Developer loses court battle against North Sea pipeline owner

Jack Nicklaus in front of Ury House on Ury Estate, Stonehaven. copy: Ewen.
Picture by GORDON LENNOX 17/07/2007.
Jack Nicklaus in front of Ury House on Ury Estate, Stonehaven. copy: Ewen. Picture by GORDON LENNOX 17/07/2007.

A developer has lost a multi-million-pound court battle against a North Sea oil giant after its proposal to build a hotel close to the Forties pipeline was rejected.

FM Group had attempted to increase the number of bedrooms in Ury House near Stonehaven from five rooms to 35, as part of the wider Jack Nicklaus signature golf course development.

However, the Health and Safety Executive (HSE) raised concerns about the nearby pipeline, which was operated by BP at the time, and planners rejected the application.

The HSE warned the council that the 235-mile pipeline that links 85 North Sea oil and gas assets to a processing plant in Grangemouth could pose a “significant hazard” if more than 10 people stayed overnight at the hotel.

The developer subsequently lodged a civil action against the oil firm in the Court of Session seeking compensation.Under the land rights for the site, any firm that wishes to develop property affected by the pipeline has the right to ask the operator, which has since changed to Ineos, to divert it or pay compensation.

The developer had approached the oil firm but at the time BP refused to change its route or offer to pay any cash in compensation.

FM Group then lodged legal action claiming it had lost out on upwards of £10million by not being able to extend the hotel, with the overall capital value of the site estimated at £12.4million.

A hearing was held in Edinburgh with witnesses giving evidence on behalf of the pursuer and the defender.

The judgement of Lord Bannatyne, who presided over the case, has now been published online.

He rejected the developer’s legal arguments and instead ruled in favour of BP, whose defence was being provided by Ineo’s legal team.

Lord Bannatyne ruled that such a hotel could be developed on the basis of existing permissions and was not prevented by the existence of the pipeline.

The judge said: “I am not satisfied on the evidence before me that a five star luxury bedroom hotel in Ury House has been prevented by the existence of the pipeline.

“But he said that after hearing expert evidence he had formed the impression that the proposed development was trying “to put a quart into a pint pot”.

Lord Bannatyne said: “It appears to be seeking to achieve a five star luxury hotel of a certain size in a space that will simply not accommodate it. Ury House is simply not of sufficient size to incorporate all the necessary elements for it to be accredited at the level of a five star luxury hotel.”

The judge said: “I believe that in respect to this issue of buildability and viability a 35 bedroom five star luxury hotel in terms of the proposed development is simply not achievable.”

Lord Bannatyne also concluded that the estate firm was not in a position to fund the proposed project and for this further reason its case must fail.

Jonathon Milne, director of FM Group, said the firm would have to properly examine the judgement before commenting properly.

A spokesman for the oil firm said: “Ineos is pleased with today’s outcome. We always believed that the case was without merit and that the judgement delivered reflects this view.

“We will always defend our interests.”