B e f o r e :
THE HON MR JUSTICE TUGENDHAT ____________________
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Mr Richard Lissack QC, Mr Tim Lord QC, Maya Lester (instructed by Thring Townsend Lee & Pembertons) for the Claimant Michael Beloff QC , Mr Charles Pugh and Mr Ben Cooper (instructed by Manches) for the First Defendant Mr Jonathan Sumption QC, and Mr Tom Adam QC (instructed by Covington & Burling LLP) for the Second Defendant Mr Nigel Wilkinson QC and Mr David Barr (instructed by DEFRA) for the Third Defendant Hearing dates: 23-24-25 February 2009 ____________________
HTML VERSION OF JUDGMENT ____________________
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Mr Justice Tugendhat :
INTRODUCTION
Foot and mouth disease ("FMD") is one of the most contagious diseases affecting livestock. As everybody knows, when an outbreak occurs, the consequences are devastating. Animal movements are one of the key routes for transmission of the disease, so stopping all livestock movements as quickly as possible is critical to the containment of any outbreak of FMD. An outbreak can destroy food supplies and farmer's livelihoods almost overnight because of the wide number of cloven-hoofed animals that are affected, the most commonly affected being cattle, pigs and sheep. FMD is listed among the International Organisation of Epizootics List A diseases which have particularly serious socio-economic or public health consequences and are of major importance in international trade of animals and animal products. In the event of an outbreak, all or any of the livestock industry in Great Britain with susceptible animals are affected, through the disease itself and through national movement restrictions.
In August and September 2007 there was an outbreak of FMD in two phases. It was first identified at a farm near Godalming, Surrey, 4.6 kms South West of the facility at Pirbright. That facility was formerly occupied by the Defendants in the well known case brought by a firm of auctioneers: Weller v Foot and Mouth Disease Research Institute [1966] 1 QB 569. In that case Widgery J (as he then was) said at p577C-D:
If any claims for compensation were brought by any of the farmers in either of those categories (those whose beasts were slaughtered, and those prohibited from moving their cattle), then there is no record of that fact in the law report. But both categories of farmers issued proceedings in the present case.
THE CLAIM
This claim was brought by 14 livestock farmers against the two operators of the facilities at Pirbright, the First Defendant ("IAH"), Second Defendant ("Merial") and against the Third Defendant named as the Secretary of State for Environment, Food and Rural Affairs ("DEFRA"). The claim is for damages for the losses they allege that they have suffered as a result of the tortious act which they allege the Defendants committed, and which caused the leak of live FMD virus ("FMDV") from the facilities. The claim is founded on the three torts of negligence, private nuisance, and under the rule in Rylands v. Fletcher .
The Claim Form was issued on 15 October 2008 and served with Particulars of Claim of the same date. On 12 and 20 November 2008 and 5 December 2008 the Defendants issued Application notices. All three Defendants applied to strike out the claims pursuant to CPR Part 3.4(2)(a), on the grounds that the claims disclosed no good cause of action. IAH and Merial applied in the alternative for summary judgment pursuant to CPR Part 24.2 on the ground that the claimants have no real prospect of establishing any liability of the kind that they are alleged to have sustained. These Applications of the Defendants came before me.
Before this hearing the claims of the First to Seventh Claimants were the subject of a settlement made between them, IAH and Merial, with the result that they no longer pursue claims against any of the Defendants. The First to Seventh Claimants are all farmers whose livestock was culled, either because the animals were infected or because they were suspected of being infected. It follows that I am concerned now only with the claims of the Eighth to Fourteenth Claimants (and that D Pride and Partners will have given their name to a case to which they are no longer parties). None of the livestock of the Eighth to Fourteenth Claimants was culled. From this point onwards the words "Claimants" will be used to refer to Eighth to Fourteenth Claimants, except where the context shows otherwise.
THE APPROACH TO BE ADOPTED BY THE COURT
The proper approach of the court to these applications can conveniently be taken from the speech of Lord Hoffmann in Sutradhar v Natural Environment Research Council [2006] UKHL 33 ; [2006] 4 All ER 490 :
Accordingly, I shall first set out the facts as alleged in the Particulars of Claim, together with some background matters of which I have been informed by counsel. At the close of the submissions for the Claimants I was concerned to know whether it is appropriate for me to decide at this stage the issues raised before me, or whether there should be a trial of those issues. I asked Mr Lord (transcript p271-272) if there was anything on the topics upon which he had made submissions to me that might be affected in a manner favourable to the Claimants if there were a trial of the facts, following disclosure in the usual way. At that point he replied that he could see no additional facts that the Claimants need, assuming all the facts pleaded to be proved. But he added that if there were a trial the submissions on the points of law would be conducted in a more thoroughgoing way. Having heard the submissions for the Defendants in reply, Mr Lord had second thoughts. He then considered that at a trial there would be further evidence before the court on the question whether the loss of condition of animals is recognisable in law as physical damage (transcript p413-414). He also submitted that further evidence on the knowledge and culpability of DEFRA would inform the scope of the duty of care. It has not been suggested, that there is any other compelling reason why the issues in this case should be disposed of at a trial, if I find that the Claimants have no real prospect of succeeding on the claim.
The written argument for the Claimants covers 129 pages, of which 35 became redundant in the light of concessions made by the Defendants after the settlement made with the First to Seventh Claimants. That leaves 94 pages on the issues raised before me. The citation of authorities is comprehensive. I can see nothing in the suggestion that at a trial the points raised before me would be addressed in a more thoroughgoing way. I shall return to the other points at a later stage in this judgment.
No Defences have yet been served, and no evidence has been filed. Although I must assume for the purposes of these applications that all the pleaded allegations are true, this does not mean that the Defendants accept that they are all true. If the matter goes forward to trial, the Defendants have indicated that there are important matters which will be in dispute. One purpose of the Defendants in reminding me of the factual issues which are in dispute (but which I do not set out in this judgment) is to make the point that if this action proceeds to trial, it will be time consuming and expensive. It is the duty of the court to consider at this stage whether the Claimants are claiming any (or any significant) loss which is recoverable in law, and if it is found that they are not, then it is in the interests of all parties for that to be determined before such time and expense is incurred.
The issues that I have to decide are essentially issues of law. I summarise the factual allegations in the Particulars of Claim as if they were established facts. And any further reference to a fact in this judgment is to be understood as an alleged fact, which may or may not be proved, if the matter proceeds to a trial.
The Defendants each made submissions through their leading counsel, but each adopted the submissions of the other two, and so the submissions can all be attributed to the Defendants collectively, except where the context shows otherwise.
THE FACTS TO BE ASSUMED
All of the Claimants are livestock farmers who farm land in various parts of England and Wales. The Eighth Claimant farms about fifty acres as a tenant in Pirbright, together with land he owns in Kent and elsewhere, and land which he rents in Surrey. The Ninth, Tenth and Eleventh Claimants also farm land in Surrey. The Twelfth and the Thirteenth Claimants farm land in Yorkshire and Wales respectively. The Fourteenth Claimant farms land in Cumbria. None of their livestock was actually infected with FMD, nor was it suspected of being infected. This reflects the success of the measures put in place to prevent the spread of the infection.
By way of background, I have been told that compensation was paid to owners of livestock culled, or other items or materials seized, pursuant to the Animal Health Act 1981 s.31 Sch 3 para 3(2). That legislation empowers DEFRA to cause the slaughter of animals either affected, or suspected of being affected, with FMD. Compensation for animals slaughtered is the value of the animal immediately before it became affected, and in every other case it is the value of the animal immediately before it was slaughtered.
Compensation is not paid for consequential losses. The Claimants were not eligible for these payments. On 8 th October 2007 the government put in place a support package worth £12.5 million for farmers in England affected by movement restrictions put in place to control the disease. The Welsh Assembly Government also introduced a light lamb disposal scheme for which a fixed price was paid for lambs voluntarily sent for slaughter and disposal.
In order to farm their land, all the Claimants rely on being able freely to move their livestock on and off their farms, between their farms, and from their farms to livestock markets, to abattoirs and to places for export. The losses they claim are ones which arose in consequences of their being unable to move their livestock freely for the period during which measures were in force to prevent the spread of the disease.
IAH is a publicly funded research company limited by guarantee and with charitable status. IAH undertakes research on animal diseases and provides diagnostic services for the government and for international agencies, from its laboratories at Pirbright and at another facility in Berkshire, with which I am not concerned. IAH states that it "exists to advance science and diagnosis that underpins the health of farm animals and, as a consequence the prosperity of farmers and allied rural businesses".
The largest single source of IAH's funding is DEFRA, which enters into diagnostic and research contracts with it. IAH leases its facility at Pirbright, and receives grants, from the Biotechnology and Biological Sciences Research Council ("BBSRC"). This is a non departmental public body which owns the site. IAH subleases part of the site to Merial. The defendant in Weller was a predecessor body to BBSRC. Work on the foot and mouth disease virus has been undertaken at the Pirbright site since around 1925.
Merial is part of a joint venture between two well known corporations, Merck & Co and Sanofi-Aventis. Merial operates a production plant at Pirbright, where it manufactures vaccines for foot and mouth disease and another disease, Bluetongue.
DEFRA licences and inspects laboratories working with specified animal pathogens, including FMDV. It licensed both IAH and Merial to work with that virus.
There is an elaborate legal and regulatory framework applicable to foot and mouth disease. One provision prohibits farmers from routinely vaccinating their animals against the disease. This is the Foot and Mouth Disease (Control of Vaccination) (England) Regulations 2006 made following the decision of the Council of the European Communities in 1990 to adopt a uniform slaughter and stamping out policy ahead of the completion of the internal market on 1 January 1993 (Directive 90/423/EEC). Measures to control the disease are laid down in Council Directive 2003\85\EEC of 29 September 2003 ("the Directive"). The Directive has been implemented by the Foot and Mouth Disease (England) Order 2006 SI 2006 No 182 ("the 2006 Order") and by a separate Order in Wales.
Once infection is suspected, premises (which include land) are declared to be "suspect premises". DEFRA declares a "temporary control zone" around the suspect premises of such size as is considered fit to prevent the spread of the disease. Animals susceptible to the disease (which include cattle, sheep and swine, and many other more exotic beasts) may not be moved in or out of that zone except in limited circumstances. Additional requirements may also be imposed restricting the movement of animal products, vehicles, and non-susceptible animals. If an infection is confirmed, the premises are declared to be "infected premises". A number of further measures are then put in place. There must be declared a "protection zone" and a "surveillance zone" (at least 3 km and 10km respectively in radius centred on the infected premises). Controls apply to the movement of susceptible animals into or out of these zones. But they also apply to a much wider section of the community than livestock farmers. There are restrictions on the holding of fairs and markets, on breeding and slaughter, on the transport and sale of fodder, milk and milk products. Similar but less strict controls apply in the surveillance zone. See the 2006 Order Arts 31 and 36. There may also be declared a wider "restricted zone" in which less strict controls are imposed pursuant to the 2006 Order arts.38-9 and Sch 7. Measures applicable in respect of a restricted zone include the requirement of a licence to move susceptible animals, and provisions relating to the transport, slaughter of animals. Restrictions imposed under Sch 7 also directly affect people other than livestock farmers. They may include restrictions of gatherings of animals and people (including restrictions on hunting and stalking), on the shearing and dipping of sheep, and on the management of slaughterhouses.
There are also a number of bio-security standards imposed by law. Some of these apply to effluent treatment systems.
Licensing is provided for under the Specified Animal Pathogens Order 1998 SI 1998 No 463 ("SAPO"), which prohibits any person from possessing FMDV without a licence. Such licenses stipulate the way in which the pathogen must be handled to ensure safe containment and disposal. Licenses are issued subject to inspections made on behalf of DEFRA. IAH and Merial are the only facilities in the United Kingdom licensed to work with the foot and mouth disease virus ("FMDV").
Between 1922 and 1967 there were only two years in which Great Britain was free of FMD. In four years there were severe epidemics: 1922, 1924, 1954 and 1968. In 1960 an outbreak occurred near the Pirbright facility which gave rise to the case of Weller.
From 2 to 9 August 2007 in the first phase of the outbreak various measures were taken pursuant to the legal regime referred to above. These included the establishment of control zones around premises near Pirbright, the ban of exports, and the slaughter of cattle, sheep, goats and pigs. These measures directly affected parts of the land of some of the Claimants. What affected all the Claimants were declarations on 3 August 2007 of a restricted zone across the whole of Great Britain by DEFRA, and corresponding authorities in Wales and Scotland. This was pursuant to the 2006 Order arts.38-9 and Sch 7.
Between 9 August and 7 September restrictions were lifted. But on 11 September 2007 a further infection was suspected at a farm in Surrey. This was the second phase of the outbreak. Infection was confirmed at a total of eight premises (none of them concerning the Claimants), resulting in the imposition of control zones and the slaughter of animals. On 12 September a restricted zone across the whole of Great Britain was declared, and the European Commission imposed a further ban on animal and related exports from Great Britain to the European Union. Restrictions were progressively lifted through October and November. All remaining restrictions on exports to the European Union were lifted on 31 December 2007, and the United Kingdom's international (OIE) FMD free status was restored on 19 February 2008.
The farming community in Great Britain observed the immediate prohibition of the movement of all animals. The effect of the movement restrictions on the farming community is pleaded as follows, although this pleading was drafted at a time when there were 14 Claimants, and this part of the pleading does not distinguish between the two categories of Claimant:
"Farmers were unable to move cattle and sheep freely to fresh grazing within farms, necessitating supplementary feeding and leaving areas of fresh pasture ungrazed for the duration of the restriction;
Milk production was lost as calved cows were unable to be moved back from outlying fields to the main farm;
Farmers were unable to move fattened stock to slaughter at the optimum time, particularly within the pig sector and in the protection and surveillance zones leading to the loss of condition, welfare problems and additional feeding costs;
Light lambs destined for the export market had to be kept on hill farms, resulting in loss of income, welfare concerns and the necessity for additional fodder;
Pig breeder and rearing units were overstocked, leading to welfare problems and costs;
There were delays in putting rams to ewes, leading to disruption in established production patterns;
The traditional sale of animals through livestock markets, from farms where they were bred to other farms for rearing/or fattening was disrupted;
Farmers were unable to export live animals (beef calves, older sows and cows, breeding stock) and derivative products abroad at all or at the optimum time".
The expressions "loss of condition" and "welfare problems" are further explained in the pleadings as follows. "Loss of condition" refers to a reduction in an animal's optimal condition, including a loss of weight (muscle and/or body fat). It also includes a change in condition including a gain in overall weight such that the body condition moves away from the animal's optimal condition and weight, and in particular for the purposes of slaughter. "Welfare problems" are impairments to the health and well being of animals, including the effects of overstocking (e.g. stress, overgrazing of pasture, worm infestation, footrot, and other problems); the effects of birthing animals in outlaying fields being unable to be moved back to a holding where they could be better monitored and assisted including injury or death to themselves and/or injury or death to their progeny and the effect of contractors being unable to attend stock in order to shear or dip sheep leading to worm and parasitic infestation or other matters.
Although that is a general description of the claims pleaded at a time when the First to Seventh Claimants were pursuing their claims, not all of the Claimants are pursuing claims under all of those heads. Counsel for Merial did an analysis of the claims still being pursued, and it shows the following, as pleaded in Appendix 1 to the Particulars of Claim.
The claim of the Ninth Claimant can be taken as representative of a number of the heads of loss claimed by itself and by others of the Claimants:
The Eighth Claimant has a total claim estimated at the same date in the sum of £31,587.26. The Eighth Claimant is the only one specifically to claim for the slaughter of an animal (not infected or suspected of being infected) and to claim in terms for "lost condition". These parts of the claim of the Eighth Claimant are pleaded as follows:
The Eleventh and Twelfth Claimants have claims respectively for totals of £146,011.52 and £368,242. While the words "loss of condition" are not used, it may be that their claims include substantial elements for loss of condition in that the pigs are said to have grown "oversized" or "overweight". For example, part of the Eleventh Claimant's claim includes:
Part of the Twelfth Claimant's claim, under the same heading, includes:
CAUSATION AND FORESEEABILITY
The primary case of the Claimants is that the source of the outbreak in 2007 was IAH, and their alternative case is that it was Merial. They attribute it to a defect in the effluent system at the Pirbright site. It is unnecessary for me to set out more details of this part of the claim. I have to assume that it is correct. There was no issue raised before me on causation. I have to assume that the Claimants are correct when they state that the outbreak was caused by the acts or omissions on the part of IAH and/or Merial and/or DEFRA which the Claimants allege to constitute breaches of a relevant duty of care. Further, for the purposes of the applications before me, there is no dispute that damage claimed by the Claimants was a foreseeable consequence of a failure to take such care.
PLEADING DUTY OF CARE - NEGLIGENCE
The duty of care that is alleged is stated as follows as against IAH (para 75) and Merial (para 77):
This and the following parts of the pleading must be read in the light of the fact that the expression "the Farmers" is defined in the Particulars of Claim (para 3) as referring to all 14 claimants. Moreover, although the duty of care pleaded is said to be owed to "the Farmers", the facts relied on in support of that contention include reference to "livestock farms in Great Britain" and "the livestock community of Great Britain" (Particulars of Claim paras 76(3) to (6), and paras 26 and 40 and 43 of this judgment). Thus there is nothing specific to the Claimants which is relied upon as giving rise to a duty of care owed to them, which would not also give rise to a corresponding duty of care to any livestock farmer in Great Britain. I have been informed by counsel for the Defendants that it is understood that the Claimants have been selected as a representative sample of livestock farmers and that their action is being supported by the National Farmers' Union.
DEFRA is alleged to be a joint tortfeasor with IAH and/or Merial, but it is also alleged to have owed an independent duty of care. There is no material distinction between the duty of care alleged to be owed by IAH and/or Merial, and that alleged to be owed by DEFRA. The independent duty of care that is alleged is pleaded as follows as against DEFRA:
In support of the contention that such a duty of care exists, the Claimants rely on a number of matters to which I have already referred, including the fearful characteristics of FMD, the roles of the Defendants, and the regime for imposing measures to prevent the spread of the disease, including restrictions on the movement of livestock and related products. The words "the measures" is used in the Particulars of Claim (eg at Particulars of Claim para 76(5)(c)) without formal definition, but it refers comprehensively to all the "regulatory measures" (Particulars of Claim para 76(5)(b)) which I have summarised above (paras 21 to 22 and 26 to 27 above). The pleading does not relate particular measures either to particular Claimants, or to particular areas of land farmed by particular Claimants. More specifically the Claimants plead as follows:
In addition, the Claimants plead that they had no option but to comply with the measures, and so were "in a particularly vulnerable position and dependent on" IAH and/or Merial performing their FMDV operations carefully. IAH and/or Merial were in a position to prevent the escape of FMDV and knew that "the interests of livestock farmers of Great Britain were at stake" if they carelessly caused an outbreak of FMD, and that the farmers would depend on IAH and/or Merial to handle the FMDV carefully. So it is alleged that such reliance was reasonable, and
There is a corresponding plea against DEFRA in relation to its responsibility as "the regulator responsible for licensing laboratories to work with FMDV and ensuring compliance with licence conditions, and under obligations strictly to control biosecurity in laboratories handling live FMDV pursuant to the Directive". SAPO art 3(2) empowered DEFRA to impose conditions and/or modify, suspend or revoke any licence.
It is alleged that, by reason of outbreaks and reports relating to previous years (in particular reports in 2002-2005, and communications between IAH, Merial and DEFRA in 2003-2007) DEFRA "was expressly on notice that (a) live FMDV was being released by Merial into the drains on the site rather than being inactivated at source; (b) Merial and IAH considered that the old effluent drains on the site ought to be renewed; (c) Merial and IAH considered that replacement of the drains would be a very considerable improvement and would provide the necessary level of biosecurity for the transfer of restricted effluent from the Merial site to the IAH fluent treatment plant" and "By necessary inference … knew or should have known that the existing systems and state of the Pirbright premises were not or may not be sufficient to provide the necessary level of biosecurity".
The pleading goes on (para 8):
Mr Lissack, and to a lesser extent Mr Lord, both emphasised to me the magnitude and gravity of the breach of duty that the Claimants allege. I do not repeat what they said, because for the purposes of these applications I have to assume that, if there is a relevant duty of care, then the Defendants are in breach of it. Moreover, in civil claims for damages for tort, the degree of culpability of a defendant is of little relevance. There is a single standard for liability, whether it be strict liability, or liability for breach of a duty of care, and where liability depends upon breach of a duty of care, the gravity of the breach is immaterial. All the claimant has to establish in this part of his case is that there has been a breach.
Following the allegations which I have summarised, the pleading then goes on to identify the three torts alleged under the headings "Negligence", "Nuisance" and "Rylands v Fletcher".
Under the heading Negligence, there are pleaded the breaches of duty the factual basis for which had been set out as summarised above. The breach is identified, in particular in causing or committing, or alternatively failing to prevent, the escape of the virus on the part of IAH or Merial. In relation to DEFRA the plea is breach of the duty in the licensing and regulatory functions. Again I must assume that these allegations are true, but in the light of the arguments addressed to me, I do not need to set out these parts of the pleading in more detail.
PLEADING NUISANCE
Under the heading Nuisance there is pleaded first the proprietary interests of the Claimants as owners and/or occupiers of their livestock farms in Great Britain. It is then alleged that the causing or permitting, alternatively failing to prevent, the escape of the virus by IAH and/or Merial constituted unreasonable user by them of the Pirbright site, which by the time of the escape in 2007 was in a state potentially hazardous to the land of the Farmers. It is said that IAH and/or Merial knew or ought to have known of the danger and that this escape of the virus caused:
The loss and damage under this head is said to comprise:
PLEADING RYLANDS v FLETCHER
Under the heading Rylands v Fletcher, there is pleaded in addition that each of IAH and Merial "brought onto the Pirbright site for their own purpose and/or with the other's permission quantities of live FMDV", that this "constitutes a non-natural user of land", and that "FMDV is a dangerous thing likely to cause damage if it escapes". It is said that the damage suffered was all foreseeable, and "is either physical damage to the Farmers' property (livestock and/or livestock farms) and/or damage which in law is analogous to and should be treated as physical damage and/or is properly consequential on the same and/or is properly recoverable".
Under the heading Joint Liability of the Defendants, it is pleaded that DEFRA is jointly liable for the torts of IAH and/or Merial and IAH is jointly liable for the torts of Merial.
It is said that IAH had sufficient authority over Merial's operation to be held to have authorised its torts. IAH had control in particular over Merial's system for inactivation for live virus, carriage of live virus from Merial's laboratory around the site and the effluent disposal. These matters are said to constitute a common design or concerted action by IAH and/or Merial and these two Defendants agreed on a common action in relation to the handling and disposing of the virus.
DEFRA is also alleged to have had sufficient authority and control to be held to have authorised the torts of the other two Defendants by means of the licensing regime. Accordingly DEFRA is also alleged to be part of a common design or concerted action as to the handling and disposal of the virus. The claimants also rely on DEFRA's demand as the customer for the services undertaken by the other two Defendants and to the matters upon which it is alleged DEFRA was on notice as pleaded.
Particular losses are pleaded in relation to each Farmer in the Appendix, extracts from which are set out above.
PHYSICAL DAMAGE OR ECONOMIC LOSS
It is convenient to start by considering the nature of the loss and damage claimed, since it is by reference to that that the duty of care alleged by the Claimants is defined (para 36 above). The Defendants submit that the loss and damage claimed in this case (or at least all but "a small rump" of it) can only be classified as pure economic loss, not consequential upon any physical damage, and as such it is not recoverable in negligence, in nuisance, or under Rylands v Fletcher . The Defendants submit that, in value terms, almost all the losses claimed can only be classed as pure economic loss (eg losses of sales or lower prices on sales). They accept that there are some minor items of loss which are what they call "a more orthodox kind" of physical damage, for example the Ninth Claimant's claim cited above that "some of the calves were lost" (for which the Ninth Claimant claims £1,053). The Defendants do not accept that the claims for loss of condition are claims for physical damage, although they recognise that that is how they are advanced by the Claimants. £1,700 is claimed for the loss of condition of a cow (para 32 above), and more substantial sums may be claimed under this head for pigs (paras 33 and 34 above).
The law provides causes of action by which aggrieved claimants can claim compensation for loss and damage. But the law distinguishes between, on the one hand, physical damage (and economic loss consequential upon physical damage) and, on the other hand, economic loss which is not consequential upon physical damage, commonly known as pure economic loss. The law of contract provides one, and perhaps the main, cause of action for claims for pure economic loss. The torts commonly referred to as the economic torts (such as conspiracy and interference with contractual relations) require greater culpability than negligence, and they provide other causes of action for claims for pure economic loss. The tort of wrongful interference with goods provides another cause of action by which pure economic loss may be recoverable. None of these causes of action are relied on in this case. As Lord Oliver said in the context of the law of negligence in Murphy v Brentwood DC [1991] 1 AC 398 , 487:
This passage is cited by the editors of Clerk & Lindsell on Torts 19 th ed, at para 1-33. The Defendants invite the court to adopt as the law the next sentence but one in that paragraph:
That sentence is to be read in its context, which was the damage alleged in the Murphy case itself (which concerned a house with defective foundations). That is clear from the next sentence, which refers to safety, when plainly there can be damage to property which does not affect safety:
Nevertheless, I accept that the sentence relied upon by the Defendants may well be helpful. It is not in terms derived from any case, but it is put forward as representing the effect of the case law. In ordinary English, injury and damage are words that suggest causation by a factor external to the property.
There is further help on the meaning of damage in the tort of negligence given in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39 ; [2007] 3 WLR 876 . That case concerned pleural plaques appearing on the claimants' lungs as a result of exposure to asbestos. Lord Hoffmann said:
The Claimants chose not to advance any case before me which distinguished between the different heads of damage advanced by each particular Claimant, or between the claims for damages alleged to have been suffered by the individual Claimants. The Claimants' arguments were at a higher level of principle. They did separately advance arguments as to why loss of condition is physical damage (or analogous to it), but these arguments were subsidiary. As it is put in the Claimants' written submissions (para 196)
There are a small number of cases in which the effect of an alleged wrong upon livestock and growing vegetable produce has been considered. Each turns on its own facts, and it is difficult to discern a principle.
The first is Weller itself. On the distinction between physical damage and pure economic loss the Claimants refer to passages in the judgment of Widgery J where he said there was a great volume of authority:
It will be necessary to consider the passage at p 577 below, but at this stage the focus is on the word "threaten", which appears to suggest something less than actual injury will suffice. The passage is not clear. In SCM at p 351 Winn LJ observed that the suggestion might be "a gloss, sound or unsound, which [Widgery J] put on" Morrison Steamship Co. Ltd. v. Greystoke Castle (Cargo Owners) [1947] A.C. 265.
The passage is at best of little assistance to the Claimants, because neither Widgery J, nor any other judge who has referred to this passage, has upheld a claim for damages for something less than actual injury to property. Nevertheless, I note Mr Sumption's submission, which (together with the doubts of Winn LJ) undermines the submission of the Claimants. Mr Sumption suggests a different interpretation of the word "threaten", that is that it relates back to the sentence higher on the same page (at 577D) where Widgery J said:
In other words, "threatened" means "suspected", so as to be subject to slaughter. The duty was thus owed not only to those whose cattle were infected and slaughtered, but also to those whose cattle were slaughtered in accordance with an administrative decision before it could be determined whether the threat of infection to them had been realised or not. Mr Sumption submits that Widgery J cannot have been suggesting that a threat insufficient to require slaughter would suffice, because when he came to formulate the duty of care he did not include damage which was not actual damage or injury. He said, at p587B:
In Muirhead v Industrial Tank Specialities Ltd [1986] 1 QB 507 the plaintiff reared lobsters in tanks into which seawater was pumped for the purpose of oxygenation. The whole purpose of the pumps was to preserve the health of the lobsters. Due to the negligence of the third defendant, the pumps cut out and the lobsters died from lack of oxygen. Robert Goff LJ held that the killing of the lobsters was physical damage: p532-533.
In F&H Contractors v Commercial Union (18 May 1993, CA unreported) contractors had spread fertiliser unevenly on a field preparatory to the planting of a crop of potatoes. The result was "striping", some potatoes showing signs of nutrient deficiency, whilst the remainder grew too quickly, resulting in an overall loss of yield. The Court of Appeal upheld the decision of Steyn J that the loss was not "loss of or damage to material property" within the meaning of the public liability policy. All the plants were found to have produced potatoes of uniform quality, but of uneven size. There was no disease. This case does not seem to me to touch on the Claimants' case on loss of condition. An analogy with vegetable crops might be a case where the crops had ripened naturally, but beyond the stage at which they could be marketed. The Claimants are not complaining simply about the uneven size of their animals, and in the F&H case the complaint was not that the potatoes were overripe.
In McMullin v ICI Austalia Operations Pty Ltd (1997) 72 FCR 1 ICI had developed an insecticide for cotton plants whose active ingredient was CFZ. It was common for cattle to graze on cotton stubble. A number of cattle became contaminated with CFZ in this way, and it was suspected that other cattle, whose owners had bought cotton plants treated with CFZ, might have become contaminated. At p 69 Wilcox J listed the claimants in seven categories. The first four categories were claimants who owned, or had in their possession, cattle which became contaminated, or those who had bought cattle, or meat, after it had become contaminated. A fifth category was claimants whose cattle were not in fact contaminated but were placed in detention because of a belief (erroneous in the event) that they were or may be infected. It is from this case that the Claimants derived the expression the "cattle trail". The cattle trail was the expression used to refer to the link connecting each of the first four categories of claimant (contaminated cattle or meat). The fifth claimants did not recover because that link was missing: p78. So the Claimants are using the expression the cattle trail differently: they use it to include cattle which were not infected or suspected of being infected, but which were detained by reason of the movement restrictions. However, McMullin also differs from the present one in that contamination by CFZ was not so serious as an infection by FMD: suspected contamination did not lead to slaughter, and it was held not to be foreseeable that erroneous suspicion by a government authority of contamination would lead to detention. Nevertheless, so far as it goes, the case tends to assist the Defendants, because Wilcox J considered that the loss in relation to the fifth category of claimant (whose uncontaminated cattle were detained) was pure economic loss (p75) and that absent contamination ("the connecting link") no duty of care was owed (p79).
In Landcatch Ltd v International Oil Pollution Compensation Fund [1998] 2 Lloyd's LR 552 (Outer House, Lord Gill) and [1999] 2 Lloyd's LR 316 (Inner House) the pursuers' business was to rear salmon eggs to smolt (juveniles up to two years of age) in freshwater conditions and then to sell them to others for growing to maturity in seawater conditions mostly around Shetland (p55 col 2). As a result of an oil spill in the sea off Shetland caused by the defenders, the Secretary of State for Scotland exercised his statutory powers to designate the affected area an Exclusion Zone, which meant that the smolt could not be grown on in that zone. The pursuers were unable to sell on their smolt to those with whom they had anticipated making contracts. Some were sold at a lower price than expected, and a significant amount had to be culled (p561 col 2). Lord Gill considered the case law on economic loss which is considered below, and then found that "the pursuers have suffered nothing more than relational economic loss" (p570 col 1). The Inner House agreed: see p328, p335 col 2, p336 col 1. No distinction was drawn between the smolt that were sold for less than expected and those which were culled. This case will be considered again in relation to the relevance of damage being "direct".
In Perre v Apand [1999] HCA 36; [1999] CLR 180 the Respondent Defendant Apand negligently introduced into South Australia a form of potato disease known as bacterial wilt on to the land of a farmer known as Sparnon (not the Appellant Claimant). The disease did not spread to the Perre's land. The potatoes were grown for export to Western Australia, but Western Australian regulations prohibited the import into Western Australia of potatoes grown within a radius of 20 kms of Sparnon's land. The Perre's land was within that radius. At p193 Gleeson CJ considered the exclusionary rule (and its distinction between physical and economic loss), but did not need to discuss what exactly happened to the Perre's potatoes, so as to establish whether it was physical damage. Under Australian law the claim succeeded on principles which the Claimants seek to introduce into English law. For present purposes the Defendants note that the loss was categorised as pure economic loss. Callinan J said that what happened to the uninfected potatoes "may not have been actual physical damage", but he compared what happened to them with what happens to land which is said to be subject to planning blight.
There are a number of cases where what constitutes physical damage has been considered in the context of a variety of other types of property. The Claimants cited Lojinska Plovidba v Transco Overseas Ltd (The Orjula) [1995] 2 Lloyds Rep 395. A layer of hydrochloric acid had leaked on to the deck of a ship, and Mance J (as he then was) proceeded on the basis that there was in fact no alteration of the deck caused by the acid, but that the acid had to be cleaned off. That was a strike out case, and Mance J was proceeding on the assumption that alleged facts were true. One such fact was the port authorities required the vessel to be decontaminated of the acid before she could sail.
In deciding that the vessel should be regarded as having suffered physical damage, he referred to some criminal cases. He said (p399)
The Defendants submit that the Claimants' animals (with the minor exceptions already referred to) are not alleged to have lost limbs or organs, but have simply got older, and either bigger and fatter, or thinner, but in either case less valuable.
The Claimants submit that this analysis fails to address the particular features of animal and vegetable produce that distinguish it from many types of inorganic matter. Buyers will commonly be unwilling to take organic produce which is beyond or below a certain stage of natural development. Meat products are commonly required to have a limited range of ratios of fat to lean. As the Defendants note in their written argument, larger carcasses are hard to handle at abattoir and have higher fat content. So too, fruit vegetables and flowers are commonly required by buyers to be at no more than a given stage of their natural processes of ripening or maturing. The environments in which animal and vegetable produce is grown and transported (including ships, trucks and warehouses) are commonly subject to cooling and other controls of air quality to ensure the required condition at the expected time of sale. Failure of the pumps (as in the Muirhead case) may result in death (which was there held to be physical damage), but it may also result in accelerated growth which is either impossible or expensive to reverse. Clearly, the breaking of a leg of sheep, the skin of a potato, or the stem of a flower, is physical damage. If the produce is too fat (or thin), or too ripe, as a result, for example, of the failure of a ventilation pump, or delay, caused by breach of duty of care, then a court could conclude that that was as much the result of an external factor (in the sense meant in the passage from Clerk & Lindsell), as would the death of the produce. If a relevant duty of care is breached, and it results in the produce passing the stage of its natural development at which it can be marketed, then I consider that there is a real prospect of a court accepting that as physical damage. In the present case the prospects of success of such an argument may depend upon more detailed information as to the precise losses and their causes that is not available at this stage of the proceedings.
It follows that in my judgment, subject to an important proviso, those Claimants who allege that their pigs went to the abattoir oversized have a real prospect of succeeding in the contention that that is physical damage, and so of recovering the loss of profit truly consequential upon that fact, but not any other economic loss. The proviso, of course, is that they must also have a real prospect of proving the other elements in a cause of action relied on by them.
Whether there is any other damage claimed as loss of condition to which the same conclusion would apply need not be decided in this judgment. I was not addressed at that level of detail on the particular heads of damage. What does appear is that loss of condition (as in the case of the overweight pigs and loss of profit truly consequential upon that fact) forms only a limited part of the claims of some of the Claimants, and no part of the claims of others. That seems to me to be the only conclusion on this point that I need reach at this stage.
The Claimants referred to a number of cases the facts of which are so far removed from those of the present case that I do not find them helpful. In Caltex Oil (Australia) Pty v The Dredge Willemstad (1976) 136 CLR 529 a pipeline was damaged and the owner of the terminal (who was not the owner of the pipeline) incurred expense in transporting refined oil to the terminal while the pipeline was out of use. It was held that he was entitled to recover that expense from the dredger which had damaged the pipeline. In Candlewood Corpn v Mitsui Ltd [1986] 1 AC 1, the Privy Council at p24G approved only the reasoning of Jacobs J in Caltex . His reasoning was (as cited at p23H) that the duty of care owed to the owner of the pipeline was also owed to
The Claimants rely upon passages from the judgment of Jacobs J not cited by the Privy Council. At p597 Jacobs introduces the concept of "immobilisation of property". He expresses the view that this ought to be a recoverable head of loss, expressing (at p602) his agreement with the dissenting judgment of Edmund Davies LJ in Spartan Steel . At p605, shortly after the passage cited by the Privy Council, he states:
The reasoning of Jacobs J in Caltex seems to me to be no more than the application to facts involving a pipeline, and the product that is carried through it, of the principle applied in Greystoke to a ship and its cargo. Jacobs J discusses Greystoke at p602 to 602 and derives from it the propositions:
In the present case (as in Candlewood (p24G)) that reasoning gives no support to the argument for the Claimants, three of whom are located in Cumbria, Yorkshire and Powys, that is to say, far from Surrey. Surrey was the place where the defendant's act or omission had its physical effect, if and in so far as it is the case that all the damage suffered by some Claimants (and much of the damage suffered by the others) is pure economic loss.
In Jan de Nul (UK) Ltd v AXA Royale Belge SA [2002] 1 Lloyd's Rep 583 the defendant appellant caused silt to be deposited on land occupied by the third party claimant, and the claim was against the insurers of third party liabilities. In that case the court held that the deposit of silt was a form of physical interference with the third parties' land. Nothing is alleged to have been deposited on the land or livestock of the Claimants. So that case does not assist them. In Transco Plc v United Utilities Water Plc [2005] EWHC 2784 [15] the defendant's employee closed off a valve, cutting off the gas supply to the claimant's customers. The claimant incurred costs investigating and restoring the gas supply. Butterfield J held that physical damage included wrongful interference with goods, and that closing the valve was such interference. He held that the tort of wrongful interference with goods was made out (para [24]). In the present case the defendants are not alleged to have touched any property of the Claimants, and what the Claimants do allege bears no relationship to the turning of a valve. Wrongful interference with goods is a separate tort from any of the three pleaded in this case.
In SCM Ltd v WJ Whittall [1971] 1 QB 337 the defendants' workmen damaged an electric cable belonging to the electricity board, thereby cutting the current to several factories, including that of the plaintiff. The claim was not struck out, on the footing that it was a one for physical damage. But the court discussed the law on pure economic loss. The Claimants rely upon the use of the words "analogous to physical damage" in the following passage:
It is clear that in that passage that Lord Denning is explaining why the Greystoke Castle is an exceptional case. He cannot be taken to be saying that it lays down a general rule, or that there is some category of damage which is not physical damage, but is to be treated as if it were, for the purposes of the exclusionary rule. No case was cited to me in which the concept of "damage analogous to physical damage" has been applied by an English court in allowing a claim for damages.
Subject to the observations on the loss of condition claims in para 74 above, I conclude that all the damage claimed by some of the Claimants, and much of the damage claimed by the others, is pure economic loss. I therefore turn to the question whether the Claimants can recover damages for pure economic loss.
THE EXCLUSIONARY RULE
The Defendants submit that there is a rule, sometimes referred to as the exclusionary rule (Clerk & Lindsell on Torts 19 th ed para 8-115), that there can be no recovery in any of the three torts in respect of loss resulting from damage which is done to property which is not the property of the claimant, but of a third party with whom the claimant is in contractual relations.
The Claimants do not claim to be in contractual relations with any third party who did suffer physical damage (eg no Claimant claims loss suffered as a result of his inability to take, or make, delivery of cattle that he had agreed to buy from or sell to one of the First to Seventh Claimants). The Defendants submit that the Claimants are in an even weaker position than persons in contractual relations with a third party who has suffered physical damage. It follows that the claims for pure economic loss cannot be good in law.
The Claimants submit that the Defendants' submission entirely misses their point, because they are not advancing their claim on the footing that they were in contractual relations with a person who has suffered physical damage. The Defendants submit that it is the Claimants who are missing the point. If the arguments from principle that the Claimants advance are sound, then they must be able to explain how those arguments are consistent with the exclusionary rule, but the Defendants submit that that cannot be done.
Weller is itself an example of the application of the principle relied on by the Defendants. Before applying that principle, at p577 Widgery J said there was a great volume of authority:
The Defendants also rely on a separate, but related, principle, to the effect that where a claimant relies on physical damage, the defendant must directly have injured the plaintiff's property, but that will be considered below.
The origin of the line of cases referred to by Widgery J is Cattle v The Stockton Waterworks (1875) LR 10 QB 453 . In that case the plaintiff was a contractor. The owner of land had made a contract with him by which he was to build a tunnel under a road, along which there was a defective water pipe. The pipe leaked, and when the contractor started to dig, the water that had accumulated under the road flowed out, obstructing the works. This either reduced the contractor's profit or caused him to make a loss. The action was brought under Rylands v Fletcher . The case was dismissed on the basis of the contractor not having title to sue. Blackburn J said:
In other words, Blackburn J contemplated as possible an action by the owner of the land, and by those workmen whose tools or clothes were destroyed. All of these had suffered physical damage. But what is excluded is claims for loss of wages by those whose tools or clothes had not been damaged, or profits on the contract.
Since Weller there have been further authorities, including the SCM case cited above. In Spartan Steel & Alloys Ltd v Martin [1973] QB 27 it was held that the claimant was unable to recover the manufacturing profits that were lost due to a power cut caused by the defendants allegedly cutting the supply line owned by a third party electricity supplier. In Candlewood Navigation Corp v Mitsui Lines [1986] 1 AC 1 (PC) it was held that a time charterer of a vessel could not sue for the profit it would have made during the period that the vessel was under repair following a collision caused by the defendant's negligence.
In Leigh & Sullivan v Aliakmon Shipping Co [1986] AC 785 the claimant had agreed to buy a cargo to be shipped on the defendant's vessel. Because of poor stowage, the cargo was damaged. At the time of the damage the claimant was neither the owner nor possessor of the cargo, but under the terms of the purchase contract he had assumed the risk of damage to the cargo. The House of Lords held that as the property was owned by a third party at the time it was damaged, the claimant had no claim. In that case Lord Brandon set out the reasons for the rule:
Any extension of the meaning of physical injury or damage (to encompass what hitherto has been regarded as economic loss) for the purposes of the law of negligence would undermine the certainty of the law, the importance of which Lord Brandon stressed in that case. It would also require consideration of the boundaries between the tort of negligence and the other torts referred to in para 55 above.
The principle was re-affirmed in Murphy at p 485C-E, and other cases, and applied in Landcatch , as noted above.
The argument that the Claimants in this case are in a weaker position than if they had been in contractual relations with the First to Seventh Claimants is one supported by Lord Gill at p 570 col 1.
A related question is whether any physical damage must be direct if it is to support a cause of action. What the word "direct" means in this area of the law may depend on the factual context under consideration in any given case. In British Celanese v A H Hunt [1969] 1 WLR 959 Lawton J considered it in the context of Rylands v Fletcher, negligence and nuisance where Metal foil had been blown from the defendant's factory premises on to an electricity sub-station, which in turn brought the plaintiff's machines to a halt. At p966 Lawton J said the meaning he would give to the phrase "direct victim" was a person whose "property was injured by the operation of the laws of nature without any human intervention".
It is clear from the citations already made that the requirement of directness came in with Cattle ("only the proximate and direct consequences of wrongful acts"), and, in negligence, with Donoghue v Stevenson [1932] AC 562 , 580 ("persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected…"). It is repeated by Widgery J in the passage cited above from Weller at p577 (para 88 above).
The requirement that the injury be direct was modified, as the Claimants submit. In SCM Lord Denning MR set out the law as follows:
But the law has moved on since then. In Marc Rich & Co AG v Bishop Rock Marine Co Ltd [1996] 1 AC 211 , 237, Lord Steyn expressed it as follows:
In Perrett v Collins [1998] 2 Lloyd's Rep 255 , 264, a personal injury case, Hobhouse LJ commented on that passage from the speech of Lord Steyn as follows:
In none of the cases does the court discuss the issue of directness as it arises in the present case, namely the effect of the government imposed restrictions upon movement, which saved the Claimants' livestock from risk of infection with FMD, but at the price of them suffering the economic and physical consequences of those restrictions, for which they now claim compensation. Although there is no issue before me on foreseeability, or causation, there is an issue of remoteness, or the scope of the duty of care. That issue is as to the significance of the fact that it was the Measures that affected the Claimants animals, and not the FMDV.
The case that comes closest to assisting on this point is Landcatch , which was cited with approval by Mance and Chadwick LJJ in The Sea Empress [2003] 1 Lloyd's Rep 327 , 335-336, 339. As noted at para 69 above there was in that case a restriction on movement of fish into the area where the oil spillage had occurred. The order did not include in the designated zone the place where the pursuer was growing the smolt, but it did include the place where the buyer of the smolt would have grown them on.
The issue of directness was addressed by Lord McCluskey in the Inner House in passages to which both sides referred me. That claim was advanced under the Merchant Shipping Act 1974, and not at common law. The legislation was construed as permitting recovery for economic loss, so the distinction between physical injury and pure economic loss did not have the importance it would have at common law. The distinction that mattered was that between direct and indirect loss. There was an issue as to whether the loss (which included the smolt culled for lack of sales) was too remote. Lord McCluskey distinguished the fishermen who had regularly fished in the polluted waters. He then said (at p332):
At p335 Lord McCluskey summarised his reason for rejecting the claim of Landcatch:
Mr Beloff in his written argument summarises the position as follows:
The Claimants submit that because they have a proprietary interest in the farms and the livestock, their position is to be assimilated to that of the fishermen who regularly fished in the polluted waters, and whose loss (albeit economic in that case) was not too remote.
It is the restriction on movement that led to the inability of Landcatch to sell its smolt at the price expected, and to cull what it did not sell. In my judgment the loss that the Claimants suffered was as indirect as the loss suffered by Landcatch, and that is so whether the loss be physical injury or economic loss. Their farms were not polluted by FMDV. It would have made no difference in Landcatch if the culled smolt had been characterised as physical injury (as the dead lobsters were in Muirhead ). Whether economic loss, or physical injury, the culled smolt were an indirect loss that was too remote. Causation was no more than of the "but for" kind: but for the pollution or the outbreak of FMD, the loss of the smolt and the losses of the Claimants' cattle and pigs, would not have occurred.
If any of the Claimants are to succeed, they must have a real prospect of establishing at trial that the duty of care is owed to them in respect of indirect physical loss. And if all are to succeed they must have a real prospect of establishing at trial that the duty of care is owed to them in respect of indirect pure economic loss. So I turn to consider the scope of the duty of care.
NEGLIGENCE – DUTY OF CARE
For the purposes of the applications before me the Defendants accepted that they owed some duty of care to avoid causing damage through the escape of FMD. The question in issue before me was: what are the limits of any such duty? I should mention that the Defendants had advanced in their written arguments another point which they have not abandoned, but did not advance before me, namely that liability at common law was pre-empted by statute ( Marcic v Thames Water Utilities [2002] 2 AC 42, [33]-[35], [62]-[70]).
The starting point can be taken from the speech of Lord Hoffmann in South Australian Asset Management Corporation v York Montague Ltd [1997] AC 191 , 211A-B, 211G-212D:
The Defendants submit that the scope of the duty in this case is restricted in accordance with the exclusionary rule, discussed above, including the principles that there are excluded from the scope of the duty both pure economic loss and indirect physical injury.The reasons for the existence of the exclusionary rule are set out in numerous case, including Cattle (para 90 above), Candlewood (para 92 above), Murphy (para 55 above).
The Claimants plead a duty of care to themselves in terms set out in para 36 above, that is in terms "not to cause … the losses sustained by the Farmers as" pleaded. I have already noted that there is nothing pleaded in support of this duty which would not equally apply so as to give rise to a similar duty to all the livestock farmers of Great Britain.
Conscious of the need to show in argument before me the limits of the alleged duty, in their written submission the Claimants argued, under the heading "There is no danger of indeterminate liability":
This proposition is derived from Perre where Kirby J said at para 299: "It is the regulation which answers the complaint about indeterminate liability". It is to be noted that the Western Australian regulation in that case restricted the importation of potatoes to those which complied with specified conditions. One condition was that the potatoes had to have been "grown on a property situated at least 20 kilometres from a known outbreak of the disease Bacterial Wilt detected within the last 5 years" (see para 59 of Perre ). There was a similar condition in relation to processing of the potatoes. The contrast here, where the measures restricting movement apply to the whole of Great Britain, is therefore striking.
Of equal concern as a suggested duty owed to livestock farmers in the whole of Great Britain, is a suggested duty owed to all those who would have to submit to the Measures. In the present case they are not limited to livestock farmers. The Defendants submit that the principle for which the Claimants contend could not be confined to livestock farmers, but would affect auctioneers and many others. That is a wider class than the processors and others referred to in the second condition in Perre at para 59 of the court's judgments.
In the Claimants' written submission "the Measures" are defined as the measures which the Government imposed to prevent the spread of the disease "which included nationwide restrictions upon the movement of susceptible livestock potentially at risk". I take that to be an abbreviated reference to the measures set out in the Particulars of Claim and summarised in this judgment at paras 21 to 22 and 26 to 27 above.
Three examples taken from the 2006 Order Sch 7 indicate those to whose business Sch 7 of the Order is directed. Art 1 prohibits the movement of susceptible animals into or out of a restricted zone, and, as it seems to me, will foreseeably have an impact on hauliers as it does as livestock farmers. Livestock farmers are not specifically identified in Sch 7, although they are clearly one of a number of groups potentially affected by it. The same applies to art 2, which controls the movement of carcases, manure, slurry or used litter from slaughterhouses. That foreseeably will affect the business of hauliers and slaughterhouse owners. The impact of art 6 is much wider than livestock farmers. It does not identify livestock farmers in terms, but does identify a number of others (for example auctioneers would be caught by art 6(1):
It follows that I cannot accept the submissions of the Claimants that "the Farmers … should have been a uniquely prominent class in the Defendants' contemplation", or that there is a clear limiting factor "beginning and ending with livestock farmers in possession of susceptible animals", or even that "the Farmers are an identifiable class, membership of which was capable of ascertainment at the time at which the Defendants were performing their work at or in respect of Pirbright". The class foreseeably affected by the declaration of a restricted zone under Sch 7 of the 2006 Order seems to be to encompass potential claimants no less numerous than those to whom Widgery J was referring in the passage cited from Weller at para 2 above.
As a further, or alternative approach, the Claimants advance submissions to the effect that they fall outside the exclusionary rule on the bases of a number of recognised exceptions. One basis for this was by reference to the Greystoke case referred to above. But as Lord Keith confirmed in Murphy at p 468E, that case is exceptional. He regarded it as turning on the specialities of maritime law concerned in the relationship of joint adventurers at sea.
The Claimants allege a special relationship and an assumption of responsibility by the Defendants (see paras 40 to 43 above). This is a reference to cases such as Hedley Byrne, Smith v Bush [1990] 1 AC 831 , Henderson v Merrett [1995] 2 AC 145 , White v Jones [1995] 2 AC 207 and Spring v Guardian Assurance plc [1995] 2 AC 296 . The Defendants submit that these cases are of no assistance at all. They are each an example of "a relationship having all the indicia of contract save consideration": Customs & Excise v Barclays Bank [2007] 1 AC 181 , 190F para [4]. There is nothing pleaded in the present case which suggests any relationship with any indicia of a contract between the Claimants and the Defendants, or any dealings between the Defendants and the Claimants. The Defendants are said to have been performing "a task", but they were not providing a service to any of the Claimants in the sense required in these cases, where the facts are very far removed from those of the present case. As the Defendants submitted, the touchstone of liability in this line of cases is "things said or done by the defendant or his behalf in dealings with the plaintiff … on exchanges … which cross the line between the defendant and the plaintiff": Williams v Natural Life [1998] 1 WLR 830 , 835C-G. Nor is there anything pleaded that could be characterised as reliance. The test is not simply reliance in fact. The test is whether the plaintiff could reasonably rely on an assumption of responsibility: p836E to 837B. The relationship here, it is submitted, is no more than one of dependence.
Further the Claimants refer to the threefold test in Caparo Industries v Dickman [1990] 2 AC 605 , Customs & Excise v Barclays Bank [2007] 1 AC 181 , 189C, where Lord Bingham sets it out as follows at [4]:
Finally, the Claimants referred to the 'incremental test', set out by Lord Bingham in the same case, at paras [4] and [7] as follows:
So far from satisfying the incremental test, if the Claimants' submissions are correct, then the exclusionary rule cases must have been wrongly decided. Foreseeability is rarely, if ever, in question in those case. For example, in Cattle the loss of profit by the contractor, and the laying off by the contractor, which led to the loss of wages of the workmen whose tools are not damaged, must be the very thing that would be foreseen. In Weller the loss to the auctioneers (and to almost all business in area affected) was foreseeable, as Widgery J noted in the passage at 577C-D cited in para 2 above. As the 2006 Order Sch 7 shows, the livestock farmers of Great Britain are in no closer proximity to the Defendants than the auctioneers. There is no connecting link, or "cattle trail", in that there is nothing connecting livestock that is infected (or is suspected of being infected) and so liable to be slaughtered with livestock that is not liable to be slaughtered. It is true that the livestock farmers are vulnerable, in the sense that there is nothing they can do to protect themselves (that is the sense used in Perre ). But that is true of auctioneers and all others carrying on business in an area subject to a declaration made under the 2006 Order.
I recognise, of course, the respect that is due to the editors of Clerk & Lindsell who have written (at para 8-117) in relation to Perre :
That may be the strongest support there is to the Claimants' arguments. But the point is not arguable, in any event at first instance. As already noted, this case is distinguishable from Perre , since the class of potential claimants in the present case, if taken from the terms of the 2006 Order, is very much greater than the class of potential claimants in Perre .
I accept the submissions of the Defendants. There is no real prospect of the Claimants succeeding in establishing a duty of care that relates to any of the loss or damage referred to in the pleading cited at paras 36 and 38 above, examples of which are set out at paras 31 to 34 above.
CONCLUSION
It follows that in my judgment the Claimants have no real prospect of succeeding in their claim in negligence against any of the Defendants.
That conclusion also means that they have no prospect of succeeding in either of the other two claims, since nuisance and Rylands v Fletcher are as much subject to the exclusionary rule as is negligence. The rule originated in Cattle , which is a Rylands v Fletcher case: see para 90 above, which Widgery J repeated in Weller at p587G-588F. That was the view of Thesiger J in SCM v Whittall & Son Ltd [1970] 1 WLR 1017, 1031E. It is common ground that Rylands v Fletcher has now been recognised as a sub-species of nuisance: Transco plc v Stockport Metropolitan Borough Council [2004] 2 AC 1 at para [9].
Nevertheless, I shall deal shortly with the claims in nuisance and Rylands v Fletcher .
NUISANCE AND RYLANDS v FLETCHER
The Claimants pleaded case in nuisance and Rylands v Fletcher is set out at paras 47 and 49 above. In Hunter v Canary Wharf [1997] AC 655 , at 695, Lord Lloyd summarised the law as follows:
The Defendants refer to the following passage from the speech of Lord Goff at p685G-686A:
The Defendants submit that there has been no infringement upon any private rights of the Claimants. If there has been any interference with the enjoyment of their land it has not been directly caused by anything emanating from the Defendants' land. So the Claimants can have no claim under either of these heads.
Nothing from the Defendants' land encroached on any land of the Claimants. For reasons given in relation to negligence, the Claimants have no real prospect of establishing that any physical injury was done to their land, still less that it was direct physical injury. The Claimants' strongest argument is in relation to the third kind of nuisance, interference with quiet enjoyment.
In order to establish that what caused the interference with the enjoyment of their land was the Defendants, the Claimants plead that the interference was in the form of the Measures (para 47 above). And in support of the proposition that liability can be found where the effect on a claimant's land is via a third party, reliance is placed on three cases: Thompson-Schwab v Costaki (customers of prostitutes in the neighbouring land), Lippiatt v South Gloucestershire Council [1999] 4 All ER 281 (travellers operating from the defendant's premises, which premises constituted a launching pad for the nuisance) and Lyons v Gulliver [1914] 1 Ch 631 (crowds queuing to gain access to the defendant's theatre blocked access to the claimant's shop).
These examples are remote from the exercise by DEFRA of the statutory powers in question in this case. In my judgment, there is no real prospect of establishing that the measures imposed by DEFRA amount to a nuisance by the Defendants.
DEFRA AS JOINT TORTFEASORS
The claims in nuisance and Rylands v Fletcher are not made against DEFRA as occupiers of any land (since they were not alleged to be occupiers). The case is advanced against them as joint tortfeasors in respect of all three torts.
In the light of the conclusions I have reached, to the effect that the Claimants have no real prospect of succeeding on any of their claims in tort, I do not need to consider whether, if they did have a real prospect of succeeding against Merial and/ or IAH, there would be a real prospect of them succeeding against DEFRA as joint tortfeasors. If I did have to consider that, I would consider that there was force in the Claimants submission that this may not be an issue appropriate for determination at this stage, that is before disclosure, and perhaps also before trial. Accordingly, I reach no conclusions on this part of the case.
SUMMARY
For the reasons set out above, I conclude that the Claimants have no real prospect of succeeding on any of their claims, and that the claims must therefore be dismissed under CPR Part 24.