- George Moerasrivier Boerdery was awarded zero compensation for chickens and eggs destroyed during a 2021 avian flu outbreak.
- The Supreme Court of Appeal majority found that compensation must be based on fair market value, assessed with reference to the animals or things in an uninfected state.
- The farm’s claim must be reconsidered, but the judgment does not guarantee full replacement costs or a specific compensation amount.
When avian flu struck George Moerasrivier Boerdery’s farms in May 2021, the company was required to destroy chickens and eggs to help prevent the disease from spreading.
Although the culling was mandated by the State, the Department of Agriculture valued the destroyed animals and eggs at zero when the farmer applied for compensation.
The dispute eventually reached the Supreme Court of Appeal, raising a key question about who should bear the financial cost when farmers must destroy productive assets to protect animal health and the wider public.
A compensation claim returned to zero
George Moerasrivier Boerdery (Pty) Ltd, which farms and sells layer hens, free-range chickens and eggs, was hit hard by the outbreak. A State veterinarian, identified in the judgment as Dr Malan, ordered the destruction of infected and in-contact birds and eggs on the company’s Onderplaas and Moerasrivier farms, and the company was required to clean and disinfect the poultry houses.
The farm complied and applied for compensation under Section 19 of the Animal Diseases Act. The claim covered the destroyed poultry and eggs as well as disposal, cleaning and disinfection costs.
On 4 November 2021, the Director of Animal Health awarded no compensation, reasoning that avian flu is highly contagious, that infected and exposed chickens were likely to die, and that the affected poultry and eggs could not be used or traded.
The company objected. An internal panel of senior officials recommended setting aside the decision, consulting the farm to reach an acceptable compensation value, and developing and publishing criteria for fair market value.
The Minister of Agriculture accepted the objection and sent the claim back for reconsideration. However, on 30 January 2023, the director again concluded that no amount above zero was acceptable for the destroyed poultry and eggs.
The farm then approached the High Court in the Western Cape to have the decision reviewed and set aside. It sought compensation of R31.89 million or whatever the court deemed appropriate.
Why the value of healthy poultry mattered
The High Court set aside the zero-compensation decision and sent the claim back to the director, directing that the destroyed animals and things be valued on the basis that they were in a healthy state. The director and minister appealed to the Supreme Court of Appeal.
In the majority judgment, Judge of Appeal DN Unterhalter found that Section 19 required the director to determine compensation using a legally appropriate criterion. Where no amount had been prescribed by regulation, the director still had to base compensation on fair market value.
The majority rejected the view that the director could choose any criterion and fix any amount without being constrained by that standard. A central issue was whether the destroyed poultry should be valued as they were when the control measures were imposed, or according to their value before infection or exposure to the disease.
The majority held that the relevant valuation had to look at the animals and things in an uninfected state. If not, the very disease that prompted the destruction could reduce their value to zero, leaving farmers to bear the financial consequences of complying with compulsory measures.
The judgment also found the director failed to consider the value of chickens that were neither infected nor in contact with infected birds but were nevertheless destroyed as a precaution.
The ruling does not guarantee replacement costs
The majority emphasised that fair market value is not the same as the cost of replacing an entire flock. Although the farm’s destroyed poultry and eggs must be assessed using the correct legal approach, the director remains responsible for determining the compensation amount.
The judgment also distinguishes between animals destroyed under official control measures and birds that died from avian flu before those measures were applied. Birds that died before official orders do not qualify for compensation simply because they were later disposed of.
The majority reasoned that compensation serves a broader public purpose. Farmers may be required to destroy animals to contain a disease that threatens other farms, livelihoods, consumers, and food security. The financial cost of protecting the public should not automatically be left entirely with the individual farmer.
A fair compensation system may also encourage farmers to report outbreaks promptly and cooperate with state veterinarians rather than risk receiving nothing for assets destroyed under compulsory orders.
A divided judgment
Judge of Appeal TV Norman, supported by Acting Judge of Appeal BH Mbha, agreed that the director’s zero-compensation decision had to be set aside but disagreed with the majority on the direction requiring valuation in a healthy state.
He believed the High Court intruded into the director’s statutory responsibility by prescribing the valuation method and highlighted discrepancies in the farm’s figures, such as differences between the number of birds claimed to have been destroyed and the numbers recorded in burial permissions.
In his view, the claim needed reconsideration without the High Court imposing a specific valuation criterion. He would also have ordered each party to bear its own appeal costs.
The Supreme Court of Appeal’s final order dismissed the director’s and minister’s appeals with costs, including the costs of two counsel where employed. The court also corrected the statutory reference in the High Court’s order to Section 8(1)(c)(i) of the Promotion of Administrative Justice Act 3 of 2000.
The compensation claim must now be reconsidered by the director under the legal principles set out by the majority. The final amount, if any, remains to be determined.
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