Pride v IAH [2009] EWHC 685
Most of us will be well aware of the dangers of foot and mouth
disease and the risks it poses, particularly for farmers and
livestock owners and whose livelihoods are badly affected by any
outbreak. It will come as no surprise that there has been
litigation arising out of the most recent outbreak in Godalming,
Surrey in August and September 2007. The case, brought by fourteen
livestock farmers, was raised against the two operators of the
research facilities at Pirbright which were the source of the
virus, and the Secretary of State for the Environment, Food and
Rural Affairs.
Claims from those farmers whose livestock had to be slaughtered
have already been settled. These claims, however, were from farmers
who said they had suffered loss by being unable to move their
animals freely during the outbreak. The farmers alleged that
negligence by the defendants, had caused the leak of the virus from
the facilities. The merits of the action, and whether the claims
disclosed a good cause of action and should be permitted to proceed
to trial, were considered in March of this year. In a judgment
which will please the government but not insurers of the farming
industry, the judge held that the claimants had no real prospect of
succeeding in their claims against any of the defendants.
From 2 to 9 August 2007, in the first phase of the outbreak,
various measures were taken to prevent the spread of the virus,
including the establishment of control zones, the ban of exports
and the slaughter of cattle, sheep, goats and pigs. These measures
directly affected parts of the land of some of the claimants. What
affected all of the claimants were declarations on 3 August 2007 of
a restricted zone across the whole of Great Britain by the
Secretary of State. As a result, the affected farmers were unable
to move livestock freely to fresh grazing, necessitating
supplementary feeding and leaving areas of fresh pasture ungrazed.
Milk production was lost as cows could not be returned from
outlying fields. Farmers were unable to move fattened stock to
slaughter at the optimum time. Lambs destined for export had to be
kept on hill farms, resulting in loss of income. Pig breeder and
rearing units were overstocked, leading to welfare problems and
costs, and farmers were unable to export live animals and
derivative products abroad.
The judgment proceeds on the basis that the virus leaked due to
a defect in the effluent system at Pirbright and as such, the
outbreak was caused by failures of one or all of the three
defendants.
The court considered the content of the duty of care owed by the
defendants in relation to the nature of the loss and damage
claimed. The farmers alleged the defendants had breached a duty to
take reasonable care in their operations at Pirbright so as not to
cause an escape of the virus and, as a consequence, an outbreak of
foot and mouth disease, and the losses sustained by the
farmers.
The defendants argued that the loss could only be classified as
pure economic loss, not consequential upon any physical damage and
so not recoverable in negligence. The court agreed. Accordingly, no
duty of care arose. By contrast, where other farmers had suffered
direct physical harm to their livestock as a consequence of the
virus, a duty of care did arise and notably, these claims were
settled out of court. While the court conceded this would be viewed
by some as a somewhat artificial distinction, reference was made to
the case of Marc Rich and Co v Bishop Rock Marine Co Ltd [1996]
1AC 211 and in particular to the judgment of Lord Steyn, who
said that the issue of directness of loss was a material factor
rather than a matter of terminology. The judgment reinforces the
existing body of case authority which indicates that the courts are
much readier to establish negligence in cases of direct physical
loss than cases involving indirect pure economic loss.
Contributed by Lynne MacFarlane