Rafferty & Elmore v Min for Agriculture and Others
|O"Donnell J.,Denham C.J.
|07 November 2014
| IESC 61
|07 November 2014
|Appeal No. 423/2008,[S.C. No. 423 of 2008]
 IESC 61
THE SUPREME COURT
Denham C.J., Murray J., Hardiman J., O"Donnell J., McKechnie J.
Appeal No. 423/2008
Farmers - Compensation - s. 17 of the Diseases of Animals Act 1966 - Principle of Proportionality - Foot-and-Mouth Disease Order 1956
Facts: The central issue in this appeal was the interpretation of "compensation" in s. 17 of the Diseases of Animals Act 1966, as amended. The appellant appealed against a High Court judgment dismissing his action. The appellant was a sheep and tillage farmer who sought to be compensated for the compulsory depopulation of his stock pursuant to the 1966 Act after an outbreak of Foot-and Mouth disease. The appellant sought compensation in accordance with s. 17 of the 1966 Act, for financial loss and damage, including consequential loss and damage associated with the culling of his sheep. The appellant also sought a declaration that the compulsory depopulation of his flock was an attack on his rights as protected by Articles 40.3 and 43 of the Constitution. The High Court had awarded the appellant compensation but it was submitted that it fell short of the actual loss and damages sustained by the appellant as a result of the cull. The High Court held that the appellant had been paid more than the market value of the culled sheep, however, it accepted that the appellant suffered losses beyond this.
The High Court held that nothing in the 1966 Act suggested that the legislature intended for compensation to include consequential loss. The appellant argued in the High Court that his sheep were not infected and were culled in the national interest. As a result, he said that he should have been entitled to all losses resulting from the cull. The High Court considered whether the process of valuing the compensation was constitutional by referring to the principle of proportionality. In addition the High Court considered whether the compensation paid interfered with the appellants property rights or constituted an attack on those rights. The compensation scheme under the 1966 Act was implemented using the Foot-and-Mouth Disease Order, 1956, S.I. No. 324/1956. The meaning of "compensation" was not defined in the 1966 Act or the 1956 Order. The respondents submitted that the 1966 Act and the 1956 Order meant in terms of compensation that market value could only be paid for the animals.
Held by Denham C J: In light of the ambiguity the court had to determine what s. 17(2) of the 1966 Act meant. It merely stated the Minister must pay compensation for animals slaughtered under that section but failed to outline the parameters of the compensation. The court disagreed with the High Courts findings that s. 17(2) meant that compensation was limited to market value and said it was capable of a broader meaning. Denham CJ held that being compulsorily deprived of ones property or property interests by the State means entitlement to compensation for the total loss caused. It is also constitutionally permissible to limit the amount of compensation paid subject to the principle of proportionality. The term compensation is payment for total loss and must include any consequential loss to the appellant"s business. To not take this approach would result in an unjust attack of the appellant"s property rights. The court allowed the appeal and made the declaration sought by the appellant. The case was remitted to the High Court to assess the total loss to the appellant including consequential losses.
I agree with the judgment delivered by the Chief Justice in this matter and wish only to add some matters by way of observation.
The outbreak of foot and mouth disease first at Maigh, County Armagh, on the 1st of March 2001, and then in a sheep flock at Proleek near Jenkinstown in County Louth, was an extremely serious development for the cattle and sheep industries in Ireland, north and south, but it was a particular catastrophe for the sheep farmers of the Cooley Peninsula of County Louth who were most obviously and directly at risk of the spread of the disease. Accordingly, I agree with the observations of the High Court Judge that this case contains elements of compulsory acquisition of property, and a form of disaster relief. I also agree with the Chief Justice that no issue arises in this case as to whether, and if so, in what circumstances, legislation may properly provide for compensation other than the market value when a property right is being acquired, or conceivably destroyed, by the State. That was not argued in this case.
Difficult legal and conceptual issues arise when the State acquires property, or as here requires the destruction of property, for a legitimate public interest. But the difficulty here is compounded by what is in my view, a wholly inadequate and confusing statutory regime. While it is now perhaps a matter of historical interest only, there must be some doubt as to the course taken by successive ministers and advisors, who did not establish a scheme under s. 58 of the Disease of Animals Act 1966 ('the Act of 1966'), and sought instead to continue to operate the regime created by the Foot and Mouth Disease Order 1956 (S.I. No. 324/1956 ('the 1956 Order')). The position is in my view only complicated by the procedure of confirming the 1956 Order by the provisions of s. 4 of the Disease of Animals ( Amendment) Act 2001 ('the 2001 Act'). If it was thought that the type of scheme envisaged under s. 58 was too cumbersome and expensive (as appears to have been suggested in argument in Rooney v. Minister for Agriculture and Food  2 I.R. 539) then the solution was to amend the Act to make provision for a more efficient and less costly scheme. But a comprehensive and detailed scheme is important both from a practical and legal point of view. The provisions of the Acquisition of Land (Assessment of Compensation) Act 1919 are well known, and have been the subject of very considerable litigation, but they are an illustration of a pre-constitutional attempt to provide relatively detailed guidance on the approach to be taken to the assessment of compensation. The effect of the non-operation of s. 58 of the 1966 Act, the adoption of s. 22 of the 1956 Order, and the confirmation of the 1956 Order by the 2001 Act, is not only complex from a legal point of view, but it has what must be the surely undesirable result that the assessment of compensation for a complex task, is made to depend on one not very informative sentence:
'Where an animal is slaughtered or a carcase destroyed by direction of the Minister under the Diseases of Animals Acts, 1894 to 1954, the value of the animal or carcase shall, for the purpose of compensation, be ascertained by a person appointed by the Minister on that behalf'. (s. 22 of the 1956 Order)
This leaves the person appointed by the Minister without guidance in the assessment of compensation in an area which may be factually complex and occurs in a context that involves a difficult intersection between constitutional rights and the public interest. Leaving the assessment of compensation without any statutory guidance must significantly increase the chances that the compensation assessed will be unfair to the citizen, the public, or possibly both.
The claim for compensation made in this case was ambitious. It is also clear from the findings of the trial judge that the assessment of compensation in respect of the animals themselves, by Mr Mulvihill, was on any view generous. I agree however with the Chief Justice that the fact that the trial judge found that the plaintiffs had not been fully compensated under certain headings of law (and in particular, for consequential loss) means that the issue must return to the High Court even if in the light of those findings of the trial judge, the final amount may be little different. In that regard, I agree that compensation must be taken to mean total loss, and that that total loss is to be assessed by market value. While market value as a concept may provide an element of certainty and definition at a legal level, it itself is not an easy concept to apply in fact, where there is no market functioning at the relevant time. Quite different figures may be arrived at in fact, depending on the date of the valuation and the assumptions that are to be made. This indeed is why the law in relation to compulsory acquisition of property goes to some length to identify the date of acquisition and the assumptions upon which any such valuation is to be made. The date of valuation and the assumptions if any upon which it is made are particularly important where as here the market for the item being acquired by the State, or required to be destroyed by the State, is likely to be affected by the event giving rise to the acquisition, and which is not caused by the State or any agency for which it is responsible.
It might be said that it would not be wise or fair, and arguably would not be 'compensation' under s.17 of the 1966 Act, if the State were to take advantage of a catastrophic drop in price caused by an outbreak of disease, and also possibly the effect of restrictions of movement imposed by the State authorities introduced to make more difficult the transmission of disease (and which restrictions themselves might not be compensatable), to fix an acquisition price at the lowest value in a market cycle especially where the acquisition and destruction of the property was designed to protect the industry, and economy, more generally. However, that has not been suggested in this case, either as a matter of...
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