DIVISIONAL COURT

(A Macdonald)

FRASER v FORBES

(Application RN SLC/125/08 – Order of 23 April 2009)

CROFT – APPLICATION TO FIX FAIR RENT TO CALCULATE THE PURCHASE PRICE – COMPARATIVE BASIS TO FIX RENT – WHETHER AGREED RENTS AND RENTS PAID IN TERMS OF A SUB-LET CAN BE USED

In this application the crofter applicant applied to the Court for an order authorising him to acquire his crofts. Parties were agreed that the only matter in dispute was the purchase price and asked the Court to fix a fair rent as the basis for the purchase price.

In adopting the comparative method as laid down by the Full Court in Sutherland Estates v Sutherland 1998 SLT(Land Ct) 37 the Court look into account rents fixed by the Court recently in the locality but would not consider rents fixed by agreement between parties or rents payable in terms of sub-leases.

The Note appended to the Court’s order is as follows:

[1] At the hearing on 19 February, the crofter applicant Duncan W Fraser and the landlord respondent were represented by Martin Mackay Solicitor, Dingwall and by John R N Macleod Solicitor, Messrs Murray Snell, Edinburgh.

[2] There were two preliminary matters agreed at the outset namely that the boundary of crofts 100 and 101A were as shown on Production No 7 and that terms had been agreed for a shooting lease on the crofts.

[3] Duncan W Fraser (71) gave evidence and confirmed the boundaries of the croft as per the red boundary outlined on Production 7. He had already acquired the house site for the property “Dunmar” outlined in red on Production 7 from the landlord. This was the present house site.

[4] He then gave evidence on the history of the crofts. Referring to Production 18, which was a copy of his IACS map, the area in orange was croft 101A and the rest was croft 100. He has a farming business with land registered as agricultural holdings along with the crofts.

[5] The area of crofts 101 and 101A is 69 acres or 27.71ha. He farms 158ha in total with some on croft land, some on land registered as agricultural holdings and some grazing leases. He previously grew barley, had a suckler cow herd and some sheep which he gave up a few years ago, all part of the larger farming business. His cow herd consisted of 63 breeding animals which he dispersed in November last year. He changed course to make life easier. With the wet weather and out wintering it was difficult.

[6] He became tenant of croft 100 in 1960 and 101A in 1967 and there is no common grazing. There was a dilapidated house of corrugated iron, which was levelled for a cattle handling area. This house was on a different site from the present croft house.

[7] With reference to Production 17, which was the IACS map coloured in yellow and pink, the yellow area was the ploughable land and the pink area was poorer land. In 1960 the yellow area was old arable capable of ploughing and the pink area was rushes, gorse and scrub. The yellow area was the best ground, not prime arable but unimproved upland. There were no fences at that time not even a march fence. Water was a problem as there were no drains. At that time the road was only a track so the road was made up.

[8] The pink area was abandoned arable from around the 1930s and some was abandoned ploughed land. This was a reclamation job. Prior to his tenancy the crofts were let to a local farmer for grazing. The area had to be cleared reseeded and fenced. The reseeding programme involved the removal of bushes and rushes and also a liming programme, due to the low pH of the soil

[9] A new concrete shed for shelter for the cattle was built, with another shed and a dutch barn on either side, with a cattle handling area at the back.

The road was tarred, electricity and water installed, all at his own expense with no assistance from the estate. Field No 4 was drained but not deep enough to get it right.

[10] The green areas are rough grazing and are not viable for ploughing.

[11] Out of the total stock of 63 breeding cows, 20 could be carried on these crofts in their fully improved condition. At entry to these crofts in their unimproved condition, only a third of that number could be carried, around 7 or 8 cows. The capacity to secure winter feed is easier now with big bale silage.

[12] At entry to the crofts the cows were outwintered which was easier then than now, even although there were no buildings at that time. When the concrete shed was erected the cows were in and out, but this was not really successful and scour in the calves was a problem.

[13] This was not a croft for cereals and was not very successful because of the short growing season. The cereals are only suitable for feeding to stock and certainly not malting barley quality, as this is a north facing croft, 120 metres above sea level at the road rising to 150 metres at the top of the croft.

[14] The croft today could carry 110 – 115 ewes and followers but in the nineteen sixties would only carry 30-40% of that figure, around 30-40 ewes.

[15] The farming business is over 158ha so the Single Farm Payment of around £17,000 is for the total business. There is also a Less Favoured Area payment of around £4,900 and a Calf Scheme payment of around £2,000.

[16] The applicant was then referred to productions 14, 15 and 16 which refer to crofts at Lochussie which are about 5 miles from here. He said that the Lochussie crofts were better than his as they are south facing and not so late.

[17] Under cross examination the tenant stated the crofts were around 1/6 of his total farming area and he had received grant aid towards all the improvements including fencing. He considered cereals not viable but in the late nineteen sixties it was oats that were grown, cut by the binder and fed to the cattle. Fields 1and 2 were of reasonable soils and relatively easy to plough but fields 3, 5 and 6 were poorer. Poaching of the ground in wet weather in the autumn was also a problem

[18] Routine drenching for Liver Fluke is necessary. Rabbits are a problem so netting was put on to the fence next to the wood to reduce the problem. This is a bare land croft with no landlord’s improvements. Spring barley is not viable because of the late spring resulting in a late harvest.

[19] The cattle were purchased in Uist mostly Limousein, Luing and Shorthorn crosses and the cows calved in mid February. Replacements were purchased in Uist also. These cattle were delivered to Dingwall mart from Uist and were collected from there to the croft by the tenant. Draff, cattle cobs and high magnesium blocks were all purchased for the cattle.

[20] The sheep flock were Highland Mules and a commercial flock. Only accredited stock was purchased at Dingwall mart. The sheep were fed hay and ewe rolls

Wintering of hoggs takes place from mid October until the second half of March, around a maximum of 280. These hoggs are folded on turnips from January onwards and are also fed hay. The charge for wintering is £15 per head for the total period and includes all feeding and management. The hoggs go on to the grass in the autumn to eat it down to avoid winter kill.

[21] The fertilizer purchased is a 20:10:10 and a special boronated fertilizer is purchased for the turnip crop which is applied at 5cwts/acre. The other crops receive 2.5 cwts/acre but this has been cut back due to the recent high price of fertilizer.

[22] The spring barley receives a weed and fungicide spray and the turnip crop is also sprayed. The work is done by a local contractor close at hand and does a total job.

Big bale silage costs £4 per bale and the baling and wrapping is now done in one operation and the baling of the straw costs £2 to £2.20 per bale and charges £30 per acre for the barley crop.

[23] The applicant has no plans for diversification and he considers the future prospects as tight, although both cattle and sheep prices are high at present but they will come back again.

[24] The future policy is to be store cattle production. At present there are 44 of last years calves left, which will go on to the grass in April and sold as stores in the autumn. In future 6/7 month old Limousein cross calves will be purchased from Uist. Haulage from there to Dingwall mart is £18 per head, where he will collect them. They will require to be treated for fluke and worm plus blue tongue virus. There is also a cobalt mineral deficiency and a vitamin E deficiency and these have to be attended to. The spring born calves averaged £500 per head at Dingwall mart and prices have increased since then. It is estimated the cost of a suckler cow for a year is now £400.

[25] The next witness was Kenneth Mackenzie (60) Managing Director of Dingwall & Highland Marts who also farm 600 acres. He is a member of FIAA (Scotland) and does valuations of stock, land and crofts on a regular day to day basis. He was then referred to Production 17, the IACS plan and confirmed he was familiar with the crofts and that area. He could recall the condition of the croft in the mid sixties and field No 3 east of Mr Fraser’s house was whins and gorse. It was all rough ground, unimproved land and stones had to be taken off it. He remembered the crofts as he had to pass by every day on the way to work.

[26] A lot was done to the buildings, fencing and drainage and at some cost. The cattle court was erected using concrete blocks and an external feed system and later a dutch barn added. There was a ruinous stone cottage/shed there, but no longer there now.

[27] The recent practice in the nineteen seventies and eighties was to build up cow and sheep numbers and this croft was part of a larger farming operation. The cow numbers had increased to between 70 and 80 in recent years and were mainly Shorthorn and Simmental cross cows. The sale of calves followed the traditional pattern of autumn and spring sales.

Before there were any buildings the calves were all sold in the autumn as weaned calves, as they could not be kept over the winter. The calves were generally in the mid to high range at the sales, when sold in Oct/Nov and an average price of £450. The annual cost of a cow is £450 - £500 per annum. Out wintering could be done on the croft in its original state, as there would be shelter from the whins and scrub, but only a small herd of cows.

[28] If there were no cow herd but a breeding sheep flock, the capacity of the croft today would be 80 – 100 ewes and followers. In the state of the croft in the 1960s, the capacity, would be a lot less, less than half, around 40 – 50 ewes.

[29] Cereals can be grown on the croft in fields 1 and 2 but not continuously as it is not a deep soil. This croft is on a ridge of rock than goes from Dingwall to Inverness and the soil is not deep.

[30] With reference to productions 14, 15 and 16 which refer to crofts at Lochussie, the witness knew the area and when compared with this croft, Lochussie is south facing whereas Ferintosh is north facing. Some of this croft is higher and more exposed when compared to Lochussie, which has more trees. Lochussie has better land, more depth of soil and heavier, not the best but better than this croft. Lochussie would grow better crops and is also better for stock management. He estimated the stocking capacity of this croft at 80 – 100 ewes.

[31] The only witness for the landlord respondent was Mrs T J Tait (44) and a member of RICS and has been involved in rural estate management for many years, in different locations.

[32] Production 3 shows the location of the croft and Production 1 the plan of the croft. Production 2 is an extract from the register of crofts showing 23.8ha arable and 3.5ha outrun. The rent is £296, set 7 years ago.

[33] There are no landlord’s improvements on this croft, all the improvements belong to the tenant. This is an upland croft with some arable ground, some undulations and wild bits in the outrun area. It is north-west facing.

[34] With reference to Production 17 and land use in the 1960s when the crofter applicant received the tenancy, there is nothing inaccurate there. This is an upland suckler cow and or sheep stock unit. Some of the fields are ploughable for forage cropping. Cows would be stocked at 1.5 acres per cow but more area is required per cow on the poorer ground; overall, probably 50 cows, but possibly 68, assuming 59 cows and 9 followers. Sheep would be stocked at 3 per acre on good ground but less on poor ground.

[35] Production No 6 shows the two units of 83 and 84 Brae, one mile from this croft to the west and part of Ferintosh Estate. Production No 9 gives the details of the sublet of croft 83 Brae at a rent of £700 per annum. Production No 10 is the sublet of croft 84 Brae at a rent of £500 per annum. These two sublet crofts have poorer ground compared to the applicant’s croft and croft 83 Brae has poor drainage. There are no landlord’s improvements on these sublet crofts and the croft house and garden ground are excluded in both sublets. Croft 83 has 17 acres arable and 10 acres outrun and the rent is equivalent to £25 per acre. Croft 84 has 5 acres arable and 7 acres outrun and is equivalent to £41 per acre.

[36] Production No 7 for croft 100 and 101A shows the croft boundaries as agreed, per this plan. On this production is Lot 104, hatched in blue which is an area of rough wet ground. This area was let for £20 per acre from Whitsun 2006. There are no landlord’s improvements on this croft. Lot 111 was also let to the same tenant at the same time. This croft is mainly arable and the rent is £25 per acre. The ground is similar to the applicant’s croft. On Lot 111 a diversification scheme is underway, in the form of a nursery garden and trees. Again, there are no landlord’s improvements.

[37] Lot 113, 116, 117 and 120 is a 33 acre unit, of which 2.5 acre are rough and the rest is arable. This is a similar unit to the applicant’s croft and is a stock farm operation with no landlord’s improvements. The rent was agreed at March 2008 at £660, which is £29 per acre.

[38] Production No12 shows the Lots of 75, 76, 77, 78, 81 and 82 at Braes of Kinkell and Braes of Balnabeen on the Ferintosh Estate. The rent for this unit is £965 from Martimas 2008 and this is equivalent to £25 per arable acre and £5 per acre for the outrun.

[39] All the above crofts in the vicinity of the applicant’s unit are comparable to his unit with similar cropping and stocking capacity. All the rents were by agreement with Ferintosh Estate and not open market rents.

[40] Productions 14, 15 & 16 all refer to Lochussie and are Scottish Land Court records of 4/5 years ago. The witness had driven round there and seen the units from the road and the ground is comparable to the applicant’s unit. Lochussie is an upland farm with cows and sheep similar to the applicant’s unit. Rents are on the increase at present compared to 4 years ago when the Lochussie rent was set.

[41] In cross examination the witness stated a stocking rate of 1 cow to 1.5 acres of good ground and on poorer ground cows need a greater area.

[42] With reference to production No 7 and crofts 104 and 111, croft 104 had been assigned to the present tenant and the landlord had objected. The rent took a number of years before it was agreed. This croft is not operated traditionally, as the tenant is a market gardener with a nursery in Inverness and he uses the croft for that purpose. Croft 111 has been planted with trees and a residential caravan placed on croft.

[43] With reference to croft 113, 116, 117 and 120, these were assigned from the previous tenant. The tenant is in negotiation with the landlord about a house site.

[44] With reference to production 9 and 10 the sublet crofts, these have been sublet to a sub tenant whose father is an existing tenant on Ferintosh Estate so it is possibly the expansion of an agricultural business. It may be more land area was required for Single Farm Payment entitlements.

[45] With reference to production No 12 and Lots 75, 76, 77, 78, 81 and 82 the tenant has an agricultural business and was involved in contracting and plant hire.

[46] In re-examination the witness stated the comparables were similar to the applicant’s crofts with similar potential and those with potential house sites were more attractive. There is a high demand for crofts in this area.

Closing submissions

[47] Mr Mackay for the applicant said, this is an application made by the tenant applicant under Section 12(1) of the Crofters (Scotland) Act 1993 seeking the granting of an order by the Land Court under Section 13(1) of that Act. Section 14(1) and Section 14(2) of the 1993 Act also applies as the Landlord Respondent has asked for a fair rent for the croft by the Land Court.

[48] There is no written lease for this croft, there is no common grazing, the house site is not part of the croft and the parties have agreed the boundaries.

[49] The criteria for fixing a fair rent is set out in Section6(40 of the 1993 Act and the methodology for a fair rent was reviewed in the case of Sutherland Estates v Sutherland in 1998.The fixing of a rent on a profit basis was not criticised in Sinclair v Sinclair

[50] Under Section6(4) of the 1993 Act a tenant shall not be assessed to rental on the value of his improvements and is in the following terms:-

“Before determining what is a fair rent for a croft or for any part of a croft, the Land Court shall hear the parties and shall take into consideration all the circumstances of the case, the croft and the district, and in particular shall take into consideration any permanent or unexhausted improvements on the croft and suitable thereto which have been executed or paid for by the crofter or his predecessors in tenancy”

[51] It is submitted that the extent of the tenant’s improvements and the effect they have had on this croft are disregarded and the croft is rented in its unimproved state. Alternatively if that is not appropriate an allowance for the annual cost of the improvements should be made when assessing a fair rent.

[52] The croft was in particularly poor condition and low fertility when the tenancy commenced. The reclamation, drainage, fencing, liming, manuring and construction of buildings were all the tenant’s improvements, as were the installation of water and electricity. The outwintering of cows on this croft is difficult, if not impossible, so suitable buildings would be necessary, away from the croft.

[53] The applicant is entitled to Single Farm Payment (SFP) due to historic farming and crofting activities plus payments from LFASS and the Calf Scheme. The SFP for the applicant’s whole farm business of 158 hectares is £17,000. LFASS was £4,900 and the Calf Scheme was £2,300. SFP was based on historic production and if this had not been maintained by the applicant, there would be no entitlement, so these payments should be ignored by the Court, when applying a comparative approach in fixing a fair rent. The only payment is LFASS falling to the crofter as a tenant.

[54] The profitability of the croft should be based on the eight cows it would carry, in its unimproved state, with feed purchased in or the cows wintered off the croft.

[55] Potential profitability for this is in the region of £800.The stock produced on the improved croft will be larger and heavier than what would have been possible on the unimproved croft.

[56] In the Sutherland Estates v Sutherland the Court fixed the rent by adopting a comparative basis, stocking and cropping capacity and the circumstances of the case. Recent rent agreements, not fixed by the Court, reflect different circumstances personal to the tenant and not to the productivity of the croft.

[57] A sublet is not a true comparable when fixing a croft rent. In the case of croft rentals there may be a desire to avoid the expense and effort of having a rent fixed by the Court. In this application, the rent fixed takes on greater significance, as it is determinative of purchase price. The rents received on Ferintosh Estate for new lettings should be disregarded, as the parties are free at any stage to seek the fixing of a fair rent by the Court.

[58] The only true comparable rental evidence relates to the crofts at Lochussie determined in 2005 and seven years has not yet elapsed. The state of the improved land at Lochussie crofts is comparable to the applicant’s croft, so that the state of the unimproved land is also comparable, given the topography and proximity. In this case the landlord has provided no improvements to the land and no building.

[59] Mr MacLeod referred the Court to Section 6(4) of the 1993 Act for the assessment of a fair rent. He also asked the Court to adopt the comparative approach and methodology as in Sinclair v Sinclair. He also said all rents agreed in the district should be considered, not only rents fixed by the Court.

[60] The Lochussie crofts were not comparables as unusually the improvements and buildings were done by the landlord and these crofts are an exception, as landlords only usually provide the land.

[61] The comparables on Ferintosh Estate should be taken into account as they are on the estate, are unimproved land with no buildings and in general of similar land quality and nature to applicant’s subjects. There was no evidence that the tenants in the comparable units may have offered, or agreed to a higher rent. The parties involved were not inclined to go to the Court, it was not an open market situation and the landlord and tenant agreed, to avoid going to the Court. The situation works both ways.

[62] The potential of planning permission and house sites may be a consideration at assignation or for an assignee, but does not have a bearing on rental figures agreed.

It is agreed Lochussie rent was fixed less than seven years ago but the more recent comparables on Ferintosh Estate are more relevant.

[64] Mr MacLeod agreed that it is the tenant’s work and what he has done that determines his state assistance and subsidies but the tenant requires the landlord’s capital of land to claim these payments. This may not be true for calf payments, but if there is no land, obviously less calves.

[65] The fact that this is a rent for purchase makes no difference, as a fair rent is to be fixed by the Court. The Court is to set a fair rent based on their expertise and on a comparative basis. The other terms have been agreed so only rent in contention and therefore purchase price.

[66] Both parties agreed to reserve the question of expenses.

Inspection

The inspection commenced on the afternoon of Thursday 19 February, accompanied by the applicant, Mr Mackay his solicitor and Mrs Tait, a rural surveyor. The inspection was completed on Friday morning, when none of the parties or agents were present. The croft units given for comparisons were then viewed.

The croft is mainly as described in evidence, the majority of the fields being in grass and one field in turnips. The fences in general are in reasonable condition and the fence next to the woods had netting to deter the rabbits. Some rabbit and mole damage was visible in some field. This is an exposed croft open to all weathers but there are pockets of shelter next to the woods. The thin soils are prone to drying out in dry weather with the consequent loss of productivity of crop. All the improvements are tenants improvements and there are no landlord improvements on this croft. All the buildings have been erected by the tenant. There is a water supply to most areas of the croft.

The fields were inspected with reference to Production No17 and these field nos. The colour codes indicate ploughable land – yellow, poorer soils – pink and rough grazing – green.

Field No3 is an undulating field with steep banks and a heap of stones near to the area where stock were fed. The soil in the yellow area was easy to dig, a good depth and contained a few small stones. This was in contrast to the pink area where the soil was much shallower, more difficult to dig and more stones. The soil lay on a rocky base. The soil at the top of the steep bank in this field was very thin and on a hard rock sub-base. You could also see the remains of old tree stumps which were cleared from the field in earlier times.

Field No 5 has a hydro power line going across it. In all the areas in this field where the soil was dug, there was a good depth of soil but with some bigger stones. There was also some earthworm activity, always a good indicator.

Field No 6 the first hole dug in the yellow area was easy to dig, good depth of soil and not many stones. The soil at the ridge in this field was shallower, contained smaller stones and on a rocky sub – base.

Field No7 is a wet area with severe rushes infestation. There is also a rocky outcrop and areas with scrub and gorse

Field No6 has a good soil and is easy to dig in the yellow area but shallower soil but with more and bigger stones on a rock sub – base in the pink area.

Field No 8 is separated from field No 6 by a ditch with a culvert for access between the fields. The soil in this field is good with few stones. This field has an old stone ruin in it. The grass is also rank and there is evidence of a severe docken infestation. In one corner of this field close to the ruin there is a pond with various scrap items in it. There is also a wet area with rushes infestation next to the ditch, along from the culvert.

Field No 4 has a wet area in it and as explained in evidence by the applicant he has not yet managed a successful drainage scheme in this field. Some areas of this field had a good soil with only a few stones and earthworm activity. However there was one area where the soil was of a heavy clay type and difficult to work. There are also areas of rushes infestation in this field

Field No 1 is in a crop of turnips and this is a very good and clean crop. The soil here is the deepest on the croft with very few stones and possibly the best field.

Field No 2. There is a drain between field no 1 and 2 running towards the road. In the area of field No2 next to the drain the soil is harder, more difficult to dig and with small stones. As you go towards the road to the croft house the soil is easier to dig, has some pebbles in it and some earthworm activity.

The other crofts viewed as comparables were similar to the above croft and typical of upland areas.

Decision

[67] In this application an order is applied for;

(1) Authorising the crofter applicant to acquire his croft land

(2) Requiring the landlord Respondents to convey the croft land to the crofter applicant

(3) Determining and specifying the terms and conditions of such acquisition and conveyance and the consideration payable therefore.

Parties were agreed that the only matter for the Court to determine as the rent and therefore the purchase price.

[68] The relevant part of the 1993 Act is to be found in Section 6(4), which is in the following terms:-

“Before determining what is a fair rent for a croft or for any part of a croft, the Land Court shall hear the parties and shall take into consideration all the circumstances of the case, of the croft and of the district, and in particular shall take into consideration any permanent or unexhausted improvements on the croft and suitable thereto which have been executed or paid for by the crofter or his predecessors in the tenancy”.

[69] At the hearing parties drew our attention to relevant circumstances of the case, the croft and the district. In most crofting cases the landlord’s input is minor and in this case there were none so it is the renting of a bare land croft. In determining a rent in those circumstances, we normally access the land “as improved” and make an allowance for the annual cost of the provision and maintenance of improvements by the crofter. Alternatively, we can assess the croft’s potential as if the improvements had never been carried out. In this case all the improvements have been carried out by the tenant so there is a risk of renting the tenant on his own improvements. The objective must be to ensure that the landlord receives a fair rent, having regard to what he has supplied in way of land and that the tenant is not rented on improvements which he has provided himself.

[70] The terms of a crofting tenancy are clearly set out in the 1993 Act, particularly Section 5 and the statutory conditions in Schedule 2:-

“3 The crofter shall, by himself or his family, with or without hired labour, cultivate his croft, without prejudice to the right hereby conferred on him to make such use thereof for subsidiary or auxiliary occupations as, in case of dispute, the Land Court may find to be reasonable and not inconsistent with the cultivation of the croft”.

[71]The Full Court in MacMaster v Castle Leod Maintenance Fund Trustee 1992 SLCR 74 at page 91, said that the rent of a croft is to be fixed on the basis that the crofter is “a prudent agriculturalist, reasonably competent and skilled”

[72]In the more recent Full Court case of Sutherland Estates v Sutherland 1998 SLT (Land Ct) 37 the Court carried out a comprehensive review of the principles previously used by the Court in determining a fair rent for a croft and concluded that these principles were no longer appropriate for determining a fair rent under modern crofting conditions particularly as modern crofters derive a considerable proportion of their income from subsidies and activities not related to the croft. At page 42 the Court states: “We consider that it is necessary to adopt a comparative approach when assessing croft rents; to base this on 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 crofter and any particular factors affecting profitability. The rent assessed will be dependent on the circumstances of the case, croft and district.

[73] In addition to the evidence bearing upon the agricultural potential of each croft, we will, as detailed above, have regard to evidence of rents fixed by the Court in comparable circumstances.

[74] In the present case we had no evidence as to the profitability of the croft and this croft is not run as one unit, but together with other land.

[75] The present level of cultivation and fertility, state of the fields, drainage fencing and the buildings on the croft, has all been provided by the crofter. We are satisfied that this croft is an upland livestock rearing croft, with the better land being used for forage production.

[76] We now look at rents fixed by the Court. The leading authority on fixing fair rents is the Full Court decision in Sutherland Estates v Sutherland and Others 1997 SLCR 144 where the Court in dealing with comparables said at page 162 “In addition to evidence bearing upon the agricultural potential of each croft, we will of course, have regard to evidence of rents fixed by the Court in comparable circumstances”. We consider that Sinclair v Sinclair can be taken into account.

[77] We now look at agreed rents. In Hitchcock’s Trustees v McCuish and Others 1982 SLCR 101 the Court said at page 104 where the Court was considering rents which had been settled by the landlord’s factor with certain tenants on the estates and said “While settlements may be referred to, the Court cannot be ruled thereby and prefer as comparisons their own determined rents in similar circumstances”. We give three reasons what the Court will not take into account agreed rents:-

(a) A tenant hoping to gain the tenancy of a croft may offer a considerable increased rent to his landlord to ensure he obtains the tenancy of a croft in the knowledge that he can then apply to the Court to have the rent revised. In Baker v Macaire (Application RN SLC/242/07) the crofter had agreed a rent of £1,100 when he first obtained the tenancy of the croft in 1996. He asked the Court in 2007 to revise the rent and the Court fixed the rent at £250.

(b) There may be an element of marriage value in that a farmer in the locality of the croft is prepared to pay an increased rent to obtain the tenancy of a croft to enable him to work it as additional ground to his own ground without having to incur any overheads in terms of additional equipment etc. There may also be the benefit of additional acres on which to claim single farm payments.

(c) The Court in the Sutherland case which we have detailed above only makes reference to taking into account evidence of rents fixed by the Court in comparable circumstances in addition to any evidence bearing upon the agricultural potential of each croft. It does not state that the Court can also have regard to agreed rents.

[78] for the reasons set out in paragraph 2 above we are also of the opinion that rents agreed on sub-let should not be taken into account as they are agreed rents. They are also agreed for a number of years (in this case three years) and the fact that they agreed for only three years could have an effect on the level of rent agreed. It is also anticipated than in the next few years, single farm payments, will change, to be based on the area of land farmed, rather than the present historical production basis for entitlements.

[79] The croft extends to 27.71 Ha or 69 acres or thereby. Having regard to the ploughable land, the not so good land and the rough grazing we consider a stocking capacity of 130 breeding ewes appropriate. We consider a rate of £5 per ewe so therefore the rent is £650. The purchase price will therefore be £9750, fifteen times the rent.

For crofter Applicant: Mr M Mackay, Solicitor, Dingwall

For landlord Respondent: Mr J R N Macleod, Solicitor, Edinburgh