Land valuation: Lands Tribunal for Scotland progresses “golden key” case

The Lands Tribunal for Scotland has found in principle that compensation payable under paragraph 7(1) of Schedule 4 to the Electricity Act 1989 following the grant of a necessary wayleave may be valued on a ransom strip basis.

What is the claim?

A claim has been brought by William Wyness against Scottish Hydro Electric Power Distribution plc (SHEPD) for compensation amounting to £1,712,000 following the grant by the Scottish Ministers of a necessary wayleave under paragraph 7(1) of Schedule 4 to the Electricity Act 1989.

Mr Wyness is the owner of Meikle Camaloun Farm, on which a 500 kilowatt wind turbine has been erected. Adjacent lies South Camaloun Farm, which is in separate ownership. A similar turbine has been constructed on South Camaloun, a short distance from the Meikle Camaloun turbine. Both turbines are connected to the electricity grid via an 11 kilovolt cable that runs from the substation, across a neighbouring estate, through part of Meikle Camaloun Farm, where it makes a short loop to South Camaloun and the turbine there and proceeds back to connect to the Meikle Camaloun turbine. The cable was subject to a voluntary wayleave agreement between Mr Wyness and SHEPD. Following the termination of this voluntary wayleave, SHEPD applied for a statutory necessary wayleave under the 1989 Act which was granted by the Scottish Ministers.

Legal arguments for and against

Mr Wyness’ application was on the basis that he has lost his legal right to require SHEPD to remove its equipment from his land. It was submitted that this was a valuable right since Mr Wyness’ land contained a “golden key”, or ransom strip, in respect of the operation of the neighbouring South Camaloun turbine. This is on the contention there were no reasonable alternative routes to export the South Camaloun electricity other than through Meikle Camaloun.

SHEPD argued that, as it had adopted the cable as part of its distribution network, this meant that Mr Wyness did not have the ability to deny the South Camaloun turbine access to the cable. SHEPD also contended that the “no-scheme rule” known as the Pointe Gourde principle should apply – which would mean that the pressing need for the land as part of a scheme should be disregarded when assessing its value for compensation purposes. Mr Wyness’ position on Pointe Gourde is that there is no “scheme” in this case, but if one can be satisfactorily identified, the rights in question pre-existed or were independent of the scheme.

Lands Tribunal proceedings

Following a legal debate, the Lands Tribunal for Scotland has accepted that, as a matter of law, Mr Wyness is entitled to seek compensation based on the “golden key” (or ransom) value of his land and has allowed the case to proceed to an evidential hearing. The Tribunal commented that SHEPD’s argument that they had adopted the cable such that Mr Wyness could not deny South Camaloun access to the cable could not “withstand the relentless logic of [Mr Wyness’] position”, which is on the basis that the distribution network post-adoption would or could have been lawfully dismantled. The Tribunal accepted that the threat of the cable’s removal would mean that the owner of the South Camaloun turbine would be forced to negotiate to secure the required rights to connect onto the cable on Meikle Camaloun.

On Pointe Gourde, the Tribunal pointed out that the authorities strongly suggest that the Pointe Gourde principle is, in an appropriate case, applicable to claims under paragraph 7(1) of Schedule 4 to the 1989 Act. Whether the Pointe Gourde principle applies in this case is fact-sensitive - the issue for the Tribunal is then to establish whether a “scheme” in fact exists, and to identify the extent of that scheme. The Tribunal has allowed the matter to proceed to an evidential hearing so this can explored.

How might this affect future cases?

This is an interesting but very fact-specific case. On the “golden key” element of the decision, the Tribunal relied on authorities from England and Northern Ireland[1], and while the decision is not binding in other jurisdictions, the 1989 Act applies UK-wide and the Tribunal’s approach may be taken in similar cases brought for compensation under paragraph 7(1) of Schedule 4 to the 1989 Act elsewhere in the UK. What valuation the land ultimately achieves on the basis of it being a “golden key” is a matter for expert evidence, and it remains to be seen whether SHEPD will successfully resist a costly compensation payment on the basis of the Pointe Gourde principle.