Appeal No.:– 196/2007 International Cases [2012] Part 3 Case 11 [SCIre]



Minister for Communications,

Marine & Natural Resources

- vs -

Lett & Company Ltd

Denham CJ

Macken J

O'Donnell J



Justice O’Donnell

  1. This is an appeal by the Minister for Communications, Marine and Natural Resources, Ireland and the Attorney General (“the State defendants”) against the judgment and order of Clarke J. of the 23rd May, 2007, which found that the plaintiff company had a legitimate expectation, created by the State, that it would receive compensation for losses incurred as a result of a restriction on the use of certain mussel beds in Wexford Harbour. Compensation was assessed at €1.15 million. It is also a dispiriting story of mismanagement by giving rise to an exposure to a large claim for compensation, and permitting a dispute between the plaintiff, the first named defendant (“the Council”) and the State defendants to become the subject of a costly 29 day hearing in the High Court, and this appeal.


  2. The plaintiff company, run by the Lett family, farms mussels in Wexford Harbour and has done so for over a century. In its essence, mussel fishing is the traditional activity of gathering mussels from areas on the seashore where they can be found. By the time of this litigation mussel farming had become a reasonably sophisticated operation involving the harvesting of mussel seed at sea, its transport to a favoured location, its deposit, and the subsequent collection, up to two years later, of grown mussels.

  3. It is clear that the mussel business will not normally own the area where the mussels are grown; accordingly the legal basis for the industry is somewhat precarious. At a basic level, mussel farming is carried out, and was carried out in Wexford Harbour, on part of the foreshore, which is regulated pursuant to the Foreshore Act, 1933. The entitlement to farm mussels in any such location was dependent therefore on the grant of a foreshore licence, which was also the only vehicle for regulation by the State. However, in the late 1990s it was sought to regulate aquaculture businesses, including mussel farming, by the provisions of the Fisheries (Amendment) Act, 1997. Under the scheme created by that Act, an aquaculture licence was required for any aquaculture activity. Application for a licence was made to the Minister, with an appeal to the Aquaculture Licenses Appeals Board. The intention was, apparently, that existing operators would be licensed for the area which they had traditionally used, and that new applicants would be licensed on a case by case basis. At the time of the proceedings, the plaintiff company was in the process of applying for such licences in respect of the mussel beds in Wexford Harbour and it received a licence for areas other than beds designated 30A and 30D which are the subject matter of these proceedings. It was found by the trial judge, and plainly was the case, that in the normal course of events, the plaintiff company would have received an aquaculture licence in respect of the entirety of beds 30A and 30D as well, if it were not for the events which are the subject matter of this litigation. One further relevant area of regulation, is that created by the Molluscan Shellfish (Conservation of Stocks) Order 1987, S.I. No. 118 of 1987, which required a licence to move mussels and mussel seed within the State, or its territorial waters. This was the regulatory regime which affected the plaintiff company at the time of this litigation, and which set the legal context in which this case was debated. There was no exploration in this case as to whether the plaintiff company had any other rights as a matter of law.

  4. In the late 1990s it was proposed to install a state of the art sewage treatment system to service the town of Wexford. A tertiary treatment plant was to be constructed, which would have the effect of greatly improving the water quality in Wexford Harbour. This was a development which ought to have been of great benefit to mussel fishermen, especially those such as the plaintiff company, which were involved in the export business, as once the treatment plant was operational, not only would the risk of contamination of the stocks be removed, but it would be possible to say that the mussels were reared in water with the highest water quality. The fact that instead of celebration the sewage treatment plant gave rise to 29 days of costly litigation and an award of €1.15 million against the State, and further cost involved in this appeal, is its own rather perverse tribute to the lack of coordination between and management in, the relevant State bodies.

  5. The water treated by the effluent plant was to be discharged into the sea through an outflow pipe. That outflow pipe would be placed in the seabed, and the design of the system required the outflow pipe to emerge in the area of the mussel beds traditionally cultivated by the plaintiff. Since this was an area of the foreshore, a foreshore licence was required from the Minister for Communications, Marine and Natural Resources. As part of its application for such a licence, the Council was required to prepare an Environmental Impact Statement (EIS). That document noted that the precautionary principle required that an exclusion zone be established around the outflow, which it was anticipated could be reduced in due course when it was apparent that the outflow posed no threat to the mussel population in the adjoining area. A necessary consequence of this development therefore was that there would be a restriction on mussel cultivation on a permanent basis within a limited exclusion zone, and for a shorter period, within a wider area. It would normally follow that since this was a work of public utility being undertaken by a public body, any private interest affected should receive compensation for any loss occasioned by the development. The Department of the Marine was well aware of the concern of the mussel fisherman. On the other hand, the Council was, perhaps understandably, extremely reluctant to take on an open-ended compensation obligation. As a background to this, was the fact that the Council had recently carried out remedial works on the bridge in Wexford Harbour which resulted in a very substantial payment to the plaintiff company. There is no legislative scheme governing situations such as this, and the process was allowed to drift. The pressure point became the fact that the Council was required to obtain a foreshore licence from the Department of Communications, Marine and Natural Resources which was sympathetic to, and protective of, the position of the mussel fishermen. At one level, the Council was understandably unwilling to accept a compensation obligation of uncertain scope. The Department, on the other hand, which was not incurring (or at least thought it was not incurring) any liability was just as predictably unconcerned about the ramifications of a compensation obligation. In these discussions, sight was lost of two things. First, it did not follow that absent a compensation scheme, the local authority could interfere with and sterilise a finite resource utilised by the plaintiff company and other fishermen without incurring some liability to them. Second, and in any event, the simple justice of the situation, and therefore it might have been thought, good administration, required that if a private party was materially affected by governmental action in the public interest, and obliged to give up some private benefit, then that party should normally receive some compensation, whether or not that was necessary as a matter of strict law.

  6. The negotiations between the Department and the Council were protracted, and at one stage involved the intervention of the Department of the Environment, which supervises local authorities. It was also perhaps inevitable that there would be intervention at a political level. In particular, on 19th November, 1998, the fishermen sought and obtained a meeting with the then Minister who was, as it happened, a local TD. The minutes of the meeting record the concerns raised by mussel fishermen as to the “implication of the relocated outflow pipe arising from the new sewage works in Wexford Town”. An official in the Department of Communications, Marine and Natural Resources is recorded as outlining the Department’s stance as follows:–

    That the existing mussel operations must be taken into account in the location of the outflow.

    That the output from the pipe must be very highly treated (including ultraviolet) to minimise any contamination – this will result in very low impact on any adjoining mussel area.

    That the local authority must make compensatory provision for any impact which the pipes output may have on any adjoining mussel business.

    [emphasis added]

    The memo continued:–

    These points have all been communicated to the Local Authority as the Department’s official view on the outflow pipe. The overall aim of the Department’s policy was actually (to) improve water quality in the bay which may lead to it becoming an (A) area in future.

  7. The Council continued to resist the compensation obligation. However, ultimately it became clear that unless it accepted the terms offered by the Department, no foreshore licence would be forthcoming and the planned treatment plant could not go ahead. Accordingly, the Council eventually accepted the licence which in the event, and somewhat appropriately, was issued on 1st April, 2000. That licence contained the following terms relating to the question of mussel fishing:–


    The Minister shall, following a scientifically based study, determine exclusion shell fishing zones around the set outfall pipe and diffuser. A microbiological and viral monitoring programme to allow those exclusion zones to be suitably amended as necessary should be carried out on behalf of the Minister. The costs associated with the said study and monitoring programme should be borne by the licensee.


    No liability shall attach to the Minister in respect of any claim for compensation by mussel fishermen arising from the operation of this Licence.


    Any claims for compensation for proven loss of income shall be assessed and set within accordance with an agreement which shall be entered into by the licensee with mussel fishermen prior to any discharge from the outflow pipe and diffuser. In the event that the Minister is satisfied that the licensee has made a bona fide effort to enter into such an agreement on reasonable terms and the mussel fishermen refuse to enter into such agreement, this condition shall not apply.

    In providing for an exclusion zone and a scientific survey, the licence was broadly consistent with what was contemplated by the Council’s EIS, albeit that the precise sequence was not mapped out in any detail.

  8. It is apparent that even at that time these provisions were not entirely satisfactory as there was no specific scheme set out, no mechanism for resolving disputes, and it was not clear what would be the position if the Minister considered that the fishermen refused to enter an agreement on reasonable terms. Would the compensation obligation fall altogether, or would it simply mean that discharge from the outflow pipe could commence without the compensation being agreed and settled? Significantly, it appears that Wexford Borough Council was specifically advised by its external solicitor of the potential difficulties involved. On 19th April, 2000, they wrote to the Council confirming advice previously given that:–

    The acceptance of clauses 13 and 14 are bound to cause the corporation serious difficulties not least in the following areas:–


    Dealing with case currently taken by Letts


    Dealing with the mussel fishermen generally;


    The advice continued:–

    It would seem to us that to sign a licence in the format presented will undoubtedly leave the corporation open to serious difficulties in the future.

  9. There could be no question therefore but that the Council was fully aware of the risks it ran in accepting the foreshore licence, and the compensation obligation contained therein. The Department also ought to have been aware of the Council’s genuine concerns in this regard and there should have been a concerted effort to limit the area of the exclusion zone and the period during which it would be in force and to agree an efficient system of assessment of compensation. It is all the more remarkable therefore, that as the trial judge observed, nothing was done. There was no scientifically based study. There was no monitoring programme. There was no assessment to claim for compensation. There was no offer to enter an agreement.

  10. However, a de facto exclusion zone of 500 metres around the outflow pipe was imposed. No decision was made on the plaintiff company’s application for an aquaculture licence for areas 30A and 30D. When the plaintiff company sought a movement licence for the transport of mussel seed the licence was granted on 22nd June, 2001, to conditions including any conditions stipulated by the Department’s Coastal Zone Administration Division. One of those conditions was that:–

    You are not to place the seed within 500 meters of the proposed location of the sewage outfall pipe scheme for Wexford Harbour.

    The company’s application for a licence in respect of other areas was granted and appealed to the Aquaculture Board which included site 30A2 in the licence “as it is outside the 500 metre exclusion zone proposed by Wexford County Council which is the vicinity of the proposed discharge pipe for the Wexford town sewage treatment plant”. As a matter of fact, therefore, all parties proceeded on the basis that there was a 500 metre exclusion zone around the outflow pipe.

  11. In late 2002, work commenced on the construction of the pipe. There was a flurry of correspondence, and there was an obvious concern on the part of the advisor to the Council that the failure to implement the compensation provisions might lead to a position where the project could not be put into operation. In early 2003, a meeting between the Council and the plaintiff was arranged to discuss compensation, and a claim for compensation was then put forward which assessed the loss on an annual basis, at over €400,000. This was purported to be calculated in accordance with the compensation scheme which had operated in respect of the Mornington fishermen in relation to works on the Boyne Estuary in Drogheda Harbour. The claim was received politely and acknowledged by the County Council. Again, however, nothing was done. Inevitably then, these proceedings were commenced, and perhaps equally inevitably the claim advanced was extremely substantial. Finally, the State and the Council responded, and very considerable resources were deployed, experts were retained, liability was denied and all parts of the plaintiff’s claim were subject to detailed searching and expensive scrutiny.

  12. Two weeks before the trial was due to commence, there was an important development. By letter of 28th June, 2006, which did not itself refer to the imminent hearing, the Department informed the plaintiff that the exclusion would be suspended and that an exclusion zone of 50 metres retained in its place “in the interest of navigational safety and to provide necessary protection to the outfall pipe and diffusers”. It might be noted, that no scientific survey was referred to; the catalyst for this development was described as “the information now available to it” i.e. the Department. The long dormant application for an aquaculture licence was now revived, and the letter informed the plaintiff that a licence had been granted for all of the area with the exception of the 50 metres reduced exclusion zone. There can be little doubt, and it was not seriously disputed, that this letter was prompted by the imminence of the hearing in the High Court. In due course that hearing proceeded, with both the State defendants and the Council separately represented. On the question of liability the State and the Council were in bitter dispute. Each party made strenuous efforts to shift liability to each other, thus making the plaintiff’s task that much easier. As already observed, the hearing in the High Court occupied 29 days.

  13. On this appeal a number of issues were debated. It will be necessary to consider the legal argument in some detail. But what is beyond dispute in my view is that matters should not have reached this point. The negotiation of the licence was itself a fraught experience. The problem of compensation was identified from the outset. Once the licence was granted however, the issue was simply ignored. A legitimate request for compensation by an Irish company and rate payer, for loss occasioned by works of public utility carried out by a local authority with the permission of the State was avoided, and allowed to fester and develop into litigation.

  14. It is, I hope, not merely hindsight to suggest that what ought to have been done was obvious. A simple compensation scheme should have been devised and approved by the Minister. The Council should have included that in the cost of the development, just as the cost of the acquisition of land for the treatment plant was itself a necessary cost. The party with a liability to pay that compensation had an obvious incentive to ensure that the initial exclusion zone was revised as soon as possible to limit both the area for which compensation was payable, and the time over which that compensation should be assessed. When it became clear that both the Department and the Council were becoming embroiled in expensive litigation, it ought to have been possible to have the differences between them resolved by an effective process of internal mediation or adjudication, which if it did not resolve the dispute, might at worst have allowed the litigation to be dealt with more efficiently. In the event the mechanism of a High Court action was the only route left open to the plaintiff to force the defendants to address their responsibilities. Litigation will produce a final result but at a considerable cost in terms of time, resources and finance. It was perhaps, the most protracted and expensive way imaginable of resolving these issues.

  15. During this case there were hints of an argument advanced by the Council from time to time that there was in truth no exclusion zone since in fact no licence had been granted until June, 2006, and that the plaintiff had no legal, protectable, right to farm mussels, and therefore no valid claim for compensation. It was said that if the plaintiff could not exploit areas 30A and 30D, this was because there was no licence to do so rather than because of an exclusion zone. The trial judge rejected these arguments, observing among other things, that if there was no exclusion zone, it was very difficult to understand what the Department thought it was suspending in its letter of 20th June, 2006. The trial judge’s conclusions in this regard were entirely correct.

  16. 16 The appellants also argued that there was no legitimate expectation created in this case. The trial judge had sought to analyse the question by reference to the judgment of Fennelly J. in Glencar Exploration p.l.c. v Mayo County Council (NO. 2) [2002] 1 I.R. 84. In that case, Fennelly J. made some remarks he described as “essentially provisional” as to three propositions which were required to be established in order to succeed in a claim based on a failure of a public authority to respect legitimate expectation. First, the authority must have made a statement or adopted the position amounting to a promise or representation, express or implied, as to how it will act in respect of an identifiable area of its activity. Second, the representation must be addressed or conveyed, either directly or indirectly, to identified persons or groups of persons affected actually or potentially in such a way that it forms part of the transaction definitively entered into or a relationship between that person or group in the public authority or that the person or group has acted on the faith of the representation. Third, the representation must be such as to create an expectation, reasonably entertained, that the public authority will abide by the representation to the extent that it would be unjust to permit the public authority to resile from it.

  17. The learned trial judge found that each element of this test was established in this case at least as far as the Department was concerned. In my view, he was entirely correct to do so. The representation given to the mussel fishermen at the meeting of the 19th November, 1998, on the Department’s position was that the local authority must make compensatory provision for any impact which the pipe’s output may have on adjoining mussel business. The terms of the licence itself, a publicly available document which was in fact obtained by Mr. Lett, provided that any claim for compensation for loss of income should be assessed and paid in accordance with an agreement entered into. These two events undoubtedly gave rise to an expectation on the part of the mussel fishermen in general, and Lett in particular, which was entirely legitimate and which it would have been unfair for either the Minister or the Council to resile from. When these dealings are viewed, as they must be, against the background of the moral, and possibly, legal claims of the displaced mussel fishermen, the conclusion that there was a legitimate expectation from which it would be unjust to permit the State to resile, is beyond serious contest.

  18. The trial judge then went on to consider the position of Wexford Borough Council. He addressed this issue in the context of the liability as between the defendants. It is perhaps implicit in this approach that the trial judge had concluded that the terms of the licence did create a legitimate expectation on the part of Wexford Borough Council as well as the Minister, although this is not clear. However, he accepted the argument made by the Council that the exclusion zone was not imposed in accordance with the licence containing the compensation requirement as there had been no prior scientific survey. Accordingly, no obligation to pay compensation arose on the part of the Council.

  19. Neither the plaintiff company nor the Department appealed this finding to this Court; consequently, it does not form any part of the issue to be determined by this Court, although as will become apparent, it has an indirect influence upon an issue which is central to this appeal. I would, for my part, respectfully question, however, the conclusion that if the licence did create legitimate expectation of compensation on the part of Wexford Borough Council (and I am inclined to think it did) then the Council could avoid its obligations by the failure to comply with the preliminary matters in relation to the imposition of the exclusion zone envisaged by the licence and over which the plaintiff company could have no control. If, instead of an expectation, there was a formal agreement between the Minister and the Council on the one hand, and the fishermen on the other, that compensation would be payable for the imposition of the exclusion zone, then neither the State nor the Council could have avoided liability to the plaintiff because one of them had not performed its obligations in precise conformity with the agreement. Even as between the defendants I am not convinced of the fact that the Department did not carry out a preliminary survey and entirely absolve the Council from any liability. The zone actually imposed was undoubtedly imposed because of the outflow pipe operated by the Council pursuant to the licence. The evidence is furthermore that it was always envisaged, not least from the Council’s own EIS that the initial exclusion zone would be imposed in a rather crude fashion, and would subsequently be refined later. That EIS proposed that “the delineation of the extent of the exclusion zone would probably be best done initially on an arbitrary manner and then subsequently refined by monitoring”. The operation of the pipe always required some exclusion zone and there was little argument that its initial size should be 500 metres or so. The Council was to carry out the scientific survey. It did not do so before the coming into operation of the pipe. The larger truth is that both the Department and the Council were at fault in this debacle. If the issue had been appealed to this Court, this Court would have had to consider very carefully the question of the Council’s possible liability to Lett. However, for present purposes, the only question is the correctness of the learned trial judge’s findings in respect of the Department.

  20. The State did not seriously challenge the Court’s finding that the legitimate expectation had been created. However, the State argued strongly that the expectation created was that compensation would be payable by the Council. Furthermore, it was an express term of the licence (clause 13), and therefore it was said of any expectation created thereby, that the Minister would not have any liability in respect of any claim for compensation by the mussel fishermen. The trial judge, it was said, had characterised his judgment as enforcing the expectation of compensation created. How, it was rhetorically asked, could such a process result in the imposition of liability to pay compensation on the Minister when the licence alleged to create the expectation expressly excluded such an obligation? It might also have been added, that any expectation by the licence was for compensation assessed in accordance with the agreement. It was never an expectation of compensation to be assessed by the High Court.

  21. It might be apparent that this point is somewhat interrelated with the failure of the claim against the Council. It would be unfortunate indeed, if the State was allowed to escape a liability, and the plaintiff was required to go without a remedy, for the breach of an expectation which the Court had correctly found was legitimate and enforceable. The High Court judgment sought to address this point by observing that the claim did not arise from the operation of an exclusion zone contemplated by the licence. Therefore, clause 13, which limited compensation payable in respect of an exclusion zone imposed in accordance with a licence, could not be availed of by the Minister. But that analysis, it might be observed, creates its own problems. If the exclusion zone was not made pursuant to the licence, and if it was the licence which created or partially created the expectation, how could any obligation to pay compensation arise?

  22. I accept that there is some force in this analysis, limited though it is to a narrow issue. But the fact that the route chosen may be dubious does not mean that the solution arrived at is incorrect. The trial judge adopted this analysis because of a concern about determining whether a claim for damages could be made for breach of a legitimate expectation. Instead, he characterised his decision as the enforcement of the expectation created. However, if the claim is understood as a claim for damages, then much of this difficulty disappears. If the State created a legitimate expectation that there would be compensation, payable albeit by the Council, and no such compensation was paid, then the State should be liable for any loss that occurs. For example, in a contractual situation if a party contracts for a benefit to be conferred by a third party and the third party does not do so, the contracting party will be liable in damages.

  23. I recognise the reasons for caution in this regard not least because this is an issue which would benefit from more extensive argument in a future case but it seems to me in principle at least, and indeed by analogy with the position in estoppel in private law, that the issue for the Court is that once a legitimate expectation or estoppel has been identified, it is necessary to make good the equity so found, and that in such circumstances again in principle, the Court can make an order, whether characterised as damages or restitution, in order to make good the breach identified.

  24. In Abrahamson v Law Society of Ireland [1996] 1 I.R. 403, McCracken J. identified a number of general principles in relation to legitimate expectation. Among those principles was the following, at p. 423:–

    Where the legitimate expectation is that a benefit will be secured, the courts will endeavour to obtain that benefit or to compensate the applicant, whether by way of an order of mandamus or by an award of damages, provided that to do so was lawful.

    [emphasis added]

  25. In coming to this conclusion McCracken J. relied on a well known dictum of Lord Denning M.R. in Amalgamated Investment & Property Company Ltd (In Liquidation) v Texas Commerce International Bank Ltd [1982] 1 Q.B. 84, at p. 122:–

    When the parties to a transaction proceed on the basis of an underlying assumption – either of fact or of law – whether due to misrepresentation or mistake makes no difference – on which they have conducted the pleadings between them – neither of them will be allowed to go back on the assumption when it would be unfair or unjust to allow (them) to do so. If one of them does seek to go back on it, the courts will give the others such remedy as the equity of the case demands.

  26. This dictum was approved, and applied by this Court in the landmark case of Webb v Ireland [1988] I.R. 353. I recognise the dangers of application of too sweeping a statement of principle, and the difficulties posed by cross-fertilisation of concepts such as proprietary estoppel, promissory estoppel and legitimate expectation. However, I am satisfied for present purposes that there is sufficient authority and principle to justify a court, once it has determined that there has been a breach of a legitimate expectation, to give such remedy as the equity of the case may demand. Indeed it could be said that Webb could be analysed in this way. The plaintiffs in that case had been led to believe that they would be treated generously and given a reward by the State. That did not ensue. The Court did not, however, direct that the State should reconsider the matter and make any award which the relevant Department considered reasonable. Instead, the Court itself fixed the amount which should be paid.

  27. The calculation of what the equity of the case may demand, may involve the assessment of the compensation, albeit not the compensation contemplated by the licence (that is compensation for the impact on the business of the outflow pipe), but a monetary remedy that the equity of the case required because a compensation scheme was not available to the mussel fishermen. This distinction may not be important in many cases (as the quantum may be the same in many cases however the issue is analysed) but it may be relevant here because it gives rise to questions of mitigation of loss, and the question of what in Webb v Ireland was described as an amount “which is reasonable in the light of all the relevant circumstances” or what Scarman L.J. (as he then was) referred to in Crabb v Arun District Council [1976] 1 Ch 179, at p. 198 when he observed that the court’s role was to determine “the minimum equity to do justice to the plaintiff”.


  28. The trial judge assessed compensation payable to the plaintiff in the sum of €1.15 million. It is perhaps significant that the calculation of this figure was carried out as an assessment of damages for the loss of the exclusion zone rather than an assessment of the compensation that would have been payable had the scheme contemplated by the licence been put into effect. The Court clearly considered what had occurred ex post rather than what compensation might have been calculated ex ante at the time when a compensation scheme ought to have been put in place. In either case, it might be thought that the assessment of damages ex post or the assessment of compensation ex ante would not be an intrinsically complex task. Lett was an established business with accounts and records dating back over ten years. It ought to have been relatively simple to identify the impact upon Lett’s profitability from the unavailability of those portions of areas 30A and 30D up until the change of position as to the extent of the exclusion zone. Any future loss referable to the much reduced exclusion zone would be a small fraction and easily calculated. However, in the event, the assessment of compensation was a much more complex task at the trial, and generated much debate on this appeal. In order to understand the manner in which compensation or damages were to be assessed in this case, it is necessary to understand the business of Lett, and the variables involved.

  29. The judgment of the High Court explains admirably clearly what is involved in the harvesting of mussels. First, it is necessary to secure mussel seed at sea, and then transport it to Wexford Harbour and lay it on the designated beds. Harvesting the mussels takes place normally two years later so that the mussels can develop to the optimum size. Therefore, beds seeded in 2002 would not be harvested until the financial year ending March, 2004. As it happened, beds 30A and 30D were harvested in the financial years ending in even numbers (02, 04, 06, 08 etc.) and beds 30B and 30C were harvested in the odd number years. This feature ought to have meant that the calculation of loss ought to be reasonably precise since it was possible not only to calculate the difference in output in particular years in the affected beds, but it also ought to have been possible to verify those figures, and any trends, by reference to the developments in adjoining beds.

  30. The first difficulty encountered was that the adoption of a simple calculation of loss by reference to the difference in output between the years prior to and subsequent to the existence of the exclusion zone appeared to show that no such loss had been suffered. In the words of the High Court:– “(i)n the events that have happened it would seem that the total level of mussels harvested by Letts since the exclusion zone came into being has not fallen short of the amount of mussels it had, historically, been harvested ....”. There was no difference in the level of production in the years after the imposition of the exclusion zone when compared with earlier years. The reason for this was the subject of some dispute. However it appears that there is little doubt but that the principal reason was that in response to the limitation of the area available, Lett had begun to lay seed in much greater density and had discovered, to their surprise, that the beds were capable of producing many more mussels than had previously been thought. This was frankly explained by Mr. Desmond Lett on day 7, question 369, as follows:–

    It is only since 2004 that, okay, if you like it was forced upon us to put quite a large amount of seed into a relatively small area, and the results were extremely good, there is no question about it.

    Again, at question 383 he said:–

    It was a change that was, if you like, some were forced on us insofar as that you weren’t really put down to a smaller area, there is no question about it.

    The trial judge summarised this evidence as follows:–

    He [Desmond Lett] attempted to place a higher level of mussel seed in the remaining beds within areas 30A and 30D to see if he could compensate for the production loss by raising ..... of not being able to use that part of those beds contained within the exclusion zone.

  31. A further reason for the improved productivity of the Lett’s business was identified by the trial judge as an unintended by-product of the litigation process. Wexford Harbour had been subjected to particularly close expert scrutiny for the purposes of the proceedings, and there was, as a consequence, far greater knowledge about the sea bed at that point than would ever have been gained in the normal course of a business like Lett. These features, on what the judge described as a very strict view of the principles applicable to the calculation of compensation, might have led to the result that Lett would be held to have suffered no loss or only nominal loss. However, the judge considered that this would not give rise to a just result. He said, at para. 6.17:–

    The reality is that Mr. Lett did, in fact, learn of the higher production capabilities of his beds. It would, in my view, be unjust in principle to deprive him of the benefit of that knowledge just because it may, at least in part, have only come about because of the litigation.

  32. As a result, the trial judge embarked upon an exercise which he described as a matter of “estimation and judgment in the light of the evidence as a whole”. He said:–

    These losses are quite hypothetical. Predicting what would have happened during the relevant harvesting season in the absence of the exclusion zone is highly problematic.

  33. Nevertheless, the trial judge attempted to construct a calculation with both characteristically impressive numeracy and a sensible scepticism of the calculations proffered by both sides. The trial judge considered that if the exclusion zone had not existed, then at some stage during the relevant period Lett would have discovered the benefits of increasing the quantity of mussel seed used, thereby increasing the productivity of the beds. At para. 6.14 of the judgment he accepted that “evidence to the effect that advice was given to mussel farmers generally to attempt to increase the level of production from individual beds so as to make the activity generally more economic”. Assuming, therefore, that at some stage during this period Lett would have increased their productivity, it followed that their exclusion from the area 500 metres around the outflow pipe meant a lost opportunity to secure the increased profits that would have been available. This, of course, is a very difficult thing to measure.

  34. Lett calculated their loss at approximately €1 million per harvesting year. In the harvesting year 2005-2006, this was calculated on the following basis. There were 70.99 hectares in 30A and 30D remaining after the alterations due to the bridge work. The exclusion zone was measured at 45.11 hectares. The average production for a season (at the increased productivity rate) from a hectare was 39.04 tonnes having a sales value of €1,050 per tonne. Thus, 1,761 tonnes were lost with a gross value of €1,849,050. Allowance was made for increased cost of mussel seed, machinery equipment, labour and other variable costs of €876,384 leaving an estimated loss of profits of €972,686.

  35. The trial judge considered it was unlikely that Lett would have carried out production at this level in the 2002 season (which would have been harvested in the 2003-2004 season). He said, at para. 7.11:–

    However it seems to me to be most unlikely that Letts would have chosen (in the absence of an exclusion zone) to suddenly move from a well established level of production to one which would have been almost double that which had historically been the case without having at least some clear evidence that such a higher level of mussel seed laying would bear dividends.

    Accordingly, he assessed the loss of opportunity for that season at a minimal figure of €50,000.

  36. However, the judge considered that by 2004, when seed would be laid to be harvested in 2005/2006, the situation would have been much different. Information would have been available as to the benefits from increased density and Lett would have responded. However, he considered it prudent to assume that the output would only result in a tonnage of 850 tonnes from the exclusion zone rather than the 1,761 calculated by Lett. Accordingly, he calculated a figure for loss of profits of €450,000. The trial judge acknowledged that there were other constraints as well. In particular, the Lett’s calculation implied an unlimited supply of mussel seed in particular as well as of equipment and labour. The trial judge was prepared to accept that there were significant constraints on the availability of mussel seed but even allowing for that it would not reduce the figure below an output of 850 tonnes upon which he based his calculations and therefore did not alter the result. Thus, he calculated Lett’s losses to the point when the exclusion zone was reduced, at €500,000.

    Future Losses

  37. It might have been thought that the abandonment of the extensive exclusion zone, even if belated, would bring an end to the ongoing losses of Lett’s business. Lett, however, did not accept that this was the case. Instead, Lett argued that the forced sterilisation of the exclusion zone had resulted in a silting over of the mussel beds with the result that major work of remediation would be required which was extremely costly and which, while being carried out, would prevent the profitable exploitation of the exclusion zone. In total, Lett claimed a figure in excess of €5 million under this heading.

  38. The trial judge analysed this area very carefully. He pointed out the implausibility of a claim of such magnitude, in circumstances where the total loss of profit, even on Lett’s calculation would have been no more than €3 million. It was not plausible, therefore, that any enterprise would engage in the expense of remediation if the cost of the works would exceed the profits that could be obtained from the beds.

  39. The trial judge substituted his own calculation for future loss. He assumed that the total net profit available from exploitation of the exclusion zone in any harvesting year was in the order of €700,000. He also assumed that the plaintiffs would have adopted a cautious approach to the reintroduction of commercial mussel growing to the exclusion zone, coupled with the possibility that it may transpire that some level of remediation work would be required. Accordingly, he considered losses to the order of €425,000 and that €225,000 would derive from the next two mussel harvesting seasons. Thereafter, it would “be possible for Letts to produce as much mussels from beds 30A and 30D as they would have been able had there been no exclusion zone” (para. 10.11). Future losses were calculated therefore in the sum of €650,000, giving a total award for compensation of €1,150,000.


  40. The trial judge acknowledged that his approach was essentially a generalised estimate. The trial judge’s approach to the assessment of compensation is set out at para. 8.4 of his judgment:–

    These losses are quite hypothetical. Predicting what would have happened during the relevant harvesting season in the absence of an exclusion zone is highly problematic. The possibilities vary widely and it is only possible to estimate, as best one can on the evidence, the most likely scenario. In those circumstances a detailed calculation resulting in a very specific figure would falsely suggest that the losses were capable of precise calculation.

  41. A number of things should be noted about this approach. First, it was one which the trial judge was forced to adopt because of the wide and unacceptable variation between the claim advanced on behalf of Lett, and the response made on behalf of the State and the Council (who it should be said did cooperate with each other in this aspect of the defence). Accordingly, the judge’s calculation of compensation or damages was essentially the Court’s own best estimate, largely unsupported by expert evidence. The judgment observed that the Lett claim went through a number of formulations, adaptations and refinements. Yet, at the outset of the hearing, the trial judge was still faced with a claim for an excess of €7 million which was met by a response that Lett had suffered no loss whatsoever. The judge recorded his view that the case showed the merits of the adversarial approach rather than the appointment of a single expert to assess damages. I do not disagree. It is sometimes too readily assumed that there is a single correct answer which some hypothetical independent expert would arrive at. There is much to be said for the benefits of having the view of an expert, however eminent tested by cross-examination which is itself informed by the views of opposing experts, not least in ensuring that a witness is appropriately cautious in giving his or her evidence. But it is highly desirable that there should be as much common ground as possible between expert witnesses in particular, and a degree of agreement as to the real issues between them. I do not think it is at all satisfactory that the judge should be faced with calculations which are so strikingly different, that he should be forced either to choose one or other, or devise his own approach, with the inevitable difficulty that such an approach itself would not have been based on any expert account, or tested by any expert evidence.

  42. The task here was made much more difficult by a number of factors. First, while the judge acknowledged that on a strict view it might be said that Lett had suffered no loss, he considered that this was too harsh an approach and awarded compensation on the basis that Lett would have discovered the merits of increased density even if there had never been an exclusion zone. That is necessarily a speculative conclusion. It was entirely dependent on the evidence recorded at para. 6.14 of the judgment that:–

    (A)dvice was given to mussel farmers generally to attempt to increase the level of production from individual beds so as to make the activity generally more economic.

  43. However, the evidence underlying this conclusion was rather more complex again. It appears that the Seed Mussel Advisory Committee (SMAC) did give advice in relation to stocking densities with a view to increasing production. However, that advice was to reduce stocking densities from the 2002 recommended density of 60 tonnes per hectare to 40 tonnes per hectare. In part, this was to optimise the return from the limited quantity of seed that was available. The evidence of Dr. Terence O’Carroll was that there was a very wide variation in stocking densities from around the country with densities as high as 180 tonnes per hectare. Lett, however, had historically employed stocking density of 20 tonnes per hectare, much lower that the 60 tonnes per hectare advised by SMAC in 2002. The proposition, therefore, that Lett would, in the absence of an exclusion zone, have hit upon the desirability of increasing their stocking density from 20 tonnes per hectare to 40 tonnes per hectare, involves the further hypothesis, that Lett, a company which in the words of the trial judge had not shown itself to be particularly innovative, and who, as a matter of historical fact, had not followed SMAC advice, would nevertheless interpret SMAC advice to reduce stocking density levels as an indicator that they should increase their stocking density levels. Against this hypothesis must be laid the fact that Mr. Lett acknowledged that the company was forced to make this change as a result of the imposition of the exclusion zone and the consequential fact that they had the mussel seed on hand. The conclusion that Lett would have come to a realisation of the benefits of increased density without the stimulus of the exclusion zone is a very considerable piece of speculation. Yet almost €1.1 million of the damages claimed is dependent upon this assumption.

  44. A further troubling feature of the case is the fact that Lett had made very substantial losses for almost every year in the period preceding the imposition of the exclusion zone. The company made losses in six of the seven years between 1997 and 2003 ranging from a low of €246,461 to a high of €923,493. Perhaps even more tellingly, the sole year in which a profit was recorded (€119,252 in the year ended 31st March, 2002), was the year in which Lett received the compensation from the Council for the works carried out in relation to the bridge and the consequent diminution of the area available for mussel farming. The trial judge observed that even if this was so, it did not mean that Lett should not recover for the loss consequent on the unavailability of the mussel beds by reason of the exclusion zone. As he correctly observed, losses increased are just as much a loss as profits reduced. In theory that is so, but in my view, the lack of profitability of the company in practice was a good reason to be very sceptical of its claim that but for the exclusion zone it was about to embark upon a period of unprecedented profitability. It was said in argument, that Lett’s losses were attributable to other businesses carried on by the company rather than the mussel farming. If indeed this was so, it is entirely unsatisfactory that after 29 days of trial and two days of hearings in this Court where claims of up to €7 million losses were made, this matter should still be unclear and left to assertion and counter-assertion in this Court. It is apparent from the judgment which sets out the historical losses and makes no references to any such explanation, that the High Court judge did not consider this a factor.

  45. There were other difficulties with the assessment of compensation. The approach of the judge was to hypothesise the likely development of the Lett business absent an exclusion zone (with all the uncertainties that entailed), then to consider how Lett had performed until the removal of the exclusion zone, and then hypothesise how Lett or a reasonable mussel farmer would have approached the area once the exclusion zone was removed, and finally to subtract one necessarily speculative calculation from the other. It is arguable, however, that a more appropriate initial guide to what the equity of the case required would have been to attempt to assess the compensation as it might have been awarded to the plaintiff company, if the scheme proposed by the licence had been implemented. In my view it would also be appropriate in that regard to take account of what actually transpired. Yet another guide might have been the rental value of beds of equivalent size and productivity to the exclusion zone as that is a measure of what Lett was deprived of, and a reasonable guide to the cost of putting themselves in a position to continue the same business after the exclusion zone was implemented, and for the duration of its existence.

  46. These considerations only emphasise the fact that there are a number of possible outcomes to Lett’s claim for damages, all of them plausible to some degree. It must also be recognised that the legitimate expectation created was to a compensation scheme, the defining feature of which was merely that the Minister should consider it fair and reasonable. Again, there must be a range of such schemes which would satisfy that test.

  47. I recognise the skill with which the learned trial judge sought to make his own calculation of loss and compensation once he had decided, correctly in my view, that the amounts proffered by Lett in particular, provided no useful guide to the compensation payable. However, I cannot avoid the conclusion that the figure of €1.15 million represents too generous a calculation of the plaintiff’s claim of anticipated profits. Where, as here, the claim amounts to a claim for loss of increased profits foregone by a business that was historically loss making, I think a court is justified in adopting a particularly sceptical and searching approach. Business is rarely as easy, or as profitable, as it is made to appear on projections produced in court.

  48. In this case, it was at all times anticipated that there would be a temporary exclusion zone after which a smaller zone would be delineated. Thereafter, Lett and the other affected businesses, would have the significant benefits of the optimum standards of water in the harbour. Compensation was necessary for the temporary disturbance involved in not being able to use 45 hectares of mussel beds which, on the most generous interpretation of the data had, as a matter of history, generated profits in the region of €200,000 in each two year cycle. The figure ultimately awarded amounted to the profits capable of being generated by something between five and six harvesting cycles over a period of ten to twelve years. Furthermore, while the supply of mussel beds is not infinite, it is clear that the availability of foreshore for mussel cultivation is not subject to anything like the same constraints as equivalent land used for agricultural purposes. Yet the figure ultimately arrived at (albeit much reduced from the claim made by the plaintiff) would be close to the equivalent purchase price which could be paid for the same quantity of agricultural land where the purchaser would be acquiring full legal title, and not simply a licence from the State, and where the method of production was better established, and in all probability less costly and precarious. This suggests that the figure arrived at by the Court is unduly generous to a company, particularly a company which had shown itself to be neither innovative nor particularly profitable. Furthermore, the figure for future losses was calculated on an assumption that there would be no real need to engage in costly remediation, and that after two cycles of limited cultivation, the mussel beds would be capable of full production at the increased stocking levels being utilised by the company after the imposition of the exclusion zone. While the assessment of compensation in the High Court properly eschewed any claim to precise calculation, it is nevertheless somewhat illogical to assume that there would be no long term difficulty in utilising the beds, but that the plaintiff company would not have done so until approximately five years after the exclusion zone was returned to it.

  49. If this was a claim for breach of contract, or any other established cause of action, I would have expected more elaborate and detailed argument on the calculation of loss, the requirement of mitigation, and the consequences of unanticipated benefits derived from the existence of litigation. Indeed, analysis of this sort, even by analogy, might have been helpful here. The fact that the claim pursued was in the relatively novel area of legitimate expectation should not mean that the assessment of compensation or damages should be calculated as if on an entirely blank page. In the present context, it is necessary to recall that the claim is one for legitimate expectation and furthermore, that the particular legitimate expectation was to some form of compensation pursuant to a scheme which had never been agreed, and which was, in effect, subject to a ministerial assessment of reasonableness. I see no reason for a court to adopt the most generous scale of assessment of loss, or to treat the parties as if they had bargained for such a scale of assessment, when by definition they did not. Legitimate expectation (like its private law comparator estoppel) is a claim often raised in default of more precise legal arrangements between the parties, and because it would be simply unjust to let one party abandon the other to its legal remedies or lack of them. This is why there is much merit in Lord Scarman’s approach in Crabb v Arun District Council [1976] Ch 179, where he considered that the question to be what was the minimum remedy necessary to address the equity of the situation.

  50. In my view, the assessment of past loss in this case was on the generous side since it assumes Lett would have increased the density for the 2003 stocking season, when there was a reasonable chance that they would not have done so for some time, if at all. However, the Court awarded only €50,000 damages in respect of the first harvesting cycle. Had the Court for example been asked to calculate damages in advance on the assumption that without the exclusion zone Lett would have continued to cultivate the entire area, at the same historically low stocking levels, then the court could have arrived at a figure for loss for two cycles close to the figure which it ultimately awarded for the second cycle alone. The future loss, however, is even more speculative. I agree fully with the High Court that there are multiple variables in this case, and that the assessment of damages is, in this case, an imprecise business. Since the High Court’s calculation was not dependent on any finding of primary fact, or any question of the impression made by particular witnesses, this court is as a matter of law free to substitute its own assessment, albeit recognising that the trial judge had the benefit of full exposure to the facts over a lengthy trial, and that considerable weight should be accorded to his overall assessment. In my view a total award of €650,000 would be more than enough to satisfy not just the minimum equity of the situation, but the broad justice of the plaintiff’s claim. This allows in full the trial courts assessment of past loss (which in the light of the evidence was, if anything, generous), and a further amount for future uncertainty or remediation. It is more than the Plaintiff’s initial claim in 2002 and more than Lett might have been awarded under a reasonably generous compensation scheme at the time. It also calculates the chance of Letts learning of the benefits of increased production within 2 years of the imposition of the exclusion zone at 100%, which, on the evidence seems generous. Even so the amount is substantial Had the agreement, delineation and operation of the exclusion zone and compensation scheme been the subject of more efficient management it might have been possible for the State parties and the Council to have significantly reduced the liability in this regard and also avoided an exposure to substantial costs. As observed at the outset of this judgment, the development of a water treatment plant for Wexford Harbour ought to have been a boon to everyone concerned, and in particular the mussel cultivation businesses. Instead, and regrettably, it gave rise to a claim for very substantial compensation, and consequently to this lengthy and costly litigation.

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