Kelsall & Ors, R (on the application of) v Secretary of State for Environment, Food & Rural Affairs

Where one part of a statutory instrument is unlawful, textual severance is not necessarily sufficient. The court must also consider whether the remaining provisions are substantially independent and whether the instrument, in its reduced form, would represent the scheme intended by the legislature.

Where positive obligations or compensation provisions are interdependent, and the court cannot be satisfied that the remaining scheme would have been adopted, consulted upon or approved in that form, the appropriate remedy is to quash the instrument as a whole. This is particularly so where the governing statute requires a rational and fair compensation scheme to be made.

The claimants challenged the Fur Farming Compensation Scheme (England) Order 2002. In an earlier judgment, the court held unlawful the provisions concerning compensation for the residual value of breeding stock.

The remaining issue was whether those provisions should be severed, leaving the other compensation provisions in force, or whether the entire Order should be quashed. The court also considered the relationship between compensation for breeding stock and compensation calculated by reference to average net profits, the effect of consultation and parliamentary consideration, and the Secretary of State’s statutory duty to establish a compensation scheme.

1. The Order was quashed in its entirety. The court held that textual severance was possible, but that this was not the only question.
2. The two heads of compensation were interdependent. The value of breeding mink lay in their capacity to generate profits, and the evidence did not explain clearly the rationale for using separate heads of compensation or for fixing the multiple of average net profits. If the scheme were reconsidered from the beginning, the multiple might properly change in light of the provision made for breeding stock.
3. The court was therefore not satisfied that the remaining provisions were substantially independent, or that the same profit-based compensation would have been adopted without the impugned provisions. The overall compensation payable had been relevant to the assessment of fairness and rationality.
4. The case was distinguished from Director of Public Prosecutions v Hutchinson [1990] 2 AC 783. That case concerned a series of substantially independent prohibitions. Here, the Order imposed positive and interdependent compensation obligations.
5. The reduced scheme had not fairly been put out to consultation, and the court could not be satisfied that Parliament would have approved the Order in that form. Partial quashing would also risk suggesting that the statutory duty to provide a compensation scheme had been fulfilled, although the court’s judgment showed that the duty remained outstanding.
6. The Fur Farming Prohibition Act 2000 required the Secretary of State to produce a rational and fair compensation scheme. That obligation had to be assessed by reference to the totality of the payments, rather than by considering individual provisions in isolation.
7. The court left unresolved whether giving weight to representations that no compensation should be paid would itself have required the whole Order to be quashed. The issue could be determined by the Court of Appeal if necessary.
8. On costs, the claimants’ costs were to be subject to detailed assessment. They were to recover 85 per cent of their legal costs, subject to a £40,000 limit, together with all reasonable surveyors’ costs. An interim payment of £25,000 was ordered within 28 days. Permission to appeal was left to the Court of Appeal.

The judgment records an earlier judgment in the same proceedings holding unlawful the provisions concerning compensation for the residual value of breeding stock. This judgment determined the consequential form of the quashing order.