Sheep farm — Pastureland deemed site of special scientific interest — Appellant farmers failing to reach agreement on long-term compensation — Matter referred to arbitration — Appellants contending that arbitrator erred in law — Appeal allowed — Matter remitted to arbitrator for further consideration
An action was brought by Mr and Mrs T against an arbitration award made pursuant to section 50(3) of the Wildlife and Countryside Act 1981. The appellants were sheepfarmers at Paviland Manor Farm, Rhossili, comprising of 471 inland acres, as well as grazing rights over a further 117 acres of cliff land. The respondent authority was responsible for conservation and protection of wildlife and was empowered under section 28 to declare certain areas to be of special scientific interest and, by a management agreement, to ban or limit operations which appeared likely to damage the countryside. Notice was given to Mr and Mrs T that pasturing their sheep had to be drastically limited. They radically altered their farming policy. Under the Act, the parties could enter into such an agreement by negotiation and if no long-term agreement was negotiated, the authority could make a formal offer (section 50(1)), which had to specify the terms for compensation and payments to be determined in accordance with ministerial guidelines (see Circular 4/83). If there was no agreement, as in the present case, the matter would then be referred to arbitration.
Mr and Mrs T brought an appeal on two grounds: (1) that the arbitrator, as a matter of law, in determining the measure of net profits which they had foregone, applied the wrong formula. Para 16 of the guidelines provided that payment of “annual sums for an agreement over a 20 year period … the payments should reflect net profits foregone because of the agreement”. He calculated the loss by reference to the difference between what they could have earned, had they continued with the proposed sheep farming activity, compared with what they could earn by switching to a farming policy, which would maximise profits without taking account of any considerations other than those which were purely financial; (2) he erred in rejecting various claims for lost capital expenditure.
Held The appeal was allowed; matter remitted to arbitrator for reconsideration
1. It was clear that in order to assess the net profits foregone, the arbitrator had estimated the profits which would have been earned if they had been allowed to continue as before and then the maximum income the farm could produce. That was wrong in law. Para 16 made it clear that the question of loss was to be looked at as a matter of causation. Farming activities could vary in profitability from year to year so that, in determining the proper meaning of para 16, it was permissible to look at the entire compensation structure provided.
2. Moreover, it was clear that individual assessment would be appropriate in most cases so that the yardstick was not purely commercial.
3. For the purposes of the present remission, it was to be stressed that the matter was one of causation — the assessment of the loss which had naturally flowed as a result of the restrictions.
4. With regard to the other claims and in particular the appellants’ claim for residual capital loss, it was not open to query whether an arbitrator got his facts right, but it was surely open to a party to contend that he had failed to perform his task.
Colin Brodie QC and Keith Lindblom (instructed by John Owen & Co) appeared for applicants, Mr and Mrs T; Keith Bush (instructed by the Treasury Solicitor) appeared for the respondent.