Don’t forget the common law – a reminder of statutory interpretation principles where common law fundamental rights are engaged

In R (LJ Fairburn & Son Ltd and others) v the Secretary of State for Environment, Food and Rural Affairs [2024] EWHC 65 (Admin), a group of poultry farmers successfully challenged the Secretary of State's policies on the payment of compensation for birds culled following outbreaks of Avian Influenza (commonly known as "bird flu"). The High Court held that, as a matter of statutory interpretation, the claimants were entitled to compensation for any birds that were healthy at the time they were condemned to slaughter, and ordered the defendant to reconsider the compensation payable to the claimants as a result. However, the court did not accept that the claimants' property rights under Article 1 of the First Protocol ("A1P1") to the European Convention on Human Rights ("ECHR") had been infringed.

Key Points

• Under conventional principles of statutory interpretation, and reflecting the fundamental common law right to property, the court should not interpret a statute as interfering with property rights without compensation unless there is no other way of interpreting the relevant provision.
• Where an interference amounts to a deprivation of property for the purposes of A1P1, a total lack of compensation can only be justified in exceptional circumstances.
• However, if a court considers the interference to be a control of use for A1P1 purposes, the State has a wide margin of appreciation in striking a balance between the general interest of the community and the protection of the individual's fundamental rights.
• Forfeitures and confiscations by the state are generally regarded by the courts as a control of use under A1P1, rather than a deprivation.

Background

The claimants were each poultry farmers whose stock had been affected by one or more outbreaks of bird flu in 2021-22. The defendant's policy at the time was that compensation would only be paid for the number of birds that were still healthy at the time of the cull, rather than the number of healthy birds condemned to be culled. However, even though the defendant was under a statutory obligation to cull birds without delay, the claimants gave evidence that there were days or even weeks between the birds being condemned and then culled. As the bird flu was highly virulent, many healthy birds which had been condemned had become diseased and died during the intervening period, thereby reducing the compensation to be paid to the claimants under the defendant's policy. The First Claimant gave evidence that they had lost almost 500,000 birds during a 14 to 15 day delay between condemnation and culling, losing £1.5 million as a result.

Paragraph 5(2) of Schedule 3 of the Animal Health Act 1981 (the "1981 Act") contains the relevant provision on compensation:

“(2) The Minister shall for poultry, other than diseased poultry, slaughtered under this paragraph pay compensation, which shall be the value of the bird immediately before it was slaughtered”.

In October 2022, the Government announced a change to its policy on bird flu compensation to allow "compensation to be paid to farmers from the outset of planned culling rather than at the end" [emphasis added]. However, in bringing a claim for judicial review, the claimants contended that the new policy (as well as the old policy) failed to discharge the paragraph 5(2) statutory duty to pay compensation, which on their interpretation, should be calculated on the number of healthy birds condemned to be culled. The claimants further contended that such an interpretation was necessary in order for the statutory provisions to be compatible with their A1P1 rights to the peaceful enjoyment of their possessions, in reliance on the interpretative obligation in section 3 of the Human Rights Act 1998 (the "HRA").

Judgment

Conventional statutory interpretation

On the claimants' case, the ordinary meaning of paragraph 5(2) was that the defendant was obliged to pay compensation for poultry that they caused to be slaughtered, and that the right to compensation accrues when this occurs (i.e. at the point of condemnation). The defendant maintained that the language used in paragraph 5(2) was unambiguous and clearly linked the value of compensation to the value of the bird immediately before slaughter.

The court noted that the defendant had "rightly" observed that Parliament could have used the phrase "caused to be slaughtered" in paragraph 5(2) if it intended the obligation to pay compensation to accrue on condemnation, as it had in paragraph 5(1), but it did not. However, the court considered that both parties' constructions were reasonable, and therefore it was necessary to look beyond the ordinary meaning of the words in paragraph 5(2). The court noted the following principle set out in Attorney General v Horner (1884) 14 QBD 245, which reflects the longstanding common law fundamental right to protection of property:

"…it is a proper rule of construction not to construe an Act of Parliament as interfering with or injuring persons’ rights without compensation, unless one is obliged so to construe it. If it is clear and obvious that Parliament has so ordered, and there is no other way of construing the words of the Act, then one is bound to so construe them, but if one can give a reasonable construction to the words without producing such an effect…one ought to do so”.

The court found that the defendant's construction resulted in the farmers' rights to their poultry being restricted without compensation. As such, the Horner principle was applicable, and the court held that the "Claimants should be given the benefit of the doubt on this issue". The court also considered the wider statutory context, the statutory purpose and the consequences of the competing constructions, which reinforced its view that the claimants' construction was correct. As neither the old policy nor the new policy operated on the basis that the right to compensation accrues at the stage of condemnation, the court held both policies to be unlawful.

A1P1

Interferences with A1P1 rights are treated differently depending on whether they amount to a deprivation of property or a control of use of the property.

The claimants contended that the condemnation of birds under paragraph 5(2) amounted to a deprivation for the purposes of A1P1 as it involved severe restrictions on the farmers' rights, including permanent restrictions on selling, slaughtering or moving the birds, while ownership of the birds passes to the Secretary of State post-slaughter. The claimants argued that this resulted in a de facto expropriation of their property and thus a deprivation, which requires compensation to be paid save in exceptional circumstances.

However, the court considered that forfeitures and confiscations by the state are generally regarded by the European Court of Human Rights (the "ECtHR") as a control of use under A1P1, rather than a deprivation. Although noting several cases in which the ECtHR has found a confiscation where the applicant had no realistic possibility of recovering their possessions to be a deprivation of property, the court relied on two recent ECtHR cases in which the preventative slaughter of cattle to combat disease had been found to be controls of use. The High Court therefore concluded that the condemnation was a control of use for A1P1 purposes.

Turning to the question of compatibility with the ECHR, the court stated that in control of use cases, lack of compensation is a factor to be taken into consideration in determining whether a fair balance between the general interest of the community and the protection of the individual's fundamental rights has been struck, but is not determinative. The court emphasised that the state enjoys a wide margin of appreciation in striking that balance, and that it would respect the legislature's judgment as to compensation unless it is manifestly without a reasonable foundation.

The court noted that the wider legislative scheme provides some compensation to be paid for slaughtered healthy birds at market value, and concluded that the approach to compensation for condemned birds as a control of use was not manifestly without a reasonable foundation. As such, it did not consider it necessary to adopt the claimants' interpretation of paragraph 5(2) of the 1981 Act to ensure compatibility with A1P1 rights. The court did, however, note that if it were wrong in its finding that the condemnation was a control of use rather than a deprivation, then it would have found in favour of the claimants on the A1P1 issue.

Comment

Although section 3 of the HRA can be a strong interpretive obligation where it applies, this case offers a helpful reminder of the relative strength of common law protection of fundamental rights and conventional principles of statutory interpretation that reflect that protection, particularly where there is an interference with property rights without compensation. In this case, although the court considered the Secretary of State's construction to be reasonable, it found that there was sufficient ambiguity that the claimants should be given the benefit of the doubt on the question of interpretation. In contrast, the court emphasised the wide margin of appreciation afforded to the State in A1P1 claims involving a control of use. The case also demonstrates the difference in the court's evaluation of the proportionality of a measure depending on whether the interference is considered a control of use or a deprivation of property for the purposes of A1P1, which can be key to the outcome of an A1P1 claim.