DIVISIONAL COURT

(D J Houston and J A Smith)

WAGSTAFF v ROSS & OTHERS

(Application SLC 120/12 – Order of 2 September 2013)

CROFTING – FAIR RENT – SUBJECTS PART OF A COMMON GRAZING – COMPETENT TO FIX RENT IN ISOLATION – PRINCIPLES OF FIXING FAIR RENT – CAPABILITY OF LAND FOR PURPOSEFUL USE – WHETHER LAND USED OR NOT IRRELEVANT – INCOME FROM LIVESTOCK ENTERPRISE AND SUPPORT PAYMENTS – SOUMINGS UNCLEAR – RENT FIXED FOR WHOLE SUBJECTS AND NOT INDIVIDUAL RESPONDENTS – LIMITED EVIDENCE – COURT RELIANCE ON OWN INSPECTION AND EXPERTISE

The owner of an area of hill land applied to have a fair rent fixed in respect of grazings rights which respondents held in respect of it. The subject area was undisputedly part of a larger crofters common grazings and the rights were held under crofting tenure. Much of it was no longer physically grazed, but some shareholders made agricultural support claims based on their rights to graze on the area. In terms of Section 6(3) of the Crofters (Scotland) Act 1993, as amended, the Court accepted that it was competent to rent a part of a common grazings. Accordingly it only inspected and thereafter considered in detail, and effectively in isolation, the subject land although it did so with certain reservations.

The basis for computation of fair rent in the circumstances was rehearsed. To what extent the land can be used purposefully by the shareholders with a view to providing income was important. Practical stock carrying capacity and income from the livestock enterprise was a part of that, but supplementary income from public funding also fell to be included. Regard was to be had to the Grazings Regulations as being determinative of the use which shareholders are entitled to make of the land for grazing. Soumings defined the maximum numbers of stock permitted to be put on the land, but, in this case, individual soumings could not be determined with certainty. The Court therefore declined to fix rents for individual shareholders and only fixed a rent for the totality of the rights held.

In the absence of relevant evidence, the Court relied significantly on its own inspection and its experience of other cases. The difficulties in considering a part of the grazings in isolation from both the remainder of it and from the associated in-bye ground were aired. If the land was capable of purposeful use, then whether or not it was actually used was irrelevant in the determination of a fair rent. It was recognised that access to support payments was voluntary, but it had to be assumed that prudent shareholders would use their best endeavours to avail themselves of such funding. Although accepting that changes in rates and eligibility conditions were inevitable, the Court concluded that public support for crofting agriculture would continue. It considered it unlikely that the total net income available to a prudent crofter would decline significantly over the seven year period for which the rent would be fixed.

The Note attached to the Court’s Order is as follows:-

Background

[1] This is an application by Ms Caroline M Wagstaff, the owner of an area of hill land lying some 3 kilometres to the south of the River Fleet and to the south and east of Rogart. The subjects of the application extend to some 497 hectares (1,228 acres) and appear to be recognised, at least locally, as being the South Strathfleet Common Grazings (Enlargement). As will be seen, there is some doubt as to the proper identification and extent of said enlargement. However it is not in dispute that grazing rights in all of the subjects of this application are held under crofting tenure by various crofters in the locality. Nor is it disputed that Ms Wagstaff is entitled to receive a fair rent for the area in question from those crofters who hold shares in the grazing. We are asked to fix that fair rent under and in terms of Section 6 of the Crofters (Scotland) Act, as amended (“the 1993 Act” or “the Act”).

[2] We heard parties in Rogart Village Hall on the morning of Tuesday 18 June 2013 and inspected the relevant land in the afternoon and on the following morning.

[3] In the lead up to the hearing, considerable effort was made by the Court and parties to properly identify the historical basis for the presently understood status and extent of the land. Although we summarise some of the outcome of that research in this Note, we do not attempt to go into the detail of it, because – for the purposes of the present application – we are satisfied that the subjects are or are at least form part of the South Strathfleet Common Grazings (Enlargement) as granted to various landholders in around 1886/87 as an extension to their then existing grazings and indeed as now regulated, as we understand it, by the “Regulations for the Management and Use of Southside Strathfleet Common Grazings” issued by the [then] Crofters Commission on 7 June 2002.

[4] In terms of section 6(3) of the 1993 Act, we are empowered to determine a fair rent for “any part of a croft”. Whilst, as we note later, there is a little doubt as to the proper identity of the shareholders and their respective shareholdings in the subjects of the application, it is accepted that the shareholdings which the respondents hold in respect of this land fall to be regarded as parts of their crofts.

[5] In carrying out the task of determining a fair rent for the rights which the respondents hold in the ground owned by Ms Wagstaff, we have treated them as if they were independent of the grazings to the north (or indeed any other part of the enlargement – if such other part can be identified) and of any associated in-bye land. We did not enquire as to what extent those rights were held with or associated with in-bye croft land or indeed held together with rights in the whole of the South Strathfleet Common Grazings lying to the north of the subjects of this application. Indeed we heard little evidence in that regard, although we did see parts of some of the in-bye land with which the grazings are or were formerly associated and we travelled through the original grazing (i.e. the area to which the enlargement was added in 1886/7) to gain access to the subjects in the first part of our inspection.

Evidence and Submission

[6] With the Court’s permission, Mr Christopher Ferne appeared on behalf of Ms Wagstaff and Mr John A Maciver, Clerk to the Common Grazings made representations on behalf of some of the respondents.

Christopher Albert Ferne (65)

[7] Mr Ferne gave evidence that he was Estate Manager for Cambusmore Estates Ltd. He had no previous experience of estate management prior to his appointment at Cambusmore, his background having been in advertising and marketing. He explained that although Ms Wagstaff was the sole owner of the subjects of this application, she was also a shareholder, along with Mr K M Greenland, in Cambusmore Estates Ltd.

[8] The applicant had not sought to engage in an adversarial court process. She was a keen supporter of crofting and did not expect to make a living income from the grazings, but the estate needed to cover its administration costs in collecting rents – which it was not doing at the present time.

There were four reasons for the present application to the Court.

1. to determine who the current shareholders were

2. to determine the soumings

3. to have a fair rent fixed

4. to find out the basis of the allocation of rent as between the shareholders

[9] As regards the appropriate level of fair rent, Mr Ferne was content to leave that entirely to the Court, although he was of the view that the present state of the land was the responsibility of the shareholders.

[10] In cross-examination, he was unable to throw any light on the discrepancy between the area of the enlargement as set out in the grazings regulations (1,900 acres) and the extent of the subjects of this application, which appeared to be 1,228 acres. All that he could confirm was that the area under discussion here had been sold to Ms Wagstaff by Ralph Abel Smith and that it extended to some 497 hectares (Production 3).

[11] Questioned as to whether the estate did not have some responsibility for the state of the land, his view was that if it was rented to someone else then the tenant was responsible for its condition He presumed that if the crofters received Single Farm Payment (SFP) then it would be for them to keep the ground in good agricultural and environmental condition. That was not a landlord’s responsibility. He was not aware of any situation in which a landlord managed let land. The estate had had no enquiry from any other organisation as regards the state of the land. He understood, however, that restrictions as to the use of the land were imposed by the authorities.

[12] Whilst the landlord was entitled to take access to the land, she did not in fact really do so to any extent. In a sense, it could be said that the ground was effectively landlocked as far as the estate was concerned. There was no reasonable access from the south or south west and so it was hard to walk into from that side. This was hill land and comprised rank, rough grazing. The estate did have shooting rights, but it chose not to exercise them – or at least to do so very infrequently. Mr Ferne was not aware of any sporting activity being carried out in the last two and a half years. He thought that extraction of peat might be possible, but was not aware of any rights in that regard, although he accepted that such rights may exist. The estate was not aware of any peat cutting having been carried out since 2002.

[13] The grazings may well be fenced, but he did not know what condition any fences were in. There was no fence between the land owned by Ms Wagstaff and the remainder of the grazing. Such fences as there were did not fall to be regarded as landlord’s improvements.

[14] The only income received by the estate in respect of the subject land was the rent. He knew that certain restrictions were applicable to the majority of the subjects in respect of it being part of a Site of Special Scientific Interest (SSSI) and Special Protection Area (SPA), but was not acquainted with the particular restrictions imposed on the crofters by the designations relating to Ms Wagstaff’s land. He was aware that users of ground subject to these designations may be required to obtain Scottish Natural Heritage (SNH) approval for the carrying out of certain agricultural uses and other activities on the land.

[15] He thought that Ms Wagstaff would have been aware of the level of rental income attributable to the land when she bought it. However, she had been unable to establish what the present basis of payment was – either in terms of the level of rent or the correct identity of those with grazing rights. She now sought to rationalise matters and obtain a slight increase in income from the land. The current rent was just 1.33p per acre. The potential subsidy income for the land through the Integrated Administration & Control System (IACS) was £10,560, yet the estate was only receiving a total of £14.06 in rent – 0.13% of that figure. It was a fair assumption that crofters could obtain SFP of £15 per sheep and Less Favoured Area Support Scheme (LFASS) of £7 per sheep, although he did not know exactly what the respondents in this case received by way of such payments.

[16] He had calculated the potential income based on a report by Gwynn Jones of the European Forum for Nature Conservation and Pasturalism dated 2009/10. A subsidy income of £22 per sheep was indicated and that would apply to the whole of Scotland. A figure of that sort of level had been confirmed to him as being likely by the local Scottish Government Rural Payments & Inspections Directorate (SGRPID) office.

John Alexander Maciver (83)

[17] Mr Maciver had been a crofter all his life. He had been employed by the local authority for 37½ years before retiring in 1993 and had actively crofted until 2009. He had been a shareholder in both the original grazings and the enlargement since 1971 and was currently Clerk of the South Strathfleet Common Grazings – a post which he had held since 2006.

[18] Discussions on rent between the grazings committee and the landlord had commenced in 2010. Mr Ferne had initially suggested asking the Land Court to fix the rent, but the crofters sought to discuss matters before involving the Court. A good deal of information about tenancies and soumings had been provided to the landlord. Ultimately it seemed to the crofters that the estate was seeking to cover the costs of administration. A £15 invoicing charge was proposed by the estate. The crofters considered this to be unfair and had proposed, as an alternative, the setting up of a direct debit system of paying rents directly to the landlord’s bank account. This had proved to be unacceptable to the estate and the present application was made. The crofters were content to leave the fixing of the fair rent to the Court.

[19] Mr Maciver was asked what payments the crofters received in respect of the restrictions imposed by virtue of the designations on the land. The shareholders had a Scottish Rural Development Programme (SRDP) application covering 661 hectares of which about 447 hectares was on the enlargement. This was a voluntary agreement for five years. A payment of £2 per hectare was anticipated – payable to the grazings committee in respect of all those who had rights in the grazing. The money would then be distributed to all the shareholders. The terms of the SRDP agreement did not impose any restrictions on the use of the land beyond those imposed by the SSSI and SPA.

[20] The designations were founded on the protection of a hen harrier population in the area. There was a severe restriction on heather burning, although in practice the crofters had not asked for permission to burn. Nor had SNH asked them to carry out any burning and, in any event, although there were areas that could be burned, it would require fifty men to be available to undertake the task – so it was virtually impossible in practice. The use of all-terrain vehicles (ATVs) on the land was also restricted, with them only being permitted to travel on hard ground. It was possible to walk most of the grazings, but with some three-quarters of it being soft and the limitation on vehicle use, access was restricted. Permission had to be obtained from SNH before peats could be taken.

[21] No stock was allowed on the grazings from December to April, although there was no restriction on sheep numbers as such. In the past, crofters had put limited numbers of hoggs out on the land during the winter months, but the restriction now imposed did not have a great impact in that regard.

[22] Cambusmore Estates had applied for permission to erect wind turbines on the grazings, but the application had been rejected as a result of SNH objections. Similarly, a joint crofter forestry scheme had been considered. Again, SNH had prevented this from being advanced and it had to be abandoned. Such schemes would have been beneficial to both the estate and to the crofters.

[23] Although there was some bracken cover, it did not extend to a large proportion of the grazings. The Court should take into account the discrepancy between the area indicated in the Regulations (1,900 acres) and the area which it was being asked to rent. Mr Maciver thought that the reduction in souming from 480 to 435 by the Crofting Commission would be relevant to the Court’s deliberations.

[24] The distance from the crofts to the grazings and the difficulties of access constrained the use which could be made of the land owned by Ms Wagstaff. It was a trek of some two miles to the enlargement and this, combined with the restriction in area which could be accessed by ATVs deterred the crofters from making use of the land. That said, any sheep which were on the grazings had potential access to the whole area. In the past, the grazings might have carried some 500 to 600 North Country Cheviot ewes in the summer months. Weaning percentage could be around 80%. The hoggs were now put out in April, with the ewes and lambs following in May following lambing on the in-bye. Some supplementary feeding would normally be required in the winter. In the past some drainage had been undertaken and heather burning carried out, but there had been no bracken control.

[25] Lamb prices were very variable, but somewhere in the region of £40 - £60 for a North Country Cheviot ewe lamb was achievable and £40 - £50 for a wether lamb. Most of the shareholders would have SFP entitlements based on their previous livestock numbers and stocking rates. Most would also be entitled to LFASS payments, but Mr Maciver was not aware of the current rates applicable to the two schemes. LFASS would only continue until 2015. Mr Maciver was unsure as to whether the grazing had to be used by stock as a requisite for SFP to be paid, although he thought the claimant had to have stock in order to obtain LFASS payment.

Donald Malcolm Ross (46)

[26] Mr Ross had been a gamekeeper for a number of years, but was now a supervisor for the Forestry Commission. He had helped out on crofts and took over his own croft tenancies some ten years ago. Those crofts extended to 22.21 hectares of in-bye, including an apportionment (9.3 hectares) of the original grazing. Presently he was carrying 80 North Country Cheviot ewes and 4 cows with calves at foot. Lambs were sold at Lairg.

[27] At the time of taking over the crofts, no reference period had been available to him. In order to obtain SFP entitlements, he had applied for an allocation from the National Reserve. He was awarded 136.13 entitlements with the rate based on the parish average of £15, together with an enhancement which took the rate up to £20.45 per entitlement. His claims were now based on 22 hectares of in-bye, with the balance being claimed on the common grazings. He also received LFASS payment. This had been determined originally on a headage basis and stocking rate in terms of livestock units per hectare, but was now paid on an acreage basis

[28] When he had first taken over the crofts in 2003, Mr Ross had put sheep out onto the Cambusmore area and they were semi-hefted there. A few other crofters had done the same. However, in the last three to four years the owners of the original grazing and the crofters had undertaken heather burning at the west end of that grazing – on the area not affected by the SSSI. This was beneficial to the owners’ estate and to graziers and the land was closer to hand for him. As a consequence, his sheep were no longer put onto the Cambusmore land. If they were to be put out there again, it would take him between four and six hours to walk from his house and round the ground to gather the sheep.

[29] The Cambusmore part of the grazing had longer, older heather than the area to the north and there was some bracken infestation. Although there was a burn running down the middle, with some associated greener areas, the ground was generally of poor value and much less attractive to the sheep. He accepted, however, that if the land was properly managed it could support a comparable stocking rate to the rest of the grazings.

[30] The hoggs went out in mid-March, but the ewes remained on the in-bye until around the end of May or early June when they were put out on the hill with their lambs. They came back to the in-bye in July for clipping, and were then returned to the grazings. The lambs were weaned in August with the ewes remaining on the hill until returning in November for tupping. The grazings which he presently used could support all of his sheep – 60 to 70 ewes with lambs at foot. In the past, one might have seen 160 to 170 sheep out on the enlargement for the summer and they were quite happy there. They received some sheep nuts at lambing time, then had access to feed blocks on the hill with some hard feed introduced when brought in for the winter.

[31] Last year Mr Ross had obtained a price of £52 for ewe lambs which was up from £24 to £25 the previous year. Wether lambs had sold at around £53, with cast ewes at £54. A tup was hired at a cost of £180 plus transport.

[32] It might be possible to undertake heather burning on the Cambusmore land if one had the manpower and equipment, but in practice it would be extremely difficult. Swiping was not an alternative on that land because it was too steep, boulder strewn and rocky.

Raymond George Ross (50)

[33] Mr Ross gave evidence that he was a chartered architect and a crofter. He had inherited his crofts after the death of his father in 2006, but he had been brought up on the crofts and had lived there most of his life. He was presently secretary of Muie grazings and Rhein grazings but was not on the Strathfleet grazings committee.

[34] He thought that the Court appeared to be concentrating on SFP and LFASS payments rather than on the use which could be made of the land. Very few people knew the allocation of payments as between the in-bye and the hill. SFP entitlements were a tradeable commodity and accordingly it did not follow that every crofter or shareholder had an allocation. It was not known who had entitlements or how many they had – whether through allocation or buying and selling. Therefore it was difficult to understand how a rent could be fixed for seven years on the basis of it. He very much doubted the hypothesis of the document referred to by Mr Ferne and in any event he thought that 60% of crofters did not receive any SFP.

[35] Similarly LFASS payments were based on a historical headage calculation related back to 2001 stock numbers and then expressed as a rate per unit of area and usually related to in-bye land. Land might be inherited or acquired and it was not known whether the payment was being claimed or not by shareholders involved in the present application. Thus it was difficult to base a rent valuation on such payments. SRDP was a competitive scheme and Strathfleet graziers had been lucky in successfully achieving a five year payment, with no guarantee that payments would be forthcoming after that.

[36] Mr Ross accepted that he could not tell the Court how to treat these schemes in arriving at its decision, but had difficulty in understanding how a rent could be based on them. In addition, he was of the view that crofters would lose out to larger farmers on funding in the future following reform of the basis for support payments. They would require to enter into schemes such as SRDP and to seek area based and environmentally linked payments – not necessarily related to the carrying of livestock. With the windmill and forestry schemes abandoned, there was no basis for rent being based on such opportunities. The Court should be looking at the agricultural capability of the land when making its rental assessment. In the present case, that capability was very poor.

[37] Stock prices had peaked in August last year, but had dropped 20% by September. Top quality lambs might fetch £50, but £40 was a good price and one could anticipate as low as £10 for the poorest lambs. Few people actually used the Cambusmore grazings. His own sheep were put out on the hill for a few weeks in the summer, but they were hefted on grazings close to the in-bye crofts. He accepted, however, that the ground at Cambusmore was similar to other areas in the neighbourhood – being hilly, rocky, steep and with little green pasture.

[38] There could be a minimum or ‘base’ figure per hectare for SFP, but he was not aware of that or, if there was one, whether it might be set at £2 per hectare. He was not against a rent increase, but was concerned as to how it would be based.

Jonathan James Hedges (42)

[39] Mr Hedges had moved from the west coast to Rogart four to five years ago to take his present croft tenancy. He had started from scratch on the bare land croft and was presently living in a caravan but hoping to build a house next year. With only 39 sheep and 20 lambs this year, the income from the croft was small. He augmented the income from livestock by carrying out agricultural contract work using his tractor. There was no surplus money, so it was not possible to invest in SFP entitlements or in the croft. He did not know what his souming was.

[40] His flock consisted mainly of North Country Cheviots, with a few Texels. Wether lambs were usually sold locally in the back end, with some sold as hoggs the following year. They made about £30 and this year he would sell 15. He had acquired 70 SFP entitlements at £40 each at the time he took on the croft, but generally speaking the monetary level of entitlements varied greatly, thus making it difficult to assess for anyone else. Because he had 11.7 hectares of in-bye, he did not make use of the grazings, although some of his SFP was claimed against his share there.

[41] As a new entrant, he was not able to access LFASS payments. However, the SFP payments helped to offset some of the costs of running the croft – which included vet and machinery bills. He was prepared to pay some additional rent for the grazings, rather than lose the rights to use them, but there would come a point when they would not be worth having.

Andrew Sutherland (69)

[42] Mr Sutherland had inherited his croft in 1965, but it had been in his family’s occupation since 1745. His involvement in the grazings committee had started in 1967 and continued today. He career had been with the Council, but he was also an active crofter. Like others he was now cutting back.

[43] Everything had been done by the graziers to try and avoid a Land Court hearing. They had met with Mr Ferne and Ms Wagstaff, who had advised that they were not seeking a rent increase, but needed to cover administration costs. A flat rate £15 administration fee had been proposed, but the graziers felt that to be unfair when everything was normally divided in proportion to the soumings. The crofters had offered to pay by direct debit and had understood that to have been acceptable to the landlord, but that had not proved to be the case.

Response for applicant

[44] In response, Mr Ferne indicated that the £15 administration fee was intended to reflect the cost to the estate of issuing each invoice. It was not Ms Wagstaff’s intention to set a precedent of going to court, but on this occasion agreement could not be reached. A commercial rent was not sought and the estate was content to have the Court set a fair rent, but it was hoped that this would be at a level which would cover the costs of administration.

Inspection

[45] We inspected the subjects in two tranches. The first was on the afternoon following the hearing and we are grateful to Messrs Angus Munro and Alan Gibson who transported us by quad bike and trailer from the public road at the south of Achvrail and through the original grazing, thereafter accompanying us on foot to view the subjects from the north. Having had Creagan Glas and Lochan Iain Bhuidhe pointed out to us, we were satisfied as to the location of the boundary between the subjects of the application and the remainder of the grazing, although – as indicated in the evidence – there was no sign of any fence or other bounding feature between them. It can be said, however, that apart from the geographical features which enabled us to identify that boundary, there is no discernible change in vegetation as between the two parts – they merge seamlessly into each other. The more obvious difference we noted was the one resulting from more intensive use and management towards the north of the original grazings as contrasted with the absence of recent use or management towards the south of the land owned by Ms Wagstaff.

[46] From a vantage point to the south west of Lochan Iain Bhuidhe, we obtained a good overview and impression of the topography and the vegetation of the application subjects. We were able to see both sides of the valley running between the plateau of Meall Meadhonach and Creagan Glas. Significant tracts of the valley area and some higher areas were lying wet, but there were also a number of more useful dry areas. Vegetation was a patchwork of mixed hill and wetland grasses / herbs and heather. The heather – at least at the north of the subjects – was not quite as tall and rank as we might have expected from the evidence and there was little bracken encroachment there. The north face of Meall Meadhonach exhibited some exposed rock and scree.

[47] On the morning of 19 June, we approached the grazings from the Strath Carnaig road, walking up the north side of Strath Tollaidh and entering the subjects at the south east corner. The exposure, topography and species distribution at the south of the grazings is different from that at the north and it was clear that no significant grazing had taken place for some time. There was a higher percentage of heather cover and it was considerably older and leggier than that further north. There was also some degree of invasion of bracken, but as a percentage of the whole area, its actual area of cover was very limited in extent – though no doubt set to expand and probably covering some of the more naturally useful areas. All that said, despite there being some wet areas, particularly along the southern boundary next to Allt Lochan na Gaoithe and Allt Locahn Iain Bhuidhe and some rocky outcrops on the steeper south facing slopes, we noted significant patches of hill grasses / herbs in a mosaic with the heather and wetter patches.

[48] Whilst the ground is steep and exposed in parts, some shelter from northerly winds is possible and a reasonable proportion of the subjects has a southerly exposure. Practical access for grazing purposes could only realistically be taken from the north – through the original grazings. Whilst it can be said that such access is not particularly easy, the restriction is in some measure brought about by the lack of grazing and heath management. The same can be said about the grazing potential of the land – particularly at the south. We consider that it has the ability to support limited numbers of stock, but in its present state, practical use is somewhat constrained.

Discussion

The land to be rented

[49] At the outset of the hearing, we explained to parties that our role in this application was solely determination of the fair rent to be paid for the land owned by Ms Wagstaff over which the various respondents had rights to graze. Although Mr Ferne indicated that the estate was looking to clarify a number of other matters, we made it clear that we would not formally be deciding anything other than the fair rent. If, in the course of the application (both in the lead up to the hearing, at the hearing and thereafter), certain other issues came to be clarified then no doubt that would be a benefit to parties and would be welcomed.

[50] We have been unable to come to a view as to what the relationship is between the area of land owned by Ms Wagstaff, extending to some 497 hectares or 1,228 acres, on the one hand and the 1,900 acres which, in terms of the documents in front of us, is said to comprise the original ‘enlargement’. Despite the efforts of Court staff in reviewing old applications and of the grazings Clerk and Chairman in reviewing their own records, the discrepancy remains unexplained. The boundaries of the whole grazings as enlarged are tolerably clear and we accept that they may well extent to something of the order of 3,550 acres – being the sum of the original 1,650 acres plus the 1,900 acre enlargement. That said, we note that even taking apportionments of the original grazings into account, the 2002 Regulations record a total area of 1,230.50 hectares (3,041 acres), but the enlargement remains stated as extending to 769 hectares (1,900 acres).

[51] There is little more we can usefully add in that regard. What matters here is that whilst the location of the internal division between those two parts remains a mystery, there is no doubt as to the extent and location of the ground belonging to Ms Wagstaff, and it is not disputed that it is at least part of the original enlargement. The area owned by Ms Wagstaff is as shown outlined in purple and green, edged in orange and annotated “Enlargement area” on the map, Production 2 of process. We are satisfied that said area extends to 497 hectares (1,228 acres) or thereby. It is that ground for which we are fixing a rent and we are satisfied that certainty in respect of the proper extent of the original grazings and the enlargement granted in 1886/87 is not a prerequisite to a proper determination of rent in this case. That is because the 1993 Act empowers us to fix a fair rent for a part of a croft and the absence of evidence as to the origins of the whole grazings is not critical.

Soumings

[52] It is agreed that we are to fix the rent for the 497 hectares owned by Ms Wagstaff. The present regulations for ‘the enlargement’ indicate a souming of 435 sheep. The earlier regulations from 1961 have a figure of 480 sheep. Both list the area as extending to 1,900 acres. The terms of Production 1, being an email prepared by Mr John Maciver in his capacity as grazings clerk, have the total souming for the shareholders therein listed at 480. Production 39, however, is – as we understand it – a print of data held by the Crofting Commission as at 7 June 2013 in regard to holdings, souming and shareholders with rights in the South Strathfleet Common Grazings. It too records the total souming for the enlargement to be 435 sheep.

[53] We must have regard to the Regulations in force at the time of fixing the rent (in this case the 2002 Regulations), because they are effectively determinative of the use which shareholders are entitled to make of the land for grazing. For our purposes, the soumings determine the maximum number of stock which shareholders are permitted to put on the ground. In most cases where we are asked to fix a rent for common grazings, the souming bears a comparison to our own assessment of the capacity of the land. In the few cases where we have found there to be a mismatch, we have tended to put that down to the difficulty of assessing the grazings separately from the in-bye land with which they were originally associated.

[54] In the present case, we had no detail as to any associated in-bye land and we are asked only to consider the area of land owned by Ms Wagstaff. The application proceeds on the basis that a specific amount of rent will be fixed for each shareholder in the grazings. However despite considerable effort by the Chairman and Secretary of the grazings, we have been unable to establish with certainty the proper souming of some respondents. As a result, we can only make a formal determination of the overall rent due in respect of the totality of crofting rights in the subjects. For the assistance of parties, we have set out in an Appendix to this Note an allocation of that rent as between the holdings and respondents as we understand them to be – based on the most up to date information available to us. Although we believe it to be accurate, it is not to be taken to have the status of a formal determination.

[55] As we discuss below, we were encouraged to reach a view that the land could no longer be usefully grazed, but it seemed to us that there was no demur as regards a souming of 435 sheep being appropriate for 1,900 acres of land of the nature of the subjects here. If the souming for the whole enlargement is 435 ewes on 1,900 acres, then on a pro-rata basis the souming for Ms Wagstaff’s land would be 281 ewes. We accept that such calculation may be an over-simplification, since it is simply not clear where, beyond the 1,228 acres, the rest of the 1,900 acres lies. Proper computation would involve having regard to the nature of all the relevant land, but we simply do not know exactly where it is.

Basis of assessment of rent

[56] Whilst we found all the witnesses to be both credible and reliable, the extent of the evidence which was directly relevant to the fixing of a fair rent was somewhat limited. It may however be said that the respondent witnesses included active crofters with considerable experience of crofting and we have taken into account in our deliberations what might be regarded as the mixture of evidence and submission which we heard from them.

[57] Over the years, much has been written about the methodology to be used in the determination of fair rents for crofting subjects, but the most recent Full Court case was Sutherland v Sutherland and Others 1997 SLCR 144. There is no need for us to rehearse the principles set out in that case here, it being sufficient to say that as far as croft land and common grazings are concerned, the Court would normally assess the stocking and cropping capacity of the land and apply to that a rate which reflected contemporary rates set in crofting cases across the crofting counties of the mainland and islands. The rate used in any particular case will take account of relevant features of the particular crofting subjects under review. In other words, in terms of section 6(4) of the 1993 Act, we “shall take into consideration all the circumstances of the case, of the croft and of the district”.

[58] As was discussed in Sutherland, the underlying basis for determining a fair rent for land under crofting tenure in the earlier cases was founded on a fair division of the net profits to be derived from the working of the holding as between the landlord and the tenant. The Court recognised, however that “the scale of operations on individual crofts is such that attempts to carry out assessment on a profit basis are very frequently unrealistic if not impossible in practice”.

[59] What was emphasised in that case was that the Court was obliged to assess the rent “unhampered by any element of competition” and was “not attempting to find a notional open market rent”. It came to the view (at p162) that “it is in practice necessary to adopt a comparative approach when assessing croft rents; to base this on assessment of the stocking and cropping capacity of the land; and to fix a fair rent by applying a rate to reflect the circumstances of the individual croft and any particular factors affecting profitability”.

[60] It has been made clear on many occasions that we are not to have regard to market rents for other agricultural subjects, or indeed to rents achieved for crofts which have been, in effect, exposed to competitive tender or otherwise negotiated. Mr Ferne recognised this in his submissions. A fair rent can perhaps be described as a rent which might expect to be achieved where there was a completely balanced market – an equality of supply and demand. It is very much a hypothetical scenario. However, even in a balanced market, it might reasonably be expected that the level of rent established would reflect the present and anticipated prospects for deriving income from the working or use of the land. The stocking capacity of the land and the scope it offers for accessing agricultural support payments are key elements in assessing those prospects.

[61] It is only through having evidence of trends in, for instance, the profitability of livestock rearing enterprises and, in modern times, levels of relevant state support for agriculture and crofting, that we are able to adjust rents over time and at any point in time so that those levels can be used to inform the rate to be applied in cases such as the present one where there was little by way of relevant comparative evidence of croft rents to assist us in our task. In this case we had very little such evidence and we have – as in a number of other cases – had to draw on our experience in cases where details were available.

Stocking capacity

[62] Assessment of the stocking capacity of the subjects here has proved a little problematical. We had little by way of evidence as to appropriate stocking rates in modern times and there is the added, and very real, difficulty brought about by the restrictions which the designations covering some 90% of the subjects impose. We have had to rely largely on our detailed inspection of the ground and our experience of other cases to reach a concluded view as to what the land is capable of supporting by way of agricultural production. The general tenor of the evidence was that whilst the grazings were naturally poor in terms of their productive ability, they were capable of carrying limited stock numbers even in their present state. We do, however, wholly accept that management of the land and management / control of stock present a significant problem.

[63] There is also the difficulty in this case of assessing the appropriate stocking capacity and monetary rate to be applied to that capacity in respect of grazing shares in isolation from the crofts to which they attach, or had attached in the past. Traditionally, in most crofting townships, the grazing rights were seen as an integral part of the whole croft subjects and the stocking capacity of the in-bye land and of the grazing were to a significant extent dependant on each other. Soumings for most grazings were set at a time when they were associated directly with and used in conjunction with the in-bye crofts. In many townships that is no longer the case and it follows that the soumings as set out in regulations may not necessarily provide a guide as to appropriate levels of stocking.

[64] By virtue of the SSSI and SPA designations which cover around ninety percent of the subjects (as we understand it some 447 out of the 497 hectares) no heather burning is permitted and use of ATVs is limited to hard ground on those areas. We have had to consider carefully the impact of the designations on our determination. Whether as a result of the restrictions or as a result of the general decline in the use of grazings – or some combination of the two – there is no doubt that the practical utility of parts of the subjects for grazing stock is limited. On the basis of the evidence, that situation is unlikely to change in the foreseeable future. Accordingly, we have taken that into account in our assessment of that element of the rent attributable to the potential for physical use of the land for grazing.

[65] We do agree to some extent with the landlord’s position which is that the land is available for use by the shareholders and that she is entitled to a fair rent whether they use it or not. We are aware of the practical difficulties in modern times of shepherding large tracts of common grazing land, particularly when the sheep are not managed under a sheepstock club regime. But the real question for us is to what extent the land can be used purposefully by the shareholders with a view to providing income. It is not disputed that livestock are able to access the subjects freely from the original grazing area to the north.

[66] The tenor of the evidence was that the subject area was still capable of carrying stock. It appears that many shareholders do not put stock on the wider grazings at all. Those that do use the grazings do not put sufficient stocking pressure on the areas close to the in-bye land to force stock to utilise the areas further away. That is patently not the fault of the landlord in the present situation. However, even she accepts that the land has limited potential, which is further constrained by the statutory designations.

[67] Whilst there was little evidence of any significant improvements to the land, there were external fences and there may have been other areas of earlier improvement which have now largely reverted through lack of use or maintenance. It was a matter of agreement that no improvements had been provided by the landlord and accordingly our assessment of rent is reflective of it being treated as “bare land”, but with whatever potential it has for productive use, including enhanced use through provision of improvement by the crofters.

[68] Although the further south one travels, the less useful the land currently is, we have little doubt that if the remainder of the whole grazings was more intensively stocked, then grazing pressure would result in limited numbers moving into the area under review here. No doubt that would result in management / shepherding issues. We are however satisfied from the evidence and our inspection that it is capable of supporting grazing livestock. There are worthwhile tracts of hill grasses and some heather areas which could still provide useful grazing and become more productive as a result of that grazing. Whether or not there were the present restrictions, we accept that the subjects could only realistically be put to grazing use in the summer months. The evidence of historical use of the grazings was that they had only been used in that period. We recognise that some supplementary feed may be required in some years and at certain times to make the best use of the land. Accordingly our assessment is based – as far as stocking levels are concerned – on such use.

[69] Albeit that we fully recognise the practical difficulties of actual use of the land, taking all of the above into account, we consider that a reasonable basis for assisting us in calculation of the appropriate rent in the circumstances prevailing here is to use a stocking rate of 280 ewes, which is consistent with our assessment of the relevant souming as set out in paragraph [55] above.

Agricultural support payments

[70] In reaching our decision as to the appropriate rent for the subjects, we have, as outlined earlier, had regard to other croft rents which we have fixed in recent times. Those rents have been assessed on the basis that income from subsidies was being received in respect of the land being utilised by livestock or available for use by them. In the present case, we are, in effect, assessing the appropriate rate for the use of the subjects for such grazing potential as they have in the summer months only, but along with their potential for realisation of supplementary income from public funding – which may well involve conditions being met for the full year.

[71] Although there was some argument here that it was inappropriate to take domestic or European support into account, we reject that contention. At the time of Sutherland, much of the support in terms of income (as opposed to assistance with capital projects) came from ‘coupled’ subsidies – the payments to farmers and crofters engaged in livestock rearing was largely on a headage basis : per cow or per ewe. Although it may be said that at that time there was targeted support in certain areas for farmers and crofters who were prepared to run their enterprises in accordance with specific guidance with a view to achieving environmental enhancement, generally speaking it did not have a major impact on the profitability of a livestock rearing enterprise.

[72] That situation has now changed and at the present time – as was promulgated at the hearing in this case – support is now available in the form of the Single Farm Payment Scheme (SFPS), Less Favoured Areas Support Scheme (LFASS) and the Scottish Rural Development Programme (SRDP). It is widely known that the arrangements for that support are presently under review. The nature of and eligibility criteria for future schemes is not clear.

[73] It was suggested that future support for crofting agriculture in particular was likely to decline significantly, would be variable and that not all crofters would be eligible. Accordingly, it was said that we should base the rent on what could be made from the livestock on the land. The point was also made that support schemes were voluntary and that receipt of payments under SFPS was dependent on possession of entitlements which were a tradeable commodity. Access to LFASS payments required active farming of the relevant land and was dependent on assessment of stocking rates from an earlier period. There were also some difficulties for new entrants to the schemes. The availability of some schemes, such as the outgoing SRDP, involved competition for the funds available.

[74] We are aware that arrangements for a replacement SRDP scheme beyond 2013 are still under review although, in this case, the respondents already have an approved SRDP contract, which will remain in place for the major proportion of the seven year period for which the rent will be fixed. It is important that we comment on those features of agricultural support and the relevance of them in determination of fair rents for crofting subjects.

[75] Firstly, no factual basis was proffered which might sustain the view that support for agriculture and crofting in particular would decline significantly. We are not prepared to accept that as proven, although we recognise that the Common Agricultural Policy budget is under constant pressure and distribution of funding from it is subject to continuing review.

[76] Secondly, although some doubt was expressed in Sutherland as to whether subsidies should be regarded as part of the income of the croft to be shared with the landlord, we are satisfied – particularly following the case of Morrison-Low v Executors of T H Paterson 2012 SC 373(the Moonzie case) – that such income does fall to be regarded as a relevant part of the income. In recent years, croft rents have been determined on that basis.

[77] Thirdly, even though present and future schemes may be voluntary, may impose certain conditions on the applicant and may involve an element of competition for funds, it is our view that the rent should be based on what a prudent agriculturalist or crofter, faced with the particular set of circumstances in any case, would do to secure income from his enterprise. We are entitled to assume that he will use his best endeavours to access financial support from the Scottish Government or such other public sources as are reasonably available to him.

[78] The fact that there may be changes in the nature and level of such support available over the next seven years for which the rent we determine will be fixed is not, in our view, a basis for ignoring it. We are satisfied that support will continue, though perhaps not at levels seen in the past and almost certainly on modified terms. In short we think that with that support, together with the trading income from breeding and rearing of hill livestock, it is unlikely that the total net income available to the prudent crofter, though variable from year to year, will decline significantly over said seven year period. We do not consider there to have been any evidence put before us upon which we could reach such a conclusion and are not prepared to do so.

[79] We have therefore proceeded on the basis of our existing practice of including the potential income from support payments in our assessment. Because a significant proportion of the net income from the use of the landlord’s ground is no longer directly linked to actual stock numbers using that land, in our determination of the rent we have not treated the stocking rate as the sole and primary determining factor. Nevertheless the income from the livestock enterprise is an important element in the viability of crofting agriculture. Accordingly the numbers and categories of stock which the land can support continue to be relevant. As it happens, in the present case, the matter becomes a little more complicated because of the difficulties we have had in assessing a realistic stocking rate for the subjects at the present time and linking that to the total and individual soumings.

[80] We had undisputed evidence that SRDP payments would be forthcoming to the shareholders at a rate of £2 per hectare for the next five years and that this payment was intended to reflect the impact of the restrictions imposed on the designated areas – some 447 hectares of the land owned by Ms Wagstaff. That suggests a sum of the order of £900 per annum. It was also established that at least some of the shareholders were in receipt of SFP and LFASS payments and that such payments were linked to the grazings – albeit that it was not clear whether the whole or only certain parts of the South Strathfleet grazings were involved in the claims.

[81] It was not suggested, for instance, that any of the area owned by Ms Wagstaff could not be utilised to match claims in a Single Application Form submitted by any shareholder with rights in the subject land. Accordingly, as outlined earlier, we consider that the prudent shareholder would seek to obtain such income and on the basis that the landlord had provided the land upon which such a claim was founded, she might reasonably expect to receive rent in respect of that land.

[82] Whilst we only had evidence of a few shareholders using the grazing, some had SFP entitlements and both SFPS and LFASS were claimed in relation to the grazings. It may be that the conditions to be met for receipt of support will change – and we have in mind in particular the question of the level of agricultural activity necessary – but we are satisfied that the correct approach is to assume that most prudent crofters would endeavour to access that support and comply with those conditions. Although it is the case that grazing of Ms Wagstaff’s land is virtually non-existent at the present time, such sheep as are on the northern part of the main grazings are not physically prevented from accessing any of the land to the south. If future conditions to be met in order to secure support involved changes to the management of the land, then it would be for shareholders to decide whether to implement such changes in order to access funding.

[83] In the normal case, where both croft and associated grazings are being rented as a unit, we are considering the output of the livestock enterprise on an annual basis. In-bye land will normally provide both grazing and winter keep, whereas the grazings usually only provides summer grazing. Here it is the potential income to be derived from grazing use for the summer period only which we are to add to the support income for the whole year when assessing the rent for the land.

Decision

[84] Taking all of the above into consideration, we determine the sum of the rents payable by the shareholders in the subjects of the application at seven hundred and eighty four pounds (£784.00), which figure shall take effect from Martinmas 2013.

[85] In arriving at that figure we have had regard not only to the potential profitability of the hill sheep breeding enterprise in its own right, but also to the associated levels of public support which may be accessed through the use of the land provided by the landlord. It is based on levels set in recent times across the crofting counties, adjusted to match the circumstances here. We accept that opportunities for profitable ‘diversification’ on the subject land appear to be extremely limited and have taken that into account in our deliberations.

[86] £784.00 is equivalent to a rate of £2.80 per ewe on 280 ewes. As discussed earlier, it seems that the proper souming for the “enlargement”, whatever its actual extent, is 435 sheep. Accordingly the proportion of the rent applicable per sheep in terms of the souming is £1.80. It should be noted, however, that if it be the case that the souming is, say, 480 sheep rather than 435, that would not affect the total rent for the land, which would remain at £784.00.

[87] Proper allocation of the rent for the whole of the subjects of the application as between the various respondents depends on certainty as to the soumings for each holding with shares in the enlargement. It also requires the identity of the persons who have possession of those holdings to be clearly established. Whilst we think that the 2002 Regulations, adjusted to take account of changes in occupancy since then as vouched by Production 39, have allowed us to carry out the exercise with a reasonably high degree of confidence, we have declined to make any formal determination of rent at individual shareholder level. In the absence of further evidence, that must remain, for the purposes of this application, a matter for agreement between the parties or be subject to determination by further procedure.

[88] Nevertheless, we do think that the situation is tolerably clear and, for the assistance of parties, we set out in the attached Appendix the rents which we expect to be payable by each shareholder as from Martinmas 2013.

Appendix

Allocation of rent by holding and shareholder – reference paragraph [88] of Note

Croft / Holding Shareholder Souming Rent
10 Acheillie Donald Malcolm Ross 9 £16.20
12 Acheillie Donald Malcolm Ross 11 £19.80
8 Acheille Donald Malcolm Ross 8 £14.40
9 Acheillie Donald Malcolm Ross 11 £19.80
Sub total Donald Malcolm Ross 39 £70.20
11 Acheillie Andrew Sutherland 13 £23.40
14 Achvrail Alexander Fraser 16 £28.80
15 & 16 Achvrail Angus David Munro 29 £52.20
17 & 19 Achvrail Angus David Munro 16 £28.80
Sub total Angus David Munro 45 £81.00
18 Achvrail Alan Gibson 16 £28.80
20 Ardachu Alan Gibson 9 £16.20
23 Ardachu Alan Gibson 13 £23.40
Sub total Alan Gibson 38 £68.40
219 Rossal Jonathan Hedges 14 £25.20
220, 351 & 217 Rossal Jonathan Hedges 15 £27.00
Sub total Jonathan Hedges 29 £52.20
21 Ardachu Sarah Joan Buchan 14 £25.20
221 Rossal Malcolm Douglas 40 £72.00
24 Ardachu David Raymond James 19 £34.20
25 Ardachu David Raymond James 12 £21.60
Sub total David Raymond James 31 £55.80
271 Dalnabreac Joy Wonderley 9 £16.20
62 & 372 Dalmore Christine Gunn 11 £19.80
63 & 330 Dalmore Christine Gunn 14 £25.20
Sub total Christina Gunn 25 £45.00
76 Inchcape James Leslie Innes 11 £19.80
79 & 83 Inchcape Christine Elizabeth Texton 24 £43.20
81, 86, 359, 80 & 74 Inchcape Donald Calum Sutherland 27 £48.60
73, 78, 358 & 77 Inchcape Donald Calum Sutherland 15 £27.00
84 Inchcape Donald Calum Sutherland 2 £3.60
Sub total Donald Calum Sutherland 44 £79.20
82 Inchcape James Alexander Innes 6 £10.80
75 Inchcape James Alexander Innes 18 £32.40
91 Inchoraig James Alexander Innes 16 £28.80
Sub total James Alexander Innes 40 £72.00
92 & 90 Inchoraig Raymond George Ross 17 £30.60
Totals 435 n/a £783.00 n/a

Although the total rent determined at paragraph [84] was £784, the total of individual rents is £783 due to rounding.