DIVISIONAL COURT

(Mr D J Houston)

GLEN SPEAN ESTATE v MACLACHLAN & OTHERS

(Application SLC 189/11 – Order of 9 November 2012)

CROFTING – COMMON GRAZING – RESUMPTION – REASONABLE PURPOSE – AGRICULTURAL USE ACCEPTABLE – SHARE IN DEVELOPMENT VALUE – PROPER BASIS OF VALUATION – RESIDUAL METHOD REJECTED – COMPARABLE BASIS APPROVED – IMPORTANCE OF EXPERT EVIDENCE – CROFTERS (SCOTLAND) ACT 1993 Secs 20 and 21

Estate owners sought to resume an area from a crofters’ common grazing for the purpose of establishing new facilities, which included holding and break-out areas for ponies to be used in connection with sporting activities carried out on the estate. The application was opposed on the basis that resumption was unnecessary and that, in any event, the sum proposed for the crofters’ share in development value was much too low.

The principle basis for objection to the resumption in terms of reasonable purpose was that most of the land would continue to be used for grazing, albeit by ponies specifically kept for use in connection with deer stalking; that arrangements could be made for that use on parts of the common grazing without need for resumption; and that such use was agricultural in nature and accordingly resumption was inappropriate.

The landlord applicants’ valuation was founded on the residual method which, in effect, sought to assess the financial merits of their proposals. They attempted to show that no monetary value would be added to the estate and that accordingly the land had no value. The main opposing respondent urged the Court to determine open market value on the basis of potential alternative uses for the land, both commercial and residential, and proffered limited evidence in that regard. In determining the value of the subjects for the purposes of section 21 of the 1993 Act, the Court had to rely extensively on its own experience in other cases.

HELD that (1) the question as to whether all or part of the land sought to be resumed could be said to remain in agricultural use following resumption was not, of itself, determinative as to whether the resumption was for a reasonable purpose; (2) an appropriate consideration in that regard was whether the proposed use could reasonably be carried out while the land remained in crofting tenure; (3) assessment of market value should fundamentally be based on the price which the relevant land, free of crofting tenure and with all its current potentialities, would be likely to achieve if exposed in the open market by an owner who genuinely sought to enter freely into a contract for its sale; (4) the residual method of valuation is not normally an appropriate basis for assessment of open market value for the purposes of section 21 of the 1993 Act; (5) comparative assessment based on hypothetical exposure of the subjects to the open market using evidence of comparable subjects which had been so exposed is the preferred method of valuation; (6) valuation is not limited to consideration of current or actual proposed use of the subjects, but may extend to potential uses.

OBSERVED that (1) whilst the comparable basis of assessment of open market value was preferred, it had to be properly applied on the basis of either sufficient detail of the comparable subjects or valid assumptions relating to them, or some combination of the two; (2) where there is a dispute as to valuation involving significant sums, the Court would normally expect to hear expert evidence relating to the instant subjects and all the comparables.

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

Introduction

[1] This is an application by the owners of Glen Spean Estate for resumption of 1.28 hectares of land situated on the Galmore Common Grazings for the purpose of erecting new facilities incorporating a deer larder, vehicle storage, stabling for estate ponies and also including holding and break-out areas for said ponies.

[2] There was some limited opposition to the application insofar as it was said that the area sought was said to be too large for the purpose and that elements of the purpose did not necessitate resumption at all. There was more widespread objection to the amount offered by the applicants in respect of the share in development value which would fall due to the crofter respondents in the event of the land being surrendered by them. There was also a challenge to the bona fides of the application in the sense that the purpose for which resumption was sought was said not to reflect the true intended use of the land by the applicants.

[3] At the hearing in Roy Bridge Memorial Hall on 3rd September 2012, Stephen Ashley Smith, one of the applicants, appeared in person. Of the crofter respondents who had lodged answers to the application, Mrs Jennifer MacLachlan appeared in her own right and also as representative for Miss Mary MacInnes. Mr Ronald MacKintosh lodged, and gave evidence in respect of, a written statement which had been prepared by his solicitor.

[4] As is often the case where party litigants are involved, evidence as to fact and submission as to why certain outcomes should follow tended not to be dealt with in separate chapters. The Court is used to that scenario and we have simply recorded below the substantive evidence and submissions as they were presented to us at the hearing.

For the Applicants

[5] Stephen Ashley Smith (52) gave evidence that he was a chartered surveyor in general practice in the north of England. His career was in chartered surveying, but he also ran a farm. The estate at Glen Spean presently had no facilities for the handling of deer or storage of vehicles and planning permission had been obtained in 2009 to develop these on the area now sought for resumption. He was of the view that the purpose was entirely reasonable as was the sum he had proposed for the share in value due to the crofters.

[6] The area of land to be developed was as shown on Production 4 and was consistent with the planning permission which had been granted. Of the nine respondents, only two had objected to the principle of the resumption as proposed and only two were dissatisfied with the sum offered as compensation and share in value. There was a majority consensus in favour of the granting of the application.

[7] There were no permanent employees on the estate and no present intention to have any. Since acquisition sixteen years ago, the estate had used a self-employed stalker and a self-employed housekeeper and it was anticipated that this would continue.

[8] The site was chosen to tie in with the existing estate house and was the only one suitable for the development. There was currently no full-time presence on the estate or at the estate house, but there could be in the future. There could also be an increase in the work available. It was likely that two ponies would be kept and that they could be looked after by the stalker. Whether there was sufficient space for storage of straw, hay and grain feeds for the horses rather depended on how the hay would be stored. It could be wrapped and stored outside, but he thought there was sufficient room in the proposed store for the purpose.

[9] The deer larder was required to accommodate deer carcasses recovered from the hill and to prepare them in a clean environment for disposal to a game dealer. The carcasses might be skinned there, but in any event they would be chilled and hung if necessary, then collected in the usual way. It was possible that they would be butchered on site, but normally any processing would be through a game dealer.

[10] Referred to Production 15, Mr Smith confirmed that 15 stags had been shot on the estate in 2010 and that this was about the normal figure. In addition there would be a similar number of hinds, together with a few calves taken with the hinds. Statistics were provided by the estate to a deer management group, to Scottish Natural Heritage and to agents like Knight, Frank and Rutley. It was not up to the estate to publish any figures. He did not anticipate any increase in numbers and the level spoken to had been fairly consistent over the past few years.

[11] Mr Smith had worked out that some 200 m2 of covered space was needed to accommodate all the equipment required for and associated with the shooting activities and was willing to invest some £90,000 on the whole project on the basis of a bag of some thirty or so deer. There was a specific requirement for the processing of the deer and for the storage of machinery.

[12] The project had been discussed with the crofters over a considerable period of time and he was now offering a sum in excess of £1,000 as compensation and share in value. Under reference to Production 13, he accepted that at a stage prior to the lodging of the application, he had offered to pay the crofters £5,500 together with their reasonable legal costs. That had been in January 2006 and had been an open offer at the time. It was not based on any specific calculations and was not necessarily how he would present an offer now. However, it had not been withdrawn and was still on offer as a means of settling the matter, subject to the proviso that he would no longer be prepared to meet legal costs.

[13] Referred to Production 12, he could not recall making any approach to the Chairman of the Sheep Stock Club in 2002 about building an additional house to the east of the present one. He thought the Chairman at that time would have been Mr Wilson and accepted that, although he could not recall it, there may in fact have been a brief discussion on the matter. At that time, there had been no need for an additional house. To the proposition that such a proposal would have been a major consideration and surely have been one that he would remember, he reiterated that he could not recall it. If the discussion had taken place, then it would have been by way of seeking to proceed by consensus and agreement. No planning permission existed for such a house. No consideration had been given to building a house to the east of the existing one in the last ten years, but the estate had considered building another house on the estate.

[14] Production 13 was a letter which the witness had written to the grazings Clerk in 2006 in which, in addition to mentioning machinery storage and a deer larder, he had also indicated a proposal to extend to the east the garden area of the estate house, because the boundary was tight against its eastern corner. The house was built on sloping ground which had had to be cut and filled to create the site. Parking and turning could be difficult, but because the area to the east of the existing site was steep and rocky, there was no longer any intention to proceed with that proposal.

[15] The western boundary of the area now sought was chosen simply because it tied in with the existing fence line at the house and was topographically logical, but if there was some difficulty with the choice of the boundary position at the north west corner, the estate would be willing to move that. The positioning of the site just seemed to be sensible on the ground.

[16] It was accepted that the Galmore shareholders may have been consulted in 2008 about a proposal from a Mr Dignan, a neighbouring proprietor, for the establishment of a small-holding and that it may have involved the release of ground which was part of the current application. Mr Dignan, whose house is at Cnoc an Eas, had also approached Mr Smith to enquire if he had any objections to the matter being discussed with the shareholders. His reply had been that he had no objections and that is where the matter had ended. That did not necessarily mean that he would have agreed or that he would have given Mr Dignan a lease of the land.

[17] Mr Smith confirmed that he was a building surveyor operating in a general practice which was largely involved with commercial property development and valuation. His main experience was in costing and valuation of commercial property, including assessing building costs. There were several different methods of valuation, one of which was to work out the residual value of a project. That involved assessing the value of the development on completion under deduction of the costs of undertaking that development – including construction costs, professional fees and finance costs. There might also be an adjustment for inflation. The resultant ‘residual valuation’ was the value of the land as deduced from the building gain.

[18] As far as the present proposal was concerned, he had estimated the costs of construction at £90,000 and, in his view, any added value to the estate from the development would not exceed those costs. It was therefore his contention that there was no development value in the land for the purpose sought in the resumption. In effect it would be a negative value. He accepted that there were various methods of valuation and that the comparative method was one and the most commonly used, but it was not the most appropriate one in this case. It had to be remembered that the planning permission here was for the limited purposes narrated in the consent – for the buildings and associated facilities for which consent had been sought.

[19] He understood the concept of “hope value” – but it involved speculation and it was debatable as to whether that was appropriate for the purposes of valuation in the current situation. For the land to have any significant value on the open market would involve the existing proprietor granting access to or through the ground. It was possible that there were other potential accesses from the east or from the public road, but there was – in effect – no access available to a potential purchaser. Any access which shared or was adjacent to the one for the estate house would impinge on the amenity and privacy of the house; that would diminish the value of the house and so the proprietors would not be willing sellers. He accepted that any access would not go past the house itself, but maintained that no one would offer for land which had no permission and no access. It would be a purely speculative valuation and any offeror would have to allow for purchase of access and an element of compensation to the seller for the negative impact of any development.

[20] There was no hope value in this case and he had not looked for comparable evidence. He had not specifically considered the added value to the estate, but in any event the costs of construction were so high that such added value as there might be would be eliminated.

[21] The residual method of valuation was frequently used by chartered surveyors and developers. Any developer would take into account the end value and allow for costs and profit in deciding what to offer for a site. For a house site, one would take the expected value of the house, take off the costs of construction, provision of services, etc and the difference was the value of the site. The open market depended on competition and different proposals were worth more to some potential offerors than others. No one was forced to offer – but ultimately they would only offer on the basis of what the site would be worth to them after they had carried out the development. One had to compare like with like. The question of whether planning permission had been obtained or was likely to be obtained had to be considered; whether services were available; what proposed uses were suitable. One had also to eliminate the special purchaser – the house next door – who may have particular reason for making an offer higher than those in the general market.

[22] He did not accept that for any bare site coming on the market all potential offerors were on the same basis. No two sites compared exactly unless they were already serviced and the same size. In making any comparisons, adjustments always had to be made for the state of access, service provision and planning permission. There were invariably issues specific to each individual site.

[23] The siting of the buildings on the resumption site had been chosen having regard to the topography of the whole site; to the need for a hard standing for vehicles to turn on; to the need for a holding area onto which the ponies could be turned onto prior to being used; and also to a break out area on which they could graze in the open. Given the nature of the ground, the area was not excessive for the ponies. The witness had a fell cob and two foals at his home and his experience was that the area allowed for on the present site may not in fact be sufficient.

[24] However, it was the area which had been discussed with the Sheep Stock Club – as could be seen in Production 13. There had been consultation with the club and an area originally put forward by Ronnie MacKintosh had been rejected by the club as being excessive. Another area proposed by the Club had not been suitable to the estate as it would have been difficult to access. Mr Smith had then suggested the present area as an alternative and he had received a positive response from Mr MacLachlan on 10th August 2006 (Production 22). He had then received a letter from MacPhee & Partners confirming the agreement of the Club Committee. That firm had started the process of drawing up an agreement by way of a deed of conditions in respect of the area now sought. The present area had therefore been deemed suitable by the crofters and he had acted on that basis and proceeded with preliminary enquiries to the planning authority; applying for and obtaining planning permission; and lodging the current application. It was only much more recently that a small number of shareholders had come forward to suggest that the area was not reasonable. Planning permission had been granted on the basis of the area now sought..

[25] That area was less in extent than he had originally sought and the area in the present proposal was not good grazing land. It was not the case that the ponies would only be needed for four weeks’ work in the year and so would only need to be on the site for that time. The stag season ran from 1st July to 20th October and hinds from 21st October to 15th February. How well the ground supported the ponies was partly dependent on how the ground was managed. It was possible they might need to be moved temporarily to better grazing. But the buildings and land proposed were what was needed; the area sought was the minimum; and it was consistent with the planning permission.

[26] Ponies had been used in the past for recovery of deer. Currently the estate used quad bikes and Argocats and that would continue if conditions required it, but the hill pony was becoming recognised as a suitable and increasingly popular way of extracting deer. Visitors liked to see them being used; it was environmentally preferable and in line with tradition; the facilities were needed so that ponies could be introduced.

[27] The ponies would need at least the area sought and it may be that some supplementary feeding would be required or that, on occasion, they would need to be grazed elsewhere. They needed shelter and space and the present proposal offered them both. It had been suggested that the shareholders had offered a compromise whereby the ponies would be allowed to graze on a larger part of the grazings thereby avoiding fencing costs. However, Mr Smith considered that this was not acceptable. If the area was not enclosed as proposed, then the ponies would not be easily managed. They needed to be kept within a safe confined area. This was not a valuable part of the grazing; it was suitable and manageable for the purpose; relatively easy to fence and enclose; and passed the test of reasonableness. Exclusive use of the area was required so that the estate would be able to undertake its plans without being vulnerable to changed circumstances and the needs of others. Sharing grazing of ponies with others was not appropriate and the loss of the land was not significantly detrimental to the crofters.

[28] Having the ponies confined near to the house with access from the public road facilitated their management and care. Having them roaming over a larger area would make that much more difficult. Time would be lost in locating them and bringing them in off the hill. The area chosen was the logical one. Mr MacKintosh did not object to the principle of resumption for the purpose of the planning permission which existed. Apart from Mrs MacLachlan, the majority of shareholders did not object and were in agreement. The area chosen had already been accepted by the shareholders and there was planning permission in respect of it.

[29] It would be unfair and unreasonable to deny the resumption now as the test of reasonableness had been passed. He was prepared to commit £90,000 to the project and if the application was refused or the area curtailed, then the estate would not have facilities to manage the ponies. If the whole area was not available to the estate on an exclusive basis, then they would not be able to manage the ponies in a proper manner. Temporary resumption was inappropriate even for the breakout area. If the estate did not have assurance of availability of that, then they would be unable to manage the ponies and there was a very real threat of the investment in the whole development being wasted if any temporary resumption was not renewed or made permanent.

[30] As far as care of the ponies was concerned, that would be undertaken by someone living locally on a self-employed basis. Such an undertaking had been discussed with a local man who was a forester, agriculturalist and stalker who was familiar with ponies. He would be willing to undertake the task and had been consulted about the layout of the facilities proposed. Mr Smith had three ponies of his own and there were other people living locally who could undertake the work in future.

[31] Deer stalking on the estate was not seen particularly as a commercial enterprise. Mr Smith had various personal and business contacts and guests who enjoyed stalking – some of whom paid for their sport and others who did not. He used to use agents to let stalking days, but it was preferable to have control of who was brought onto the estate. Although the bag may seem limited, over the sixteen years of ownership of the land, there had been reasonable bags of deer – red stags and hinds, roe and Sika.

For Respondents

Ronald MacKintosh

[32] The earlier mentioned written statement was accepted as Mr MacKintosh’s evidence in chief. We need not repeat it in full here, mainly because it was largely confined to submissions which we take account of in our Discussion below.

[33] In summary, he did not object to the principle of the resumption for the purpose as stated, but considered that the area sought was excessive for that purpose and the level of compensation, together with the basis on which it had been calculated, failed to have regard to section 20 of the Crofters (Scotland) Act 1993 (“ the 1993 Act”). It could fairly be said that part of the area sought for resumption was covered by the planning permission and so it was reasonable for that to be resumed and developed. But it was his view that no planning permission existed for the remainder of the land and so the Court could not satisfy itself as to reasonable purpose in regard to it.

[34] Although the landlords had stated that they had no intention to further develop the land once resumption was authorised, it remained the case that they could do so and that was of little comfort to him.

[35] The crofters were willing to allow the landlords to fence off an area of land on which the ponies might be grazed without it being resumed. That would allow the estate to pursue that aspect of their scheme, but remove the possibility of all of the resumption area being developed in the future without adequate compensation as required by section 21 of the 1993 Act.

[36] If the area was to be valued as agricultural land, then the figure of £1,000 per acre would be accurate. However, the legislation clearly provided that market value was to be calculated on the basis of the land being sold on the open market by a willing seller, with the crofters being entitled to share in that figure. He encouraged the Court to have regard to the figures submitted by Mrs MacLachlan.

[37] At the outset of cross-examination of Mr MacKintosh, it became obvious that he was unclear as to the precise footprint of the resumption site. His principle concern appeared to relate to the loss of an area at the north-west corner of the proposed site, which he said had been reseeded some 18 years ago. Following discussion, it transpired that he had misunderstood the plan and this was confirmed with the Court at inspection immediately following the hearing. Both at the hearing and at inspection, Mr MacKintosh apologised for any waste of time caused by that misunderstanding.

[38] However, he maintained his position throughout the hearing of acceptance that the estate needed an area to accommodate their requirements, but that it did not need to be so extensive. Although at one stage he did maintain an objection on the basis of “what the ground was to be used for eventually”, he did not pursue that line. The estate had to have a larder and a place for vehicles. The crofters had no right to deny them that. But too much land was being asked for in relation to the operation. Otherwise he had no objection and no complaint. It was a matter of balancing what the crofters needed and what the estate needed. He appreciated that the landlords had to be able to run their estate.

[39] There were some 7,000 acres on the grazing and the Club achieved reasonable results from their sheep flock. They had spent several thousands of pounds on fencing off areas of the grazings on the estate. There were miles of internal fencing on the grazing – erected to facilitate lambing and tupping. 300 acres had been enclosed for that purpose and the Club did not want to lose that land. The various fenced-off parts were in effect the equivalent of in-bye areas; had been expensive to create; and were vital to the management of the sheep. They were areas where the shepherd could have the ewes close at hand at tupping and lambing time and they did not want those areas eroded.

[40] The Galmore Club had adopted the idea of fencing off these in-bye areas from the wider terrain to a degree not much seen elsewhere in Scotland. They had sheep management down to a fine art and to such an extent that whereas in the past seven or eight people were needed to gather, two people could now gather and manage the flock. If the Club was to lose parts around the edges, then that achievement could be reversed. However, he accepted that whilst the cumulative effect of such losses could be a significant interference, what was proposed here would have very little impact and would not interfere in any serious way with the Club’s activities. Much more could be achieved by concentrating on spraying bracken than by worrying about this particular area which might be lost to the Club.

Jennifer Cecilia MacLachlan

[41] Mrs MacLachlan (56) gave evidence that she lived in Alexandria, but was the crofter at 5 Achluachrach and had a one half share in the Galmore grazings. She was also representing her Aunt, Miss MacInnes of 4 Achluachrach, who was another respondent in the case and had at one time been a clerk to the grazings. The witness had obtained the tenancy in 2007 and had been on the grazings committee for 2½ years. Her family had been involved at Achluachrach for around one hundred years. Her sister had succeeded to the croft which had then been divided so that Mrs MacLachlan had a half share in the grazings. Her mother had come from a crofting community, as had her grandfather.

[42] Mrs MacLachlan had been involved with farming to some extent all her life. Her father had been factor at Lithgow Estates. She had a degree in Land Economics and had been a member of the Royal Institution of Chartered Surveyors for 33 years. She was married to a farmer and they lived on the farm, which carried a small suckler herd of Angus cross cows. She had experience of crofting and of some agricultural practices, but had never been involved in the handling or gathering of sheep.

[43] Professionally, her career had been mainly in the public sector. She had worked for a local authority estates department and was now a senior valuer to a valuation board. She undertook property valuation across the area. In her present capacity, she was involved in giving advice to the valuation committee, including as to whether particular parcels of land were classified as agricultural and so exempt from the valuation rolls.

[44] She had highlighted in her responses to the application that the estate house was operated as a self-catering unit and that as such its use was not restricted to occupancy by shooting tenants. There was no suggestion that shooting was offered to occupants. It meant that there was no permanent estate presence. She felt that the estate’s real intent for the use of the land was to provide a new estate house. She referred to the extract from minutes of the grazing committee at Production 12 and submitted that there had been approaches to them in relation to such a proposal.

[45] It had been emphasised by the applicants that the estate had discussed matters with the shareholders, but that seemed to have extended only to discussions with the clerk or members of the grazings committee. She had been told of the proposals when she became a shareholder in 2007, but none of her family had been clear as to the nature of those proposals.

[46] Mr Smith had written to the clerk in 2006, with a copy to all shareholders, and offered to compensate them for the loss of land in the amount of £5,500 together with reasonable legal expenses. That had been the first time for most shareholders that they had had any detail of the proposals. She submitted that Mr Smith must have been in doubt as to the extent to which his proposals had been discussed when he made the decision to post copies to all shareholders. The new grazings committee was communicating with shareholders on a monthly basis.

[47] Emphasis had been laid by Mr Smith on an agreement being having been reached, yet as late as January 2012 the shareholders were still discussing the matter; opinions were being canvassed; enquiries as to progress were being made. That did not seem to her to imply any form of consent to the proposal now before the Court. Mr Smith had attended a meeting at which the shareholders had intended to make a formal approach to him as regards the make up and extent of the ground insofar as it was necessary for a deer larder and store. They felt that the grazing of the ponies could be accommodated on the grazing itself and that stables could be erected elsewhere according to where the horses were to be grazed.

[48] A pony shelter could be built at a boundary fence and a loose-box with a small catchment area provided for medical purposes or storage. That could be sited elsewhere on the grazing. The shareholders were trying to accommodate the estate’s needs. Her Aunt had been totally opposed to the proposal. She now thought the area was too large and that the storage / deer larder could be accommodated elsewhere. From her own viewpoint, Mrs MacLachlan thought that there was no need for grazing ground to be taken at all, but if any was to be taken, then the hard-standing / deer larder / store could be re-positioned in the general location of the existing proposal but taking up less ground.

[49] She had looked at the plans and, under reference to Production 10, had already indicated where a facility of similar size to the proposed larder / store could be accommodated within the existing house site. Mr Smith had said that the septic tank was situated on that area. No explanation had been given as to the basis for the extent of the building in any case. Why did it need to extend to 174 m2 external area and 160 m2 internal area? The area of ground presently taken was determined by where the buildings had been located. There was much wasted space and that could be addressed by moving the buildings closer to the estate house.

[50] She herself did not keep ponies, but she thought that some ponies survived perfectly well with a pony shelter in a field. Hill ponies were probably out of doors all year – or at least that is what she had read. She referred to an article in the September 1 2012 edition of Scottish Farmer. A member of her family had been a stalker and the pony he used was kept on croft ground with no shelter facility.

[51] The Court would be aware of her concerns about possible future development of a different nature and she thought there were indications of that. She accepted that at least hypothetically an estate would require some form of utility building. But there was no evidence here as to why these buildings were the size proposed or as to actual requirements. In her opinion, too much ground was being sought for all aspects of the development. Her view that the estate might be considering development for housing had come from discussions with planning officials and other government bodies when she had been investigating the possibility of an apportionment for her own use. She had been informed that the estate had made enquiries about ground to the west of the current site.

[52] Under reference to Production 14, which was a copy of a redacted letter from Mr Smith to Highland Council’s Planning Department in 2008 in regard to the possibility of development of a site for six houses some distance to the west of the resumption site and on the opposite side of the main road, she said that this backed up her contention / feeling that the estate owners had development in mind and were looking at any parts of the estate which might be suitable for development.

[53] The witness had a wide experience in the valuation of property. There were five or six methods of valuation and the last time she had used the residual method adopted by Mr Smith had been at college. In her own work the predominant method of valuation used was the comparative basis. She sought out details of sales, what the subjects of purchase consisted of, who the parties to the sale were (in an attempt to ensure that it was a bona fide transaction and so truly open market) and the basis of the sale. In working out the valuation for the present subjects, she had done what anyone else in her profession would do.

[54] She had access to information about a wide variety of sites and they provided good valuation evidence. Data was sought from the Registers of Scotland and from the internet. She had selected twelve different sites which she thought would be suitable comparables in the present case. Two of them had been discounted as it was thought that one was a collusive sale and the other related to a forestry disposal.

[55] A summary of the basis of her valuation was set out in Production 16. In respect of loss of grazing, loss of crofting value and share of development value, Mr Smith was currently offering £1,280. In 2006, he had offered a total of £5,500 together with an unspecified contribution to legal fees. Her own ‘basic’ valuation of £35,068 was based on a site at Kinchellie, Roy Bridge which extended to 0.292 hectares and sold in 2007 for £8,000. On a pro rata basis, that put the resumption site at £35,068. She had not adjusted for the passage of time since that sale. She had ascertained that the owner of the land had been concerned as to future development and had placed a title restriction on the subjects whereby he was to receive 100% of any development value. The comparison was appropriate here as it concerned a willing buyer and willing seller and for a similar piece of ground. In effect, it had development value stripped out of it and represented a base value for a piece of common grazing land.

[56] Her second comparable was at Keppoch – an area of agricultural ground sold some two years earlier for public works at £15,000. On a pro rata basis this equated to £81,081 per hectare and so £103,784 for the resumption site. She had not investigated what basic agricultural values were in the area, but contended that on the basis of the Kinchellie site, the basic agricultural value of the resumption site was £35,068 or £27,397 per hectare. It was not a correct approach to look at the per acre value of an estate or of a farm of say 300 acres, but perfectly reasonable to do so for smaller areas or sites.

[57] In attempting to assess the value of the site for commercial development, her approach was to put a value on the whole area to be resumed as if it was zoned for commercial use. Hypothetically someone could move in and build a store or a deer larder and then go on to use the site for commercial purposes. Someone with a lorry would find this site very useful as a base and in Mrs MacLachlan’s view various quasi industrial / commercial uses would be permitted for which further planning permission would not be required. In her experience, there would be no difficulty in getting permission for a yard and storage.

[58] Mr Smith had said that processing would be carried out on the site, so there was therefore a presumption that other uses would be permitted. As evidence of the value for such uses, the witness had looked at the sale of a 0.324 ha site at Annat Point, near Corpach, Fort William. The site was used by a haulage company and it had been acquired from the local enterprise company in 2003 for £70,500, which equated to £217,592 per hectare or £278,518 for a site of 1.28 hectares on a pro rata basis.

[59] She accepted that the comparator site was in a more commercial location. In an attempt to adjust for this she had consulted the Highland Assessor of the Scottish Assessors Association to obtain the relative rental value of the transport yard at Annat Point, Corpach and one at Spean Bridge used by the same company. The comparative rental rates as between the two locations, were £1.30 per m2 at Corpach and £0.60 per m2 at Spean Bridge. Applying those figures proportionately to the figure of £278,518 resulted in a value applicable to the resumption site of £128,546. Allowing further for the increase in net asset values as between 2005 and 2010, an uplift of 25% was indicated and this gave a figure for the resumption site of £160,682.

[60] Mrs MacLachlan accepted that there was doubt as to what commercial use the resumption site might be put and her view was that the more appropriate way to estimate the value of any site which came up for sale was to look at its value for residential purposes. She had discussed the matter with the authorities and had been told by the local planning officer that the attitude to housing development was generally favourable. A favourable view would be taken of development above the road at Achluachrach. The authorities were not averse to housing developments provided the outcome would be well spaced individual houses. The witness referred to the area shown shaded in yellow on Production 10. It was an area comprising the resumption site together with land to the east of it. It was a possible area for expansion of the Achluachrach crofting township, whose land was subject to flooding.

[61] There were two possible accesses – the first being the present access to the estate house at the west and the second the road to the church at the east. She had shown the plan to a man from Transport Scotland who advised of visibility requirements and it seemed that neither of these would be acceptable access points for any development. The most suitable access would be one taken between the two, just to the west of the point where the burn system crossed the public road. The curve in the road there allowed for better visibility.

[62] She had no house on her own croft and the croft land itself was liable to flooding. The local authority was against development on any flood plain. She had planning permission for a house on an estate elsewhere. However she had submitted a consultation to the estate, to shareholders, to the Highland Council Planning Department and to Transport Scotland in regard to the yellow shaded area and the possibility of the development of two houses. Although the Council had been generally supportive of a development to the north of the trees on the top side of the road, but avoiding the cairns, there was a difficulty with provision of access.

[63] Had it not been for Mr Smith’s proposal, then she would have been considering locating one house on the site now sought for resumption and another to the east of that. Commercial use was not discussed with the planners and she accepted that such use would require larger and wider access points onto the public highway.

[64] It was also her contention that Mr Smith’s proposals might adversely affect water courses which were the source of private water supplies. The water course at the east fed an existing supply and the one to the west, although not currently used, was listed in the title deeds of 1 Achluachrach and could presumably be enforced. If the land was drained and reseeded, then the east-most water course might be affected. It might also be affected by use of chemicals and other materials. If one had a large hardstanding area which collected surface water, then care had to be taken with the outfall from it.

[65] When it came to valuation, Mrs MacLachlan felt she had looked at a wide range of comparable plots for building houses. The worst case scenario which she had investigated related to land with no prospect of development. Several plots at Achnasol had been sold at £20,000. According to information she had obtained from Registers of Scotland, one gentleman had bought four plots at £20,000 each on a purely speculative basis and with no compulsion. On a pro rata basis that would put the resumption site at £555,313. However, she admitted that the sale of these plots had been seen as a scam.

[66] Of the other house plots she had investigated, she was not sure whether they were fully serviced or not, but she had presumed water was available and that power was nearby. In her final analysis she had used the sale of a plot at Bohuntine, Roy Bridge at £130,000 in 2010 as the best comparator. On the basis that three houses would be envisaged on the resumption site by a hypothetical developer, this put the value at £390,000.

[67] She urged the Court to bear these figures in mind when assessing the open market value of the resumption site. She had attempted an honest valuation using the Bohuntine site as a basis. She had not adjusted for size, even though the sites on the resumption area would be significantly larger. Nor did she adjust for the passage of time. The only evidence to support updating had been at Annat Point. In summary, she urged the Court to find that the open market value of the resumption site be fixed at £390,000.

[68] Under cross examination, Mrs MacLachlan accepted that the effect on the grazings enterprise of the resumption being authorised would be negligible. In regard to her allegation that Mr Smith may have had doubts as to whether all shareholders had been fully consulted – and under reference to the letter of 31 January 2006 – she was of the view that because he had written to all shareholders, he must have had doubts as to whether they had been consulted. The fact that he wrote to the clerk who was the appropriate contact, with copies to the other shareholders, implied concern as to whether the matters would be brought to the attention of all the interested parties.

[69] Mrs MacLachlan said that not all shareholders had in fact been informed. Her sister, Patricia Lamont had been concerned. There had, however, been no representation from her in this case. Miss MacInnes was also against the proposal. At that point in time, they were the only members of the her family who were shareholders. She could not comment on whether other shareholders had objected to the principle of resumption of the site.

[70] She had no experience of keeping horses, although she had experience of keeping cattle. Asked why she thought the area being taken was excessive, her view was that the grazing ground was not required at all. If the proposed site was to be taken for horses, then the area sought may in fact be too small. Her only knowledge of horses came from seeing her neighbours offer grazings to horse owners. She did not think the estate needed the ground because it had the offer of use of the wider grazing from the shareholders.

[71] In relation to valuation, she had worked in general practice which involved buying and selling property. She had also worked for Hacking and Paterson and for Strathclyde Region’s Estates Office which involved seeking sites for council developments and negotiating for their acquisition. She had been involved in compulsory purchase for roads and was familiar with the compulsory purchase procedure. She had also assisted in preparation of sales particulars and advertising. However that had been some time ago – and she had not been actively involved in property sales for perhaps 20 years.

[72] During her investigations for valuation of the resumption site, she had obtained information about the comparable sites from the internet and investigated them via Registers of Scotland. She had not talked to any of the selling agents involved with the comparables. The figure of £35,068 at item 2 on Production 16 had been derived from item 1 on Production 18. This had been a neighbour to neighbour transaction and involved the acquisition of a fringe of land around the purchaser’s property. Asked if he would not then be a special purchaser, she thought it would have been bought for his benefit and doubted whether there would have been any other potential purchasers. It probably would not have added anything to the value of the seller’s property.

[73] The comparable at Keppoch had involved purchase for public works and she accepted that had the owner refused to sell, then the acquiring authority might apply compulsory purchase procedures. As Scottish Water was a quasi public body, they would have to pay open market value. She was not aware of what, if any, payments had been made in regard to disturbance or injurious affection. Put to her that in a transaction involving Scottish Water, the figure for the sale would be recorded as the purchase price, but that disturbance, loss of use, temporary use and injurious affection for perceived damage would all be paid separately, she was unable to comment. In any event, she was only citing the Keppoch figure to show that she was not using a top figure as a basis for valuation.

[74] The basis of the commercial valuation she had arrived at was founded on the site being used by a haulage company. She had to accept that access from the A86 would be difficult and that in particular access for articulated lorries and large rigid axle lorries would be unlikely to be practicable or permitted. But she maintained that the resumption site could be used for a builder’s yard. It was a large open space next to a trunk road and that was what the comparable at Annat Point was.

[75] Her experience was that a small business such as an independent haulier or a small builder’s yard using Transit vans with flatbed trailers could operate from the site. There was already permission for access off the trunk road for commercial use. Her experience was that there was a demand for properties from which a small business could operate and the present permission was for commercial use. She did not know whether the present permission would encompass use by large commercial vehicles.

[76] As regards future development of the Achluachrach township and her discussion with the authorities on that in relation to access, she had only discussed residential access, not commercial access. She thought that using the comparison with a site currently operated by Ferguson Transport was perfectly valid. The land was non-agricultural and non-residential. It was bare land being used as a haulage depot but it could be used for various commercial purposes. It was the only commercial transaction comparator that she could find in the area. Fergusons had put services in and built a workshop on it. Employees could leave their cars there. The fact that its current use was for a transport firm was neither here not there. Many small-holdings north of Glasgow were used by small haulage companies who used smaller vehicles.

[77] She did not know the dimensions of access necessary for an articulated vehicle, but that would not stop use by a Transit van. As far as she was concerned, it was perfectly valid to use the Annat Point site as a comparable. It had been a bare land site when sold and was accessed off a side road on an industrial estate. She accepted the criticism that a site on an industrial estate in Fort William was not directly comparable to the present one, but said that she had discounted for the difference. She had done that by asking the Highland Assessor about differential rental rates applied to bare land sites in Highland Region. In rural areas, one did not get the same access to facilities as compared with industrial estates on urban sites. But there were a number of rural sites which took access off side roads – for instance to the back of farm buildings. Adjustment was made to allow for the difference between urban and rural sites and the more restricted services which the latter offered.

[78] This was done on a broad basis. She had therefore adjusted in her calculations for location and for date. The location adjustment had been based on the Highland Assessor’s figures for rental values of a bare land site at Annat Point when compared to one at Spean Bridge. The relative figures were £1.30 per m² and £0.60 per m². The former figure related to an industrial commercial yard with modern access in an urban area. The latter related to a rural setting with the disadvantages which go with that.

[79] Returning to the question of access, she accepted that if there was no access for commercial vehicles then there would be no value. But in the present case there was permission on the present site and nothing to stop the access being used by a Transit van. That justified it being compared to other commercial sites.

[80] As regards residential property, she had not investigated whether the sites used as comparables had planning permission when sold, although she had checked to make sure they did not have houses or partially built houses on them at the time of sale. Nor did she have any information as to whether the basis of the sale had been conditional on planning permission being obtained. It was still valid to use that partial information as it was evidence of a site on which there was an intention to build a house. One could draw inferences from the sale price that the purchaser knew that he had planning permission or that he would get it.

[81] She did not know whether titles to subjects could be registered when the purchase was conditional on planning permission being obtained. The two plots at Roy Bridge had been open market – or at least they had been widely advertised for sale. As far as she had understood, services and drainage were available, but she did not know that. She did not think that her valuation was therefore suspect. She herself had been involved in the building of three houses and potential purchasers would make enquiries about availability of services. However, she had not spoken to the sale agents and didn’t know who they were.

[82] She acknowledged that the estate had never applied for planning permission for residential development of the resumption site. When she had spoken to the planning official about possible development to the east of the site, he had acknowledged that it was close to an existing community; that the belt of trees above the road would screen any development from view from the road and allow the houses to blend into the landscape. That area was a natural expansion area for the township. She had not investigated potential access in detail, but looking at the matter speculatively, then access could be taken where there had once been a crofting access. That was at a point close to where the water course crossed the road at the east end of the resumption site. She admitted that the access to which she was referring did not meet the road authority’s guidelines, but because it was a croft house, the authorities were sometimes prepared to bend the rules – for instance by allowing two houses where only one might normally be allowed.

[83] Her valuation had assumed three residential plots and that access would be taken where the existing access to the estate house was. If she was the owner of the site and there was a prospect of selling three plots, then any negative impact on the existing house would not put her off selling. She had had no indication from the planning authority that the existing access would be suitable for three houses. However, her view was that a developer would take the view that the access could be upgraded. She accepted that there was no real basis for assuming that the existing access was suitable and no tangible evidence that the access close to the burn would be suitable.

[84] She did not, however, accept that the prospect of residential development was minimal. Development had been allowed at Roy Bridge and her discussions with the authorities had led her to the view that there was a good chance that housing would be permitted on the resumption site. Her own experience was that properly arranged access could be taken on the curve at the burn and that development for croft housing might receive special consideration. In any event, the existing access was adequate. There was a good chance that housing would be allowed.

[85] Her concern about water courses related to the possibility that the development might interfere with private supplies. She accepted that any development on the resumption site would not directly affect her aunt’s supply. However the hostel to the south of the development site and below the road had rights to a supply whose source was on the resumption site. If that was affected, then her aunt’s supply, which also served three other houses, might be required to serve the hostel as well – and that would put pressure on it. She accepted that the supply would not be cut off, but there was a possibility of it being redirected, depending on how the site was drained.

[86] She had visited or driven past some of the sites which were used as comparables. She had walked across and tried to determine the boundaries of the proposed resumption site.

[87] Asked as to why she had applied a pro rata rate per hectare to the resumption site based on her comparables, she thought it was reasonable to value across the whole site. On any site there was an area which one would physically build on; then there were areas beyond that which would be less intensively used. Hard development might possibly be on only one third of the present site. That could be used commercially by a small builder as the core area for storage, then other materials could be held beyond that. She would pay £390,000 for the site.

[88] It may be noted that Mrs MacLachlan had confirmed during cross-examination of Mr Smith that she was not attempting to challenge the figure of £90,000 as being a proper assessment of the cost of undertaking the development as proposed. She also indicated that she was not prepared to accept the sum of £5,500 as a basis for settlement and that any small reduction in the area as a result of Mr MacKintosh’s concerns would not alter her position.

Summary for Applicants

[89] The purpose for which the resumption was sought was reasonable. There was planning permission for the development proposed. Seven out of the nine crofter respondents accepted that resumption was reasonable and had raised no objections. The development was needed by the estate. Mrs MacLachlan had not undermined the applicants’ case as regards reasonable purpose – either for the project in its entirety or for some more limited development or area.

[90] The cost of what was being proposed would mean that there was no net added value to the estate, so there was, in effect no added value to be shared with the crofters on the basis of the proposal and the purpose of resumption. The applicants had offered £1,280 in the application, but were still prepared to pay £5,500 as had previously been offered prior to the current application being lodged.

[91] The original offer had also been on the basis that if there were to be a further development in future, then the applicants would share any increase in development value at that time. Such a scheme was discussed and documentation had been prepared by MacPhee and Partners on behalf of the crofters in regard to it. However no meaningful progress appeared to have been made. That firm no longer acted for the crofters. In any event, the evidence showed that there had been a sound basis for the estate proceeding on the view that the area now sought had the approval of the shareholders at the time when planning permission had been sought and subsequently when the present application was lodged.

[92] If the Land Court had a discretion to do so, then Mr Smith was quite prepared to accept an Order whereby £5,500 would be paid to the crofters now, subject to a condition that if there was any further development in the future which did not relate to the purpose now sought, then the applicants would pay to the crofters 50% of any further increase in development value which resulted from such change. It appeared that the crofters’ main concern was future development and the estate had always said it would share any increase in value at that time if the situation arose. The values proposed by Mrs MacLachlan were entirely unrealistic.

[93] Temporary resumption was not appropriate. The idea that the estate would commit the sort of sums involved without security of exclusive possession would not make any sense.

Summary for Mr MacKintosh

[94] Mr MacKintosh summed up his position by confirming that he did not object to the resumption in principle, but thought that too much ground was being asked for and that the shareholders’ interests needed to be protected.

Summary for Mrs MacLachlan

[95] As regards section 20, she accepted that the development would possibly be for the good of the estate. However she questioned the extent of the ground to be taken – it was too much. There were questions as to whether the plan was feasible. In her view the capacity of the buildings intended was not commensurate with the size of the operation proposed, which was in any event to be carried out on a seasonal basis with part time contractors. The only full size carcasses would be the 15 stags and 15 hinds.

[96] She accepted that the effect on the common grazings was probably minimal – other than possible interference with fence lines and inconvenience with gathering. The most important effect was on the crofting community – which comprised the shareholders. Three of them had formally objected; two had objected in part; three others had not responded for some reason.

[97] Up until the time of the Land Court application being notified, the shareholders were still trying to work out a solution – whether that be alternative siting or the offer of grazing for the ponies. They were looking for a restrictive contract which would have applied to the crofters’ successors as well. The solicitors had found difficulty in wording a contract which was acceptable. In other words, the crofters had accepted such an approach, but it had proved too difficult to formalise.

[98] It was relevant, however, that the resumption site took up about half of the natural expansion area for the township. Three out of the five shareholders with houses had objected. One other had attended the hearing. Two of the five did not have houses in the township. The witness was trying to acquire a house of her own and another shareholder was too. The area to the east had cairns on it. It was also the location of the only permanent water supply for the houses below the road and that had to be taken into consideration.

[99] Although it may only be conjecture, she thought the area to the east would be suitable for only one house, possibly with storage for implements and livestock housing. The buildings in the existing developed part of the township were stone built and not suitable for modern use. The removal of the resumption site restricted what further expansion of the township might be possible.

[100] As regards sustainability of crofting and the community, there had been resumptions in the past which had had problems which could not have been foreseen, but she accepted that the Court had to make decisions based on what was presently known.

[101] The only real evidence of valuation was her own. She did not think that Mr Smith’s valuation could be taken as equivalent to open market value – which was what was needed for section 21. On the basis of her evidence, the Court should look to £35,000 as a base value of the land without any prospect of development. The full development value was therefore £355,000 and market value for the purposes of section 21 should be £390,000. She was not averse to the suggestion that if some form of contract or condition could be agreed, a lower valuation at the present time would be an acceptable option. But if that was to be done, then the initial valuation should be based on a commercial use value of £160,000 for the whole site, with the Court making it a condition that future increases resulting from alternative use of the site would be shared. The value of £160,000 was based on the planning permission which existed today.

[102] As far as the pony grazing area was concerned, section 277(1) of the Town and Country Planning (Scotland) Act 1997 included under the definition of agriculture the use of land as grazing land. In terms of planning, therefore, the use of the land as now proposed was still agriculture. This meant that there was in fact no real change of use for the area which was to be grazed by the ponies. In other words, the status of the majority of the land would not change. She understood that the Court was normally reluctant to grant resumption where the use was not changing and it should bear that in mind when making its decision. The Court could limit the area by taking out everything other than the hardstanding and access. If that was to be done, then the valuation would require to be adjusted on a pro rata basis.

Reply for Applicants

[103] Mrs MacLachlan’s argument about the extent of the planning permission was spurious. Planning permission existed for everything enclosed by the red line on the plan. The breakout and holding areas were ancillary, but also essential, to the main developed area.

[104] The use proposed of the land was equestrian, not agricultural. The use would not in practice be agricultural and would be a change from use as common grazings for sheep. It was in any event unfair to bring this aspect up at this stage. There was no basis for the concept that the land would remain in agriculture – the land used for these other purposes was ancillary and so it would not fall to be regarded as agricultural grazing.

[105] In her valuations, Mrs MacLachlan had made far too many assumptions. She had provided no evidence as to the basis of her assumptions and she had had little regard to reality. She hadn’t inspected the sites and had made too many unjustified inferences. Her methodology would not meet RICS standards.

[106] Mr Smith confirmed his earlier submission as to why he considered temporary resumption inappropriate and, in any event, Mrs MacLachlan had not sought that.

Inspection

[107] We undertook a brief inspection of the site on the evening of 3rd September. We also confirmed with Mr MacKintosh and Mr Smith immediately after the hearing that the north western part of the site did not include any of the area which had been reseeded in the past. We carried out a more comprehensive inspection on 5th September, including an overview of the area to the east of the site (accessed from the road to Cille Choirille church) and of the locus (as we understood it) of the present township buildings and croft land between them and the river.

[108] As far as topography goes, we noted generally that the northern half of the site was quite steep with some cover of bracken, birch and willow scrub – some of it relatively impenetrable. Although there are a few drier areas, and some with rock fairly close to the surface, the whole area of the site was generally wet and populated by grasses, heath and scrub species common to that type of land. It is typical of many areas of rough grazing in the area, but – as was accepted by parties – it has very limited grazing value.

[109] We noted that the site chosen for access and for the proposed hard build area was largely on the flatter parts at the south and east. The site is crossed in an east west direction by an electricity power line, but there is also a branch line heading to the south – close to what will be the eastern boundary of the hard build area.

[110] Viewing the site in the context of the whole proposed development, it is sufficient to say that our impression is that although site construction may not be entirely straightforward, the layout seems to us to accord with its natural landscape – utilising as it does the relatively flatter areas for hard build and access and the steeper parts for the holding and grazing of the ponies. It also appeared to us that the chosen location of the hard build area results in it being appreciably screened from view by the present bungalow by virtue of natural undulations and the current extent of scrub growth. Only a relatively small proportion of the proposed access from the public road will be shared with the estate house.

[111] We had little evidence about the township and the croft land. However, from our inspection we can accept that the scope for further residential or agricultural building on the ground between the public road and the railway line may be somewhat limited. It is also relatively clear that the land to the south of the railway line and north of the river could be liable to flooding.

Discussion

[112] As we outlined to parties at the start of the hearing, our task is really twofold. Firstly we have to establish whether the purpose for which resumption is sought is reasonable in terms of section 20 of the Crofters (Scotland) Act 1993. Secondly, if we are satisfied as to reasonable purpose, we have to establish, under section 21, today’s open market value of the land which the applicants seek to resume.

[113] We have broadly accepted the evidence as contained in the earlier paragraphs in so far as we do not question the credibility of the witnesses. To the extent that we have had any doubts or concerns in that regard, they are narrated in the paragraphs which follow. From a more general viewpoint, we have had to make our decision on the basis of evidence which in some aspects was considerably less full than we would have liked. However, taking all the material with which we were presented and on a broad basis, we have been able to reach an outcome which we consider meets the requirements of the relevant legislation.

Reasonable Purpose

[114] In terms of section 20 of the 1993 Act it is for the applicants to persuade us that the proposed use of the land which they seek to remove from crofting tenure meets the requirements of the section. As will be seen, we are satisfied that the applicants, as owners of Glen Spean Estate, do intend to proceed with a project which utilises the land sought for a purpose which meets those requirements.

[115] It was accepted that the estate required facilities for a deer larder and storage facilities for estate vehicles with associated access and hard standing. The only real challenge to the project as a whole came from Mrs MacLachlan – in her own right and as representative for Miss MacInnes. Underlying that challenge seemed to be a doubt as to the true purpose for which the site might ultimately be used. But the main challenge – insofar as reasonable purpose was concerned – related to the need to take any land out of crofting tenure beyond that required for the ‘hard build’.

[116] As far as the ‘hard build’ area is concerned, we are not persuaded that the area proposed for buildings, hard standing and access is either too large or inappropriately sited for the purpose. Although we would have preferred to hear more detail of the proposed larder and storage building, nothing in cross examination of Mr Smith would lead us to think that the intended facilities did not appropriately meet the estate’s requirements. We accept Mrs MacLachlan’s general criticism as regards lack of detail as to the reasoning behind the choice of layout for the buildings and the basis of their size and design, but her only positive alternative proposal was a suggestion that the deer larder could be located within the existing house site. Having regard to the evidence and the accepted objective of the applicants, we are satisfied that it is appropriate for the deer larder to form an integral part of the buildings as proposed. We have no basis from the material in front of us which would lead us to the view that the layout as approved in the extant planning permission will not be suitable for the intended purpose. Nor is there any basis for concluding that there was a more suitable site elsewhere. Thus, having regard to the proposed use of the whole site, it is not obvious from the evidence or from our inspection that the extent is excessive or that the layout and location is unsuitable.

[117] The objection to the resumption of the larger area outwith the ‘hard build’ came, in effect, under two heads. Firstly there was some question as to whether ponies were appropriate at all; and secondly, if they were, then it was suggested that they could be accommodated by way of an agreement with the shareholders whereby the landlords could use a more extensive area of the common grazings, but without taking that area out of crofting tenure.

[118] Although we had some doubts as to depth of detailed thought which had been given by the applicants as to the use and management of ponies by the estate, we are persuaded that the proposed scheme is a genuine one which the applicants intend to implement. It was not disputed that the use of ponies is intended for at least the full deer season – in other words for at least six months – and we consider it entirely reasonable for the landlords to seek to establish facilities for their shelter, health management, fodder and bedding storage, feeding, exercising and grazing at a convenient location on the estate. We had considered the possibility of curtailing the area which we would allow to be permanently resumed to such area as may be needed for the storage of vehicles and the deer larder facility with associated hard standing. Our thinking was that we might only authorise temporary resumption for a period of, say, five years for the remainder of the area sought. That would have allowed the estate to carry out their intentions with regard to the use of ponies. Permanent (or ordinary) resumption could thereafter have been sought on the basis of a successful operation during the temporary period.

[119] Of course, from the respondents’ viewpoint that might also be seen as a suitable way of testing the bona fides of the applicants’ proposals. If we had thought that the scheme was unlikely to go ahead as proposed, that might, in some circumstances have been an appropriate route for the Court to take. But we accept the submission by Mr Smith that this would result in unacceptable uncertainty for the applicants. It may be that any stable / feed store designed specifically for the ponies could be adapted for some other purpose were the ponies to be withdrawn, but we have come to the view that if ponies are to be introduced – and we are satisfied that they are – then temporary resumption is inappropriate in relation to the facilities which they will require and the intended system of management.

[120] In relation to the question of bona fides, such evidence as there was from the respondents as regards the estate’s intentions was largely hearsay and unfounded. Mr Smith openly agreed that the estate had considered the possibility of a further house on the resumption site at some time in the past. He also confirmed the applicants’ intentions as regards a potential housing development some distance to the west of the resumption site. But there is no indication that the estate is presently considering building a house or houses on this site, nor does it follow that the applicants are looking wherever they can for development opportunities. That said, it seems to us that any estate owner is perfectly entitled to achieve best value from his assets and can hardly be criticised for doing so.

[121] Our view that the landlords’ intentions are genuine is strengthened by their expressed willingness to enter into an agreement with the respondents to the effect that the crofters would receive a share of any increase in development value of the land should there be a change of use at some time in the future. They were also willing to make it a condition of our authorisation of resumption that any such future ‘uplift’ in value through development would be shared. We shall touch on that later.

[122] We are satisfied that the project will be for the good of the estate and it has been accepted that it will have minimal impact on the interests of the shareholders in the common grazing. In other words, “the good of the croft” will be little affected. To an extent, the interests of the crofting community in the locality and the wider public interest might be said to have been catered for in the procedures which required to be gone through prior to the grant of planning permission. We have been presented with no material which would lead us to believe that there will be any meaningful negative impact on the sustainability of crofting in the locality, or on the crofting or other communities in the area. The same is true in regard to the landscape and the environment. Nor can we foresee any negative effect on the social or cultural benefits associated with crofting. Although it is not suggested that there will be any increase in stalking activity, it seems to us that the proposed development may well provide some temporary additional employment in the area as well as sustaining employment in the future.

[123] We have considered carefully the material presented by Mrs MacLachlan in regard to the lack of areas available for future expansion of the ‘built’ township at Achluachrach. The evidence led on that aspect was very limited. There was little detail of the true restrictions in and around the present houses and croft buildings and no real evidence of the need for, or investigations into, the detailed requirements thought to be necessary for the future. We did not, for instance, hear of any positive proposals for apportionment of common grazing land with a view to enhancing the facilities available to any individual croft. From the limited evidence and our inspection of the area to the east of the resumption area, it may be said that there will still remain in crofting tenure over sixty per cent of the area identified and hatched in yellow on Production 10. That would include a potential site for one house and associated outbuildings in terms of Mrs MacLachlan’s evidence.

[124] As regards any impact on water supplies, there was no basis on which we could make a finding that there will be any detrimental affect on private water supplies as a result of the development as proposed. Whilst we accept that there is potential for impact on water-courses, we have no reason to believe that care will not be taken in any works of site preparation, land drainage and future land usage to ensure that there is no adverse interference with water supplies. We are not prepared to accept this as a valid negative impact for the purpose of consideration of the reasonableness of the resumption.

[125] Although something was made in the pleadings of the suggestion that the applicants had acted inappropriately in pushing ahead with application for planning permission and then for resumption, we do not consider that to be relevant. It could be taken as a plea that the application to the Court was premature. It does not seem to us that the applicants have acted improperly in that regard. Whilst they were aware that proposals for some form of contract were being considered, that did not relate to the main purpose for resumption – it related to the concerns which some respondents had about their entitlement to share in the value of any future development. Planning permission for the resumption area as presently sought has been in place since 2009 and the possible alternative arrangement appears, on the evidence, unlikely to have ever come to fruition by agreement. That in itself seems a good enough reason for initiating procedures to secure the development now.

[126] It was implicit in both Mrs MacLachlan’s and Mr MacKinosh’s submissions that resumption of the whole of the area of land was unnecessary because alternative grazing arrangements for the ponies had been offered. We reject that argument. The applicants seek an exclusive area for grazing of their ponies, unencumbered by potential interference by others and have persuaded us that such arrangement is entirely reasonable.

[127] Although there was some hint in the pleadings that the use of ponies was not appropriate, there was no suggestion of that at the hearing. Mrs MacLachlan referred us to an article in Scottish Farmer. That seemed to us to be supportive of the applicants’ proposals – referring as it did to “a resurgence in traditional deer stalking methods” and the potential for “the added value that Highland ponies can bring to modern estates”.

[128] There was some doubt in our minds as to whether the full implications and requirements of managing Highland ponies for use on the hill had been adequately considered by the estate. We would have preferred to have heard more about the thought processes in arriving at the design and layout of the buildings and other areas allocated for the ponies, but nonetheless we are satisfied that the proposal is practicable and that the estate intends to implement it. No aspect of the proposal was, in our view, successfully challenged as being inappropriate. Even if it had been shown that the location of the stabling / handling / food storage facilities was inappropriate – and in our view it was not – there was an acceptance that some sort of facility would be required, even if not located as presently shown on the plans. As far as the holding and break-out areas are concerned, it was clear that Mr Smith had at least some experience of the management of horses and nothing in the evidence or on our inspection led us to think that the proposal was not workable, albeit that we tend to agree with the tone of the evidence to the effect that additional grazing / supplementary feeding may be needed at times.

[129] Although Mr Smith argued that the purpose was reasonable on the basis that no-one had objected to it, or at least a majority had not objected to it – that is a misunderstanding of the test of reasonableness in relation to purpose under section 20. The fact is that there is opposition – albeit only strongly contended by Mrs MacLachlan – not only to the resumption per se, but also to the quantum of share in value offered. It is important to note that we have to be satisfied as to reasonable purpose in terms of section 20 – and there have been a number of cases where, despite the agreement of all parties to the case, we have refused to authorise resumption because we did not consider the requirements of the section had been met.

[130] Mrs MacLachlan submitted that past resumptions had had unforeseen problems, but she did not expand on those and we do not see that as any valid basis for refusing this one. In our overall consideration of reasonableness of purpose, we would of course take into account any proven likelihood that there was a prospect of a material negative impact in respect of the various regards listed in section 20. None was proven in this case.

[131] She also pointed out, under reference to the definition of agriculture in the planning legislation, that there was, in effect, no change in use in respect of the land from its current grazing use – in other words that the use continued to be agricultural – and that the Court in other cases was reluctant to authorise resumption where the use to which the land was to be put remained agricultural. That may be a rational starting point, but our view is that the more appropriate consideration is whether the purpose – whatever it is – can be reasonably carried out while the land remains in crofting tenure. Whether or not all of, or even part of the land sought in this case can be said to remain in agriculture or even grazing use, is not the appropriate test. In this case we are satisfied that the applicants could not properly undertake their development without the exclusive possession which they seek.

[132] Accordingly we are satisfied that the applicants have made out a reasonable purpose under and in terms of section 20 of the 1993 Act. For the reasons outlined above, although we have a discretion under section 20(1B) to authorise temporary resumption, we have decided not to exercise it. That is not what is sought in the application. It was properly resisted when raised at the hearing and there was no indication that any respondent thought it was appropriate.

[133] We therefore authorise resumption forthwith of the area as sought. In accordance with our usual practice, which we consider to be entirely appropriate in this case, we shall make it a condition of our authorisation that the applicants or their successors erect and thereafter maintain a stock-proof fence on all boundaries of the site which are contiguous with the remaining parts of the common grazing land.

Compensation

[134] Parties were aware from the outset of the terms of our Practice Note No 4 to the effect that compensation in terms of section 20 of the 1993 Act is generally very low and usually assessed at nil. There is a widespread misuse or interchange of the use of the words ‘compensation’ and ‘share in value’, but we are satisfied that despite frequent reference to compensation in the pleadings in this case, what was generally meant was share in value. No material was presented to us which would suggest departing from our normal practice of assessing the section 20 compensation value at nil. Even if we had attempted to assess the monetary affect on the Club of the loss of the land here, it would be a very small figure.

Share in Value

[135] Our task, in terms of section 21(1) and 21(2) of the 1993 Act is to establish from the material in front of us “the market value of the land (on the date on which resumption thereof is so authorised)” – that figure to “be a sum equal to the amount which the land, if sold in the open market by a willing seller, might be expected to realise”. Accordingly we are to determine what price this 1.28 hectares or so of common grazings land, free of crofting tenure and with all its current potentialities, would be likely to achieve if exposed today in the open market by an owner who genuinely sought to enter freely into a contract for its sale.

[136] Taken broadly, we are faced with the applicants on the one hand who consider that the figure should be nil, but are prepared to accept for present purposes a sum which equates to a market value of £2,560. And, on the other hand, respondents whose valuation was £390,000, founded on the land’s suitability for residential development and calculated on the basis of three house sites. As will be seen, we do not accept the figures proposed by any of the parties. That is because we consider that the valuations put forward derive from the use of what we regard as an inappropriate method of valuation by the applicants and a flawed application of an appropriate method by the respondents.

[137] Dealing firstly with the landlords’ approach, whilst we can fully understand the worth of the residual method of valuation for certain purposes, we do not accept it as the proper approach to determination of open market value for the purposes of section 21 in this case. We can accept that the estate owners’ residual value calculation is a reasonable basis on which to assess the financial merits of their proposals. We do not doubt that the level of expenditure envisaged (which was not challenged as being an unrealistic figure) is unlikely to make any net addition to the value of the estate upon completion. Nor do we have any difficulty in accepting that the applicants are prepared to go ahead with the proposal even though it may never in fact add monetary value to their estate.

[138] But we are not concerned here with the value to the estate of the development as proposed by it. The value to the seller as an adjunct to his existing landed estate and the impact which it has on the value of that estate, having regard to the costs involved in achieving the purpose, is not of any direct relevance to our determination. It may well be that any prospective purchaser on the open market would be well advised to undertake some form of residual value calculation in the process of deciding whether to offer – but an unfavourable result from that calculation does not necessarily prevent him from making an offer. If he seeks to acquire the land, then he knows he will have to compete in the market with, potentially, a number of other offerors who may have different views and different objectives. In order to secure the subjects he must, in general, beat his competitors. Their approach – including that to ‘residual’ assessment – may not be on all fours with his.

[139] We do not accept Mr Smith’s argument that there is effectively no open market value because the estate would not grant an access. Clearly there is potential for diminution in the value of the existing estate house in terms of loss of amenity and possible changes to the maintenance requirements of that part of the access which would be shared. That might make the owner of the house a less willing seller. However we think it plain that a willing seller – and we have to assume the estate owners to be in that category for present purposes – would grant appropriate access, but would take into account any potential negative impact on their remaining property in deciding what level of offer might be acceptable for the land which was to be removed. Not only that, they would be able to exert control over the nature and extent of that access both in any promotional material and in negotiating the final contract. But that is a far cry from saying that there is no open market for the subjects and that the comparative basis of valuation is not applicable in this case.

[140] Mr Smith effectively conceded that the residual value method might not be the appropriate method of valuation for present purposes. Rather than challenging the comparative method as a valid technique for present purposes, he challenged Mrs MacLachlan’s methodology in its use. He acknowledged that the open market depended on competition; that different proposals were worth more to some potential offerors than others; and that use of the comparative method was widespread – albeit under caution of the need to use suitable comparable subjects and proper information about them. Ultimately, he proposed a section 21 payment which was equivalent to a valuation of hill grazing land on the open market at £2,000 per hectare.

[141] Although we reject significant elements of Mrs MacLachlan’s valuation, we consider the use of the comparative assessment to be the correct one here. Section 21 requires us to determine the price which the land would make, assuming a willing buyer and a willing seller, if properly exposed to the market place today. The evidence presented in this case was somewhat inadequate as a basis for a sound valuation by the comparative method. It detracts from the reliability of the outcome, but that does not render the method itself unsuitable.

[142] We have no doubt that the appropriate way to value the proposed resumption area for our purposes is on the basis of its hypothetical exposure to the open market on the basis of all its potential uses, including that authorised by its present planning permission. We consider that it is correct to adopt the general approach taken by Mrs MacLachlan which was to value the land using comparable subjects which had in fact been exposed to the open market. The potential uses of the land include possible uses to which those in the market place think that the land might realistically be put now or in the future. As with all market transactions, purchasers may be prepared to speculate and take risks to a greater or lesser degree.

[143] The Court authorises resumption of croft land for the specific purpose set out in an application. But once the land is surrendered, the provisions of the crofting legislation cease to apply to it and it effectively falls outwith the jurisdiction of this court. Although recent provisions have been introduced whereby resumed land may revert to crofting tenure (Section 21A of the 1993 Act), there is no immediately obvious basis upon which the Court can prevent the future use of resumed and hence decrofted land for a purpose other than that for which resumption was authorised. Accordingly we do not consider that we are limited in our assessment of market value to a figure based on the use proposed in the application or, necessarily, to only the use permitted in the extant permission. The open market value is determined according to what those in the market place are prepared to offer to secure the subjects for such use as they consider to be apt and ultimately achievable having regard to all the attributes and potentialities of those subjects.

[144] In saying that we do not intend to cast doubt on the bona fides of the applicants. We are satisfied that their current true intentions as regards the use of land are as set out in the application. But that does not mean (a) that the use of the land by the estate owners might not change at some time in the future; or (b) that a prospective purchaser would not take the view that there was opportunity for such change either now or at some time in the future. That is what “hope” value is all about and it has to be taken into account in a present day valuation.

[145] We have no doubt that the open market is, by definition, the same for all potential offerors. What varies between those submitting offers for land is the basis of their thought processes in working out whether to offer or not and then on what basis to make any offer. Offerors are at liberty to put their own value on the land and may have a whole variety of reasons for assessing the end value at a level which might seem to others excessive. Whether an offer is ‘excessive’ or not is effectively irrelevant, for, unless there is a special purchaser, such offers – if accepted – determine the open market. What may seem a ‘daft’ offer to potential purchaser A may look entirely logical to offeror B. Their financial circumstances, personal and business objectives and attitude to risk may be poles apart, but if B is successful and he does not fall to be regarded as a special purchaser, then he is the one who determines the market price.

[146] We therefore proceed on the basis that the comparative method is the one to be used here. But, very importantly, the comparative method is only a reliable guide if properly undertaken and on the basis either of sufficient detail of the comparable subjects or valid assumptions relating to them – or some combination of the two. We agree with Mr Smith that ‘issues’ particular to every site, including the one for which a valuation is being made, need to be known before undertaking a comparative valuation. The whole basis of good valuation relies on detailed knowledge of each of the sites to be used in the comparison. It is only when armed with that information that a skilled valuer can make the necessary adjustments to the subjects whose value is known in order to arrive at a value for the subjects being valued. As Mr Smith pointed out, seldom are two subjects ever the same or directly comparable. In the present case, we do not have evidence relating to any land which closely resembles the resumption subjects. Nonetheless perfectly valid assessments of open market value can be made using data about apparently disparate subjects – as long as there is sufficient reliable data.

[147] We acknowledge the depth of the analysis Mrs MacLachlan has undertaken and accept many of the principles which she adopted. At times we found her material a little confusing. Were we valuing the site as a potential one for commercial use; if so what sort of commercial use? Were we valuing it for residential use; if so was it three houses or one? Critically, however, we think she did not have sufficient detail of her comparable subjects and that she made a number of assumptions which did not stand up to scrutiny.

[148] Our view is that the lack of depth of research into the detail of the comparables was properly exposed under cross-examination. In particular the basis of her commercial valuation had been comparison with a bare site now used by a haulage company, when it was effectively conceded that such use was not a realistic possibility for the present site. Nor does it follow that the fact that a site can be used by a commercial haulage company necessarily mean that the value of use for that purpose bears direct comparison with, for example, its use for a builder’s yard. It was not obvious that she had allowed for such differences.

[149] Generally, we heard very scant detail of the situation, location, topography, planning status, access and services status or indeed of the terms of sale of virtually all of the subjects which she put forward as comparables. Where there is a dispute as to valuation – especially one of such magnitude as we have here – we would normally expect expert evidence to be led in relation to both the subjects of valuation and all the comparables. We find ourselves in a position where we do not have the depth of evidence which we would have preferred.

[150] That said, we agree with Mrs MacLachlan that the only evidence of comparative valuation was her own – at least to the extent that we have rejected Mr Smith’s residual approach for present purposes and he did not in fact proffer any comparable evidence. We do not doubt that her attempts to reach a proper valuation were founded on a genuine belief that her methodology was correct and the depth of her research adequate. It is clear that much time had been devoted to her task.

[151] Whilst we have reached a decision as to the appropriate valuation in this case, we have done so on the basis of what we see as an absolute minimum level of reliable evidence. We have relied on that, combined with our experience in other cases, to reach our conclusion. Insofar as they go, we do commend the extent of the research and the accuracy of the calculations which Mrs MacLachlan has undertaken. However, in the absence of full detail of the comparable subjects and the terms and nature of the sale of each, we have found ourselves having to reject many of the conclusions which she has arrived at.

[152] In assessing what this 1.28 hectares of relatively poor agricultural land is worth if exposed on the open market for sale with the planning permission which exists, it is important, as a first step, to define what exactly is being valued and on what basis. We do not agree with Mr Smith’s approach in regard to access. The willing seller of this land would, in our view, be highly unlikely to bring it to the market without some basis for access being made available to the purchaser. In this case there is, in effect, access to the agricultural subjects already available. With the now extant planning permission – which is not limited to implementation by those who obtained it – there is available access directly from the public highway to the resumption subjects for all the purposes envisaged by that permission. We consider that the proper approach here is to assume that the subjects would be offered for sale with that access.

[153] If it was offered for sale with access but without the existing permission, we have little doubt from our own experience that it would fetch sums well in excess of its agricultural value on a pro rata basis. Parties seemed to agree that an appropriate agricultural value was £2,000 per hectare, giving a basic site value of £2,560. We have some criticisms of a number of aspects of Mrs MacLachlan’s pro rata approach to site valuation, but we do accept that there is a distinction to be made between the rate appropriate for a whole farm or estate and that for a small, identified, parcel on that farm or estate. We are not prepared to accept that a small area of common grazing land such as that for which resumption is sought here has an agricultural value of over £27,000 per hectare, as Mrs MacLachlan argues, but we agree with her that if the per hectare value of larger tracts of common grazing land is of the order of £2,000 per hectare, that is unlikely to be an appropriate rate for application on a pro rata basis to the present site in order to ascertain what might be termed a basic current use site value.

[154] We had no direct reliable evidence of what similar plots might make on that basis. The reliability of the material based on Kinchellachie was, in our view, successfully challenged by Mr Smith. Quite apart from lack of detail, it appeared that it could be regarded as a ‘special purchaser’ situation. Our own experience would suggest that even with prospects of use other than agriculture being very low, such parcels would be likely to achieve between two and three times their ‘large tract’ unit price. That would put a base value on the subjects of the order of £6,500.

[155] But here we have subjects with a permitted use which, even if still extensively regarded as agricultural, extends to equestrian facilities and which some potential purchasers may consider have the possibility of use for (a) what Mrs MacLachlan would call quasi-commercial purposes; and (b) residential development.

[156] As far as commercial use based on the present consent is concerned, we hesitate to accept the terms ‘quasi-commercial’ because of the precise terms of the planning consent. We note from Production 6 that the consent is for “Erection of a storage shed and separate stable/store”. Condition 2 of that consent is in terms “The land and buildings to which this permission relates shall only be used for the use applied for and for no other purpose”. The reasoning for that condition is “To accord with the use applied for, and in order to allow the Council as Planning Authority to control any subsequent change of use which might otherwise be permissible in order to protect the amenities of the area”.

[157] Two things may be noted. First of all, although the headline consent might appear to relate to the ‘hard build’, we accept Mr Smith’s evidence that the consent covers the whole of the subjects as exhibited to the planning authority on the plan approved by it. That plan encompasses the same area as the resumption subjects. Secondly, there is no express permission for ‘a deer larder’. We do not know what planning or other permissions are required for use of the buildings for that purpose. However, we accept that the estate already operates ‘a deer larder’ (albeit in what appears to be little more than a free-standing garage) and may well be able to continue the activities previously carried out there. Thus, although Mrs MacLachlan pressed the concept that permission now existed for some commercial activity, we treat that submission with some caution.

[158] We also note that Condition 1 of the consent – which applies to the materials to be used in the development – is in terms “To ensure that the development progresses in accordance with the design hereby approved and is thus sensitive to its surroundings and respects the visual amenity of the area”. It seems to us that having such condition in the background to the existing consent also implies that any development on the site is liable to be closely scrutinised to ensure that it is in keeping with its surroundings

[159] That said, we are well aware of the widely held view that, once an area of land has received planning permission for a use other than agriculture, or even for construction of new rather than replacement ‘hard build’, permission for uses beyond what has been permitted by the first change of use can sometimes be achieved more readily. We question whether that should be viewed as a sound basis for any presumption that this could happen here, but we consider it right to bear it in mind in relation to hope value. We would be very surprised if the sort of quasi-industrial / commercial uses to which Mrs MacLachlan referred were covered by the existing permissions. Unfortunately we had no reliable evidence on that matter. We do not consider Mrs MacLachlan to be an expert on the subject and we doubt she would either. We have taken her views into account, but in the absence of more material, we are reluctant to accept that as a proper basis for valuing the present site.

[160] Nonetheless, whilst the extant permission may be limited to that narrated in the consent, that does not definitively mean that some uses of a similar nature would not be allowed with the current permission or that permission for enhanced uses would not be capable of being obtained either now or in the future. Thus we support Mrs MacLachlan’s view, contrary to that of Mr Smith, that there is some ‘hope’ value for this site and that it is proper to allow for it in our valuation.

[161] We accept that the existence of the present permission enhances what we have termed the base current use site value considerably, particularly so on the basis that buildings extending to some 160 m2, together with a hard standing of some 2000 m2 with access have been approved. We have no doubt that that is the basis upon which a willing seller would offer the land for sale. That would give a prospective offeror assurance as to what he can positively do with the land and, accepting the general concepts outline above, some hope, albeit limited, of achieving further enhanced use and hence value in the future.

[162] We heard little evidence as to the planning policy for the area in which the land is situated. Although Mrs MacLachlan would have it that the existing permission can effectively be taken to extend to a much wider commercial use, we heard no proper evidence of that. In any event, the land cannot be valued for present day purposes on the basis of unwarranted speculation as to what might happen in the future. There is no difficulty with speculation as such, but we consider that much of the prospects foreseen by Mrs MacLachlan were unwarranted. They were certainly not backed up by the sort of evidence we would require to enable us to accept her figures in their entirety. We see no basis for concluding that the site might at any time in the future be used by, for instance, a commercial haulage company. In effect, she conceded that under cross examination in relation to access.

[163] Indeed she conceded that access for both housing and commercial use was problematical. That we think puts a very considerable constraint on the chances of such development being permitted on anything like the scales she had been suggesting. Ultimately she seemed prepared to accept that, on the commercial side, use for a small business operation founded on the sort of layout already proposed or use for the site of one house might be more realistic. We are prepared to proceed on that basis, but considering the whole of the evidence, we think that the chances of such uses being permitted have not been adequately researched and that we must take a very cautious approach to accepting and assessing ‘hope’ value. In the absence of evidence or submission as to a proper assessment of that value, we have had to fall back to an extent on our experience in other cases.

[164] Although Mrs MacLachlan indicated that she had discussed potential alternative locations for access to the site, she did not bring any expert evidence in that regard. Having inspected the locus and considered the tenor of the evidence, our view is that access for anything other than for relatively light vehicles would be very unlikely to be supported by the roads authority. In any event, there is no evidence in front of us whereby we could conclude that the site would positively get permission for any alternative commercial use. We have little doubt that it could in fact be used for a variety of light industrial / commercial uses – but that is not to say that it would get permission for such use. Accordingly, at best, we take from all the evidence we have that the sum to be added to the ‘base value’ of the site with its present permissions has to be relatively small. Put another way, it means that a very substantial discount requires to be applied to comparative values which have been assessed on the basis of extant permissions for commercial use.

[165] We do however accept that some addition in respect of prospects for wider commercial or semi-commercial use is warranted – based on the views expressed by Mrs MacLachlan and our own experience in other cases. However, the starting point should be its value based on the planning permission granted. There is no evidence that the site is zoned for commercial development and so significant adjustments have to be made to cater for that. We did visit the Annat Point site, which is located on a major highway, with easy access to rail and sea transport and in the absence of proper evidence to the contrary, we think it reasonable to assume that it had the necessary planning permission and that full services were available. Even discounting it for location to Spean Bridge would not in our view equate it to the isolated site at Glen Spean – and that quite apart from the very real doubt as to the extent of use to which the resumption site could actually be put.

[166] Despite the lack of detail of the precise basis of sale of the Annat Point site or the nature of the site at Spean Bridge, for present purposes we are prepared to accept that the value of the Spean Bridge site can be taken at £125,500 per hectare for the bare site with access and permission for commercial use. In the absence of evidence to the contrary, we think it reasonable to assume that that site has been valued on that basis. Although Mrs MacLachlan expressed a view that around one third of the area of the resumption site might be suitable for hard development, we think from our own inspection of the site that nearer to half – perhaps 0.6 hectares – could reasonably be utilised for commercial purposes. Although we have reservations about assessment on a pro-rata basis, that might suggest a value of £75,300, but allowing for some use of the rest of the area, we would round that to £80,000.

[167] That value assumes that the Glen Spean site is essentially directly comparable to the Spean Bridge one. It is not. Firstly it is isolated and considerably more remote with little by way of infrastructure in close proximity to it. Secondly it does not have permission for commercial use as a haulage depot. Thirdly, it has been conceded that it does not have either current or prospective access for that use. And, fourthly, we do not know whether services would be sufficient for that purpose. A prospective purchaser only has assurance that he can use the site in accordance with the current permission. We have accepted that such purchaser would be entitled to look beyond that use when framing an offer to purchase. But it is abundantly clear than any assessment of valuation based on the evidence in this case involves very significant adjustment to cater for all those uncertainties.

[168] Taking all the above into account, we consider that a realistic open market valuation of the subjects for the use set out in the planning permission, but with some very limited scope for wider commercial use, would be fairly based on 20% of the commercial use value set out above. That produces a value of £16,000.

[169] Turning now to valuation for residential purposes, upon which Mrs MacLachlan ultimately founded, it has to be said that many of the problems relating to commercial valuation are the same when it comes to valuation for residential development. The absence of proper expert evidence in regard to planning prospects and other relevant detail of the comparables renders meaningful comparison much less reliable and accordingly makes our task a difficult one. Nonetheless, we have taken from the evidence such aspects as we think are reliable and, having regard to parties’ submissions and our own experience of similar cases, we have been able to reach an outcome which we consider is a realistic assessment of the open market value of the site if offered with present permissions, but viewed by the potential purchaser as having prospects for residential use.

[170] Mrs MacLachlan admitted that although housing development might be favoured by the local authority, there was a real difficulty with access provision. In the end she admitted that she had looked at access ‘speculatively’ and that progressing development might require ‘bending of rules’ or special consideration. Based on the present permission, such evidence as we have, our inspection of the site and our experience in other cases, we do think that a potential offeror would take the view that development of the resumption site for a single house with extensive amenity ground would have some prospect of being achieved. Although there may be space for more intensive development, the evidence in relation to access was such that we are able to conclude that the chances of permission being forthcoming whereby more than one family home might be built on the site are very remote indeed.

[171] It may also be said, in passing, that we have some difficulty in accepting Mrs MacLachlan’s pro rata approach as being apt for this site. We consider it to be totally inappropriate here where it is abundantly clear from any inspection of the subjects that the number of houses which could be built on the site is not equivalent to the result of division of the total area by the extent of any one of the comparable house sites. However, we do accept that most comparables will in fact have parts of the site which are more intensively developed than others.

[172] Although we heard some detail of a number of house sites, Mrs MacLachlan ultimately based her case on the sale of Plot 2 Bohuntine at Roy Bridge. It is a reasonably contemporaneous sale and apparently relates to a plot extending to 0.14 ha at a price of £130,000. Again we have virtually no detail regarding the sale. We visited the general locus of most of the sites offered as comparables. It is sufficient to say that in our view any valuation of them would require very significant adjustment for a whole variety of reasons. In regard to the plot at Bohuntine, it seems that it was located next to an existing housing development or, at any event, was part of one.

[173] Mrs MacLachlan did not know whether the sites were sold with or without planning permission. She did not know the basis of the sale – including as to whether the missives had been suspensive on planning permission being obtained. She did not know if the site was offered fully serviced, but simply presumed that water was available and power was close by. Although she told us that the planners had indicated that they looked for well spaced out individual house sites, she gave us no idea of the detail of such spacing in different circumstances. Nor were we addressed as to what view would be taken of increasing the volume of traffic entering and exiting the site.

[174] It is possible that the planning authority would take a favourable view of development of well spaced houses above the road – but we were not told the basis of the propositions put; to whom they were addressed; nor the precise nature of the opinions offered. Accordingly this evidence is of very limited value. A potential developer might seek – as Mrs MacLachlan proposed – to develop 3 houses on the site. We doubt the proposition that three fully serviced plots with good access and full planning permission at the site in question might sell for £390,000. But, in any event, no evidence has been adduced which would lead us to conclude that the resumption site in terms of topography and underlying geological structure is at all suitable for such development. At present there is real doubt as to the extent of access which would be allowed. Although we realise that provision of services has been taken into consideration in formulation of the estate’s plans for the site, that does not mean that they are necessarily suitable or adequate for residential development. We noted power lines close by, but we know nothing about the availability of sufficient power. Nor do we know whether an adequate water supply or acceptable waste systems would be capable of being provided economically.

[175] All that said, however, we are well aware that many plots of land are sold in the open market which lack one or all of these details and they command prices significantly in excess of agricultural value. It is clear that those acquiring such sites do so in anticipation that development of some sort will ultimately be facilitated or that the sites have some particular attraction which is not necessarily obvious to all. That is why we have been prepared to accept Mrs MacLachlan’s proposition that this site has the possibility of development for either some alternative light industrial use or use for at least one house site.

[176] In the end, Mrs MacLachlan relied on the proposition that a serviced house plot with planning permission would have an open market value of £130,000. We are prepared to accept that such a plot located at the resumption site, with suitable access, could command a comparable figure. We say that on the basis that the resumption site appears to us to be an attractive location for an individually designed house with extensive amenity ground. But bearing in mind (a) that services are not actually in place and we have no information as to how easily they might be acquired; (b) that it is far from certain that permission for a single dwelling-house would be forthcoming; and (c) we have been presented with no evidence as to what conditions might be attached to any planning permission which a purchaser might hope eventually to obtain, we consider that a very significant discount must be applied to the figure of £130,000.

[177] In the absence of good evidence and submission, it is difficult to assess what the extent of that discount should be. We consider that any prospective purchaser interested ultimately in pursuing a residential use would have regard to the site’s underlying value based on the use permitted by the current consents, but with some limited prospects for wider commercial use. Our figure for that was £16,000. To that he would make an addition representing the amount he would be prepared to speculate on the prospect of securing the ultimate goal of residential value. Again, doing the best we can on the evidence before us, we have concluded that an increase of 25% is appropriate – giving a value of £20,000. That is indeed a very significant discount on £130,000, but considering all the potential hurdles which a person offering for the site can be expected to have to overcome, we think it is justified.

[178] As we have accepted that development for either limited commercial purposes or for residential use are possible, then the open market value falls to be assessed according to whichever prospective use is likely to lead to the highest offer which would be acceptable to the willing seller. In this case, that turns out to be residential use. Thus we conclude that the open market value of the resumption site as at today’s date is £20,000.

[179] As with our assessment of compensation, we also consider the ‘crofting value’ of the resumption site, based on a calculation of that element of rent for the grazing applicable to the site, to be so low that it can be taken to be nil. Accordingly no deduction falls to be made in respect of it in terms of section 21(1) and the respondents are therefore entitled to share in the sum of £10,000.

Conditions

[180] We were encouraged to consider imposing a condition whereby, if, in the future the landlords did in fact obtain permission to develop the land in such a way that its development value increased the crofters would share in that increase. We were not addressed as to how such a condition might be formulated and there may be doubt as to how easy it would be to enforce. In any event, we think that a more appropriate way of dealing with that scenario – albeit not apposite in this case – would be through the use of temporary resumption which specifically envisages the possibility of additional payments. In the present case, we are authorising permanent (otherwise ordinary) resumption. As we said at para [143] above, once surrendered, the land will no longer be subject to crofting tenure and will effectively be outside our jurisdiction. A condition of the nature contended for is not, in our view, apt.

[181] To the extent that any shareholder might consider this to be an unfair result in the sense that in five or ten years’ time circumstances change and more intensive development becomes appropriate, it is important to point out that our valuation is our assessment, based on all the material before us, of the open market value of the land in its present state, freed of crofting tenure and with all the potential for further development that exists at the time of our authorisation. We are satisfied, in terms of the legislation, that the figure which we find due to the crofter respondents reflects that value. The respondents are not entitled to share in any value in excess of that. The applicants have expressed their willingness to augment payment to the crofters in the event of further development. If such development comes about, then they may voluntarily honour that commitment, but they are under no obligation to do so. That is so because account has already been taken in our assessment of value of the potential for future development as at today’s date.

[182] Otherwise, we see no reason to depart from our usual practice of making it a condition of our authorisation that the applicants or their successors shall erect and thereafter maintain a stock-proof fence on all mutual boundaries between the resumption site and the land which will remain part of the common grazings.

Decision

[183] We find that the purpose for which resumption has been sought is reasonable under and in terms of section 20 of the 1993 Act. Accordingly we authorise resumption of the relevant land forthwith, subject to the fencing condition outline above.

[184] We find that the open market value of the relevant land as at today’s date in terms of section 21 of the 1993 Act is the sum of £20,000; that the crofting value is nil; and accordingly that the respondents are entitled to share in the sum of £10,000 upon surrender of the subjects.