Logan v Scottish Water
| Jurisdiction | Scotland |
| Judgment Date | 01 November 2005 |
| Neutral Citation | [2005] CSIH 73 |
| Date | 01 November 2005 |
| Docket Number | No 10 |
| Court | Court of Session (Inner House) |
Court of Session Inner House Extra Division
Lord Osborne, Lady Cosgrove, Lord Philip
Compulsory powers - Construction of sewers on private land - Compensation - Right to compensation of party suffering loss, injury or damage in relation to matter in which not in default - Whether right to compensation for secondary or relational claims - Basis of valuation of claims - Whether Pointe Gourde principle applicable - Whether wayleave recognition payment available - Sewerage (Scotland) Act 1968 (cap 47), secs 1, 3(1)(a)(ii), 20(1)
Section 1 of the Sewerage (Scotland) Act 1968, as amended, provides,inter alia, that subject to the provisions of the act it shall be the duty of Scottish Water: to provide such public sewers as may be necessary for effectual drainage of its area; to take its public sewers to points which will enable the owners of premises which are to be served by the sewers to connect their drains or private sewers with the public sewers at reasonable cost; but that these duties shall not require a sewerage authority to do anything which is not practicable at a reasonable cost. Section 3(1)(a)(ii) thereof provides that Scottish Water may construct a public sewer in, on or over any land not forming part of a road. Section 20(1) provides that Scottish Water shall make full compensation for any loss, injury or damage sustained by any person by reason of the exercise of its powers under the act in relation to a matter as to which the person has not themselves been in default.
The appellant owned 225 acres of land at Tarvit to the south and east of Cupar, Fife, forming part of Tarvit Home Farm. He proposed to develop 28 acres thereof for housing. The Guthrie Trust owned approximately 70.4 acres to the south and west thereof and in respect of which detailed planning permission for the erection of dwellinghouses had been given. In June 1988 a planning inquiry was held into the issues of adequacy of provision for housing in the Cupar area and approval of further housing land. The reporter found that simultaneous development of the two sites would result in excessive provision but that development of the Guthrie Trust land was unlikely to produce a significant number of houses by 1992 in light of the infrastructure costs. The reporter accordingly granted permission for housing and other developments on areas of land including the appellant's land. He recommended conditions be included in any grant of planning permission prohibiting extension southwards of pipe infrastructure within the Logan land or connection thereof with any other residential development on other land without the express consent of the planning authority. Outline planning permission was thereafter granted by the Secretary of State in respect of the Logan land, which included this condition. On appeal in 1990, by the Guthrie Trust to the Court of Session, the planning permission was quashed.
Prior to the appeal hearing, a further application for outline planning permission for development of the Guthrie Trust land on a phased basis had been submitted. In 1988, the Secretary of State indicated he would grant the permission subject to sec 50 agreements being entered into with the regional planning authority. Notices having been served by the planning authority and not objected to by the appellant, sewers were laid across the appellant's land and completed in November 1993. Residential development of the Guthrie Trust land thereafter took place.
The planning inquiry in relation to the appellant's land was reopened and an appeal hearing held in April 1991 against refusal of planning permission for the appellant's development following the 1990 Court of Session appeal decision. Having concluded that the Guthrie Trust land would become effective by the end of 1993, the reporter recommended refusal of the appellant's application and this advice was accepted by the Secretary of State. Planning permission for housing development on the appellant's land was refused in January 1991.
The appellant's law agents in 1994 wrote to the regional council as sewerage authority indicating that the appellant had suffered loss and damage by reason of the authority's exercise of their statutory powers under Pt 1 of the 1968 Act in relation to matters as to which he had not himself been in default. It was maintained that but for the exercise of those statutory powers, a fresh grant of planning permission would have inured to the appellant's land following the quashing of the original grant and the value of the land would accordingly have been increased. The regional council disputed liability and the claims were placed before the Lands Tribunal as arbiter in terms of a joint remit adjusted between parties. An action of declarator in the sheriff court in which certain prescription or limitation points were taken anent the claims was unsuccessful, both at first instance and on appeal before the sheriff principal and thereafter the Court of Session.
Following a proof before answer in September 2002, the tribunal in a draft decision rejected the appellant's first two claims, loss of development value of the appellant's land and loss of right to make a ransom claim against the owners of the Guthrie Trust land, but upheld the third claim of 2,000 in respect of the continuing presence of pipes on the appellant's land. The tribunal then submitted a stated case for the opinion of the Court of Session on five questions (2.1-2.5) as to its entitlement to conclude that: (1) the appellant's loss in his first claim did not arise as a result of exercise by the authority of its statutory powers; (2) no entitlement arose in relation to the appellant's first claim; (3) the appellant had no right to any sum in respect of his second claim; (4) the tribunal had no power to award interest on any sum claimed; and (5) the regional council was due to make payment to the appellant of the sum of 2,000 for the ongoing presence of pipes in his land. It was conceded that the fourth question fell to be answered in the affirmative.
On behalf of the appellant, in relation to the development claim it was maintained that the terms of the 1968 Act providing for compensation were wide in their terms. The tribunal had misdirected itself in its approach to sec 20 of the 1968 Act. In focusing on the planning history, the tribunal had failed to consider the relevant question of the loss suffered by the appellant in November 1993. In the absence of exercise of the statutory powers, the appellant's development land would have had its planning permission reinstated and the loss of the opportunity for that was what the tribunal should have focused its attention on. It was an error of law for the tribunal to state that the appellant's land had no particular development value due to the refused permission if the reason why it had no such permission was the exercise of the statutory powers. It was erroneous in law to conclude that there had been no loss, injury or damage by reason of the exercise of the statutory powers by comparing the value of the ground one month before the work of creation of the sewers, completion and one month after. The correct approach which should have been adopted was to consider what would have occurred if the statutory power had not been exercised. In relation to the alternative ransom claim for wayleave rights, the appellant argued that the focus required to be not on what the appellant had lost, but on what the Guthrie Trust had gained, being the loss of development value to the appellant.
The respondents argued that the appellant had suffered no loss of development value when the statutory powers were exercised because the appellant's development land had had no such development value immediately before the powers had been exercised. Any loss of development value had not been directly caused by the exercise of statutory powers. Even if the appellant had lost the opportunity to obtain a fresh planning consent, this was a loss of hope value which the tribunal had valued at nil. Section 20 of the 1968 Act was inconsistent with the appellant's approach of relying on a non-scheme world comparison which was only applicable in cases of compulsory acquisition. The statutory powers excluded any ransom claim and loss of opportunity to extract a ransom payment was not an appropriate head of claim under sec 20.
Held that: (1) the compensation available under sec 20(1) of the 1968 Act was for loss, injury or damage sustained in a direct sense by reason of exercise of the powers granted under the act and did not cover secondary or relational claims (para 97); (2) there having been no planning permission extant immediately before or after exercise of the statutory powers, there had been no change in development value as a result of the exercise of powers (para 98); (3) no claim for a ransom value existed under sec 20(1) of the 1968 Act (paras 100, 105); (4) thePointe Gourde principle of fair compensation applicable in cases of compulsory purchase did not apply in relation to sec 20 claims (para 108); (5) the tribunal had erred in holding that a wayleave recognition payment fell to be paid to the appellant (para 109); and questions 2.1 to 2.4 answered in the affirmative and question 2.5 in the negative.
Andrew Logan intimated a claim for compensation under sec 20(1) of the Sewerage (Scotland) Act 1968 to Fife Regional Council as sewerage authority. The council disputed liability and parties agreed that the matter be placed before the Lands Tribunal as arbiter. Following a proof before answer in September 2002, the Lands Tribunal issued a draft decision in respect of which it submitted a stated case for the opinion of the Court of Session. Scottish Water were called as respondents.
Cases referred to:
Aikman v Caledonian Rly CoUNK (1877) 4 R 1020; 14 SLR 617
Allan v BarclayUNKUNK (1864) 2 M 873; 36 Jur 436
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