3 Payments under management agreements
13.138 The statutory consultation on damaging proposals in an SI may lead to the conclusion of a management agreement under s 15 of the 1968 Act, with payments based upon statutory guidance issued by the Environment Departments.
Until the passage of the Countryside etc Act 2000 this was provided by DETR Circular 4/83, the Financial Guidelines for Management Agreements under the Wildlife and Countryside Act 1981. Following the introduction of a new regime for protecting SIs introduced by the Countryside etc Act 2000 this was replaced by new guidance : the Guidelines on Management Agreement Payments and related matters (DETR 2001) By virtue of s 50(1) of the Wildlife and Countryside Act 1981 this guidance has statutory effect in relation to management agreements entered into in three situations:(i)In a site of special scientific interest, where the relevant Conservation Body has been notified of an agricultural operation and offers a management agreement to prevent damage to the site;
(ii)In a site of special scientific interest, national park or other designated area, where farm capital grant has been refused because of an objection on conservation grounds; and
(iii)Where the relevant Conservation Body has undertaken to voluntarily apply the guidelines by virtue of s 32(2) of the 1981 Act whenever other types of capital grant have been refused.
13.139 Payments under management agreements offered in Environmentally Sensitive and Nitrate Sensitive Areas are proscribed by the designation Orders relative thereto, on a flat rate basis per hectare, and vary from one designated area to another. Similarly, payments under ‘whole farm’ environmental management schemes such as Tir Cymen (in Wales) and the Wildlife Enhancement Scheme (in England) are calculable on a fixed basis per hectare with top up payments for maintenance or enhancement of specified landscape or environmental features.
(a)Sites of Special Scientific Interest – the Financial Guidelines
13.140 Where a management agreement is offered, the calculation of payments made to the landowner for the restrictions placed upon his land use is provided for in the Guidelines on Management Agreement Payments and other Related Matters (DETR Circular Feb 2001, Welsh Assembly for Wales Oct 2001). Prior to this, payments were based upon DOE Circular 4/1983. This provided for the making of either: (i) annual payments based on the net profit foregone by the landowner as a consequence of being unable to proceed with the operations notified as damaging to the conservation interest of the site; or (ii) a lump sum payment reflecting its loss in capital value.
(i)‘Net Profits Foregone’ – the 1983 Guidelines
13.141 The 1983 Financial Guidelines gave a considerable amount of guidance as to how the ‘net profit foregone’ as a consequence of a proposed management agreement is to be calculated. However, they did not give much assistance to an arbitrator asked to settle a disputed claim as to the quantum of payments. They were criticised as overly prescriptive in matters of valuation detail, unfocussed and poorly drafted In Thomas v Countryside Council for Wales,274 Rougier J. criticised the drafting of para 11 of the Guidelines (‘Minimising Losses’) as ‘earning few prizes for drafting’.
13.142 This could cause unnecessary difficulties, especially where disputes were referred to arbitration and the drafting of individual paragraphs of the Guidelines were subjected to close legal scrutiny.
(ii) The Financial Guidelines for Management Agreement Payments (2001)
13.143 The revised Financial Guidelines introduced in 2001 stipulate instead that where the conservation interest of an SI or international site is not being maintained, or it is subject to inappropriate management, the agencies can offer a management agreement with payments in return for positive conservation measures that the land manager would not normally undertake for economic reasons.
The agreement offered by English nature will normally be a Wildlife Enhancement agreement with a standard payment menu for positive capital works and annual payments. However, the revised Guidelines also require that, in calculating payments, reference will be made to the income foregone by the owner/occupier, as well as costs incurred in implementing positive management. The chief difference is that the income foregone is to be used to calculate the standard annual payment regime to be offered under a Wildlife Enhancement agreement, rather than as the basis of an individual management agreement negotiation in each case. This change of emphasis in the role of ‘income foregone’ reflects the fact that the incentive payment offered under a positive agreement is often derived by looking at the net profit foregone by the owner as a consequence of the changes in land management agreed, although other facts may also be present eg additional payments for capital works. Where (as is envisaged for the future) a positive agreement is concluded under a scheme such as the Wildlife Enhancement Scheme, with a standard payment menu for positive capital works and annual payments, the distinction is more clearly drawn – although here, also, it is to some extent artificial, as the ‘menu’ of standard incentive payments will initially be calculated by taking account of participants’ potential losses of income. Under the revised Financial Guidelines, positive agreements under schemes such as the Wildlife Enhancement agreements are to the norm.(b)Impact of Human Rights Act
13.144 The claimants in Trailer and Marina (Leven) Ltd v Secretary of State and English Nature275 challenged the manner in which the Guidelines on Management Agreement Payments had been applied. The key objection was to the transitional provisions in the 2000 Act and the replacement of the formula under which compensation was payable on the basis of net profits foregone if potentially damaging operations were not carried out.
Where land was already designated an SI prior to the 2000 Act the notification provisions were (to use Lord Justice Neuberger’s phrase) largely ‘toothless’. The claimants argument in Trailer and Marina was that the giving of teeth by the 2000 Act to some of the notifications already made under the 1981 Act might result in an infringement of the Art 1 protocol rights of the landowners affected.13.145 The claimants were the owners of the Leven Canal near Hull in East Yorkshire, a shallow slow moving canal with a number of aquatic plant species of international importance. The SI notification restricted dredging operations and the owners were unable to reopen the canal for commercial use. They had negotiated a five-year management agreement with English Nature in 1997, under which they were paid £19,000 a year for managing the canal in accordance with a management plan which envisaged a limited number of fishing pegs (40 over a 10-kilometre stretch of bank), and boating restricted to small boats owned by the occupants of a trailer park adjacent to the canal. The dispute was triggered by the withdrawal of the annual compensation from the negotiations for a new agreement, and the offer of terms with greatly reduced payment for the conservation management of the canal.
13.146 The combined effect of the 2000 Act and the revised Financial Guidelines, according to the claimants, was to reduce the value of their interest in the canal to virtually nil. The court of appeal rejected the claim, however, holding that the amended 1981 Act was not vulnerable to the accusation of inherent incompatibility with Art 1, and that the statutory management provisions in SIs did not amount to a disguised appropriation of ownership. Viewed as a control of use case, the court held that the test to be applied was essentially subjective – provided the state could properly take the view that the benefit to the community outweighs detriment to the individual, a fair balance will be struck without the requirement to compensate the individual.276 If this is not the case, then compensation in some appropriate form may become relevant to redress the balance and ensure that no breach of Art 1 occurs. In the light of the purpose of the legislation, and of the safeguards applied to protect landowners where operational consent for damaging operations was sought, the benefit to be enjoyed as a result of the amendments made by the 2000 Act, although achieved at the expense of the owners and occupiers of SIs, could not justify the argument that there had been an infringement of the convention rights of the latter.