Supreme Court allows appeal on compensation assessment for compulsory property destruction under Foot and Mouth Disease Order 1956.

THE SUPREME COURT

Appeal No. 423/2008

Denham C.J.

Murray J.

Hardiman J.

O’Donnell J.

McKechnie J.

Between/

Brendan Rafferty

Plaintiff/Appellant

and

Minister for Agriculture, Food and Rural Development, Ireland and The Attorney General

Defendants/Respondents

Judgment of O’Donnell J. delivered on the 7th of November 2014.

1. I agree with the judgment delivered by the Chief Justice in this matter and wish only to add some matters by way of observation.

2. 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.

3. 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 [1991] 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.

4. 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.

5. 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 law or fact. But I do not see any reason in principle, and still less in the

terms of s. 17 of the 1966 Act, and Article 22 of the 1956 Order, which requires a valuer to assess compensation here on the

assumption that the foot and mouth outbreak in Co. Armagh and North Co. Louth had not occurred or (which would amount to the

same thing), to value the loss at a point in the market before the outbreak.