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Scottish Court of Session Decisions
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Cite as:  ScotCS 19
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OUTER HOUSE, COURT OF SESSION
OPINION OF LORD HAMILTON
in the cause
JOHN PAUL and OTHERS
ALEXANDER LINDSAY OGILVY
Pursuers: Smith, Q.C.; Balfour & Manson
Defender: Haddow, Q.C.; Biggart Baillie
25 January 2000
The late Thomas Paul was, prior to his death on 9 January 1990, the tenant of each of two farming units in the vicinity of Bearsden, Glasgow. One was the farm and lands of Kessington, part of the Estate of Killermont, which he held by virtue of a lease by Killermont & Garscadden Estates Limited in favour of Arthur Lawrie dated 20 November 1940, the tenant's interest in it having been assigned to Mr Paul by Assignation in his favour by Mr Lawrie with the consent of Killermont & Garscadden Estates Limited dated 12 and 21 December 1962 and 3 and 17 January 1963. Over the years the extent of Kessington Farm had been reduced by the landlords taking parts back for development. By the time of Mr Paul's death it extended to about 50 acres, including a farmhouse and steading. That unit constituted an agricultural holding within the meaning of the Agricultural Holdings (Scotland) Acts. Mr Paul was also the tenant of an adjacent statutory smallholding styled Number One West Millichen, Maryhill, the landlords thereof being Garscube Estate. It also extended to about 50 acres.
These holdings were at the time of Mr Paul's death farmed by the firm of Thomas Paul and Sons. Mr Paul and his wife, Mrs Isabella Paul, had originally farmed in partnership but as each of their sons John and William attained the age of twenty one he was assumed as a partner. John became a partner in 1973 and William in 1980. In about 1988 Mr Thomas Paul and Mrs Paul retired from the partnership, the business being continued by John and William. The tenant's interests in the holdings were held as assets of the partnership.
On the death of Mr Thomas Paul those interests vested by virtue of the Succession (Scotland) Act 1964 in his executors, namely, Mrs Paul, John and William. By virtue of section 16 of the Act the executors were entitled within one year of Mr Paul's death to transfer each of those interests to one of the persons having certain rights in or against Mr Paul's estate, including John and William. The defender had acted as solicitor for the partnership and the individual partners for many years. He also acted for the executors. He failed to give appropriate advice in relation to the transfer of those interests. He admits for the purposes of this action liability to make reparation to the pursuers, John and William as partners of Thomas Paul & Sons and as individuals, for such losses as may arise from that failure. The question in this case is the measure of the damages payable.
The landlords of Kessington Farm exercised their right, no timeous transfer having been effected, to terminate the lease of that farm. They served a notice to quit which took effect at Martinmas 1992. The outstanding issues in this case are concerned with certain consequences of the loss of the benefit of the secure tenancy of Kessington Farm. Certain matters have been agreed. A claim for "housing loss" (consequential on the loss of domestic accommodation at Kessington Farm) was agreed in the sum of £15,000 inclusive of interest to the date of decree. A claim in respect of One West Millichen (in respect of which no notice to quit by the landlords was served until relatively recently) was agreed in the sum of £10,000 inclusive of interest to the date of decree.
Kessington Farm lies immediately to the east of the built-up area of Bearsden, a popular dormitory for Glasgow. In 1989 Mrs Paul noticed an advertisement in a local newspaper seeking land for sale in the vicinity. A response to it resulted in conditional missives being entered into on various dates between May and July 1989 for the acquisition by Alfred McAlpine Homes Scotland Limited (housebuilders) of the leasehold interest of Kessington Farm. The conditions in the missives included -
"(1) The price shall be SEVEN HUNDRED AND FIFTY THOUSAND POUNDS (£750,000).
(2) Entry, settlement and vacant possession to the subjects shall be six months after entry is taken in terms of Condition 4 hereof.
(4) This offer is subject to our clients acquiring the subjects or part thereof from Killermont and Garscadden Estates in terms satisfactory to them and taking entry thereto.
(5) The Assignation of said lease shall be in terms of the draft annexed and signed as relative hereto. This offer is subject to the landlord formally consenting to said Assignation....".
The provision in respect of the price was subsequently qualified by a term that, in the event of the acquirer obtaining planning permission for housing development on any part of a specified 17.56 acre field, the price would be increased to £800,000. In the event that qualification is not material for present purposes. The terms on which Alfred McAlpine Homes Scotland Limited might acquire the landlords' interest were not spelt out in these missives but clearly were likely to be conditional on planning permission being obtained for housing development.
The principal farming activity carried on in 1989 at Kessington and at the adjacent West Millichen was a dairy herd with followers. In addition some crops were grown. A retail milk business was carried on. The partnership also owned land at Duncryne, Gartocharn which had been purchased in about 1980. Duncryne, on which beef cattle were run, extended to about 130 acres. Shortly after Mr Paul's death the partnership purchased a dairy farm, then extending to about 180 acres, at Newbigging, Carnock, near Dunfermline in Fife. Duncryne was sold as were most of the beef cattle run on it. The retail milk business hitherto run from Kessington was also sold. Those steps were taken by the Pauls having in mind that, in the event of the missives with Alfred McAlpine Homes Scotland Limited being purified, they might require to vacate Kessington at relatively short notice. Entry was taken to Newbigging in late 1990 and the milking cows transferred there from Kessington. Additional milking cows were purchased from the seller of Newbigging. John Paul took up residence there. He had always had and retains a strong interest in the dairying aspects of the pursuers' business. William Paul, who was at that time unmarried, remained with Mrs Paul at Kessington. Dry cows and followers were kept on it and on West Millichen, as were a number of beef cattle formerly at Duncryne. Some crops were grown.
At about the same time as missives were being negotiated relative to the tenant's interest at Kessington Farm, Alfred McAlpine Homes Scotland Limited (which later changed its name to Egerton Homes Strathclyde Limited) was negotiating with the landlords. Missives between them were ultimately concluded in August 1989, being subsequently amended in October and again in November of that year. These missives were conditional on planning and other permissions being obtained for residential development on terms satisfactory to the purchasers. In the event applications for planning permission made to the local planning authority were refused. In September 1990 Egerton Homes Strathclyde Limited wrote to the solicitors for the landlords advising that they had taken the view that there were no prospects of a successful appeal against those refusals. These missives with the landlords were never purified. Egerton Homes Strathclyde Limited subsequently went into receivership.
In May 1991 solicitors acting for the landlords wrote to an agent for the pursuers intimating that, as more than a year had expired since Mr Paul's death, they were now treating the tenancy of Kessington as terminated. Despite representations on behalf of the pursuers made initially by the defender and subsequently by Mr Rennie, then of Messrs Connell and Connell (to whom they had transferred their instructions), the landlords declined to depart from that position. They were prepared to enter into a limited partnership with the pursuers in respect of the farm but insisted that the agricultural tenancy was at an end. Mr Rennie achieved a degree of postponement of the inevitable (as well as successfully negotiating in respect of milk quotas) but, a notice to quit having as earlier mentioned been served, the pursuers had no alternative but to vacate the holding (including the farmhouse and steading) at Martinmas 1992. The animals hitherto kept at Kessington were then transported to Newbigging. Mrs Paul took up residence there, as initially did William Paul. On William's subsequent marriage the partnership acquired a house for him in Carnock.
In the 1993 and 1994 seasons the pursuers took seasonal grazings (from 1 May to 31 October) of the fields at Kessington on which they then kept young stock, cows in calf and bulling heifers. No winter accommodation being by that time available to the Pauls there, those animals required to be transported to Newbigging for wintering. In 1994 a farm adjacent to Newbigging was sold in lots. The pursuers succeeded in acquiring in that sale about 60 acres (West Camps) which they incorporated into Newbigging thus increasing its acreage to about 240 acres. No further seasonal grazings were taken by the pursuers at Kessington, the animals formerly grazed there being from the 1995 season kept at Newbigging. In 1998 the pursuers acquired another farm (Kinninmonth) also in Fife. The milking cows have now been moved to that farm, where Mrs Paul and John Paul now reside. William now resides at Newbigging.
An important element in the pursuers' claim for damages is their claim for the loss of the chance of obtaining payment in respect of the potential for development of Kessington Farm or part of it for housing purposes. This can be regarded either as a distinct head of claim or as an aspect of the claim for the loss of the secure tenancy. I consider it appropriate, in the interests of clarity of exposition, to deal with it as a distinct head of claim, though it is appropriate always to bear in mind that these claims all stem from the loss of the tenancy. In the course of the present proceedings the parties entered into a Joint Minute whereby they agreed -
"to the following issues being remitted by the Court to John Fullarton, Dip. T.P..... for determination, such determination to be binding on the parties, and the procedure in the remit to be as here set out. It is further agreed that these issues are exhaustive of the basis of any claim by the pursuers against the defender in respect of lost benefit of development potential, but are not exhaustive of the amount of any claim, should any of the issues be answered to any extent in the affirmative, nor of the appropriateness of assessing loss on the basis of an affirmative answer to Issue 2 or Issue 3....
1 Whether an appeal to the Secretary of State would, on the balance of probabilities, have succeeded against the decisions by Bearsden and Milngavie District Council in about April and May 1990 to refuse the applications by Egerton Homes Limited for planning permission for housing at Kessington Farm, had appeal been timeously taken.
(a) as at January 1991 and
(b) at any time between January 1991 and the present date
it was (or is) more likely than not that planning permission would have been (or will be) granted for housing on Kessington Farm or on any part thereof on an application made to said District Council or to its successor as planning authority (or on appeal therefrom to the Secretary of State). If Mr Fullarton answers any part of this issue in the affirmative, he is asked to describe the nature of the grant, when the application or appeal would have been granted (or will be granted) and over what part or parts of Kessington it might extend.
(a) as at January 1991 and
(b) at any time between January 1991 and the present date
(c) as at the present
there was (or is now) any prospect of the grant of planning permission for housing on Kessington Farm or on any part thereof on an application made to the District Council or its successor as planning authority (or on appeal therefrom to the Secretary of State). If Mr Fullarton answers any part of this issue in the affirmative, he is asked fully to describe and explain the nature of the prospect, if any, when the application might have been (or might be) granted and over what part or parts of Kessington Farm it might extend".
On 29 September 1997 the Court interponed authority to that Joint Minute and in terms thereof remitted the issues identified therein for Mr Fullarton's determination.
Mr Fullarton, having inspected the site and having considered the planning history and other documents, expressed his conclusions in a report dated 7 September 1998. He answered Issues 1, 2 and 3(a) and (b) all in the negative. His conclusions with reference to Issue 3(c) are contained in paragraphs 7.2 to 7.9 of his report. These are in the following terms -
"7.2 This leaves item (c) and the question of whether at the present time there exists any prospect of planning permission being granted by East Dunbartonshire Council [the current local planning authority] for housing development on the farm or any part thereof. I find myself in agreement with the views of Malloy Smith Associates and Montgomery Forgan Associates that:-
(a) the northern site of 5.7 acres at Kessington would be unlikely to attract consent due to its proximity to the alignment of the Antonine Wall, and its location within the green belt:-
(b) the total southern section measuring 27 acres would not be approved, since it could easily accommodate more than 200 dwellings and it would inevitably encroach unacceptably into the surrounding countryside and green belt.
I also conclude that any appeal against refusal of planning permission for either of the sites would be doomed to failure as being contrary to development plan and national planning policies.
7.3 This leaves the 8.9 westernmost part of the southern site at Kessington Farm containing the existing farmhouse and steading buildings, with its frontage to Inveroran Drive. Like the remainder of the Kessington land, the area concerned falls within the green belt as defined in the current adopted local plan, and its development for housing purposes would thus breach policies contained in the local plan as well as those within the adopted structure plan and national policy guidelines. In these circumstances I take the view that a planning application lodged at the present time for the provision of housing on the site would be found to fail.
7.4 During the course of my consideration of this case I took the opportunity to discuss current government policy with regard to development in the countryside and the protection of designated green belt areas with the Chief Public Inquiry Reporter of the Scottish Office. This discussion did not refer to any specific site. As a consequence I can state that national policy towards the protection of green belt areas has strengthened rather diminished in recent years. I am firmly of the view that any appeal, lodged at the present time, against refusal of planning permission for housing development on the site of 8.9 acres at Kessington would be dismissed.
7.5 I consider that there is no realistic prospect, in the medium term (during the next 4 to 5 years) of a planning application for housing on this site being approved. In order to succeed there would have to emerge an acknowledged shortfall in the availability of housing land and a need for the release of greenfield sites within the Bearsden/Milngavie area to meet the shortfall. It would further need to be demonstrated that the 8.9 acre greenfield site at Kessington offered the best opportunity to meet that need with least damage to and intrusion into the designated green belt.
7.6 Alternatively, the boundaries of the green belt might be reviewed in relation to Kessington Farm. It is anticipated that the current adopted structure plan would be superseded, at a future date, by a replacement Glasgow and Clyde Valley Structure Plan promoted by the relevant planning authorities. Given current government policy towards development in the green belt, I conclude that revised structure plan policies will not diminish the importance of green belt designation nor its relevance in determining the location of new development within the structure plan area. Similarly, the adopted local plan will fall to be reviewed in due course by East Dunbartonshire Council when green belt policies may be redefined. Both of these revisions of the development plan covering the Bearsden and Milngavie area are unlikely to emerge for at least 4 or 5 years from now.
7.7 In the event of the favourable realignment of green belt boundaries taking place, or the need for green belt land for housing purposes being established, the 8.9 acre site at Kessington might well be reassessed. In its favour is the fact that it is bounded to the north, west and south by urban land uses, and it contains existing agricultural buildings, some of which are in poor condition and underused. Only in such circumstances can I envisage the setting aside of existing planning policies to allow housing development to occur.
7.8 In my view it is not possible to state categorically that those circumstances will never arise. However, even in the longer term of from 5 to 10 years say, I consider that it is a fairly remote possibility that planning policies will emerge, and be adopted, which would permit the 8.9 acres of Kessington to be developed for housing. I take this view on the basis of my understanding of national planning policies and of the guidance issued by central government to the local planning authorities concerning development in the countryside and in the green belt. I conclude that, on the balance of probabilities, the prospect of planning permission for housing development being granted within a 5 to 10 year timescale is markedly less than a 50: 50 chance. I further consider that any appeal lodged within that time scale against a refusal of such planning permission would be dismissed.
7.9 I believe that to attempt to forecast how the current situation might change over a period of time longer than 10 years would amount to unsupported speculation".
Before addressing the legal issues which arise from those conclusions, it is appropriate to consider certain oral testimony which was led at the proof. Mr Thomas Donald, a chartered surveyor with specialised knowledge and experience of the valuation of agricultural land in various circumstances, was led for the pursuers. A report prepared by him in March 1999 (No 31/1 of process) had been lodged. In that report he explained that, having considered Mr Fullarton's report and conclusions, he had had "a look further into the background to Mr Fullarton's concluded framework in order to refine my own views and valuations". His report thereafter went on to explain the results of certain enquiries he had recently made of the local planning authority and to set out "some of the facts which might be influential in prompting a release within the early stages of Mr Fullarton's prescribed timescale". When Mr Donald came to speak in evidence to this part of his report, Mr Haddow for the defender objected to the line of evidence on the ground that it was liable to traverse the issues which had been remitted by the parties to Mr Fullarton for determination. I allowed the evidence to be led subject to competency and relevancy.
Mr Donald's evidence on this aspect may be summarised as follows. A new draft local plan was in preparation with publication expected at any time. Within that statutory process the present shortage of effective private housing land would be identified as a major issue. There was a real demand for new private housing in the immediate area of Kessington, a site very close to it (but within the urban boundary) having, he understood, very recently been sold by tender at a price reflecting approximately £620,000 per acre. Mr Donald had been informed that there had been over thirty offers and that the successful bid was by no means the highest. The site in question was that of a former primary school. It was appropriate also to have regard to factors such as the influence of planning gain on planning decisions. Another compelling additional factor which had emerged was that in August 1997 the landlords of Kessington had entered with another party into an option contract relative to areas of Kessington including the 8.9 acres referred to in paragraph 7.3 of Mr Fullarton's report. It was believed that the other party was a speculative house building company of which a principal was an individual who had formerly been with Alfred McAlpine Homes Scotland Limited. All those factors suggested that the 8.9 acres could be released for development by around 2003.
Before ruling on this evidence I should add that in the course of the defender's proof the valuation expert led by him (Mr Elvy) was also asked in cross-examination (subject, following an objection, to reservation as to competency and relevancy) questions touching on the planning prospects. Mr Elvy gave certain answers to the cross-examiner. The matter was further explored in re-examination when Mr Elvy gave evidence to the effect that in the long term one could be reasonably confident that the land would eventually be built on, that logically that must come given the profile of development in the area and that it was just a matter of timing.
In my view Mr Donald's evidence on this aspect, insofar as directed to the planning prospects (including the timing of any prospective planning permission), was in the circumstances inadmissible and falls to be disregarded. The parties had, very sensibly, agreed that the issues remitted to Mr Fullarton were "exhaustive of the basis of any claim by the pursuers against the defender in respect of lost benefit of development potential but are not exhaustive of the amount of any claim...". The "basis of any claim" must in the circumstances, in my view, embrace all aspects of assessment of the planning prospects including the assessment of when any relevant planning permission might be granted. Some of the matters spoken to by Mr Donald (such as the influence of planning gain etc) were clearly matters for Mr Fullarton, the interpretation of whose views as expressed in his report is obviously for the court and for the court alone. Other aspects (such as the sale of the school site and the making of the option contract) related to matters which had not occurred or were not known to have occurred prior to Mr Fullarton finalising his report. To the limited extent that these matters touch on the current value of land for development they are admissible as being concerned with "the amount of any claim" within the meaning of the Joint Minute. However, insofar as they may tend to suggest that the prospects of early permission for development are more favourable than was apparent on the material available to Mr Fullarton, they are not, in my view, admissible. Mrs Smith for the pursuers cited Rieley v Kingslaw Riding School 1975 SC 28 as illustrative of circumstances in which the court, notwithstanding an earlier determination of damages, had declined to close its eyes to material bearing on the current position. In Rieley, an action for damages for personal injury, the pursuer had sustained injuries in the course of a riding accident. At the time of the proof in the Outer House the injuries sustained to her right leg, while serious, were such that on the evidence available it was not thought likely that she would lose that leg. Subsequently and before a reclaiming motion was heard, the pursuer required to undergo amputation of the leg. The Inner House allowed amendment to introduce this development and in the event reviewed the level of damages having regard to that change in circumstances. In the present case the parties agreed by Joint Minute that a remit to Mr Fullarton on the issues identified should be exhaustive of the basis of any claim in respect of lost benefit of development potential. That constituted a binding contractual arrangement that, insofar as concerned the basis of the relative claim, Mr Fullarton's evaluation would be determinative. The court is, in my view, bound to give effect to that arrangement and cannot, at least in ordinary circumstances, enter upon an evaluation influenced by materials not placed before Mr Fullarton. If, of course, there had been a material change of circumstances since Mr Fullarton reported, a further remit to him to provide a supplementary report in the light of those circumstances might have been an available course; but that was not sought here. In exceptional circumstances other remedies might have been available. But, while it is of course for the court to interpret and to apply Mr Fullarton's conclusions, it ought not to modify or to qualify them on the basis of material not placed before him.
In the event, however, the new matters of fact are not such as, in my view, to affect materially the inference properly to be drawn as to the planning prospects. There is no doubt that Bearsden is an attractive area for private housing development. It is unsurprising that when a site, within the already built- up area and formerly used for other purposes, became available, it should attract considerable interest for housing development purposes. Nor is it surprising that the planning authority should regard a site so positioned as suitable for such purposes. Little can be drawn, in my view, from the option contract of 1997 in respect of areas of Kessington Farm. Similar arrangements have been made in the past (including the relatively distant past) without planning permission being in the event granted. The option under the 1997 contract endures until 5 August 2002 and can under certain circumstances be extended until 5 August 2004. These circumstances contribute little, in my view, to the question whether and, if so, when permission will be granted for development of a site presently zoned as green belt. As to the procedural arrangements, planning policy is subject to an ongoing process, constantly subject to review. There is nothing about the current procedural arrangements relative to the draft local plan that suggests to me that a decision favourable to development is for procedural reasons likely to be taken earlier rather than later.
In his report, speaking as at September 1998, Mr Fullarton expressed the view that "it is not possible to state categorically that [a favourable alignment of green belt policies or the need for green belt land for housing purposes being established] will never arise". He then addressed a timescale of "from 5 to 10 years say" and reached a view as to the prospect of planning permission for housing development being granted within that period (ie. between about September 2003 and September 2008). He regarded any attempt to forecast matters over a period of time longer than ten years as amounting to unsupported speculation. For the purposes of the assessment of damages it is, notwithstanding the imponderables involved, desirable to fix a time within the 5 to 10 year timescale at which to postulate that a relevant planning decision would be taken. I see no good reason to adopt any other than a mid-point in that period, say, the Spring of 2006.
Mr Fullarton, in addressing the prospects of planning permission being granted within the 5 to 10 year timescale, used in paragraphs 7.6 to 7.8 a number of expressions, both verbal and arithmetical. These include "a fairly remote possibility" and "markedly less than a 50:50 chance". For the purposes of assessment of damages it is convenient, in my view, to adopt a percentage figure. Mrs Smith submitted that, having regard to all the circumstances, the percentage chance of the grant of planning permission should be assessed at not less than 40%; Mr Haddow urged me to adopt a figure in the range of 10 to 25%. I regard both those suggestions as too extreme. Having regard to the whole content of paragraphs 7.6 to 7.8 of Mr Fullarton's report against the general circumstances disclosed in the admissible evidence, I assess the prospect of planning permission being granted for housing development of the 8.9 acre site as at the postulated date of Spring 2006 at 30%. In Davies v Taylor  AC 207 Lord Reid at p.212 described a 40% chance as "quite likely but less than an even chance". The prospect referred to by Mr Fullarton is, in my view, materially poorer than that description. On the other hand, the range referred to by Mr Haddow is, in my view, too remote from an even chance to be described as "markedly less" than it. Before considering the consequences of that assessment for any award of damages to the pursuers, it is appropriate to discuss certain other issues which arose in argument.
Mr Haddow submitted that the pursuers were, in respect of their claim for loss of development potential, entitled only to nominal damages - a few thousand pounds at most. That submission was based on the proposition that the correct date for the assessment of any such loss was the date when the loss occurred (Livingstone v Rawyards Coal Co (1880) 7R (HL) 1). That, so ran the argument, was January 1991 (at which time the obligation of the landlords to accept a transfer of Mr Thomas Paul's interest in the lease of Kessington Farm was lost) or at latest Martinmas 1992 (when the landlords had secured the effective termination of the tenancy). Assessed as at either of those dates there was no loss sounding in damages. The lost right required to have "an ascertainable, measurable, non-negligible value" (Kyle v P & J Stormonth Darling, WS 1992 SC 533 at p. 549 - also, curiously, reported again at 1993 SC 57). It was clear from Mr Fullarton's report that, viewed at any time prior to the opening of the 5 to 10 year period referred to by him, there was no realistic prospect of planning permission being obtained.
The general rule on which damages for reparation fell to be assessed is that "you should as nearly as possible get at the sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation" (Livingstone v Rawyards Coal Co, per Lord Blackburn at p. 7). Although in an action laid in delict iniuria and at least some damnum will inevitably have occurred prior to the date when the court comes to assess damages, the assessment will fall to be made in the circumstances as known at the time of assessment. Where the iniuria involves an infringement of a right of property, the known circumstances may include what benefit the proprietor might have had if his property had not been wrongously interfered with. These circumstances may be such that in practical terms he could have profitably exploited his property only in a particular way at a particular time. Such a case was Livingstone v Rawyards Coal Co. There the pursuer was the proprietor of a small feu where the mineral rights had not in the feu grant been reserved to the superior. The rights in the whole surrounding mineral field remained in the superior who had leased them to the defenders. When, in bona fide ignorance of the pursuer's rights, the defenders had worked out the coal under the pursuer's feu, it was held that the proper measure of damages was its value at the time it was taken (calculated by reference to the royalty which might reasonably have been paid by the defenders), not to the market value of the coal wrought less the estimated cost of working it. That was because in practical terms there was no question of the pursuer having been able to exploit in isolation the coal below his feu; the only practical mode of exploiting his mineral rights would have been to lease them to the defenders so that they might exploit them in the course of an orderly working of the coalfield as a whole. Accordingly, the measure of his loss necessarily fell to be assessed with reference to the only time at and mode in which he might have profitably exploited his rights. It is in that context that a reference is made to "the value of the coal... at the time it was taken" (per the Lord Chancellor at p. 3) and similar references are made elsewhere in the speeches. The circumstances of that case are accordingly special (the Lord Chancellor at p. 4 refers to the circumstances as "very peculiar") and have, in my view, no application to the present case where the possibility of lost benefit remains a future event. I accordingly reject Mr Haddow's submission that the pursuers are entitled only to nominal damages in respect of the loss of development potential.
Mr Elvy spoke in evidence to a report (No 30/1) in which he assessed the pursuers' loss of Kessington at certain dates. That assessment proceeded on the premise that at the material date the landlords would have been entitled under the lease to resume possession of the 8.9 acres (for which hypothetically planning permission would have been granted) and would successfully have exercised that entitlement so as to require the pursuers to give them up. This assessment of loss accordingly addressed the compensation which the pursuers might reasonably have expected to receive in such circumstances. Mr Haddow did not urge me, in the event of rejection of his submission that only nominal damages be allowed, to restrict the amount of damages to be awarded under this head to the figure brought out in Mr Elvy's report; rather, he submitted that this was a factor to be taken into account as part of an overall assessment by the court of the value of the loss of the tenancy. It is, however, convenient to deal at this stage with the premise upon which Mr Elvy's approach depends. The subjects let under the lease were "ALL and WHOLE the farm and lands of Kessington" delineated and shown within boundaries on an annexed plan "together with the existing farm buildings and offices". Those buildings and offices (which comprise the farmhouse and steading) stood and stand upon part of the 8.9 acres mentioned earlier. They were also (by reason of their situation at the western end of that area) a critical aspect of its development. The lease provides -
"RESERVING ALSO to the proprietors and their foresaids power... to resume any part of the said lands for making roads, selling or for feuing or for planting or for any other purpose, the proprietors and their foresaids being bound at their own expense to enclose with proper fences such parts of the said lands as shall be resumed...".
Provision is then made for indemnification and for payment to the tenant in certain respects. Certain further provision in relation to the financial consequences of resumption by the landlords is made in the Assignation which also provides -
"The tenant binds himself to reside personally on the said Farm during the currency of the said Lease..."
In my view the pursuers were not at any material risk, by reason of the possibility of the landlords resuming possession of the 8.9 acres, of losing their prospect of obtaining payment for development potential. Mr Rennie in a report (31/2 of process) and in evidence indicated reasons, based on a construction of the lease why, in his view, the landlords would not have been entitled contractually to resume built-on land. These, in summary, were (1) the tenant being contractually bound to reside on the farm, resumption of a part which included the only dwellinghouse could not have been intended, (2) the absence of any provision for abatement of rent in respect of built-on ground (in contrast with prescribed rates for ground under cultivation or in grass) and (3) the existence of an obligation on the tenant to overhaul each year the roofs of buildings. Mrs Smith in argument referred to section 5(2) of the Agricultural Holdings (Scotland) Act 1991 and to the principle sometimes referred to as "fraud on the lease".
It is clear that a contractual right of resumption, albeit very widely expressed, is open to construction. Ground on which there are erected buildings necessary for the continued operation of the subjects as an agricultural unit may, as a matter of the sound construction of the lease as a whole, be impliedly excluded from resumption under the contractual power (Trotter v Torrance (1891) 18 R. 848, especially per Lord Young at p. 854; The Admiralty v Burns 1910 SC 531, especially per Lord Salvesen at p. 542; Glencruitten Trustees v Love 1966 SLT (Land Court) 5). In the present case the point was never tested, there never having been any suggestion by the landlords of Kessington Farm that they were minded to exercise their contractual power of resumption under the lease. In my view, in the hypothetical situation of one of the pursuers being in continued occupation of the farm as agricultural tenant and the landlords attempting to resume under their contractual power the 8.9 acres (including the dwellinghouse and steading) for development purposes, the tenant would, having regard to the terms of the lease as a whole and to the principle of construction referred to, have been in a very strong position successfully to resist such an attempt. While in the hypothetical situation postulated, there might have been room for some negotiations between landlords and tenant, these would not, in my view, have resulted in any material reduction in the financial benefit which the tenant would have obtained from the development potential of that ground. In these circumstances I see no justification in discounting for this reason the pursuers' claim against the defender.
I now return to consider the consequences for the valuation of the present claim of my conclusion that the prospect of planning permission being granted for housing development of the 8.9 acre site as at the postulated date of Spring 2006 is to be assessed at 30%. Although there were some differences between the experts with regard to current values of land for housing development, I am satisfied that the sum to which any percentage falls to be applied may fairly be taken at the same figure as the relevant consideration under the missives of 1989, subject to an appropriate discount in respect that the sum decerned for will be payable at the date of decree rather than at the postulated date of the grant of planning permission. The relevant figure in the missives is £750,000, the circumstances giving rise to an enhancement to £800,000 being inapplicable. I shall return in due course to the issue of what discount for early payment is appropriate. First, it is convenient to address a major issue between the parties, namely, the valuation for the purposes of an award of damages of the chance (assessed by me at 30%) of planning permission being granted as postulated. Mrs Smith's contention on this matter was relatively straightforward. Once it was established that the lost right "had an ascertainable, measurable, non-negligible value" (Kyle v P & J Stormonth Darling WS at p.549), it was, she argued, appropriate to apply to the discounted capital sum the same percentage as that at which the chance had been assessed, even in circumstances where that chance was less than 50:50. It was not necessary to prove on a balance of probabilities that planning permission would be granted at the postulated time; nor was it necessary to prove any other matter on a balance of probabilities. Mrs Smith relied particularly on Allied Maples Group Ltd v Simmons & Simmons  1 WLR 1602 and First Interstate Bank of California v Cohen Arnold  5 Bank. L. R. 150. She also referred to Yeoman v Ferries 1967 SC 255 and Mallett v McMonagle  AC 166. While such an arithmetical approach was not mandatory, it was in the circumstances of a case such as this the fairest method of calculating damages.
Mr Haddow submitted that a purely arithmetical approach was inappropriate. A much more subtle approach was necessary, he argued. It was important to bear in mind that the pursuers had not, on a balance of probabilities, lost anything. There was no Scottish authority to support the approach adopted by the Court of Appeal in First Interstate Bank of California v Cohen Arnold. Reference was made to Bourne v Lothians Racing Syndicate Ltd 1951 SLT (N) 37, Yeoman v Ferries, Beattie v Furness-Houlder Insurance (Northern) Ltd 1976 SLT (N) 60 and Kyle v P & J Stormonth Darling, WS. The Scottish approach, where the prospect was more than merely speculative, had been, as in Yeoman v Ferries, to assess what the verdict of a jury or an offer in compromise might have been. Lord Avonside's approach had been approved in Kyle v P & J Stormonth Darling, WS. The approach adopted by the Court of Appeal in Allied Maples Group Ltd v Simmons & Simmons was not soundly based on the earlier authorities there relied on. Reference was made to Chaplin v Hicks  2 KB 786, Kitchen v Royal Air Force Association  1 WLR 563, Otter v Church, Adams Tatham & Co  1 Ch. 280, Hall v Meyrick  2 QB 455, Yardley v Coombes  107 S.J. 575, Griffiths v Evans  1 WLR 1424, Dunbar v A & B Painters Ltd  2 Ll. L.R. 38, Spring v Guardian Assurance Plc  2 AC 296 and Davies v Taylor. The decision of the Court of Appeal in First Interstate Bank of California v Cohen Arnold depended on the soundness of Allied Maples Group Ltd v Simmons & Simmons and should not be followed. The reasoning of the judge at first instance in the former case (Jacob J.) was much more convincing. What was required was not an arithmetical approach but an evaluation by the court which included a shading having regard to the degree of certainty or uncertainty involved. A prudent investor would not invest £400,000 against a 40 per cent chance that he would get £1 million but a 60 per cent chance that he would lose his whole investment. In the present case the valuation of the chance (when taken with other factors) should be held to be significantly less than any arithmetical application of the percentage chance.
The question posed by this aspect of the debate has not, it appears, previously been considered directly by a Scottish court. In Bourne v Lothians Racing Syndicate Ltd the head of claim was rejected on the ground that the prospects of the horse winning certain races were impossible to assess with any accuracy. The damage under that head was described by Lord Strachan as "really unascertainable". In effect, it was so speculative that no award could be made. In the present case that is not maintained by the defender on this aspect of the argument. It is not disputed that the requisite threshold for some award has been reached, the issue being the proper approach to its assessment. That threshold may be variously described. Lord Avonside in Yeoman v Ferries referred to "a matter of real and definable value" (p. 264); the Court in Kyle v P & J Stormonth Darling, WS at p. 549 referred to a "lost right" which "had an ascertainable, measurable, non-negligible value". Both Yeoman v Ferries and Kyle v P & J Stormonth Darling, WS concerned claims against solicitors for failure to bring or to pursue on behalf of the pursuer, their then client, actions against a third party. The valuation of the lost chance (or prospect), therefore, involved a consideration of what hypothetically might have occurred in the primary litigation had the relative professional duties been performed. In such cases it may be both legitimate and helpful for the judge evaluating the secondary claim to take into account (no doubt from an earlier professional existence) his experience of the extrajudicial settlement of claims (at sums discounted from their full prospective value in the event of total success) or of the differing prospects for a pursuer in the event of one form of process rather than another (such as a civil jury trial rather than a proof). Both those factors were taken into account by Lord Avonside in Yeoman v Ferries without any requirement that evidence be led in respect of them.
In Beattie v Furness-Houlder Insurance (Northern) Ltd the professional negligence (by insurance brokers) lay not in the field of litigation but in respect of failure to arrange insurance for loss of profits. Lord Robertson held after proof that the pursuer had not established that he had incurred any loss of profits by reason of the peril which ought to have been insured against. He, nonetheless, sustained an alternative claim for loss of the opportunity to make a claim and the prospect of an ex gratia payment being made by the insurers, though no evidence was led as to the practice of insurers in that regard. That decision is, however, of limited value for present purposes as the prospect was one only of a nuisance value with an award, in the event, of nominal damages.
It is important to bear in mind that the present issue is not concerned with causation in the conventional sense, namely, whether or not damage was historically caused by the defenders' negligence. Damage was indisputedly so caused when the tenancy was lost and the pursuers were thus deprived of the opportunity then and in the future of exploiting the rights of a secure tenant of the farm. It is not disputed that these rights had some value. The present issue is the measure of the loss - in particular of the lost opportunity to derive benefit from the postulated future grant of planning consent. That opportunity is not such as can be valued by reference to familiar alternative modes of dispute resolution or by what an insurer might be supposed to have been prepared to pay to be rid of the trouble and expense of dealing with a claim. No evidence was led of any price which a third party would have been prepared to give for an assignation of the pursuers' contingent benefit. Indeed, it seems unlikely that there would be a ready market in such matters. Nonetheless, the pursuers' prospect of securing a money benefit being real and non-negligible, it is necessary to arrive at some method of translating the planning prospect into financial terms.
The issue addressed by the Court of Appeal in Allied Maples Group Ltd v Simmons & Simmons, was essentially a prior question, namely, what, in a case where the plaintiff's loss depends on the hypothetical action of a third party, it is that the plaintiff requires to prove on a balance of probabilities. In that case (which was also concerned with a claim for professional negligence against solicitors in non-contentious business) the court unanimously rejected the proposition that in order to succeed the plaintiff required to prove on a balance of probabilities that the third party (there another party to a commercial transaction) would have acted so as to confer the relative benefit on the plaintiff. It held that what a plaintiff must prove is that he has (or had) a real or substantial chance (as opposed to a speculative chance) of that occurring, that chance then being evaluated having regard to how it stands in the spectrum between something that just qualifies as real or substantial on the one hand and near certainty on the other. It clearly envisaged that, if a chance having been found to be real or substantial was evaluated at less than 50%, an award of damages would follow, although it did not require in the circumstances of that case to discuss the mechanism by which that award would be calculated.
That prior question does not properly arise for decision in the present case. Some damage having admittedly been caused by the defender's negligent failure to secure the transfer of the tenancy, the matter now at issue falls clearly within the field of quantification of loss. Even if the only element of loss were that of a real or substantial chance of planning benefit, I would be disposed to hold in the circumstances of this case that that sufficiently satisfied the requirements of causation and brought one into the field of quantification. The loss of that chance was consequential on the deprivation of a right, namely, the right to have the tenancy transferred and thereafter to hold it. Such deprivation of a legal right will in itself satisfy the requirements of causation and so constitute a completed wrong (Kyle v P J Stormonth Darling, WS, per Lord Prosser at p.542, - see also per the Extra Division at pp. 547-9), provided the chance has some value. In these circumstances I find it unnecessary to express a view on the test propounded by the Court of Appeal as to what a plaintiff has to prove on a balance of probabilities.
One of the authorities referred to by the Court of Appeal was Davies v Taylor where their Lordships discussed the proper approach to a claim for loss of support by the widow of a man who had died as a result of the defendant's negligence, the widow having deserted her husband some weeks before his death. All of their Lordships held that the true question was not whether the plaintiff had proved on a balance of probabilities that there would have been a reconciliation with her husband (and consequent support by him) but whether she had shown that there was a chance, being more than merely speculative, that there would have been a reconciliation in which event that chance would require to be evaluated having regard to its quality. Lord Reid said at p.212E-G -
"I am well aware of the fact that in real life chances rarely are or can be estimated on mathematical terms. But for simplicity of argument let me suppose two cases of a widow who had separated from her husband before he was killed. In one case it is estimated that the chance that she would have returned to him is 60% probability (more likely than not) but in the other the estimate is that the chance is 40% probability (quite likely but less than an even chance). In each case the tribunal would determine what its award would have been if the spouses had been living together when the husband was killed, and then discount it or scale it down to take account of the probability of her not returning to him".
Viscount Dilhorne said at pp.218H-219C -
"When dealing with the burden of proof, one speaks of the balance of probabilities being in favour of a conclusion of fact. One means that it is more likely than not that that fact occurred. But one can have a reasonable expectation that something may happen and it may be reasonably probable that something may happen without it being more probable than not that it will happen. In this case it had to be decided whether there was a reasonable expectation of a reconciliation, not that a reconciliation was more likely than not, and I think therefore it was an error to say that expectation had to be established on a balance of probabilities.
If a reasonable expectation is to be inferred, then the damages to be assessed are proportioned to the injury. If though there is a reasonable expectation or probability, the chance of the event happening is slight, then the damages assessed reflect that."
Lord Simon of Glaisdale said p.220C-E -
"But this is one of those cases where a balance of probabilities is not the correct test. If the appellant showed any substantial (ie. not merely fanciful) possibility of a resumption of co-habitation she was entitled to compensation for being deprived of that possibility. The damages would, of course, be scaled down from those payable to a dependent spouse of a stable union, according as the possibility became progressively more remote. But she would still be entitled to some damages down to the point where the possibility was so fanciful and remote as to be de minimis".
Lord Cross of Chelsea said at p.223A-D -
"In assessing damages for such a loss, the court ought not - as I see it - to decide on the balance of probabilities whether or not the deceased - if he or she had lived - would in fact have given financial support to the plaintiff... In such cases so long as the chance of future support which the plaintiff has lost was substantial or fairly capable of valuation, the court ought, I think, to set a value on it even if it was less - and possibly much less - than a 50 per cent chance."
Lord Morris of Borth-Y-Gest was to a similar effect. In that case the loss (or "injury") in question was the loss of the plaintiff's right, if living with her husband, to be supported by him.
This approach was not new even in 1974. The reasoning of the judges both in Chaplin v Hicks (the loss of the chance of winning a competition for aspiring actresses, the plaintiff having been denied her contractual right to an interview) and in Kitchen v Royal Air Force Association (the loss of the chance of bringing legal proceedings under the Fatal Accidents Acts) supports the proposition that a real or substantial chance, albeit less that 50:50, will, at least in circumstances where there has been the loss of a right, sound in substantial damages proportionate to the quality of the chance - though again in these cases it was unnecessary to address the particular calculation. An observation by Lord Diplock in Mallet v McMonagle is also in point. At p.176F-G his Lordship said -
"But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards."
It is accordingly clear on authority that, once the requirements of causation have been satisfied, the assessment of damages may involve the evaluation of a chance or prospect. In appropriate cases that evaluation may be by the adoption of a proportion of what would have been awarded had the prospect been a practical certainty. In First Interstate Bank of California v Cohen Arnold the Court of Appeal applied Allied Maples Group Ltd v Simmons & Simmons to a situation in which it valued the chance at 66%; it adjusted the damages to a figure representing 66% of the best price which could reasonably have been achieved. It does not appear to have been there disputed that, if the court were to take the view that the prospects of the chance being realised were 66%, the "best price" figure would fall to be discounted proportionately. Neither counsel before the Court of Appeal sought to support the approach taken by Jacob J. at first instance which involved an averaging of the prices which might have been obtained in either of two situations, both of which were regarded as "real possibilities". Sedley J., however, sitting as a member of the Court of Appeal, observed -
"In the ordinary way there will be no need to arrive at a best market price and then to discount it in order to value the lost chance of a sale. It is sufficient, having decided on the balance of probability that a worthwhile chance was lost, to make the best estimate than can be made, taking the rough with the smooth, of the price which would have been realised but for the defendant's wrongdoing. To discount this figure would be, in effect, to discount twice.
In the present case Jacob J. has found £3 million to be the best price reasonably obtainable for the property at the date when the tort took effect, but has not gone on to estimate the chance of selling it at that price in a falling market. I agree with Nourse LJ and Ward LJ that a fair estimate of the chance of realising this sanguine valuation was two to one".
Thus, in some circumstances it may be possible and useful, in addressing the issue of quantification, to proceed by a single step exercise; in others a two-step exercise may be called for. Yeoman v Ferries, Yardley v Coombes and Chaplin v Hicks may be illustrative of the first mechanism. Kitchen v Royal Air Force Association (where the starting financial figure was the maximum recoverable under the statutes) and First Interstate Bank of California v Cohen Arnold (where the starting figure was the "best market price") may be illustrative of the second. In Davies v Taylor (where the starting financial figure was the prospective award of loss of support in the event of the primary claim being successful) a percentage discount as a second step was clearly contemplated - albeit that in the circumstances of that case (where it was held that the prospects of the wife returning to her husband were so remote as to be speculative) it was unnecessary to carry out the discounting exercise.
In my view, in some cases an approach to quantification by arithmetical discounting will be helpful and may, in the absence of any other helpful touchstones, be a necessary mechanism for calculating the amount of an award of damages. In the circumstances of the present case the chance of a favourable planning event occurring has, after taking into account the whole relevant imponderables in the planning situation, been evaluated at 30%. There is not available any mechanism for evaluating the claim by reference to what might have been achieved by some alternative mode of dispute resolution. Nor is there a market in which any contingent right might have achieved a price. In the context of evaluation of a chance I do not find helpful speculation as to what "a prudent investor" might have been supposed to do; I rather suspect that "a prudent investor" (in the ordinary sense) would not readily invest in a chance at all. While at the extremes of the spectrum (as where the chance is a near certainty of success or it is only marginally above the threshold of being non-speculative) different considerations may apply, in circumstances where the chance is well above the threshold although well short of 50:50 I see no good reason why an award of damages proportionate to the percentage chance should not fairly compensate a pursuer for the loss which he has sustained. Accordingly, subject to discounting for early payment, the damages due to the present pursuers for the loss of development potential fall, in my view, to be assessed at 30% of the sum which they might reasonably have expected to receive in the event of the postulated planning event occurring.
There is an issue between the parties as to the appropriate rate at which to discount for early payment. Mrs Smith, under reference to Wells v Wells  1 AC 345, submitted that a rate of 3% should be applied. Mr Haddow submitted that it was unnecessary to fix upon a particular rate, it being appropriate to adopt a composite approach to the pursuers' loss of the agricultural tenancy (encompassing both the development potential and other aspects of the tenancy), early payment being then simply another element to be taken into account in arriving at a single figure for fair compensation. If it were appropriate to deal with the development potential discretely, a discount rate in the traditional range of 4-5% would, he argued, be appropriate. He referred to Mallett vMcMonagle, especially per Lord Diplock at p.176.
In my view it is preferable, in the interests of clarity of exposition, to deal discretely with the development potential and with other aspects of the loss of the tenancy and to fix upon a rate at which to discount for early payment the compensation due for the loss of the benefit of the development potential. In the circumstances of the present case a discount rate of 33/4% would in my view be reasonable. The pursuers are not in the situation of the physically injured plaintiffs in Wells v Wells who required a sum from which they could from the outset draw down at regular intervals both capital and income to meet their current needs. Their position is closer to that of the traditional investor, albeit one minded to invest over a period of 6 years or so rather than over a longer term.
As earlier held, the capital figure upon which subsequent calculation falls to be made is £750,000. Applying discount rates of 3% and 41/2% to that sum brings out present values of £628,110 and £575,918 respectively. The mean of those figures is £602,014. The application to that mean of 30% values the chance of the postulated planning event at £180,604 (say, £181,000) which, in my view, represents fair compensation to the pursuers in respect of that head of claim.
On the premise that there is a 30% chance of the postulated event occurring, there is a 70% chance of it not occurring. On the latter hypothesis the pursuers have been deprived of the benefit of a secure agricultural tenancy, albeit one without prospect of development potential. Evidence was led to the effect that the full value of the tenant's rights (excluding any development element) would be in the order of £50,000. Reference was made in this regard to the approach to compensation adopted in Baird's Executors v Inland Revenue Commissioners 1991 SLT (LT) 9. It was recognised that such valuations were not an exact science. Mrs Smith submitted that appropriate compensation for this aspect of the loss of the agricultural tenancy would be that percentage of £50,000 as represented one hundred less the percentage allowed for the chance of development potential. She sought interest on the resultant sum from Martinmas 1992 (when the tenancy was surrendered) to the date of decree. Mr Haddow's approach, as earlier noted, was to treat compensation for the loss of the tenancy (including the potential for development) as a composite whole. He acknowledged that the landlords, if they had a reason for seeking to regain possession of the holding, might have been prepared to pay a premium to the tenant to persuade him to surrender the tenancy voluntarily. He submitted, however, that in the circumstances of this case the landlords would have no interest in seeking to regain possession except in respect of any development potential and that the premium which they might have been prepared to give in the whole circumstances (including the planning prospects) would not have exceeded about £75,000. Subject to his argument that only nominal damages were due, he accepted that £75,000 represented reasonable compensation for the loss of the tenancy. If the development potential element was left out of account (being otherwise compensated for), there was no loss of value, he argued. For the purpose of capital taxation it was necessary to disregard the circumstance that the lease was non-assignable; here that factor should not be disregarded. Hence the approach adopted in Baird's Executors v IRC was of doubtful usefulness for present purposes.
In my view, as earlier indicated, the development potential and the other aspects of the tenancy merit separate consideration. Disregarding for present purposes any development potential which any part of Kessington Farm may have had, the security of tenure which the pursuers would, but for the defender's negligence, have continued to enjoy was, in my view, a valuable asset. It is notorious that at least in the 1980s substantial sums were paid by landlords for surrender of such tenancies. A modern practice, illustrated in the present case, of landed proprietors being prepared to cede possession to working farmers only on the basis of limited partnership agreements points to the disadvantage to such proprietors of an agricultural tenancy arrangement. It is true that no approach was made by the landlords of Kessington to persuade the tenant, at a price, to surrender his tenancy; but it does not follow that these landlords would not have been prepared, even in the assumed situation of there being no development potential, to pay a sum for a voluntary surrender of the farm as a whole.
Valuation of the rights enjoyed by a secure agricultural tenant is notoriously difficult. The "robust approach" adopted by the District Valuer in Baird's Executors v IRC of valuing the tenancy interest at 25% of the vacant possession value is not wholly satisfactory and, like the tribunal in that case, I reserve my opinion as to whether some other approach might not be more satisfactory. However, Baird's Executors v IRC is, whatever its limitations, likely to have featured in any negotiations for voluntary surrender of the secure tenancy of Kessington Farm. Again like the tribunal, in the absence of any alternative valuation for this discrete element other than nil, I am prepared to accept Mr Donald's figure of £50,000, being 25% of the estimated (and undisputed) open market vacant possession figure of £200,000. The capital sum for the loss of the chance of obtaining a premium for voluntary surrender of the farm without planning potential is accordingly 70% of £50,000, that is, £35,000. Interest on that sum at 8% per annum from Martinmas 1992 I calculate at £20,160. However, standing the allowance in part of the claim next discussed (the arable loss claim), I cannot see that interest can be due from 1992 on the loss of the tenancy. The arable loss claim proceeds on the premise that Kessington would have remained as a secure tenancy in the pursuers' hands in the years following 1992. Allowance of interest from 1992 on the loss of the tenancy claim would be appropriate only on the basis that the tenancy would have been voluntarily surrendered at that time. I shall return to the issue of interest on this head of claim.
The pursuers also claim damages for the loss of use of the 50 acres of farmland surrendered at Kessington. The claim is in respect of the seasons from and after that of 1995 since, although the agricultural tenancy was compulsorily surrendered at Martinmas 1992, the pursuers continued to take grazing lets of Kessington in the seasons 1993 and 1994. The claim, as ultimately formulated, is that as from the 1995 season 50 acres which would otherwise have been used at Newbigging for productive cultivation were instead devoted to the pasturing of cattle previously kept at Kessington. The financial loss claimed is formulated on the basis of the return which it is estimated would have been achieved from cultivation of those 50 acres. The loss is maintained to be a continuing one.
The context in which the pursuers, having taken seasonal grazings at Kessington in the seasons 1993 and 1994, ceased to maintain that arrangement was that they had in 1994 acquired an additional 60 acres at Newbigging (the West Camps ground). That allowed them to run at the extended Newbigging the cattle previously grazed at Kessington. That was, I am satisfied, a commercially prudent act of farm management given among other factors that neither winter accommodation for the animals nor human habitation was available to the pursuers at Kessington. The practical consequence was, however, that some 50 acres of the expanded farm was not available for cropping. I am satisfied that, if the pursuers had continued to have the benefit of the secure agricultural tenancy of Kessington, they would still have acquired West Camps when it became available in 1994 and would have continued to run cattle at Kessington, the extended acreage at Newbigging being used for productive cultivation. They were accordingly, by reason of the defender's negligence, effectively deprived while that state of affairs continued of the opportunity to use those acres for that purpose.
I am not, however, satisfied that, in the events which have subsequently happened, they have continued to be so deprived. At the beginning of 1998 the pursuers purchased Kinninmonth which extended to about 100 acres, having gained early entry to it in October 1997. The dairy herd was then transferred from Newbigging to Kinninmonth, thus releasing 100 acres at Newbigging for other uses including more extensive cultivation. The acreage acquired no doubt prospectively compensated to the extent of some 50 acres for the by then anticipated loss of West Millichen but it also released a further 50 acres for cultivation at Newbigging.
The evidence as to what would have happened if, as at 1997/98 the pursuers had continued to enjoy the rights of an agricultural tenant at Kessington, was somewhat varied. Mrs Paul testified in unqualified and emphatic terms that in these circumstances Kinninmonth would not have been purchased. Although by this time Mrs Paul was no longer a partner, she continued to take an active part in the financial aspects of the business; her views on capital commitments are likely to have been treated with respect. Both William and John Paul likewise testified that Kinninmonth (which lay eastwards of Newbigging) would not have been purchased but suggested that additional ground or perhaps even another farm might have been purchased at some location west of Newbigging. William stated that they "would probably have bought another farm"/"we could have handled a bit more"; he suggested "towards the east end of Glasgow" as a possible location. He later testified that it would be "hard to say" whether they would have bought a farm of the same acreage as Kinninmonth and concluded by stating that "perhaps" they would have had "another farm or ground". John stated that "we would have had a go at a farm at Milngavie" or "pockets of ground" in that vicinity. I do not doubt the honesty of any of that testimony but it is insufficient to satisfy me that, after the pursuers' acquisition of Kinninmonth, they continued to sustain an arable loss by reason of the defender's negligence. Immediately prior to that negligence taking effect the pursuers had run an enterprise which farmed some 280 acres (180 at Newbigging and 100 in total at the adjacent holdings of Kessington and West Millichen). By early 1998, after various vicissitudes, they had expanded their acreage (disregarding the 50 acres at risk at West Millichen) to 340 viz 100 at Kinninmonth and 240 at Newbigging. Both were substantial farms with their own domestic accommodation and animal housing, a brother residing at each; both were secure in that both were owned by the pursuers. They were, with the addition of the 60 acres at West Camps, in as strong if not a stronger position than they had been prior to the defender's negligence and as they would have been if Kessington and West Millichen had remained as secure holdings. It may be that at some stage they might have further expanded their enterprise but that would, in my view, have been unrelated to the consequences of the defender's negligence. In any event, the 50 acres lost to cultivation at Newbigging (on which the pursuers' claim depends) had been restored once the dairy herd had been moved to Kinninmonth. Accordingly, in my view, the pursuers' arable loss claim is properly restricted to the growing seasons 1995, 1996 and 1997.
Mr Haddow submitted that the claim for arable loss (at least as presented in submission) was excluded on the basis that the pursuers had not taken all reasonable steps to mitigate their loss in that respect. Kessington remained available as a seasonal grazing let from 1995 onwards. Failure to continue to take such a let was a failure by the pursuers to take reasonable steps to mitigate their loss. I am unable to accept that submission. For the reasons earlier given, the decision not to renew a seasonal grazing let at Kessington once West Camps had been acquired was a course which the pursuers were, in my view, entitled to take as an act of prudent management. Their legitimate claim against the defender is neither diminished nor extinguished by the adoption of that course.
Mr Haddow also submitted that the pursuers' claim for arable loss as presented in submission should not be entertained as due intimation of it had not been given in advance. The defender's accountancy advisers had experienced great difficulty in identifying the basis of the pursuers' arable loss claim. When material had ultimately been presented in writing in a report by Mr Savage of the Scottish Agricultural College, the import of the calculations contained in it was that the pursuers' claim was for loss of profit on the sale of crops which would have been grown at Newbigging and then sold to third parties. The pursuers' claim for arable loss had likewise been formulated in their Statement of Items of Claim (No 26 of process) and their Schedule of Damages (No 26A of process) as for loss of profit. There had been no evidence to substantiate such a claim. In the end the submission made on behalf of the pursuers had been that they had lost the benefit of the 50 acres to grow crops for feeding to their animals. That claim was also unsubstantiated by evidence. The pursuers might be able to maintain a claim for loss of the use of grazing land but not their present claim.
In my view the pursuers have given sufficient notice of the claim which they advance and that claim is adequately vouched by the material led in evidence. As the claim necessarily proceeds on a hypothesis (viz that, had the 50 acres not been used for pasturage, they would have been used for cultivation), the material in support of it does not relate to what actually happened at Newbigging. Although Mr Savage's calculations were described by Mr Haddow as "a budget exercise", they have to be seen against the clear evidence (which I accept) that the pursuers were and are very efficient farmers who would, given the appropriate opportunity, have deployed their assets to the best possible advantage. In the present circumstances the deployment of the 50 acres at Newbigging for the cultivation of a range of crops (as well as "set aside") of the kinds identified by Mr Savage in his careful report is in the circumstances, in my view, a reasonable hypothesis, particularly against the background that crop growing as well as animal husbandry had long been an established aspect of the pursuers' farming business. The financial figures brought out in Mr Savage's report are ultimately net margins foregone. It is not clear on the evidence that there would have been any material difference to those figures on the various hypotheses that the crops were all used internally within the pursuers' business for animal feed, were wholly sold to third parties or were partly used internally and partly sold. The financial figures proceed on ex farm prices so that any purchaser would have been liable for the cost of transportation on sale. Certain points made by Mr Elvy at paragraph 5 of his report No 38/1 were put to Mr Savage in cross-examination but his response (which I accept) was that, in relation to the second and third points made there, the cost differences might well have been nil or marginal; as to the first point, the cost of transport (of feed) from Newbigging to Kessington, he acknowledged that he had made no allowance for this. No figure was put to him as appropriate. Nor did Mr Elvy in evidence offer a figure for such transport costs. While it is possible that in certain circumstances the net figures might be overstated, there is no acceptable evidence before me that any over-statement is likely to be significant. In these circumstances I am prepared to use these figures as a sufficiently reliable basis for calculating this head of claim. In general I prefer Mr Savage's approach to the calculation of loss to that of Mr Elvy, some of whose figures were in any event not adequately vouched.
The figures brought out in Mr Savage's report for net margins for the years 1995, 1996 and 1997 are £13,662, £13, 359 and £9,665 respectively. From each of those figures falls to be deducted the agricultural tenancy rent of £2,000 per annum which would, on the relevant hypothesis, have been payable in respect of Kessington. The total net capital loss is accordingly £30,686. In the absence of information as to when particular crops would have been harvested and exploited (whether internally or by sale) it is impossible to make a precise calculation of interest but it would seem fair to allow it from (say) July 1995 to July 1997 at 4% and thereafter at 8% per annum to the date of decree. I calculate the arable loss claim including interest to the latter date at £39,278.08 (say, £39,300).
I return to the matter of interest on the loss of the secure tenancy (other than in respect of the development aspects). As Mr Haddow's approach was to urge a single figure for loss of the tenancy assessed at the present time, I heard no submission from him on interest on any past element. I am prepared with some hesitation to allow interest at 8% per annum on this head of claim from Autumn 1997 to the date of decree. This I calculate at £6,300. That claim accordingly inclusive of interest amounts to £41,300.
I should add that there was a chapter of evidence concerned with a proposal that the pursuers might, on losing their tenancy of Kessington, have entered into a limited partnership with the landlords as regards those subjects. The pursuers in the event decided not to enter into any such arrangement. Nothing in the end turns for present purposes, in my view, on that decision. In any event, it was a decision which in the whole circumstances they were, in my view, reasonably entitled to take.
In summary, I assess damages to the date of decree as follows -
(1) Loss of development potential -
(2) Loss of other aspects of secure tenancy -
(3) Arable loss -
(4) Housing loss (as agreed) -
(5) Loss of West Millichen (as agreed) -
I shall grant decree for that total sum together with interest thereon at the rate of 8 per cent per annum from the date of decree until payment.