Scottish Court of Session Decisions

 

OUTER HOUSE, COURT OF SESSION

[2015] CSOH 41

P1328/14

OPINION OF LORD MATTHEWS

In the petition of

J MARK GIBSON

Petitioner;

for Judicial Review of a decision of

the Scottish Ministers, Energy and Climate Change Directorate

not to hold a public enquiry and to grant consent

for the construction and operation of

Dersalloch Wind Farm, east of Straiton, Ayrshire

 

Petitioner:  Burnett;  Morton Fraser LLP

Respondents:  Johnston QC, Ross;  Scottish Government Legal Directorate

Interested Party:  Armstrong QC, Sutherland;  MacRoberts LLP

14 April 2015

[1]        The petitioner seeks judicial review of a decision of the respondents not to hold a public enquiry and to grant consent under section 36 of the Electricity Act 1989 and deemed planning permission under section 57(2) of the Town and Country Planning (Scotland) Act 1997 to Scottish Power Renewables (UK) Ltd, (the interested party) for the construction and operation of Dersalloch Wind Farm, located about 4km east of Straiton in South Ayrshire.  The decision was intimated to the developer by letter dated 23 July 2014.  The petitioner seeks declarator that the decision is ultra vires of the respondents, proceeds under error of law and is unreasonable.  He also seeks reduction of the decision and expenses.

[2]        The petitioner lives at Craigengillan House on the Craigengillan Estate, Dalmellington, Ayr.  It is said that the house is Category A listed and that it is approximately 4.2km from the wind farm development.  It is also said that its associated designed landscape is included in the Inventory of Gardens and Designed Landscapes in Scotland.  It is said that when deciding whether to include a site in the inventory Historic Scotland use seven assessment criteria and Craigengillan is assessed as outstanding in all seven categories.  It is averred that on 16 November 2011 Historic Scotland visited Craigengillan with a view to extending the area covered by the designation in the inventory and that on or about 17 April 2012 the boundary included in the inventory was so extended.  The western boundary was extended to the boundary of the proposed wind farm development, to which the petitioner objected.  It is not necessary to go into details of the objections.

[3]        The Scottish Dark Sky Observatory is located on a hill within the boundary of Craigengillan and is said to be one of only eight dark sky parts in the world.  It is one of only two to be designated as a “gold” tier dark sky park according to the petitioner.  It is said to be 4.6km from the nearest proposed turbine in the wind farm development and to be a key tourist attraction in the area.

[4]        It is averred that a number of parties objected to the development.  These included South Ayrshire Council, East Ayrshire Council, local community councils, bodies known as Save Straiton for Scotland, and VisitStraiton and Historic Scotland itself.  Once again I need not go into details about these objections or the progress of them.  The background is set out in an affidavit by the petitioner dated 3 March 2015.

[5]        East Ayrshire Council decided to challenge the decision to grant consent for the development and the decision not to hold a public enquiry.  In light of that the petitioner decided not to raise legal proceedings himself.  A hearing in East Ayrshire Council’s petition was set for 18 and 19 December 2014 but on the afternoon of 17 December East Ayrshire Council decided to withdraw.  In those circumstances the petitioner himself raised these proceedings.

[6]        The case called before me on the petitioner’s motion for a protective expenses order under Rule of Court 58A.3 limiting their liability in expenses to the respondent and interested party to a cumulative total of £5,000 and limiting the liability of the respondent and interested party in expenses to the appellant to £30,000.

[7]        As originally enrolled the motion also sought a protective expenses order at common law, on an esto basis, but Mr Burnett indicated that he was not insisting on that part of the motion.

[8]        Along with the motion there were lodged a number of documents in terms of Rule 58A.3(4), including the affidavit of the petitioner to which I have referred and a supplementary affidavit designed to deal with certain remarks made in the opposition to the motion.

[9]        The petitioner’s pension arrangements were referred to in the discussion and as a result of that I requested further information about them.  This was provided to me, at my request, after I made avizandum, as were letters from the financial advisors assisting the petitioner in relation to his pension and letters from financial advisors instructed by the solicitors for the interested party.  I invited further comments from the parties and offered them a further hearing in respect of this information but all parties declared themselves content that I should proceed with the information presented in the papers.

[10]      The background to protective expenses orders under the Rules is set out in the opinion of Lord Drummond Young in the case of Carroll v Scottish Borders Council [2014] CSOH 30.  I am content and grateful to adopt what he said therein.  Putting it shortly, Rule 58A was introduced to implement the obligations incumbent on the United Kingdom under the law of the European Union following the adoption of the Aarhus Convention in 1998.  That Convention was intended to encourage public participation in public decisions on environmental matters, including access to the courts.  A number of EU legislative measures followed the Convention and they were in large measure consolidated in Directive 2011/92/EU passed on 13 December 2011.

[11]      There is no dispute that Lord Drummond Young properly set out the manner in which the Rule is to be interpreted, in the light of the Directive.

[12]      The Rule is further discussed in the opinion of Lord Philip in John Muir Trust v Scottish Ministers [2014] CSOH 172A.

[13]      The Rule applies to applications to the supervisory jurisdiction of the court, including challenges to a decision which is subject to the public participation provisions of the 2011 Directive.  There is no dispute that the instant case challenges such a decision.  The applicant must be an individual or a non-Governmental organisation promoting environmental protection and that is not an issue.  Rule 58A.2(3) defines a protective expenses order as an order which regulates the liability for expenses in proceedings (including as to the future) of all or any of the parties to them, with the overall aim of ensuring that proceedings are not prohibitively expensive for the applicant.  Rule 58A.2(4) provides that subject to the provisions of paragraph (6) the court is obliged to make such an order where it is satisfied that the proceedings are prohibitively expensive for the applicant.  Paragraph (5) of the same Rule provides that for the purposes of the Rule proceedings are prohibitively expensive if the applicant could not reasonably proceed with them in the absence of a protective expenses order.  However in terms of paragraph (6) the court may refuse to make such an order if it considers that the applicant has failed to demonstrate a sufficient interest in the subject matter of the proceedings or the proceedings have no real prospect of success.

[14]      In terms of Rule 58A.4, a protective expenses order must contain provisions limiting the applicant’s liability and expenses to the respondent to the sum of £5,000 unless the court on cause shown lowers that sum.  It must also contain provision limiting the respondent’s liability and expenses to the applicant to the sum of £30,000 although the court may on cause shown, raise that sum.  In both cases the alteration in the sums would be for the benefit of the applicant but Mr Burnett did not seek any such alterations.

[15]      There was no dispute about the petitioner’s interest in the subject matter nor was there any suggestion that the proceedings had no real prospect of success.  The only issue was whether the proposed proceedings were prohibitively expensive for the applicant.  Most of the time spent in the hearing of the motion was taken up with a consideration of the petitioner’s financial position.  It seems to me that I should only discuss that in fairly general terms since to do otherwise we would run the risk of disclosing confidential financial information.

[16]      In moving the motion Mr Burnett first of all set out the background to the case then referred me to the relevant parts of Lord Drummond Young’s opinion in Carroll.  For present purposes the most significant of those were perhaps paragraphs 16 and 17, the latter in particular.  In the course of that paragraph his Lordship said the following:

“So far as the likely expenses of proceedings are concerned, I am of opinion that a wholly objective approach must be adopted:  what must be considered is the likely expenses of the proceedings contemplated, on the basis of fair and reasonable charging rates.  The complexity of the proposed proceedings may be a relevant factor, however;  in Edwards the Court of Justice mentioned this as a relevant factor at p.2936, para.42.  So far as the resources of the applicant are concerned, I consider it appropriate to adopt an approach that is partly subjective and partly objective.  I should make it clear that by a ‘subjective’ approach I mean an approach that has regard to the actual resources of the particular applicant, on a fair assessment;  I do not mean that the court should have regard to the manner in which the applicant himself considers his own resources.  In my opinion the court must first determine the particular applicant's resources, both capital and income.  So far as capital is concerned, it is capital that is actually or potentially liquid that counts;  it is not realistic to take account of, for example, the applicant's home or business assets, which are obviously essential to his existence.  Secondly, the court must consider the applicant's living expenses, liabilities and the like.  At this point an element of objectivity emerges, particularly in relation to living expenses:  while the starting point must be the particular applicant's living expenses, if these appear extravagant or disproportionately high on an objective basis the court would in my opinion be entitled to take that factor into account.  Thirdly, the court must decide whether the likely expenses of proceedings are beyond the applicant's means.  At this stage I consider that the approach must be objective:  the question is whether the likely expenses are, objectively, beyond the applicant's available income and capital.  The question is whether the likely expenses of the proposed litigation are ‘prohibitively expensive’ for a person with the applicant's resources of income and capital, and that must in my opinion be decided objectively;  it cannot be the applicant's own views about whether he can fund the litigation that matter, but rather whether the statutory test is satisfied for a reasonable person with the applicant's actual resources.  In practice, of course, the probable expenses of environmental litigation of any complexity are likely to be well beyond the means of an ordinary person.”

 

[17]      The petitioner’s first affidavit, 6/35 of process, sets out the circumstances in which he came to own the property and its designation in the Inventory of Historic Gardens and Designed Landscapes compiled by Historic Scotland.  It is said in the affidavit that:

“It is described as a rare example of a complete and unfragmented estate landscape, started in the 16^th century and held in one family for almost 400 years.  The complete designed landscape dates from the later half of the 18^th century and includes the A listed Craigengillan House and stables, formal gardens, a walled garden and Japanese water garden.  The listing mentions also notable drystone walling, extensive policy woodland, a rocky gorge and remnants of industrial archaeology.”

 

The affidavit goes on to describe the Galloway Forest Dark Sky Park and the Scottish Dark Sky Observatory.  The petitioner says that he was the founder and is a trustee of the Observatory.  He leases the land to the Observatory at a nominal rent.  The affidavit sets out the petitioner’s financial position.  He is the owner of the estate and farms the land with a sheep enterprise producing organic lamb.  He cares for and manages the woodland.  Over the last 15 years compatible enterprises have developed including a riding stable and the restoration of two cottages for holiday letting.  The income from these various sources contributes towards the annual running costs of the estate.  Along with the sheep enterprise and the woodlands they are part of the single business asset which is Craigengillan.  The petitioner states that it is very difficult to identify any part of the estate which could be sold without substantially undermining its historic integrity and financial viability.  A very significant proportion of the land would have to be sold to cover the anticipated cost of the litigation breaking up what he is planning to preserve and enhance.  The petitioner also practises as a chartered surveyor.  All of his income goes into the Craigengillan account and all expenditure comes from it.  He gives details of his personal income which he draws from the Craigengillan account.  This all has to cover the basic expenses which are set out in a schedule.  He makes reference to a SIPP pension fund, to which I will revert shortly.  He refers to an overdraft and certain financial commitments.  Breaking up the estate would reduce the “very modest” income which he derives from it and which he needs to live on.  Craigengillan’s value as a heritage asset is intrinsically linked to the fact that it is intact.  If the order were not granted he would not proceed with the action.

[18]      Mr Burnett indicated that he would intend to draw his pension in a couple of years.  He drew my attention to 6/43 of process, a letter from the petitioner’s bank dated 23 February 2015 setting out his current business borrowing facilities.  Mr Burnett submitted that there was no scope to raise funds by selling the estate or breaking it up.  It would be contrary to the interests of justice in any event to sell part of the estate, it being a rare example of an unfragmented estate as reflected in the designation by Historic Scotland.

[19]      The likely cost of the case was £173,000 in terms of five schedules contained in 6/36 of process.  The estimates were not unreasonable.

[20]      The estate accounts for the year ended 30 November 2013 have been lodged showing a net loss.  The previous year showed a profit and Mr Burnett explained that the difference was largely because of certain grant income and a one‑off subsidy for the planting of a particular area of woodland.

[21]      The petitioner’s income was shown on the accounts.  The balance sheet shows a particular figure for drawings which represented about four times the annual income.  It was explained that in 2013 the petitioner had to make a large personal tax payment in respect of income for the year to November 2011.  The petitioner’s affidavit indicated that the money went straight to settle the tax bill and did not represent drawings which he was able to use for any other purpose.  It appears though that when one adds together his stated income for the year and the tax bill there is still an unexplained figure of around £9,000.  Nonetheless his position is that the drawings shown in the 2013 accounts are entirely unrepresentative of his current income and his realistic future income.  Prior to 2009 he said he had a busy full‑time surveying practice but he had now cut back that practice significantly.  He was now 63 and at the point of retirement.  I think it fair to point out that the figure for drawings for the previous year is substantially more than the income which the petitioner says he has.  Nonetheless, draft accounts for 2014 were lodged showing a significant loss and drawings which do in fact equate to the income which the petitioner claims.  6/41 of process, a schedule of his taxable earnings for 2012/2013 is in line with the figure he claims and 6/42, a schedule of taxable earnings for 2013/2014 shows figures which are higher than that but not to any significant extent.

[22]      Looking at the matter in broad terms I am prepared to accept that the petitioner’s personal income is broadly as he says it is.

[23]      Number 6/43, the letter from his bank dated 23 February 2015, gives details of his business borrowing facilities.  There is a balance on an overdraft facility but the petitioner explained that this provided emergency funding for the running of the estate.  The second facility was a short‑term loan granted for the specific purpose of planting new native woodland within the estate.  The bank loan allowed him to fund the tree planting and it was tied to a contract with the Forestry Commission in terms of which they would provide funding retrospectively.  Invoices in respect of the tree planting required to be approved by a forestry consultant and the petitioner and the invoices were then sent to the bank which would release the relevant funds into the bank account.  The bank would not release funds for any other purpose.  When the loan expired in a few months’ time the grant funding would be received from the Forestry Commission to pay off the facility, which would then come to an end.  A third facility was in respect of a loan for a biomass project, a wood chipping facility fuelling a biomass boiler heating the house, stables and several other buildings within the estate.  The loan had been spent and had to be repaid over the next six or seven years.  It was not an asset but a liability.

[24]      The bank provided another letter, 6/47 of process, dated 3 March 2015.  It confirmed that the facility relating to the forestry project was only available to fund the approved forestry costs with drawdowns against paid invoices and was expected to be repaid in full on receipt of a grant on completion.  The letter also confirmed that the bank would not fund any additional borrowing for potential litigation/legal costs due to the lack of ability of the existing business to evidence an ability to service the debt.  Thus the petitioner’s bank would not provide him with further sums on the security of the property to meet any potential legal expenses.

[25]      In any event the petitioner should not have to borrow on the security of his property.  This would be contrary to the purpose of the Directive.  He would be putting his property at risk and would be discouraged from bringing proceedings.  He should not be required to sell any property that was part of his home or main business interests.  (Carroll, supra) Mr Burnett conceded that it might be a question of fact and degree but in this case the property was also designated on the basis that it was intact and the scope to break it up was limited.  Breaking it up would be expensive and would deter proceedings.  It would be ironic if the petitioner had to sell his property in order to protect it.

[26]      Mr Burnett addressed the grounds of opposition to which I will turn shortly.  The interested party had obtained a valuation of the property, at market value.  The petitioner pointed out that the figure in his accounts was the book value of the estate in 2014, basically the purchase price plus the capital expenditure incurred in improving the land and buildings.  He had had no open market valuation of the estate prepared.  He had no intention of selling it but proposed to leave it to a charitable trust when he died.  The valuation obtained by the interested party had to be treated with some caution.  It was not clear if account had been taken of the access granted to the Scottish Dark Sky Observatory or the fort and more generally to local people who wished to use the estate for walking and other recreational purposes.

[27]      If there was insufficient information contained in the paperwork lodged by the petitioner then Mr Burnett moved me either to refuse it in hoc statu or continue it for more information.

[28]      No further borrowing facilities were available.  As far as the Dark Sky Observatory was concerned the petitioner was an individual and it was not relevant to consider that.  It was said in opposition that the Observatory had substantial funds available as at 31 May 2013 but they were allocated for other purposes and would not be available.  The petitioner’s supplementary affidavit indicated that these funds were designated for the purpose of constructing the Observatory.  It had now been built and the money had now been spent.  The Observatory had a small amount of reserves as set out in his supplementary affidavit but did not have the funds to repay the loan to the estate which was referred to in opposition.  It currently operated on a break‑ even basis.

[29]      The petitioner had a personal interest in the Observatory as a trustee but had no financial interest in it.  The lease to the Observatory had a duration of about 25 years at a nominal rent and at the expiry there was an option to renew for a further period of 25 years.

[30]      In short the Observatory was not relevant.

[31]      Mr Johnston for the Scottish Ministers moved me to refuse the application.  He was content to proceed on the approach set out in Carroll and agreed that finance was the only issue.

[32]      He pointed out that while reference had been made by the petitioner to the public interest a neighbouring local authority, East Ayrshire Council had decided not to continue with a judicial review and South Ayrshire Council had not resorted to court action.  That was an important point when the petitioner claimed to be acting effectively in the public interests.  As it happens, however, I do not think that that point is relevant.

[33]      At paragraph 25 of Lord Philip’s opinion in the John Muir Trust case his Lordship pointed out that the motion roll did not lend itself to a detailed examination of the way an organisation carried out its business nor should the court normally attempt to second guess the business decisions of a responsibly run charitable organisation.  Although this was not a charity, Mr Johnston said he was not seeking a minute forensic analysis of the accounts or demanding that the petitioner should spend cash on specific objects but there was an objective element to all this.  Did the petitioner, independent of his own view, have the resources to fund the litigation.  If he did it meant he would have to spend money on that purpose rather than another but that was a choice he had to make.

[34]      His resources were substantial.  Some weight had been placed on the inappropriateness of his having to sell part of his estate but this was in fact a large estate and not just one house as in Carroll.

[35]      Mr Johnston criticised the figures in schedule 4 which set out the petitioner’s annual income and outgoings.  The figure for electricity for example could not be connected with the sums in the accounts which had been produced.  The figures were notional and it might be that these were his own figures having taken money from the business but the point was that they had nothing to do with any of the tax returns or accounts.

[36]      It seemed pretty obvious though that the figures were merely an indication of what his annual income was and where the money went.  It did not seem to me that it was designed to tie in with the accounts at all and I did not think there was anything in that point.

[37]      The petitioner had tried to address the issue of the discrepancy between the drawings and his income by referring to a tax bill.  It may well be that he only lived on the figures which he claimed but the fact that he was able to draw money to pay a large tax bill indicated that he was able to draw more if he chose.

[38]      The accounts for 2013/14, 6/38 of process, showed a number of overheads and charges.  For example there was a large amount of expenditure on roads and bridges and the petitioner had taken out a substantial loan for a biomass boiler.  That was a choice on his part.  It was up to him to decide whether to spend money on this action or on bridges and the like.  On an objective view the proceedings were not prohibitively expensive.

[39]      Mr Johnston queried the level of estimated expenses, particularly counsel’s fees.  In his estimate the total expenses would amount to around £132,000 and given the substantial resources the petitioner had it could not be said that he could not reasonably proceed.

[40]      For the interested party, Mr Armstrong adopted Mr Johnston’s submissions.  He went into the background of the interested party’s objections to some extent but I need not discuss that for present purposes.

[41]      The petitioner claimed in his affidavit that the business was still operating at a loss but that was far from clear.  It was wholly artificial to say that his fees as a Chartered Surveyor went into the estate.  The estate had increased in value and the issue was what his actual revenue was, not what he considered it to be.  To what extent was his capital liquid or potentially so?  At paragraph 23 of his affidavit he referred to a pension fund and his projected income out of that.  He was now 63 and from April of this year he could draw on the capital of his pension but there were no details of it.  There was no indication of what the fund was worth.

[42]      The accounts, 6/37, for the year ended November 2013, showed a loss but the previous year showed a profit.  That was inconsistent with the statement that the business was “still” operating at a loss.  Page 5 of the accounts showed his net total assets.  Even on those figures he was a rich man.  The drawings in 2012, which I have already mentioned, were unexplained.

[43]      It was not possible to work out what had happened to the debtors other than trade debtors referred to at page 6 of the account for the year ended 2012.  Were they written off?

[44]      Clearly there was income from properties on the estate.  For the period to November 2014 there was a substantial income.  Purchases were needed to generate that but they came to significantly less.  There were large amounts of money spent on legal and professional fees, buildings repairs and maintenance, and fencing, roads and bridges.  It was not clear how much of the legal expenditure was on this petition.  These various items of expenditure were all a matter of choice.  Mr Armstrong drew attention to the figures for fixed assets and current assets in the draft accounts to November 2014 and a loan to the Dark Sky Observatory.  The net assets were substantial.  They were based on the value of the estate as set out in the accounts and took no account of the petitioner’s pension pot.

[45]      Mr Armstrong drew my attention to a report produced by the interested party setting out what was said to be the market value of the estate.  This valuation report, by Rettie &Co, is the first item in the first inventory of productions for the interested party.  The market value with vacant possession is set out at paragraph (vii) on page 5.  It can be seen that it is significantly greater than the figures in the petitioner’s accounts.  The date of inspection was 13 February 2015.  The report deals with various parts of the property, referring to Craigengillan House and gardens, the gatehouse and home farm house, the cottages, the farmlands and woodlands.  The Observatory is also referred to as well as stables, holiday cottages, burdens, rateable values, footpaths and public rights of way.  It is a fairly comprehensive document.

[46]      Mr Armstrong submitted in short that the petitioner had a substantial amount of capital.

[47]      The interested party had lodged the title sheet to the estate.  The petitioner had bought the estate in 2000 for the sum of money set out therein and he had spent a lot of money on it.  Items 16 and 17 in the title sheet showed two dispositions by the petitioner of what appeared to be parts of the estate in late 2006.

[48]      The third document lodged by the interested party was a report by the trustees of the Dark Sky Observatory together with a note of its financial statements for the year ended 31 May 2013.  As far as the Observatory is concerned Mr Armstrong reminded me that the petitioner was a trustee and director.  The registered office was Craigengillan.  The fixed assets consisting of land and buildings are valued at page 5 of the balance sheet, the valuation being over twice what it was in 2012.  The land was rented by the petitioner to the Observatory for a nominal figure, as I have indicated.  Mr Armstrong said that one would assume that at the end of the lease the property would revert to him and that was another substantial asset.  He was very well‑off and on that basis alone the motion should not be granted.

[49]      Mr Armstrong turned to Rule 58A.4.  He pointed that a protected expenses order must (subject to paragraphs 2 and 4) contain provision limiting the applicant’s liability and expenses to the respondent to the sum of £5,000 and limiting the respondent’s liability in expenses to the applicant to £30,000.  The interested party was not a respondent.  One view of that was that there was no restriction on the order which could be made in connection with an interested party.  The position was not entirely clear.  However, while the main argument was that the order should not be granted at all, the limit should be £30,000 in total.

[50]      The petitioner argued that it was unreasonable to ask someone to borrow against his assets but in this case the petitioner had a number of assets as set out in the valuation report.  It was unreasonable to interpret the Rule as disallowing the court to take account of the ability of a party to borrow on his assets, especially where they were substantial.  The letter 6/47 indicated that the bank would not fund the petitioner’s borrowing for legal costs but we did not know the basis of that letter.  Was it on information from the petitioner to the effect that he was earning what he said he earned?  Was the bank aware of the market value of the property?  Little weight should be attached to it.

[51]      Mr Armstrong’s final point was that if the petitioner with his substantial assets and income could obtain a protected expenses order there was no point in the Rule.  It was hard to imagine very many people with his assets.

[52]      In reply Mr Burnett said that attempts had been made to examine the information in the accounts on an uninformed basis.  Reference had been made to expenditure on fencing but that was needed as part of a contract with the Forestry Commission.  The legal fees were in connection with obtaining patents for a new heating and energy device.  It had been suggested that all the income of the business was available to him as he wished but the accounts showed that in order to run the business properly various expenditures had to be incurred.  The court was not in a position to go into the reasonableness of the business decisions, which would entail expert evidence from accountants.  The bottom line was a substantial loss.  The Observatory was irrelevant because it was the subject of a 25 year lease.  At the end of the lease the Observatory could take all the equipment away.  The suggestion that the petitioner could fund the litigation was contrary to the evidence produced by his bank.  He would require to sell his property in order to pursue litigation and that property was the income generating part of his business.  He was not making substantial profits.  As far as the terms of the order were concerned, paragraph 27 in Carroll showed how the matter should be dealt with.  Otherwise an interested party could ask to be excluded from the terms of the order.  The purpose of the Rule was to limit the expenses to which petitioners were exposed and provide some certainty.

[53]      The pension fund should not be taken into account.  The court should be reluctant to ask the petitioner to make a significant withdrawal from a pension fund accumulated over the years to provide an income for retirement.  That would be a significant disincentive to pursuing such actions.  There were substantial fixed assets but they should not be realised when it was not possible to obtain loans.  They were his home and his business assets and the purpose of the directive should be borne in mind.

[54]      As I have indicated I called for further information about the pension fund and in response to that was provided with various documents to which I have already referred.  Apart from the documents neither party wished to make further submissions.

[55]      As I read these documents, letters dated 6, 9, 11 and 17 March 2015, there does not appear to be much between the parties as regards the funds and the options available.  The main difference appears to me to be the predicted growth rate.

[56]      As far as I can tell, there appear to be funds available in the pension fund which could meet the expenses of the litigation.  The petitioner however wishes to clear an overdraft and his advisors would dissuade him from extracting the expenses from the fund since this would have an adverse effect on his income going into retirement.

 

Discussion
[57]      As I have indicated, for reasons of confidentiality I am not able to discuss in detail the exact figures for income and capital available to the petitioner nor can I go into details of his pension fund.  The parties are aware of the position however and the documents are produced.

[58]      I respectfully agree with Lord Drummond Young that I should take account of capital which is actually or potentially liquid.  In general terms I also agree that it is not realistic to take account of an applicant’s home or business assets.  I think that Mr Burnett, however, recognised that that is a question of fact and degree.  In the present case I am dealing with a sizeable estate and a business with a number of facets.  The petitioner’s position is that the estate cannot realistically be broken up as that would reduce the income he derives from it and would have an adverse effect on his value as a heritage asset.  The description in the Historic Scotland entry highlights the complete and unfragmented nature of the landscape.  It is obvious, however, that the extent of the lands has not been static.  Mr Armstrong pointed out that certain lands were disposed of in 2006 according to the title sheet and it is averred in the petition that on or about 17 April 2012 the boundary of the area of Craigengillan included in the inventory was extended.  Mr Burnett did not address these issues in his helpful submissions.

[59]      It is not for me to undertake a minute examination of the various entries in the accounts.  At best I can only adopt a broad brush approach.

[60]      I do not think it can properly be said, on the information before me, that any particular items in the accounts are extravagant.  On the other hand, I do not know to what extent expenditure will be repeated.  The draft accounts for the year to 12 November 2014 referred to substantial expenditure on legal and professional fees, building repairs and maintenance, and fencing roads and bridges which, as far as I can tell, are not reflected in the accounts for the previous year.  The figures for depreciation are also substantial.  I have no reason to disbelieve the petitioner’s account of his income from the estate but when one considers the figures to which I have just referred and the substantial figures for drawings to meet a tax liability it appears to me that there exists the potential to expend large sums of money and to dispose of parts of the estate when required.  I find that the criticisms of the letter from the petitioner’s bank in relation to the provision of a facility to pay legal fees are well‑founded.  It is not at all clear to me that the bank is aware of the value of any securities which they might hold.

[61]      Assuming the estimates for the expenses are accurate it would appear that a withdrawal from the pension pot of sums to meet those expenses would leave a fund which might be a few thousand less or a few thousand more than the income which the petitioner currently draws.  It is said that he will also require to pay the indebtedness to the bank from his pension pot which would have the effect of reducing his pension to less than half of his current income.

[62]      It appears to be the petitioner’s wish to clear this debt upon retirement but he is not entirely clear on the material before me that he has to do so.  It is not clear what is to happen to the business on the petitioner’s retirement.  According to his supplementary affidavit he intends to leave the estate to a charitable organisation when he dies.  I infer from that that it is intended that the business will continue after his retirement and it is not clear why the business cannot be responsible for the repayment of the banking facilities.  If it is not intended that the business continue then I see no barrier to at least parts of the estate being sold.  If the petitioner choses to leave the business to a charity that is a matter for him but it will mean that he will have divested his estate of a valuable asset, which he could have done in life for a substantial consideration.

[63]      I do not think that the pension fund can be ring fenced from my consideration of the petitioner’s financial position.  If the funds which are represented in it were to be found in a savings account I have no doubt that they would have to be taken into consideration, albeit that the savings might have been put aside over many years to assist in the petitioner’s retirement.

[64]      It is not clear to me that the judicial expenses would require to be met wholly from one source.  In view of the fact that the observatory is subject to a lease, I leave it out of consideration but nonetheless I do not think that the petitioner has established that he would be unable to meet the expenses when I look at his assets as a whole. Doubtless the risk of incurring a six figure sum in judicial expenses is a disincentive to proceeding but that is not the test.

 

Decision
[65]      Having regard to the petitioner’s financial position as a whole I am not satisfied that he has made out that he could not reasonably proceed with the proceedings in the absence of a protective expenses order and the motion is refused.

[66]      I was asked to reserve all questions as to the expenses of the motion, and I accordingly do so.  No doubt these can be dealt with at a later stage if necessary.