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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Logan v. Scottish Water [2005] ScotCS CSIH_73 (01 November 2005)
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Cite as: [2005] ScotCS CSIH_73, [2005] CSIH 73, 2006 SC 178
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Logan v. Scottish Water [2005] ScotCS CSIH_73 (01 November 2005)
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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION |
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Lord Osborne Lady Cosgrove Lord Philip
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[2005CSIH73] XA21/03 OPINION OF THE COURT delivered by LORD OSBORNE in STATED CASE under section 20(2) of the Sewerage (Scotland) Act 1968 by ANDREW LOGAN Appellant; against SCOTTISH WATER Respondents: _______ |
Act: J.G. Reid, Q.C., Logan, Advocate; Macbeth Currie (Appellant)
Alt: C.M. Campbell, Q.C., A.R.W. Young, Advocate; Dundas & Wilson (Respondents)
1 November 2005
The background
[1] The appellant is the heritable proprietor of certain land at Tarvit, by Cupar, Fife, which forms part of Tarvit Home Farm. The respondents are Scottish Water, a body corporate established by the Water Industry (Scotland) Act 2002. They are the statutory successors of the East of Scotland Water Authority and Fife Regional Council, which at certain material times, was the local authority for the purposes of Part 1 of the Sewerage (Scotland) Act 1968, hereafter referred to as "the 1968 Act". [2] The appellant's land lies to the south and east of Cupar, extending to 225 acres delineated in red on the plan produced in the present proceedings; it is referred to hereafter as "the Logan land". A part of the Logan land, extending to approximately 28 acres, delineated and hatched in red on the said plan, is referred to hereafter as "the Logan development land". To the south and west of the Logan land lies land extending to approximately 70.4 acres, formerly owned by the J.M. Guthrie Discretionary Trust, which is referred to hereafter as "the Guthrie Trust land". A portion of the Guthrie Trust land extending to approximately 48 acres, which is the subject of the planning permission hereafter referred to, is delineated and hatched in blue on the said plan. Adjacent to the Logan land to the east lies certain land owned by a Mr Rodger, hereafter referred to as "the Rodger land" and land owned by a Mr Crichton, hereafter referred to as "the Crichton land". [3] Between 13 and 16 June 1988, a planning inquiry was held by Mr. R.M. Hickman, which dealt with, inter alia, the questions of whether there was an adequate supply of housing land in the Cupar area to meet the statutory local plan target and whether there was a need to approve more housing land. At that time, there was already in existence a detailed planning permission, dated 11 July 1979, for the erection of 419 dwellinghouses on the Guthrie Trust land. The reporter at that inquiry found that the simultaneous development of both the Guthrie Trust land and the Logan land for housing would create an excessive provision of housing, having regard to demand and planning requirements. There was, however, an issue as to whether there was a prospect of actual development of the Guthrie Trust land and the reporter concluded that the prospects of that land producing a significant number of houses by 1992 were remote because of infrastructure costs. That factor, among others, led the reporter to recommend the grant of planning permission for housing and other developments on areas of land including the Logan land. He recommended, however, that that grant of planning permission should be subject to certain conditions, including a condition that the water and sewage services pipes within the Logan land should not be extended southwards, or connected in any way to serve any other residential development on other land, except with the express consent of the District Council as planning authority and the Regional Council as water and drainage authority. The purpose of this condition was to prevent joint development of the two areas of land, since the availability nearby of sewage and other pipe work would have made development of the Guthrie Trust land a much less remote prospect than otherwise it would have been. [4] The Secretary of State granted an outline planning permission, dated 17 February 1989, in accordance with the reporter's recommendation, including this condition. Thereafter the appellant entered into conditional missives for the sale of the Logan land at a price of about £67,000 per acre. However, the decision to grant planning permission for the Logan land was the subject of appeal to the Court of Session by the owners of the Guthrie Trust land, and by North East Fife District Council. In due course, that planning permission was quashed by a decision of this court, dated 8 May 1990, reported as North East Fife District Council v Secretary of State for Scotland 1992 S.L.T. 373. The basis of the decision was that the condition described was an invalid condition and not severable. [5] Before the appeal to the Court of Session had been heard, the owners of the Guthrie Trust land had submitted a further application for outline planning permission for development of the Guthrie Trust land on a phased basis. On 24 August 1988, the Secretary of State indicated that he would grant such permission, subject to the making of a section 50 agreement with Fife Regional Council as regional planning authority. Fife Regional Council then served statutory notices on the appellant under section 3 of the 1968 Act. The first notices served were not valid, but valid notices were subsequently served on 5 December 1991. The appellant did not object to these notices and Fife Regional Council started work laying sewers across his land in about October 1992. The work was completed in about November 1993. Subsequently, residential development on the Guthrie Trust land has been undertaken. [6] The planning inquiry in relation to the Logan land was re-opened and a hearing held between 23 and 25 April 1991 on an appeal against refusal of planning permission for the Logan development land, which had followed the decision of this court dated 8 May 1990. The reporter, again Mr. R.M. Hickman, was aware that Fife Regional Council intended to exercise their statutory powers to construct a sewer to serve the Guthrie Trust land and, in the light of that information, concluded that the Guthrie Trust land would become "effective" by the end of 1993 and that approval of housing development on the Logan land would be an unnecessary addition to the housing supply. The reporter therefore recommended that the planning application in respect of the Logan land should be refused. That recommendation was accepted by the Secretary of State, who refused planning permission for housing development on the Logan land on 31 January 1992. Since we considered that the reasoning of the reporter in this inquiry might have been pertinent in the context of the present litigation we requested and obtained a sight of his report. However, it was submitted to us by counsel for the appellant and the respondents that it was of no relevance. Accordingly we say no more about it. [7] Subsequently, in letters written by Messrs Strutt and Parker on behalf of the appellant, dated 6 April and 18 July 1994 to Fife Regional Council, as sewerage authority, to the effect that the appellant had suffered loss and damage by reason of the exercise by that authority of their statutory powers under Part 1 of the 1968 Act in relation to matters as to which the appellant had not himself been in default, it was averred that, but for the exercise of those statutory powers, the planning permission which had inured for the benefit of the Logan land would have been the subject of a fresh grant, following the decision of this court to quash the original permission, and would have formed part of the value of the Logan land. If not the subject of a fresh grant by 1993, it was claimed that there would have been by then a very real prospect that such a grant would have been made. That prospect of planning permission would have formed an important part of the value of the Logan land. Thus, the value of the Logan land had been substantially diminished by reason of the exercise of the statutory powers. Further, it was claimed that, but for the exercise of the statutory powers, the appellant would have had and taken the opportunity to secure a share in the development value of the Guthrie Trust land. [8] Fife Regional Council, in response to these claims, made it clear that they disputed liability to make any payment in respect of the claims. It was then agreed that the dispute should be placed before the Lands Tribunal, hereinafter referred to as "the Tribunal", as an arbiter. A joint remit was adjusted and was submitted to the Tribunal on 22 November 1995, in terms of section 20 of the 1968 Act. Subsequently, certain prescription or limitation points were taken in relation to the claims mentioned by means of an action of declarator in the sheriff court. After a preliminary proof, the sheriff, and on appeal the sheriff principal, held that the claims were not time barred. The pursuers in that action appealed to the Court of Session, but their appeal was refused by a decision dated 19 October 1999, reported as East of Scotland Water Authority v Logan 2000 S.L.T. 28. [9] In due course, a proof before answer took place before the Tribunal in the arbitration between 10 and 18 September 2002. At that stage, the appellant had three claims under section 20 of the 1968 Act. The first claim was for loss of development value of the Logan land. The second claim was for loss of a right to make a ransom claim against the owners of the Guthrie Trust land, who had benefited from the laying of the pipes in question through the Logan land. There was also a third claim arising from the ongoing presence of the pipes in that land. The Tribunal, in due course, in a draft decision, rejected the appellant's first two claims, but upheld the third claim, proposing to award a sum of £2,000 in respect of it. The Tribunal has now stated a case for the opinion of this court on certain questions of law. These are as follows:"Having regard to the facts and reasoning in the draft decision which I propose to make, would I be correct in law to hold:
2.1 That I am entitled to conclude that the loss claimed by the appellant in respect of what I have referred to as his first claim, did not arise by reason of the exercise of the sewerage authority of their statutory powers under section 3 of the Sewerage (Scotland) Act 1968.
2.2 The appellant is not entitled to any sum in what I refer to as his first claim.
2.3 In the event of the appellant not being entitled to any sum in respect of his first claim, he is also not entitled to any sum in respect of what I have referred to as his second claim.
2.4 I have no power to award interest on any sum claimed to which the appellant may be found entitled.
2.5 The respondent is due to make payment to the appellant of the sum of £2,000 for the ongoing presence of pipes in his land."
Submissions of junior counsel for the appellant
[10] Junior counsel for the appellant pointed out that there were two parts to the draft decision of the Tribunal. First, it had found that the cause of the loss to the appellant was not the exercise of the statutory power contained in section 3(1)(a)(ii) of the Sewerage (Scotland) Act 1968, but the refusal of planning permission for the development of the appellant's land, following the second public inquiry conducted by Mr Hickman, dated 31 January 1992. Secondly, in respect of the ransom claim, the Tribunal had found that a ransom payment did not fall within the scope of section 20(1) of the 1968 Act. Both of these aspects of the decision were flawed. [11] Certain questions of law had been posed for the opinion of the court, in terms of section 20(2) of the 1968 Act. It was submitted that question 2.1 should be answered in the negative. The Tribunal was bound to conclude, on the facts found, that the loss claimed by the appellant and assessed by it had arisen by reason of the exercise of the statutory powers contained in section 3 of the 1968 Act. Question 2.2 ought also to be answered in the negative. Having regard to the findings in fact, the appellant was entitled to compensation in the sum of £1,392,000, together with interest from 18 July 1994, the date on which his claim had been lodged with Fife Regional Council, the then sewerage authority. Question 2.3 required to be answered only in the event of the appellant's first claim being rejected. It related to the ransom claim, which was an alternative to the first claim. In the event of its requiring to be answered, it ought to be answered in the negative. Under the ransom claim, the appellant was entitled to a compensation payment of £600,000, not the figure of £200,000 referred to by the Tribunal. On the assumption which the court might make, that the assessment of compensation was a matter for the Tribunal, the court was invited to find only that there was an entitlement to a ransom payment. As regards question 2.4, the court ought to declare that the Tribunal had power to award interest and ought to do so from 18 July 1994, or such other later date as it thought fit to select. Alternatively, if the court held that there was no such power to award interest, the court, in a subsequent action, could do so from 18 July 1994, on any compensation awarded. Finally, question 2.5 ought to be answered in the affirmative. This payment was what might be described as a wayleave recognition payment in respect of inconvenience to the landowner arising from the presence of the pipes under his land. The finding in fact 2.18(o) was the factual basis for such an award, about which there could be no argument. [12] Counsel next drew attention to the Tribunal's draft decision, contained in Appendix A in the Stated Case. It was evident from this decision that the first of the appellant's claims had been rejected as too remote, but there were also issues of causation. Counsel then went on to examine and elaborate the draft findings in fact in the case. Finding 2.3 dealt with the background to the grant of planning permission to the Guthrie Trust for the development of 419 houses on that part of their land coloured blue on the plan annexed to the case. Finding 2.5 dealt with the planning permission which had been granted for development of the appellant's land following the first public inquiry conducted by Mr Hickman. The condition attached to that planning permission referred to in the finding had been held by this court to be unlawful by a decision dated 8 May 1990, as appeared from finding in fact 2.9. The result of that decision had been that the whole planning permission fell, since the invalid condition was not severable. Finding in fact 2.10 dealt with the re-opening of the planning inquiry relating to the appellant's land. The outcome of that step had been that the Reporter recommended that the application in respect of that land should be refused. That recommendation had been accepted by the Secretary of State, who refused planning permission for that land on 31 January 1992. Finding in fact 2.11 was important, containing, as it did, the findings in fact made by the Reporter following the re-opened planning enquiry. Finding in fact 2.13 dealt with the notices served by Fife Regional Council, the then sewerage authority, under section 3 of the 1968 Act. Subsequently work on the sewer running through the appellant's land had commenced in August 1992 and had been completed by November 1993. Finding in fact 2.17 was a matter of crucial importance. It was there found that, if the Guthrie Trust land could not be effectively developed, there would have been no impediment to the re-instatement of the planning permission previously granted for the appellant's land. A similar finding had been made in finding in fact 2.18(b). [13] Counsel went on to elucidate the terms of the relevant statutory provisions, namely sections 1, 3 and 20 of the 1968 Act. The compensation provisions in section 20(1) were of crucial importance. Their terms were wide. There was provision for the making by the sewerage authority of "full compensation for any loss, injury or damage sustained by any person by reason of the exercise by the authority of any of their powers under this Part of this Act ... ". [14] Reference was then made to the Tribunal's narrative of the evidence which it had accepted. While, strictly speaking, there was no finding in fact relating to the sum claimed of £1,392,000, it was evident from what was set forth at p. 25 of the case that the Tribunal had accepted the evidence supporting that figure. [15] Counsel then went on to make certain formal submissions concerning the Tribunal's decision. First, it was contended that, by focusing on the planning history of the matter, the Tribunal had failed to consider the relevant question of what loss had been suffered by the appellant in November 1993 by reason of the exercise of the statutory power. Secondly, it was contended that, in relation to that question, the planning background was relevant only to the extent that it supported the finding in fact that, in the "non-scheme world", the appellant's development land would have had its planning permission re-instated. By way of explanation, the "non-scheme world" was a reference to the situation in which the statutory powers had not been exercised. Thirdly, it was contended that the loss of opportunity upon which the arbiter should have focused his attention, was the loss of the opportunity for the appellant to have the previous planning permission re-instated. In response to a question raised by the court, it was submitted that having regard to the terms of finding in fact 2.18(b), it had to be assumed that, re-instatement of that permission was feasible. The Tribunal had misdirected itself by looking at the refusal of planning permission in 1992. Fourthly, it amounted to an error in law on the part of the Tribunal to state that, as at 1992, the appellant's land had had no particular development value, because, by then, planning permission had been refused, if the reason why it had no such permission was the existence of the statutory scheme. Fifthly, it was erroneous in law to conclude that there had been no loss, injury or damage by reason of the exercise of the statutory powers by comparing the value of the ground one month before the work of creation of the sewers had been completed and one month after. Both of those values existed in the same "scheme world", so it was no surprise that no loss, injury or damage was shown by such a comparison. Sixthly, the correct method of determining the consequences of the exercise of the statutory powers was to consider what would have occurred, had the statutory power not been exercised. That was what Mr Thornton-Kemsley had done, on the basis of whose evidence the Tribunal had concluded that there would have been a development value of £1,392,000. [16] Elaborating these submissions, counsel submitted that the appellant's first claim was of a very direct nature. There was no real issue of causation relating to it. The real issue was whether the claim was one which the law recognised under section 20 of the 1968 Act. The proper method of approaching the matter would have been to look at the position with and without the exercise of the statutory powers. That was an approach which had commended itself in the field of compulsory purchase compensation. [17] At this point in his submissions, counsel drew our attention to a number of authorities. In the Attorney General v Blake (Jonathan Cape Ltd., Third Party) [2001] AC 268, the House of Lords had considered the scope of damages for wrongful interference with property rights, which was, in effect, what existed in this case. It was evident from the observations of Lord Nicholls at p. 278 that the approach desiderated would cover the loss of development value contended for here. Reference was also made to Livingstone v Rawyards Coal Company (1880) 7 R (HL) 1. In that case, Lord Blackburn had elaborated the principles governing an award of damages. It was accepted by both of the parties to the case that the common law principles relating to causation and remoteness of damage had to be observed here. In addition, the claim required to fall within the terms of section 20 of the 1968 Act. [18] In relation to the words "full compensation", used in section 20(1), it was helpful to look at Stirling v North of Scotland Hydro Electric Board 1965 S.L.T. 229. Davie v The Magistrates of Edinburgh 1951 S.C. 720 showed that, although the tests of causation and remoteness had to be applied, these matters should not be approached in a restrictive manner. Reference was also made to Tayside Regional Council v The Secretary of State for Scotland 1996 S.L.T. 473. At p. 25 of the case, the Tribunal had appeared to consider that this case justified a restrictive interpretation of section 20(1) of the 1968 Act. Properly viewed, that decision did not have that effect. Again, the Tribunal had placed emphasis on Hoveringham Gravels Ltd v Secretary of State for the Environment [1975] 2 All.E.R. 931. However the circumstances of that case were very different from those of the present one. It was evident from the nature of the subjects there considered that planning permission would never have been granted for the extraction of sand and gravel from the particular site concerned, which was of historic significance. Accordingly the making of the preservation order had had no causal effect. Here, the appellant had previously obtained planning permission for development of his land. Reference was also made to Grampian Regional Council v The Secretary of State for Scotland 1983 SC (HL) 1, at pps. 29-30. Counsel submitted that, on the basis of this case, even if there had been an obligation to provide sewerage, it was impossible to ignore the statutory notices which had been served. [19] Counsel went on to rely upon Raja Vyricherla Narayana Gajapatiraju v The Revenue Divisional Officer, Vizagapatam [1939] AC 302, a case decided in the Privy Council. It was concerned with valuation of land compulsorily acquired. It was decided that such land required to be valued, not merely by reference to the use to which it was being put at the time at which its value had to be determined, but also by reference to the uses to which it was reasonably capable of being put in the future. Reference was made particularly to the judgment of the Board, delivered by Lord Romer at pps. 319 to 320. Applying this principle to the circumstances of the present case, it was submitted that the valuation exercise necessary here ought not to be affected by the fact that the Guthrie land alone had to be drained. [20] When Mr Hickman made his decision following the second public inquiry, the situation was that there was no planning permission in respect of the development of the appellant's land. However there was a potential for the appellant to apply for planning permission for the development of his own land, in the event of the statutory powers contained in section 3 of the 1968 Act not being exercised. The assessment of the appellant's loss required to take account of that state of affairs. The Guthrie Trust land could not be "effective" without appropriate drainage. As soon as the statutory procedures had been operated, the Guthrie Trust land had become "effective" and the appellant's land had become incapable of receiving planning permission for housing development, on account of the restraints contained in the local plan. Upon the assumption that the appellant's land could be valued upon the basis of its potential, assuming that the statutory powers had not been exercised, there was no dispute as to the value of that potential, as appeared from the passages at pps. 18 and 25 of the case. That value was £1.392 million, in accordance with the evidence of Mr Thornton-Kemsley. [21] In response to questions by the court, it was submitted that the court did not require to be concerned about the possibility that planning permission might have been granted for the appellant's land as well as the Guthrie Trust land, the situation which resulted in the attempt to impose the condition which was held invalid by this court, in view of the findings in fact made in the case, to which reference had already been made, findings in fact 2.17 and 2.18(b). Possible methods of avoiding the particular problem of the existence of two planning permissions had not been explored at the proof before the Tribunal. The evidence of Mr Montgomery, having regard to which the findings in fact just mentioned had been made, was not challenged on this basis. [22] It was submitted that one of the errors which the Tribunal had made in reaching its proposed decision was that it had looked back at the planning situation affecting the appellant's land and had concluded that the prospect of planning consent had been lost with the Secretary of State's decision on 31 January 1992 and, with it, the value in the appellant's land attributable to the prospect of development. In this way the Tribunal had reached the conclusion that that value had not been lost "by reason of the exercise by the authority of any of their powers", within the meaning of section 20(1) of the 1968 Act. What should have been done by the Tribunal was to look forward at the potential possessed by the appellant's land in the "non-scheme" world. It was instructive to note the submissions which had been made to the Tribunal in writing. Reference was made to paragraph 23 on p. 9 of that document. That paragraph expressed succinctly the appellant's case for loss of development value. Further, the Tribunal had gone on to decide that the appellant's claim was too remote, which conclusion was flawed. A prominent error in the Tribunal's decision was that it had been assumed that the powers contained in section 3 of the 1968 Act would be exercised. That assumption ought not to have been made. The Tribunal should have looked at the value of the appellant's land in a "non-scheme world". [23] Counsel next referred to Fletcher Estates (Harlescott) Ltd v The Secretary of State for the Environment [2000] 2 AC 307, a case concerned with compensation following compulsory purchase. In that context, which was argued to be comparable with the present one, the House of Lords had decided that, in determining what alternative development might be appropriate, the local planning authority ought to have applied ordinary planning principles to the circumstances existing at the relevant date and that it had to assume that the scheme for which the land was proposed to be acquired, together with the underlying proposal as it stood at the relevant date, had been cancelled. Reference was made to the speech of Lord Hope of Craighead at pps. 315 and 319-324. Following the approach commended in that decision, in the present case, the Tribunal ought to have assumed that, at the appropriate date, November 1993, the statutory "scheme" had been cancelled and conducted a valuation of the appellant's land on that basis. The date of November 1993 was selected, since it was only on completion of the pipe laying works at that time that it could be said that the powers contained in section 3 of the 1968 Act had been "exercised", within the meaning of section 20(1) of that Act. [24] Up to this point in the argument, the focus had been upon a proper method of assessing the appellant's loss of development value claim. Counsel then moved on to consider the appellant's alternative claim, the so-called ransom claim. In this context, it was necessary to look at what had been gained by the beneficiary of the events in question, the owners of the Guthrie Trust land, as opposed to what had been lost by the appellant. The ransom claim involved the contention that some reasonable proportion of the benefit gained by the beneficiaries of the scheme, that is to say those in right of the Guthrie Trust land, should be allocated to the appellant. In this connection reference was made to Wards Construction (Medway) v Barclays Bank plc [1994] 2 E.G.L.R. 32 and, in particular, what was said by Nourse, L.J., at pps. 33-34. It was submitted that the words contained in section 20(1) of the 1968 Act were consistent with the appellant's ransom claim. The basis of the claim was that the exercise of the statutory powers in section 3 of that Act had caused the appellant to lose what he would otherwise have possessed, in the form of a ransom claim. Accordingly he was now entitled to claim what he had lost in terms of section 20(1). Applied to the exercise of the statutory powers, there had been an opportunity to the appellant to extract a ransom. The planning permission obtained by those in right of the Guthrie Trust land in 1979 was capable of being used only by means of the establishment of drainage through the appellant's land. In the passage relied upon in this case, it was made clear that, in the assessment of such a claim, the scheme was to be ignored. [25] Turning to the decision of the Tribunal here, having regard to the findings in fact which had been made, it appeared that this alternative claim had failed on the basis of the test of remoteness. In this context, remoteness was to be understood in the same way as it was understood in relation to common law damages. In its handling of this part of the appellant's claim, the Tribunal had relied upon Edwards v The Minister of Transport [1964] 2 Q.B. 134. However, it was submitted on behalf of the appellant that that case was of no assistance in the present context. The law, as elucidated in that case, had been changed by the enactment of section 41 of the Land Compensation (Scotland) Act 1973. [26] Counsel went on to consider Landcatch Ltd v International Oil Pollution Compensation Fund 1999 SLT 1208. It was submitted that the Tribunal had used this case as a means of restricting the effect of the wide words used in section 20 of the 1968 Act. That was an erroneous approach. If the facts of Landcatch Ltd v International Oil Pollution Compensation Fund were examined, it was apparent that that case was immediately distinguishable from the present one. The claimant there had no definite contractual relationship with those who had been directly affected by the Braer disaster. Furthermore, they were physically distant from the area where the impact of that disaster had been felt. The claimant's claim in that case had been excluded, upon the view that it involved economic loss of a secondary or relational nature. It was held to have been a claim which could not have succeeded at common law and accordingly could not succeed in the context of statutory compensation. Reference was made in particular to the judgments of Lord Justice Clerk Cullen, as he then was, and Lord McCluskey at pps. 1218 and 1224 respectively. [27] The Tribunal had also apparently relied upon Aikman v The Caledonian Railway Company (1877) 4 R. 1020. It was concerned with whether the consequences of the loss of the benefit derived from a wayleave could be recovered as statutory compensation for the compulsory acquisition of land taken for the purposes of building a railway. The court had held that that claim was too remote to be recoverable. Reference was made to the Opinions of Lord Justice Clerk Moncreiff at p. 1027 and Lord Ormidale at p. 1029. It was submitted that the circumstances of that case could readily be distinguishable from those of the present one. Accordingly it could not properly be used to support the Tribunal's decision. Counsel went on to consider Wrotham Park Settled Estates v Hertsmere Borough Council 1993 R. and V.R. 56. The compensation sought in that case, following upon compulsory purchase of land, was in respect of the loss of the right to enforce a restrictive covenant. The case had been relied upon by the Tribunal at p. 16 of the case. It contained observations by Sir Thomas Bingham, M.R., concerning the nature of the right to statutory compensation under the Compulsory Purchase Act 1965, section 10. While it might be true that statutory compensation might not provide perfect compensation, as was there observed, the provisions under which that case was decided differed from those involved in the present case. In any event, there was a line of English authority to the effect that compensation might be paid for breach of a restrictive covenant. An example of that authority was Bracewell v Appleby [1975] 1 Ch. 408. Another example was Carr-Saunders v Dick McNeil Associates Ltd & Others [1986] 1 W.L.R. 922. S.J.C. Construction Company Ltd v Sutton London Borough Council [1975] 29 P. and C.R. 322 was a case in which the Lands Tribunal in England had awarded compensation for the modification of restrictive covenants. The decision of the Lands Tribunal was reported at [1974] 28 P. and C.R. 200. That decision was upheld in the Court of Appeal. [28] Counsel went on to submit that, in the light of the decisions just mentioned, there were grounds for doubting whether Wrotham Park Settled Estates v Hertsmere Borough Council had been correctly decided. In this connection, it had to be noted that that case had been concerned with a right over land not owned by the claimant. In that respect it differed from the present case. Secondly, in the judgment of Sir Thomas Bingham, M.R., as he then was, there was a criticism of the decision in Wrotham Park Estate Company Ltd v Parkside Homes Ltd [1974] 1 W.L.R. 798. This was to be found at p. 60 in the judgment. However, in Attorney General v Blake, at pps. 282-283, Lord Nicholls rejected Wrotham Park Settled Estates v Hertsmere Borough Council, in favour of Wrotham Park Estate Company Ltd v Parkside Homes Ltd. In these circumstances, it was to be taken that Wrotham Park Settled Estates v Hertsmere Borough Council was bad law. However, the Tribunal had relied upon that case. Accordingly, this court ought to be slow to conclude that the Tribunal's decision could be supported by that case. [29] Counsel proceeded to consider Strathclyde Regional Council v Persimmon Homes (Scotland) Ltd 1996 S.L.T. 176, a case concerned with the consequences of wrongful encroachment. Damages were sought on the basis of a ransom, which was similar in nature to the ransom claimed as an alternative in the present case. Accordingly, it could be concluded that these principles were not confined to the law relating to compulsory purchase. [30] Counsel next referred to Vestey v Blunt 1988 S.L.T. (L.T.) 34, which involved an application for resumption of common grazing land. The principle of the "golden key" had been applied in the context of statutory compensation for resumption. The importance of that was that it showed that the principle had application outside the field of compulsory purchase law, over a whole range of situations. It ought to be applied in the present case in the assessment of "full compensation", within the meaning of section 20 of the 1968 Act. Counsel went on to rely on Lingke v The Mayor of Christchurch & Others [1912] 3 KB 595, a case concerned with loss caused by temporary obstruction, in relation to section 308 of the Public Health Act 1875, a provision almost identical to section 20 of the 1968 Act. It supported the appellant's position in this case. Counsel then drew attention to Kettering Borough Council v Anglian Water Services plc 2001 R. and V.R. 266, a case in which the claimants sought determination of the compensation due to them under schedule 12 of the Water Industry Act 1991 for the depreciation of the value of their interest in land said to have been caused "by virtue of the exercise by (the respondents) of their power to carry out pipe-laying works on private land." The statutory provisions involved in that case, which referred to "full compensation", were similar to those involved in the present case. However, it was accepted in that case that, on account of certain features of those statutory provisions, which gave to the owner of development land the right to serve certain requisition notices, the claimant's land could not possess any ransom value. It appeared that this decision was one of the main bases for the decision of the Tribunal in the present case. The appellant's submission was that that case had been wrongly decided. The situation there should have been examined on a "non-scheme" basis, but had not been. In any event, that case was distinguishable from the present one, having regard to the terms of finding in fact 2.18(d) to the effect that the exercise of the statutory power was not a foregone conclusion. An erroneous concession had also been made in that case, as narrated in paragraphs 19 and 21 of the decision. It was submitted that the case of Kettering was based upon a false premise, to the effect that, because there existed a statutory power to lay pipes, there could be no ransom value. Because there was no ransom value, there could be no compensation based upon it. The correct approach was that set out in the compulsory purchase cases and in Strathclyde Regional Council v Persimmon Homes (Scotland) Ltd. On that approach, it was necessary to look at the position where statutory powers existed, but were not exercised. The decision in Kettering was a decision by the Lands Tribunal and, accordingly, was not binding on this court. That case had been wrongly decided. [31] It was important to examine how the Tribunal here had dealt with the issue of ransom value. Its approach was set out at p. 29 of the case. The fourth paragraph on that page reflected the approach taken in the case of Kettering. It was submitted that what was stated there by the Tribunal was inconsistent with the terms of finding in fact 2.18(d). It was also extraordinary to note that in the fifth paragraph on p. 29 of the case the Tribunal referred to the position of Mr Stephen the developer. [32] In that passage, it was narrated that Mr Stephen had indicated that he might have been prepared to pay a ransom up to £10,000. Furthermore, in the sixth paragraph on p. 29 of the case, the Tribunal had misrepresented the position of Mr Thornton-Kemsley. He had not assumed that the statutory power did not exist; he had assumed that it existed, but had not been exercised. The correct position had been set out in finding in fact 2.18(m), which was consistent with the evidence of Mr Rintoul and Mr Thornton-Kemsley and with the case law. Turning to p. 30 of the case stated by the Tribunal, it was submitted that the second paragraph was not a correct statement of the Scottish position. In any event, the Tribunal here had misapprehended the approach followed in the case of Kettering Borough Council v Anglian Water Services plc. In that case, the ransom value was agreed to be taken at 25% of the development value of the development land, because there had been two land owners. That percentage was reached by a division of 50% by two. The fourth paragraph on p. 30 of the case involved the making of an assessment by the Tribunal of ransom upon an esto basis. In this assessment, the Tribunal had erred, since it had been assumed that the relevant ransom value required to be divided by three. That had been done on the basis that there were three interests among whom the ransom required to be divided, the appellant's interest, the Rodger land interest and the Crichton land interest. However, that approach was fallacious in view of finding in fact 2.18(j), in which the Tribunal had found that it was not necessary for the surface water pipes to pass through the Crichton land or the Rodger land. Accordingly, the appellant alone held the "golden key". [33] Counsel went on to submit that section 1(4) of the Conveyancing and Feudal Reform (Scotland) Act 1970 was in wholly different terms from section 20 of the 1968 Act, in respect that the payment which might be directed to be paid under the former enactment was of a discretionary nature and went to the benefited proprietor. The payment itself required merely to be "just". Putting the matter in another way, section 1(4) of the 1970 Act did not confer a right to full compensation but only for any "substantial loss or disadvantage". Furthermore, because of the use of the words "as such benefited proprietor" in the enactment, the payment could be made only to the benefited proprietor in that capacity. In the whole circumstances, it was submitted that caution required to be exercised in relation to reliance on what might be called the conveyancing cases. In particular, it was necessary to recognise that Strathclyde Joint Police Board v The Elderslie Estates Ltd 2002 S.L.T. (L.T.) 1, a case involving a police house, was of a very special nature. No guidance could be derived from it in the present context. The backgrounds to the two enactments were quite different. It was generally considered that the conferring of a windfall benefit upon a superior was a bad thing. However, under the 1968 Act there was rightly a recognition that there should be full compensation in appropriate circumstances. Junior counsel drew attention to Conveyancing and Feudal Reform (Scotland) Act, Halliday 2nd ed. paragraphs 2.58 to 2.68. [34] Looking at the totality of the Tribunal's decision, there appeared to be three strands of reasoning; first, there was a substantial reliance upon the case of Kettering Borough Council v Anglian Water Services plc; secondly, reliance had been placed on Edwards v The Minister of Transport; and thirdly, there was reliance upon what might be called the conveyancing cases, decisions under section 1(4) of the Conveyancing and Feudal Reform (Scotland) Act 1970. The appellant contended that those cases were irrelevant to the issues arising here. In contrast to those elements in the Tribunal's proposed decision, the appellant had relied upon Stokes v Cambridge Corporation (1961) 13 P & C.R. 77 and Ozanne and Others v Hertfordshire County Council [1992] 2 E.G.L.R. 201. There was an analogy between the latter case and the present one. There it had been decided that the wider development was not part of the "scheme". The "scheme" here amounted merely to the introduction of pipes, not the development of the Guthrie Trust land. The appellant's position was that the land of the appellant had acquired a ransom value as soon as development of the Guthrie Trust land was in prospect. That ought to have been recognised by the Tribunal and should have led the Tribunal to make an award of £600,000, in round figures. [35] It was appropriate to mention a recent case that had not been before the Tribunal, Railtrack plc (In Railway Administration) v Guinness Ltd [2003] E.W.C.A. Civ 188, which had been concerned with the valuation of access rights over a railway. It did not involve the exercise of statutory powers, yet the basis of valuation was identical to that adopted where such powers had been exercised. It followed that the rules contended for by the appellant were not special to compulsory purchase law. Reference was made to paragraphs 27 to 32 of the judgment of Carnwath L.J. The flaw in the case of Edwards v Minister of Transport was that a willing seller had not been assumed. This also showed that Kettering Borough Council v Anglian Water Services plc had been wrongly decided. In the real world, one was not looking at a veto as such; one was assuming a sale of the right of veto. The case of Railtrack plc v Guinness Ltd was important because it demonstrated the approach which, it was submitted, ought to have been adopted by the Tribunal here; that approach was not one peculiar to the area of compulsory purchase, but was a general approach which ought to be applied where compensation under section 20 of the Sewerage (Scotland) Act 1968 was in issue. What had to be assumed was the non-exercise of a statutory power, in association with a willing buyer and a willing seller. [36] In concluding his submissions counsel renewed the motion originally made. In relation to question 2.4 posed for the opinion of the court, he stated that it now had to be accepted that the Tribunal had not had the power to award interest; accordingly it had to be answered in the affirmative.Submission for junior counsel for the respondents
[37] Junior counsel for the respondents commenced his submissions by indicating that his motion was that questions 2.1 to 2.4 ought to be answered in the affirmative. Question 2.5 ought to be answered in the negative. He went on to indicate that his submissions would fall into four chapters: (1) general issues of statutory compensation; (2) the development value claim; (3) the ransom value claim; and (4) the respondents' cross appeal relating to the wayleave recognition payment ordered by the Tribunal. [38] In relation to chapters (2) and (3) of the submissions, six propositions would be advanced:(i) The appellant had not suffered any loss of development value when the statutory powers in question had been exercised, because, as the Tribunal had found, the appellant's development land had no such development value immediately before the powers had been exercised. This raised essentially a question of causation. For this purpose, "exercise" meant not just completion; the appellant had focused on the date November 1993, but the powers had been exercised before that.
(ii) If the appellant had suffered a loss of development value at any time, such loss had not been directly caused by the exercise of the statutory powers. Again that involved an issue of causation.
(iii) Even if the appellant had lost the opportunity to obtain a fresh planning consent, that had not resulted in any compensatable loss. This formulation of the appellant's loss amounted to a claim for loss of hope value, which the Tribunal had valued at nil.
(iv) In both the development value and ransom claims, the appellant was wrong in law to rely upon a "non-scheme world" comparison. The concept of a "non-scheme world" applied only in cases of compulsory acquisition. The terms of section 20 of the 1968 Act were inconsistent with the application of a "non-scheme world" approach. This had been the respondents' position before the Tribunal. This particular proposition reflected the most important issue between the parties.
(v) The appellant had not enjoyed any ransom claim as the existence of the statutory powers excluded such a claim.
(vi) The loss of an opportunity to extract a ransom payment was not an appropriate head of claim under section 20 of the 1968 Act.
Submissions of senior counsel for the appellant
[59] In view of the lapse of time since the last hearing of the appeal senior counsel began his submissions by providing a resumé of the background to the case. He then reminded the court of the submissions made by junior counsel for each party, already summarised. Senior counsel went on to outline the submissions that he would make. These fell into six chapters. The first would consist in a summary of the appellant's overall position; the second would deal with the statutory provisions applicable; the third would deal with the principal head of claim; the fourth with the subsidiary head of claim, that is to say the ransom claim; the fifth with the claim for the consequences of the recognition of a wayleave; and the sixth would be concerned with residual matters.
[79] Edwards v Minister of Transport had been relied upon by the Tribunal and the respondents. The issue in that case was one of statutory injurious affection of land other than that taken by compulsory purchase. It was not concerned with ransom at all. Accordingly, the passage at page 156, had to be read in context. The case was of no assistance in the present situation. The Tribunal had completely misunderstood the nature of that case.
[80] Senior counsel then went on to consider what he called the conveyancing cases. The Tribunal had dealt with these on page 30 of the stated case. It was contended that these cases related to a wholly different field of law from that involved here. The statutory arrangements for the discharge or variation of land obligations were not comparable with the statutory provisions involved in this case. It was not possible sensibly to import reasoning from cases decided under those provisions into the present context. Any conclusions drawn from those cases were irrelevant here. In Wrotham Park Settled Estates v Hertsmere Borough Council, at page 59, the Court of Appeal had indicated that the comparable cases in England, under the Law of Property Act 1925, had to be viewed with very considerable caution in the context in which that case was decided. [81] At page 29 of the stated case, the Tribunal had relied upon the evidence of Mr. Stephen in relation to ransom value. However, the evidence of Mr. Stephen appeared to relate to the nuisance value attached to the position of a landowner who might resist the statutory notice that preceded the laying of pipes. Thus, that evidence did not relate properly to ransom at all. The evidence could not be used to undermine the appellant's ransom claim. If an award were to be made in respect of ransom value, it was recognised that it should be £600,000, not £200,000, as thought appropriate by the Tribunal. [82] Senior counsel turned then to rebut the attack mounted by the respondents on the making of an award for a wayleave recognition payment. In that connection he adopted the contents of his written submissions. Standing finding in fact 2.18(o), which had not been challenged, it was submitted that the Tribunal's reasoning at pages 33-34 of the case was sound. The formula which had been used was simply a pragmatic approach to the assessment of this element of loss and damage, which otherwise would have been difficult to value. [83] Senior counsel finally summarised his overall position in this way. First, having regard to the findings of the Tribunal, it had misdirected itself on causation. It had been bound to conclude, as it really did, that the effect of the exercise of the statutory powers of the respondents was to deprive the appellant of the opportunity to obtain planning permission for the development of his land in 1993. Putting matters in terms of any normal test for causation showed a direct link between the exercise of the powers and the loss of the appellant's opportunity to develop. None of the authorities cited had the effect of excluding the appellant's claim. Secondly, the only question of law arising was whether the claim was relevant. Loss of development value was accepted as a relevant head of claim. Loss of opportunity was firmly established as such, as appeared from the observations of Lord Nicholls in Attorney General v Blake and other cases. There was no authority in being which required the court to hold that the appellant's first claim was irrelevant, or too remote in law. It was of a kind established in 1911, recognised in Lingke v The Major of Christchurch. Thirdly, once it had been appreciated that causation was not truly the issue, the determination of the extent of loss was straightforward. There were no statutory rules affecting the matter, such as those relating to injurious affection. Section 20 of the 1968 Act had the flavour of compulsory purchase and common law damages. The general principles of compensation recognised that there should be full and fair compensation for the loss suffered. That should involve the claimant being put in the original position prior to the suffering of loss. Compensation might be assessed generally by the making of a comparison between the position of the claimant standing the exercise of the statutory powers, or a breach of legal duty, with the position without the exercise of those powers, or breach of that duty. In relation to the actual assessment of appropriate figures for compensation, the Tribunal had preferred the claimants' evidence. Fourthly, a claim for the loss of a right to exact a ransom was well-established under the code for compensation in compulsory purchase and other statutory provisions; also at common law. In this connection assistance could be got from Attorney General v Blake, Ozzane and Others v Hertfordshire County Council, Wards Construction (Medway) v Barclays Bank plc, Wrotham Park Estate Company Limited v Parkside Homes Limited, and Vestey v Blunt; also Strathclyde Regional Council v Persimmon Homes (Scotland) Limited. The appellant had been deprived of the value of an interest which he had possessed in his land, which, in the absence of statutory intervention, he would have been able to turn to account. Fifthly, the wayleave recognition payment was a claim bound to succeed if the first and second claims failed, given the terms of finding in fact 2.18(o). Finally, the result of the court answering the questions in the manner proposed would be that the Tribunal would be bound to issue an award determining compensation at £1.392m, or alternatively £600,000, or alternatively £2,000.Submissions of senior counsel for the respondents
[84] Senior counsel began by adopting the submissions made by his junior. He drew attention to certain general observations in written form submitted to the court. He said that there appeared to be two main themes in the appellant's submissions: (1) compensation under section 20 of the 1968 Act ought to be assessed as would common law damages; (2) compensation ought to be assessed by reference to the "non-scheme world". There were three parts to the appellant's claim: (1) loss of development value; (2) loss of ransom value; (3) payment for a wayleave. It was submitted that all of these were based on the same erroneous approach. Senior counsel did not intend to deal with development value and ransom value separately, since they could appropriately be dealt with together. [85] As regards the appellant's first main theme, that compensation under section 20 of the 1968 Act ought to be assessed as would be common law damages, it was submitted that this approach was misconceived, since the laying of pipes was not an unlawful act. The question was whether any damage said to have been sustained was the result of that lawful act. If it was, then compensation for it might fall under the terms of section 20. It had been said that a comparison should be made between the situation where there was assumed to have been no exercise of the statutory powers with the situation where they had been exercised. That was wrong. The proper question to ask was what had been changed by the exercise of the powers. The Tribunal had concluded that the laying of the pipes had not altered the value of the land of the appellant. That was correct. What was crucial was the existence of the statutory powers. A landowner had no entitlement to stop the laying of pipes in pursuance of the exercise of those powers. The question was what had Parliament intended to do in providing for compensation for the laying of pipes in pursuance of the exercise of the powers. The appellant said that on the contrary the court should assume that the landowner had a right to stop the laying of the pipes. That was a false position. If the laying of the pipes had prevented the appellant from getting a planning permission, it was submitted that that was something for which Parliament had not intended that he should be compensated. The fact of the matter was that the planning system had given the owners of the Guthrie Trust land the power to develop that land. The sewerage authority, in that situation, had a duty to provide drainage facilities. The laying of the pipes was the result of a public authority carrying out its statutory duty authorised by Parliament. Once the pipes had been laid, their use by others was wholly legitimate and could not be the subject of compensation. In this connection reliance was placed on Tayside Regional Council v Secretary of State for Scotland, at pages 475-476. It appeared from that case that the sewerage authority had a duty to exercise its powers to provide efficient methods for the reception and treatment of sewage, subject to the qualification contained in section 1(3) of the 1968 Act, that the authority was not required to do anything which was not practicable at a reasonable cost. Thus the appellant's private property rights had been overridden by Parliament in that manner in the public interest. In that situation, it was not surprising that Parliament had laid down a compensation regime more limited than that operating in relation to a delict. Where there was a wrongful act, the position was different. Cases such as Attorney General v Blake and Wrotham Park Estate Company Limited v Parkside Homes Limited related to situations where a wrong had been committed. In such situations it was proper for full compensation to be available. However, that was not the position here. The presumption was that there should be no liability for the consequences of a lawful act. The appellant had sought to create a "loss" on an hypothesis which was unreal. If the appellant's arguments were correct, Aikman v Caledonian Railway Company should have been decided in the opposite way to that in which it had actually been decided. What that case showed was that authorised changes in the layout of a railway might cause loss, but that loss was to be borne by those on whom it fell. There was a distinction between the direct consequences of construction, which were compensatable, and loss caused, in effect, by the use of the facilities concerned, which was not. In the context here, it was not the formation of the pipes in the appellant's land that caused the loss claimed; it was the use to which they had been put, providing sewerage facilities for the houses erected on the Guthrie Trust land. That point was made in Wildtree Hotels Limited v Harrow London Borough Council, at page 7 in principle 5. Lord Gifford in Aikman v Caledonian Railway Company at page 1032 was to the same effect. The situation for the appellant would have been just the same if the pipes to service the development on the Guthrie Trust land had skirted his land, yet, in that situation, even on his own argument he could have had no claim. [86] In Wrotham Park Settled Estates v Hertsmere Borough Council, the decision of the Court of Appeal was that the restrictive covenant, which could have stopped a development had been wiped out by the exercise of statutory powers. There was no substantial award because there was no wrongful act. However, in Wrotham Park Estate Company Limited v Parkside Homes, there was a substantial award because there had been a wrongful act. It was important to identify the correct question. It was not what would have happened if the powers had never been exercised, but what had happened when they were. Here, none of the appellant's claims could be said to be based upon what had been caused by the exercise of the respondents' powers. One could not assume that the development works on the Guthrie Trust land had not been carried out. The appellant's land had been worth the same before and after the exercise of the statutory powers. Thus no damage had been caused by the exercise of the powers. There never was any ransom value, in particular. The true nature of the appellant's complaint was not about the exercise of the powers, but about the existence of the powers themselves. Putting the matter in another way the appellant's land did not lose development value by virtue of the exercise of the powers. [87] In the present situation, three things could be said. First the value of the appellant's land was not changed by the exercise of the statutory powers, as was found by the Tribunal at pages 22-23 of the stated case. Secondly, because of the existence of the legislation itself, the appellant never had enjoyed a veto over the laying of the pipes; accordingly his land never had a ransom, or "golden key" value. Thirdly, there was no right to a notional licence payment for the presence of the pipes under the appellant's land. In connection with the second of these propositions reliance was placed on Edwards v Minister of Transport, at pages 156-157. However, that was not to say that there could never be a "golden key" value attaching to land, where a person had to negotiate with the owner of that land to achieve some objective. In the present case, a ransom value could only exist in an hypothetical world in which the statutory powers, either did not exist, or would not be exercised. There was no reason to resort to such assumptions. [88] Kettering Borough Council v Anglian Water Services plc demonstrated the erroneous character of the appellant's submissions in relation to this aspect of the case. In paragraph 17 of that decision the terms of the English legislation were set out. There was no real difference between the terms of that legislation and section 20 of the 1968 Act. [89] Reliance had been placed by the appellant upon the concept of the "non-scheme world" and the Pointe Gourde principle. It was helpful to see how that principle had emerged. The principle was born of a desire to ensure that compensation for land compulsorily acquired should not be inflated by reference to the need of the acquiring authority, or the need to acquire the land for those public purposes underlying the scheme in pursuance of which the acquisition was made. The principle was designed to avoid the artificial inflation of compensation by reference to some land use to which the acquiring authority might put the land, but to which the existing owner could not put it. If the principle was properly understood, it would readily be seen that it was irrelevant to the circumstances of this case. There was no authority to support the proposition that the Pointe Gourde principle had any application whatsoever outside the field of compensation for compulsory purchase. In particular no authority had been cited to show its applicability to matters of statutory compensation in general. For a number of reasons, it was plain that the present situation was not comparable to that in which the principle could apply. In particular, the events which had occurred had left the appellant's land in his own hands. Had it been compulsorily acquired, that would not have been the case. It followed from that position that his land might be developed at some time in the future. There was therefore no obvious reason why he should be able to keep his land and yet have compensation based upon loss of development value. Secondly, it was beyond question that if land were to be compulsorily acquired, adequate compensation should be payable, since the land had been taken by the acquiring authority. However, the loss of some prospect of obtaining planning permission was not the loss of a property right. The same consequences therefore did not flow from such a loss. In short, the provisions of section 20 of the 1968 Act constituted a self-contained code for the provision of compensation in the context to which it applied, which ought to be operated according to its own terms. Compulsory acquisition of land involved a clear deprivation of property, the consequence of which could be identified. Here, the laying of pipes in the land did not categorically guarantee any particular outcome for the Guthrie Trust land, or indeed the Logan land. The mere laying of pipes did not determine the prejudicial outcome underlying the appellant's claim. [90] Assuming that the foregoing submissions were unsound and that the Pointe Gourde principle, or some similar principle was to be applied, the appellant's submissions did not involve an application of that principle. In this connection, one had to ask what was the "scheme" which was to be ignored. It appeared that the answer had to be the laying of the pipes in the Logan land, permitting the Guthrie Trust land to be developed, as appeared from finding in fact 2.18(h). However, if the Pointe Gourde principle were to be applied, it would require the assessor of compensation to disregard the consequences of that scheme, in particular, to disregard the opportunity which the laying of the pipes gave for the development of the Guthrie Trust land. Yet the appellant had argued that, for certain purposes, regard should be had to the scheme. On any view of the matter, the application of the Pointe Gourde principle could not create a value which did not exist in the real world. It would be extraordinary that the respondents should be required to bear the consequence of the Guthrie Trust land obtaining planning permission and the Logan land not doing so. Putting the matter otherwise, there was no good reason why the respondents should be penalised for performing their statutory duty. [91] The claim made in Waters and Others v Welsh Development Agency was similar in nature to the claim made on behalf of the appellant. It failed. Thus, if it were relevant to look at cases dealing with compensation for compulsory purchase, which it was not, the decision in that case suggested that the exercise would not assist the appellant. In Waters and Others v Welsh Development Agency, at paragraph 140, Lord Brown of Eaton-under-Haywood recognised that a "golden key" value could be recognised, but that was a value in the real world, not a value based upon certain assumptions about a "non-scheme world". At paragraph 157, the relationship between the Pointe Gourde principle and the principle derived from Stokes v Cambridge Corporation 13 P. & C.R. 77 was considered. There was no difficulty as to the relationship. If a premium value was entirely due to the scheme underlying the acquisition, it had to be disregarded. If it was pre-existent to the acquisition, it had to be regarded. Here the Tribunal had found that the appellant's land possessed no pre-existent premium value in relation to the Guthrie Trust land because of the existence of the statutory powers, which deprived the appellant of the opportunity of holding the owners of the Guthrie Trust land to ransom. What the appellant was attempting to do in this case was what claimants in the conveyancing cases had sought to do. They had failed and so should the appellant. Those cases had set their faces against veto claims in statutory compensation. Parliament had decided in that area to override the veto which a proprietor might otherwise possess. [92] Senior counsel made two points in conclusion on this aspect of the case. The respondents had not cited Landcatch v International Oil Pollution Compensation Fund to suggest that the appellant's claim was secondary or relational, but only for the purpose of showing that issues of causation and remoteness applied in cases of statutory compensation, about which there might be no dispute. Secondly, mention should be made of the decision of an Extra Division in the present proceedings in relation to the time-bar point, reported in 2000 S.L.T. 28. At page 33, that Division had expressed certain reservations concerning the validity of the claims, which were said to be unusual or entirely novel. [93] Senior counsel turned finally to the third of the appellant's claims, which the Tribunal considered should be allowed, the wayleave recognition payment claim. That was based upon a formula advanced by the claimant's expert witness, derived from extra-statutory practice followed in England. The nature of this claim was revealed by its name. It was open to the same criticisms as the other claims. It proceeded upon an assumption that the respondents were taking something which they were not entitled to take and should pay for it. The finding in fact 2.18(o) had been relied upon by the claimants. St. John's College, Oxford v Thames Water Authority, which dealt with the effect of the laying of a pipeline under statutory powers had to be considered in this context. There was sterilisation of a strip of land. The Lands Tribunal for England and Wales made an award based on such evidence as was available to it, although it plainly had had doubts as to the appropriateness of the approach taken in that evidence. It was submitted that this approach should not be followed in the present case. The concern of the respondents was the importation into Scotland of the practice in England of using formulae to justify payments for the exercise of statutory powers. The use of formulae was inconsistent with the notion that compensation should be paid only for damage proved. In any event, if the court were to uphold the Tribunal's approach on this matter, care was required in the expression of the basis for the award.The decision
1. The statutory provisions
[94] The three claims advanced by the appellant in this case are all made in terms of section 20(1) of the 1968 Act. Its provisions are as follows:"Subject to the provisions of this section, Scottish Water shall make full compensation for any loss, injury or damage sustained by any person by reason of the exercise by Scottish Water of any of its powers under this Part of this Act in relation to a matter as to which he has not himself been in default."
The reference to the "powers under this Part of this Act" of Scottish Water includes the power conferred by section 3 of the Act. It deals with the construction of public sewers and public sewage treatment works. Section 3(1) provides:
"Subject to the provisions of this Act, Scottish Water may -
(a) construct a public sewer -
...
(ii) in, on or over any land not forming part of a road;
... ".
In this context it is also pertinent to note the provisions of section 1 of the 1968 Act. It provides:
"(1) Subject to the provisions of this Act, it shall be the duty of Scottish Water to provide such public sewers as may be necessary for effectually draining its area of domestic sewage, surface water and trade effluent, and to make such provision, by means of sewage treatment works or otherwise, as may be necessary for effectually dealing with the contents of its sewers.
(2) Without prejudice to the generality of subsection (1) above -
(a) Scottish Water shall, subject to paragraph (b) below, take its public
sewers to such point or points as will enable the owners of premises which are to be served by the sewers to connect their drains or private sewers with the public sewers at reasonable cost;
...
(3) The duties imposed by the foregoing subsections shall not require a sewerage authority to do anything which is not practicable at a reasonable cost. ... ".
"The term 'injuriously affected' connotes 'injuria', that is to say, damage which would have been wrongful but for the protection afforded by statutory powers."
In the latter of these cases what was in issue was the statutory liability of certain undertakers, who were required to make "full compensation to all persons for any damage sustained by them by reason or in consequence of such discharge (of
water) ... ". The latter provisions bear a close resemblance to those involved in this case. In his judgment, Lord Avonside stated, at page 236:
"In my opinion, these authorities establish that no compensation is due under the provision of the relevant clauses in the schemes of the defenders unless it be proved that the damage of which complaint is made would have afforded a ground of action had the schemes not been in existence. The person claiming damages is not put in a special position by reason of the existence of the schemes. ... The 'damage' of the schemes is 'actionable damage' and compensation is payable on proof of such damage and not on some ground equivalent to insurance."
It was a matter of concession by the respondents in this case that such actionability did exist, by virtue of the fact that the excavation of the appellant's land and the laying of pipes in it would, but for the statutory powers, have amounted to an unlawful encroachment upon the property of the appellant.
[96] In this state of matters, the next question of importance is in respect of what is "full compensation" to be made. It was argued for the respondents that the question was not to be answered by identifying what damages might have been awarded to a claimant at common law. We agree with that contention. The compensation to be awarded, we consider, must depend exclusively upon the language of the statutory provisions invoked. That position is supported by several cases. In Aikman v Caledonian Railway Company what was in issue was compensation under section 19 of the Lands Clauses Consolidation (Scotland) Act 1845. The Lord Ordinary rejected the notion that common law damages were what was available; what could be claimed was what was provided for in section 19 of the 1845 Act, that is to say compensation "for any damage that may be sustained by reason of the execution of the works". On appeal, the Second Division adhered. In Wrotham Park Settled Estates v Hertsmere Borough Council, at page 59, Sir Thomas Bingham M.R., as he then was, stated:"A second and separate argument advanced by counsel for the claimants is that no right to compensation arises unless there would have been a good cause of action in the absence of statutory powers and that, accordingly, damages should be assessed on the same basis as if there were no statutory powers. To my mind, that proposition does not follow for the reason that I have just attempted to outline, namely that the compensation to which a landowner is entitled is that to which the statute and the cases allow no more and no less."
While, in the arguments deployed before us, certain criticisms were made of certain parts of Sir Thomas Bingham's judgment, we do not consider that that part of it is in any way unsound.
[97] Reverting to what compensation is available under section 20(1) of the 1968 Act, it is to be noted that it is compensation for any loss, injury or damage sustained by any person "by reason of the exercise by Scottish Water of any of its powers ... ". In our view, these words necessarily introduce the need to establish a causal connection between the loss, injury or damage and "the exercise" of the powers. In this connection, although there are plainly differences between the circumstances of Landcatch Limited v International Oil Pollution Compensation Fund and the present case, we find the Lord Justice Clerk's approach to causation at page 1218 attractive in the present context. At that part of his judgment he rejected the "but for" construction of causation. He considered that the compensation provisions in issue in that case did not cover what he described as "secondary or relational" claims. Thus, in our view, the search has to be for loss, injury or damage sustained in a direct sense by reason of the exercise by the respondents of their powers.2. The consequences of the exercise of the powers
[98] We now turn to consider the appellant's claims in the light of the principles just explained. We deal, first of all, with the claim for loss of development value. In assessing whether any loss of development value has arisen directly as a consequence of the exercise of the respondents' powers in relation to the Logan land, in our opinion, it is necessary to examine the state of affairs immediately before and immediately after the exercise of the powers. In the context of a claim for development value, we consider that that value must inevitably be directly related to what planning permission may or may not be available in relation to the land in question. Without planning permission, there could be no significant development As previously narrated the Secretary of State granted outline planning permission, dated 17 February 1989, in accordance with Mr. R.M. Hickman's recommendation, following the first public inquiry, which included the condition to which we have already referred. However, that planning permission was quashed by the decision of this court, dated 8 May 1990. There followed the re-opening of the public inquiry in relation to the Logan land, the outcome of which was a recommendation that the planning application in respect of that land should be refused. That recommendation was accepted by the Secretary of State, who refused planning permission for housing development on that land on 31 January 1992. Accordingly, when the sewerage authority, in pursuance of their powers under the 1968 Act, entered upon the Logan land to lay sewage and drainage pipes in about October 1992, no planning permission for the development of the land was extant. It is our understanding that the work of installation of the sewage and drainage pipes was completed in about November 1993. We consider that, as at that date, the exercise of the powers conferred by section 3 of the 1968 Act had come to an end, in respect that the construction was complete. As at November 1993, on the conclusion of the exercise of the powers, no planning permission for the development of the Logan land was extant. Thus, looking at the state of affairs in relation to that land immediately before and immediately after the exercise of the powers, it is apparent that there was no change as regards planning permission and therefore, in our view, no change as regards development value. Prior to the exercise of the powers, there had been no development value and the position remained exactly the same following the completion of the exercise of the powers. Accordingly, we find ourselves in agreement with the opinion expressed by the Tribunal to this effect at page 22 of the stated case. So, looking at the realities of the situation, in our opinion, there was no loss of development value consequent upon the exercise of the statutory powers. For that reason and in the light of the conclusion that we have reached regarding the applicability of the Pointe Gourde principle to the present case, explained below, we consider that the appellant's first claim is doomed to fail. [99] In reaching this conclusion, we have examined what we consider to be the realities of the situation affecting the Logan land, since we think that this is the appropriate approach. Of course, during the course of the arguments advanced for the appellant, resort was had to what was described as the "non-scheme world". Those arguments involved the making of certain assumptions about the existence, or, at least, the exercise of the statutory powers. We have thought fit to deal with those parts of the appellant's submissions separately and do so in the third part of our decision. [100] We turn next to consider the appellant's claim for loss of ransom value in the Logan land, advanced as an alternative to the claim for loss of development value. Once again, having regard to the terms of section 20(1) of the 1968 Act, which require that the compensation available must be for loss, injury or damage sustained by reason of the exercise of the sewerage authority's powers, we consider that, in relation to this claim, it is necessary to examine the position immediately prior to the exercise of the powers and immediately after the exercise of the powers, with a view to identifying whether any ransom value has been lost by virtue of that exercise. Since it is obvious that, following the exercise of the powers, no ransom value existed in the Logan land, attention must be focused upon the position immediately prior to the exercise of those powers. Looking to the realities of the situation, at that stage the provisions of section 1(1) and (3) imposed a duty on the sewerage authority to provide such public sewers as might be necessary for effectually draining its area of domestic sewage provided that such provision was practicable at a reasonable cost. In pursuance of those duties, the sewerage authority, under section 3 of the Act had the power to construct sewers in any land. Having regard to the existence of this duty and power, in our opinion, there could be no ransom value in the Logan land prior to the exercise of the powers. No claim for a ransom had ever been asserted by the appellant. The evidence of Mr. Stephen before the Tribunal was to the effect that he would not have paid a ransom, although he might have made a modest payment to avoid the trouble that might be generated by notices under section 3(2) of the 1968 Act being objected to, with the result that delay might occur. [101] The Tribunal has made a finding in fact 2.18(n), which is in these terms:"If the authority had not exercised its statutory powers and did not lay the sewer pipes actually laid, then in order to proceed with the development, the developer would have had to negotiate a 'wayleave' from the claimant. In these circumstances, the claimant's land would have had a ransom value. Payment for such a wayleave would have been based upon the development value of the Guthrie Trust land. Holders of ransom land are often able to negotiate a payment amounting in total (to be divided usually equally between or among the holders of the ransom land if there is more than one) to about one third to one half of such development value or a sum which is about the cost of laying the sewer pipes along an alternative route if any."
We consider that that finding does not undermine the conclusion which we have just expressed on this aspect of the case. The finding is conditional upon the non-exercise of the statutory powers. The situation here was that the powers were available to the sewerage authority and that authority had decided to exercise them. Thus the condition on which the propositions in the finding depend was not satisfied.
[102] Furthermore, having regard to the authorities cited to us, we are of the opinion that a claim for ransom value, such as is asserted here, is not capable of being awarded as part of a claim under section 20(1) of the 1968 Act. Although the circumstances in Aikman v Caledonian Railway Company were different from those involved here, a claim for the loss of a wayleave previously enjoyed before the execution of the works was not allowed. The view taken by the court was that the claim was based upon the use of the facilities provided by the undertaker rather than the execution of the works to provide those facilities, in respect of which compensation was available. Here, the owners of the Guthrie Trust land, by reason of their use of the pipes provided in the Logan land had no reason to make any payment to the owners of that land by way of ransom. In Edwards v Minister of Transport, a case concerned with compensation in respect of compulsory purchase, the relevance of the veto principle to compensation was considered. In the judgment of Harman L.J. at page 156 he said:" ... I do not find anywhere in the textbooks or in any of the authorities any suggestion that a kind of ransom value, to which a man having a power of veto might hold the promoting authority, was the measure of his damage; for in fact he does not have a right of veto and the question, therefore, does not really arise."
Of course, in the present case, it is not the respondents who might have been expected to have been faced with a claim for a ransom payment, but the owners of the Guthrie Trust land. However, it appears to us that the dictum quoted militates against the availability of a ransom payment as part of statutory compensation. Blythswood Friendly Society v Glasgow District Council is also a case concerned with compensation following compulsory purchase. Where a tenement property, over which, by contract of ground annual, there was secured a ground annual, was compulsorily acquired, the holder of the ground annual referred the question of the consideration to be paid for its discharge to the Lands Tribunal, contending that the consideration should be enhanced to take into account the extinction of their right to enforce title conditions, or land obligations, contained in the contract of ground annual, including the related power to obtain money payments in consideration of granting waivers of such obligations. In holding that the loss of a power to obtain money in consideration for granting waivers was not compensatable the Lands Tribunal said at page 35:
"The Tribunal do not however consider that, even where compensation is due for injurious affection, it should normally be based on waiver considerations - for that is not usually a proper measure of the harm caused to the dominant land or an interest therein. Furthermore, in our view, there can be no claim for compensation for loss of a mere power to obtain money in consideration of a waiver - either under the 1970 Act (the Feudal Reform (Scotland) Act 1970) or under the compulsory purchase code."
While the statutory code under which that case was decided is distinct from that with which we are concerned, it appears to us that these observations tend to undermine the validity of the claim under consideration.
[103] The case of Wrotham Park Settled Estates v Hertsmere Borough Council was the subject of proceedings in the Lands Tribunal for England and Wales. In the report of those proceedings, it is clear that it was submitted that the appropriate basis for the assessment of damages was what the parties would have agreed as the price for the relaxation of the covenant in question. Such an element could be made the subject of an award of compensation following compulsory purchase. That submission was rejected by the Lands Tribunal. The decision of Mr. H.H.J. Marder, Q.C., dealt with this matter at page 671. There he said:"This examination of the cases leads me to conclude that there is no rule, and no authority, requiring me to hold that the compensation payable under section 10 of the Compulsory Purchase Act 1965 for injurious affection to the claimants' land in the circumstances of this case is to be calculated by reference to the amount likely to be receivable by the claimant in free negotiation for relaxation of the covenant."
Once again recognising the difference between the statutory code there involved and that involved here, this case appears supportive of the respondents' position. That decision was affirmed by the Court of Appeal. At page 59 of the report of that decision, Sir Thomas Bingham rejected the submission that compensation should be assessed upon the basis that there were no statutory powers.
[104] Kettering Borough Council v Anglian Water Services plc was concerned with an issue of compensation for depreciation in value of land by virtue of the exercise of pipe-laying powers, under the Water Industry Act 1991, Schedule 12, paragraph 2(1). The issue of ransom value was considered. His Honour Judge Michael Rich, Q.C., in paragraph 31 of his decision concluded:" ... that the provisions of paragraph 2 of Schedule 12 of the 1991 Act neither require nor permit me to assess compensation on the unreal assumption that the pipe-laying powers of the undertakers contained in section 159 or the requisitioning powers contained in section 98 do not exist. I therefore hold that there is no ransom value to be attributed to the claimants' land and that the compensation is to be assessed at (figure)."
Once again, while the statutory code involved in that case differed in detail from that applicable here, we regard this case as a valid indication of the approach which ought to be taken in a case such as the present in relation to a claim for ransom value.
[105] Having regard to these cases, we conclude that a claim for ransom value of the kind asserted by the appellant is not available under section 20(1) of the 1968 Act. [106] The third of the claims advanced by the appellant, which the Tribunal proposes to allow, is that for a wayleave recognition payment. We deal with that matter in section 4 of this decision.3. The Pointe Gourde principle
[107] It will be seen from our narrative of the submissions made on behalf of the appellant that a fundamental element in those submissions was the contention that both the appellant's claim for loss of development value and his claim for loss of ransom value should be evaluated on the basis of the assumption of what was referred to as the "non-scheme world". That submission was said to be an invocation of the Pointe Gourde principle, familiar in the context of compensation following compulsory purchase. In considering the validity of this submission, which formed such an important part of the appellant's argument, we think it right to examine this principle in some detail. Pointe Gourde Quarrying and Transport Company Limited v Sub-Intendent of Crown Lands [1947] AC 565 is the case, the name of which has come to be applied to a principle of compensation following compulsory acquisition, although the principle had been recognised long before the decision of that case and had sometimes been referred to as the "value to the owner" principle. In Pointe Gourde Quarrying and Transport Company Limited v Sub-Intendent of Crown Lands Lord MacDermott said at page 572:" ... compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition".
This brief dictum was a general reflection of the decision in Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam, a decision of the Privy Council. That case and the history of the principle was considered by the House of Lords in Waters and Others v. Welsh Development Agency. In the latter case it was stated that market value, for the purposes of compensation following compulsory purchase did not include enhanced value attributable solely to the particular use proposed to be made of the land under a scheme of which compulsory acquisition of the subject land was an integral part. That element of value was not part of market value because it was not an element that the owner could have realised in the open market. It was recognised that there were notorious difficulties in applying the principle in particular circumstances. These arose out of the problem of identifying the particular scheme, the effect of which had to be ignored. On account of those same difficulties, we think it inadvisable to express any opinion upon the respondents' subsidiary argument, based on the assumption, contrary to their main submission that the Pointe Gourde principle was to be applied. In any event, for the purposes of our present consideration, it is happily unnecessary to enter upon those matters. For the present purposes, it is sufficient to recognise the function and purpose of the principle, which is to ensure, as Parliament had intended, that the acquiring authority should not require to pay as compensation a larger amount than the owner could reasonably have obtained for his land in the open market in the absence of the power of compulsory purchase. However, it has been recognised that, in identifying the enhanced value which must be disregarded, it is necessary to look beyond the mere existence of the power of compulsory purchase; it is necessary to identify the use proposed to be made of the land under the scheme for which the land is being taken.
[108] However, in our opinion, what is quite clear is that the principle under consideration is one for use in the valuation of land compulsorily acquired, for the purposes of the assessment of compensation. In particular, its rationale is the imposition of a restriction upon that value, conceived in favour of the acquiring authority, but yet consistent with the payment of fair compensation to the owner from whom acquisition has taken place. Having regard to that, we are wholly persuaded that the principle cannot be used in the manner in which it was sought to be used by the appellant in this case. As we understand the appellant's arguments, the making of an assumption of a "non-scheme world", in a context other than that of compensation for compulsory purchase, was to demonstrate the existence of loss in circumstances where, having regard to the realities of the situation, no such loss had in fact occurred. In our view, that approach is wholly misconceived. We consider that the concept of the "non-scheme world" can have no part to play in the determination of the issues in this case. No authority was cited to us on behalf of the appellant showing that it could. Thus, to the extent that the appellant's submissions proceed upon the basis of a "non-scheme world", they must be rejected.4. Wayleave recognition payment
[109] The Tribunal has proposed to award a figure of £2,000 in respect of this part of the appellant's claim upon the basis of the application of the formula commended to the Tribunal in evidence by Mr. Thornton-Kemsley as a measure of the diminution in the value of the land occasioned by (i) the presence of the sewer pipe in the solum of the appellant's land, and (ii) the respondents' statutory right to enter upon the land on a minimum of 24 hours notice to carry out their duties of inspection, maintenance and repair, etc., under section 2 of the 1968 Act. We consider that, in awarding that sum, the Tribunal has erred in law. The terms of section 20(1) of the 1968 Act, already quoted, make it clear that the compensation available is for the loss, injury or damage sustained by reason of the "exercise by Scottish Water of any of its powers." The power under section 3(1)(a)(ii) exercised was that of constructing a sewer in land. It is clear from the narrative of the evidence of Mr. Rintoul, described at pages 32-33 of the stated case, that a number of claims associated with the laying of the pipes had been agreed. He gave details of the matters in respect of which that had been done. Compensation is not available for the mere presence in the land of the sewer which has been constructed. It appears to us that the matters to which Mr. Thornton-Kemsley's formula applied would be consequences of the existence of the sewer in the ground, rather than its construction. In these circumstances, we consider that those matters cannot properly be a basis for compensation. Furthermore, we do not accept that the use of a formula to bring out a notional figure could ever be a proper basis for compensation, even in respect of items in respect of which it might be due, since compensation is available only for proved loss, injury or damage. In the nature of things, the formula cannot establish such proved loss, injury or damage. Two cases were cited to support the view taken by the Tribunal, Markland v Cannock Rural District Council and St. John's College, Oxford v Thames Water. In the first of these it appears that compensation was awarded in respect of the Council's right to send men without leave to inspect the pipeline at any time and to carry out repairs. In that case the award made by the Lands Tribunal for England and Wales was only to the extent of a concession by the Council's surveyor. For that reason it appears to us to be of little weight. In the latter case, the statutory provisions relied upon differed from those involved in this case in respect that injurious affection of the land was compensatable. The Lands Tribunal for England and Wales considered that it had to assess compensation by applying one of the methods recommended by the expert witnesses, although it is plain from what was said that the Tribunal considered the state of the evidence in the case somewhat unsatisfactory. In these circumstances, we cannot regard that decision as persuasive.Disposal
[110] Having regard to all of the conclusions which we have reached we would answer questions 2.1 to 2.3 in the affirmative. As regards question 2.4 it was a matter of concession that this question should also be answered in the affirmative. Question 2.5 will be answered in the negative.