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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Feakins & Anor v Department for Environment Food & Rural Affairs [2005] EWCA Civ 1513 (09 December 2005)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2005/1513.html
Cite as: [2005] EWCA Civ 1513

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Neutral Citation Number: [2005] EWCA Civ 1513
Case No: A2/2004/2727, A2/2004/2745
AND A2/2004/2745(C)

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM The High Court of Justice
Chancery Division
Mr Justice Hart

[2004] EWHC 2735 (Ch)

Royal Courts of Justice
Strand, London, WC2A 2LL
9th December 2005

B e f o r e :

LORD JUSTICE WALLER
LORD JUSTICE JONATHAN PARKER
and
LORD JUSTICE MOSES

____________________

Between:
Feakins and Anr
Appellants
- and -

Department for Environment Food and Rural Affairs
Respondents

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal WordWave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Nicholas Dowding QC and Stephen Jourdan (instructed by Burges Salmon) for the Appellants on the Claim and Stephen Jourdan (instructed by Burges Salmon) on the Counterclaim
Nicholas Caddick and Sarah Lee (instructed by DEFRA Legal Department for the Respondents on the Claim
Neil Garnham QC,Sarah Lee, Paul Harris and Sarah Stevens (instructed by DEFRA Legal Department) for the Respondents on the Counterclaim

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Lord Justice Jonathan Parker :

    Introduction

  1. This judgment deals with the claim. The counterclaim is dealt with in the judgments of my Lords. I agree with those judgments.
  2. By its claim, The Department for Environment Food and Rural Affairs ("DEFRA") seeks relief against the defendants ("KF" and "Miss Hawkins") on the footing that an arrangement into which they entered in early October 2001 relating to the sale of Hill Farm, Llancloudy, Herefordshire constituted a transaction at an undervalue for the purposes of section 423 of the Insolvency Act 1986 ("the 1986 Act"). KF and Miss Hawkins deny that the arrangement in question constituted such a transaction. At trial Hart J upheld DEFRA's claim, and by his order dated 26 November 2004 he granted relief accordingly.
  3. The Factual Background

  4. The general factual background, which is not in issue, is set out by the judge in paragraphs 2 to 12 of his judgment, as follows:
  5. "2. [DEFRA] is the government department which sues (and is sued) as successor to the rights (and liabilities) of the Ministry of Food Agriculture and Fisheries ("MAFF") and the Intervention Board for Agricultural Produce ("IBAP"). It is unnecessary to set out the steps by which this succession took place. For much of the period with which I am concerned the relevant body was MAFF rather than DEFRA. For convenience I refer to DEFRA as the relevant body throughout.
    3. [KF] is a farmer. In 1986 he and his first wife ("Sarah") moved from Wiltshire and together bought Hill Farm, comprising a sizeable Georgian farmhouse with various agricultural buildings and farm land of approximately 250 acres in Herefordshire. Their business, conducted at first in partnership, and later through the medium of a limited company KA and SBM Feakins Ltd ("the company") in which their eldest child Matthew was a 10% shareholder, prospered. By 1997 its turnover approached £6m per annum. In 1997, however, the first in what were to be a series of hammer blows of misfortune struck. One of the company's major customers, the UK Halal Meat Company ("Halal") failed leaving huge debts owing to the company. Thereafter, the company ceased to trade, remaining in existence solely for the purpose of seeking to realise the security which it enjoyed in respect of Halal's indebtedness. The business was thereafter carried on either by KF and Sarah in partnership, by a new limited company KA & S Feakins & Sons Limited and, as from February 1998, by a further limited company, Garron Livestock Limited ("Garron") which had an outside shareholder Mr S. W. Watkins.
    4. From 1992 onwards KF and Sarah had been engaged in litigation in the High Court, along with others, against IBAP relating to the validity of payments received pursuant to what was known as the sheep premium clawback scheme. A reference to the European Court of Justice was one amongst other causes of that litigation becoming protracted. Eventually, however, on 23 June 2000 Mr Justice Kennedy gave judgment for IBAP against KF in the sum of £650,654.
    5. In the meantime the relationship between KF and Sarah had broken down. Sarah commenced divorce proceedings against KF in the autumn of 1999. The financial negotiations between them eventually resulted in a Consent Order dated 25th May 2000 pursuant to which KF agreed to pay Sarah £50,000 and to indemnify her against any adverse judgment in the IBAP litigation. In return, Sarah gave up her interest in Hill Farm, in the company and in KA & S Feakins & Sons Ltd. The mortgage liabilities in respect of Hill Farm in favour of National Westminster Bank plc ("NatWest") were transferred into the sole name of KF.
    6. By September 2000 Hill Farm with vacant possession seems to have been worth some £1.03m, subject to NatWest's charge of in excess of £400,000. KF was hoping that an appeal against the judgment of Kennedy J would either extinguish or substantially reduce his liability thereunder. His plan, however, at this stage seems to have been to sell Hill Farm. He found potential purchasers at a price of £1.03m in the persons of a married couple, Mr Nechvatal and Ms Cloud ("the Nechvatals"), who were looking to retire from their respective careers in the financial sector and take up organic farming. They were able to agree terms subject to contract. KF was not, however, in a position to enter into a contract with the Nechvatals. On 22nd September 2000 IBAP obtained a charging order nisi against Hill Farm in respect of its judgment debt and interest. Thereafter KF's hopes of realising anything for himself from a sale rested either on his appeal being successful, or on his reaching some compromise with IBAP, or on finding a way of selling the farm free from the IBAP charge while leaving the net proceeds in friendly hands.
    7. We do not know what advice KF had received as to his prospects on appeal. If the position had in fact appeared to him as bad as it turned out to be (the appeal was dismissed in October of the following year) his position was indeed bleak. On 14th November 2000 Nat West made formal demand for the £202,832.51 owed to it by KF and for the £230,000 owed by the company and guaranteed by KF. The only potential string to his bow lay in the fact that KF and Sarah had, on 6th March 1995, granted the company an agricultural tenancy of the land at Hill Farm, and had done so with the consent of NatWest. Through a recently instructed firm of solicitors The Robert Davies Partnership ("RDP") he invited IBAP, by a letter dated 15th November 2000, to consider the consequences if the bank were to sell subject to the tenancy (which would leave IBAP with nothing), and to interest them in the proposition that, if he were to procure a sale with vacant possession, the net proceeds might be split between IBAP and KF. Nothing came of this.
    8. On 26th February 2001 a case of foot and mouth disease ("FMD") was diagnosed at Hill Farm. This was one of the earliest cases diagnosed in what was to prove to be the catastrophic epidemic which engulfed much of the country in the following months. One amongst many consequences which flowed from this was to throw KF into a closer association with the second defendant, Georgina Hawkins ("Miss Hawkins"). Miss Hawkins had rented stabling and grazing at the farm for her horses (it is not clear from whom, whether Garron, KF or the company) from late 1999, and rooms in the farmhouse for herself from January 2000. By May 2001 they had become engaged, and they married on July 25th that year.
    9. Another consequence was that Hill Farm was declared to be an "Infected Place" ("IP") by DEFRA, and was thereafter subjected to a lengthy, and invasive, series of measures undertaken by DEFRA with a view to the eradication of FMD at the farm. This involved, inter alia, the slaughter and disposal of all the cattle and sheep at the farm and a consequent cleansing and disinfecting (C&D) operation at the farm.
    10. By the end of July 2001 a plan was in place for the realisation of Hill Farm. NatWest was to sell as mortgagee to Miss Hawkins subject to the tenancy for a price of £450,000.00. That sale would overreach IBAP's charge, and NatWest would swallow the proceeds under its charge. The company would then surrender the tenancy, leaving Miss Hawkins free to sell with vacant possession to the Nechvatals for £1.03m. This plan was then implemented. On 2nd October 2001 NatWest exchanged contracts to sell the property subject to the tenancy to Miss Hawkins for £450,000.00. That contract was completed the following day with money borrowed by Miss Hawkins from KF's brother Robin Feakins. Miss Hawkins then entered into a contract to sell to the Nechvatals for £1.03m, a deposit of £103,000 being paid, with completion fixed for 30th November 2001. KF and Miss Hawkins then left the country for a four week holiday in Australia.
    11. While the couple were still in Australia, DEFRA learned of the cancellation of its charge. On their return the couple had to face three unpleasant developments. The first was the receipt of a report ("the Fieldfare report") into the environmental consequences of the operations undertaken by DEFRA on Hill Farm consequent on the FMD outbreak. The second was that the appeal against IBAP's judgment had been dismissed. The third was a freezing injunction granted on DEFRA's application by Gross J on 21st November 2001 (and continued by Penry Davey J on 4th December 2001).
    12. Disclosure of the Fieldfare report to the Nechvatals led to the latter refusing to complete and claiming a return of their deposit. Proceedings have subsequently been started by the Nechvatals which are due to be heard later this year."
  6. In paragraph 28 of his judgment the judge described the tenancy as "an extremely fragile interest". He continued:
  7. "The financial state of the company … meant that it was in no position to insist that it be kept alive for any appreciable period should the freeholder for the time being desire its termination. The only circumstance in which the tenancy potentially had an exploitable value as an asset of the company was one where the freeholder was contemplating a sale with vacant possession, and needed to be able to secure a surrender for the purpose of being able to give vacant possession. …. Maintaining the existence of the tenancy in the context of the subsequent sale by NatWest was not done with a view to preserving an asset of the company but solely with a view to enticing NatWest to dispose of the property to Miss Hawkins at an undervalue."
  8. In paragraphs 29 to 38 of his judgment the judge recorded the events leading to the sale by NatWest, as follows:
  9. "29. …. On 21st February 2001 KF had retained the services of a Mr Lovell, of Charles Lovell & Co, chartered accountants. In March 2001 he had a meeting with Mr Lovell at RDP's offices at which Mr Lovell suggested that he seek the advice of insolvency specialists Poppleton & Appleby. It appears to have been Mr Terry Gumbley of the latter firm who suggested that the way forward was to propose to the bank that it should appoint him or his partner as LPA receivers to sell the property. The idea at this stage seems to have been that a "friendly" LPA receiver might sell the farm to Miss Hawkins subject to the tenancy, and that the family would either continue to farm it under the tenancy, or Miss Hawkins would sell it with vacant possession. There is an issue (to which I return below) as to whether a sale to the Nechvatals continued at this time to be a realistic possibility.

    30. The proposal that the bank should appoint LPA receivers was put to Mr Dicks of NatWest (by that time in new ownership so that Mr Dicks was in fact an employee of Royal Bank of Scotland) at a meeting in late April or early May 2001, but he rejected it. He indicated that the bank would sell on the basis of two independent valuations from local valuers. He also indicated that, provided the valuations supported the sale price, it would not matter if the purchaser was a relative ("say, an aunty") of KF.

    31. On 15th May 2001 KF wrote to Mr Dicks reiterating the proposal that NatWest should appoint an LPA receiver in the following terms:

    "Further to our meeting, I am writing to you to set out our reasons for disposing of the farm via the use of an LPA receiver, and in particular, Poppleton & Appleby. These are as follows:
    1. Due to outbreak of foot and mouth, several farms in the area will be coming up for sale. I consider that it is important to achieve a sale quickly, as prices will probably be affected by the glut of sales.
    2. At present, the indications are that the value of the farm will settle the bank, pay the receivers and leave a small excess for the Intervention Board, about which you are aware.
    3. Currently, there is a buyer available, who will leave the tenancy in place, which will leave me earning a living, which is important to me.
    4. Such is our relationship with Poppleton and Appleby, we have confidence that they will deal with the transaction to the satisfaction of all parties, while avoiding any potential adverse publicity to the bank.
    I look forward to hearing from you as soon as possible."

    32. On 8th June 2001 KF, by now appreciating that NatWest was not going to appoint LPA receivers, wrote again to Mr Dicks a letter which included the following passages:

    "When we visited your office four weeks ago it was to suggest a way of paying off the bank debt and also to leave my family and myself here as a tenant still with a viable business. As I explained to you there is a potential customer who has taken a liking to the farm, actually at present running a few horses here. They are interested in buying Hill Farm subject to the tenancy remaining in the company name and are happy to let us carry on living at Hill Farm renting the bulk of the land leaving them access to a small area of land and stables. I think I did write and inform Ian Cook of this very early on in the year.
    Undue nationwide publicity at this stage, when our business is owed considerable money for our stock slaughtered here and in France because of the FMD, could spell the demise of our business as well as bringing unwanted publicity to the bank.
    My legal advice from my family solicitor in Salisbury has been that the bank are able to sell under its mortgage by using at least two valuers who would put a correct valuation on the property for the bank taking into account the company tenancy and the remaining problems surrounding the FMD outbreak around here. The bank could then use these values to give instruction to a solicitor to sell to the interested party at what would then be the correct market price.
    Two valuers of excellent reputation who did the valuation of Hill Farm for my divorce were Mr Gwyn Williams of Williams Parry Richards, Ross on Wye and Mr Robert Parry of G Herbert Banks, Worcester. Both know the farm intimately and could value the property again on behalf of the bank without falling foul of these (schedule A) FMD restriction, stopping people coming on to the farm. Robert Davies of Robert Davies Partnership whom as you know I used for the past year to try to sell Hill Farm without success, is a very competent solicitor. At present I understand he has the deeds and has done all necessary searches on the property and again with his knowledge of the farm could work for the bank probably a lot cheaper and a lot faster than another firm of solicitors who would have to start from scratch
    …..I am mindful that when we advertised the farm nationally one year ago at considerable expense before the problems with the FMD we only found one customer whom as you know we have lost. I think we have been lucky to find a person who has stayed interested and would be prepared to purchase Hill Farm and effectively relieve RBS of the debt and I do not want to lose this client. All I want to do is get the bank cleared secure a home and a future for my family by keeping our business going and would only ask that we move towards this end as soon as is practically possible. Several valuable weeks have already passed by since I first came to Birmingham and we are aware that other properties are coming onto the market most of which do not have any restrictive problems with FMD."

    33. On 14th June 2001, Mr Dicks wrote to KF. He said that he had instructed Hammond Suddards Edge ("HSE") to act for the bank (thus rejecting KF's suggestion that RDP should act) and would arrange valuations on a tenanted basis and then proceed with the sale. On 15th June 2001, HSE wrote to D1 setting out the procedure that the bank proposed to take, saying that the bank would sell pursuant to the power for sale to a purchaser to be introduced by KF. It was envisaged that the farm would be sold subject to an existing tenancy, but the letter reserved the bank's position as to whether any existing tenancy bound it.

    34. By a letter dated 25th June 2001 Miss Hawkins then introduced herself to HSE "as the client who is prepared to purchase Hill Farm", informing them that she proposed to use RDP as her solicitors, and saying:

    "I am prepared to purchase Hill Farm with the tenancy staying in place so that Mr Feakins can continue running his business from there. I have had the benefit of knowing the farm and its problems for some time now and have taken advice on the price that I shall offer. I am prepared to pay £450,000 for Hill Farm as it stands today. That price reflects on the company tenancy that exists on the farm and the problems with the Foot & Mouth disease. That money is available without the necessity of having to sell any properties"

    35. It is far from clear that at that date Miss Hawkins did have the necessary money available. What is clear is that at least from a date very shortly afterwards what was in contemplation by KF and Miss Hawkins was that the purchase from NatWest would be followed by a sale by her to the Nevchatals: a manuscript note addressed by KF to RDP, made on a letter dated 3rd July from HSE to KF, instructed RDP that

    "you will need to draw up a legal document for [the company] to give up the tenancy when you sell from [Miss Hawkins] to [the Nevchatals]."
    Moreover, in the course of July, in connection with Miss Hawkins' (in the event unsuccessful) attempts to obtain bridging finance from Barclays, RDP was able to confirm to Barclays that the purchase and sale would be simultaneous. It is further clear (from correspondence between RDP and the Nevchatals' solicitors Shawcross & Co in August and September) that the contemplation throughout was that the tenancy would be surrendered immediately following Miss Hawkins' purchase in anticipation of the completion of the sale with vacant possession to the Nevchatals.

    36. Two valuations of Hill Farm were then obtained by NatWest on the basis that an agricultural tenancy was in place. G Herbert Banks submitted a valuation on 10th July 2001 valuing the property (but not the house) subject to an agricultural tenancy at £516,000. The valuation made favourable comments about the repair and condition of the property. The valuer concluded that the property would "attract a reasonable level of interest if placed on the open market", that inquiries for such properties were forthcoming on a regular basis, and that it would take no more than four months of marketing to achieve the best prices". G Herbert Banks sent a revised valuation to Mr Dicks at the Bank on 13th July 2001 on the basis that the farmhouse was included within the agricultural tenancy, lowering the value to £455,000.

    37. Williams Parry Richards submitted a valuation on 11 July 2001. The value placed on the property by Mr (Gwyn) Williams subject to the tenancy was £450,000.

    38. The bank appears to have relied on these valuations in entering into the contract of sale to Miss Hawkins on 2nd October 2001 for £450,000 subject to the tenancy, which sale was completed on the following day. In the event she was able to do so, as a result of a loan made to her by Robin Feakins on commercial terms. Miss Hawkins exchanged contracts on the same day (3rd October) for the sale of the farm with vacant possession to the Nevchatals for £1.03m. For a stated consideration of £1 the company (acting by KF's daughters who had by this time been appointed directors) then (on 5th October) surrendered the tenancy, thus putting Miss Hawkins in a position to complete her sale to the Nevchatals."

    The 1986 Act

  10. Section 423 provides as follows (so far as material):
  11. "(1) This section relates to transactions entered into at an undervalue; and a person enters into such a transaction with another person if…(c) he enters into a transaction with the other for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by himself.
    (2) Where a person has entered into such a transaction, the court may, if satisfied under the next sub-section, make such an order as it thinks fit for – (a) restoring the position…and (b) protecting the interests of persons who are victims of the transaction.
    (3) In the case of a person entering into such a transaction, an order shall only be made if the court is satisfied that it was entered into by him for the purpose – (a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or (b) of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make…
    (4) …..
    (5) In relation to a transaction at an undervalue, references here and below to a victim of the transaction are to a person who is, or is capable of being, prejudiced by it." "
  12. Section 436 provides that, save where the context otherwise requires (and subject to an immaterial qualification), the word "transaction" where used in the 1986 Act "includes a gift, agreement or arrangement".
  13. Section 424(1)(c) provides that an application for an order under section 423 may be made in three cases, one of which is "by a victim of the transaction". Section 423(5) provides that references to 'a victim of the transaction' are references to 'a person who is, or is capable of being, prejudiced by it'.
  14. Section 425(1) sets out, without prejudice to the generality of section 423, various orders which the court may make under the latter section. Section 425(2) provides that an order under section 423 may affect the property of any person, whether or not he is the person with whom the debtor entered into the transaction, but subject to a proviso protecting interests in property acquired otherwise than from the debtor in good faith, for value and without notice of the circumstances by virtue of which an order under section 423 may be made.
  15. DEFRA's Case

  16. DEFRA's principal case (as formulated by the judge in paragraph 16 of his judgment) is that:
  17. "… the deliberate engineering by KF of a situation whereby Hill Farm was transferred to Miss Hawkins at a 'subject to tenancy' valuation but in fact with vacant possession and with a view to realising its vacant possession value ostensibly for Miss Hawkins' benefit, constituted a transaction at an undervalue entered into by KF".
  18. By its Amended Particulars of Claim DEFRA alleged that the tenancy was a sham from its inception. However, it did not pursue that contention before the judge, contending instead that, although not a sham from its inception, by October 2001 it had become a sham. In paragraph 28 of his judgment the judge rejected that contention.
  19. By a Respondent's Notice DEFRA repeated its contention that by October 2001 the tenancy agreement had become a sham, but before us Mr Nicholas Caddick (appearing for DEFRA on the claim, leading Miss Sarah Lee) elected not to pursue that contention. Accordingly no issue of sham is raised on this appeal.
  20. The Judge's Judgment

    (i) The judge's findings

  21. In paragraph 26 of his judgment the judge found that the tenancy was maintained by KF purely as a device to depress the value of Hill Farm and to induce NatWest to sell the farm to Miss Hawkins at an undervalue. He in effect repeated this finding in the last sentence of paragraph 28 of his judgment (quoted in paragraph 4 above).
  22. In paragraph 39 of his judgment the judge observed that it was clear "that KF was prepared to lie if necessary to in order to persuade the bank to sell to Miss Hawkins, failing to reveal in his letter dated 25th June that the 'potential customer' was soon to be his wife, and claiming falsely that the property had been expensively marketed in the previous autumn". The judge went on to say that there were also substantial reasons to doubt whether by that time there was any real intention that he and his family should continue to farm the land. He concluded paragraph 39 by saying:
  23. "I think it more probable than not that both KF and Miss Hawkins were of a mind by 25th June 2001 that a sale to the Nechvatals was very much on the cards."
  24. The judge continued (in paragraph 40 of his judgment):
  25. "That said the fact remains that it was the bank which made its own decision to sell to Miss Hawkins subject to the tenancy. That sale suited KF and Miss Hawkins very well: there can be no doubt that their purpose was to get Hill Farm into Miss Hawkins' name, out of the reach of DEFRA as a secured creditor of KF, and to enable the vacant possession value to be realised in Miss Hawkins' hands."
  26. In paragraphs 47 and 48 of his judgment the judge made findings of fact in relation to the ownership and control of the company, as follows:
  27. "47. Following the conclusion of his divorce proceedings against Sarah in June 2000 the shareholdings in the company were held as to 90% by KF and as to the remaining 10% by his son Matthew. By that date it was (as it had been since 1997) hopelessly insolvent. Its balance sheet as at 31st March 2000 (not in fact signed off until 10th January 2001) showed current assets of £228,508 and creditors of £648,199. Of those creditors some £225,000 consisted of indebtedness to NatWest secured by KF's guarantee. The assets represented the amount owed by KF to the company following the transfer to him of its assets and stock in the year ended 31st March 1998. The shares in the company were accordingly plainly worthless.

    48. At some point prior to 1st August 2001, KF appears to have transferred his shareholding in the company to his daughters Kathleen and Charlotte, both of whom were then students. It is not clear when the shares were transferred, or why. As to the timing, no share transfers have been disclosed. The only evidence consists of an Annual Return form apparently signed on 1st August 2001 recording 40 shares as having been transferred to Charlotte and 50 to Kathleen on 1st September 2000. It seems doubtful however whether that return was ever made in the form in which it has been produced to me, since the form supplied by Companies House for completion the following year continued to show KF as holding 90 shares. However that may be the case before me has proceeded on the footing that the shares had been transferred by 1st August 2001. The exact date is not important save insofar as establishing it may assist in tracing the evolution of KF's thinking, and the advice which he received, in relation to a possible transfer of Hill Farm subject to the tenancy enjoyed by company. KF himself admits to have been considering various options in relation to this in the autumn of 2000, as indeed must be the case having regard to the letter sent to IBAP on 15th November 2000. It seems probable that it was at this stage that it seemed expedient for KF to transfer the shares in the company to the daughters, and possible that he had already done so by the time the letter dated 15th November 2000 came to be written: that would explain why in that letter RDP describe the tenant company as "effectively controlled" by KF. Mr Lovell gave some evidence, not altogether satisfactory, as to having been instructed in the following year to provide share transfers, but the explanation for that may have been (as he himself suggested) that there was uncertainty as to whether the previous accountants (Martin & Co.) had completed the documentation."

    (ii) The judge's conclusions on the issues of law

  28. Three issues of law were raised before the judge. The first was the allegation that the tenancy was (alternatively had become) a sham. For reasons given earlier (see paragraphs 11 and 12 above), I need not consider that issue further. The second was what the judge described as 'the mortgagee point': viz. that KF did not enter into any 'transaction' for the purposes of section 423 since the only relevant transaction for those purposes was the sale by NatWest as mortgagee. The third was what the judge described as 'the company point': viz. that the surrender of the tenancy was effected not by KF but by the company.
  29. (a) The mortgagee point

  30. After setting out the relevant facts, as found or admitted, the judge turned to the submission of Mr Stephen Jourdan (for KF and Miss Hawkins), relying on my decision in Re Brabon [2001] 1 BCLC 11, to the effect that the relevant transaction in the instant case was the sale by NatWest as mortgagee, to which KF was not a party and into which he could not be said to have entered.
  31. In Brabon the debtor contracted to sell land to a third party developer, Silver. Between contract and completion, the debtor was made bankrupt. His wife, who already held legal charges over part of the land, took a transfer of a charge over the remainder of the land from Nationwide Building Society and completed the contract by transferring the entirety of the land to Silver in exercise of her power of sale as mortgagee. It was contended that, for the purposes of section 423, the sale by the debtor's wife as mortgagee to Silver was a sale at an undervalue which had been entered into by the debtor. I rejected that contention, holding (at p.33g-i) that the sale by the debtor's wife as mortgagee could not be dismissed as "conveyancing mechanics", and that the transfers by the debtor's wife effectively superseded the contract.
  32. In paragraph 42 of his judgment the judge accepted the submission of Miss Lee (for DEFRA) that Brabon is distinguishable from the instant case in that the only 'transaction' under attack in Brabon was the sale by the mortgagee, and that that transaction was not calculated to confer a benefit on the debtor.
  33. Accepting that the court should not look to narrow the wide statutory definition of 'transaction', the judge went on to pose the question whether, in the instant case, KF could be said to have 'enter[ed] into' a 'transaction' for the purposes of section 423. In paragraph 44 of his judgment he said this:
  34. "The answer, in my judgment, is that it is permissible as a matter of statutory construction, and entirely consonant with the purpose of the section, to read 'enter into a transaction' as 'participate in an arrangement', and to ask whether KF participated in the arrangement. That was not a question which had to be addressed in Re Brabon. The 'arrangement' here whereby the asset was transferred at an undervalue consisted, in my judgment, of an agreement between KF and Miss Hawkins whereby they agreed that KF would introduce Miss Hawkins to NatWest as a potential purchaser subject to the tenancy but with KF's commitment in advance to procure a surrender of the tenancy if and when NatWest took the bait. Miss Hawkins' ability to purchase from NatWest was dependent on the existence of that prior commitment (since the only finance available to her was finance premised on a subsequent sale with vacant possession to the Nevchatals), and fulfilment of that prior commitment was the means by which value in excess of the £450,000 paid by her was effectively gifted to her. If that is the correct identification of the 'arrangement', then, subject to what there may be in the 'company point', I do not think that there is any difficulty in saying that KF participated in it: his ability to commit in advance to, and subsequently to procure, a surrender of the tenancy was central to it."
  35. In reaching that conclusion, the judge rejected two submissions made by Mr Jourdan. He explained his reasons for doing so in paragraph 45 of his judgment, as follows:
  36. "Mr Jourdan submitted that no such analysis of the transactions was possible. He submitted, first, that only two transactions could be identified, namely the sale by NatWest to Miss Hawkins and the surrender by the company of the tenancy to Miss Hawkins, secondly that KF was not a party to either of them, and, thirdly, that in any event it was not permissible to treat them together as one transaction for the purposes of applying section 423. As to the first two submissions I have already indicated why I regard the relevant arrangement as having encompassed more than the two individual transactions, and the way in which KF participated in that arrangement. In support of the third proposition Mr Jourdan sought support from the decision of the Court of Appeal in National Westminster Bank v Jones [2001] EWCA Civ 1541, [2002] 1 BCLC 55 ["Jones"]. In that case, farmers were advised to incorporate a company, and then grant a tenancy and transfer the farming assets to the company, in order to try and prevent the bank from obtaining possession of the farm. They followed that advice. The company was incorporated with the shares beneficially owned by the farmers. Two weeks later a tenancy was granted to the company and the farming assets sold to it. The bank applied to set aside the tenancy and sale under s.423. The farmers argued that the incorporation of the company and the tenancy and sale were a single transaction. As they owned the shares in the company, if the tenancy or sale were at an undervalue, the effect would be to increase the value of the shares, so that overall, the value of the consideration received by them was not significantly less than the value of the tenancy and assets to the company. Thus (so the argument ran) there was, looking at the matter in the round, no "transaction at an undervalue". At first instance Neuberger J rejected that argument, holding that the acquisition of the company could not be said to be "part of the 'transaction' under consideration in the present case….not least because it was entered into between the defendants and third parties and related to the company as the subject matter of that transaction" (see [2001] 1 BCLC 98 at para 72). His decision was upheld in the Court of Appeal, but on the simpler basis that it was the sale and the tenancy which had been entered into by the defendants for the purposes of putting assets beyond the reach of the bank, and they were therefore the relevant transactions to be considered (see paragraph 26 of the Court of Appeal judgment). Nothing in the case can be read as authority for the proposition that it is impossible under section 423 to regard two or more linked transactions as one. On the contrary, if the reason behind the linkage of two or more individual transactions is to achieve by that means the object which the section is designed to frustrate, that may itself in my judgment be a justification for treating them as one composite arrangement for the purposes of the section."

    (b) The company point

  37. The judge addressed the company point in paragraphs 49 to 52 of his judgment, as follows:
  38. "49. Given the insolvency of the company, I cannot see that there was any purpose in transferring the shares to the daughters except as part of a scheme to insulate the company from any association with KF (who faced bankruptcy) and to enable the company to assert the apparent tenancy at an appropriate moment as against both himself (as owner of Hill Farm) and NatWest (as a mortgagee bound by the tenancy) and thereafter, having achieved the purpose of a sale to Miss Hawkins, to surrender it.

    50. As already indicated (see paragraph 28 above) the only way in which the company could, if at all, benefit from the existence of the tenancy was by cooperating with the vendor of the freehold of Hill Farm in realising the vacant possession price in exchange for a share of the marriage value, but this was never perceived as in fact being an asset of any significant value to the company. The reality is that the tenancy was throughout treated by KF as an asset disposable of by him for his own (and in the final play for Miss Hawkins') benefit.

    51. I heard evidence from both Kathleen (by video link from Australia where she now works as a portfolio manager) and from Charlotte who is a beauty therapist. Neither could remember much about why the shares had been transferred to them or when. Nor did either of them have a satisfactory explanation as to why they were appointed directors of the company on 1st August 2001, how they came to be described as farmers in the annual returns, or what their thinking had been, as directors, in relation to the surrender of the tenancy in favour of their recently acquired stepmother for a consideration of £1 on 5th October 2001. It is as plain as can be that their role in all these matters was simply to do their father's bidding, a role which they dutifully performed. They cannot be criticised for any lack of filial loyalty.

    52. Accordingly, I have no difficulty in holding that it was KF who procured the company to execute the surrender."

    (iii) The judge's summary of his conclusions

  39. The judge summarised his conclusions on the claim in paragraph 57 of his judgment, as follows:
  40. "In my judgment DEFRA's claim under section 423 succeeds and it is entitled to an order which restores its position to what it would have been had the transaction not been entered into. As at present advised, an order which has the effect of charging Miss Hawkins' freehold interest with the amount previously secured by IBAP's charging order would appear to be the correct solution: I understand that it is common ground between the parties that Robin Feakins' charge would have priority in that event. It may, however, be argued that some other order would be more appropriate and I will hear further argument on this. In that connection I am open to persuasion that an order should also seek to reverse that part of the arrangement which consisted of the surrender by the company: amongst the consequences of so ordering would be to enable the creditors of the company to derive what advantage they might be able to negotiate from the technical existence of the tenancy and to claim any user damages in respect of trespasses by DEFRA during the intervening period."

    The Judge's Supplemental Judgment

  41. After handing down his judgment, the judge heard further argument pursuant to the invitation which he had extended in paragraph 57 of that judgment (quoted in paragraph 24 above).
  42. Counsel for the company submitted that in granting relief under section 423 the court ought to reinstate the tenancy, since unless that were done DEFRA would be unjustly enriched at the company's expense. The judge ruled on this submission in a short supplemental judgment, in paragraphs 5 to 7 of which he said this:
  43. "5. In my judgment it is not necessary under section 423, when the Court is considering the form of the order to make for "restoring the position to what it would have been if the transaction had not been entered into and protecting the interests of persons who are victims of the transaction" that the order should seek to replicate the precise position which would have existed but for the impugned arrangements. The principal purpose of the section is to adjust the position as between the parties to the transaction, and the parties to the transaction, for the purposes of this action, were the defendants, and the victim was DEFRA.
    6. To the extent that the company played a role in those arrangements, it was the entirely voluntary role by which it surrendered its tenancy for £1. If the directors of the company perceived that at that time to be in the best interests of the company, then there is no reason to suppose that it does not remain a transaction which was a good idea from the point of view of the company. If, on the other hand the directors of the company were not considering the interests of the company at all in executing the surrender, but were simply to confer a benefit out of company assets on Miss Hawkins, then it does not seem to me to lie in the mouth of the company under the control, still, of the same directors, now to come to Court and seek to take advantage of their own abuse of powers to restore the company's position.
    7. If, as a result of all that, the unsecured creditors of this insolvent company have suffered damage as a result of the voluntary actions of the board of the company, those creditors may, in due course, in another forum, have their remedy in respect of that. But, having reflected on the matter, and having had the benefit of further submissions, it does not seem to me to be the right, as part of my order, to resurrect the tenancy."

    The Relief Granted

  44. The judge's order contains the following recital:
  45. "AND UPON the court having held that the arrangement, in which [KF] participated, by which Hill Farm was transferred to [Miss Hawkins] for a consideration of £450,000 was a transaction at an undervalue for the purpose of putting assets beyond the reach of [DEFRA], being a person who was making a claim against [KF] within the meaning of section 423 of [the 1986 Act]".
  46. Paragraph 1 in the body of the order contains a number of definitions. Those which relate to the claim are self-explanatory save for the expression "the Robin Feakins Charge", which is defined as "the charge by way of legal mortgage of Hill Farm dated 13 August 2003 and made by [Miss Hawkins] to Robin Feakins pursuant to the Order herein dated 31 July 2003".
  47. Paragraphs 2, 3 and 4 in the body of the order are in the following terms:
  48. "2. It is ordered that [Miss Hawkins] beneficial interest in Hill Farm shall stand charged with the payment of the sums which [KF] was liable to pay to the Intervention Board for Agricultural Produce, and is now liable to pay to the Claimant, under the judgment of the High Court entered in Claim No. 1992 F No. 0165 against [KF] by Mr Justice Kennedy on 23 June 2000 consisting of the principal sum of £650,645.68 and the costs of £10,000.00, less the sum of £16,500 received by the Intervention Board for Agricultural Produce or the Claimant from Sarah Feakins in February 2002, together with interest thereon pursuant to the Judgments Act 1838 at 8% per annum.
    3. The charge created in paragraph 2 above is to rank behind the Robin Feakins Charge, but not behind any other interest in Hill Farm whatsoever.
    4. The surrender of the Tenancy by the Company to [Miss Hawkins] on 5 October 2001 is not to be set aside."
  49. By paragraph 15 of his order the judge ordered KF and Miss Hawkins to pay DEFRA's costs of the claim (subject to a set-off in respect of the costs of an earlier order). By paragraph 20 of his order he granted KF and Miss Hawkins permission to appeal in respect of the claim.
  50. The Grounds of Appeal

  51. By their grounds of appeal against the judge's order on the claim, KF and Miss Hawkins contend primarily that KF's agreement to introduce Miss Hawkins to NatWest as a potential purchaser of Hill Farm subject to the company's tenancy (but with KF's commitment in advance to procure a surrender of the tenancy) – an agreement which they call "the Introduction Agreement" – was not a relevant 'transaction' for the purposes of section 423.
  52. In the alternative, that is to say if 'the Introduction Agreement' was a relevant 'transaction' for the purposes of section 423, they contend that it was not one where any consideration of value in money or money's worth was provided by KF since the surrender of the tenancy was effected not by KF but by the company; that KF did not enter into the 'Introduction Agreement' for the purpose of putting assets beyond the reach of DEFRA, or of otherwise prejudicing the interests of DEFRA; and that DEFRA was not a 'victim' of the transaction for the purposes of section 424(1)(c).
  53. They further contend that, if the judge was otherwise right to grant relief under section 423, his refusal to reinstate the tenancy placed DEFRA in a better position than it was in prior to the sale.
  54. The Arguments on the Appeal

    (i) The arguments for the defendants

  55. Mr Nicholas Dowding QC (appearing for KF and Miss Hawkins on the claim, leading Mr Jourdan) submits that there were only two transactions in the instant case: the sale by NatWest as mortgagee to Miss Hawkins, and the surrender of the tenancy, neither of which was entered into by KF. In support of that submission he relies (as did Mr Jourdan below) on Brabon. He submits that Brabon cannot be distinguished from the instant case on the basis that the purchaser in Brabon was a bona fide purchaser (in the sense of an independent third party purchaser), or that the transaction in Brabon was not calculated to confer a benefit on the debtor. He submits that Brabon is authority for the proposition that in relation to a sale of land the relevant 'transaction' is the conveyance, and not the preparatory steps leading to the conveyance. He submits that although the debtor may initiate a sale, unless he actually sells he does not enter into a 'transaction' for the purposes of the section. He submits that in any event Miss Hawkins was a bona fide purchaser who paid the agreed price to NatWest under a genuine transaction of sale between herself and NatWest.
  56. Mr Dowding relies on Jones for the proposition that in a case involving a series of events it is necessary to identify the particular event which constitutes the 'transaction'. (The judge referred at some length to Jones in paragraph 45 of his judgment, quoted in paragraph 21 above.) In paragraph 72 of his judgment in Jones, Neuberger J said this:
  57. "As a matter of ordinary language, it appears to me that the 'transaction' or 'transactions' in the present case was or were the tenancy and the sale agreement entered into between the defendants and the company. I do not think that the acquisition of the company could be said to be part of the 'transaction' under consideration in the present case. The acquisition of the company could no doubt be a transaction for the purposes of section 423(1), but it seems to me that it was a separate transaction from the tenancy and the agreement, not least because it was entered into between the defendants and third parties and related to the company as the subject matter of that transaction, whereas the transaction or transactions under attack in the present case consist of the tenancy and the sale agreements entered into between the defendants and the company itself."
  58. This court agreed with Neuberger J's approach to the identification of the relevant 'transactions'. Mummery LJ, delivering the judgment of the court, identified three relevant questions, the first of which was: What are the relevant transactions? In paragraph 26 of the judgment he answered that question thus:
  59. "The answer is the tenancy agreement and the sale agreement. They were the transactions entered into by Mr and Mrs Jones with [the company] for the admitted purpose of putting assets (i.e. the farm land and the farming stock) beyond the reach of the bank, which was making a claim, and of prejudicing the interests of the bank in relation to the claims it was making against Mr and Mrs Jones under its securities. The acquisition of [the company] and the issue of the shares in it was not a relevant transaction within section 423."
  60. By analogy, submits Mr Dowding, the only relevant 'transaction' in the series of dealings concerning Hill Farm was the sale by NatWest as mortgagee.
  61. Mr Dowding also relies on the decision of the House of Lords in Phillips & Anor. v. Brewin Dolphin Bell Lawrie Ltd [2001] 1 WLR 143 ("Brewin Dolphin") as providing further support for that submission.
  62. In Brewin Dolphin a company (AJB) agreed to sell its stockbroking business to the first defendant (Brewin Dolphin) for £1.25M. AJB was also the lessee of certain computer equipment, which Brewin Dolphin was not interested in using. The sale was effected in the following way: (1) AJB transferred the stockbroking business to a subsidiary (BSL) and sold the shares in BSL to Brewin Dolphin for £1; (2) Brewin Dolphin also undertook to discharge certain redundancy obligations owed by AJB to its employees; (3) in breach of its leases, AJB sublet the computer equipment to Brewin Dolphin's holding company (PCG) for four years at an annual rent of £312,500 payable in arrears (making a total rent payable by PCG over the four years of £1.25M); (4) Brewin Dolphin lent AJB £312,500, to be set off against the first rental payment under PCG's sublease. Shortly thereafter (and before the first rental payment had become due under the sublease) the owners of the computer equipment terminated A's leases of the computer equipment on grounds of non-payment of rent and recovered the equipment. P thereupon claimed that it was discharged from its liability to pay rent under the sublease. A went into insolvent liquidation and the liquidator applied under section 286 of the 1986 Act for a declaration that the agreement for the sale of the shares in the subsidiary was a transaction at an undervalue for the purposes of that section. Section 238(4)(b) contains a provision identical in all material respects to section 423(1)(c). Brewin Dolphin contended that the relevant 'transaction' was not limited to the share sale agreement but also included the sublease and P's obligations thereunder, and hence that the 'transaction' was not at an undervalue.
  63. At first instance Evans-Lombe J held that the share sale agreement and the sublease were linked, in that it was never contemplated that one would be entered into without the other. However, he held that Brewin Dolphin and PCG could not at the same time contend on the one hand that the sublease was a separate transaction which had come to an end on the recovery of the equipment by the owners and on the other hand that the obligation to pay rent under the sublease was part of the consideration for the sale of the shares. He accordingly ordered BSL to pay the amount of the undervalue, viz. the difference between the value of the shares (assessed at £1,050,000) and the value of BSL's obligation to discharge AJB's redundancy obligations (assessed at £325,000).
  64. The Court of Appeal upheld the judge's decision, but adopted a different approach, holding that (absent a sham, or an artificial division of a single transaction into supposedly separate parts) the form of the agreement into which the parties had entered would be determinative in identifying the relevant 'transaction' for the purposes of section 238. The Court of Appeal decision is reported at [1999] 1 WLR 2052.
  65. The leading judgment in the Court of Appeal was delivered by Morritt LJ, with whom Lord Woolf MR and Laws LJ agreed. Morritt LJ identified the two issues before the court as being (1) the value of the shares in BSL to be taken into account for the purposes of section 238; and (2) the value of the consideration in money or money's worth for those shares provided to AJB. Mr Dowding referred us to a passage in the judgment of Morritt LJ at p.149D-F where he said this:
  66. "The first two issues to which I referred earlier, particularly the second, depend on ascertaining, for the purposes of section 238 of the [1986 Act], what was the transaction alleged to have been entered into by the company at an undervalue. The allegation of the liquidator is that the share sale agreement was the transaction so that only the consideration passing to and from the company thereunder is to be taken into account. This was disputed by Brewin Dolphin on the basis that the court must have regard to the whole transaction not just that part of it the liquidator seeks to challenge. This is a point of some importance on the true construction and application of section 238. It is true that the word 'transaction' is very widely defined. It is also true, as submitted by counsel for Brewin Dolphin, that, given the purposes of sections 238, 339 and 423 to which it applies, the court should not strain to narrow the definition by judicial decision. However, the word 'transaction' is to be construed and applied as part of section 238 as a whole…. First, the transaction must be identified by reference to the person (or persons, for the singular must include the plural) with whom the company entered into it. Only the elements between the company and that person may be taken into account. Thus, without more, a contract between the company, A, and B cannot be part of a transaction entered into by the company, A, with C. I introduce the caveat 'without more' to guard against cases where the transaction is artificially divided. The second limit appears to me to flow from the comparison the statute requires the court to make. In each case it is necessary to ascertain the consideration to be received by the company. In the case of section 238(4)(a) the transaction is either a gift of 'on terms that provide for the company to receive no consideration'. In other cases, as provided for in subsection (4)(b), the task is to ascertain the value of the consideration provided by the other person 'for' the consideration provided by the company. Whether or not the word 'consideration' in those contexts is confined to its legal meaning it clearly connotes the quid pro quo for that which it is alleged the company disposed of at an undervalue."
  67. Turning to the facts, Morritt LJ concluded that the relevant 'transaction' for the purposes of section 238 was the share sale agreement alone. He expressed his reasons in the following passage (at p.2061):
  68. "First, the parties acting at arms' length and for readily understandable reasons chose to structure the deal between them so that on the face of the documents the share sale agreement and the lease agreement effected two separate, though linked, transactions. There is no indication that this different treatment was a sham or otherwise colourable. If parties in such circumstances choose to structure their commercial dealings in my view the court should give full weight to their intentions. Second, for reasons I have already given, the share sale agreement and the lease agreement cannot be the same transaction for the purposes of the section because, though the company was party to both of them, only Brewin Dolphin was party to the first and only PCG party to the second. Third, the parties to the lease agreement … unambiguously attributed the four annual payments of £312,500 to rent due thereunder for possession and use of the computer equipment to which it related. The promise to make those payments cannot be re-characterised as consideration by PCG or Brewin Dolphin 'for' the shares being sold by the company."
  69. In the House of Lords the leading speech was delivered by Lord Scott, with whom the rest of their Lordships agreed. In paragraph 20 of his speech Lord Scott addressed the issue whether Evans-Lombe J and the Court of Appeal were right to exclude the rental covenant in the sublease from the value of the consideration for which AJB entered into the share sale agreement. After referring to the differing approaches adopted by Evans-Lombe J and the Court of Appeal he concluded that neither approach was right. He went on:
  70. "One must, obviously, start with the share sale agreement. That was the agreement under which AJB agreed to divest itself of its allegedly valuable asset, namely, the shares in BSL. … [Section 238(4)(b)] does not stipulate by what person or persons the consideration is to be provided. It simply directs attention to the consideration for which the company has entered into the transaction. The identification of this 'consideration' is in my opinion a question of fact. It may also involve an issue of law, for example, as to the construction of some document. But if a company agrees to sell an asset to A on terms that B agrees to enter into some collateral agreement with the company, the consideration for the asset will, in my opinion, be the combination of the consideration, if any, expressed in the agreement with A and the value of the agreement with B. In short, the issue in the present case is not, in my opinion, to identify the section 238(4) 'transaction'; the issue is to identify the section 238(4) 'consideration'.
  71. Lord Scott went on to conclude that on the facts of the case no other conclusion was possible but that the consideration for the BSL shares included the benefit of PCG's rental covenant in the sublease.
  72. Thus, Lord Scott (like Evans-Lombe J and the Court of Appeal) treated the relevant 'transaction' as being the share sale agreement, but (unlike Evans-Lombe J and the Court of Appeal) he held that the consideration for which AJB sold the BSL shares under that agreement included the value of PCG's rental covenant. However, he then went on to hold that, on the facts, that value was nil. In paragraph 27 of his speech he said this:
  73. "Where the value of the consideration for which a company enters into a section 238 transaction is as speculative as is the case here, it is, in my judgment, for the party who relies on that consideration to establish its value. PCG and Brewin Dolphin are, in the present case, unable to do so."
  74. The House of Lords accordingly affirmed the Court of Appeal's decision and dismissed Brewin Dolphin's appeal.
  75. Mr Dowding submits that Brewin Dolphin is another example of a case in which the relevant 'transaction' did not include another, albeit 'linked', transaction.
  76. He further submits that in the instant case it cannot be said that the 'arrangement' which the judge identified was causative of the Bank's decision to sell Hill Farm. He reminds us of the judge's observation in paragraph 40 of his judgment (quoted in paragraph 14 above) that "the fact remains that it was the bank which made its own decision to sell to Miss Hawkins subject to the tenancy". He points out that if NatWest had decided not to sell to Miss Hawkins the 'arrangement' could not have gone ahead. He submits that no legal rights were created by the 'arrangement' and no property passed under it; whereas (as he submits) it is clear from the whole tenor of section 425 that the statute is contemplating a transaction which has legal consequences. He submits that the 'arrangement' identified by the judge was no more than an informal understanding, and as such is not capable of constituting a 'transaction' for the purposes of section 423(1).
  77. Turning to the question of consideration, Mr Dowding submits that the requirements of section 423(1)(c) are not met in the instant case. He submits that no consideration in money or money's worth was provided by KF, since the surrender of the tenancy was effected by the company. Nor, he submits, did KF provide the farm: NatWest did that. Accordingly he submits that under the 'arrangement' KF parted with nothing of value and that his assets were not in any way depleted. To the extent that there was a depletion of assets in the instant case, he submits, that depletion was suffered not by KF but by the company when it surrendered the tenancy. He relies on the fact that NatWest sold the farm subject to the tenancy for full value, in accordance with the valuation advice which it had obtained.
  78. In support of these submissions, Mr Dowding referred us to the decision of Millett J in Re MC Bacon Ltd [1990] BCLC 324 (another case concerned with section 238 of the 1986 Act).
  79. In MC Bacon the liquidator of the company contended (among other things) that the grant of a debenture by the company was a transaction at an undervalue. Millett J held that that contention was misconceived, since the grant of the debenture did not operate to deplete the company's assets. At p.340h he said this:
  80. "The mere creation of a security over the company's assets does not deplete them and does not come within the paragraph [a reference to section 238(4)]. By charging its assets the company appropriates them to meet the liabilities due to the secured creditor and adversely affects the rights of other creditors in the event of insolvency. But it does not deplete its assets or otherwise diminish their value. It retains the right to redeem and the right to sell or remortgage the charged assets. All it loses is the ability to apply the proceeds otherwise than in satisfaction of the secured debt. That is not something capable of valuation in monetary terms and is not customarily disposed of for value."
  81. Millett J accordingly concluded that the grant of the debenture was not a transaction at an undervalue for the purposes of section 238.
  82. Turning to the purpose of the 'arrangement' which the judge identified, Mr Dowding submits that its true purpose was not to prejudice DEFRA but to benefit Miss Hawkins at the expense of the company. He points out that neither KF nor DEFRA could prevent NatWest selling the farm in exercise of its power of sale as first mortgagee, and that their only protection was NatWest's duty to obtain the best price reasonably obtainable. In the event, it discharged that duty.
  83. Next, Mr Dowding submits that DEFRA was not a 'victim' of the 'arrangement' within the meaning of section 424(1)(c) since it was the sale by NatWest which left DEFRA unsecured. He contends that had NatWest sold the farm to an independent third party the price would not, on the evidence, have been any greater. Hence, he submits, the 'arrangement' caused DEFRA no loss.
  84. Lastly, Mr Dowding submits that even if the judge was otherwise right to grant relief under section 423, he ought, in granting such relief, to have reinstated the tenancy; and that his refusal to do so has improved DEFRA's position in that by reason of the surrender of the tenancy its debt is now better secured than it was previously.
  85. He submits that, given that it is no longer contended that the tenancy was or became a sham, the benefit of the tenancy should be restored to the company.
  86. In support of these submissions he cites the following passage from the judgment of Nourse LJ in Chohan v. Saggar & Anor. [1994] 1 BCLC 706 at 714c-d:
  87. "The object of sections 423 to 425 being to remedy the avoidance of debts, the 'and' between paras (a) and (b) of section 423(2) must be read conjunctively and not disjunctively. Any order made under that subsection must seek, so far as possible, both to restore the position to what it would have been if the transaction had not been entered into and to protect the interests of the victims of it. It is not a power to restore the position generally, but in such a way as to protect the victims' interests; in other words, by restoring assets to the debtor to make them available for execution by the victims. So the first question the judge must ask himself is what assets have been lost to the debtor. His order should, so far as practicable, restore that loss."

    (ii) The arguments for DEFRA

  88. Mr Caddick submits that the judge was right, for the reasons he gave, to identify the 'arrangement' which he described in paragraphs 10, 40 and 44 of his judgment (quoted earlier) as the relevant 'transaction' for the purposes of section 423; and that its informality is of no consequence in that respect.
  89. As to the requirements of section 423(1)(c) in relation to consideration, Mr Caddick submits that the court should view the surrender of the tenancy not in isolation but in the context of the wider transaction involving the sale by NatWest. In support of this submission he cites the decision of this court in Agricultural Mortgage Corporation plc v. Woodward & Anor [1995] 1 BCLC 1 ("Woodward").
  90. In Woodward the first defendant, Mr Woodward, mortgaged his farm to Agricultural Mortgage Corporation plc ("the AMC") as security for a loan. He fell into arrears with payments under the mortgage, and the AMC gave him a deadline of 18 April 1992 to clear the arrears. On 16 April 1992 he granted an agricultural tenancy of the farm to his wife, the second defendant, at an annual rent of £37,250. The AMC sought to have the tenancy set aside and applied for summary judgment on the ground that the tenancy was not binding on it, alternatively that the grant of the tenancy was a transaction at an undervalue for the purposes of section 423(1).
  91. At the hearing of the application for summary judgment the AMC accepted that there was a triable issue as to whether the grant of the tenancy was binding on it by virtue of section 99 of the Law of Property Act 1925 (subsection (6) of which provides that a lease granted pursuant to the powers conferred by the section shall reserve the best rent that can reasonably be obtained). The argument before the judge accordingly proceeded on the basis that the annual rent of £37,250 represented a full market rent. However, it was contended by the AMC that the value in money or money's worth of the consideration received by Mr Woodward for the grant of the tenancy was significantly less than the value in money or money's worth of the consideration provided by him, since by virtue of the grant of the tenancy Mr Woodward suffered a substantial diminution in the value of his freehold interest in the farm. At first instance His Honour Judge Weeks rejected that contention, holding ("with some regret") that for the purposes of section 423(1) the detriment suffered by Mr Woodward by reason of the diminution in the value his freehold interest was not to be regarded as part of the consideration provided by him. The AMC appealed.
  92. The leading judgment in the Court of Appeal was delivered by Sir Christopher Slade. After referring to the decision of this court in relation to a similar arrangement in Lloyds Bank Ltd v. Marcan [1973] 1 WLR 1387 (in which Russell LJ described the arrangement as "less than honest" and as "sharp practice": see p.1391), Sir Christopher Slade observed that the relevant transaction in Woodward would plainly have fallen within section 172 of the Law of Property Act 1925 (which was replaced by section 423 of the 1986 Act). He continued:
  93. "Prima facie it seems most unlikely that the legislature would have intended a transaction of the Lloyds Bank Ltd v. Marcan type to escape the net of the section. Nevertheless, the wording of section 423 is very different from that of the old section 172 and, while having due regard to the purpose of the section, we must apply that wording as we find it."
  94. Sir Christopher Slade then turned to the AMC's contention that the detriment suffered by Mr Woodward by reason of the diminution in the value of his freehold interest in the farm should be brought into account in assessing the value in money or money's worth of the consideration provided by him on the grant of the tenancy. After referring to MC Bacon, on which the AMC had relied in support of that contention, Sir Christopher Slade said this (at p.10e):
  95. "I see some force in the argument that mere detriment to the person entering into the relevant transaction, unaccompanied by a corresponding benefit to the other party, cannot properly be treated as part of the consideration provided by such person for the purpose of applying section 423(1)(c) unless the incurring of the detriment is actually part of the bargain, as opposed to being merely an incidental result of the transaction. However, I have some doubts as to whether this is what Parliament would have intended and would prefer to leave this question open for decision in another case. For I am of the clear opinion that Mr Moss [for the AMC] is correct in his second main submission on this appeal.

    This submission focused attention not so much on the detriment to the first defendant as on the benefit to the second defendant conferred by the transaction. 'Transaction', it was pointed out, is a wide word, defined by section 436 as including 'a gift, agreement or arrangement'. The tenancy, if effective, gave her the threefold benefits of safeguarding the family home, enabling her to acquire and carry on the family farming business, and a surrender value. Furthermore, and most significantly, the transaction, if effective, placed her vis-à-vis the plaintiff in what Mr Moss described as a 'ransom' position. If the tenancy was effective, the plaintiff would have had to negotiate with and no doubt pay a high price to her before it could obtain vacant possession of the farm and sell it for the purpose of enforcing its security and repaying the debt owed to it by the first defendant. Thus, it was submitted, the transaction plainly conferred, and was intended to confer, on her significant enhanced benefits beyond the rights granted by the tenancy agreement itself, for which enhanced benefits she did not pay.

    Mr Dowding, in answering these submissions, naturally relied strongly on the concession that the annual rent of £37,250 reserved under the tenancy represented a full market rent, being the best rent that could reasonably be obtained. … In Mr Dowding's submission, to bring the case within section 423(1)(c) the plaintiff would have to show that the annual rent of £37,250 was significantly less than the market rent and this has not been shown. The alleged threefold benefits relied on by the plaintiff are, he contended, irrelevant. Any such tenant could have acquired the farming business and lived in the farmhouse. Any such tenant would have acquired the benefit of the surrender value. All these potential advantages were part and parcel of the factors which would be reflected in the assessment of the market rent, which, together with the other obligations entered into by the second defendant under the tenancy agreement, constituted full consideration for the benefits conferred on her.

    Persuasively though these submissions were advanced, I am not persuaded by them. In applying section 423(1)(c) to the facts of the present case, one must look at the transaction as a whole; the tenancy agreement cannot be considered in blinkers. Due weight must be given (inter alia) to the facts not only that the agreement was entered into by the first defendant with his wife for the purposes outlined above, but that the land in question was mortgaged and that the wife, through the grant of the tenancy, would be placed in the 'ransom' position described above. Accepting that she agreed to pay for her yearly tenancy a rent which was the best rent reasonably obtainable for that tenancy viewed in isolation, and that she undertook the other tenant's obligations imposed by the tenancy agreement, it seems to me nevertheless clear that, when the transactions are viewed as a whole, the benefits which the first defendant thereby conferred on her were significantly greater in value, far greater in value, in money or money's worth than the value of the consideration provided by her. To hold otherwise would seem to me to fly in the face of reality and common sense. No further evidence was, in my judgment, required to establish that the transaction was one falling within section 423(1)(c); the agreed facts speak for themselves. On the facts of this case, the substantial detriment incurred by the first defendant under the transaction was largely matched by a substantial benefit conferred on the second defendant beyond the rights specifically conferred on her by the tenancy agreement."
  96. In a short concurring judgment, Neill LJ expressed himself as having been unconvinced by Mr Dowding's arguments. He continued (at p.13b):
  97. "The purpose of the grant of the tenancy agreement was to ensure that the plaintiff did not get vacant possession of the property and was for the purpose of prejudicing the interests of the plaintiff. By the grant of the tenancy, Mrs Woodward acquired the benefit of the surrender value which placed her, as counsel for the plaintiff put it, in 'a ransom position' in any future dealings with the mortgagee. … In the circumstances I see no answer to the argument that, quite apart from any value which may be attributed to the securing of the family home and the acquisition of a debt-free business, the surrender value constituted 'consideration provided by' Mr Woodward which was significantly greater than the payment made by Mrs Woodward for the grant of the lease."
  98. Saville LJ agreed with the judgments of Sir Christopher Slade and Neill LJ.
  99. Mr Caddick submits that the same 'non-blinkered' approach as this court adopted in Woodward should be adopted in the instant case, and that account should be taken of the substantial benefit conferred on Miss Hawkins under the 'arrangement' between her and KF above and beyond the value of the surrender of the tenancy, viz. the benefit represented by her ability, following her purchase from NatWest, to market Hill Farm with vacant possession – a benefit worth approximately £1M. The conferring of that benefit, he submits, was the central purpose of the 'arrangement'. By comparison, the consideration received by KF under the 'arrangement' was the satisfaction of his indebtedness to NatWest in the sum of £450,000 or thereabouts.
  100. So far as the company is concerned, Mr Caddick submits that the reality of the situation was that the company was no more than KF's creature, and as such would inevitably do his bidding. He submits that, adopting the Woodward approach, it was effectively KF who surrendered the tenancy. He accordingly submits that the judge's conclusion on the 'company point' was right for the reasons which the judge gave.
  101. Finally, so far as section 423 is concerned, Mr Caddick submits that, on the judge's findings, the 'victim' of the 'arrangement' was plainly DEFRA.
  102. As to the judge's order, Mr Caddick submits that the judge was right to refuse the company's application to reinstate the tenancy, for the reasons which he gave in paragraphs 5 and 6 of his supplemental judgment (quoted earlier).
  103. Conclusions

    The relevant 'transaction' for the purposes of section 423

  104. In my judgment the judge was clearly right to find that the 'plan' or 'arrangement' which he identified in paragraphs 10, 40 and 44 of his judgment as having been made between KF and Miss Hawkins was a 'transaction' for the purposes of section 423.
  105. Let me return briefly to the facts. I start by considering the factual position before any plan or arrangement was made between KF and Miss Hawkins in relation to the sale of Hill Farm. At that stage, KF was the owner of Hill Farm subject to a legal charge in favour of NatWest securing some £450,000 and an equitable charge in favour of DEFRA securing its judgment debt, and subject also to an agricultural tenancy in favour of his farming company which was binding on NatWest. However, the open market value of the farm was not affected by the existence of the charges over it: the granting of those charges did not deplete KF's assets (for the reasons given by Millett J in MC Bacon). Thus the farm remained KF's to dispose of for its full open market value (albeit that the net proceeds of any sale would be largely if not wholly swallowed up in payment of the secured debts). KF was in severe financial difficulties, and had no income with which to service the secured indebtedness. Hence a sale of the farm, either by receivers appointed by NatWest or by NatWest itself as mortgagee, was virtually inevitable. KF's earlier suggestion to NatWest that it should appoint receivers to sell the farm had been turned down by NatWest, so that left only the possibility of a sale by NatWest as mortgagee. Any sale of the farm by NatWest as mortgagee would be subject to the agricultural tenancy (if still subsisting). The value of the farm subject to a subsisting agricultural tenancy was some £450,000 (that is to say, enough to satisfy NatWest's secured indebtedness, but not enough to leave any balance to be applied in reduction of DEFRA's secured debt), whereas the value of the farm on the open market with full vacant possession was approximately £1M. As to the tenancy itself, in paragraph 28 of his judgment (quoted in paragraph 4 above) the judge found that its only substantial value lay in its availability as a bargaining factor in negotiations with a freeholder wishing to sell the farm with vacant possession (e.g. a purchaser from NatWest).
  106. So much for the factual position immediately prior to the 'arrangement'. I now turn to the factual position immediately after the 'arrangement' had been fully implemented and all relevant dealings with the farm had taken place. The position then was that NatWest's secured debt (amounting to some £450,000) had been paid in full; DEFRA's judgment remained wholly unsatisfied and its security had disappeared (its equitable charge having been overreached); and Hill Farm was vested in Miss Hawkins free from any charge and free from the tenancy, at a cost to her of £450,000. Thus, at a cost of £450,000 Miss Hawkins had become the owner of an asset worth approximately £1M on the open market: an extremely beneficial result from the point of view of herself and KF but not so from the point of view of DEFRA, whose security had mysteriously evaporated.
  107. How, then, was this result achieved? The means by which it was achieved was a sale of the farm subject to the tenancy by NatWest as mortgagee to Miss Hawkins at a price which reflected the existence of a subsisting and continuing agricultural tenancy, coupled (crucially) with KF's "commitment in advance" – the existence of which was concealed from NatWest and its valuers and from DEFRA – "to procure a surrender of the tenancy if and when NatWest took the bait" (see paragraph 44 of the judge's judgment, quoted in paragraph 21 above). Thus the 'arrangement' between KF and Miss Hawkins, entered into in advance of any sale of the farm, consisted essentially of two elements: (1) the need to persuade NatWest to sell the farm (a) to Miss Hawkins and (b) at a price reflecting the existence of a continuing agricultural tenancy; and (2) KF's commitment to surrender the tenancy following completion of such a sale.
  108. In order to achieve the first of those objectives KF and Miss Hawkins resorted to what was by any standard deceitful conduct. I have in mind in particular the correspondence to which the judge referred. I would for my part have no hesitation in regarding the 'arrangement' in the same way as Russell LJ regarded the 'transaction' in issue in Lloyds Bank Ltd v. Marcan (see paragraph 63 above): viz. as "less than honest" and as "sharp practice".
  109. However that may be, the question remains whether the 'arrangement' which the judge found is a 'transaction' for the purposes of section 423. I agree with the judge that it clearly is. As the judge pointed out, 'transaction' includes an 'arrangement' (see section 436); and 'arrangement' is, on its natural meaning and in the context of section 423, apt to include an agreement or understanding between parties, whether formal or informal, oral or in writing. In my judgment the wide definition of 'transaction' in the context of section 423 is entirely consistent with the statutory objective of remedying the avoidance of debts (see per Nourse LJ in Chohan v. Saggar at p.714, quoted in paragraph 58 above).
  110. The 'transaction' which the judge found to exist in the instant case is, in my judgment, materially different from 'transaction' in issue in Brabon. As the judge rightly pointed out in paragraph 42 of his judgment, the transaction which was under attack in Brabon was the sale by the debtor's wife as mortgagee to the third party developer. In the instant case, by contrast, there is no attack (nor could there be) on the sale by NatWest to Miss Hawkins. It was, of course, vital to the success of the 'transaction' in the instant case that that sale should take place, and that the price should reflect the value of the farm subject to a subsisting and continuing agricultural tenancy; but the 'transaction' under attack in the instant case is the arrangement between KF and Miss Hawkins, which involved using the sale by the NatWest as the means by which to achieve the beneficial result referred to earlier.
  111. Nor have I found Woodward or Brewin Dolphin to be of assistance in identifying the relevant 'transaction' in the instant case, since every case must turn on its own facts. In some cases it may be appropriate (as it was in Woodward and Brewin Dolphin) to treat a single step in a series of linked dealings as the relevant 'transaction'; in others it may not. In the instant case, in my judgment, the judge adopted the right approach and correctly identified the relevant 'transaction' as the 'arrangement' between KF and Miss Hawkins which he described in his judgment.
  112. The requirements of section 423(1)(c)

  113. In order to bring the 'transaction' within section 423 it is necessary that the person who enters into it should do so for a consideration the value of which in money or money's worth is significantly less than the value in money or money's worth of the consideration provided by him (see subsection (1)(c)); but, as Lord Scott made clear in Brewin Dolphin, the consideration received by that person may in appropriate circumstances consist of, or include, the benefit of a collateral agreement between him and a third party.
  114. I turn first to the consideration (if any) provided by KF under the 'transaction' in question. In the first place, I reject Mr Dowding's submission that KF provided no consideration since the tenancy was surrendered by the company. Given KF's control of the company, his commitment to procure the company to surrender the tenancy was for all practical purposes the equivalent of a commitment by the company itself to do so. But the substantive point, to my mind, is that the implementation of the 'transaction' led and was intended to lead – through the medium of the sale by NatWest – to the ownership of the farm being transferred from KF to Miss Hawkins in circumstances where she took it free from encumbrances, that is to say free from the charges and free from the tenancy. To put it shortly, the 'transaction' was designed to, and did, have the effect of transferring to her an asset worth approximately £1M. That was a benefit which only KF had the power to provide.
  115. I turn next to the other element in the calculation required by section 423(1)(c): viz. the consideration 'for' which KF entered into the 'transaction': that is to say, the consideration obtained by him. As Mr Caddick rightly submitted, the consideration obtained by KF under the 'transaction' was the discharge of his indebtedness to NatWest in the sum of £450,000 or thereabouts: a consideration the value of which in money or money's worth was significantly less than the value in money or money's worth of the benefit which Miss Hawkins received under the 'transaction'.
  116. I accordingly conclude that the requirements of section 423(1)(c) are met in this case.
  117. The purpose of the 'transaction'

  118. As the judge said in paragraph 40 of his judgment (quoted in paragraph 15 above):
  119. "[T]here can be no doubt that their purpose was to get Hill Farm into Miss Hawkins' name, out of the reach of DEFRA as a secured creditor of KF, and to enable the vacant possession value to be realised in Miss Hawkins' hands."
  120. Not only was that a finding which the judge was fully entitled to make, but it was (to my mind) an inevitable finding on the uncontested facts. It follows that the 'transaction' was entered into by KF for the purpose of prejudicing DEFRA's interests in relation to the recovery of its judgment debt, and that it accordingly falls within section 423(3).
  121. Was DEFRA a 'victim' of the 'transaction'?

  122. As noted in paragraph 8 above, section 423(5) defines 'victim' as meaning, in relation to a 'transaction at an undervalue', 'a person who is, or is capable of being, prejudiced by it'.
  123. With respect to Mr Dowding's submissions, it seems to me to be beyond argument that DEFRA was a 'victim' of the 'transaction' in the instant case. The fact that the sale by NatWest, looked at in isolation, caused no loss is not to the point. The point is that the 'transaction' was not the sale by NatWest, but the arrangement between KF and Miss Hawkins to use that sale as a necessary step in the process of transferring the intended benefit to Miss Hawkins.
  124. Should the judge have reinstated the tenancy?

  125. This is the only aspect of the case on which I have difficulty with the judge's conclusion. The judge's reasoning in paragraphs 5 and 6 of his supplemental judgment undoubtedly has a superficial attraction. However, the fact remains that unless the tenancy is reinstated (that is to say, the surrender cancelled) DEFRA's position as a secured creditor is, on paper at least, better than it was previously. The practical consequences of reinstating the tenancy may be a matter for conjecture, but given (a) that the tenancy is no longer said to be a sham and (b) that the company is "hopelessly insolvent" (see paragraph 47 of the judge's judgment, quoted in paragraph 16 above), I can see no justification for not reinstating it. I would accordingly vary the judge's order by reinstating the tenancy.
  126. Result

    Subject to varying the judge's order to the extent indicated, I would dismiss the appeal.

    Lord Justice Moses:

    Introduction

  127. This part of the appeal and cross-appeal relates to the counterclaim brought by Kevin Feakins and Georgina Hawkins (whom I shall call "the Feakins") in respect of measures undertaken by DEFRA to combat foot-and-mouth disease on Hill Farm. The infectious and virulent nature of the disease which broke out in 2001 was unprecedented; its effects were catastrophic. Some four million animals had been slaughtered by the end of the year.
  128. On Hill Farm foot-and-mouth disease was diagnosed on 26 February, 2001 and the farm was declared to be an infected place. On the farm, 937 animals were slaughtered between 26-27 February 2001. 200 cattle and 115 sheep belonged to Garron. The remainder were owned by others; 544 sheep were owned by Mr Watkins renting a field known as the Root Field. The Veterinary Instruction Procedures and Emergency Routines Manual ("VIPER") were the rules adopted by the MAFF veterinary officer. After slaughter the rules required that carcasses should be disposed of by the most expeditious means available on the infected premises. They were cremated. Decisions were made about where to build the cremation pyre, where to bury the resulting ash and how to deal with the run-off from the extensive cleaning and disinfecting operation. After a site for the pyre was identified, the Environment Agency issued an authorisation pursuant to the Groundwater Regulations 1998.
  129. The pyre was lit in the evening of 1st March 2001. By 4 March the cleansing and disinfecting operation was underway. A lagoon was constructed to catch the effluent from that operation.
  130. During March a further pit was excavated for the disposal of general rubbish from the cleansing and disinfecting operations ("the C and D pit"). An Ash Pit was constructed in the Pyre Field. The Ash Pit was excavated on about 27 March, 2001. The farmyard muck heap was initially moved to a situation near the lagoon and then relocated in what became known as "the Raised Area". It was not until 16 July, 2001 that a Form 7 Certificate of Disinfection was signed. Notices were served pursuant to the Foot and Mouth Disease Order 1983 prohibiting the emptying of the lagoon or the movement of the farmyard muck heap without an inspector's licence.
  131. It is worth noting the effect on the Feakins of these events as recorded by the judge:-
  132. "It is not difficult to imagine the distress which these events caused the Defendants and KF in particular: the horror of the slaughter process, the impotence in the face of the loss of his business, and their confinement to the premises for an extended period were in themselves likely to be traumatising. Unlike other farmers who suffered similar experiences, KF had further grounds for complaint and resentment against DEFRA. He was labouring under the shadow of what he perceived to be the unfair IBAP judgment. Press reports in March 2001 identified him (apparently with DEFRA's encouragement) as the farmer responsible for having exported FMD to France. The C&D operation took far longer than it might have done…"
  133. Before the judge the Feakins' claims were for the most part in trespass. Many of the issues turned on whether the Ministry had power to conduct those activities which constituted a permanent invasion of private rights in the land at Hill Farm. In a hearing between 9 June and 16 July, 2004 Hart J. was compelled to consider 74 issues relating to the Feakins' claims. He heard over 30 witnesses of fact, and expert evidence on Transmissible Spongiform Encephalitis ("TSE"), on hydrogeology and on valuation. The comprehensive clarity of his rulings on those many issues has left this court with a far less burdensome task. It has enabled this court to focus on the essential question as to the extent of DEFRA's statutory authority to conduct the activities which, it is said, constitute a trespass.
  134. Although I must consider DEFRA's statutory authority to trespass there is an air of unreality to this process. DEFRA was faced with a disease, which was exceptionally serious both in its effects on farming and the wider rural economy. The Government had to attempt to control and eradicate the disease, the scope and spread of which was unprecedented. As Mr. Landeg, the Veterinary Head of DEFRA's exotic diseases, explains, the task of combating the disease was particularly difficult and demanding.
  135. Central to this task were the slaughter of diseased animals and of those in dangerous contact with them, strict restriction of movement, and cleansing and disinfection operations. A national policy was essential to fight a disease which became a national disaster in a matter of days. It would have been impractical to leave operations such as cleansing and disinfection to individual farmers; the cost would have been crippling, the urgency and effectiveness would have been undermined.
  136. Farmers, such as the Feakins, co-operated and assisted with these operations. The last thing that they, or those officials could have been expected to consider were the niceties of statutory construction of sub-sections of the Animals Act 1981 and the law relating to statutory authority for trespass.
  137. I ought, therefore, to stress that, whilst it is necessary to refer to DEFRA's interference with private interests in land, it has not been suggested that it acted in deliberate disregard of private rights or that it was seeking to do other than its best in assisting those, such as the Feakins, faced with the dire consequences of the disease.
  138. The issues

  139. Under the counterclaim this court is only concerned with the following issues:-
  140. (1) Whether DEFRA had power to bury items in the C and D pit (DEFRA's first ground of appeal)

    (2) Whether DEFRA had power to bury non-Garron animals in the Ash Pit on Hill Farm (DEFRA's second ground of appeal)

    (3) Whether DEFRA had power to conduct cleansing and disinfection operations on Hill Farm (the Feakins' second ground of appeal)

    (4) Whether DEFRA committed a trespass in respect of the construction of the Raised Area (the Feakins' third ground of appeal)

    (5) The relevance of measures of European Community Law in relation to TSE and groundwater pollution (the fourth and ninth grounds of appeal)

    (6) Whether the judge's rulings as to alleged breaches of those measures were correct (the Feakins' grounds of appeal 5, 6, 7, 8 and 10)

    (7) Whether the judge's assessment of user damages was correct. Waller LJ has considered this aspect of the appeal. I agree with his judgment.

    It is convenient, first, to deal with the scheme of the relevant statutory provisions and the relevance of the measures relating to TSE and groundwater pollution before applying my conclusions as to the statutory scheme to the particular factual circumstances which arose on Hill Farm.

    Statutory authority generally

  141. Since many of the issues raised in this part of the appeal turn on the extent to which statutory authority has been conferred on DEFRA, it is as well to start with the principles according to which statutory authority may be identified. There was no dispute between the parties but that DEFRA could justify the legality of its interference with property rights on Hill Farm if it could establish that there was either express or implied statutory authority for such interference. There was, however, some understandable difference in emphasis as to the extent to which it was possible to imply such authority from the relevant statutory provisions.
  142. From time to time it seemed that DEFRA was contending that a statutory power could be implied where the absence of such a power would lead to what it described as "an illogical and undesirable result". These words were plucked from a judgment of Mr Beatson QC in R v Secretary of State for Environment, Food and Rural Affairs, ex parte Dixon [2002] EWHC 831 Admin. (Judgment of 10 April 2002). But in the same sentence in which he used those words, the judge made it clear that he was not intending to diminish the stringent yardstick implicit in the test of "necessary implication". He specifically referred to the reminder by Lord Lowry (in McCarthy & Stone Developments v Richmond Upon Thames LBC [1992] 2 AC 48) that those words imposed a test more rigorous than that which would be satisfied by what is reasonable, conducive, or incidental (see his speech at page 71A).
  143. Examination of the relevant authorities amply supports the stringency of the test. Most of those cases concern defences to allegations of nuisance. In Allen v Gulf Oil Refining Limited [1981] AC 1001 the express authority to construct an oil refinery carried with it the authority to refine. It was impossible to construct and operate the refinery upon the site without creating a nuisance (see Lord Wilberforce at 1013C-H). Lord Edmund-Davies echoed the rigour of the test; it is for the defendant to establish that any proved nuisance was wholly unavoidable, irrespective of the expense necessarily involved in its avoidance (see his speech at 1015E). Later in his speech, Lord Edmund-Davies referred to the principle that the absence of compensation clauses is an important indication that the statute on which reliance is placed was not intended to authorise interference with private rights (1016E). But, as Allen itself demonstrates, the absence of compensation clause is not determinative. It is, however, all the more important in the absence of compensation clauses, to be able to identify an intention to take away private rights in clear and unambiguous terms (see Lord Warrington of Clyffe in Colonial Sugar Refining Co. Ltd. v Melbourne Harbour Trust Commissioners [1927] AC 343, 359, cited by Lord Wilberforce in Minister of Housing and Local Government v Hartnell [1965] 1134 at 1173C).
  144. Although most of the cases concern nuisance, there was no dispute but that DEFRA could justify the legality of interference with private rights on the farm by reference to statutory authority (see e.g. British Waterways Board v Severn Trent Water Limited [2002] Ch 25 at paragraph 36, page 35). It will be necessary to return to these principles in connection with the submissions that DEFRA is deprived of the defence of statutory authority in circumstances where its actions are in breach of statutory provisions, not to be found in the statute said to confer authority.
  145. Accordingly, analysis of the statutory scheme should be focussed upon whether DEFRA can establish either an express statutory power authorising its activities in question or a power conferred by necessary implication in the sense that, absent such authority, DEFRA would be unable to exercise the powers expressly conferred by the statute.
  146. The Statutory Provisions

  147. Part II of the Animal Health Act 1981 is concerned with disease. Sections 31-34 deal with slaughter and compensation in respect of slaughter in relation to a number of identified diseases including foot and mouth. Power to slaughter is contained in section 32. Section 34 is headed:-
  148. "Slaughter and Compensation Generally".

    Section 34(2) provides:-

    "Where an animal has been slaughtered under this Act at the Minister's direction, the carcase of the animal shall belong to the Minister and shall be buried, or sold, or otherwise disposed of by him, or as he directs, as the condition of the animal or carcase and other circumstances may require or admit…

    Section 34(4) provides:-

    "Where an animal has been slaughtered under this Act at the Minister's direction, he may use for the burial of the carcase any ground in the possession or occupation of the owner of the animal and suitable in that behalf, or any common or unenclosed land."
  149. Section 35 confers a power to make orders relating to the seizure and disposal of carcasses under the rubric:-
  150. "Carcasses etc. liable to spread disease".

    Section 35 "Seizure and disposal of carcasses etc.

    1. The Ministers may by order make such provision—
    (a) for the seizure of anything, whether animate or inanimate, by or by means of which it appears to them that any disease to which this section applies might be carried or transmitted, and
    (b) for the destruction, burial, disposal or treatment of anything seized under the order,
    as they may think expedient for preventing the spread of any such disease".
    Foot-and-mouth disease is one of the diseases to which s.35(1) applies: s.35(2).
  151. Section 36 under the heading "Compensation for seizure" provides:-
  152. "(1) Ministers shall pay compensation –
    (a) for anything seized under an order made by virtue of section 35(1) above for the purpose of preventing the spread of foot-and-mouth disease; …
    (2) The Ministers may by order provide for the payment by the minister of compensation for carcasses or things obtained from or produced by animals or birds affected by any disease to which section 35(1) applies other than foot-and-mouth disease or fowl pest being carcasses or things seized under an order made by virtue of section 35(1) above.
    (3) The compensation payable under subsection (1) or subsection (2) above for anything seized shall be its value at the time of seizure.
    (4) Where anything destroyed, buried or disposed of under an order made under paragraph (e) of section 23 above could have been seized under an order made under section 35(1), the Minister shall pay the like compensation (if any) for it as if it had been so seized at the time of the destruction, burial or disposal.
    (5) The Ministers may make such orders as they think fit for all or any of the following purposes –
    (a) for prescribing how the value of anything seized under section 35(1) is to be ascertained; …
    (b) for prescribing and regulating the destruction, burial or disposal of anything seized under section 35(1)."
  153. In a different part of the Act, Part IV, under the heading "Local Authorities" power is conferred to acquire land for certain purposes. Section 55, under the heading "Power to Acquire Land", provides:-
  154. "(1) A local authority may –
    (a) purchase land by agreement, or
    (b) if so authorised by the Minister or the appropriate Minister, purchase land compulsorily or
    (c) by agreement take land on lease or to rent, for the following purposes –
    (2) for use for burial of carcasses, in cases where there is not any ground suitable in that behalf in possession or occupation of the owner of the animal, or any common or unenclosed land suitable and approved by the Minister or the appropriate Minister in that behalf; or
    (3) for any other purpose of this Act.
    (2) The powers conferred by this section may be exercised by a local authority in England or Wales with respect to land within or without their district…"
  155. Compensation for the slaughter of animals affected with foot-and-mouth disease or suspected of being so affected is payable under paragraph 3(2) Schedule 3 of the 1981 Act.
  156. The power to make orders in respect of seizure conferred by section 35(1) and under a general enabling provision contained in section 1 of the 1981 Act, was exercised in the Diseases of Animals (Seizure Order) 1993, S.I. 1993 No. 1685. Paragraph 2 provides:-
  157. "(1) An inspector or veterinary inspector shall have power to seize anything (other than a live animal) whether animate or inanimate, by or by means of which it appears to him that a disease to which section 35(1) of the Animal Health Act 1981 applies might be carried or transmitted.
    (2) An inspector or veterinary inspector exercising powers under this Order shall dispose of the thing seized by destruction, burial, treatment or such other method of disposal as he thinks expedient to prevent the spread of disease."
  158. The Foot-and-Mouth Disease Order 1983, S.I. 1983 No.1950 was made under the general enabling provision in section 1 and specifically under section 26(1) of the 1981 Act which concerns, inter alia, the control of foot-and-mouth disease found in transit. Article 9 sets out rules to be observed in an infected place:-
  159. "Rules to be observed in an infected place (1) Any premises declared to be an infected place by a notice in Form A served under Article 5 above, and any person who is from time to time on those premises, shall be subject to the following rules, namely:—
    Rule 1. No person shall move into or out of the infected place, or cause or permit to be so moved, any animal, animal product, fodder, litter, dung, slurry, utensil, pen, hurdle, vehicle or other thing, except under authority of a licence granted by a veterinary inspector and in accordance with such conditions as may be specified therein
    Rule 2. The owner or occupier of the infected place shall—
    (a) on confirmation of disease, erect and maintain in a conspicuous place at the main entrance thereof an infected place notice supplied by the Ministry;
    (b) thoroughly disinfect, to the satisfaction of a veterinary inspector, any slurry or shed washings before permitting them to drain or escape from any part of the infected place in which an affected or suspected animal is kept or has recently been kept;
    (c) maintain a footbath containing an approved disinfectant in some convenient place at the exist from the infected place, and renew the disinfectant daily and whenever so directed by an inspector;
    (d) destroy, so far as he is able, any rats in the infected place; and
    (e) if required by an inspector, confine any animal on the infected place and, in any event, ensure that any animal in the infected place does not stray there from.
    For the purposes of this sub-paragraph "animal" means any kind of four-footed beast.
    Rule 3. No person shall enter or leave the infected place except under the authority of a licence granted by an inspector of the Minister, and in accordance with such conditions as may be specified therein.
    ….
    (2) A veterinary inspector may by notice in writing served on the occupier of the infected place direct that—
    (a) such additional rules as may be specified in the notice shall apply to the infected place…."
    "Article 11 Cleansing and disinfection of premises
    "A veterinary inspector may, by notice in writing served on the occupier of any premises in which an affected or suspected animal, or the carcase of such an animal, is being kept, or on which it has been kept at any time during the period of 56 days immediately preceding the date on which it is discovered to be an affected or suspected animal or the carcase of such an animal, require him to cleanse and disinfect such premises at his own expense or at the expense of the Minister in accordance with such of the provisions of paragraphs 1 and 2 of Schedule 2 to this order are specified in the notice, or in such other manner as may be specified in the notice, and within such time as may be so specified." (emphasis added)
    "Article 12 Cleansing and disinfection of vehicles
    Where a vehicle—
    (a) is used or has at any time during the previous 56 days been used for the carriage of an affected or suspected animal, or the carcase of such an animal; or
    (b) is used for the carriage of any embryo, ovum, semen, litter, straw or other thing which has been on any premises on which there has been an affected or suspected animal, or the carcase of such an animal, during the previous 56 days,
    an inspector may by notice in writing served on the owner or person in charge of the vehicle require him, as soon as practicable and before any animal or carcase or any fodder, litter or thing intended to be used in connection with, or for or about any animal is loaded therein—
    (i) to cleanse and disinfect the vehicle, and
    (ii) to cleanse and disinfect any apparatus or thing used in connection with the loading of an affected or suspected animal, or the carcase of such an animal, into, its unloading out of or carriage in, the vehicle,
    in accordance with such of the provisions of paragraph 3 of Schedule 2 to this order as are specified in the notice, or in such other manner as may be specified in the notice and within such time as may be so specified."

    Article 40 Powers of Ministry officers and inspectors of local authorities in case of default

    (1) If –

    (a) the owner or occupier in charge of any premises; or
    (b) the owner or person in charge of any vehicle or thing,
    fails to cleanse and disinfect those premises or, as the case may be, that vehicle or thing as required by any of the foregoing provisions of this order or by a notice served under any such provision, an officer of the Ministry or an inspector of a local authority may, without prejudice to any proceedings for an offence arising out of such default, carry out, or cause to be carried out such cleansing and disinfection.

    (2) …

    (3) The amount of any expenses reasonably incurred by an officer of the Ministry or by an inspector of a local authority in the exercise of any power conferred by paragraphs (1) or (2) above shall be recoverable on demand as a civil debt by the Minister or by the local authority, as the case may be, from the person in default."

    "Article 45 Offences

    Any person who, without lawful authority or excuse, proof of which shall lie on him—

    (c) contravenes any provision of this order or any provision of a licence, approval or notice granted, served or erected or displayed under this order; or
    (d) fails to comply with any such provision or with any condition of any such licence, approval or notice or;
    (e) causes or permits any such contravention or non-compliance,
    commits an offence against the Act".

    Schedule 2 of the Foot and Mouth Disease Order 1983 provides:

    "1. Where under this Order premises are required to be cleansed and disinfected, such cleansing and disinfection shall be carried out in the following manner, that is to say –
    (a) the whole of the premises including the fittings shall first be thoroughly wetted with an approved disinfectant;
    (b) all dung, excretions and other discharges shall be removed from the walls, fittings and floors and the premises shall then be swept out. The sweepings and all other litter, dung, or other things which have been in contact with, or used about, any animal, shall be effectively moved there from and shall forthwith be burnt or thoroughly saturated with an approved disinfectant and effectively moved from contact with animals; then
    (c) the whole of the premises including the fittings shall again be thoroughly wetted with approved disinfectant.
    2. In the case of a field or other open space not capable of being treated in the foregoing manner, cleansing and disinfection shall be carried out so far as is practicable to the satisfaction of a veterinary inspector of the Minister"

    Statutory authority to interfere with interests in land

  160. The foregoing provisions are relevant to a number of different issues which arise in this appeal. But, to my mind, it is convenient to consider the overall scheme before plunging into the interstices of particular issues. The quest, in relation to all these statutory provisions is to identify whether and to what extent power has been conferred to interfere with private property interests. DEFRA contended that the power to bury the ashes of an animal slaughtered and burnt on Hill Farm was contained in section 34(2) of the 1981 Act. The condition of the animal or carcass and other circumstances, they submitted, required disposal of the carcasses of all the animals slaughtered on Hill Farm by burning the carcasses and burying them in the ground of Hill Farm.
  161. Mr Garnham QC, for DEFRA, drew attention to the virulent and infective nature of foot-and-mouth disease. It was not until July 2001 that a protocol was in place which would have enabled ash to be moved. The ash itself might well have contained infected material. In the circumstances it was plain, so he contended, that circumstances required disposal of the slaughtered animals by burning and burying the ash on the farm.
  162. In this appeal it was not argued that there was no power to dispose of a slaughtered animal by burning the carcass on the farm. This had been the contention of the Feakins before Hart J. He rejected that argument following the decision of Mr Beatson QC in Ex parte Dixon (to which I have already referred). Mr Jourdan, for the Feakins, did not pursue that argument on appeal. But he maintained the position that the power to bury ash from the burnt carcasses of the slaughtered animals on the farm was to be found, if at all, in section 34(4). For reasons which I shall develop later, it was contended that that power was limited by the words used within subsection 4 and did not cover the activities of DEFRA.
  163. In my view, the only power to bury ash from the carcasses of slaughtered animals on Hill Farm is that which is contained in section 34(4). The wording of section 34(2) is in stark contrast to that of subsection 4. Section 34(2) makes no reference whatever to the use of any ground or land for burial. If section 34(2) conferred a power not only to dispose of the carcass of an animal, as its condition or other circumstances required, but also to dispose of that carcass in a way which constituted a permanent interference with a private property interest, specific and clear words would be required.
  164. It is important to recall what is in issue: a permanent, not a temporary interference with private interests in land. The contrast between a temporary and permanent interference is instructive. The slightest intrusion on land in the possession of another constitutes a trespass (as the Forensic Fable of the Real Property Lawyer and the Surly Gamekeeper teaches). No damage to the land need be proved. The temporary trespass caused by burning the carcass, ownership of which had been transferred to DEFRA by s.34(2), was authorised , by necessary implication, by s.34(2). The nature of the disease was such that the carcase had to be burnt as soon as possible. As the judge concluded (at paragraph 95), it would not have been possible to do that without the temporary use of the land. But there is no similar necessity to be found in the words of s.34(2) in relation to a permanent use of the land.
  165. Section 34(4) confers a specific power to bury a carcass in specified ground, namely ground in the possession or occupation of the owner of the animal. Such burial, as it seems to me, necessarily involves permanent interference with the private property rights of the owner of the animal. It was, as I have said, not contended before us that burial of the carcass did not cover burial of the ashes of the carcass. The Act makes specific provision for compensation to be paid to the owner of the animal (see Schedule 3, paragraph 3(2)). It makes no provision for compensation for the use of land in his occupation or possession. That seems to me a powerful indication that authority to interfere permanently with private property rights is to be limited to the circumstances identified in section 34(4) and not to be extended to the more general power of disposal conferred by section 34(2).
  166. There are two further considerations which drive me to that conclusion. Firstly, as both Mr Beatson QC and Hart J. concluded, if section 34(2) authorised burning and burial on private property, section 34(4) would be unnecessary. Secondly, there is to be found in section 55 of the 1981 Act specific power to interfere with private rights in land. The existence of section 55 seems to me to provide a further compelling indication that the only power to interfere permanently with private rights in land is that which is contained in section 34(4). I should emphasise that this conclusion as to the meaning and effect of section 34 still leaves open the question as to whether DEFRA's activities can be justified under section 34(4). But it does seem to me to be necessary to record, at this stage, the limited authority which the statute confers to interfere permanently with private rights of property.
  167. DEFRA relied, in addition, upon powers conferred by Orders made under section 35. It contended that the power to make Orders for the burial of anything seized for the prevention of the spread of foot-and-mouth disease by section 35(1)(b) and the exercise of that power under paragraph 2 of the 1993 Order provided legal justification for permanent interference with private rights. Burial necessarily involves the use of land in which a private person might have an interest.
  168. The powers conferred to make Orders under section 35(1)(b) are far too wide and general to allow of a similar implication to that which necessity compels in section 34(4). The power contained in section 35(1)(b), and the relevant 1993 Order made under it, make no specific reference to the use of any particular ground for burial. The Order merely confers a power to deal with items which have been seized; it does not confer any statutory authority to justify permanent trespass.
  169. If section 35 was intended to confer a power to make Orders, under which specified land could be used for the burial of items which had been seized, one would have expected to find specific provision using the words used under section 34(4). The absence of such words is striking and compels the conclusion that no such statutory authority has been conferred by section 35.
  170. I conclude, therefore, that the statutory scheme provides no general power to interfere permanently with private property rights. The only authority conferred by the statute to interfere permanently with private property rights is that which is contained in section 34(4).
  171. The relationship between section 34 of the 1981 Act and EU measures dealing with the disposal of animal by-products and pollution of Groundwater

  172. The conclusion that the only statutory justification on which DEFRA can rely is to be found in section 34(4) of the 1981 Act leads to the following substantial issue raised by the Feakins. They contend that it is not open to DEFRA to justify its trespass because the ground which it used to bury ash was not "suitable in that behalf" within the meaning of section 34(4).
  173. They contend that the ground was not suitable because of breaches of two sets of measures:-
  174. i) measures dealing with the disposal of animal by-products in general and SRM in particular, namely the Animal Waste Directive 90/667/EEC of 27 November 1990 ("the AWD") and the Commission Decision of 29 June 2000 "regulating the use of material presenting risks as regards transmissible spongiform encephalopathies and amending Decision 94/474/ EC" ("the TSE Decision");

    ii) measures dealing with the pollution of Groundwater, namely the Water Resources Act 1991, Council Directive 80/68/EEC of 17 December 1979 on the protection of groundwater against pollution caused by certain dangerous substances ("the Groundwater Directive") and the Groundwater Regulations SI 1998 2746 ("the Groundwater Regulations").

  175. A considerable proportion of Hart J's judgment dealt with the many issues which arose both in relation to the TSE Decision and the Groundwater Directive.
  176. The judge considered not only the relevance of the TSE Decision but also factual issues which arose under that decision. He considered similar issues in relation to the Groundwater Directive, and the extent to which an individual is entitled to invoke the provisions of the TSE Decision and the Groundwater Directive in asserting private rights.
  177. Both parties accepted before the judge, and before us, that the issues relating to the TSE Decision and the Groundwater Directive arose because of the reference in section 34(4) to ground "suitable in that behalf". The judge concluded:-
  178. "i) The word "suitable" should not be construed solely by reference to the suitability of the ground quoad its propensity to destroy the FMD virus and prevent the spread of the disease, but should be construed so as to include suitability having regard to wider public and animal health issues. I reach that conclusion as a matter of impression and common sense, and without regard to European legislation. It follows that, in determining the suitability of the ground, some regard has to be paid to its suitability from the point of view of water pollution and TSE control;
    ii) Insofar as there is directly applicable legislation relevant to these considerations, that legislation should be applied so far as possible to achieve legislative harmony. In the present case the Groundwater Regulations, which implement the Groundwater Directive, represent the directly applicable legislation so far as water pollution is concerned. For reasons which I elaborate below I do not consider the TSE Decision to have the quality of directly applicable legislation in this context, although the scientific background to it (and to some extent the fact of its adoption) is relevant;
    iii) Although the words "suitable in that behalf" are capable of being read objectively, the context in which they appear (that of a power exercisable by the Minister) gives some margin of judgement to the Minister in the selection of the site. This margin of judgement may be important if, as is theoretically possible, it is necessary to balance conflicting desiderata. Thus it may be possible to regard ground as suitable for the destruction of FMD virus even if, looked at solely from the point of view of TSE control, it would not be regarded as suitable. That would not be because the AHA in its application to FMD trumps all other considerations as a matter of construction (which is DEFRA's preferred approach), but because "suitability" has to be given sufficient elasticity to allow for the balancing of what may be incommensurable risks. (see paragraph 132)."
  179. In order to reach a conclusion as to the relevance of the TSE Decision and the Groundwater Directive it seems to me necessary to raise the question whether too much weight has been placed upon the reference in section 34(4) to ground being "suitable in that behalf". The language of section 34(4) hardly suggests that it is of such importance as to require the Minister to have regard to wider public health and animal health issues. If it has that significance, it is surprising that those words do not qualify the use of common or unenclosed land. One would have thought that it is important to ensure that the use of common or unenclosed land for burial should avoid water pollution and the transmission of disease from animal waste.
  180. The mystery is compounded by the apparent adoption of similar expressions in section 55(1)(ii). I repeat:-
  181. "(ii) For use for burial of carcasses, in cases where there is not any ground suitable in that behalf in possession or occupation of the owner of the animal, or any common or unenclosed land suitable and approved by the Minister or the appropriate Minister in that behalf;"

    The reference to common or unenclosed land being suitable for the purposes, for example, of compulsory purchase and the repetition of the expression "in that behalf" qualifying the appropriate Minister shows a ready wit on the part of the draftsman but does not lead to clarity. It seems to me that "suitable in that behalf" in section 34(4) merely connotes an obligation on the part of the Minister to bury a carcass in an appropriate position, having regard to the private possession or occupation of the ground where the carcass is to be buried. Reading the 1981 Act as a whole, it is possible that the draftsman did not regard it as necessary to refer to the suitability of common or unenclosed land for the burial of a carcass because it was envisaged that there would be no such burial in such land without the exercise of the powers to which section 55 refers. Those powers could only be exercised in relation to common or unenclosed land if such land was suitable and approved for that purpose. But the matter is far from clear.

  182. For those reasons I do not think that issues relating to the TSE Decision or Groundwater provisions are triggered by the reference to the requirement that the ground be suitable. That is not to say that those measures are irrelevant. It seems to me that they do have relevance in the context of the wider issue of statutory authority.
  183. The relationship between the TSE Decision, Groundwater provisions and statutory authority

  184. As I have already remarked, most of the authorities, relating to statutory authority as a defence to claims in tort, relate to claims in respect of nuisance. In such cases the immunity afforded by statutory authority is limited. It will only cover a nuisance which is unavoidable by the exercise of statutory powers. It will not cover the negligent exercise of those powers (see e.g. the passages in the speeches of Lord Wilberforce and Lord Edmund-Davies in Allen v Gulf Oil Limited qv supra).
  185. It seems to me that similar reasoning may be applied in relation to the alleged breaches of the TSE Decision and Groundwater provisions. The immunity from liability for trespass is limited. It will not extend to an interference with a private right in land when a breach of statutory provisions which are relevant to the use of that land affects the nature or extent of the interference. That proposition requires consideration of :-
  186. (1) whether there are provisions which regulate the use of the land on which the interference has taken place and

    (2) whether the alleged breach of such a provision affects the nature or extent of the interference.

  187. I have attempted to confine the ambit of that proposition. If it is stated too broadly it seems to me it would cover statutory provisions and breaches wholly irrelevant to the essential issue. That issue is confined to one of statutory authority for interference with private rights in land. To assert that no statutory power, such as that conferred by section 34(4), can sanction unlawful activity may be true. But it is far too broad a proposition. It does not assist in determining the limits of the immunity in relation to the particular trespass alleged. The question is not whether the Ministry has acted unlawfully; it is whether its power to interfere with a private interest in land has been exercised outwith the ambit of the immunity. The focus must, accordingly, be directed at the exercise of the power as it affected the private interests in the land.
  188. Mr Jourdan, on behalf of the Feakins, contended both before the judge and before this court, that any breaches of the TSE Decision and the Groundwater provisions rendered the activities of DEFRA, in using Hill Farm to bury ash, unlawful. That submission seems to me far too wide. The power conferred by section 34(4) does not require every provision of the law which relates to the use of land by the Executive to be read into it. It is necessary to determine whether the statutory immunity on which DEFRA relies has been exceeded. Only those breaches which relate to the manner of DEFRA's activities on Hill Farm are relevant. Only those breaches will undermine the authority conferred by section 34(4).
  189. For those reasons I reject the submission, on behalf of the Feakins, that statutory authority is removed once any breach of either the TSE Decision or the Groundwater provisions is established.
  190. Mr Jourdan contended that the TSE Decision and the Groundwater Directive were relevant on four bases. Firstly, he relied on Marleasing SA v La Comercial Internacional de Alimentacion SA [1990] ECR 1 – 4135 and Webb v EMO Air Cargo(UK) Limited [1993] 1 WLR 49 for the proposition that national legislation must be interpreted so as to achieve the objective of EU law. Secondly, he contended that the Directive was directly effective and thus this court should apply section 34(4) in a manner which does not impede the implementation of the decision. Thirdly, he contended that the TSE Decision created rights which could be enforced by individuals. Fourthly, prompted by this court, he contended that in any event the decision was material to the question whether the ground was suitable.
  191. In the light of my conclusion as to the extent of the statutory immunity conferred by section 34(4) it seems to me unnecessary to resolve these issues. I should, however, add this. The rationale for the principle that an individual has the right to invoke a measure of Community law before a domestic court is that, absent such a right, the effectiveness of a measure which imposes an obligation on a Member State would be undermined. A similar rationale exists in those cases in which an individual may claim damages for a breaches of Community legislation, (see e.g. Grad v Finanzamt Traunstein (Case 9/70) [1970] E.C.R. 825, and Burton v British Railways Board (Case 19/81) [1982] Q B 1080, and Brasserie du Pecheur SA v Germany [1996] ECR 1-1029, all of which were cited by the judge). The proposition which I have advanced, that the only relevant breaches are those which affect the nature or extent of the interference with private rights in land, does not undermine that rationale. In so far as rights conferred by the relevant Community legislation may be vindicated by individuals, those rights persist. If the Feakins can show they are interested parties they can enforce those rights. But in so far as those breaches do not affect the quality and extent of the interference with their interests in the land, those rights must be vindicated in proceedings which are distinct from a claim for trespass. Such breaches have nothing whatever to do with the issue whether there is statutory immunity from the alleged trespass.
  192. It will be seen, therefore, that while I do not disagree with the judge in the passages I have cited, I have sought to provide a more precise test of relevance than that to be derived from his acceptance that "some regard" must be paid to the pollution of groundwater and TSE control.
  193. I conclude, for those reasons, that it is necessary to consider whether there have been breaches of the TSE Decision and Groundwater provisions but only to resolve the issue as to whether the alleged breaches affect the nature or extent of DEFRA's interference with private interests on Hill Farm.
  194. The TSE Decision

  195. The TSE Decision refers to provisions in the Animal Waste Directive, which is designed to provide harmonised rules to prevent the spread of pathogens in the environment from incorrect disposal of animal waste. Article 3 refers to "high-risk material" which includes:-
  196. "(c) animals which are killed in the context of disease control measures…"

    Article 3(2) provides that:-

    "The competent authorities may where necessary decide that high-risk material must be disposed of by burning or by burial where:
    Burial must be deep enough to prevent carnivorous animals from digging up the cadavers or waste and shall be in suitable ground so as to prevent contamination of water tables or any environmental nuisance. Before burial, the cadavers shall be sprinkled as necessary with a suitable disinfectant authorised by the competent authority"

    An epizootic disease is a disease affecting a large number of animals simultaneously throughout a large area and spreading with great speed.

  197. The TSE Decision came into force on 1 October 2000. It was expressed, by Article 12, to be binding on Member States. It defined SRM by reference to parts of the body of cattle, sheep and goats including, for example the brains and eyes (see Annex 1, paragraph 1). SRM was not to be removed from dead animals and was to be stained with a dye before being completely destroyed. Provision was made for three alternative methods of destruction by incineration without pre-processing, by incineration after pre-processing by "ordinary" rendering and thirdly "pressure cooking rendering" followed by burial in an approved landfill site. The provisions are far more detailed than that but it is unnecessary for the purposes of this judgment to set them out with as great precision as the judge did (at paragraph 120).
  198. By Annex 1, paragraph 4 of the decision it is provided that:-
  199. "Member States may derogate from the provisions of points 2 and 3 to allow the incineration or burial of specified risk material or entire bodies, without prior staining, or, as appropriate, removal of the specified risk materials, in the circumstances set out in Article 3(2) of [the AWD] and by a method, which precludes all risk of transmission of a TSE, and is authorised and supervised by the competent authority, in particular where animals have died, or have been killed in the context of disease control measures." (emphasis added).
  200. There was much dispute as to whether the TSE Decision was directly effective. I should record that in an appendix to DEFRA's supplementary written argument, it contended that the Decision was not directly effective but was an interim decision reached in the context of a lack of political consensus and scientific uncertainty as to how to deal with the spread of diseases such as BSE. DEFRA related in detail the history of the making of the Decision. Since I have concluded that the statutory immunity does not extend to a breach of the TSE Decision which affects the quality or extent of the interference with private interests in the Hill Farm, it is unnecessary to resolve the issue of direct effect. I emphasise, however, that I have reached no conclusion as to the extent to which any individual can, in other proceedings by way of public or private law, rely upon a breach of that Decision.
  201. The real issue, in this appeal, is whether there was any breach of the Decision which affected the nature and extent of DEFRA's interference with the land. The scheme of the Decision is to permit derogation only where one or more of the circumstances identified in Article 3(2) apply and where the method adopted "precludes all risk of transmission of a TSE". Mr Jourdan contended that there could be no derogation without first a decision. The judge concluded that:-
  202. "Derogation is permissible if any of the factual circumstances listed in AWD is present."

    There is no need to make any conscious decision. The only question was whether the derogation was lawful (see judgment at paragraph 143 and the decision of this court in R (Feakins) v Secretary of State for Environment Food and Rural Affairs [2003] EWCA, 156 [2004] 1 WLR 1761).

  203. Only one of the pre-conditions identified in Article 3(2) of the Animal Waste Directive need be satisfied before a Member State is entitled to derogate under Annex 1, paragraph 4. The judge concluded that the pre-condition at the 1st bullet point, namely the danger of propagation of health risk, and at the 3rd bullet point were satisfied. The judge concluded that the first circumstance was satisfied because:-
  204. "Unless and until appropriate protocols had been developed for such transport it was not, as a matter of fact an option. On the evidence, protocols for the transport of infected carcasses had not been developed until on or shortly before 9 March 2001 or for the transport of pyre residue until towards the end of June 2001." (in fact it was on 8 July 2001) (see paragraph 162 of the judgment)
  205. Mr Jourdan rightly pointed out that the possibility of rendering whole carcasses was first actively considered on 5 March 2001 and could have been implemented from 9 March. It was only the failure to prepare protocols earlier which led to the rejection of transport to the nearest high-risk material processing plant. Indeed, it was contended that that option had never been considered.
  206. It does appear that there was a delay in considering the option of transport. But I agree with the judge that that delay itself constituted an implicit rejection of the option of transport. It may be that a Member State will disqualify itself from exercising the power under Annex 1, paragraph 4 in circumstances where its own inactivity has given rise to one or more of the circumstances set out in Article 3(2). But it is unnecessary to decide this point where, as a matter of fact, DEFRA did reject transport because of the danger of propagation of health risks until the appropriate protocols were in place. I agree with the judge that the circumstance set out in the first bullet point in Article 3(2) was satisfied.
  207. The next question, therefore, which arises is whether the burial of the ash on Hill Farm was a method which precluded "all risk of transmission of a TSE" within the meaning of Annex 1, paragraph 4. It was accepted that the words in Annex 1, paragraph 4, should not be read literally because there is no known method of disposal of SRM which eliminates all risk. Both parties, accordingly, accepted that the correct construction requires:-
  208. "A reduction in risk comparable to the reduction in risk to be found in disposal methods employed in non-exceptional circumstances, one of which is rendering at a high-risk processing plant followed by disposal by landfill".
  209. The judge, despite the agreement of the parties, questioned whether that was the correct interpretation. It does not seem to me, for reasons to which I shall turn, to matter for the purposes of this case. He purported to adopt the construction for which both parties contended. In fact, when he considered the complex factual issue which required him to evaluate the evidence of a number of experts, he concluded that the burning of the carcasses and the burial of the pyre residue "eliminated all foreseeable risk of the transmission of TSE" (see paragraph 189).
  210. One can only pause to admire the clear and thorough way in which the judge evaluated that evidence. But it is, perhaps, worth mentioning that the question as to whether the method adopted eliminated all foreseeable risk of the transmission of TSE was not the same test as that which the parties agreed should be applied and which the judge said he was going to apply earlier in his judgment. It may be, and I need not decide, that the test which the judge in fact adopted is not the test provided in Annex 1, paragraph 4. It is arguable that the correct test is whether the method in fact adopted produces no greater risk of transmission than the methods sanctioned in Article 3(2) of the AWD, called "the normal disposal method". But, again, it is important to bear in mind the purpose for which these provisions are being analysed. The question is whether the boundaries of the immunity have been exceeded by the activities of DEFRA. Once the judge found as a fact that burial of the pyre ash effectively eliminated risk of transmission of TSE to humans it is impossible to suggest that the asserted breaches of the TSE Decision had anything to do with this case. Those breaches did not, as a matter of fact, affect the quality or extent of the interference with land on Hill Farm. The judge's finding of fact as to the effective elimination of risk renders any further consideration of breaches of the TSE Decision irrelevant. The activities of DEFRA on Hill Farm did not create any risk of transmission of TSE to humans. The TSE Decision can, therefore, play no further part in consideration of the legal justification for the alleged trespass.
  211. Breach of Groundwater Provisions

  212. The judge considered a number of issues relating to the Groundwater provisions. He concluded that the Groundwater Directive was irrelevant to whether the ground was suitable under section 34(4) and, in consequence, took the view that it was unnecessary for him to decide whether and to what extent any breaches had been established.
  213. The Groundwater provisions have the same relevance to the issue of trespass as the TSE Decision. In order to assess whether the activities of DEFRA have exceeded the immunity conferred by the 1981 Act it is necessary to look at the nature of the breaches alleged by the Feakins to have been committed contrary to the Groundwater Directive and the Groundwater Regulations.
  214. The Groundwater Directive's purpose is to prevent the pollution of groundwater by substances identified in list I or II in the Annex (see Article 1(1)). Pollution is defined as:-
  215. "the discharge by man, directly or indirectly, of substances or energy into groundwater, the results of which are such as to endanger human health or water supplies, harm living resources and the aquatic ecosystem or interfere with other legitimate uses of water." (Article 1(2)(d))
  216. The obligation of Member States to prevent the introduction to groundwater of list I substances in Article 3(a) and to limit the introduction into groundwater of substances in list II to avoid pollution in Article 3(b), is amplified in Articles 4 and 5:-
  217. "4.1. To comply with the obligation referred to in Article 3(a), Member States: -
    - shall prohibit all direct discharge of substances in list I,
    - shall subject to prior investigation any disposal or tipping for the purpose of disposal of these substances which might lead to indirect discharge. In the light of that investigation, Member States shall prohibit such activity or shall grant authorization provided that all the technical precautions necessary to prevent such discharge are observed,
    - shall take all appropriate measures they deem necessary to prevent any indirect discharge of substances in list I due to activities on or in the ground other than those mentioned in the second indent…."
    "5.1. To comply with the obligation referred to in Article 3(b), Member States shall make subject to prior investigation:-
    - all direct discharge of substances in list II, so as to limit such discharges,
    - the disposal or tipping for the purpose of disposal of these substances which might lead to indirect discharge.
    In the light of that investigation, Member States may grant an authorization, provided that all the technical precautions for preventing groundwater pollution by these substances are observed.
    Furthermore, Member States shall take the appropriate measures they deem necessary to limit all indirect discharge of substances in list II, due to activities on or in the ground other than those mentioned in the first paragraph."
  218. Articles 4 and 5 have been implemented by Regulations 4 and 5 of the Groundwater Regulations. Article 7 of the Directive, implemented by Regulation 7 of the Groundwater Regulations amplifies the nature of the prior investigations required by Articles 4 and 5:-
  219. "The prior investigations referred to in Articles 4 and 5 shall include examination of the hydrogeological conditions of the area concerned, the possible purifying powers of the soil and subsoil and the risk of pollution and alteration of the quality of the groundwater from the discharge and shall establish whether the discharge of substances into groundwater is a satisfactory solution from the point of view of the environment."
  220. Section 85 of the Water Resources Act 1991 creates a number of criminal offences for pollution. Section 88 read with Regulation 14(2) of the Groundwater Regulations provide a defence to that offence if authorisation has been given.
  221. The Feakins' case was that there had been no prior investigation of the nature required by the Groundwater Directive, and that DEFRA had failed to take the technical precautions necessary to prevent either the direct or indirect discharge of list I substances or groundwater pollution by list II substances. They further contended that the Environment Agency's authorisation failed, as required by the Groundwater Directive, to list the maximum permitted quantities and the technical precautions determined to be necessary in the light of the prior investigation.
  222. The very nature of the allegations I have identified demonstrates that the alleged breaches have no relevance to the extent of the immunity against an action for trespass conferred by the 1981 Act. The alleged failure by DEFRA, or the Environment Agency, were failures in the procedure which must be adopted in circumstances where there is a risk of either direct or indirect discharge of substances in list I and II. Those procedural requirements are of the utmost importance in achieving the objective identified in the first recital to the Council Directive, namely the urgent need for action to protect the groundwater of the Community from pollution. But in the absence of any evidence of pollution of the groundwater at Hill Farm, it is impossible to establish any link between the alleged failures of DEFRA and its intrusion on the land at Hill Farm. In short, those failures, if established, do not take DEFRA's activities out of the ambit of the statutory immunity. The judge's findings as to absence of evidence of pollution of the groundwater are crucial. The judge concluded that it was proved that the ash contained part I and part II substances. There was a perched aquifer at relevant locations. But he concluded:-
  223. "I would not hold that they had proved that the perched aquifer was at a sufficient height to result in a direct discharge of the substances into the groundwater."

    At paragraph 254, in relation to the Ash Pit, he concluded that risk of transmission of prions was negligible on the basis of one of the experts, Mr Comer's evidence. The judge recorded that the Feakins had adduced no direct evidence of the presence of list I and II substances in the ash leachate or in any springs connected with the perched aquifer as may exist in contact with the Ash Pit. There was no evidence that such contaminants as may have been in the Ash Pit leachate would have been likely to exist in sufficient quantities in the springs to pose any danger to human or animal health (see paragraph 255 of the judgment). Of course, as I have recalled, in order to prove trespass it is not necessary to prove damage. But in the absence of any evidence that there was any contamination or pollution of the groundwater it is impossible to say that DEFRA's activities were of a nature which took it outwith the protection afforded by the statutory authority in 1981 Act.

  224. Mr Jourdan, on behalf of the Feakins contended that the judge wrongly reversed the burden of proof. It was for DEFRA to prove that the interference with private rights in land was authorised by section 34(4). I do not read the judge's factual findings as turning on the burden of proof at all. Both sides called expert evidence. Tests did not reveal the presence of any of the alleged contaminants from the Ash Pit. It is true that it is for DEFRA to establish that its actions are the unavoidable consequence of the exercise of powers conferred by the statute (see for example Lord Wilberforce in Allen v Gulf Oil Limited qv supra 1014B and Lord Edmund Davies at 1015E). Beyond that, it is unnecessary and seems to me, unwise, for me to go. I find it difficult to envisage any case concerning statutory immunity for trespass which will turn upon the issue of where the burden of proof lies.
  225. Conclusions as to statutory scheme

  226. Before considering the application of my conclusions to the particular issues which arise in the appeal, it is convenient to state my conclusions as to the statutory scheme:-
  227. (1) The only statutory authority for any permanent interference with private interests in the land is that which is contained in section 34(4) of the 1981 Act. Neither section 34(2) nor section 35 nor any Orders made under section 35 provide any such statutory authority;
    (2) The TSE Decision and provisions relating to groundwater are relevant only to the extent that breaches of those measures affect the nature or extent of the interference with private interests in land. Only breaches of that nature will take the activities of DEFRA outwith the protection afforded by the statutory authority within section 34(4);
    (3) Such breaches as do affect the nature and extent of interference with private rights are relevant not because of the meaning to be attached to "suitable" in section 34(4). There is no warrant for reading into section 34(4) a requirement to comply with every measure which is engaged by DEFRA's activities;
    (4) There was no breach of the TSE Decision which affected the nature and extent of DEFRA's interference with the land on Hill Farm;
    (5) There was no breach of the Groundwater provisions which affected the nature and extent of such interference.

    The C and D pit

  228. The C and D pit was excavated near to the intended burial place for the ash in the pyre field. It was intended to dispose of general rubbish from the C and D operation on the farm. It was initially excavated on 6 March 2001 and extended on 21 March. The judge concluded that the contents of a building known as 'the workshop', metal fittings, a small amount of animal feed and possibly some chemicals were disposed of in that pit.
  229. DEFRA relied, before the judge, and before this court, upon the provisions of paragraph 2 of the Diseases of Animals (Seizure Order) 1993 made under section 35(1) of the 1981 Act. The judge concluded that having regard to the express provision in section 34(4), section 35(1) should not be construed as conferring what would amount to a power to requisition land. The judge said:-
  230. "To justify the permanent invasion of property rights which is the result of DEFRA's construction the legislation should provide for it clearly and unambiguously…" (105).
  231. I agree with the judge's conclusion. As I have already recorded, section 35 contains no power to make orders providing for a permanent interference with property rights. Had it been intended to make authority for burial in a way which amounted to such interference then the express words contained within section 34(4) would have been used. The point is underlined by the existence within the Act of the powers conferred in section 55. In those circumstances I would hold that DEFRA fails in its cross-appeal in relation to the C and D pit.
  232. The power to bury non-Garron animals

  233. 544 sheep were owned by Mr Watkins. They were grazing in what were referred to as the roots field. 46 calves owned by Mr Hendy were being contract reared in a shed at the farm and Mr Pugh owned 32 cattle being kept in another shed. The burial of the ash from the burnt carcasses of those animals did not take place either in the root field or, of course, in the sheds. Accordingly, the Feakins contended that DEFRA had no power to bury the burnt remains of those animals in part of Pyre field. The judge agreed and awarded user damages at paragraph 9 of his order.
  234. DEFRA appeals on the ground that the power to bury the ash from those animals is to be found in section 34(2). Alternatively it contends that the owners of those animals were in occupation of Hill Farm in the sense that they were in occupation of a field or sheds at Hill Farm.
  235. For the reasons I have already recorded, section 34(2) gives no statutory authority for the burial of ash from the carcasses of slaughtered animals in a way which permanently interferes with private property rights. The only statutory authority is that which is to be found in section 34(4).
  236. In my judgment, the only statutory authority conferred by section 34(4) is the power to bury in land in the possession of or occupied by the owners of the animal which is buried. Having regard to the system of compensation for which the statute provides such a conclusion is not surprising. The owner of the animal in occupation of the land receives compensation in respect of that slaughtered animal (see section 34(1)). Thus those owners of animals who are not in possession or occupation of the ground in which those animals are buried will receive compensation. But the person who is in possession or occupation of that land will have received no compensation whatever in respect of the animals buried in what might loosely be called his land.
  237. It was argued, on behalf of DEFRA, that to limit its powers to burial in land in the possession or occupation of the owner of the animals leads to an absurd result. There will be many farms in which land is used by animals belonging to others. It is quite impracticable, in the face of a virulent and infectious disease, to construe the Act as requiring sub-division of the land according to the ownership of the animals. Some of the animals will pass from one field to another, others will stray. To require such sub-division is illogical and undesirable. There can be no logical purpose in sub-dividing Hill Farm into separate parcels for the purpose of identifying separate multiple disposal sites.
  238. Accordingly, Hill Farm should be regarded as one unit and as a matter of ordinary language the owners of the non-Garron animals were in occupation of Hill Farm. Ground to which section 34(4) refers means anywhere on Hill Farm.
  239. Like the judge, I reject those submissions. The owners of the non-Garron animals were not in occupation of the only relevant part of the farm, namely the area where their ashes were buried in what was called the Ash Pit. I agree with the judge that had Parliament intended to confer power to bury any animals on any of the land it could have said so. Section 17(2) of the 1981 Act, as the judge pointed out, refers to every place or area declared infected as "an infected place". There was no reason why, had Parliament intended to confer a wider power, section 34(4) should not have referred to an infected place or area. It does not do so. The judge was right to conclude that there was no power to bury the burnt remains of the non-Garron animals in the Ash Pit.
  240. Cleansing and disinfection powers

  241. The Feakins contended before the judge that DEFRA had no express or implied power to cleanse or disinfect the premises since it had failed to serve a notice under Article 11 of the Foot and Mouth Disease Order 1983. The judge ruled that DEFRA had power under Article 40 to cleanse and disinfect the farm. Alternatively, in so far as it was asserted that DEFRA had committed a trespass, he suggested that the Feakins had consented.
  242. The resolution of this issue is peripheral to determination of the issues arising on the appeal. It is, so it is said, marginally relevant to the approach it is said the judge adopted to the measure of damages under paragraph 276. In that paragraph he referred to the fact that ostensibly DEFRA was in a position to insist, if it chose, that Mr Feakins be responsible for the cost of the cleansing and disinfecting operation. But he immediately qualified that comment:-
  243. "Mindful of the fact that KF might have had a public law argument that such playing of hard ball on DEFRA's part would have been judicially reviewable."
  244. Accordingly, it is only necessary to deal with this issue in passing. It would be wrong to regard this part of my judgment as any binding authority as to DEFRA's powers to conduct cleansing and disinfecting operations pursuant to the Foot and Mouth Disease Order 1983.
  245. Article 40 confers power on the Ministry to carry out cleansing and disinfecting where the owner or occupier in charge of any premises:-
  246. "fails to cleanse and disinfect those premises…as required by any of the foregoing provisions of this order or by a notice served under any such provision".

    It is noteworthy that the fullout words permit the Ministry or an inspector to carry out:-

    "such cleansing and disinfection".
  247. Part of DEFRA's argument was that there had been a failure within the meaning of Article 40 by reason of the Feakins' failure to carry out Rule 2 in Article 9 of the 1983 Order as set out on the back of the Form A notice with which he was served. He was not served with any Article 11 notice. I do not agree. It is plain that the powers conferred by Article 40 are restricted to carrying out the work identified in a notice which has been served. In the absence of any notice under Article 11 it was not open to DEFRA to rely upon Mr Feakins' failure to observe Rule 2 of Article 9.
  248. But that is not the end of the matter. There were two bases upon which DEFRA was entitled to carry out the work. Firstly, it was open to the judge to conclude, as he did, that in effect Mr Feakins had consented. The work was urgent and it would have been quite impossible for him to carry it out himself. DEFRA was prepared to undertake the work and spare him the expense. Indeed, he was paid for his assistance in the operations. The judge was correct that it would not have been open to him to assert that DEFRA committed a trespass in conducting the operation.
  249. Furthermore, it is not realistic to suggest that any coercive powers had been exercised by DEFRA at all. DEFRA had decided to undertake responsibility for cleansing and disinfecting premises at its own expense nationwide. This decision, as the judge found, was made for the purposes of co-ordinating activities and supplies and saving potentially crippling expenditure to which individual farmers would otherwise be exposed if they were forced to comply, at their own expense, with the rules under Article 9 of the 1983 Order (see the judge's judgment at paragraph 97). Mr Feakins did not even read the Form A served upon him containing the rules to be observed in an infected place. In that situation the judge was correct to conclude that there was no question of any exercise of coercive powers and that all the cleansing and disinfection was, as one would expect, performed with Mr Feakins' active co-operation.
  250. The Raised Area

  251. The farmyard muck heap was moved to make room for the lagoon which was designed to catch effluent from the cleansing and disinfection operation. It was re-located to the Pyre field where, later, muck and scalpings, removed from the buildings, were added to it. In June, 2001 it was moved to a new location between the farm buildings and the lagoon where it was spread and covered in a metre of top soil, creating a Raised Area.
  252. The Feakins contended that the construction of the Raised Area constituted a continuing trespass. The judge, having ruled that DEFRA was not entitled to rely upon section 35(1) of the 1981 Act and paragraph 2 of the 1993 Order in relation to the power to bury items in the C and D pit, took a similar view in relation to the Raised Area. I agree with the judge's view that for the reasons I have already given, there was no statutory authority for the construction of the Raised Area to be found in paragraph 2 of the Diseases of Animals (Seizure Order) 1993 made under section 35(1) of the 1981 Act. The judge also concluded that the muck and scrapings were never seized pursuant to a power contained in the 1993 Order. He took the view that they were the product of the cleansing and disinfection operation under paragraph 1(b) of Schedule 2 to the 1983 Order. Both parties agreed that it was not open to the judge to reach that conclusion. The contents buried in the Raised Area were not limited to those items to which Schedule 2, paragraph 1(b) of the Foot and Mouth Disease Order 1983 refer. They were not the :-
  253. "sweepings and all other litter, dung, or other things which have been in contact with or used about any animal…".

    The contents of the muck heap contained past scrapings from the buildings consisting of bedding and stone scalpings (see the judge's finding at paragraph 107).

  254. There remains the issue on which the judge found in favour of DEFRA. He concluded that Mr Feakins had consented to the deposit of the material and its burial in the agreed location so as to create the Raised Area (see paragraph 110). This conclusion was challenged by the Feakins. In order to resolve the issue it is necessary to recall the contentions advanced by DEFRA in support of its defence to the claim for continuing trespass in the Raised Area.
  255. DEFRA contended that that part of the farmyard muck used to construct the Raised Area had either been returned to Mr Feakins or taken back by him. Alternatively, it contended that he had expressly or impliedly consented to not receiving monetary compensation for that part of the farmyard muck used to construct the Raised Area since he wanted it back for use in constructing the Raised Area, received it back and used it for that purpose. The judge rejected that case in his findings of fact at paragraph 107 of his judgment. The judge concluded:-
  256. "I am satisfied that, while the location was proposed by KF, the context in which it was made was a belief that the burial had to take place somewhere on the farm and KF chose the site which he did in order to make the best of a bad job rather than to achieve an improvement." (see paragraph 109).

    But the judge continued:-

    "In the ordinary sense of the word KF undoubtedly consented to the deposit of the material and its burial in the agreed location so as to create the Raised Area. The question is whether his mistaken belief that DEFRA had power (which it would exercise in the absence of his consent) to insist on burial at some less (from KF's point of view) desirable part of Hill Farm means that he is now entitled to say that DEFRA has trespassed on his land by adopting his proposal. I do not think that he is so entitled. He may have made a mistake in making the suggestion which he did, but he undoubtedly made it and it was acted on by DEFRA. I would add that, even if he was mistaken to believe that DEFRA could insist on burial he would not have been wrong to have regard to the equally powerful consideration that, unless and until authority was given under Rule 1 of Article 9 of the 1983 Order or the farm ceased to be an IP, the material in question would have had to remain unburied on Hill Farm. It was therefore in his interests that the burial should take place." (paragraph 110).
  257. Both sides accepted that Mr Feakins cannot be regarded as having consented to the deposit of the material and its burial in the agreed location if he was labouring under a misapprehension as to the powers exercisable by DEFRA. But DEFRA contended that the judge was correct in concluding that he had consented irrespective of any misapprehension he may have had as to DEFRA's statutory authority.
  258. In my judgment, there was no factual basis for the judge to conclude that Mr Feakins had consented to burial of the material in question at all. True it is that he consented to the location. The question:-
  259. "Given that we are going to bury the farmyard muck and scrapings from the buildings on your land, where would you like it to be buried?"

    is very different from the question:-

    "Do you agree that we may bury the material on your land?"
  260. The judge's conclusion that Mr Feakins chose the site in order to make the best of a bad job was entirely supported by the evidence. The conclusion that he consented to the burial was not. In cross-examination it was suggested to him that re-location of the farmyard muck heap was of benefit to him. Mr Feakins denied that, saying:-
  261. "There was no mention of any benefit to me. I said if they have to bury it then they will have to bury it where they have already got all their diggings."

    He continued by denying there was any implied permission or compromise agreement; he had merely suggested the best place to put the muck.

  262. It was that evidence which led to the judge's finding of fact at paragraph 109 that Mr Feakins was making the best of a bad job. In my view the judge was not entitled to reach the conclusion that Mr Feakins consented to burial of the farmyard muck in the Raised Area. This disposal amounted to a continuing trespass for which the Feakins are entitled to user damages.
  263. I conclude for those reasons:-
  264. (1) DEFRA fails on its first ground of appeal in the counterclaim; it had no power to bury seized items in the C and D pit. The judge's conclusion at (1) of paragraph 235 was correct;

    (2) DEFRA fails in its second ground of appeal in the counterclaim; DEFRA had no power to bury the burnt remains of the non-Garron animals in the Ash Pit. The judge's conclusion at (2) of paragraph 235 was correct.

    (3) The Feakins fail on all grounds of their appeal save in relation to the third ground of appeal. DEFRA has committed a continuing trespass in respect of the construction of the Raised Area for which they are entitled to user damages.

  265. As I have said, I agree with Waller LJ's judgment as to remedy and damages. I agree with Jonathan Parker LJ's judgment.
  266. Waller LJ:

  267. I have read the judgments of my lords and I agree with them. Thus I agree that so far as the claim is concerned the appeal of the Feakins must be dismissed for the reasons given by Jonathan Parker LJ. As regards the counterclaim I agree that DEFRA fails on its two grounds of appeal; that the Feakins fail on their grounds of appeal apart from the third relating to the raised area for the reasons given by Moses LJ. In this judgment I shall deal with remedy and, in particular, user damages and consider whether the Feakins' attack on the judge's conclusions as to remedy and in particular his awards of damages should succeed and what remedy should be available to the Feakins in relation to the raised area.
  268. In this judgment it will be necessary to distinguish at times between the Feakins and I shall refer to Kevin Feakins as KF and to Georgina Hawkins as GH. I ignore the position of the company although if it was considered that might place serious difficulties in the way of either of the Feakins recovering any damages.
  269. The position with which I must deal is as follows. The Feakins have established liability for trespass in relation to the ashpit in so far as it contains ash from the non-Garron animals. They have also established liability for trespass in relation to the muck heap (the FYM) buried under the raised area. DEFRA do not accept that they should take any of that material away, and resist being ordered so to do. Indeed they say it would be unreasonable to incur the cost of taking that material away having regard to the fact that very little harm, if any, is done to the land or, putting that a different way, the diminution in value of the land by virtue of the material remaining there would be minute.
  270. The Feakins have also established liability for trespass in relation to the remainder of the FYM and the C & D pit but DEFRA have agreed and indeed been ordered by the judge to take that material away; thus the only question is what sum should the Feakins receive for the temporary trespass.
  271. It is convenient to consider first those items which DEFRA say they should not be ordered to take away, and consider whether at any stage either of the Feakins would have been entitled to an order that DEFRA remove (a) the contents or part of the contents of the ashpit or (b) any of the material buried under the raised area. I use the phrase 'at any stage' because the question is not simply relevant to the issue whether, following the trial, the Feakins should be entitled to such an order. It is also relevant, where no order at trial would be made, to the assessment of damages.
  272. The judge having held that the burying of the ash of the non-Garron animals in the ashpit was a trespass had to consider whether any order should be made for removal of any part of that ashpit. He should have also considered, as we have now held, whether any order should have been made for the removal of material under the raised area. Then if he held the Feakins were entitled to such an order, according to the argument of Mr Jourdan, the judge should then have put the Feakins to an election as to whether they wished an order or wished a declaration as to their entitlement, and have damages awarded on the basis of that entitlement.
  273. In paragraph 237 he held so far as the ashpit was concerned that it was not a case for injunctive relief saying this:-
  274. "I should add that, so far as the non-Garron animals were concerned, it was argued on behalf of the defendants in supplemental written closing submissions that the mixture, before burial, of their ash with that of the Garron animals meant that DEFRA had put it out of its power only to bury the latter, so that burial of all the ash was trespassory. I do not accept that submission. Even were I to accept it, it would not in my judgment lead to any difference in my approach to the calculation of user damages in respect of the Ash Pit for the reasons given in paragraph 276 below. I would add that, on any view, this is a case where I do not think it appropriate to grant injunctive relief requiring the removal of the contents of the Ash Pit. Given the fact that the relevant defendant can be fairly compensated in money for the continuing trespass and the disproportionate expense which such removal would occasion to DEFRA, the grant of such relief can in my judgment properly be viewed as oppressive within the principle laid down in Jaggard v Sawyer [1995] 1 AER 189 CA."
  275. The same reasoning would apply to the material under the raised area, and it is clear that if he had had to consider that aspect his conclusion would have been the same.
  276. As I have said, the question whether the court at the time of trial would order removal of the "trespassing material" or indeed whether it would ever have ordered their removal, is an important first question in considering what remedy should be available to the defendants. If the court at the time of trial would order the removal of the same or would take the view that the defendants were entitled to have the same removed and (I would add) certainly if the claimants were intent on carrying out the removal, then it either makes that order or it might, in lieu of that injunctive order, award damages, which on that basis would equal the actual costs of removal. It is not clear that if the court came to the conclusion that the Feakins were entitled to an order that the Feakins would have the right to elect to have damages in lieu assessed on the basis of the cost of removal, if it were clear they had no intention of carrying out the work. However that alternative I will not explore further, having regard to my conclusion as to whether they were entitled to an order at all. All one can note at this stage is that it seems that the Feakins are not so interested in getting the material removed as they are in obtaining monetary compensation. That might be some indication that they do not feel that the presence of the material, buried as it is, has any major effect on them or indeed the property or its value.
  277. If prima facie they were entitled to an order but it would be unreasonable, having regard to the injury done to the defendants, to order removal or thus give the defendants the costs of removal, that forms a starting point for consideration as to the correct assessment of damages (if any). If the case is one in which an injunction might, as in one case it was put "however unwisely", have been granted to prevent future wrongful conduct, the court has the jurisdiction to award damages not only for the past wrongdoing but for the future. So far as the future is concerned under the Lord Cairns' Act principles the court assesses a reasonable sum to compensate for that future wrongful conduct. It is also relevant to the question of damages whether, if a claimant had moved earlier, an injunction or order would ever have been made.
  278. In Jaggard v Sawyer [1995] 1 WLR 269 the Court of Appeal reviewed the authorities concerned with awarding damages in lieu of an injunction, and drew a distinction between damages at common law awarded for past infringements or wrongs, and damages in lieu of an injunction which are concerned to compensate for the future damage that an injunction would otherwise have prevented. Both Sir Thomas Bingham, MR, and Millett LJ, with whose judgments Kennnedy LJ agreed, cited and applied the "working rule" explained by AL Smith LJ in Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 where he said:-
  279. "Many judges have stated, and I emphatically agree with them, that a person by committing a wrongful act (whether it be a public company for public purposes or a private individual) is not thereby entitled to ask the court to sanction his doing so by purchasing his neighbour's rights, by assessing damages in that behalf, leaving his neighbour with the nuisance, or his lights dimmed, as the case may be. In such cases the well known rule is not to accede to the application, but to grant the injunction sought, for the plaintiff's legal right has been invaded, and he is prima facie entitled to an injunction. There are, however, cases in which this rule may be relaxed, and in which the damages may be awarded in substitution for an injunction as authorized by this section. In any instance in which a case for an injunction has been made out, if the plaintiff by his acts or laches has disentitled himself to an injunction the court may award damages in its place. So again, whether the case be for a mandatory injunction or to restrain a continuing nuisance, the appropriate remedy may be damages in lieu of an injunction, assuming a case for an injunction to be made out. In my opinion, it may be stated as a good working rule that – (1) If the injury to the plaintiff's legal rights is small, (2) And is one which is capable of being estimated in money, (3) And is one which can be adequately compensated by a small money payment, (4) And the case is one in which it would be oppressive to the defendant to grant an injunction: - then damages in substitution for an injunction may be given.
    There may also be cases in which, though the four above-mentioned requirements exist, the defendant by his conduct, as, for instance, hurrying up his buildings so as if possible to avoid an injunction, or otherwise acting with reckless disregard to the plaintiff's rights, has disentitled himself from asking that damages may be assessed in substitution for an injunction. It is impossible to lay down any rule as to what, under the differing circumstances of each case, constitutes either a small injury, or one that can be estimated in money, or what is a small money payment, or an adequate compensation, or what would be oppressive to the defendant. This must be left to the good sense of the tribunal which deals with each case as it comes up for adjudication. For instance, an injury to the plaintiff's legal right to light to a window in a cottage represented by £15 might well be held to be not small but considerable; whereas a similar injury to a warehouse or other large building represented by ten times that amount might be held to be inconsiderable. Each case must be decided upon its own facts; but to escape the rule it must be brought within the exception. In the present case it appears to me that the injury to the plaintiff is certainly not small; nor is it in my judgment capable of being estimated in money, or of being adequately compensated by a small money payment."
  280. Both judgments supported the approach of Brightman J in Wrotham Park Estate Co. Ltd. v Parkside Homes Ltd [1974] 1 WLR 798, both as to his reasoning for refusing the grant of an injunction to force the demolition of houses built in breach of covenant and as to his basis for assessing damages by reference to the bargain that would have been struck for a release from the covenant including awarding only a conservative sum because of the failure to warn the developer that no consent would be forthcoming. Both emphasised that in their view Brightman J was concerned with assessing compensation, disagreeing with Steyn LJ in Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 who had suggested that Brightman J's approach was restitutionary.
  281. They both furthermore disapproved the judgment of Scott J in Anchor Brewhouse Developments Limited v Berkley House (Docklands Developments) Ltd (1987) 38 BLR 87 and his views as to why an injunction should be granted, having regard to the fact that (in his view) damages could not be awarded so as to remove the plaintiff's right to bring actions for trespass in the future if the trespass continued. Scott J, as he then was, had said:-
  282. "I find some difficulty with Bracewell v Appleby mainly because, as it seems to me, the judge regarded the damages he was awarding as a once and for all payment. But it was, as I see it, not within the power of the judge to produce that result. Whether or not an injunction were granted, the defendant's use of the right of way would, after the judgment as well as before, represent trespass unless and until he were granted a right of way. The judge could not by an award of damages put the defendant in the position of a person entitled to an easement of way. So assuming, which is not clear from the case, that there had not been some agreement by the plaintiffs to treat the damages as entitling the defendant to a right of way, the defendant's subsequent use of the private road would have constituted a continuing trespass. A succession of further actions for damages could have been brought. In those circumstances it seems to me very difficult to justify the withholding of the injunction. By withholding the injunction the court was allowing a legal wrong to continue unabated. Nonetheless Mr Moss is entitled to refer to the case as one in which an injunction was refused."
  283. In relation to the above passage Sir Thomas Bingham, MR, said:-
  284. "I, for my part, find some difficulty in these observations of Scott J. It is of course true that the court cannot, on an application of this kind, revoke a covenant or grant the defendant a right of way. But if the court, in exercise of its jurisdiction derived from Lord Cairns's Act, instead of granting the plaintiff an injunction to restrain the defendant's apprehended future unlawful conduct, awards the plaintiff damages to compensate him for that conduct, it seems to me that a succession of future actions based on that conduct would, if brought, be dismissed or struck out, since a plaintiff could not complain of that for which he had already been compensated."
  285. In the judgment of Millett LJ he agreed that Scott J's approach could not be supported and that damages could be awarded "once and for all" (see page 286A). Millett LJ further emphasised how in respect of damages or compensation under Lord Cairns' Act, it is a factor that an injunction might otherwise be granted. If a plaintiff has lost the right to an injunction then Millett LJ was of the view that damages could only be awarded at common law. He contemplated that for example "laches" might have lost the plaintiff the right to an injunction and it would follow that damages could not be awarded under Lord Cairns' Act (see 291G-H). That I should say does not seem to have been the view of A.L Smith LJ in the passage which I have quoted, and I am not sure, with the greatest respect, that I accept the analysis completely. What however is clear is that the bargaining position of claimants and in particular the strength of their argument that the court would ever have ordered the removal of trespassing material is important in assessing the appropriate compensation. Also relevant may be the fact that by not acting quickly to obtain an order or injunction, the claimant no longer has a strong bargaining position.
  286. It seems to me that the working rule certainly does not contemplate that in all circumstances where the court could have awarded an injunction, damages will be assessed on the basis that the claimant would otherwise be entitled to an injunction or have been entitled to an injunction i.e. on the basis that the claimant is or was in a position to hold the defendant to ransom. It includes circumstances where prior to Lord Cairns' Act the court, although it may have had the jurisdiction to do so, would not in fact have granted an injunction because the damage was small or would not grant an order now because if a claimant had moved earlier, an order might have been made which did not involve a defendant in substantial expense, and it is more equitable to mark whatever wrong has been committed with a sum in damages – and as the working rule foresees – a small sum at that.
  287. Mr Jourdan referred us to Harrow London Borough Council v Donohue [1995] 1 EGLR 257. That case was concerned with a garage, half of which had been built on the plaintiff's land. The judge had awarded damages in lieu of a mandatory injunction. The Court of Appeal in a judgment delivered by Waite LJ, with which Hirst LJ and Sir Stephen Brown agreed, held that where a landowner had been "totally dispossessed by the defendant's "encroaching building" the plaintiff was entitled "as of right to a mandatory order" although it suggested that the court, depending on the circumstances, might "well retain a limited discretion".
  288. Mr Jourdan sought to persuade us that on the basis of the above authority the judge had no discretion in the matter, and was bound to order removal of the ash in the ashpit or (if we reversed the judge) the material under the raised area. I cannot accept that submission. Whether or not the Harrow case was correct on its own facts, it does not seem to me to be a case where there was a full review of the authorities as there was later in Sawyer. It seems to me that to suggest there was little if any discretion is out of line with Sawyer. In any event this case is not about an encroachment of a building totally dispossessing the defendants. It is about material buried on the land over which land the defendants still otherwise have all their rights.
  289. It is perhaps also relevant to quote paragraph 894 of Halsbury's Laws Vol 24:-
  290. "Trespass by bodies taking land. Injunctions will be granted to restrain trespass by public companies or bodies having statutory powers compulsorily to take and enter land. As a general rule an injunction will not be refused where it is clearly shown that a public company is exceeding its powers, but if the company, acting in good faith, has made a mistake as to the land it has valued and taken and the question between the company and the landowner is merely one of value, or, it seems, if the company has taken land in excess of its powers but the quantity and value of the land are extremely small, the court may decline to interfere.
    A private person cannot obtain an injunction on the mere ground of a deviation by the company on another's land in the construction of its undertaking, which is not injurious to him."
  291. How then should the Feakins case in relation to the ashpit and the raised area be approached? Mr Jourdan suggested that the Court should be concerned with the position of GH who, when she obtained the land, found that there was the non-Garron ash buried with the other ash or material under the raised area which constituted a trespass. His approach was then to suggest either that she should have an injunction now ordering removal or that since she would have been entitled to an order forcing DEFRA to remove the trespassing material, she would have had a bargaining position by reference to what it would have cost DEFRA to remove the same.
  292. If the approach is from GH's perspective I do not accept that she should be entitled to any injunction now or the strength of her bargaining position. First she bought the land as it was with what was buried; I doubt whether she had any claim in trespass at all. Second, even if she did have some claim in trespass, she was either in a situation where she could never have obtained an injunction at all, and therefore Lord Cairns' Act would not provide any remedy in damages for future trespass (I accept unlikely), or she would clearly be within the working rule and a "small sum in damages" would compensate her. Damages should not in my view be assessed on the basis of her having a bargaining position under which she could say that DEFRA were bound to remove the material and should thus pay her some proportion of what they saved.
  293. If the approach is from KF's perspective, he too would fall within the working rule. If his position is considered prior to the burning of any carcases, the judge is clearly right that he would have been happy to accept a small sum to allow the non-Garron animals to be burned in the same place as the Garron animals, and to allow for the burial of all ash together. I do not accept the criticism made by Mr Jourdan in his skeleton argument of the judge taking this as the appropriate moment to place any negotiation, nor of his taking into account the realities of the situation in which the Feakins and DEFRA would have been.
  294. He would furthermore, on the judge's findings as to his attitude to the raised area, have been content to receive a small sum to allow burial of material under the raised area.
  295. So far as the non-Garron animals are concerned I should expand a little on what I have said. If KF's position should have been considered only once the burning had taken place, the position would have been that it would always have been oppressive to order DEFRA to remove the non-Garron ash, and a small sum in compensation would always have been appropriate. That sum would not be assessed on the basis of some bargaining position which on this hypothesis KF would not have had.
  296. So far as the non-Garron animals are concerned, to assess the figure by reference to KF's position before the burning took place (as the judge did) actually put KF in as good a bargaining position as he was ever likely to be. At that stage it might not have been so oppressive to order DEFRA to remove the non-Garron carcases, and thus KF's bargaining position would have been by reference to the cost of so doing – i.e. £6500. The judge assessed the appropriate figure as somewhere between those costs and the sum that DEFRA would have paid for the area of land as agricultural land - £2500. That seems to me to be a legitimate basis on which it was right in calculating compensation not to award the full cost to DEFRA. It would also have been legitimate to recognise that in fact, KF did not protest specifically in relation to the non-Garron carcases, and was likely to be co-operative as the judge pointed out.
  297. So far as the raised area is concerned, again, I should expand a little. We have held that KF cannot be taken to have consented to the burying and construction of the raised area. But he took no steps to obtain an order of the court to stop the same, at a time when it might have been less expensive for DEFRA to take some different action. Indeed he co-operated with the construction of the raised area. It would be oppressive to make any order for removal of trespassing material now and that would always have been so once construction of the raised area started. The working rule applies and the assessment of damages should not take place on the basis that the Feakins had a strong bargaining position. The truth is that the Feakins were, and always in reality would have been, co-operative, even if they had appreciated that DEFRA did not have the statutory power to compel use of the raised area. The Feakins would, in the circumstances that existed at the time of the construction of the raised area, have been prepared to accept a small sum and DEFRA would have been prepared to pay that sum in relation to the construction of the raised area. I would assess the figure that would have been negotiated between DEFRA and the Feakins as £1,000 to cover both past and future losses.
  298. I now turn to those items where the Feakins have established a temporary trespass. So far as the C & D pit is concerned the judge held that the Feakins claim to £2,133 calculated at 4% of what it would have cost DEFRA to remove the same, had no rational basis because he could not envisage a situation in which DEFRA would have been confronted with the prospect of removing 90 tons at a costs of £211 per ton (see paragraph 278). He therefore awarded a nominal sum of £250 per annum.
  299. The Feakins' claim is based on what they assert would be the saving to DEFRA of not having to expend money earlier on the removal. But although it may be relevant to look at profits or losses that a trespasser has made in considering the likely bargain that would have been struck that is not the only matter to take into account. Furthermore it would be necessary in a case such as this to establish the date at which the bargain would have been struck, and how the parties would have reacted. It would not be right for example to look at this matter purely from GH's point of view. This was clearly a case for the award of a small sum, and I can see no basis for disagreeing with the judge's assessment that a sum of £250 per year for this item was appropriate.
  300. So far as the FYM heap is concerned the judge said this at paragraph 279:-
  301. "The imagined negotiation over the FYM would in some respects have had a different quality. It is important not to forget what we are talking of here: the farm muck heap. DEFRA, having now conceded that it "seized" the muck heap, has necessarily had also to recognise an obligation to pay its fair value. Had that in fact been recognised at the time at which it is now conceded that the seizure took place, the owner of the FYM (whoever that was, but presumably the company as tenant) would have been in the position of knowing that it was going to be paid compensation for it and that DEFRA was in due course going to have to remove it at its own expense. The argument that "if you leave it here, for the time being, you are saving yourself the cost of taking it away now, so in the meantime pay me interest on that cost" would have had some logic to it. On the other hand, unless and until some such argument actually was put, it would be a rather surprising basis on which to expect to charge for the continued presence on your land of a muck heap. The reality of the situation is that the continued presence of the muck heap on the land was not the result of any defiant or deliberate trespass by DEFRA, but the result of the fact that the parties were in bona fide dispute as to whether it had been "seized" and, therefore, whether DEFRA was liable to pay compensation for it. In my judgment, the damage suffered is damage suffered as a result of the delay by DEFRA in recognising the latter obligation, and is properly compensated for by awarding a suitably generous rate of interest on the amount of that compensation."
  302. Once again on this item the Feakins suggest that their approach of 4% of what it would have cost to remove the heap is the correct rate that being representative of the saving to DEFRA. They submit that the judge was wrong simply to award interest at a generous rate.
  303. My first thought was to ask myself whether the judge's assessment takes full account of the fact that the Feakins should be compensated both for the delay in payment and the fact that in the meanwhile the muck heap was on their land. The negotiation that must be imagined would be on the basis that the FYM was DEFRA's and it was going to be removed. But it is difficult to place the time of this negotiation and to construct what would have been likely to be agreed. However, as the judge said, this is the farm muck heap for which the Feakins were bargaining to be paid compensation. The question then, in real terms, is what should the Feakins be paid for the FYM including the fact that it has been on their land pending negotiation? A legitimate approach to damages would be to increase the compensation figure to reflect the fact that the FYM has been on the land. My view is that it cannot be said that a generous award of interest does not do that, and I would accordingly not interfere with the judge's decision on this point.
  304. My conclusion is thus:-
  305. i) that the figure awarded by the judge for the non-Garron ash was one we should not disturb;

    ii) that a sum of £1000 should be awarded in respect of the raised area;

    iii) that the figure awarded for the C & D temporary trespass should not be disturbed; and

    iv) that the judge's ruling that a generous sum in interest on the compensation for the FYM was appropriate in relation to that item.


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