Decision of the Scottish Land Court

Stornoway Windfarm Limited (Applicant)
v
Crofters having rights in the Stornoway Windfarm site (Respondents)

Case reference SLC/59/17
before
Lord Minginish, Chairman, and Tom Campbell
1 March 2019

INTRODUCTION

[1] This is an application under sec 19A(1)(a) of the Crofters (Scotland) Act 1993 (“the 1993 Act” or “the Act”) by Stornoway Wind Farm Limited (“SWF”) with the consent of Stornoway Trust (“the Trust”) as owners of the landfor consent to common grazings in the vicinity of Stornoway, Isle of Lewis, being used for the creation of a wind farm in accordance with a scheme which accompanies the application (“the scheme”).

The applicants

[2] SWF is a joint venture between two major commercial companies with extensive involvement in renewable energy, AMEC Project Investments Limited and EDF Energy Renewables Holdings Limited. They have entered into a lease of the site of the proposed wind farm with the Trust.

The scheme

[3] The scheme takes in the common grazings of nine townships and has attracted opposition from people with rights in four of these, being (i) Aignish, (ii) Melbost & Branahuie, (iii) Sandwick North Street and (iv) Sandwick & Sandwick East Street. The ground of opposition is not any kind of environmental or aesthetic objection to wind farms but the desire of these four townships to develop their own, wholly community-owned, schemes on their own common grazings. Notwithstanding that opposition, the scheme enjoys the support of the local authority, Comhairle nan Eilean Siar, and planningconsent for it was granted by Scottish Ministers under sec 36 of the Electricity Act 1989 on 7 September 2012. That consent, as subsequently varied on 22 March 2016, was for the erection of no more than 36 wind turbines of a maximum blade-tip height of 145 metres and with a maximum generating capacity of 180 MW, withsupporting infrastructure, to remain in place for a period of 25 years from the date of full commissioning. We understand from items in The Stornoway Gazette that certain amendments to current plans are being contemplated but, at the time of writing, these have still be to beformalised.

Procedural history

[4] When intimated the application drew 231 objections. It was clear that a significant number of those were from people who were not competent objectors in terms of how subsec (7) of sec 19A had been interpreted by the Court in Coigach Wind Power Limited v Achiltibuie Common Grazings Shareholders & Ors at paras [14] to [29] and, having given those concerned the opportunity of lodging submissions on the matter, by our orders of 11 May and 10 August 2018 we eliminated 113 of the original objectors. This left 118 competent objectors, none of them at that time with legal representation. Happily, however, from a logistical point of view, 60 of them have now come to be represented by Gillespie Macandrew LLP, who lodged answers to the application on their behalf on 3 August 2018. These answers recast the arguments already made by the individual respondents but also introduced what was said by the applicants’ agents to besome new material, notably a challenge to the competency and relevancy of the application because of its alleged failure to specify any relevant recompense payable to the respondents in terms of sec 19A(1).In what follows this is referred to as “the respondents’ preliminary issue”, the respondents referred to being those represented by Gillespie Macandrew.

[5] The applicants’ agents, Pinsent Mason LLP, had no objection to points already raised being recast in Gillespie Macandrew’s answers but did object to new material being introduced at that stage. We shall refer to this as “the applicants’ preliminary issue”.

[6] Since both parties had preliminary issues to be disposed of, both sets of agents agreed that a debate should be fixed but Pinsent Mason suggested that it should deal not just with the foresaid preliminary issues but with other matters which could profitably be disposed of at this stage with a view to narrowing the scope and focus of any subsequent proof. Accordingly,we heard legal argument about a range of issuesat Stornoway on 12 December 2018 when the applicants were represented by Mr Craig Connal QC, solicitor-advocate, and the respondents (i.e. thoserepresented by Gillespie Macandrew) by Mr James Findlay QC and Mr Denis J Garrity, advocate. The remaining respondents chose not to take part in the debate but some of them reserved their right to participate in further proceedings, should there be any.

Legislation

[7] Section 19A of the 1993 Act is as follows:

19A Schemes for development

(1) The landlord (or owner), or any person acting with the consent of the landlord (or owner)—

(a) may by application to the Land Court seek its consent to—

(i) croft land or common grazing; or

(ii) land near to croft land or common grazing if rights and liabilities in relation to the croft land or common grazing would be affected, being developed in accordance with a scheme appended to the application; or

(b) may intimate to that Court that every person who has rights in or over croft land or a common grazing consents to its being developed in accordance with a scheme appended to the intimation, and the applicant shall send a copy of the application or as the case may be of the intimation (and, in either case, of the appended scheme) to the Commission.

(2) Consent under paragraph (a) of subsection (1) above is not to be given unless the Court is satisfied—

(a) that the development is for a reasonable purpose;

(b) that to carry it out would not be unfair;

(c) that the scheme provides for there to be fair recompense to each member of the crofting community in the area affected by the development for the effects of the development (including, in relation to the croft land of each such member, recompense at least equivalent to the recompense which the member might be expected to have obtained had that croft land been resumed); and

(d) that, were the development carried out—

(i) that community would be likely to benefit financially; and

(ii) such benefit would be at least commensurate with any financial benefit which the members of that community might obtain on the development proceeding other than by virtue of this section.

(3) For the purposes of subsection (2) above—

(a) the definition of “reasonable purpose” in subsection (3) of section 20 of this Act applies as it does for the purposes of subsection (1) of that section;

(b) it is unfair to carry out a development only where to do so would have significant adverse consequences for one or more of the members of the crofting community in the area affected by the development and either those consequences would be disproportionately greater than the adverse consequences for the other members of that community or there would be no adverse consequences for those other members;

(c) whether recompense is fair is to be determined having regard both to the value of the development and to its effect on the member in question; and

(d) an effect for which there is to be fair recompense may be an effect of any kind whatsoever (and in particular need not be an effect on a croft qua croft).

(4) An application under paragraph (a) of subsection (1) above or intimation under paragraph (b) of that subsection shall—

(a) be made in such form; and

(b) be accompanied by such fee,

as the Court shall specify; and the Court may make different provision for different categories of case.

(5) Provision made under subsection (4)(a) above shall include provision as to the form and content of the appended scheme.

(6) A person making an application under paragraph (a) of subsection (1) above or giving intimation under paragraph (b) of that subsection shall forthwith give public notification of the application or intimation.

(7) Within 28 days after the public notification is given (including the day on which given)—

(a) the Commission; or

(b) any other interested party,

may submit to the Court written objections, on one or more of the grounds mentioned in subsection (8) below, as respects the application or intimation; and the Court shall hear the objectors (if any) before determining whether to give consent under this section or as the case may be before determining whether to proceed under subsection (10) below as respects the intimation.

(8) The grounds are—

(a) that the development is not for a reasonable purpose (the definition of “reasonable purpose” in subsection (3) of section 20 of this Act applying for the purposes of this paragraph as it applies for the purposes of subsection (1) of that section);

(b) that to carry out the development would be unfair to the crofting community;

(c) in the case of a submission under paragraph (a) of subsection (7) above, that the scheme does not provide for there to be fair recompense to each member of the crofting community;

(d) in the case of a submission under paragraph (b) of subsection (7) above—

(i) that to carry out the development would be unfair to the objector;

(ii) that the scheme does not provide for there to be fair recompense to the objector;

(e) that, were the development to be carried out, the crofting community would be unlikely to benefit financially;

(f) that, were the development to be carried out, any financial benefit to the crofting community would not be as mentioned in sub-paragraph (ii) of subsection (2)(d) above.

(9) The Court shall, whether or not there is a hearing under subsection (7) above, give reasons for any such determination.

(10) On—

(a) giving consent under this section; or

(b) determining to proceed under this subsection as respects an intimation,

the Court shall advise the Commission that it has done so and provide them with a copy of the scheme in accordance with which the development is to take place; and the Commission shall enter that copy in the Register of Crofts.

(11) When so entered the scheme shall, in so far as its terms so provide, be binding on—

(a) the landlord (or owner);

(b) any member of the crofting community in the area affected by the development;

(c) any person who, though not described in paragraph (b) above, is—

(i) a tenant of a croft; or

(ii) a holder of grazing rights,

in that area; and

(d) the successors to the persons mentioned in paragraphs (a) to (c) above.

Authorities

[8] Cases

Coigach Wind Power Limited v Achiltibuie Common Grazings Shareholders SLC/109/15, decision of 17 June 2016
Mackay’s Trustees v Colthart 1959 SLCR 43
Pentland Road Wind Farm Limited v Crofters having rights in the Common Grazings of Knock & Swordale & Ors SLC/138/11, decision of 18 January 2012
Reference by Crofters Commission under sec 53 of the Crofters (Scotland) Act 1993 2012 SLCR 159
Ross v Graesser 1962 SC 66
Viking Energy Wind Farm LLP v Crofters having rights in the Common Grazings of the Townships of Sandwick, Sweening & Laxo & Ors SLC/31/16, decision of 5 September 2018

[9] Texts

Flyn & Graham, Crofting Law, 2017, paras 5.1-5.4

Submissions

For the respondents

[10] We heard Mr Findlay first. His motion was that we should dismiss or refuse the application as incompetent and/or irrelevant et separatim lacking in essential specification in that it failed to specify the information necessary for the Court to determine whether fair recompense was to be available to the respondents in terms of sec 19A.

[11] That motion was supported by three distinct submissions:-

(i) that the application did not specify “the value of the development” which was a pre-requisite of determining “fair recompense” in terms of sec 19A(3)(c);

(ii) that the application did not specify relevant compensation payments in that it did not provide for a capital payment to individual respondents for interference with their property rights; and

(iii) that the scheme did not provide for any payment direct to members of the crofting community, only conditional payments to the landowner under a lease which might be varied, assigned or surrendered, leaving recompense as a matter of discretionary distribution by the landowners of sums which they may or may not receive/collect from the applicants.

[12] Section 19A(1)(a)(i) covered both croft land and common grazing. This was to be contrasted with the definition of “croft land” in sec 12 of the 1993 Act which excluded land comprising part of a common grazing. In Pentland Road Wind Farm Limited v Crofters having rights in the Common Grazings of the township of Knock & Swordale and Ors the Divisional Court (Mr D J Houston) had made no distinction between common grazings and croft land (see para [10] of the judgment), which was the correct approach. The words in parenthesis in sub-sec (2)(c) of sec 19A (which provide that there must be fair recompense to each member of the crofting community in the area affected by the development “including, in relation to the croft land of each such member, recompense at least equivalent to the recompense which the member might be expected to have obtained had that croft land been resumed”) were words of inclusion, not distinction.

[13] The effect of consent being granted would be to interfere with the respondents’ rights in and to the common grazings. These rights included the right to bring forward proposals for alternative uses of the common grazings under sec 50B of the 1993 Act, as the four dissenting townships had done. Since both sets of proposals could not co-exist, it was wrong of the applicants to describe this interference as “modest” or “minimal”.

[14] Because, in terms of sec 19A(2)(d) of the Act, consent to the development could not be granted unless the Court was satisfied that the community would be likely to benefit financially and that such benefit would be at least commensurate with any financial benefit which the members of the community might obtain if the development proceeded otherwise than under sec 19A, it was necessary for the application to specify the amount of compensation and half-share in development value that would be payable were it to be carried out by way of resumption or temporary resumption. In the absence of such information whether the scheme afforded fair recompense could not be assessed: the comparative exercise could not be carried out.

[15] It also had to be remembered that resumption was not the only alternative to sec 19A; sec 50B was another. There was nothing to prevent this development going ahead under sec 50B and if it did the communities concerned would not lose out.

[16] The application also failed to aver the value of the development, which was one of the factors in the assessment of whether the recompense proposed was fair; sec 19A(3)(c). What was proposed in the application was that the recompense payable would be calculated with reference to the income generated by the development. It would be a percentage of that income but that did not provide a basis upon which to calculate the value of the development.

[17] The applicants’ approach seemed to be that recompense was related only to the effects of the development but that was not so: it was to be assessed “having regard both to the value of the development and to its effect on the member in question”; sec 19A(3)(c). So recompense was not just compensation for loss of grazings, it was also related to the value of the development. The value of the development must be known to the developers: there must be a figure for it in their books and it must have been specified for planning purposes. In any event it was knowable: there was a track record in terms of three turbines already built (a reference, we understand, to a separate development on land belonging to the Trust).

[18] In the respondents’ submission the legislation required a capital payment to be made as part of “fair recompense”. That was not necessarily to be a capitalised payment based on a percentage of future income but it had to be a capital payment of some sort. Only such a payment would be comparable to the combination of compensation and share in development value payable in resumption cases under secs 20 and 21 of the Act. Reference was made to the Court’s Practice Note (No 4), dealing with resumption payments. The fixing of a capital sum was necessary so that a comparison could be made between the recompense available on resumption and that available under sec 19A. There was no basis for making a distinction between the two statutory provisions nor for treating common grazings and croft land differently. There could be other forms of recompense, certainly, (such as provision of alternative land or the carrying out of improvement work) but that had to be in addition to a lump sum payment, not instead of it.

[19] A capital payment was also required as a matter of Human Rights law because this was a temporary compulsory acquisition. Compulsory purchase principles were applicable here and these required a capital payment to be made.

[20] Compensation or fair recompense also had to be calculated, at least in part, by reference to the market value of the land in question and any increase in the value of that land arising from the proposed use. There was no mention of land values in the application or the scheme.

[21] Moreover the payment obligations set out in Part 4 of the scheme were so complex as to be unfathomable to the ordinary person and unworkable in practice. There was no mechanism by which the crofting community could analyse the data and make the calculations required to ensure that they were getting their entitlement (fair recompense) over the lifetime of the development. That was why the legislation required a capital payment.

[22] In summary, the application did not contain a valid payment scheme for the purposes of sec 19A and was, therefore, irrelevant as a matter of law. Separatim it (the payment scheme) was unenforceable by the respondents and could not, therefore, form a basis for fair recompense and was irrelevant as a matter of law for that reason also.

[23] By way of elaboration on this last point, payments were to be made to the landowners in terms of a lease with the applicants (as developers) but the respondents were not party to that lease and it was not explained how they could enforce its provisions or how they could compel the landowners to pay them any part of the sums received from the applicants. Subsection (11) of sec 19A made schemes binding on the landowners once entered in the Register of Crofts but was of no assistance in compelling them to make payment of any sums to the respondents. No directly enforceable obligation was created by the subsection or otherwise. Accordingly it could not be said that the scheme afforded fair compensation to the respondents and the application was irrelevant and/or incompetent as a result.

For the applicants

[24] Mr Connal adopted both the applicants’ written response to the respondents’ answers and his note of argument.

[25] Before embarking on his substantive submissions he made two points. First, this was not a procedure roll debate in the Court of Session, it was a broader exercise than the examination of pleadings. Second, although the case was being portrayed in certain quarters as multinationals v crofters, it had to be remembered that as against the 120 or so competent objectors to the application, the scheme affected something of the order of 600 shareholders in common grazings, the vast majority of whom were not opposed to it.

[26] What the applicants were seeking to do at this debate was narrow the issues on which evidence required to be led, rather than have a proof at large, as had happened in Viking.

[27] Although the applicants were adhering to the objection that the respondents’ preliminary issue came too late Mr Connal was quite happy, in the interests of making progress, to address the merits of the points it raised, leaving the objection as to lateness to the Court.

[28] Coming to his substantive submissions, Mr Connal first addressed “reasonable purpose”. The generation of electricity was one of the reasonable purposes listed in sec 20 of the Act. That was all that was required and there was no warrant or scope for indulging in a broader discussion as to whether the proposal was reasonable by way, for example, of comparison with sec 50B. At para [36] in Coigach the Court had doubted whether a broader discussion, of the kind advanced in that case, was necessary. Similarly in Viking, where the respondents’ had been saying “yes to electricity generation but not like this”, the Court had made clear (at paras [82} and [83]) that there was no scope for saying that one kind of electricity generation would be acceptable and another not.

[29] As to whether the Court had to be satisfied that the development would be carried out, there was no such requirement under sec 19A; Viking at para [85]. The existence of possible other schemes – a reference to the sec 50B applications – was nothing to the point. The Court could only deal with the application before it and discussion of anything else was irrelevant.

[30] Turning to the question of “unfairness”, the statute gave the word a narrower meaning than its normal one. It spelt out very clearly what was required to constitute unfairness and there was no room for other considerations. The gist of unfairness as defined in sec 19A was that someone in the crofting community was being disproportionately impacted upon. The idea that it involved, in this case, a comparison with what a sec 50B scheme might offer was simply wrong. Here the allocation of benefits among members of the crofting community was unchallenged and there were no averments that anyone was being disadvantaged. So all discussion of unfairness was excluded, a matter which would save a great deal of time at any subsequent hearing.

[31] Turning to the financial benefit to the community which the scheme would bring, in terms of sec 19A(2)(d)(i), it seemed to be accepted by the respondents that there would be financial benefit to the community. The various arguments which had been advanced as to recompense were all ill-founded. The recompense was to be for the effects of the scheme. In questions of compensation one normally looked to the claimant to specify what he was wanting compensated for. Although the effects of the scheme were listed in the application (at 11.22), that onus should not be inverted. In any event the effect of such schemes on grazings shareholders was minimal, as had been shown in Viking at para [50].

[32] The comparison with resumption was wrong in law. This scheme was confined to common grazings and no croft land was being taken. Similarly the insistence on the need for a capital sum to be offered was wrong: there was simply no such requirement in the statute. The respondents’ approach was based on a misreading of sec 19A and an inept parallel with resumption. Where there were going to be continuing effects which required continuing compensation, why should sec 19A be taken as requiring a capital payment? A regular payment calculated by reference to the profits of the scheme was more apt and recompense structured in that way had been accepted in both Coigach and Viking. The requirement in sec 19A(2)(d)(ii) was that the benefit to the community must be commensurate with, not identical to, any financial benefit obtainable on the scheme proceeding other than under the section. So there was no necessary tie-in with payment of a lump sum on resumption.

[33] In assessing whether benefit was commensurate, the comparison was not with other schemes but with other ways of carrying out the present scheme. The present scheme, as one initiated by the landlords, could only be carried out under sec 5(3) (by agreement with the crofters and with the approval of the Land Court), sec 20 (resumption) or sec 19A, not sec 50B, which was about schemes initiated by crofters. Moreover there was nothing in the legislation which gave sec 50B applications priority over sec 19A applications. So the sec 50B applications by the four dissenting townships were irrelevant and a clear ruling to that effect would save a great deal of time later.

[34] If, contrary to that submission, these applications were in principle relevant the effect of their refusal by the Crofting Commission would be the same on all members of the crofting community affected by that refusal, whereas, unfairness under sec 19A required a disproportionate adverse effect on some members of that community compared to others.

[35] As to the requirement, in subsec (3)(c), that recompense was to be determined by reference to the value of the development (as well as to its effects), that was an odd provision. “Value” was not defined and it was not obvious what difference taking account of value was to make. No mechanism was provided for linking recompense to value. In any event, recompense was not a matter of cutting up the cake but compensating for loss.

[36] The value of the development must be related to the income it produced but at this stage in the development of a wind farm it was impossible to state with any certainty how much income would be generated. All that could be done was make projections based on a variety of hypotheses. A view as to how the benefits of the scheme compared with other possible ways of carrying out a similar development could be taken after evidence was heard. The absence of a figure for value at this stage was not fatal to the competency of the application.

[37] Likewise there was no merit in the lack of enforceability of obligations against the applicants. Although subsec (11) did not bind the applicants, the lease contained a clear obligation on the part of the applicants to make payment to the landlords and the scheme contained a clear obligation on the landlords to account to the crofters, via their grazing committees, for their share. There was nothing discretionary about it and making payment to the crofters through the grazings committees was eminently sensible, given their number and because the committees would have records as to who the shareholders in the common grazings were from time to time.

[38] Nor was it a valid objection that the recompense provisions were too complex. That was being patronising to the crofters. There were detailed provisions in the scheme as to how recompense was to be calculated and there was no statutory constraint on how it was to be structured.

[39] The respondents’ objections based on recompense thus all fell away, which failing they could be held over pending the hearing of evidence, and the application should be allowed to proceed to a hearing on the merits.

Mr Findlay in response

[40] Mr Findlay dealt first with the matters which Mr Connal had invited us to exclude from any hearing on the merits of the application.

[41] He reminded us that there were six objectors who were not present today but had reserved their right to take part in any further hearing. It would be wrong to exclude matters which they might wish to argue. We should in any event be cautious about cutting down evidence in advance of hearing it.

[42] On reasonable purpose, it was not the case that the fact that a purpose was listed in sec 20 meant ipso facto that it was a reasonable purpose in all circumstances; Mackay’s Trs v Colthart at p 45. In Viking, at para [95] the Court had indicated that, had forestry not been unlikely because of Shetland’s climate, the potential for a scheme for tree-planting and the effect of the proposed development on that potential would have been a relevant consideration. So it was not the case that the sec 50B applications were irrelevant and there should be no restriction of the evidence to be led in relation to reasonable purpose.

[43] As for unfairness, the four dissenting townships would be more adversely affected than others because their sec 50B schemes could not proceed if this development went ahead.

[44] Mr Connal had been wrong on two counts as regards fair recompense. First, although it included compensation, it was not restricted to compensation. It had to be assessed with reference to the value of the development as well as its effects. Secondly, the negative effects which required to be considered were not confined to the limited effects described in Viking (at para [95]) but also included the loss of the opportunity to pursue their sec 50B applications.

[45] “Value” had to do with share in the development value. It was not confined to considerations of whether what was being offered to the crofters was fair. It had to be related to the value of the development overall. It was wrong to say that the value of the development could not be worked out at this stage. The scheme itself contained worked examples of income and a valuer could value the development on the assumption that a CfD[1] was in place. That would give the respondents a “target to challenge or accept”. As matters stood they could do neither.

[46] As to legally binding obligations, the only relevant one was the one on the landlords to pass on monies received from the applicants. If they received nothing there was nothing the crofters could do about it. There was no legally binding obligation as between the applicants and the crofters.

[47] Dealing with the applicants’ objection that the respondents’ preliminary issue (i.e. the foregoing points as to the relevancy and competency of the application) was late and ought not to be entertained, Mr Findlay noted that the point had not been pressed by Mr Connal but submitted (a) that it was not late, (b) that it had been raised in earlier answers, and (c) that since it went to the competency of the application it was pars judicis. With reference to (a) the issue had been raised in the answers lodged in obedience to the Court’s order of 10 July 2018, which contained no restriction as to the permitted scope of answers. With reference to (b) the same points had been made in the earlier answers (lodged before Gillespie Macandrew’s involvement). With reference to (c) the respondents considered that the application was irrelevant and/or incompetent and there was no point in proceeding to an evidential hearing at which the application was bound to fail.

Discussion

The applicants’ preliminary issue: whether the answers lodged by Gillespie Macandrew contain new matter which is too late

[48] Mr Connal took a commendably pragmatic approach to this. He did not press the point but instead addressed the merits of the issues raised. But nor did he expressly abandon his objection and we must, therefore, rule on it. Since we do so without having heard full argument we will content ourselves by saying that we regard the matters contained at paragraphs [4] – [12] and [30] of the answers as developments of arguments already advanced by the respondents, all in identical terms, under the heading “The scheme does not provide for there to be fair recompense to the Respondent and that such benefit would not be commensurate with any financial benefit which the Respondent or other members of the community might obtain on the development proceeding other than by virtue of section 19A”. Accordingly we repel the objection.

The respondents’ preliminary issue: whether the scheme specifies any relevant recompense payable to them in the event that consent is granted.

(i) The failure to specify the recompense a member of the crofting community might expect to get on resumption.

[49] This turns on the meaning of subsec (2)(c) of sec 19A. It prohibits us from giving consent unless we are satisfied “That the scheme provides for there to be fair recompense to each member of the crofting community in the area affected by the development for the effects of the development (including, in relation to the croft land of each such member, recompense at least equivalent to the recompense which the member might be expected to have obtained had that croft land been resumed)”.

[50] The effect of the words in parenthesis is to make clear that included in the requirement for fairness is that the recompense must be at least equivalent to what a member might expect get if any of any of his “inbye” land was being resumed. The words do not apply to common grazings because the definition of “croft land” in sec 12(3) of the Act excludes (at sub-para (b)) “any land comprising any part of a common grazing, unless the land has been apportioned and (i) is adjacent or contiguous to any other part of the croft; or (ii) consists of arable machair”. All of the land with which we are concerned here (with the exception of a single apportionment mentioned, but not relied on, by Mr Findlay) is unapportioned common grazings. What Mr Findlay’s argument appears to involve is a kind of “reverse inference” from the words in parenthesis to the earlier words, from the particular to the general.

[51] That is not how we read para (c). Had the intention been that fair recompense must be equivalent to what members might expect to get on resumption in all cases, it would have been easier to say so. Instead we have a specific requirement relating to inbye land as distinct from common grazings. There would be no need for such a provision unless a distinction was being made: it would never occur to anyone that a general requirement for equivalence with resumption would not apply to inbye land. So it seems to us that a distinction is being made between land which is part of common grazings, in respect of which the requirement is one of general fairness, without a specific requirement of equivalence with resumption, and land in the exclusive occupation of individual crofters.

[52] It is hard to know why Parliament intended this distinction. There is a difference between resumption affecting croft land (as defined in the Act) and resumption from common grazings. The first is a classic resumption situation where land is being resumed from a lease. However, crofters’ rights in common grazings are not rights of tenancy of land, they are rights of grazing (Ross v Graesser per Lord President Clyde at pp 74-75), and what is being taken away on resumption is those rights over a given area of land. In those circumstances resumption is not an “easy fit”, as the Court observed, although not in those terms, in its discussion of the matter in Reference by Crofters Commission under sec 53 of the Crofters (Scotland) Act 1993 2012 at paras [7] to [12]. However it is not clear that this difference provides a rationale for the distinction made in sec 19A(2)(c).

[53] Be that as it may, we are satisfied, as a matter of statutory construction, that the requirement for equivalence with resumption does not apply to common grazings for the purposes of that subsection. To read the provision in this way does not empty it of content in relation to common grazings because it has to be read with subsec (3)(c) which provides that whether recompense is fair is to be determined having regard both to the value of the development and its effect on the member in question.

[54] The result is that, at least for the purposes of subsec 2(c), the applicants do not require to show how much each member of the crofting community would stand to get on resumption.

(ii) the failure to specify the financial benefit the crofting community might obtain on the development proceeding other than by virtue of sec 19A

[55] Paragraph (d) of subsec (2) deals with financial benefit to the crofting community, as opposed to its individual members. It provides that such benefit must be “at least commensurate with any financial benefit which the members of that community might obtain on the development proceeding other than by virtue of [sec 19A]”. That clearly involves comparison with resumption and, before we can grant consent, we have to be satisfied that the community will get at least as much financial benefit from the development going ahead under sec 19A as it would if it went ahead as a resumption under secs 20 and 21.

[56] That this is something the applicants will have to prove is acknowledged in the application, as are the other requirements and tests of adequacy of recompense; see paras 16, 17 and 18. Paragraph 16.1 acknowledges that the Court must be satisfied that to carry out the scheme would not be unfair, para 16.2 sets out the test for unfairness contained in sec 19A(3)(b), para 17.1 narrates that the Court must be satisfied that each member of the crofting community will receive fair recompense for the effects of the development and para 18.1 sets out the test for the adequacy of the financial benefit to the crofting community. The other provisions of these paragraphs explain the various forms financial benefit will take and further detail is provided in the scheme document itself, at section 4 and schedule 4.

[57] Whilst the application therefore acknowledges the things as to which the applicants must satisfy the Court in terms of recompense and financial benefit and we accept these acknowledgements as offers to prove that recompense will be fair and financial benefit to the community no less than might be expected were the development to proceed other than under sec 19A, there are no averments as to the level of benefit which might be expected were it to proceed by way of resumption and the question is whether that absence is fatal to the application at this stage.

[58] We are not persuaded that it is. As has just been said, there is in the application an offer to satisfy the test contained in sec 19A(2)(d) and the rest must be a matter for evidence. What the applicants’ pleadings are to be taken as saying and offering to prove, therefore, is that, the amount which would be payable on resumption, whatever it may be, is not greater than the financial benefits set out in the application and scheme. Although evidence will have to be led as to what the sum payable on resumption might be, it is not necessary, as a matter of competency, relevancy or specification to say what that is likely to be at this stage.

(iii) the failure to offer a capital sum

[59] We can dispose of this point in short order. Nowhere does sec 19A contain a requirement that the recompense to crofters or the financial benefit to the crofting community must include a capital sum. Mr Findlay’s argument depended on parallels with (i) resumption and (ii) compulsory purchase. These parallels are unnecessary and unhelpful. The fact is that we are not dealing with resumption or compulsory purchase. Sec 19A contains its own code and nowhere is practice from these other areas imported. As Mr Connal correctly pointed out, what the section requires is equivalence (in terms of value) with the position on resumption, not that the benefit be structured in the same way. As for compulsory purchase, the comparison is a remote one. For one thing, nothing is being purchased. There is no permanent deprivation of a capital asset. Instead what is envisaged is that for a period of years crofters’ rights will be restricted. There is no reason in principle why that should have to be compensated by way of a lump sum payment (with or without other payments) rather than a series of payments over the period of restriction. The attempt to read into sec 19A a requirement for a capital payment therefore fails.

(iv) the failure to specify the value of the development

[60] It is true that nowhere in the application or scheme do we find a statement of the value of the development, although there is information which would probably allow someone suitably qualified to quantify it, at least if a definition of “value” could be agreed upon. The absence of such a definition in sec 19A is, we think, significant. If the intention was that recompense to the crofters was to be linked to the value of the development in some sort of formulaic way, a definition of value would be necessary, as would a formula. We have neither, so it seems to us that something looser and more general is in contemplation, which might be expressed as a requirement that the recompense payable must be in some broad proportion to the value of the development. This is simply reflecting the need for fairness: the higher the value of a development, the higher one would expect the financial benefits to those whose rights are being interfered with by the development to be.

[61] As has already been said, the tests which the applicants have to satisfy are narrated in their pleadings. Paragraph 17.4 says that the sums to be paid by the developers “will provide fair recompense having regard to the effects and value of the development”. The applicants are offering to prove that and no doubt evidence to that effect will be led from a suitably qualified person. Although they are less well placed to do so, it is open to the respondents themselves to instruct a valuation of the development and, if so advised in the light of it, contend that the recompense on offer is insufficient.

[62] In those circumstances we consider that we would not be justified in preventing the application from going further because it does not contain information which sec 19A itself does not require.

(v) the unenforceability of the payments by the respondents

[63] Payments are to be routed from SWF, to the Trust, then to the individual Grazings Clerks and, finally, to the individual crofters. There is no contractual nexus between the crofters, individually or collectively, and SWF, so they cannot sue SWF for their share of revenue. Only the Trust can do that. But the scheme (and presumably the lease, although we haven’t seen it) appears to contain a contractual duty on SWF to pay the Trust certain sums, quantified in accordance with the provisions of the scheme, and there is an obligation on the Trust to make payment to the crofters, through their Grazings Clerks. Although we did not hear detailed argument on the point, that must confer upon the crofters some sort of third party right to recover monies paid by SWF to the Trust for their behoof.

[64] In the absence of fuller argument, we reserve to the respondents the right to return to this but, given our present understanding of the matter, we are unable to sustain this objection at this stage.

[65] Before we move on to other matters we should, for completeness, deal with three other points which were touched on in Mr Findlay’s argument. These are (i) the complexity and alleged unworkability of the payment provisions, (ii) the fact that the developers and their successors are not listed among those bound by the scheme, once consented to by this Court and entered in the Register of Crofts, in terms of subsec (11) and (iii) the fact that the lease between the Trust and SWF might be assigned.

[66] The payment provisions in the scheme are certainly complex but we have not yet come across a wind farm scheme in which they were simple. The development is subject to variables which will affect its earnings from time to time so a degree of complexity is inevitable. We observe, however, that the majority of crofters affected by this scheme seem to have no difficulty with its payment provisions, so we presume they find them to be intelligible and acceptable. The Court is in no position to judge as to whether the provisions are so complex as to be unworkable at this stage. A view on that can only be taken after proof.

[67] Mr Findlay’s point on subsec (11) was that it does not assist the applicants as to the enforceability of the scheme and he is right. All subsec (11) does is make the scheme binding on the parties listed there and their successors. It does not add anything to their substantive rights and obligations. So even if the developers were listed there their obligations would be no greater than those they have under the scheme. The scheme remains the measure of rights and liabilities. The extent of the crofters’ rights, or the absence of such rights, against the developers would not be affected by the developers being listed under subsec (11). So we do not think subsec (11) affects the position in any way. The point is correct but it is neither assists nor prejudices the applicants’ case.

[68] So far as the assignability of the lease is concerned, the possibility of assignation is certainly contemplated in the scheme (again, we haven’t seen the lease) and there are provisions (at para 4.2.5) for an assignation fee to be paid to the crofters should the lease be assigned to a company which is not “a Group Company of SWF”. Should assignation take place, the assignee will simply step into SWF’s shoes and have the same rights and obligations as the assignor. Whether the crofters will be better or worse off will depend on the financial standing of the assignees and how well equipped they are in other ways to continue with the development. There is no doubt an element of risk there, but assignability of the lease is, we imagine, a commercial necessity in a development of this kind and an unquantifiable risk which may or may not arise further down the line is not a reason for holding the recompense and financial benefit provisions of the application to be invalid or irrelevant.

Other matters debated

[69] That disposes of both preliminary issues: in essence they are both repelled and the respondents’ motion for dismissal for want of competency, relevancy or specification is refused. We now go on to the other matters which the applicants wished dealt with in advance of a proof.

(i) Reasonable purpose

[70] The question whether this application is for a reasonable purpose is a separate and distinct question from whether it is reasonable (having in mind issues of fairness) for us to consent to the application. The generation of energy is one of the purposes listed in sec 20(3) and the Court has already said that reasonable likelihood of the scheme going ahead is not a requirement of sec 19A; Viking at [85]. However, the respondents argue that the present case is different. The difference is the existence of the sec 50B applications. The respondents argue that it is necessary to address whether there is a reasonable prospect of the development proceeding because, if consent is granted and it does not, the respondents will be prevented from carrying out their own development schemes; the land involved will be “sterilised” by the extant consent.

[71] However, all we are concerned about at this stage in the argument is whether the purpose of this development is reasonable. Its purpose is not to defeat the sec 50B schemes: its purpose is the generation of energy and that is a recognised reasonable purpose, as we have seen. There is no scope in sec 19A for qualifying that by reference to other schemes, perhaps for equally reasonable purposes, which might go ahead on the same land. Accordingly we hold, at this stage and without the need for further enquiry, that the purpose of this application is a reasonable purpose in terms of sec 19A.

(ii) Whether the sec 50B schemes are relevant for the purposes of sec 19A(2)(d)

[72] Subsection (2)(d) is the one which requires financial benefit to the crofting community to be commensurate with benefits which might be obtained “on the development proceeding other than by virtue of this section”. Mr Findlay invited us to allow a comparison with the benefit which might accrue if the sec 50B schemes went ahead.

[73] That comparison is, however, impossible or at least extremely difficult to envisage. Section 50B schemes can only be initiated by crofters with rights in common grazings; not landlords. So, in order to carry out the present scheme, there would have to be applications under sec 50B by all nine townships. Quite apart from the fact that five of the townships seem to have no interest in bringing forward their own schemes, such a conglomeration of schemes would not be the same development as the present one. It would be differently led and differently structured and the comparison requires us to assume that a developer would be prepared to take on such a potentially disparate scheme. The subsection refers to “the development” and that can only be a reference to the development which is the subject of the scheme, not any other development. There is no scope for interpreting it as meaning something like “the development or any similar development for the same or similar purpose”.

[74] The purpose of para (d) is simply to prevent landowners and developers from short-changing crofters by proceeding under sec 19A rather than secs 20 and 21. The comparison cannot be with the development proceeding in a way which is not within the landowner’s power to deliver.

[75] Our conclusion is, therefore, that the sec 50B schemes are nor relevant for the purposes of subsec (2)(d).

(iii) Whether the sec 50B schemes are relevant for any other purpose

[76] We do, on the other hand, consider that the sec 50B schemes may be relevant to our consideration of subsec (3)(b), which defines the limited circumstances in which unfairness arises as being where to carry out the development “would have significant adverse consequences for one or more of the members of the crofting community in the area affected by the development and either those consequences would be disproportionately greater than the adverse consequences for other members of that community or there would be no adverse consequences for those other members”.

[77] Mr Connal’s reply to this was that the effects are the same across the whole of the crofting community in the area affected by the development. But that is not so if we include among the possible effects of the development that four of the townships concerned will not be able to promote their own schemes, whereas the other townships do not have schemes of their own. At least as presently advised, we do not see why “consequences of the development” should be limited to the effect of the development on the land or the environment or on aesthetics (which are more in the nature of planning considerations in any event) or any such thing. If a consequence of the development going ahead is to prevent the sec 50B schemes going ahead, as the respondents offer to prove (and the applicants might even admit), we do not see any ground for excluding it from our consideration of fairness. Accordingly evidence in relation to the sec 50B schemes will, subject to the outcome of the extant appeals, be relevant here.

Expenses

[78] Mr Findlay moved for the expenses of the respondents to date, whatever our decision on the matters debated. He also sought sanction for the employment of both senior and junior counsel. His motion was based on a parallel with the Court’s practice in resumption cases, where the tenant usually gets his expenses win or lose, provided he has not acted unreasonably, and what was said in Coigach (at paras [12] – [13]) as to the same approach being applicable in sec19A cases. He relied on paras (1)(a) and (b) of Rule 89 of our Rules for his motion re the employment of counsel, that is to say (a) difficulty/complexity and (b) the particular importance or value of the case to his clients.

[79] Mr Connal submitted that it would be premature to make any pre-emptive determination on expenses at this stage. He referred to Kennedy v Stewart & Ors (No 2) 2008 SLCR 271 at paras [4] and [7] – [9], where the Court sounded a note of caution about the “landlord pays, win or lose” approach, particularly in relation to questions of share in development value under sec 21 of the 1993 Act, and said a discriminating approach was appropriate. He did not oppose sanction for senior counsel but made no submission in relation to junior.

[80] Mr Findlay responded to the effect that he was not seeking a pre-emptive determination. The respondents had not behaved unreasonably up until now, so it was appropriate that they be awarded their expenses thus far. What was being sought was akin to protective expenses awards under the Aarhus Convention. It was important for respondents to know that their expenses would be paid as matters progressed, provided they acted reasonably.

[81] In principle we consider that the same approach to expenses should be taken in sec 19A cases as in resumption cases. When we say “the same approach” we include in that the Court’s caution about the need for a discriminating approach sounded in Kennedy v Stewart, so this is not to be taken as an indication that the landlord will pay, win or lose, in all sec 19A cases.

[82] That leaves us with two questions in this case: whether the respondents have behaved reasonably and whether we should make an award at this stage.

[83] No submission was made to us that the respondents’ had behaved unreasonably. Although a range of issues were raised by Mr Findlay and he has been unsuccessful on most of them, none of these issues was said to be unreasonable. Similarly it was not said that the bringing of the sec 50B applications was itself unreasonable. What becomes of these applications between now and the hearing of evidence will depend on the outcome of the appeals against the Crofting Commission’s decisions but we have had no submissions to the effect, for example, that the bringing of these applications was merely a spoiling tactic, or anything of that sort. So there is no basis for holding that the respondents or those representing them have behaved unreasonably hitherto.

[84] As to whether we should deal with expenses now or later, we did consider whether we should await the outcome of the sec 50B appeals but, even if the appeals are unsuccessful, that will not affect the reasonableness of the applications having been brought where it is not being said that the applications themselves or the appeals from the Commission’s decisions are spurious. Another consideration is that we realise that it is important for the respondents to know where they stand, in terms of expenses, as the case progresses. Accordingly we have decided to award the respondents their expenses at this stage. In the same way as that decision does not commit us to awarding expenses to crofters in all sec 19A cases, it does not commit us to awarding the respondents the expenses of the forthcoming hearing on the merits: that will be subject to the same test of reasonableness.

[85] As to sanction for counsel, we are satisfied that the case was of sufficient complexity and importance to justify the employment of senior counsel but it did not need both senior and junior, so we have restricted certification to senior.

Disposal

[86] That disposes of the matters covered at debate. The application will now proceed to a full hearing, subject to the parameters identified in this note. However it would make sense to dispose of the appeals from the Crofting Commission decisions on the sec 50B applications first because, should those appeals fail, it will obviously affect the scope of the hearing.


[1] “Contract for Difference”. The scheme is dependent on the awarding of such a contract by the UK government and the subsequent installation of an interconnector to export electricity to the mainland and the National Grid.