Scottish Court of Session Decisions

A Special Case was stated by an arbiter acting in an arbitration under the Small Landholders (Scotland) Act 1911 (1 and 2 Geo. V, cap. 49) between Mr Macdonald of Glenlonen, in the county of Argyll, claimant, and the Board of Agriculture for Scotland, respondents. The arbiter's duty was to assess the amount of compensation to which the claimant was entitled in respect of the formation of a small holding on the farm of Glenamacrie, proposed to be carried out by the respondents in terms of a scheme sanctioned by the Scottish Land Court conform to order dated 30th November 1914. The claimant made, inter alia, the following claims in the arbitration:—Head III—“For damage or injury to the letting value of the land to be occupied by the new holder, £400.” Head IV—“For damage or injury to farm of which such lands ( i.e., the lands taken for the new holding) form part, £1000.”

After proof had been led the arbiter disallowed the claim made under head III, and under head IV he allowed £200 as compensation to the claimant under deduction of £125, being the capitalised appreciation in the return upon capital to the claimant which he held fell to be credited to the respondents.

In his note the arbiter stated the grounds of his decision thus—“As regards the claim of £1000, being damage to the farm of which the holding forms part, this is an item which requires detailed consideration. …

A large amount of evidence was adduced to show that the southern portion of the farm could not be worked along with either of the adjoining sheep farms belonging to and in the personal occupation of the claimant. After considering the evidence and giving effect to my own practical knowledge I have come to the conclusion that the southern portion, carrying a comparatively small stock, could without much inconvenience be worked along with either of the adjoining farms of Torinturk or Clachadhu. I recognise, however, that there will be additional expense in so working this portion of the farm, and I propose to allow as compensation under this item the sum of £200, subject to the deduction after-mentioned.

It will be observed that from my proposed allowance for damage to the farm of which the lands taken form part (head IV of claim) I have deducted a sum of £125, being the capitalised appreciation in the return upon capital through the constitution of the new holding. Upon the assumption that the southern portion was worth £30 per annum, and after crediting 4 per cent. interest on the value as estimated of the buildings and fences, the respondents made out an increased return to the claimant of £19 per annum, which capitalised at twenty-five years showed a capital appreciation in the value of the farm of £475, which they properly claimed as a credit item. This figure, of course, varies with the valuation of the buildings and fences, and with the rent allowed for the southern portion of the farm, which they stated at £30, whilst claimant's witnesses made it out to be practically

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nil. I think a fair annual value of the southern portion is £18, and on this basis, and after crediting interest on the allowance for buildings and fences, and making one or two alterations upon the other figures in the estimate, I reckon an annual increment of about £5, which capitalised at twenty-five years makes the £125 for which I have given the respondents credit.

I explain that the parties left to me to fix the value of the houses, buildings, and fences belonging to the claimant taken by the scheme, and that I proposed to find the value of these to be a cumulo sum of £951, 3s. 3d. After disallowing the claim for said southern fence, the half of which if I had held the claim competent I would have valued at £36, I arrived at the conclusion that the claimant got a pecuniary benefit of £5 a-year on the new holding on the footing that he would be able to invest the price proposed to be fixed for said buildings and fences at 4 per cent. per annum. The said buildings and fences were wholly situated on the new holding.”

The questions of law for the opinion of the Court were—“2. In awarding compensation under head IV of the claim was I entitled to set off against the depreciation upon the said southern portion of the farm the capitalised appreciation of the claimant's income so arrived at from the northern portion taken from the holding? 3. In determining the amount of the damage or injury done to the letting value of the land to be occupied by the new holder and of the farm of which said land forms part, was I entitled to take into consideration the fact that by investing the price obtained for the buildings and fences at 4 per cent. the claimant might get a pecuniary benefit?”