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MICHAEL GODFREY WENMAN WYKEHAM(TRADING AS KNIGHTWOOD KENNELS) & ANOR v. THE MINISTER OF STATE FOR AGRICULTURE, FISHERIES AND FOOD [2001] EWHC Admin 979 (19th November, 2001)

		Neutral Citation Number: [2001] EWHC Admin 979
		Case No: CO/2745/2000

IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
(ADMINISTRATIVE COURT)

CO/3497/2000

The Royal Courts of Justice
Strand, London WC2A 2LL

19th November 2001

B e f o r e :

THE HONOURABLE MRS JUSTICE RAFFERTY
____________________

(1) (MICHAEL GODFREY WENMAN WYKEHAM
(trading as Knightwood Kennels) and
(2) THE QUARANTINE ASSOCIATION)
Claimants

- against -

THE MINISTER OF STATE FOR AGRICULTURE, FISHERIES AND FOOD
Defendant

____________________

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

____________________

Mr Stuart Isaacs QC and Mr Clive Lewis (instructed by Barker Gotelee Solicitors for the Claimant)
Mr David Anderson QC and Mr Mark Hoskins (instructed by Legal Department, Ministry of Agriculture Fisheries and Food for the Defendant)
____________________

HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
____________________

Mrs Justice Rafferty:

Consequent upon an oral application ex parte on 2nd May 2001 to Judge LJ for permission to appeal the refusal on 10/11/2000 by Richards J of permission to apply for Judicial Review, I have heard an application voiced by Mr Isaacs QC on behalf of Mr Wykeham and the Quarantine Association and opposed on behalf of MAFF by Mr Anderson QC. Throughout this judgment I shall refer to Mr Wykeham and to the Quarantine Association as “the Claimant”.

Judicial Review is sought of the 9/5/2000 letter of the Defendant said to be a decision refusing to introduce a compensation scheme for owners of quarantine kennels after the introduction in January 2000 of the Pet Travel Scheme Pilot Arrangements (England) Order 1999, popularly known as the Pet Passport Scheme (PPS). Mr Isaacs made 4 submissions: First, he addressed the approach this court should take to delay. Second, the substantive aspects of his case as to Article 1, Protocol 1 of the European Convention on Human Rights as scheduled to the Human Rights Act 1998. Third, the absence of reasons. Fourth, the factual elements as to delay. He links the first and the second.

The facts are simply stated. Mr Wykeham at one time, ran one of 71 licensed quarantine kennels in the UK and the introduction of the PPS has had an unwelcome effect upon his business. Figures whether calculated by the Claimant or by the Defendant make clear that over a few years at least a 30% decline has occurred. A number of such kennels has already closed, and more may yet do so, or cease trading. Others have sold at a loss, or at a figure which does not reflect the value of the goodwill. A consultant has advised the Claimant to demolish his buildings and commence a different business.

On the other hand, some kennels have flourished, whether by diversification or astuteness or luck it is not possible in every case to say. Questionnaires compiled for the Claimant show the differing circumstances of individual kennel owners. Not all are suffering.

It was the Claimant who put to MAFF in July 1999 a decommissioning grants scheme designed were it accepted to take effect upon the introduction of the PPS. Although by letter of 25/8/99 MAFF declined payment, it is the Claimant’s case that at the same time the minister was telling interested parties that his rejection of the Claimant’s scheme did not mean he was not considering other ideas. Certainly in September 1999 he was using the phrase “keep talking” to describe what he saw as the task for him and for the kennel owners, and was referring to “alternative schemes” which in the context it is argued must mean proposals other than that submitted by the Claimant. The Claimant’s former solicitors wrote on 14/9/99 seeking clarification. Where relevant their letter reads as follows:

“…it is not clear…whether this is a refusal to pay compensation…or ..a rejection of the proposed scheme to manage the transition of the old regime to the new one.

You will appreciate……..the Association’s…....claim under the ECHR and .a strict time limit. It would therefore be very helpful if you could answer this enquiry as a matter of urgency.”

The reply dated 8/10/99 read in relevant part:

“The Minister’s letter of 25th August made it clear that the Government would not compensate.….for any loss of business……before or following the introduction of the PPS. Furthermore, there is no money available to help finance the decommissioning scheme proposed by your client.

MAFF does not accept that …..the PPS will infringe any rights….under the ECHR or that the Convention entitles them to any compensation”

Once the PPS, made on 22/12/99, came into force on 17/1/00, and no compensation for owners was set out, the Claimant on 2/3/00 sought from the Minister justification for its absence. He sent a reminder on 10/4/00. On 9/5/00, Baroness Hayman, the Minister of State, wrote an important letter. The Claimant contends it was the decision letter, the Defendant that it did no more than rehearse what was already decided and conveyed. I set it out in full:

Thank you for your letters of 2 March and 10 April to Nick Brown about compensation for quarantine kennel owners in the light of quarantine reform.

The consideration of whether or not to include a compensation scheme in government legislation is made on a case by case basis, and takes into account the need to achieve a balance between the needs of individuals and the general public interest.

In determining whether or not the payment of compensation is merited in any one case, there are many factors which MAFF has to examine. We will need to consider, for example, whether an affected business, will, as a result of Government action, be closed down entirely and prematurely; whether it has had reasonable notice or knowledge of the intended action or whether the owners of the business in question will remain owners of tangible assets. The jurisprudence of the European Court of Human Rights (for example, the case involving the UK Pinnacle de-boners) also provides MAFF with guidance as to the principles which, in the opinion of that Court, should govern decisions on compensation.

Having given careful consideration to the relevant factors, MAFF has concluded that we cannot support the case for the payment of compensation to quarantine kennel owners.

Consequent upon that letter, application for permission to apply for Judicial Review was lodged on 2/8/00. Following the ruling of Richards J an appeal on paper to the Court of Appeal was rejected by Mantell LJ on 15/3/01. After the oral appearance before Judge LJ on 2/5/01 there existed initially some confusion as to quite what he had intended to order, but parties are now clear that he allowed the Claimant’s application for permission to appeal Richards J’s refusal of it.

The most sensible approach to reaching a conclusion in this application must be first to consider what Judge LJ intended this court to do for, if the Defendant is correct, I should be obliged to follow the ruling of Richards J. The effect of that would be a swift end to proceedings since he found that delay operated to prevent the Claimant being able to advance substantive grounds.

R v CICB ex parte A [1999] 2 AC 330 makes plain that delay may be considered prior to a substantive hearing. Alternatively the merits may be decided and delay then considered in the context of whether to grant a remedy. S31(6) Supreme Court Act 1981 reads as follows:

Where the High Court considers that there has been undue delay in making an application for judicial review, the court may refuse to grant-

(a) leave for the making of the application; or

(b) any relief sought on the application,

if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration.

I am in no doubt that Mr Isaacs is correct in urging that Judge LJ intended this court to examine the question of delay wherever it found it logically to fall within this application. Were I in any doubt I should resolve it by reference to the letter from the Claimant’s solicitors to MAFF dated 2/5/2001 which reads where relevant:-

“………at an oral hearing before Judge LJ today, our application for permission to appeal the decision of Mantell LJ…….refusing permission to claim for judicial review was granted..

During the course of his judgment Judge LJ expressly stated he was not deciding on the issue of the extension of time or whether there was delay but leaving that for the substantive hearing.”

Having said that, nevertheless a sensible and convenient progress through the issues prompts me first to turn to delay.

It is not easy to treat as discrete a number of factors with relevance to that decision, but a chronology is helpful, and I set one out in abbreviated form:

The first mention of possible compensation is in a letter dated 16.7.97 from the Claimant to Mr Jeffrey Rooker MP the then Minister of State. At a meeting in December 1997 he made plain that no funds were available to pay decommissioning grants.

8.4.99 Claimant to Defendant: good case for compensation were there a de facto expropriation of property

28.5.99 Defendant to Claimant: no compensation.

15.7.99 Claimant to Defendant: decommissioning plan

25.8.99 Defendant to Claimant: no money, no decommissioning

14.9.99 Claimant’s then solicitors to Defendant: please clarify 25.8.99

8.10.99 Defendant to Claimant’s then solicitors; no compensation

22.12.99 PPS Order made

17.1.00 Order into force

2.3.00 Claimant to Defendant: please give reasons:

10.4.00 Claimant to Defendant; ditto

9.5.00 Defendant to Claimant: reasons

2.8.00 Form 86A.

The first aspect of concern is the gap between the perceived announcement of reasons and the lodging of Form 86A. If I am right and the decision were communicated in October, then the point is unarguable and rightly not taken. Even assuming that the Claimant were correct in his identification of 9/5/00 as the relevant date, in the context of all that had happened before then, to run so close to the three month line seems to me quite the opposite of prompt.

It has always been the contention of the Defendant that the decision date is 8/10/99. If it be wrong as to that its fallback position is that grounds arose upon the making of the order, 22/12/99. If Mr Isaacs be right that the time which bites is 9/5/00 then the application though at the outer limit of three months was nevertheless in time. His contention is that to have sought to apply on 8/10/99 would have been to risk a challenge for prematurity there being in place no order. Prematurity is to my mind demolished as an arguable point by that 8/10/99 letter. The alleged misinterpretation of the ECHR was if tenable clearly available to the Claimant upon the face of that letter. It cannot be said that not until 9/5/00 was there the opportunity to address the issue. Richards J found that grounds arose on 8/10/99 when the letter swept aside any arguable doubt. I agree. That letter is in terms a pronouncement and clearly intends to convey finality. It is not a letter couched in, or open to interpretation as being in, terms which allow of negotiation. There is about it nothing of the incremental. It announces the refutation not only of the proposed decommissioning formulation but also, and crucially, of any liability to compensate. The Minister had taken account of ECHR and concluded that it did not oblige the government to modify its view.

The implementation on 22/12/00 of the PPS did nothing to alter the effect of this letter, so that only the letter of 9/5/00 remains to be considered. Can the Claimant hinge upon it a submission that, when read, it showed the October letter not to have been a decision letter at all? Plainly he cannot. It does no more than supply reasoned justification for the unambiguous stance set out in October. Were there any doubt as to its purpose, the letter of 2/3/00 which was its trigger removes it. That letter sought and received a reasoned response.

I see no reason to depart from the finding of Richards J that by the date of lodging this application was some seven months out of time.

Exercising then my undoubted discretion (R v Sec of State for Foreign and Commonwealth Affairs ex p World Development movement [1995] 1 WLR 386, and R v Sec of State for Home Dept ex p Ruddock [1987] 1 WLR 1482.) I turn to whether time should be extended. Mr Isaacs argues that there exists good reason so to do. His primary submission is that the case raises issues of general public importance.

Is the existence of compensation for quarantine kennel owners a matter of general public importance? I am unconvinced that it is, it seeming to me rather more a question of particular interest to one category of the public. For all the reasons rehearsed, I reject this application on the grounds so far considered.

Though not strictly necessary nevertheless for the avoidance of doubt I turn to the remainder of the Claimant’s grounds. What is the effect of Article 1 of the First Protocol? It reads:

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

Though the HRA 1998 was not then in force I can deal shortly with whether nevertheless ECHR should have been taken into account. It should and it was. The Claimant cannot substantiate his contention that until the 9/5/00 letter it was unclear whether the Minister had done so. He had plainly done so by 8/10/99 as his letter shows.

It is argued that the interference with peaceful use of possessions can occur if a business’s goodwill or the potential it affords for earning are adversely affected: Tre Traktorer Aktiebolag v Sweden (1989) 13 EHRR 309. Art 1 Protocol 1 had not been violated when the applicant company’s liquor licence was revoked. The Article was defined as setting out three distinct rules, the second and third of which are the deprivation and control of use entitlements, though they are to be construed by reference to the first, peaceful enjoyment. The court specifically found the interference, a control of use, to have been severe but outwith the Article. Though the company was no longer able to operate premises as a restaurant, still it retained economic interests and tangible assets.

The meaning of “interference” bears scrutiny. In Van Marle v Netherlands (1986) 8 EHRR 483 accountants were refused a licence, which effectively stopped them from practising anywhere in the Netherlands because in the circumstances of the withdrawal the law prohibited it. A strong court found by a majority of 16 to 2 that Art 1 applied, but unanimously that there had been no violation.

Sporrong and Lonnroth (1982) 5 EHRR 35 concerned property owners. The government had authorised expropriation permits which were extended for 8 and 23 years respectively, prohibition notices lapsing after 25 and 12 years respectively. By 10 votes to 9 Art 1 was held to have been violated.

The Claimant’s argument, based upon this authority, is that the second paragraph of Article 1 requires the court to determine whether the state were controlling the use of property in the general interest and if so whether a fair balance were struck between that interest, (here, in relaxing the quarantine rules) and the protection of human rights. The Court remarked, at paragraph 63:-

"The Court considers that it must look behind the appearances and investigate the realities of the situation complained of. Since the Convention is intended to guarantee rights that are `practical and effective`, it has to be ascertained whether that situation amounted to a de facto expropriation, as was argued by the applicants.

In the Court’s opinion, all the effects complained of (see paragraph 58 above) stemmed from the reduction of the possibility of disposing of the properties concerned. Those effects were occasioned by limitations imposed on the right of property, which right had become precarious, and from the consequences of those limitations on the value of the premises. However, although the right in question lost some of its substance, it did not disappear. The effects of the measures involved are not such that they can be assimilated to a deprivation of possessions. The Court observes in this connection that the applicants could continue to utilise their possessions and that, although it became more difficult to sell properties in Stockholm affected by expropriation permits and prohibitions on construction, the possibility of selling subsisted; according to information supplied by the Government, several dozen sales were effected (see paragraph 30 above).

There was therefore no room for the application of the second sentence of the first paragraph in the present case."

As the permits were not meant to limit or control use, they fell to be considered under the first sentence of the first paragraph. In other words, Mr Isaacs contends, it is the approach of the authority which is important. The 10:9 split is evident from paragraphs 61 and 73:

It remains to be ascertained whether or not the interference found by the Court violated Article 1.

That Article comprises three distinct rules. The third rule recognises that the States are entitled, amongst other things, to control the use of property in accordance with the general interest, by enforcing such laws as they deem necessary for the purpose; it is contained in the second paragraph.

Being combined in this way, the two series of measures created a situation which upset the fair balance which should be struck between the protection of the right of property and the requirements of the general interest: the Sporrong Estate and Mrs Lonnroth bore an individual and excessive burden which could have been rendered legitimate only if they had had the possibility of seeking a reduction of the time-limits or of claiming compensation. Yet at the relevant time Swedish law excluded these possibilities and it still excludes the second of them.

The Defendant points to that combination of two measures as upsetting the fair balance. The Claimant reminds me that the court found the prohibitions to have aggravated the consequences of the permits, and found it unnecessary to determine whether the prohibitions alone infringed Art 1.

Does the introduction of the PPS impose an individual and excessive burden? If it does, it falls outside the justification afforded by Art 1. Though the Claimant accepts that in principle the alteration in the domestic law could constitute action in the general public interest, nevertheless he argues that as no compensation was paid the balancing exercise was either not done or was done but the wrong conclusion reached.

The complete absence of compensation is relevant in assessing the proportionality of the burden imposed. (James v UK (1986) 8 EHRR 123 “The Duke of Westminster’s case” and Lithgow v UK (1986) 8 EHRR 329)

Though it is right that Strasbourg jurisprudence requires the court to look practically at possible violations of Art 1, and cautions as to the taking of a strict de jure approach, nevertheless there is a major difference between the facts of Van Marle and this case. There, though by dint of their own work the accountants had built up a clientele and their income was suffering, still the interference was justified. The relevant Act under which they were disqualified was one designed to promote the public interest by ensuring the profession was competently staffed, and a fair balance had been achieved.

Here, the Claimant is suffering reduced income and gloomier prospects than might have been the case save for the PPS. In van Marle, the accountants had had removed from them the chance to practise at all the profession for which they had been trained. Their livelihood had been as it were affected at the root whereas the Claimant can point only to the removal of boughs. In my judgment there is little comparison.

The facts of this case are presented by the Claimant as so special as to mean that MAFF has exercised control over his property and interfered; since the quarantine kennels owe their raison d’etre to governmental regulations designed to protect against rabies and exist solely for that purpose, they are effectively substitutes for the only alternative, that is, government owned and run establishments. Thus, the argument proceeds, expenditure was directed at this exclusive end and, once the rules were relaxed, the lack of viable alternative use must require compensation from the very entity which bears responsibility for their genesis. As the state instituted the need for kennels and the state has now reduced the need, it should compensate, and its failure constitutes an interference. Another presentation of the same complaint is that the state has exercised control over the Claimant’s property, which requires it to comply with Art 1. The kennels exist solely to accomplish the regulation of disease desired by the state and thus its reduction of the need is an interference, It should be said that Mr Isaacs accepts that this is an unusual construction. It is in my judgment untenable.

The kennel owners elected to enter an industry and to make legitimate profit from the then regulations. They are not, as were the van Marle accountants, put by state action in a position where they cannot earn. They take the rough with the smooth in a business world. As men of business they must be expected to keep open a weather eye to current affairs. The writing was clearly on the wall as to quarantine’s reduced role for some years before the PPS emerged. I have no doubt that the contentions of the Defendant on this point are to be preferred. Were I seeking fortification for my view I should find it in the examples set out for me by Mr Anderson. If the Claimant’s arguments prevail, what of the pharmacist who suffers when vaccine is modified or improved? Of the makers of battle tanks, or fire retardant furniture, when regulations change? Such an outcome would so alter the status of businesses with links to government policy as to make management of the public purse impossible.

Whether the authorisation scheme is as the Claimant contends analogous to the grant of a government licence takes the matter no further.

The lack of balance imposed too harsh a burden upon him it is said. The effect upon him is extreme, reducing as it does the goodwill of a business he built up, the value of its tangible assets, and prospects of future viability if run in similar form. His business is in partnership with his wife and forms their sole livelihood, so that they face an income so reduced as to be insufficient to support them.

Since he is said to perform a public service in that but for him the government would have to perform it, to deny him his livelihood or drastically to reduce it is argued to be the imposition of an excessive and unjustified burden.

That the government would introduce a vaccination scheme was said to be unforeseeable. I reject that argument. As I have earlier said in a different context, those in business are expected to read the runes, and these were not difficult to read. Veterinary and medical science have moved on apace in the last decade, as the man who takes a newspaper could tell us. The foreshadowing of relaxation of anti rabies legislation was clear for years before this scheme was enacted.

The EC as early as 1991 was proposing that member states reconsider quarantine. Indeed the Claimant was worried from 1990 about the turn events were taking. He felt however that anxiety was not the same as awareness of definite difficulties ahead. What was he to do? Jump too soon and he might have misread things. Wait and hope, and mitigate any damage? My view will by now be plain that he could be expected to react as a businessman would and see that the tide was not going to turn back. The owners of Hill Farm Kennels did just that. They made provision for what in early 1997 they saw as forthcoming changes in quarantine regulations likely shortly to render their kennels redundant. By the summer of 1997 the Claimant wrote of his awareness that the majority of kennel owners knew at the very least that 6 months was a term which would not endure.

The Agriculture Select Committee in 1994 recommended the replacement of quarantine as to certain countries and concluded it is true that kennel owners should be compensated for substantial policy changes. There was a swift governmental response. Such a course was said to represent erosion of or at least departure from established principle.

Application number 33298/96 Pinnacle Meat Processors Company ECommHR 21.10.98 involved the applicants’ businesses of de-boning cattle heads and selling their products on. Typically they are small specialised and often family concerns. Licences were granted to those running specialised plant and premises. Controls had become stricter as years went by, but the introduction in 1996 of the BSE Orders made it an immediate offence to sell as they had been doing. 6 of the 9 applicants had ceased trading, the others sought to survive by diversification and further investment. 6 received payment under the Beef Stocks Transfer Scheme at 65% of unsaleable stocks at a fixed point.

In parliamentary debate on 13 November 1996 the Minister of State said

“It has ….been a long-standing matter of settled public policy that no Government are under any obligation to pay compensation to a business for any loss of opportunity of carrying on that business which may arise from Parliament’s properly considered legislative decisions.”

The Commission said:

"The Government take the view that the 1996 Orders did not amount to a deprivation of possessions, but that it was either a control of use or that it falls within the residual category in the first sentence of Article 1 of Protocol No 1..... They add that the Government were not acting as an economic operator in passing the 1996 Orders, but were responding to scientific advice which had rendered the measures inevitable. They also add that the applicants must have been aware of the possible risks inherent in handling bovine heads.

The applicants consider that, as they had made extensive investments in their businesses, and had obtained necessary approvals and licences, there was an implied representation that they would be able to carry on their businesses, subject to the Government’s right to take measures in the public interest and without subjecting the applicants to any excessive burdens. They claim that the prohibition on the use of bovine heads without any compensation was disproportionate and excessive, however the interference is labelled.

The applicants’ businesses in March 1996 comprised their stock at that time, the assets of the businesses, and the goodwill, or the “present value of the future income stream which the company can be expected to derive”.

The applicants also claim that the 1996 Order effectively revoked the applicants’ licences under the 1992 Regulations and the Specified Bovine Offal Order, leaving the applicants with specialised plant and premises which it is difficult or impossible to use for other purposes.

The Commission notes that by the entry into force of the 1996 Order on 29 March 1996, a number of factors were present which must have had a considerable impact on the market for beef meat in general and head meat in particular.

The Commission thus considers that whilst the applicants’ businesses were affected by the 1996 Orders, it cannot accept the applicants’ contentions as to the extent of their losses as the market for those businesses must have been seriously depressed by the state of the beef market in general and the offal market in particular.

Whilst it is true that some of the applicants have now ceased their businesses as cattle head deboners, the Commission notes that they remain owners of their tangible assets, and that those assets can either be used in new or related businesses, or they can be sold. Further, in respect of eligible beef stocks held on 9th April 1996, the applicants have in fact received compensation totalling over £430,000.00."

Some head de-boners when their business was declared illegal received compensation amounting to 65% of the value of their stock pre BSE crisis. Mr Anderson stresses that stock was valued, whereas the kennel owners have none.

The de-boners’ assets were capable of use for other purposes, but it is argued those of the kennel owners are not. This seems to me to be a difference as to degree. Though the de-boners had tangible possessions which could find a use elsewhere, the kennel owners have so I am told none such. I am not convinced. There may I accept be differences between the attractiveness to a buying public of boarding kennel services, positioned and designed to catch domestic trade, and quarantine kennels. The locus may have been chosen so as to be more remote. The layout as at present may accommodate only the requirements of a quarantined animal, and the advice given to the Claimant to demolish and change direction reflects these factors. Having said that, the fact is that other premises have contrived to survive or even to flourish. The diminution in revenue is not common to all, and that fact weakens the Claimant’s case.

The head de-boners were said to have suffered adversely in advance of the BSE crisis. Science was in the public domain and the housewife was voting with her purse. It cannot be said however that the kennel owners were in a wholly different position. The march of science was clear in the case of rabies too, and well before the PPS.

The Claimant criticises the Defendant for what he characterises as an erroneous conclusion in law even if based upon correct facts. The sworn statement of Valerie Smith reads as follows:

"The Government has always accepted that, if the number of animals entering quarantine were to fall for whatever reason, the number of quarantine premises could be expected to fall in line with the size of the market. But the Government has never seriously contemplated abolishing quarantine altogether (although it is accepted that this was one of the options of which the AGQ was asked to calculate the risk). Accordingly, the Government has always believed, and still believes, that there will be a demand for quarantine accommodation for the foreseeable future. It is accepted, however, that changes to Government policy have resulted in a decline in the size of the market for which the authorised quarantine premises are competing.

The Treaty of Amsterdam itself contains no requirement to pay compensation in the circumstances described. However, in that Treaty, the Member States of the EU affirmed that, in the application of the law, regard must be had to the fundamental principles of the European Convention on Human Rights (“the ECHR”). Article 1 of the First Protocol to the ECHR, guarantees the right to enjoy peaceful enjoyment of possessions. The Government’s understanding of that article is that compensation is required generally where property is expropriated. However, where the state does not take away property, but instead alters the economic circumstances under which it is operated, there is no presumption that compensation is due. Therefore, given that quarantine kennel owners would still be in possession of their premises, and still have available a market for their business, or the option of conversion to boarding premises, this article would not have the effect of requiring compensation to be paid, should Government legislation allow some pets to enter the UK without having to undergo quarantine.

The issue of whether to reform quarantine was debated in the House of Commons on 29th October 1998. In his closing speech, Elliot Morley MP, Parliamentary Secretary (Commons) at the then Ministry of Agriculture, Fisheries and Food made clear the Minister’s view that, because the market for quarantine would continue to exist, compensation was not payable. I exhibit the Official Report (Hansard) report of Mr Morley’s closing speech at Tab 18."

If the existence of some market is construed as ruling out interference, then, submits Mr Isaacs, the Defendant has failed to grasp that if a kennel owner bought premises now proving more amenable to adaptation and allowing of diversification, that is an irrelevance, since there exists no compensation scheme at all.

Where a state implements changes which adversely affect businesses it cannot be said that Art 1 cannot apply. Whether the Defendant be correct in contending that a cessation of as opposed to a decline in business is the sine qua non for compensation I doubt. A decline may be capable of bringing the relevant business within the scope of a compensation scheme but I do not need to decide the issue since upon these facts I am satisfied that any balancing act required was properly done.

The Commission, according to the learned authors of Clayton and Tomlinson, has said that control of use cases will rarely involve compensation. The learned authors write:-

"The elimination of one of the “bundle of rights” comprising ownership will not usually be sufficient to deprive a person of ownership: but such an infringement may amount to a control of the use of property. Such control may be effected by the state either by requiring positive action of individuals or by imposing restrictions upon their activities. Restrictions include planning controls, environmental orders, a prohibition on construction, rent control, suspension of eviction from residential property, import and export laws, economical regulation of professions, the seizure of property for legal proceedings, or inheritance laws, forfeiture provisions for the enforcement of laws relating to the use or possession of property and forfeiture proceedings to seize or confiscate property in criminal proceedings as a preventative or interim measure. A refusal to grant planning permission will not be an interference but a planning enforcement notice will be. "

It is upon this basis that the Defendant submits that not even control of use can be made out, since the Claimant retains all his rights. The authors continue:-

"(d) Justification and the `fair balance test`

It is now clear that when considering whether an interference with the peaceful enjoyment of possessions is justified:

This approach is taken whichever of the three rules applies. However, the detailed application of the `fair balance` test will not be the same in all circumstances.

In order to satisfy the `fair balance test` two conditions must be fulfilled:

the interference must have a `legitimate aim`;

there must be a reasonable relationship of proportionality between the means employed and the aim pursued.

Two factors are of particular importance in deciding whether there is a `fair balance`. First, whether the property owner is entitled to compensation for the interference. This was a significant factor in Sporrong and Lonnroth v Sweden and has been prominent in other cases. Thus, the administration of a scheme for the consolidation of agricultural holdings in the interest of their economic exploitation was found to be in violation of Article 1: 16 years after the scheme had been implemented it had still to be concluded and no means of redress for interim losses of the applicants had been provided."

In Tre Traktorer, Pinnacle, and London Armoury, legislation introduced a removal of a right to carry on an aspect or aspects of the Claimant’s’ business. That is not so in this case, where the right remains untouched but the business has suffered in some cases. That in my judgment puts it in a different category from control of use.

Applicn no37666/97 London Armoury et al ECommHR 26.9.00 concerned firearms businesses, clubs and gun ranges affected by the 1997 Firearm Amendment Legislation which affected income from handguns. There was no compensation for the reduced value of goodwill and assets. The Government conceded that the relevant Amendment Acts amounted to a control of use, but argued that in reliance upon Baner v Sweden (Dec 9.3.89 D.R. 60 128) none normally existed. They urged that the number of schemes, existing and probable, designed to protect the public interest would if vulnerable to compensation so constrain the public purse as to burden it disproportionately. The judgment quotes from the words in parliamentary debate of the then Shadow Home Secretary Mr. Straw:

“The effect …….would be ….that, when next we felt there was a need to improve public safety through legislation, whether in respect of furniture, the pharmaceutical industry, the transport industry or firearms control, Governments and the House would always be constrained and often prevented from making decisions in favour of public safety by the enormous cost involved…….”

The Court found that the interference, a control of use, was akin to that in Pinnacle. These applicants would have been entitled to compensation for the value of stock (handguns) but the Court shared the Government’s view that they had no legitimate expectation that the use of particular firearms would continue. The legislature's decision would attract a wide margin of appreciation and unless manifestly arbitrary or unreasonable would be respected. There had been a fair balance struck and the application was manifestly ill founded.

In contrast to the factual basis in Tre Traktorer, Pinnacle and London Armoury, where there was a removal of the right to conduct business, this Claimant remains entitled to conduct his business. He complains of its reduced profits, no more.

Though one way of viewing matters is as put by the Claimant that he ran a business whose genesis was exclusively in government policy, another is that no one constrained him, years ago, to choose it as opposed to another livelihood. Equally, he must have made a decision that there was a demand for quarantine kennels and has in the intervening years made profit from it. As I earlier remarked, he takes the rough with the smooth.

The by now familiar approach of Strasbourg jurisprudence gives domestic states a wide margin of appreciation, in that the ECtHR will not substitute for a decision which included the exercise of discretion its own view.

I have accepted the Defendant’s contention that this is not a “control of use” case but even if it were Baner v Sweden (1989) 60 DR 128 would he argues suggest that compensation would be blocked. It reads:

" ..... the Commission’s view [is that] such a right to compensation is not inherent in the second paragraph......"

I do not share that interpretation. Rather, in a control of use case, there is in my judgment a requirement that the court should review all the circumstances so as to determine the question of fair balance. That must be, given the passage in Baner which reads:-

"This does not exclude that the the law may provide for compensation in cases where a regulation of use may have severe economic consequences to the detriment of the property owner. The Commission is not required to establish in the abstract under which circumstances Article 1 may require that compensation be paid in such cases. When assessing the proportionability of the regulation in question it will be of relevance whether compensation is available and to what extent a concrete economic loss was caused by the legisaltion."

Is this a case in which, exceptionally, fair balance would lead to compensation? Pinnacle was a case in which the government’s refusal of compensation was held to have been justified, as it was in London Armoury. In R v SS for Health ex parte Eastside Cheese Co (1999) 3 CMLR 1234, public health requirements meant that cheeses could not be bought or sold. The measure was characterised as severe but the claim under Article 1 failed. The Article is not in my judgment designed to mitigate financial hardship endured by those whom legislative change has not favoured. That being so there arises no necessity for me to consider fair balance, but, for the avoidance of doubt, I make plain that in my judgment the decision of the Defendant cannot on that ground be criticised.

Duty to give reasons.

The 9.5.00 letter not in my judgment being a decision letter, I consider it to be a clarification of what was already plain.

Substantial correspondence and exchanges had made clear the position of the Defendant, and in my judgment this argument cannot be substantiated.

For the above reasons this application fails.