Summary of legal implications

  1. Statutory compensation for losses caused by Foot and Mouth disease is only paid in limited circumstances to those directly affected.
  2. At the last outbreak it was conservatively estimated that farmers lost £510 million, which was not subject to statutory compensation, which appeared mainly to have been caused by the Movement Ban.
  3. This time, if there is proven to be a manmade originator of the outbreak there could be a strong claim against that originator for losses caused to the farming industry by the Movement Ban.
  4. The NFU, CLA and TFA are already considering the legal implications of this.

Background

The Government Orders made on 3, 4 and 5 August 2007 have not only imposed strict protection and surveillance zones around the infected sites in Surrey but have also imposed a total ban on the movement of livestock throughout England. Similar Orders have been made for Wales and Scotland. The EU Commission has also imposed its own complementary restrictions today.

The current outbreak appears to be fundamentally different from the widespread contamination of 2001 as it seems to be highly localised. Despite the apparently localised contamination, on the advice of the Chief Veterinary Officer (and following the recommendation of the Royal Society's report on Infectious Diseases in Livestock dated July 2002) an immediate nationwide Movement Ban was (predictably) imposed pursuant to powers under Schedule 7 of the Foot-and-Mouth Disease (England) Order 2006. This zone is termed the Restricted Zone and is separate from the Protection and Surveillance zones around the immediate area of infection.

No livestock may be moved within the Restricted zone, which in effect is the entire United Kingdom, without a licence. One such general licence has been granted - which primarily allows the movement of cows for the purposes of milking. This Movement Ban is causing untold damage and loss to many farmers (and other businesses within the Protection and Surveillance zones) who are still recovering from the 2001 outbreak.

Whilst matters are still developing at high speed there are suggestions that the outbreak may have been caused from the escape of a virus from a laboratory in Pirbright. If this is the case, and that the escape has been caused by the negligence of the laboratory, those affected by the Movement Ban, (and possibly those directly affected within the other zones) may have a claim in compensation against the laboratory.

The possibility of such a claim is important as under the statutory compensation scheme set up under the Animal Health Act 1981 (as amended) and its associated regulations, statutory compensation is paid only in the three following broad circumstances:

  1. Where livestock has been slaughtered;
  2. Where livestock has been vaccinated; and
  3. Where property has been seized.

In other words statutory compensation is only available to those who are directly affected by culling or the seizure of property. Compensation for livestock which has been vaccinated was introduced after the 2001 outbreak. However, there is no statutory compensation for those who are affected by the Movement Ban or whose businesses suffer directly within the protected zones.

The Foot and Mouth Disease 2001: Lessons to be Learned enquiry identified (probably conservatively) that agricultural producers lost in the region of £510 million. These losses included:

  1. Loss of revenue caused by the changing market patterns;
  2. Export losses;
  3. Extra costs and deterioration in quality associated with holding animals on a farm beyond the optimum marketing dates; and
  4. Consequential losses associated with the loss of production whilst farms were prevented from re-stocking.

It appears that no compensation was paid for these losses although some £155 million Agrimoney aid was paid. These losses are in addition to the losses sustained by the Food Industry - markets and abattoirs - and the massive losses sustained by the Tourism industry.

In very practical terms farm losses were sustained when individuals who would have taken livestock to market could not do so and had to pay additional fee costs, livestock housing costs, diminution in killing, out value of animals ready for market, veterinary fees and possibly additional labour and fuel costs.

These losses may by claimable, if in this instance if it can be established that the laboratory was negligent in allowing the virus to escape and if it can be established that such losses were foreseeable to the person causing the loss. On a preliminary view it would appear that such damage was foreseeable as it was well known that in the event of a further Foot and Mouth outbreak an immediate nationwide Movement Ban would be imposed. This was a recommendation of the Royal Society report relating to Infectious Diseases in Livestock published in 2002.

In order to prepare for a potential claim farmers, and other businesses affected, should seek to keep all receipts for expenses that they would not have incurred but for the Movement Ban, for example additional feed. To do this they should keep detailed records, invoices and letters and other communications, note down telephone calls and other steps that were necessary in order to deal with livestock whilst the Movement Ban is in place. In other words it is important to note down exactly what has been spent and what has been used. Market prices for livestock should also be noted.

The facts still have to be fully investigated, but once those facts have been clarified, legal advice can be given, but claims can only be brought if there is evidence available to prove losses. There will be no quick fix to claim or even be been paid compensation but steps can be taken to place farmers in the best possible position should such a claim be made.

Bircham Dyson Bell is currently monitoring the position with the NFU, CLA, and TFA and is prepared to continue to advise those affected how best to proceed with this matter.