local authority for refusal. The appeal before the Secretary of State did not consider other issues. It did not need to do so. The presence of the pipeline was sufficient reason in itself for the reporters' task. It does not follow, however, that the other reasons given by the local authority were irrelevant can be disregarded. Further, the subsequent proposed development which was refused on a lesser area, was not refused only because of the existence of the pipeline, it was refused because the development was uneconomic and for other planning and amenity reasons.

[25] The construction of Clause 25F provides that even if planning permission had been refused only on the ground of the existence of the pipeline, the company can prove that it would have been refused in any event for grounds unrelated to the pipeline.

[26] The refusal was specified to be upon several grounds. The pursuers did not insist upon their appeal in relation to the larger area before the Secretary of State. It is also apparent from the decision of the Secretary of State following upon his reporter's recommendations, that even for the lesser area, there were other considerations which were reasons for refusal. These related to the breaching of the by-pass boundary of Stonehaven.

[27] Accordingly, on the facts in the present case, where it is apparent that refusal was not by reason only of the existence of the pipeline, matters do not get to the stage of the defenders having to establish anything under 25F.

[28] I accordingly accede to the defenders' motion, sustain their first plea in law and dismiss the action.

[29] I would also have dismissed the action on the ground of lack of fair notice of the damages claimed. It is apparent from the documents founded upon in the case that there are at least serious doubts about the extent of the claimed loss in relation to the pursuers' acreage which it is claimed has lost development value. In particular, there is serious doubt about the alleged development value quoted per acre for the site in question, bearing in mind that there are two other pipelines nearby. There are archaeological constraints in addition to the other reasons given by the planning authority for rejection. Thus, there is no proper specification of what could be developed and consequently of the development value that is lost. I would have dismissed for that reason also.

[30] I would not have remitted to probation the averments challenged by the defender about statements made by them on other occasions. There is no plea of personal bar and what the defenders thought a planner should do cannot assist the Court in the construction of the Deed of Servitude even if that Deed were thought to suffer from ambiguity.