Lochaber Power Company v Assessor for Inverness-shire., North British Aluminium Company v Assessor for Inverness-shire
| Jurisdiction | Scotland |
| Judgment Date | 24 January 1936 |
| Date | 24 January 1936 |
| Docket Number | No. 24. |
| Court | Lands Valuation Appeal Court (Scotland) |
Lands Valuation appeal Court.
Lord Hunter. Lord Fleming. Lord Pitman.
ValuationValueSubjects in owners' occupationHydroelectric power worksAluminium factoryMethod of valuationContractor's principle.
The Lochaber Power Company, incorporated by statute, were the owners and occupiers of hydro-electric power works in Inverness-shire, which included dams for raising the level of lochs, and a tunnel, fifteen miles in length, through the Ben Nevis range, for conveying the water of these lochs to the Company's power house, where it was utilised in turning the hydro-electric machinery. The total cost of the works was 3,376,069. The Assessor in making his valuation proceeded upon the contractor's principle, and, instead of the ordinary percentages applied in valuing industrial undertakings5 per cent for land, 7 per cent for buildings, 7 per cent for machineryhe, as a concession, applied an overhead percentage of 4 per cent. The Company contended that, if the contractor's principle was adopted, the percentage applied should have been per cent, which would have resulted in approximately the figure which would have been reached upon the comparative principlethe comparable subjects being those of the Kinlochleven Power Schemeor upon the revenue principle, which was the principle they favoured. They also contended that a substantial reduction in valuation should have been made in respect that the works were to the extent of two-thirds unproductive and the expenditure thereon largely unremunerative.
At the same time the Assessor valued an aluminium factory at Fort-William, owned by the North British Aluminium Company, and supplied with hydraulic and motive power and electricity by the Lochaber Power Company. He proceeded upon the contractor's principle, taking the ordinary percentages, but he made a deduction of 20 per cent from the total capital cost in respect of post-war construction costs. The Company contended that the valuation was excessive. Both the Lochaber Power Company and the North British Aluminium Company were subsidiary companies of the same parent company which owned the shares of the two companies.
Held that the valuations of the Assessor were right, and that he had proceeded upon the proper principle and had applied appropriate percentages. As regarded the comparative principle, had it been applicable, there was nothing to indicate the method by which the valuation of the Kinlochleven Power Scheme had been arrived at, and, further, the subjects in that case were owner-occupied; as regarded the revenue principle, that principle was applicable in cases of monopolies and quasi-monopolies only, and, further, in the present case the buyer and the seller were in reality the same persons; as regarded the contention that the works were largely unproductive and unremunerative, it was merely based on the fact that they were capable of supplying more power than was at the moment required, which did not warrant any deduction.
Case of the Lochaber Power Company.
At a meeting of the Valuation Committee of the County of Inverness, the Lochaber Power Company appealed against an entry in the Roll for the year ending Whitsunday 1936, in which Hydro-Electric Power Works, comprising tunnels, pipe line, power house, tail race, pier and pier railway, Inverlochy, were entered in the Roll at the gross annual value of 132,544 and the rateable value of 31,065, and pier and part of pier railway, Fort-William, at the gross annual value of 2500 and the rateable value of 586. The appellants, who were owners and occupiers of the subjects, craved that the figure of 132,544 should be reduced to 15,750, the figure of 31,065 to 3691, 10s., the figure of 2500 to 250, and the figure of 586 to 58, 10s. The Committee having dismissed the appeal, the appellants craved and obtained a stated case on appeal to the Lands Valuation Appeal Court.
The case set forth that the following facts were admitted or proved or were within the knowledge of the Committee:"(1) The appellants are a statutory company, incorporated under the Lochaber Water Power Act, 1921. Under that Act the appellants were empowered to utilise the waters of the catchment area for hydraulic and motive power and electricity to be supplied by the Company mainly to the North British Aluminium Company, and to supply electricity in bulk for other purposes outside the area of supply. (2) The capital, as shown in the accounts of the Company for the year ending 31st December 1934, consists of 3,000,000 shares of 1 each, of which 2,236,889 have been issued, and 1,040,492 4 per cent first mortgage debenture stock was outstanding as at 31st December 1934. (3) During the construction of the works, and until the current year, no principle or basis of valuation had been applied to the undertaking, and the figure appearing in the Valuation Roll was merely an agreed-upon one between the Company and the then Assessor. (4) The discussion before the Committee proceeded on the basis that the contractor's principle was the correct principle of valuation to apply to this undertaking, and it was agreed between the parties that the figure of 3,376,069 was the total capital cost to be taken in applying that principle. (5) The main works of the Company are as follows:The first stage consists of tapping the waters of Loch Treig, and conveying them in a tunnel, which starts roughly about 100 feet below the surface of Loch Treig. This tunnel runs through the Ben Nevis range for a distance of 15 miles, and is 15 feet in diameter. From the surge-chamber at the end of the tunnel the water is conveyed through pipes 5 feet 6 inches in diameter down to the power house, where the water is utilised in turning the hydro-electric machinery in the Lochaber Power Company's power house. The total electricity which can be generated by the present plant is almost wholly supplied to the North British Aluminium Company's factory. The second stage of the scheme, which has also been completed, involved the erection of a dam at the end of Loch Treig and the raising of the Loch as a reservoir, the erection of a dam some way distant from Loch Laggan, which holds up a certain amount of the water, and connecting Loch Laggan and Loch Treig by a tunnel 4 miles long. The water flows through Loch Laggan into Loch Treig and down into the main tunnel. These are the two stages which have been completed. A third stage was contemplated, but has not yet been commenced."
The case further stated:"The Assessor at the Court submitted that the usual percentages pertaining to undertakings throughout the country valued on the contractor's...
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