My understanding from Rosalind Michenson who did the definitive biography of Sir John Sinclair of Ulbster,"Agricultural Sir John":
the languages primarily spoken in Caithness were three: 1;early on, but was well on the way to dying out by 1700 was Erse or a form of Norse localised in northern Scotland. 2; Gaelic mostly in the south and 3:along side and also from early on was a form of English or "Inglis" that was not as broad as the lowland Scots but related. The old Rosslyn documents/charters (admittedly emanating from Rosslyn Castle) at the University of Guelph here in Ontario, which were discussed in an earlier issue of Roslin O Roslin (Winter 1999 Issue) show that this "Inglis" was the language of choice for these charters. The earliest in the collection is signed by Henry St. Clair of Rosslyn and Earl of Orkney who was the son of Prince Henry 1st Sinclair Earl of Orkney and this language by implication would have been used in Caithness at least by his retinue in Caithness at this time.
Gaelic tended to arrive in Caithness from the south with the emmigration of highlanders from Sutherland and other parts before and during the Clearances. The work done at the Dunbeath Heritage Centre on place names in Caithness shows a preponderance of Gaelic names in the southern (and mountainous) parts of the County and a preponderance of Norse and English derived names in the northern and coastal areas which seems to bear out Niven's observations except a couple of anomolies with respect Caithnessian Sinclairs that I peronsally know about viz.:
1:W.E. Bill Sinclair, President of Clan Sinclair Canada, descends from Gaelic-speaking Sinclairs from, either Wick or Thurso. This is fact-- it may be exceptional but I simply can't comment on how exceptional.
2: Our oldest living member of Clan Sinclair Canada is William R. Sinclair (pen-name 'Auld Wullie') -- his ancestors are from Caithness and he reports to me that, although he (Wullie) never met his grandfather, Wullie's father always said, whenever he passed the old homestead in West Toronto, "That is where your grandfather lived -- he spoke Gaelic"
Based on this small survey, I would suggest that Niven's " Sinclairs NEVER spoke Gaelic" should be qualified but that is my opinion and that and 50 cents in Canadian funds will get you a cup of coffee up the street.
hope this is helpful
Rory in Toronto.