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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> PETITION OF THE SALMON NET FISHING ASSOCIATION OF SCOTLAND AND OTHERS FOR JUDICIAL REVIEW OF A DECISION OF THE SCOTTISH MINISTERS AND MARINE SCOTLAND [2020] ScotCS CSOH_11 (24 January 2020)
URL: http://www.bailii.org/scot/cases/ScotCS/2020/2020_CSOH_11.html
Cite as: [2020] ScotCS CSOH_11, 2020 GWD 5-71, [2020] CSOH 11
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OUTER HOUSE, COURT OF SESSION
[2020] CSOH 11
P552/19
OPINION OF LORD PENTLAND
in Petition of
THE SALMON NET FISHING ASSOCIATION OF SCOTLAND AND OTHERS
Petitioners
for
Judicial Review of a decision of the Scottish Ministers and Marine Scotland
Petitioners: MacColl QC, A McKinlay; Urquharts
Respondent: Crawford QC, E Campbell; Scottish Government Legal Directorate
24 January 2020
Introduction
[1] This petition for judicial review came before me for a substantive hearing. The first
petitioners are the Salmon Net Fishing Association of Scotland (“the Association”). The
Association was formed in 1906 to represent the interests of persons holding title, as
heritable proprietors or as tenants under heritable leases, to fish for and take salmon by net.
Such titles are found in coastal areas around Scotland; some of the titles have existed for
hundreds of years. Three office-bearers of the Association, Mr James William MacKay,
Mr Peter Hutchison, and Mr George Keith Allan, represent the Association for the purposes
of the present proceedings. Mr MacKay and Mr Hutchison have direct or indirect interests
in heritable titles permitting net fishing for salmon in coastal waters. The second petitioner
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is Mr William Anderson Paterson; his firm, William Paterson & Son, is the owner and lessee
of six such heritable titles. The respondent to the petition is the Lord Advocate, representing
the Scottish Ministers (“the Ministers”).
[2] The sole substantive remedy sought in the petition is a declarator that the continued
prohibition on retaining salmon caught in coastal waters in regulation 3 of the Conservation
of Salmon (Scotland) Regulations 2016 (“the 2016 Regulations”), as amended by the
Conservation of Salmon (Scotland) Amendment Regulations 2019 (“the 2019 Regulations”),
taken together with the compensation scheme set out in the Ministers’ letter to the
Association dated 12 April 2019 (“the 2019 compensation scheme”), is outwith the Ministers’
legislative competence, ultra vires, and of no effect.
[3] At the outset, it is important to note that the prohibition and the 2019 compensation
scheme are challenged in the petition on the express ground that they are outside legislative
competence. Notwithstanding that, Mr MacColl QC, who appeared for the petitioners,
made clear in his oral submissions that the prohibition itself was not challenged in principle;
the focus of the petitioners’ case was on the alleged unfairness of the 2019 compensation
scheme. Although the terms of the declarator suggest otherwise, the 2019 compensation
scheme, as I will explain, was not made by legislation.
[4] The ground of challenge on which the petitioners rely is that the 2019 compensation
scheme does not strike a fair balance between the property rights of the Association’s
members and the general interests of the wider community because it is arbitrary in its
nature and in its effects. The scheme is said to infringe the rights of the members (ie all the
members) of the Association under Article 1 of the First Protocol to the European
Convention on Human Rights (“A1P1”). In the adjusted petition, the Association admits
that it has no rights under A1P1, but explains that it represents the interests of its members
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who do have such rights by virtue of their heritable titles. The Ministers, for their part,
accept that any governmental actions having the effect of depriving a person of his property
or preventing a person from exercising peaceful enjoyment of his property must strike a fair
balance; they maintain that the 2019 compensation scheme achieves this. The Ministers also
challenge the petitioners’ case on the basis that they have failed to establish the impact of
the 2019 compensation scheme on any individual title holders. The Ministers argue that, in
the circumstances of the present case, it is not appropriate to take a blanket approach to the
question of whether A1P1 has been infringed.
[5] The petitioners aver that many individual netsmen earn their living from the revenue
generated through use of their legal rights to carry out coastal salmon fishing. In some other
cases, the rights to fish for salmon are owned and operated by larger commercial
organisations, which employ a number of workers to run their businesses. For a variety of
reasons, some title holders do not currently exercise their rights to fish, but the petitioners
aver that such titles still have a value to the owners based upon inter alia their potential for
sale, lease, future exploitation, and as a basis for the receipt of payment from conservation
organisations in return for agreeing not to fish.
The background to the 2016 Regulations
[6] To set the scene for consideration of the parties’ competing positions, it will be
helpful if I set out briefly the main aspects of the background to the making of the 2016
Regulations.
[7] It is well known that Atlantic salmon have cultural and economic importance in
Scotland, as they do elsewhere in Europe. So far as the ownership of salmon fishing rights
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under Scots law is concerned, Rankine set out the fundamental principles in this way (The
Law of Landownership in Scotland, 4th ed, 1909, page 304):
“Whether on account of the great value of the salmon as an article of food and
commerce, or of its close connection with the sea, which was in a peculiar degree
under the King’s control, or of the ruinous complexity of interests which must
otherwise have arisen, the right of salmon fishing - as distinguished from the
ownership of individual salmon captured - has in Scotland from early times … been
regarded as one of the regalia minora; in other words, a right separate from the
ownership of land, and presumed to be retained by the Crown in granting feus of
land adjacent to sea and river.”
[8] Rankine went on to explain (op cit, page 305) that since in point of fact the King was
unable to exercise his prerogative right, and in early times it never occurred to him to lease
out the fishings temporarily, the result was that express rights of salmon fishing became
very usual, either as separate grants or, more commonly, in connection with lands adjoining
the fisheries. As I have mentioned, the Association’s members are owners of rights to fish
for salmon by nets, either as heritable proprietors or as tenants under heritable leases.
[9] Since estimates were first made in about 1971, the number of salmon returning from
their marine migration to Scottish rivers has steadily declined. Salmon is a species listed
and protected under Directive 92/43/EEC on the conservation of natural habitats and of wild
fauna and flora (“the Directive”). In October 2015 the European Commission commenced
infraction proceedings on the ground that Scotland did not have a suitable management
system for meeting the United Kingdom’s obligations under the Directive insofar as it
sought to conserve and protect Atlantic salmon, particularly in regard to coastal netting
operations.
[10] The Commission was concerned about the protection of Atlantic salmon populations
in Scottish rivers designated as Special Conservation Areas (“SACs”) under the Directive
and the United Kingdom’s failure to comply with Article 6(1) thereof. In particular, the
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Commission considered that the United Kingdom had failed to comply with its obligations
under Article 6(1) of the Directive to establish necessary conservation measures involving, if
need be, appropriate management plans. The Commission’s letter of 22 October 2015 stated
inter alia as follows:
“The UK and in particular Scotland hosts the most significant part of the EU
population of the salmon. Its conservation status in the Atlantic region is
‘unfavourable-bad’; however, its status is ‘unfavourable-inadequate’ in Denmark,
Ireland and the UK. From an EU-perspective, the Scottish salmon population is
therefore a stronghold of highest EU importance and there is in consequence a
particular responsibility for Scotland to ensure all measures needed for the
conservation of this species are implemented.”
[11] Guidelines issued by the North Atlantic Salmon Conservation Organisation
(“NASCO”) for the management of salmon fisheries define a mixed stock fishery as one that
exploits a significant number of salmon from two or more river stocks. Fisheries of mixed
stocks, particularly in coastal waters, present particular management and conservation
challenges because they cannot effectively restrict fishing to stocks that are at full
reproductive capacity where there are other stocks that are below conservation limits mixed
in with the stocks being fished. The accepted conservation practice is that management
measures should, in such circumstances, aim to protect the weakest of the contributing
stocks.
[12] The 2016 Regulations were made, under powers given by the Salmon and
Freshwater Fisheries (Consolidation) (Scotland) Act 2003 (“the 2003 Act”), in response to the
European Commission’s notice of infraction proceedings and in light of evidence of
declining salmon stocks and the poor conservation status of such stocks. Regulation 3(1)
provided as follows:
“No person may retain any salmon caught in any coastal waters in a salmon fishery
district.”
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[13] The term “salmon fishery district”, as defined in section 34 of the 2003 Act, covers
most of Scotland’s coastal waters in which salmon are caught by nets. All the titles held by
the Association’s members and office-bearers are within salmon fishery districts; so too are
the second petitioners’ titles.
[14] There was no time limit imposed on the prohibition introduced by the 2016
Regulations. The Ministers agreed that the prohibition would, however, be reviewed within
a period of 3 years. This would allow for the collection of further data so that the Ministers
through Marine Scotland (a directorate of the Scottish Government) could develop a more
robust understanding of the nature and potential impact of mixed stock fisheries on SACs
and other in-river fisheries. The evidence to be gathered during the 3-year period would
form the basis for a decision as to whether and, if so, where the prohibition should remain in
force, and whether and, if so, where coastal netting of salmon could be resumed.
The 2016 compensation scheme
[15] The Ministers established a compensation scheme (“the 2016 compensation scheme”)
for netsmen whose businesses were adversely affected by the prohibition contained in
the 2016 Regulations. The 2016 compensation scheme was based on the cost of
“mothballing” for 3 years the salmon fishing operations (ie keeping them in good condition
during the limited term of the prohibition so as to allow possible future use). The idea was
to allow title holders to resume fishing with minimal cost and inconvenience in the event
that the prohibition did not extend beyond 3 years.
[16] The broad basis of the 2016 compensation scheme was: (1) where there was an
established compensation agreement for conservation reasons (such as an agreement with a
district fishery board), the compensation payable under such an agreement was matched;
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(2) larger commercial operators received compensation to reflect their lost income during the
3-year period; and (3) in the case of smaller operators, the level of compensation was based
on the 3 year average reported weight of salmon caught, multiplied by the average price of
salmon per kilogram (£14).
The scientific evidence obtained following the 2016 prohibition
[17] In an affidavit prepared for the purpose of the present proceedings, Mr Simon
Rimington Dryden, the former head of the salmon and recreational fisheries team at Marine
Scotland, set out the main findings of the scientific studies commissioned by the Ministers
following the 2016 prohibition. There were two studies carried out: the first, by Downie and
others, reviewed the use of historic tag data to infer the geographic range of salmon river
stocks likely to be taken by a coastal fishery; the second, by Armstrong and others, examined
the application of acoustic tagging, satellite tracking, and genetics to assess the mixed stock
nature of coastal net fisheries.
[18] The conclusion of the Downie review was that the evidence showed that coastal net
fisheries exploited salmon which originated from a range of rivers, often some considerable
distance from where the fisheries operated. This finding was supported by the results of the
Armstrong study. There was evidence that coastal net fisheries exploited a mixed stock
resource. In view of these findings, Marine Scotland decided that the appropriate course
was to adopt a precautionary approach by assuming that all Scottish coastal net fisheries
utilised multiple stocks unless it could be shown otherwise. In addition to the specific
netting research, Marine Scotland also took account of the annual International Council for
the Exploration of the Sea Report of the Working Group on North Atlantic Salmon. This
evidence was thought to provide the best estimate of Scotland’s wild salmon population. In
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short, it was found that fewer salmon were returning to Scottish waters than in the recent
past; those returning were smaller, in poorer condition, and of lower reproductive capacity.
It was estimated that the downward trend of returning salmon was continuing such that
Scotland’s overall salmon population was considered to be less than half of what it had been
in the early 1970s.
The Ministers’ decisions in 2018 and 2019
[19] In view of these findings, the Ministers announced in about October 2018 that they
intended to maintain the prohibition on taking and retaining salmon caught in coastal
waters. It was considered that retention of the prohibition was necessary in order to
continue to comply with the Directive and with the NASCO guidelines. The Ministers
undertook that they would review the necessity of the prohibition on an annual basis. If it
was found to be no longer required or justified, it would be removed. The Ministers aver
that the data currently available to them does not permit an accurate prediction to be made
of when, if ever, the prohibition will become unnecessary.
[20] The 2016 Regulations were amended, with effect from 1 April 2019, by the 2019
Regulations. The latter regulations did not specifically provide for a continuation of the
prohibition; it was simply allowed to remain in force.
[21] The Ministers took the view that compensation was required in light of the extension
of the prohibition. Mr Dryden explained in his affidavit that a number of options were
considered and discussed with the Association. The first possible option involved
compensation continuing to be paid on the basis of “mothballing” in order to allow further
time for the assessment of Scotland’s wild salmon population. This option was considered
to be inappropriate because the scientific evidence pointed towards the prohibition having
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to remain in place for an indeterminate period. The overall trend in the number of adult
salmon returning to Scottish waters continued to be a downwards one and there was no
clear evidence that this trend would be reversed in the foreseeable future. The second
option was based on the idea of buying out the heritable rights of those coastal netting
stations which had been active between 2011 and 2015. The view was taken that there was
no evidential basis on which the value of the heritable rights could be properly valued in
isolation from the assets that generated financial gain to the operator. A further factor
militating against the second option was that a number of the Association’s members
strongly argued that they would not be prepared to sell their heritable rights as these had
been in their families for generations; these members submitted that the value of the
heritable rights was not capable of being assessed in purely monetary terms. Moreover, the
possibility could not be discounted that coastal netting might be permitted to resume at
some future time if justified by the improved health of the salmon population. The third
option (and the one that was selected) was to be a one-off payment intended to allow the
netsmen the opportunity to dispose of and diversify as opposed to mothballing their
operations. If in the future the prohibition is removed, the Ministers have undertaken not to
attempt to recover any compensation paid.
[22] From about October 2018 meetings were held between Marine Scotland and the
Association. An initial offer of compensation was based on loss of net profits over a 7-year
period. The 7-year period was derived from previous policy work associated with fixed
quota allocations attached to Scottish Government commercial sea fishing licences. Marine
Scotland had considered new policy options for the allocation of these quotas and had
concluded that current holders of the quota allocations would require a minimum of 7 years
notice in the event that the quotas were to be reallocated.
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[23] The offer included a de minimis net profit margin of 12.6 per cent. This was in
recognition of the fact that 16 of the 18 recipients of compensation under the 2016 scheme
had been unable or unwilling to provide certified accounts to demonstrate the nature and
extent of their commercial activities. Marine Scotland considered that this was a generous
net profit margin which would allow operators to recover the full value of their capital
assets.
[24] For its part, the Association sought “as a minimum” a continuation of the status quo
on compensation “with no end date” and with index linking “to counter inflationary
pressures”. In response, the Ministers explained that they were not in a position to offer
index linked compensation or to continue payments in perpetuity. They said that they were
prepared to consider modifications to the offer and invited the Association to discuss how
they thought that the formula was flawed.
[25] In the course of discussions with the Association, the Ministers stated that they
would be willing to remove the de minimis provision and to offer compensation based on
each business’s actual profit margin as shown by certified accounts and also to seek to
resolve recovery of the full capital value of assets separately.
[26] Following the making of further representations by the Association, the Ministers
agreed to extend the 7-year period to 10 years. They accepted that the 3-year period during
which compensation had previously been paid (ie 2016 to 2019) would not be taken into
account in calculating the loss of profits. This concession recognised that the initial
compensation scheme had been for the distinct purpose of “mothballing” and as such could
be discounted as a period during which operators could be expected to plan for future
diversification. The Ministers also agreed to allow indexation on the price per kilogram of
salmon and grilse of 2.5 per cent per year cumulatively from years 2 to 10; this was later
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extended so as to apply to years 1 to 10. They agreed to increase the 5 year average salmon
landings, excluding zero years, by 5 per cent for all operators who were active in the period
between 2011 and 2015; this was to compensate for voluntary delays to the start of the
netting season.
[27] Discussions continued for several months. The Ministers’ final position on
compensation was set out in a letter from Mr Michael Palmer (a senior official) to the
Association dated 12 April 2019. So far as relevant for present purposes, the letter was in the
following terms:
“....I consider that we have now reached the end stage of our negotiations and that it
is appropriate to explain the final position which the Scottish Government has
reached in respect of the method by which it intends to calculate compensation
payments to coastal netsmen in light of the decision to retain the prohibition
contained in regulation 3 of the Conservation of Salmon (Scotland) Regulations 2016.
...
The Scottish Government’s position remains that it is appropriate and reasonable to
move from payment for ‘mothballing’ operations to compensation for cessation of
operations in the foreseeable future. We could not justify otherwise in terms of the
consequences for the public purse.
We continue to believe that our offer, based on pure net profit, reasonably
compensates operators for the continuation of the prohibition whilst, crucially, not
extinguishing the heritable rights to fish for salmon in coastal waters should stocks
recover over the long term. We are not able to move on these principles.
Our final offer is therefore a further one-off single compensation payment to
non-dormant operators based on:
a 2019 market sale price of £23.58 per kg for wild Scottish salmon and,
separately, £13.33 per kg for grilse;
a cumulative 2.5% increase in the market sale prices, year on year;
a net profit, assessed on a historic case by case basis, but with a de minimis
of 12.6%;
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a 10 year period with a 3.5% social discount, based on the average annual kg
weight of salmon and grilse landed in the period 2011-2015 inclusive, with zero
years excluded;
and
a 5% increase in the average weight of salmon landed to reflect the voluntary
delay to the start of the netting season that many operators observed.
Our calculations based on this framework, and assuming the de minimis net profit
of 12.6% for all operators, show a total, one-off compensation payment of circa
£939,000. This is in addition to the circa £1.7m which has already been paid.
Our offer to remove the 12.6% net profit de minimis provision and alternatively to
calculate each operator’s compensation based on their actual profit margin (as
evidenced through certified accounts) and to seek to resolve recovery of the full
capital value of their assets separately also remains on the table.
I note that your letter explicitly acknowledges that ‘.....it will be for the Scottish
Government to engage with individual members and property owners on a case by
case basis, to determine if any individual agreements can be reached’. I am writing
today to the eighteen coastal operators (to whom we will ultimately make a further
offer of compensation once our discussions with the SNFAS are complete) to update
them on the situation and attach a copy of the text of that letter.”
[28] Following that letter Mr Dryden duly wrote to each of the individual operators on
16 May 2019 informing them that the Ministers had concluded discussions with the
Association without coming to an agreement. The letters offered a single one-off further
payment of compensation for the continuation of the 2016 prohibition. The letters continued
as follows:
“Previous compensation payments made in 2016 were based on the annual level of
income foregone by no longer taking part in the fishing activity, so that it enabled
operators to mothball their operations during the three-year review period. We are
now faced with a different scenario. The science shows that coastal netting stations
operate in mixed stock fisheries. Marine Scotland (MS) should therefore aim to
protect the weakest of the contributing stocks and, whilst MS will continue to assess
the status of Scotland’s wild salmon populations, we acknowledge that there is a
high risk that this assessment will continue to conclude that a significant number of
rivers have stocks that are below conservation limits for a prolonged period.
We have therefore proposed a further offer of compensation which is designed to
reasonably compensate operators for the loss of net income (profit). It deliberately
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moves away from an annual compensation figure for moth-balling operations to a
one-off compensation figure which reflects the fact that operators may need to phase
out direct and indirect costs over time.
Your offer has been established by calculating the assumed net income (profit) which
could have been generated over a 10-year period from 2019 to 2028 inclusive...”
[29] The offer letters continued by setting out the details of the compensation package in
line with the letter of 12 April 2019. Acceptance of the offer was to be in full and final
settlement of any and all claims, arising at the time of acceptance or in the future. In all,
sixteen compensation offers were made, of which two have been accepted. Marine Scotland
is not aware of whether the two operators who have accepted the offers are members of the
Association.
The petitioners’ submissions
[30] Mr MacColl submitted that the continued prohibition amounted to a deprivation of
the title holders’ property for the purposes of A1P1. He stressed that the primary purpose of
the heritable titles was to fish for and retain salmon. The effect of the prohibition was to
make the titles useless in practical terms. If, contrary to the petitioners’ principal contention,
the prohibition did not amount to a deprivation of property, it was at least a material control
of use. Mr MacColl acknowledged that ultimately the exact categorisation of the
interference with property rights was not crucial. Whether there was a deprivation or a
control of use, compensation had to be reasonably related to the value of the affected
property rights, having regard in particular to the potentially indefinite duration of the
prohibition. Since the prohibition was expected to endure for the foreseeable future, the
whole purpose and value of the heritable titles was being stripped away.
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[31] Senior counsel submitted that it was important to note that the 2019 compensation
scheme focussed on loss of income for a limited period only; this failed to reflect a fair
paragraph 121, the European Court of Human Rights had acknowledged that the taking of
property without payment of an amount reasonably related to its value would normally
constitute a disproportionate interference which could not be considered justifiable under
A1P1. Here the overall approach of the 2019 compensation scheme was irrational because it
failed to take account of the effect of the prohibition on the fundamental purpose and value
of the heritable property rights. Reference was made to R (Kelsall) v Secretary of State for the
Environment [2003] EWHC 459, paragraphs 62 and 63, where Stanley Burnton J (as he then
was) held that provisions in the Fur Farming (Compensation Scheme) (England) Order 2002
were unfair and irrational because they operated unfairly as between different farmers and
generally; they discriminated between brown mink farmers and farmers of different breeds
without justification; and they produced arbitrary effects.
[32] Mr MacColl went on to argue that the 2019 compensation scheme was structurally
flawed because it failed to address the specific circumstances of the individual title holders.
It was, counsel submitted, a one size fits all model. In the case of each and every title holder
the prohibition had the effect of destroying the fundamental purpose of the heritable title.
By allowing compensation based only on loss of income for a limited period of 10 years,
the 2019 compensation scheme failed to recognise the true nature and effect of the
prohibition. Mr MacColl submitted that the 2019 compensation scheme infringed the rights
of all the title holders.
[33] Mr MacColl made clear that the petitioners did not seek to challenge the existence of
a rational basis for the continued prohibition. Instead, the focus of the challenge was, he
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said, on the imposition of a potentially indefinite ban without providing fair and proper
compensation. In support of that broad ground of challenge, the petitioners identified a
number of alleged deficiencies in the 2019 compensation scheme. These may be summarised
as follows.
[34] First, it was argued that the potentially indefinite duration of the ban meant that the
offer to compensate for loss of net profits over a 10-year period was arbitrary and irrational.
The 2019 compensation scheme had no logical relationship with the property rights affected.
This point was said to be underscored by the fact that there had been an increase in the
compensation period from 7 to 10 years in the course of discussions between the Ministers
and the Association. The possibility that the prohibition might be lifted in the future was a
remote one, which held no value for the holders of the heritable titles. Members of the
Association could not reasonably be expected to maintain infrastructure and assets
indefinitely. In the circumstances, the emphasis put by the Ministers on the possibility of
the prohibition being lifted at some future point was misplaced and did not withstand
scrutiny.
[35] Secondly, it was argued that the title holders would continue to incur liabilities and
fixed costs during the period of the prohibition. These costs would extend to mortgage
payments on properties; local authority rates; the costs of maintaining and servicing
equipment; hire purchase costs for plant and equipment; insurance costs; electricity and
fuel charges; storage costs; and staff and directors’ salaries. Reference was made to
information contained in affidavits from some members of the Association. If the decision
was taken to wind down the activities of a fishery, that would itself give rise to significant
costs. If a fishery had to be brought back into production in the future, there would be costs
involved in doing so.
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[36] Thirdly, the petitioners submitted that the compensation scheme ignored the value of
moveable assets owned by the fisheries. It was said that an indefinite ban would render
many of the assets worthless. The Ministers had provided no details on their alternative
proposal to resolve the recovery of capital assets separately. That proposal had not been
repeated in the offer letters of 16 May 2019.
[37] Fourthly, Mr MacColl submitted that the compensation scheme was flawed because
it failed to offer any compensation for owners whose fisheries were dormant or were fished
only to a limited extent between 2011 and 2015. For a variety of reasons, such as ill-health or
the effects of pollution, a number of the Association’s members did not actively or fully
exploit their ownership rights between 2011 and 2015; such rights were nonetheless of
value.
[38] Fifthly, the scheme was said to be unbalanced because it made no allowance for the
fact that some title holders had not actively fished between 2011 and 2015 as a result of
voluntary conservation agreements they had entered into with local fishery boards in
exchange for compensation. The 5 per cent fish weight uplift was said to be insufficient.
[39] Sixthly, the petitioners founded on the fact that some netsmen had been offered a
single one-off payment under the new compensation scheme that was lower than the total
annual payments made to them under the 2016 scheme. Some of the affidavits referred to
this.
[40] Seventhly, the use of 2011 to 2015 catch data was argued to be arbitrary. The number
of salmon caught at particular locations had ebbed and flowed materially over the years.
The new compensation scheme employed a period of historically low catch levels.
[41] Finally, it was said that the new compensation scheme was unsound because it failed
to take account of profits made from smoking salmon after it had been caught. The open
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market value of smoked salmon could greatly enhance profitability. There were references
to this in the affidavits.
[42] For all these reasons, the petitioners submitted that the compensation proposed in
2019 did not strike a fair balance between the rights of individual property owners and the
general interests of the wider community. It was arbitrary and without reasonable
foundation. It breached the rights of the individual property owners, including Mr Mackay,
Mr Hutchison, and Mr Paterson, and the Association’s members.
The respondent’s submissions
[43] On behalf of the Lord Advocate, Miss Crawford QC submitted that there was a
fundamental flaw in the petitioners’ approach. It was trite that A1P1 rights were held by
individuals and, as such, any assessment of whether those rights had been breached
required consideration of individual circumstances. It was not permissible to adopt a
blanket approach, as the petitioners sought to do in the present case. Insufficient detail had
been supplied of the burden allegedly imposed on the individual title holders. It was,
therefore, impossible to say whether the burden was excessive notwithstanding the
compensation offered.
[44] In any event, the 2019 compensation scheme was a fair and reasonable one. It was
designed to provide a one-off payment to compensate for the prohibition for an
indeterminate period. It was reasonably based upon the net profits of the individual
netsmen for a 10-year period. The netsmen had been notified that they should seek to
diversify their activities. They could take immediate steps to do so, utilising and/or
retaining the benefit of the compensation. In the event that the prohibition was to be lifted
in the future, the netsmen retained their heritable titles and would be able to exploit them.
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[45] Miss Crawford submitted that the basis upon which the loss of profit was
determined was reasonable and logical. It was tailored to the circumstances of the
individual netsmen by reference to their catch volumes and profit margins. The Ministers
had properly taken into account the representations made by the Association. The price
per kilogram was based on market data; it incorporated a year by year increase. A
favourable social discount was allowed. An increase in average catch figures was applied in
order to reflect the fact that some (but not all) of the netsmen had previously agreed to delay
the start of their fishing seasons. A generous de minimis net profit margin of 12.6 per cent
was allowed. An offer to explore reimbursement of capital assets had been put forward, but
had not been accepted. The 5-year period upon which catch figures were calculated was
reasonable. There was no basis for assuming that the salmon population and catch figures
would have increased had the prohibition been lifted. The trend in the numbers and size of
salmon caught was a downwards one. That trend was ignored for the purpose of the
compensation formula.
[46] In the case of those title holders who had not actively fished between 2011 and 2015
the prohibition could not be said to impose an excessive burden on them. Any interference
with the peaceful enjoyment of dormant fisheries was negligible. It was reasonable for the
Ministers to conclude that no compensation should be given to netsmen who were not
utilising their titles. Title holders who had facilities for smoking salmon were not prohibited
from making use of these; they could smoke wild Atlantic salmon or farmed salmon.
[47] Overall, the 2019 compensation scheme was, Miss Crawford submitted, well within
the Ministers’ margin of appreciation.
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Analysis and decision
[48] A1P1 provides:
“(1) Every natural or legal person is entitled to the peaceful enjoyment of his
possessions. No one shall be deprived of his possessions except in the public interest
and subject to the conditions provided for by law and by the general principles of
international law.
(2) The preceding provisions shall not, however, in any way impair the right of a
state to enforce such laws as it deems necessary to control the use of property in
accordance with the general interest or to secure the payment of taxes or other
contributions or penalties.”
[49] The general principles applying to the interpretation of A1P1 are well-known.
Lord Reed summarised these principles in AXA General Insurance Limited v
HM Advocate 2012 SC (UKSC) 122, paragraphs 107-108.
[50] A1P1 comprises three distinct rules: The first rule is of a general nature and
expresses the principle of peaceful enjoyment of property; the second rule covers
deprivation of possessions and makes it subject to certain conditions; the third rule concerns
the State’s right to control the use of property in accordance with the general interest. The
three rules are interconnected. The second and third rules are concerned with particular
instances of interference with the right to peaceful enjoyment of property and must,
therefore, be interpreted in accordance with the general principle expressed in the first rule.
Each of the two types of interference defined must comply with the principle of lawfulness
and pursue a legitimate aim by means which are reasonably proportionate to the aim sought
to be realised.
the European Court of Human Rights provided an authoritative summary of the principles
applying to A1P1 in the following terms:
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“Not only must an interference with the right of property pursue, on the facts as well
as in principle, a ‘legitimate aim’ in the ‘general interest’, but there must also be a
reasonable relation of proportionality between the means employed and the aim
sought to be realised by any measures applied by the state, including measures
designed to control the use of the individual’s property. That requirement is
expressed by the notion of a ‘fair balance’ that must be struck between the demands
of the general interest of the community and the requirements of the protection of
the individual’s fundamental rights.
The concern to achieve this balance is reflected in the structure of Article 1 of
Protocol No 1 as a whole. In each case involving an alleged violation of that Article
the Court must therefore ascertain whether by reason of the state’s interference the
person concerned had to bear a disproportionate and excessive burden.”
[52] The categorisation of the interference as either expropriation or control is not critical.
The correct focus is on whether the interference imposes a disproportionate and excessive
the Supreme Court held that the severity and disproportion (as compared to others) of the
impact of a restriction of fishing rights on the claimant were such that there had been a
breach of his rights under A1P1. In that case no compensation had been offered. At
paragraph 32 Lord Carnwath explained that it was necessary to consider whether the effect
on the particular claimant was excessive and disproportionate. His Lordship went on to
observe, at paragraph 37, that the case was an exceptional one on the facts. He added that
the Strasbourg cases showed that the national authorities enjoyed a wide margin of
discretion in the imposition of necessary environmental controls, and that A1P1 gave no
general expectation of compensation for adverse effects. Furthermore, where the authorities
had given proper consideration to the issues of fair balance, the courts should give weight to
their assessment.
Human Rights recalled that it had previously stated that the national authorities must enjoy
a wide margin of appreciation in determining not only the necessity of the measure of
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control concerned but also the types of loss resulting from the measure for which
compensation will be made; the legislature’s judgment in that connection would in
principle be respected unless it was manifestly arbitrary or unreasonable.
[54] More recently, in O’Sullivan McCarthy Mussel Development v Ireland (2018) EU:
44460/16 the Strasbourg Court reiterated, at paragraph 109, that it had often stated that the
protection of the environment was an increasingly important consideration in today’s
society, having become a cause whose defence aroused the constant and sustained interest
of the public, and consequently the public authorities. The Court noted that in the instant
case the impugned measures taken were adopted to ensure the respondent State’s
compliance with its obligations under EU law, which the Court had recognised as a
legitimate general interest of considerable weight. At paragraph 124 the Court recalled that
it had often stated in its case law that environmental protection policies, where the
community’s general interest is pre-eminent, confer on the State a margin of appreciation
that is greater than when exclusively civil rights are at stake.
[55] In evaluating the petitioners’ grounds of challenge in the light of these principles, the
question to be addressed is, therefore, whether the interference with the petitioners’ peaceful
enjoyment of their possessions constituted by the prohibition contained in the 2016
Regulations strikes a fair balance between the demands of the general interest of the
community and the requirement of the protection of the individual’s fundamental rights.
The question is not, as the petitioners’ submissions and the affidavit evidence tended to
stress, whether the 2019 compensation scheme itself struck a fair balance. Nor is the
question whether in some general sense the compensation scheme is a fair and reasonable
one - again, that tended to be the petitioners’ approach, as is clear from the affidavits.
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[56] A further difficulty arises because the petitioners’ approach to the effect of the
prohibition on the title holders has been presented to the Court at a high level of generality
without any real focus on the nature and extent of the burden that will be imposed on them
individually. In the adjusted petition the petitioners encapsulate their approach in the
following averments in statement 3.4:
“Explained and averred that the compensation offer made on 12th April 2019 applies
equally (and in an equally arbitrary fashion) to all heritable title holders in terms of
the applicable formula. Standing the nature of the compensation offer made by the
Respondent (sic), the issue of whether the A1P1 rights of title holders have been
breached is capable of being determined without the necessity of considering the
individual circumstances of each title holder.”
[57] The petitioners attempt to justify this approach by averring that negotiations
between the Ministers and the Association proceeded on a general basis and did not have
regard to the circumstances of individual title holders. The petitioners then add that insofar
as it may be of any assistance to the Court to consider the individual circumstances of title
holders, reference is made to affidavits to be lodged by the petitioners (the terms of which
are held as incorporated in the petition brevitatis causa).
[58] I have considered the terms of the affidavits. They rehearse a number of complaints
about what is alleged to be the overall unfairness of the 2019 compensation scheme. They
claim that the title holders will not be fully compensated for all their losses. The approach
taken is that the compensation will not be sufficient to enable them to continue with their
fishing businesses. This misunderstands the basis and purpose of the prohibition and of the
2019 compensation scheme. The scientific evidence shows that the prohibition will probably
have to remain in force for the foreseeable future. Compensation is accordingly intended to
allow the title holders to dispose of their interests and to diversify their operations over a
number of years.
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[59] The generality of the approach taken by the title holders can be seen, for example, in
Mr Mackay’s affidavit where he states that the 2019 compensation scheme is flawed because
he will not be compensated at a level or in a manner “to ensure my business survives”
(paragraph 31). Later in his affidavit Mr Mackay criticises the 2019 compensation scheme on
the ground that it does not allow him to “dispose of significant assets, key to my business,
which may be needed in future” (paragraph 34).
[60] Mr Hutchison states in his affidavit that the owners of the fishery in which he has an
interest estimate that to recommission operational status in the future would cost
approximately £50,000 for replacement and renewal of necessary plant, materials and
equipment (paragraph 14). He then provides a series of round figures as a “first level
estimate” of such costs. In paragraph 23 Mr Hutchison refers to “the significant economic
growth potential” of the fishery; he contends that this should be recognised and
compensated for.
[61] In his affidavit Mr Paterson complains that “the Scottish government want to stop us
fishing with no reassurance that the fishing will ever start again” (paragraph 14). His
evidence is presented at a high level of generality. For example, in paragraph 22 he says that
the value of a heritable title was not based on recent catch figures (which may be currently
low) but on its potential as evidenced by the much larger catch figures of the past.
[62] Messrs David Thomson Pullar and George Stewart Pullar provide a list of assets
used in their business; “their conservative replacement cost/values” are then set out in a
series of round figures, including the amount of £1,000,000 for an operating base with
outbuildings and land (paragraph 32). It seems obvious that many of the fixed costs to
which they refer would not have to be incurred if the business was wound up, for example
accountancy fees and mortgage payments. In paragraph 40 of the affidavit the assumption
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is made that the assets of the business will have to be retained “to support any future
restart”.
[63] Mr Gary Stephen Fraser explains in his affidavit that his fishings have been dormant
since 2009/10 due to oil pollution. Compensation has been paid by those responsible for
causing this.
[64] Mr Joseph Buchan Yule claims that the true cost of decommissioning is in the value
of the heritable titles; he claims that the three fisheries with which he is concerned would
have a value of £250,000 (paragraph 7).
[65] I accept that the affidavit evidence shows that the title holders consider that they will
not be fully and fairly compensated. It seems to me, however, that the evidence fails
sufficiently to acknowledge that the prohibition is necessary for sound reasons of
environmental protection and conservation. In such circumstances, A1P1 does not give rise
to any entitlement to receive full compensation for all the financial losses that may possibly
flow from the relevant measure. In the affidavits there is no real attempt to explain what the
impact on the individual title holders will be in the event that they elect to accept
compensation under the 2019 scheme and proceed to dispose of their business interests and
diversify their operations over time. No convincing attempt is made to explain in concrete
terms why, in those circumstances, the burden imposed on them should be regarded as
excessive.
[66] In my opinion, the petitioners are mistaken to describe the 2019 compensation
scheme as one which does not take account of individual circumstances. In fact, the scheme
is tailored to the circumstances of individual netsmen by reference to their catch volumes
and profit margins.
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[67] Stepping back and trying to take a fair and, I hope, realistic view of matters, it
appears to me that a compensation scheme based on loss of net profits for a period of 10
years cannot be said to impose an excessive burden. This is especially so where the
prohibition has been put in place for sound reasons of conservation and environmental
protection and to ensure that EU law is complied with. Both the Supreme Court and the
Strasbourg Court have emphasised the importance of these considerations. The period for
which compensation is to be paid is a substantial one. The compensation is to be calculated
by the net profits generated over a representative period. It is important to recall also that
the netsmen will retain their heritable titles and will be able to exploit them in the event that
the prohibition is lifted in the future. This points towards the interference being more in the
nature of a control of use than an expropriation. The case law makes clear that a wide
margin of deference should be extended to the national authorities in circumstances such as
the present, particularly where, as here, they have consulted those affected and given careful
consideration to the measures complained of.
[68] I take account also of the fact that the Ministers were willing to consider
compensation based on recovery of the full capital value of assets, but for reasons that were
not explained the Association has chosen not to explore this option.
[69] In my view, the 5-year period (2011 to 2015) adopted for catch figures reflected a
reasonable and balanced approach. There is no reason to think that catch figures would
have increased had the prohibition been removed after it was first introduced in 2016. In the
case of title holders who did not fish during that 5-year period, any interference with the
peaceful enjoyment of their possessions appears to me to be negligible. It was, in my
judgment, reasonable for the Ministers to conclude that no compensation was required for
such dormant fisheries.
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[70] The comparison with the 2016 compensation scheme is irrelevant in my view. It was
put in place for a different purpose.
[71] I consider that it was reasonable for the Ministers to take the view that no specific
element of compensation was necessary to reflect the fact that the businesses run by some
title holders extended to the smoking of fish. They may be able to continue with these or
similar activities in the future notwithstanding the prohibition.
[72] In conclusion, I find myself in agreement with Miss Crawford’s submission that none
of the exceptional circumstances identified in Mr Mott’s case exists in the present case (Mott
v Environment Agency supra). The Ministers have offered a rationally based compensation
scheme that is, I consider, well within their margin of appreciation. I am satisfied that it
strikes a fair balance. It is not manifestly arbitrary or unreasonable. I shall for these reasons
sustain the respondent’s pleas-in-law, repel the petitioners’ pleas, and refuse the petition. I
shall reserve all questions as to expenses.