Of Coase and Corn: A (Sort of) Defence of Private Nuisance

AuthorDavid Campbell
Publication Date01 March 2000
Date01 March 2000
Of Coase and Corn: A (Sort of) Defence of Private
David Campbell*
Drawing on the work of Coase, the essay argues for a reform of the law of
nuisance based upon property rights rather than determinations of social welfare
by the courts, and for the use of a reformed law of nuisance as the least flawed
method of regulating the environment in many situations compared to other
techniques of regulation. The argument is developed and illustrated by reference
to several contemporary issues, including genetically modified crops.
The creation of a Food Standards Agency separated from the Ministry of
Agriculture, Fisheries and Food (MAFF)1is the principal legislative response to
the series of ‘food scares’ which have occurred over the last decade.2The injury,
death, concern, massive slaughter of stock and huge expense which have attended
these scares have left the public highly sceptical of MAFF’s ability to guarantee
the safety of food and control the environmental impact of agriculture. It is in this
climate that a most important debate now is obliged to be conducted about the
release of genetically modified organisms (GMOs) into the environment through
the growing of genetically modified crops in open fields. Such has been the low
level of public confidence in MAFF to conduct this debate at all well that
concerned parties have illegally destroyed these crops, and there is considerable
public sympathy for what I think it is right to regard as acts of civil disobedience.3
Whatever the changes in the public body charged with handling this issue, the
method of handling it shows a very familiar pattern.4The right decision is being
taken for all of us on the basis of accumulation of sufficient expert, especially
scientific, evidence. Public debate therefore has very much been the swapping of
scientific claim and counter-claim, and debate about the corrigibility of such
claims. I, for one, have found the tedium of this debate unrelieved even though it
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* Cardiff Law School.
This paper has been read to the Department of Law, Lancaster University, to the 1999 Annual Conference of
the Canadian Law and Economics Assocation held at the University of Toronto, and to the School of Legal
Studies, University of Wolverhampton. I should like to acknowledge the many perceptive criticisms of the
paper made by those audiences, though given the comments of some of the more strident followers of
Richard Posner in Toronto, I must confess that, like Max Weber, ‘I was encouraged to publish the following
arguments by the opposition rather than the assent which they elicited’ M. Weber, Political Writings
(Cambridge: Cambridge University Press, 1994) 1. I also am grateful to Jill Campbell for her assistance with
the research for this paper and to Michael Cardwell, Kevin Dowd,Bob Lee, Sol Picciotto, Neil Stanley, John
Wightman and the Articles Editor of this Review and his referees for their comments on it.
2 C. Booker and R. North, Scared to Death: An Anatomy of the Food Scare Phenomenon (London:
Duckworth, 1998).
3 J. Vidal, ‘Seeds of Dissent’ (17 August 1999) The Guardian. The Chairman and Chief Executive of
Iceland Frozen Foods, the first company to remove GMOs from its own brand foods, has issued a
statement which begins: ‘I am very concerned about the failure of the political system and
Government to act on the clear refusal of the British public to accept genetically modified food and
crops’ and concludes: ‘[g]iven the widespread unease about these developments and the need for a
wide-ranging debate, it is not surprising that people and organisations take it upon themselves to
respond to the wishes of the public in acts of non-violent direct action’. M. Walker, ‘Statement
Regarding the Custody of Peter Melchett after Direct Action against GM Crops’
4 I. Paulus, The Search for Pure Food (London: Martin Robertson, 1974).
has descended into the often interesting spectacles of acrimony and victimisation,5
and have done so because, leaving aside the self-satisfaction of many of these
experts, it does not speak to the real issue. That issue is not what is the evidence
that will allow the government to reach the right decision for all of us? It is that
such is the uncertainty of the available information, this is a case where the
government cannot reach the right decision for all of us. After a century of welfare
capitalism, such a claim initially is almost incomprehensible and certainly
paralysing, for if we cannot reach a correct general policy, what on earth are we to
In this paper, I want to locate the issue of genetically modified crop releases
against the background of the exposure of ‘government failure’ in a debate over
welfare policy, particularly regarding environmental harms, that has been led by
the law and economics movement after Ronald Coase. In ‘The Problem of Social
Cost’,6Coase suggests a way to take decisions about environmental harms without
recourse to attempts to determine the social welfare function by the government.
Coase raises the possibility of a market in property rights fashioned on the law of
private nuisance. This has a particular resonance in this country as disenchantment
with the government recently has led to reconsideration of the use of nuisance in
Khorasandjian vBush7and Hunter vCanary Wharf Ltd.8I will argue, however,
that any such reconsideration must countenace radical reform of the law of
nuisance along Coasean lines, for the existing law is itself so dominated by
purported determinations of the social welfare function that it is, as I will put it,
hopelessly contingent.
Unfortunately, Coase’s powerful suggestions, far from inspiring law reform in
this country, are often rejected out of hand because they are conflated with other
claims advanced in the colours of law and economics, namely those of Richard
Posner for wealth maximisation. Wealth maximisation seems often to so overstate
the efficiency of the market that it is thought to be no improvement on welfare
determinations by the government, if, indeed, it is not worse.9But, as I have argued
elsewhere,10 Coase’s and Posner’s proposed governance structures for the
allocations of goods (and harms) are quite contradictory. What fundamentally
characterises Coase’s work is extreme caution about the success of any governance
structure, tellingly expressed in his advice that: ‘[u]ntil we realise that we are
choosing between social arrangements which are all more or less failures, we are
not likely to make much headway’.11 It is my fundamental aim in this paper not to
proselytise on behalf of ‘the market’, ‘the Coase Theorem’, etc, but to encourage
heed to be taken of this advice, which I think is very wise. With this advice in
mind, a reformed law of private nuisance looks a much more plausible means of
regulating environmental harms than it generally is taken to be. I will illustrate my
5 eg L. Flynn et al, ‘Ousted Scientist and the Damning Research into Food Safety’ (12 February 1999)
The Guardian; Anonymous, ‘Top Researchers Back Suspended Lab Whistleblower’ (12 February
1999) The Guardian; M. S. Gillard et al, ‘Food Scandal Exposed’ (12 February 1999) and
Anonymous, ‘Royal Society Dismisses Flawed GM Food Research’ (18 May 1999) The Guardian.
6 In R. H. Coase, The Firm, the Market and the Law (Chicago: University of Chicago Press, 1986).
8 [1997] AC 667.
9 eg C. E. Baker, ‘The Ideology of the Economic Analysis of Law’ (1975) 5 Philosophy and Public
Affairs 3.
10 D. Campbell, ‘On What is Valuable in Law and Economics’ (1996) 8 Otago Law Review 489–514,
reprinted, with revisions, in R. W. McGee (ed) Commentaries on Law and Economics: 1997 Yearbook
(Dumont (USA), Dumont Institute for Public Policy Research, 1998).
11 R. H. Coase, ‘The Regulated Industries: Discussion’ (1964) 54 American Economic Review (Papers
and Proceedings) 194, 195.
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argument with particular reference to RvSecretary of State for the Environment
and Ministry for Agriculture, Fisheries and Food, ex parte Watson,12 a case of
judicial review of a decision to grow genetically modified crops the relevance of
which, I trust, will emerge.
Market failure and government failure
Welfare economics after A. C. Pigou has largely been concerned to identify
circumstances where there is such a divergence between, as Pigou has it in part 2 of
The Economics of Welfare, the private and the social marginal net product of an
investment,13 that state intervention might increase the welfare function:
Certain optimistic followers of the classical economists have suggested that the ‘free play of
self-interest’, if only Government refrains from interference, will automatically . . . yield . . .
more economic welfare than could be attained by any arrangement other than that which
comes about ‘naturally’ . .. if private and social net products everywhere coincide, the free
play of self-interest . . . will tend to bring . . . the sum of economic welfare to a maximum . . .
when marginal private net products and marginal social net products coincide, any obstacles
that obstruct the free play of self-interest will, in general, damage the national dividend. In
real life, of course, marginal private and marginal social net products frequently do not
coincide . .. When there is a divergence between these two sets of marginal net product, self-
interest will not . .. tend to make the national dividend a maximum; and, consequently,
certain specific acts of interference with normal economic processes may be expected, not to
diminish, but to increase the dividend.14
Welfare economics has tended to argue for state ‘intervention’ or ‘interference’ in
the economy in circumstances of ‘market failure’, that failure occurring when a
social assessment of the welfare function reached by a public administrative
hierarchy diverges from, and is taken to be superior to, the private one produced by
the market.
The type of environmental harm posed by the release of GMOs is thought to
pose a particular problem because it is an ‘externality’, one of the causes of the
divergence between the private and social welfare functions. It is not, in the first
example Pigou gives in The Economics of Welfare, of a steam train emitting sparks
that cause damage to property near the track,15 that the market does not assess that
damage. It is that, unless the railway company owes a duty to the nearby
landowners not to damage their property, the market assesses that damage as zero,
which, from the private perspective under these conditions, it is. However, upon
public acknowledgement that the damage has a cost, following, say, the
landowners’ successful application to a commission of inquiry, that cost is
identified as pertinent to the social welfare function though it is ‘external’ to the
private. The natural conclusion is state intervention, such as – my examples16 – the
redistributive imposition of a tax on the railway company out of which the nearby
landowners can be compensated, or the provision of a ‘public good’ such as state
funded research into railway engines which do not emit sparks which the railway
company (for sensible reasons given private accounting horizons) is reluctant to
12 [1999] Env LR 310. This appeal was from a judgment of Jowitt J which is unreported but the Smith
Bernal transcript, number CO/2393/98, is available on Casetrack.com and LEXIS.
13 A. C. Pigou, The Economics of Welfare, 4th edn (London: Macmillan, 1932) pt 2, ch 2, s 5.
14 ibid 127, 143, 172.
15 ibid 134.
16 Though based on Coase’s speculations about the similar problem of smoke nuisance in ‘The Problem
of Social Cost’, Coase, above n 6, 151–153.
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Coase has himself insisted that the principal theme of his work is its critique of
Pigouvian welfare economics. One part of that critique has been to show that it is
in itself not enough to ground state intervention to point to a market failure. One
must show that the alternative of intervention would be superior to what the failed
market has done. Simply to advocate intervention because one was dissatisfied
with the market is a non sequitur.17 One’s perception of ‘market failure’ must be
complemented by a perception of ‘government failure’ when making choices
between alternative governance structures for the allocation of economic goods.18
Given that the public bodies are themselves imperfect, there is no necessity for
intervention to be superior to the market even when the market is shown to have
failed. One must compare the costs of market and state governance under the
empirical circumstances and choose the cheapest. To do so, one must, of course, be
aware of the costs of state governance. Pigou, Coase argues, typically was not.
Let us leave aside the question of the overall accuracy of Coase’s criticisms of
Pigou,19 for in relation to the sparks example, Pigou certainly did take it without
argument that intervention was such a solution. He uses this as an example of an
occasion for intervention without any description of how, or, more importantly,
any inquiry whether, intervention would work. The sparks problem is, in fairness,
very briefly treated by Pigou (though one might indeed make this a point of
criticism). The Economics of Welfare was first published in 1920 and the last
edition is the fourth of 1932 (or its reprints). In all editions Pigou reserves
examination of what Coase calls government failure to a very short separate
chapter on ‘Intervention by Public Authorities’.20 But though this chapter
recognises that: ‘[t]he mere failure of private industry ... to maximise the national
dividend does not of itself warrant intervention; for this might make things
worse’,21 this treatment is brief and abstract.22 Quite tellingly, Coase points out that
one of three examples Pigou gives of a good regulatory body in this chapter in all
editions of The Economics of Welfare is ‘the Interstate Railway Commission of the
United States’,23 and Pigou no doubt thought a body of some such sort would deal
with the sparks problem. Of this example, Coase says:
In all editions the Interstate Commerce Commission is referred to as the Interstate Railway
Commission, and this body, created in 1887, is always described as ‘‘recently developed’’,
which does not suggest any real interest in the subject.
17 ibid 24.
18 ibid 195.
19 This accuracy has been called into question by Simpson in an exchange out of which Coase does not
come at all well, the only example of such an exchange ending with such a result of which I am
aware. A.W.B. Simpson, ‘Coase v Pigou Reexamined’ (1996) 25 Journal of Legal Studies 53; R.H.
Coase, ‘Law and Economics and AW Brian Simpson’ (1996) 25 Journal of Legal Studies 103 and
A.W.B. Simpson, ‘An Addendum’ (1996) 25 Journal of Legal Studies 99. Though I am obliged to
mention a point of indebtedness to Simpson at n 75 below, this issue need not be pursued here. With
Matthias Klaes, I am examining it at length in ‘Ronald Coase’s Political Views at the Time of Writing
‘‘The Nature of the Firm’’’, unpublished.
20 Pigou above n 13, pt 2, ch 20. cf 1st edn (London: Macmillan, 1920) pt 2, ch 18; 2nd edn (London:
Macmillan, 1924) pt 2, ch 19 and 3rd edn (London: Macmillan, 1929) pt 2, ch 20. This chapter also is
to be found in A.C. Pigou, Wealth and Welfare (London: Macmillan, 1912) pt 2, ch 15, on which
Economics of Welfare as a whole is based.
21 Pigou above n 13, xviii. cf 1st edn n 20 above, xviii; 2nd edn n 20 above, xix and 3rd edn n 20 above,
22 In the terms to be developed in this paper, in the light of this chapter, Pigou should be described not as
a ‘blackboard’ but a ‘ceteris paribus’ reasoner.
23 Pigou n 13 above, 334. cf 1st edn n 20 above, 298; 2nd edn n 20 above, 303 and 3rd edn n 20 above,
334. No examples are given in Wealth and Welfare.
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And further: ‘Pigou never seems to have thought it necessary to enquire whether
his optimistic opinion about [this commission] was justified by events’ because he
was of a cast of mind that assumed ‘the existence of (almost) perfectly functioning
public bodies.’24
Coase thought such an attitude a species of what he called ‘blackboard
many propositions of modern welfare economics [are more] concerned with diagrams on a
blackboard than with the real effects of such policies on the working of the economic
system. I have referred to this type of economics as ‘‘blackboard economics’’ because .. . the
whole process takes place on a blackboard. This is not the way one operates with a social
system. All that can be done is set up a new agency, or change the rules under which an old
agency operates, or take some other similar action. All that is possible is to operate on social
institutions and to discuss social policy in a sensible way; it is necessary to consider the
effect of changing the social institutions with which we work.25
I do not doubt that Coase is describing a general cast of mind which dominated
until recently. It is still, I would say, the most common attitude. It is a cast of mind
which moves from showing that the market is imperfect to thinking that regulation
is better without joining up the dots.
What now so concerns those of us in the social democratic countries who have
had very considerable confidence in the state to determine the social welfare
function and to implement policies to actualise it is that we feel there may well be
something in Coase’s point. In an interesting note in this Review on the law of
private nuisance after Hunter vCanary Wharf Ltd, John Wightman captured this
mood of concern with government failure and set out proposals to expand the role
of private nuisance in dealing with environmental harms. Wightman was scarcely
alone in being disappointed that their lack of a proprietary interest and therefore
standing prevented the plaintiffs in Hunter vCanary Wharf Ltd from pursuing an
action in respect of the dust harm they suffered during the construction, as part of
the development of the London Docklands, of the Limehouse Link Road. He
argued that certain non-proprietary rights should be recognised so that private
nuisance might be brought to bear on ‘environmental protection’ by creating:
a more pluralistic model of interests in land [which] recognises that citizens have interests in
the use of land . . . which do not spring from exclusive possession, and that [in] the
protection of such interests (which are frequently shared) . .. unofficial action by groups and
organisations plays an increasingly important part.26
The need for unofficial action, I want to stress, arises from disenchantment with
official action. Wightman turns to AG vPYA Quarries Ltd, in which Lord Denning
distinguished between a private and a public nuisance in this way:
a public nuisance is a nuisance which is so widespread or so indiscriminate in its effect that
it would not be reasonable to expect one person to take proceedings on his own
responsibility to put a stop to it, but that it should be taken on the responsibility of the
community at large.27
24 Coase n 6 above, 22.
25 R.H. Coase, ‘The Theory of Public Utility Pricing and Its Application’ (1970) 1 Bell Journal of
Economics and Management Science 113, 119.
26 J. Wightman, ‘Nuisance – the Environmental Tort’ (1998) 61 MLR 870, 885. The very notion of my
writing this paper was sparked by reading this note, and subsequently Wightman’s other work on this
issue. D. McGillivray and J. Wightman ‘Private Rights, Public Interests and the Environment’ in T.
Hayward and J. O’Neill (eds) Justice, Property and the Environment (Aldershot: Ashgate, 1997) and
J. Wightman ‘Private Law and Public Interests’ in T. Wilhelmsson and S. Hurri (eds) From
Dissonance to Sense (Aldershot: Ashgate, 1998).
27 [1957] 2 QB 161, 169.
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It is obvious that Lord Denning equates the ‘should’ in the last clause with ‘would’,
but this is the last thing we now would do. Wightman now says:
When the PYA Quarries case was decided (1957) there were few environmental
organisations, and perhaps also more confidence that such matters could be left to official
bodies. Now, when there are many more organisations prepared to behave proactively to
keep public bodies on their mettle, and scepticism about regulation is more widespread, it
would be possible [if Wightman’s proposals to expand private nuisance were implemented]
for such organisations to take on the same kind of role.28
Even though this is welcome, one might uncharitably say that it has taken us a long
time to catch up with Coase, for the PYA decision was handed down at just the time
Coase was formulating the arguments of ‘The Problem of Social Cost’. But let us
be glad we are there now. Only, we are not, because Wightman, as with the great
majority of others, has taken on board only part, and the lesser part, of Coase’s
position. Wightman is concerned about government failure as a failure to enforce
such measures as might bring about collectively determined goals of reducing
pollution. It is, in essence, a criticism of lack of effectiveness, in line with the
important current insistence of a necessary ‘reflexivity’29 or ‘responsiveness’30 in
good regulation.
Wightman is much more acute than many presently seeking to expand our
‘rights’ for he perceives that there is not much point in a right that is ineffective.
Hunter vCanary Wharf Ltd would appear to have brought a halt, for the time being
at least, to the attempt to recognise non-proprietary locus standi in Khorasandjian
vBush. In that case, the daughter of the owner of a home obtained a nuisance
injunction against harassment by phone calls to the home, and it manifest that this
case was an attempt ‘to create by the back door a tort of harassment’.31 Wightman
has strong reservations about this case and tries to exclude it from the class of
environmental harms he is trying to recognise.32 The ‘arguments of substance’ he
allows tell against the case include the following:
Confining the action to a single owner – rather than to many occupants – meant that any
negotiation with the defendant would be facilitated; if occupancy were to be admitted as
sufficient, line drawing problems about who is included (the lodger, au pair, resident nurse?)
would be created.33
These arguments are criticisms of want of effectiveness. Wightman insists,
however, that these arguments should be distinguished from ‘the argument from
principle’ that nuisance must be based on a proprietary interest. Wightman’s
argument is that the principle as such must be rejected, but that Khorasandjian v
Bush, the first case in which it was rejected:
muddied the issues, with the result that the arguments about whether a proprietary interest is
needed have become unnecessarily intertwined with arguments about whether private
nuisance can and should be adapted into a tort protecting against harassment.34
To the extent that I understand the issues, I agree with the dissent of Peter
Gibson J in the Court of Appeal in Khorasandjian vBush,35 the House of Lords in
28 Wightman, ‘Nuisance – the Environmental Tort’ n 26 above, 884.
29 G. Teubner, Law as An Autopoetic System (Oxford: Blackwell, 1993).
30 I. Ayres and J. Braithwaite, Responsive Regulation (Oxford: Oxford University Press, 1992).
31 n 8 above, 691–692 per Lord Goff.
32 Wightman ‘Nuisance – the Environmental Tort’ n 26 above, 880–881.
33 ibid 875.
34 ibid 881.
35 n 7 above, 740–746.
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Hunter vCanary Wharf Ltd and with Wightman himself about the right not to be
harassed created in Khorasandjian vBush. For the purposes of this paper, let us
allow this is a bad right because it is very difficult to operationalise. This is not, of
course, to say anything about the desirability of the background goal were it to be
pursued by other means.36 The main thrust of Coase’s argument is not, however,
about, as it were, occasions of ex post government failure to achieve its goals. It is
about occasions of ex ante government failure to determine those goals properly.
Ceteris paribus reasoning and the determination of the socially
optimal level of harm
Let us indulge in the sort of counter-factual speculation which in social science is
called an imaginary experiment and imagine that the licensees in Hunter vCanary
Wharf Ltd had locus standi and guess what would have been the consequences for
the construction of the Limehouse Link Road. One can, I submit, guide this
speculation by considering what did happen in the action against the television
interference in Hunter, to which lack of standing was no barrier. Lord Cooke
looked the issue most clearly in the face, cutting through distinctions between, say,
interference caused by physical presence and by electromagnetic radiation which
detained his brethren, to get to the basic point:
the lineaments of the law of nuisance were established before the age of television and radio,
motor transport and aviation, town and country planning, a ‘crowded island’ and a
heightened public consciousness of the need to protect the environment. All these are now
among the factors falling to be taken into account in evolving the law. It is possible for the
courts to cater for such developments because the forms which nuisance may take are
protean . . . and nuisance is a term used to cover a wide range of tortious acts or omissions . . .
as to the impairment of the enjoyment of land, the governing principle is that of the
reasonable user – ‘the principle of give and take as between neighbouring occupiers of land’
. . What hasmade the law of nuisance a potent instrument of justice throughout the common
law world has been largely its flexibility and versatility.37
I submit that the essential quality of, and fundamental problem with, a right
against interference with the use of land of this ‘give and take’ sort is that it is by
definition contingent. Such a right is recognised only to the extent that the court
thinks it a good right because it produces outcomes which are thought good. So,
having given out the right with one hand, Lord Cooke is able to agree with his
brethren and take it away with the other. Lord Cooke sees plainly enough that the
Canary Wharf Tower must, given present technology, interfere with television
reception, but balances out the ‘competing legitimate ‘‘commercial’’ interests, both
of concern to the public’, and gives greater weight to the interest of Canary Wharf
Ltd.38 As such a right against interference is intrinsically contingent, perhaps it is
better to say that what is given with one hand is not taken away by the other but is
taken away with the same hand:
What in my opinion must defeat an action for interference with television reception by the
construction of a building, not only in this but in most cases, is the principle of reasonable
user, of give and take . .. The Canary Wharf project in general, and the tower at One Canada
36 J. Conoghan, ‘Harassment and the Law of Torts’ (1993) 1 Feminist Legal Studies 189.
37 n 8 above, 711, citing Cambridge Water Co v Eastern Counties Leather plc [1994] 2 AC 264, 299 per
Lord Goff.
38 Subject to exceptions turning on negligence or malice on the part of the defendant, which really make
the issue no longer one of nuisance.
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Square in particular, were obviously of a scale totally transforming the environment. There
was an original planning condition that heights were not to exceed 120 feet except by
agreement with the enterprise zone authority. Agreements were obtained and it is not
suggested that they were insufficient [to build a building over 250 metres high and 50 metres
square] .. . The tower is clad in stainless steel and the windows are metallised but it would
seem hopeless to contend that the use of these materials and the design of the tower
constituted any unreasonable or unexpected mode of constructing a building of this height.
In these circumstances . . . the tower falls fairly within the scope of ‘a strategic planning
decision affected by considerations of public interest’.39
Lord Cooke famously based his judgments as President of the New Zealand
Court of Appeal, in which he sought to identify a ‘truly distinctive’ New Zealand
law, on his claims to know the mind of reasonable persons in that country.40 He
manifestly feels he can repeat the trick after transplantation to a different
jurisdiction, and concludes that, on a balance weighed in this way, Canary Wharf is
a good thing. At least in Hunter vCanary Wharf Ltd Lord Cooke’s purported grasp
of the common mind is based on the tangible evidence of statute rather than the
verisimilitude of sympathy with public opinion on which such claims typically
rest. In the original proceedings, the defendants raised as a defence the unarguable
fact that the construction was pursuant to statutory authority.41 Whatever the merits
of this as a defence to private nuisance as such,42 it is obvious that the existence of
the authority must have a tremendous impact on assessments of public interest and
therefore on the extent of a private nuisance right of non-interference which is
contingent because at its heart it is recognised only when it is in the public interest.
If one accepts the legitimacy of the state taking the decision to develop the
Docklands, then one must construe affected rights subject to that decision.
One’s concern about both decisions in Hunter vCanary Wharf Ltd is not so
much that they are wrong, but that in claiming to have the expertise to reach any
decision the court is making unsustainably ambitious claims to be able to identify
the social welfare function. But, of course, this is what the law of private nuisance
has long been about. That law is an example of what I will call ‘ceteris paribus
reasoning’. A lawyer might presume to add something to Coase’s contribution to
the analysis of policy formulation by saying something further about the way the
mischief of blackboard economics actually is visited on policy decisions. For, of
course, no one engaged in economic (and by extension legal and social) policy
formulation ever admits that they are at the blackboard. Rather, they enter all sorts
of caveats about the application of the blackboard outcomes and then proceed
regardless with policy proposals the basic nature of which follows from their being
formulated on blackboard assumptions. There is both an acknowledgement, as a
caveat, of the institutional engineering which would be necessary to make those
proposals effective, and a perfect disregard of that engineering in the proposals put
forward. (The proposals would, of course, be changed in the process of ever
accommodating that engineering.)
It is the law that gives us the most well worked out example of this ceteris
paribus reasoning of which I am aware, in Dworkin’s attempt to eliminate
discretion from adjudication by postulating a judge ‘of superhuman skill, learning,
39 ibid 720, 723.
40 Sir Robin Cooke, ‘The New Zealand National Legal Identity’ (1987) 3 Canterbury Law Review 171,
182. My attitude to Lord Cooke’s jurisprudence in this respect was formed in conversation with John
Smillie, and I refer readers to J. Smillie, ‘Formalism, Fairness and Efficiency: Civil Adjudication in
New Zealand’ [1996] New Zealand Law Review 254.
41 n 8 above, 660.
42 It was rejected by the Court of Appeal and not raised in argument before their Lordships, ibid 666–
670 per Pill LJ.
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patience and acumen’, Hercules, who is able to decide hard cases in a way
consistent with precedent.43 Dworkin’s very definition of Hercules was intended to
make it clear at the outset that Hercules is fictitious, and Dworkin’s defences of his
position have always stressed this.44 But Dworkin’s ideas about adjudication have
no definable meaning unless there is some sense in which real judges do have
Hercules’ acumen, and Dworkin’s manifest failure to make much of a dent in the
use of discretion in adjudication45 has followed from his equivocation46 when he
has both to assert and to deny this.47 In particular, Dworkin’s valuable notion of
rights as trumps48 falls away under the power of Hercules to interpret even these
trumps in ways consistent with principle when, if they are to be trumps, they must
above all be clear and, in a sense, immune to such interpretation, for that
interpretation trumps the trumps. Hercules’ determination of the right answer by
deduction from principle exemplifies ceteris paribus reasoning.
In nuisance cases it has long been the case that rather than enforcing private
rights, the courts have moulded those rights to accommodate welfare assessments
which the courts have felt capable of making with either a naivete´ or an arrogance
which simply takes one’s breath away. A perfect example is given in one of the
principal authorities on interference with television reception cited in Hunter v
Canary Wharf Ltd, the dicta of Buckley J in Bridlington Relay Ltd vYorkshire
Electricity Board:
For myself, however, I do not think that it can at present be said that the ability to receive
television free from occasional, even if recurrent and severe, electrical interference is so
important a part of an ordinary householders’ enjoyment of his property that such
interference should be regarded as a legal nuisance.49
Were Buckley J speaking for himself, this would be perfectly well, though
excellent material for a story of the ‘judge did not know who Elvis was’ type. But,
of course, he was not speaking just for himself but for us all. He was determining a
social welfare function by means on which he did not dwell, but, had he so dwelt,
he would have been seen to have limited competence to make. Every controversial
private nuisance case of which I am aware since at least St Helen’s Smelting Co v
Tipping50 turns on exactly the construction of the right to non-interference as
contingent and claimed competence to determine the socially optimal extent of that
contingent right at which I am trying to drive. Whatever confidence one may have
in the possibility of reaching any such determination, a judge is in no position to do
so. Her or his competence and the information he or she receives do not equip her
43 R. M. Dworkin, Taking Rights Seriously, rev edn (Cambridge (USA): Harvard University Press, 1977)
44 eg R. M. Dworkin, Law’s Empire (London: Fontana, 1986) 258–266.
45 J. Allan, ‘Positively Fabulous: Why it is Good to be a Legal Positivist’ (1997) 10 Canadian Journal of
Law and Jurisprudence 231.
46 J. Habermas, Between Facts and Norms (Cambridge: Polity, 1996) 213.
47 Dworkin n 44 above, 245.
48 Dworkin n 43 above, xi–xii. Dworkin has, nevertheless, described classical liberalism in just the way
that makes it clear why rights as trumps are so important. R. M. Dworkin, A Matter of Principle
(Oxford: Clarendon Press, 1985) 191–192. The principal reason why his argument is confused here is
that he conceives of ‘economic efficiency as a collective goal’ (Dworkin n 43 above, 91) whereas, in
classical liberal terms, the unique claim for the legitimacy of Pareto optimality is that it is an
efficiency which can be realised only in the absence of a collective goal. F. A. Hayek, Law,
Legislation and Liberty (London: Routledge and Kegan Paul, 1982) vol 2, ch 7.
49 [1965] Ch 436, 447.
50 (1865) 11 HL Cas 642. I would argue that the same thing has happened to Rylands vFletcher (1866)
LR1 Exch 265, affd (1868) LR3 HL 330, which, as has been noted, has been ‘progressively
emasculated’. B. S. Markesinis and S. F. Deakin, Tort Law, 4th edn (Oxford: Clarendon Press, 1999)
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or him to do so, nor can one see any way in which this might be otherwise. Of
course, ceteris paribus reasoning which allows the judge to act as if he or she were
Hercules appears to solve this problem. If we are to have a real solution, however,
we need to give up pursuit of the fiction of Hercules and to try to devise a sort of
adjudication that asks much less of the judge.
In the light of all this, I hope it is clear that private nuisance rights as currently
conceived are hardly much of an alternative to the state environmental regulation
we now doubt. Those private nuisance rights have the contingent quality which
follows from having a judgement of social purpose at their heart and this places
them at the mercy of ceteris paribus reasoning. One might, to return to
Wightman’s response to Hunter vCanary Wharf Ltd, have a non-proprietary
right not to have one’s dwelling smothered in dust, but it would be of little help if
the court could construe the extent of this right subject to the public interest to have
the Docklands developed, or some other equally marvellous scheme of social
improvement undertaken. Recalling the political forces behind the Docklands
development, who can doubt that, had such a right been recognised, the Limehouse
Link Road would have been built in just the same way? Wightman’s proposal is, I
am afraid, pointless, because recognising a plethora of non-proprietary rights when
even proprietary rights do not trump utilitarian evaluations of the social good by
the court, but are contingent on those evaluations, is indeed pointless. Progress will
be made only if we address not the effectiveness of implementation, but the
logically prior point of policy determination. A further comment on law and
economics will, I hope, indicate what is needed.
Posner’s and Coase’s treatments of the problem distinguished
In his textbook on Economic Analysis of Law, Posner himself takes up the sparks
example discussed by Pigou and says:
X buys a farm long before there is a railroad in his area. The price he pays is not discounted
to reflect future crop damage from sparks, because the construction of the railroad line is not
foreseen. But eventually a line is built and is near enough to X’s farm to inflict spark damage
on his crops. He sues the railroad but the court holds that the level of spark emission is
reasonable because it would be more costly for the railroad than for the farmer to prevent the
crop loss. With property values thus exposed to uncompensated depreciation by unforeseen
changes in neighbouring land uses, the incentive to invest in farming will be reduced. But . ..
a reduced level of investment in farming may be an efficient adjustment to the possibility
that some day the highest value of the farmer’s land may be as a dumping ground for
railroad sparks.51
When put in the bald language of utilitarian social welfare calculation which
Posner calls wealth maximisation,52 this is a perfect example of why Posner’s law
and economics is so often repugnant. The railway company gets the right to pollute
because it is adjudged efficient that it have it, but no argument about the efficiency
51 R. A. Posner, Economic Analysis of Law, 5th edn (New York: Aspen) 60.
52 I am aware that Posner tries to distinguish wealth maximisation from utilitarianism but ignore the
distinction, which I have previously observed is largely pointless logomachy. D. Campbell, ‘Ayres
versus Coase: An Attempt to Recover the Issue of Equality in Law and Economics’ (1994) 21 Journal
of Law and Society 434, 445–459. I have nothing to add to what has been said on this in C. G.
Veljanovski, ‘Wealth Maximisation, Law and Ethics: On the Limits of Economic Efficiency’ (1981)
International Review of Law and Economics 3, 5–10.
53 D. Campbell and S. Picciotto, ‘Exploring the Interaction Between Law and Economics: The Limits of
Formalism’ (1998) 18 Legal Studies 249, 266–268.
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is made, though one can easily see the way his mind is working. Having done so
previously,53 I have no wish to criticise Posner’s thinking on this point here. But, of
course, all that Posner is doing is making the sort of determination that we have
seen is typical of private nuisance. Instead of market institutions being created to
handle difficult problems of allocation, Posner typically eschews the market in
favour of collective decision making. The particular unpleasantness of this is that
Posner comes to just the opposite conclusion than seems fair.54 His preferred
institution for taking collective decisions would be a US government which gives
effect not to wishy washy environmentalists but to the wishes of corporate
capitalists as the ‘economic rationality’ revealed by purportedly technical wealth
maximisation. And hence the farmer must be rendered subject to loss of amenity
because Posner sacrifices her or his interest to the social welfare function as he
understands it. The crucial thing to see is that there is no market other than the
‘market’ of the large corporations able to carry out investment projects using the
powers of eminent domain of the state. The plausibility of Posner’s work lies in the
fact that this is, of course, the empirically existing capitalist market.
Coase makes a very interesting observation about this theme as he finds it in
Pigou. Pigou’s citation of the sparks example remained more or less unchanged in
all editions of The Economics of Welfare.55 Coase therefore plausibly assumes that
Pigou can be taken to have had in mind the situation obtaining in Britain after the
passage of the Railway Fires Act 1905.56 Having claimed that the common law of
nuisance would impose a liability on the railway company causing the damage,57
Coase argued that it was only because the state extended protection against the
common law to the railway companies that they were able to proceed in the way
they did. The 1905 Act allowed claims of up to £100 against the railways, other
claims being in effect barred by previous statute.58 The general point Coase is
making, and he would seem to be right,59 is that the building of the railways in the
way found objectionable was, in essence, accomplished by expropriation on the
basis of exercise of eminent domain.
Of course, in the light of this history, Pigou’s proposed regulation may well be
supererogatory. Rather than Pigou’s example being a case where it was necessary
for ‘[s]tate action to improve on ‘natural’ tendencies’, it might well have been a
case in which the state was part of the problem, not the solution,60 and a reversion
to common law property rights through what we would now call deregulation was
plausible, for:
the situation in which sparks from a railway locomotive could start fires which burnt woods
on land adjoining the railway without the railway having to pay compensation to the owners
of the woods . .. had come about not because of a lack of governmental action but because of
54 C. A. E. Goodhart, ‘Economics and the Law: Too Much One Way Traffic?’ (1997) 60 MLR 1, 13.
55 Pigou n 13 above, 134. cf 1st edn n 20 above 115; 2nd edn n 20 above 118 and 3rd edn n 20 above
56 5 Edw 7, c 11.
57 Coase n 6 above, 137 n 43.
58 n 56 above, s 1.
59 F. Dobbin, Forging Industrial Policy (Cambridge: Cambridge University Press, 1994) 167–175 and
R. W. Kostal, Law and English Railway Capitalism 1825–1875 (Oxford: Clarendon Press, 1994) ch 4.
60 The principal shortcoming of the otherwise overwhelmingly welcome recognition of the creation of
the ‘risk society’ is its limited understanding of the role of the state in the creation of that society,
which has obvious implications for the typical recourse to regulatory governance of that society. U.
Beck, Risk Society (London: Sage, 1992).
61 Coase n 6 above, 23.
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Coase’s thinking62 on these points is exactly the opposite of Posner’s.63 In the
hypothetical examples he sets out at the beginning of ‘The Problem of Social
Cost’64 Coase postulates the grant of, or the refusal to grant, an injunction against,
to take the example based on Sturges vBirdgman,65 a noise harm, and the
subsequent bargaining by the parties. The grant or refusal to grant the injunction
creates a property rights regime in respect of the harm which facilitates negotiation
about it. If, say, the injunction is granted, then the confectioner wishing to make
the noise must start negotiation and ultimately pay the doctor sufficient to make
him give up his right.66 If the injunction is not granted, then the doctor must pay the
confectioner sufficient to make him cease making the noise.67 The right outcome is
reached when the more profitable activity is able to proceed by paying for the
discontinuation68 of the less profitable one, and so proceeds by paying the full costs
of doing so, which include compensation to the affected other party. In the railway
sparks example, if the landowners were able to sue in common law, the railway
would have to decide either to obtain a permission to damage nearby property (by
buying the freehold or an easement, etc) from the landowners (financed from
revenues of operating the trains) or not to build (if those revenues would not cover
the cost of the permission), and the market would produce a solution without the
necessity of state intervention.69
Leaving aside whether this is a good way of dealing with this sort of problem for
the moment, let us try to be clear about one aspect of how it could ever work. It
could work only because the injunction creates a right of a very bright-line nature.
The grant of the injunction gives the doctor the right to prevent the nuisance or to
accept payment not to exercise that right, as he chose. The refusal to grant the
injunction creates the opposite. There is no reference to any social welfare
function, for the decisions about whether or not to enforce the injunction if granted
are entirely the election of the parties. Coase is wholly indifferent to the outcome
of the exchange, which he leaves it to the parties to determine. The Coase Theorem
produces Pareto optimal solutions70 because it sets voluntary exchange in motion,
that exchange being a pure procedure71 wholly determined by the preferences of
the parties, making no reference to an ideal outcome72 or patterned principle73 to
which those exchanges should tend. In this sense, the Coase Theorem simply
eliminates consideration of the social welfare function.74
Discussion of this example has been hindered by myriad confusions, but, before
mentioning some of the better known ones, let us look at the most important, which
62 The nearest thing to an accurate interpretation of Coase’s views I have come across, stressing their
similarity to the concept of exchange in Austrian economics, is E. Krecke, ‘Law and the Market
Order: An Austrian Critique of the Economic Analysis of Law’ (1996) 7 Journal des Economistes et
des Etudes Humaines 20.
63 And hence Posner’s notion of ‘efficiency’ as ‘wealth maximisation’ is excoriated by libertarians
committed to exchange conceived broadly in the terms of Austrian economics. eg M. Rothbard,
‘Frank S. Meyer: The Fusionist as Libertarian Manque´ ,’ in G.W.Carey (ed) Freedom and Virtue: The
Conservative/Libertarian Debate (Lanham (USA): University Press of America, 1984). cf M.
Rothbard, For a New Liberty, rev edn (San Francisco: Fox and Wilkes, 1978) 26–27.
64 Coase n 6 above, 97–114.
65 (1879) 1 Ch D 852.
66 Or build insulation against the noise, or invent a noiseless process, etc.
67 Or build insulation against the noise, or move, or learn to live with it, etc.
68 Or amelioration.
69 Coase n 6 above, 133–149.
70 V. Pareto, Manual of Political Economy (New York: Augustus M Kelley, 1971) ch 6, sec 3.
71 J. Rawls, A Theory of Justice (Cambridge (USA): Belknap Press, 1971) 83–90.
72 B. Barry, Political Argument (London, Routledge and Kegan Paul, 1965) ch 3, secs 1–4.
73 R. Nozick, Anarchy, State and Utopia (New York: Basic Books, 1974) 150–160.
74 G.J. Stigler, The Theory of Price, 3rd edn (New York: Macmillan, 1966) 113.
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I think I am the first to point out.75 The Sturges vBridgman example has been
taken as the paradigmatic case of use of private nuisance to determine optimal
levels of environmental harm, and therefore as warrant for property rights
solutions. In that theoretical example nuisance works because the injunction is, as I
say, a perfect, bright-line, private right. It would not necessarily work in the
empirical law of private nuisance as it has been. To the extent that it demonstrated
the tendency I have sketched out between St Helens Smelting Co vTipping and
Hunter vCanary Wharf Ltd, the empirical law of private nuisance would not grant
an absolute, bright-line injunction. It would weigh up whether sweeties are better
than auscultation for the social welfare function (or some similar felicific
calculation) and grant or refuse to grant an injunction accordingly. Should it give
the injunction, it would expect the harm to stop. The aim would be to pass a
judgement on the harm, and allow it or prevent it, rather than to create the
governance structure which would allow the parties to pass that judgement. This is
private nuisance if you like, but a private nuisance which at its heart smuggles in a
belief that the court can evaluate the joint welfare of the affected parties better than
they can themselves, and so publicly undercuts their private assessments of their
The principal reason why this line has been taken follows from the undoubted
truth of the criticism of the Coase Theorem that the conditions under which it must
produce Pareto optimal outcomes are purely hypothetical. Though expressed in
prosaic terms of cattle ranching, confectionery making, medical practice, etc,
Coase discusses his examples under, as he clearly states, the assumption of costless
transacting, which means that the negotiating mechanism he describes is general
competitive equilibrium. Under this assumption, negotiation will produce Pareto
optimal solutions by definition. The Coase Theorem is merely a way of restating
the first theorem of welfare economics which focuses our attention on the role of
property rights.76
Understood in this way, the pure Coase Theorem is of no earthly use as a guide
to policy formulation, for the assumption which it needs to operate will never
obtain. Coase has been at great pains to point this out himself, both in those later
sections of ‘The Problem of Social Cost’77 in which he drops the assumption of
zero transaction costs and in his own retrospective comments on the Theorem.78
The reasons why he thought it important to develop what we know as the Coase
Theorem in the way he did really turn on an aspect of the critique of Pigouvian
theoretical welfare economics which need not be set out here. The important point
for policy formulation follows from returning to our perception of government
failure. Property rights solutions based on the direct application of the Coase
Theorem are wrong-headed, for they must work with implausible assumptions of
the existence of fully contingent markets. At positive transaction costs, markets
cannot produce Pareto optimal allocations, and indeed one can, as Coase did, press
the point that, as transaction costs are always positive and therefore all empirical
markets will fail in this sense, ‘externalities’ must be ubiquitous.79 But the point,
we recall, is that it is not enough to justify regulation to show market failure.
Intervention can be justified only if it will produce a superior outcome to, inter
75 The point is implicit in Simpson’s criticisms of Coase’s treatment of Sturges vBridgman, but this is
obscured as Simpson’s own argument actually runs in the opposite direction, back to Pigouvian
welfare economics. Simpson, ‘Coase v Pigou Reexamined’ n 19 above, 84–92.
76 G.J. Stigler, ‘Two Notes on the Coase Theorem’ (1989) 99 Yale Law Journal 631–633.
77 Coase n 6 above, 97, 102, 114–119.
78 eg ibid 15.
79 ibid 26.
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alia, the existing or possible market.80 When we now are so uncertain in a number
of cases about the results of state intervention to realise a pre-determined welfare
optimisation policy, a property rights solution may be optimising even if we
recognise that the market the property rights structure establishes will, in the sense
set out above, fail. But it is hardly enough to reject a proposal because it fails to
conform to an ideal which cannot be achieved.81 In our study of comparative
failure, the market may fail less badly than the state, and, as I have said at the
beginning of this paper Coase puts it, ‘[u]ntil we realise that we are choosing
between social arrangements which are all more or less failures, we are not likely
to make much headway’.82
The governance of the growing of genetically modified crops
In RvSecretary of State for the Environment and Ministry for Agriculture,
Fisheries and Food, ex parte Watson, Sharpes International Seeds Ltd wished to
obtain a listing in the National List of seeds for a new, genetically modified strain
of maize, such a listing being a condition of marketing of a new seed within the
EU.83 Under procedures laid down by the EU and UK governments, a listing
requires trial plantings of a sort which inevitably would involve release of seeds
into the environment,84 and a GMO can be so released only with the consent of the
Secretary of State for the Environment, who must be satisfied that the release is
safe.85 Being so satisfied, the Secretary granted the consent. The National Institute
of Agricultural Botany (NIAB) conducted the trial planting on land adjacent to that
on which Mr Watson, then the largest producer of organic vegetables in Britain,
grew his crops, including sweet corn. He feared that the genetically modified maize
would cross-pollinate his sweet corn, destroying its ‘organic’ character (as
accredited by the Soil Association) and very markedly reducing its value (and, by
loss of reputation, the value of his other crops). Mr Watson sought judicial review
of the Secretary of State’s decision.
Whilst I may be wrong, and I leave this issue to those more competent to
comment, it appears to me there was ultimately86 no ground for judicial review
80 This is the welfare economic problem of producing Pareto ‘optimising’ (as opposed to optimal) or
‘second best’ solutions. R. G. Lipsey and K. J. Lancaster, ‘The General Theory of Second Best’
(1956) 24 Review of Economic Studies 11. Calabresi has given a most persuasive reading of Coase as
sanctioning this type of solution in G. Calabresi, ‘The Pointlessness of Pareto: Carrying Coase
Further’ (1991) 100 Yale Law Journal 1211.
81 Coase n 6 above, 30.
82 Coase n 11 above, 195.
83 70/458/EEC, art 3(2). This appears to be incorrectly cited as 70/457/EEC in the Smith Bernal
Transcript, number FC3 98/6570/4, and subsequently in [1998] EGCS 122, n 11 above, 312; (1998)
95 (30) LSG 26 and (31 August 1998) The Times.
84 The Seeds (National Lists of Varieties) Regulations 1982, reg 11(3).
86 As well as other ingenious but meretricious procedural points, Mr Watson’s counsel pointed out that
MAFF did not require Sharpes in this case (and had not required anyone in any case since 1995)
properly to comply with the procedures for obtaining a listing. This was conceded to be indefensible
and, in dissent, Judge LJ would have upheld the appeal on this point, the only one he considered: n 12
above 322–323. It was on this point that the report of the case in The Times, n 83 above, concentrated.
But, of course, as Simon Brown LJ quite rightly observed, Sharpes were perfectly at liberty to make a
fresh application for a listing which, if correctly made, would, on the substantive merits given the
legislation as it stands, have to be granted: n 12 above, 319–320. When Friends of the Earth
subsequently successfully showed similar contraventions of regulations in relation to other trial
plantings, the Minister stated that he would not challenge this point but would not halt the plantings
for what he saw as a ‘technical’ breach of regulations. A Gillan, ‘GM Trials Doubt After Planting
Ruled Illegal’ (18 September 1999) The Guardian.
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which would protect Mr Watson’s interests, even though it was not disputed that
the trial would harm Mr Watson’s crop in much the way he claimed. The central
point seems to be a Wednesbury irrationality challenge to the decision that the
planting was safe. The Secretary of State relied on the advice of the Advisory
Committee on Releases to the Environment (ACRE), which had told him that it
estimated that one sweet corn kernel in every 40,000 would be cross-pollinated.87
In the light of this, Simon Brown LJ said:
If cross-pollination occurs, it will have a devastating effect upon the applicant’s business,
reputation and livelihood. The Soil Association take an absolute stance with regard to
accreditation. Not merely would the organic status of the applicant’s present sweet corn crop
be imperilled; so too would the rest of his farming enterprise. Grave though I accept the
consequences of contamination here would be, and understandably worried though the
applicant must be, I cannot regard this as an irrational decision . .. the assurance [given by
ACRE is] a reasonably confident assessment that realistically there is no more than minimal
risk. Of course, this falls short of the guarantee which the applicant and [another interested
party] were looking for. But it seems to me a perfectly reasonable point at which to strike the
balance between the competing interests in play.88
This is ceteris paribus reasoning indeed. Though no doubt some such argument
will arise in future litigation, it is quite beside the point to attempt to draw a
reasonable line between one in 40,000 and the one in 1,000 which ACRE thought
the level of cross-pollination in the ‘worst case scenario’.89 The real point is that,
on the facts he accepted, Simon Brown LJ condoned Mr Watson having his
livelihood taken from him without compensation in the belief that a benefit will
accrue to Sharpes that makes this taking reasonable.90 Following this decision, the
future for the cultivation in Britain of organic crops as accredited by the Soil
Association appears bleak indeed.91 One is uncertain whether to admire or deplore
87 The applicant claimed that ACRE had actually said the risk was ‘likely to be zero’, which Simon
Brown LJ seemed, and if so rightly, to have thought would have been irrational, but he regarded
ACRE’s advice as more complex than this. n 11 above, 315–316. The advice was published on 16
July 1998 as ACRE, Advice for the Secretary of State for the Environment, etc on Genetically
Modified Maize in National List Trials Adjacent to an Organic Farm in Devon, 23 June 1998.
That Simon Brown LJ’s generous reading is questionable is argued in the commentary provided in
the Enviromental Law Reports, n 11 above, 326–327. With respect, I believe it to be wholly wrong.
MAFF itself does not appear to agree with it. A MAFF public information document currently being
circulated to those, like myself, who have tried to raise the issue with their MP, claims that the
decision that the trial should proceed was taken following receipt of the advice that cross-pollination
was likely to be zero, and that this was ‘a decision subsequently upheld by the High Court and the
Court of Appeal’. Joint Food Safety and Standards Group of the Department of Health and the
Ministry of Agriculture, Fisheries and Food, Fact Sheet: Genetic Modification of Crops and Food.
88 n 12 above, 315–316.
89 ibid 316. Research commissioned by the Soil Association put the level as high as 1 in 93. J. Emberlin
et al, The Dispersal of Maize Pollen, January 1999 (available from The National Pollen Research
Unit, University College, Worcester, WR2 6AJ).
90 I will not pursue this implication here, but it is clear that criticism of this aspect of ex parte Watson
involves criticism of the, indeed extremely suspect, ethical background of the justification of
intervention by theoretical compensation calculated according to the Kaldor-Hicks welfare criterion.
N. Kaldor, ‘Welfare Propositions in Economics and Interpersonal Comparisons of Utility’ (1939) 49
Economic Journal 549 and J. R. Hicks, ‘The Foundations of Welfare Economics’ (1939) 49 Economic
Journal 696.
91 One anticipates that the Soil Association will either have to dissolve itself or, more likely, water down
its standards, which are agreed with national and European authorities, the Association’s wholly
owned subsidiary, Soil Association Certification Ltd, being a licensing body authorised by the EU and
UK under the UK Register of Organic Food Standards. 2092/9/EEC. This is exactly what the Organic
Trade Association, an American equivalent to the Soil Association, claims will be the effect of
national organic certification standards currently being proposed by the United States Department of
Agriculture. Organic Trade Association, ‘Organic Trade Association Cites Nine Threats to Organic
Integrity in USDA’s Proposed Rule’, Organic Trade Association Press Release, 15 December 1997.
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Simon Brown LJ’s confidence in his welfare calculation, if calculation be the right
word for a conclusion reached by the recitation of the single word ‘reasonable’. It
is quite right to respond to this rather sour observation that Simon Brown LJ is
merely scrutinising the government’s policy in the way required in public law. He
is indeed doing this, and I do not think he could arrive at any other decision. But, of
course, one can be happy with this only if one thought the government were able to
carry out the necessary calculation itself.
It is manifest that the public has no confidence in the government to make such
decisions in regard to the growing of genetically modified crops.92 I have no wish
to enter into the public debate as currently conducted, but a point particularly
relevant to the theme of this paper should be mentioned. Under The Town and
Country Planning Act,93 ‘public concern’ must be taken into account when
planning decisions are made, and a line of recent decisions has given effect to this
provision.94 These cases have allowed Neil Stanley to identify a list of potential
issues which should be taken into account when assessing concern. In
environmental cases these would include how many people are exposed to the
risk, the nature of those people and whether they voluntarily assumed the risk or
had it imposed on them, whether the observable results of the risk if manifested are
graphic, etc.95 Now, as someone but poorly versed in planning law, I find it a little
startling that Stanley says it is a ‘most significant development in planning’ that
‘[t]he planning system in general, and decision-makers in particular, can no longer
remain partially or totally deaf to expressions of public concern’.96 Leaving this
aside, when the problem in hard cases precisely is, as Stanley recognises, ‘how can
the decision-maker weigh what the decision-maker does not fully understand?’97 It
is difficult to see what actual progress is being made by listing the relevant issues.
It is with the government’s ineradicable incapacity to ‘assign . . . due weight’98 to
such issues that we must come to terms, and a list does not speak to this at all,
whatever its length.
My point is that in hard cases we cannot have confidence in a determination of
the social welfare function however reached. It is as well, however, to bear in mind
something of the quality of the process by which it will be reached. One’s
confidence in the government was at least as much undermined as bolstered by the
‘purge’ of ten of the thirteen members of the ACRE Committee which advised the
Secretary of State on Mr Watson’s case.99 The Committee had had one member
from the Green Alliance, who had consistently criticised its decisions, but she had
found her opinion invariably outweighed by those of the other members, all
scientists committed to the research which had led to genetic modification being
possible, ten of whom had links to companies with a financial interest in the release
92 M. Woolf, ‘Poll Reveals Public Doesn’t Trust Labour on GM Food’ (23 May 1999) Sunday
93 s 70(2).
94 A. Platt, ‘Public Concern: A Material Consideration’ [1997] JPL 397 and cases cited therein.
95 N. Stanley, ‘Public Concern: The Decision Makers’ Dilemma’ [1998] JPL 919, 920–925.
96 ibid 934.
97 ibid 919.
98 ibid 934.
99 P. Brown, ‘Minister Orders GM Watchdog Clearout’ (12 April 1999) The Guardian and C. Clover,
‘Meacher to Purge GM Crops Advisers After Public Unease’ (12 April 1999) The Daily Telegraph.Dr
Cunningham, Minister for the Cabinet Office, in his capacity as Chairman of the Ministerial Group on
Biotechnology and Genetic Modification, nevertheless endorsed the Select Committee on Science and
Technology’s subsequent finding that it had ‘been impressed by the robustness and expertise of . . .
ACRE’. Cabinet Office Press Office, ‘Dr Cunningham Welcomes Select Committee Report’, CAB
105/99, 12 May 1999. cf House of Commons Science and Technology Committee, Scientific Advisory
Committee: Genetically Modified Foods, HC 286-I, May 1999, para 84.
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of genetically modified crops (Professor Nigel Poole of Zeneca, Dr Philip Dale of
John Innes, etc) in prima facie contravention of the Nolan rules. That the
Committee had granted every one of the 60 applications which had come before it
can hardly come as a surprise. Under circumstances such as these, one must ask
whether a property rights solution might be better than state governance, because
such governance is so suspect.
Let us imagine that Mr Watson had a right to grow what crops he wished on his
own land, however that right be framed, and obtained an injunction to prevent
NIAB from growing Sharpes’ maize. Sharpes would have had to offer to pay Mr
Watson not to rely on his injunction100 if it wished NIAB to proceed. Mr Watson
would then either enforce the injunction and stop the planting or be compensated,
the level of compensation being set by his and Sharpes’ voluntary exchange. One
might have enhanced confidence in the claimed social benefit of genetically
modified crops if Sharpes had such faith in its product that it were willing to pay
for the right to grow it rather than rely on EU and UK regulations to grant it the
right to pollute without having to pay. Far from it being regrettable that this slows
down the rate of introduction of the new crops, though influential companies,
‘scientific’ opinion and the government all be committed to a belief that they
enhance welfare, this is a welcome approximation of that rate to the rate of growth
of our knowledge of the costs of these crops.
The growing of genetically modified crops seems to me to prima facie be a case
when Hayek’s argument for spontaneous market order or catallaxy101 should be
considered. Genetically modified crops are a good about the full costs and benefits
of which there appears to be such uncertainty that state governance, which is of its
nature sweeping, is far too blunt a regulatory method. It would appear that we
simply cannot know these costs and benefits ex ante in such a way as allows one to
take a general decision about them, and, of course, any decision other than an in
itself arguably unjustifiable total ban is a permission which, ex hypothesi, has
incalculable consequences. In this circumstance, the gradual extension of a market
in the good would be a preferable governance structure. Without, as I say, wishing
to enter into the argument in detail, I want hopefully to defer obvious objections by
saying that I am conscious both of the transaction costs of creating such a market
and of the problems of distributive justice likely to arise given the existing
distribution of property. Let me try to sum up my argument by trying to fit the
growing of these crops into the law of private nuisance.
The governance of the growing of genetically modified crops by
the law of private nuisance
Buxton LJ made no attempt to conceal his impatience with Mr Watson’s attempt to
thwart government policy by means of judicial review in ex parte Watson.He
observed that ‘[i]t has, I think, been the instinctive reaction of every judge to whom
it has been put that [Mr Watson’s application] must be wrong’102 and concluded
Jowitt J., in a case that was thrust upon him with virtually no warning, delivered a judgment
that clearly identified the essential difficulties of [Mr Watson’s] application. I for my part
100 Or move its production to the 2 km distance at which ACRE said cross-pollination ‘is likely to be
zero’ (n 12 above, 315), etc.
101 Hayek n 48 above, ch 10.
102 n 12 above, 324.
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regret that the Applicant did not feel persuaded by that judgment to conclude that, whatever
substantial grounds of complaint he may have, the present application is not the medium
through which to pursue them.103
This is a stance with which one cannot but agree. But what other medium might
there be to properly pursue the substantial grounds of complaint? Buxton LJ
observes, rightly, that the nub of Mr Watson’s case ‘sounds like one of private
nuisance’104 and indeed, he was of the opinion that ‘[w]ithout his adjacent crops
the Applicant would be a mere busybody’.105 I am afraid, however, that Buxton LJ
gives little encouragement to Mr Watson to pursue his complaint in private
nuisance, for, were he to do so:
difficult questions would arise as to the extent to which the Applicant was seeking to impose
limitations on NIAB, in a farming area, by the introduction of special or specially sensitive
Buxton LJ is anticipating – quite accurately I fear107 – the successful use of the sort
of defence set out in Robinson vKilvert,108 that the plaintiff suffers loss of amenity
because of what is regarded as her or his unusual sensitivity to the harm. Were
organic crops regarded as specially sensitive in this way, the use of private
nuisance to govern their cross-pollination by genetically modified crops would be
dead from the outset. The right to farm one’s land as one wishes is rendered wholly
contingent in the way I trust now is familiar, and such a right is useless.
The line taken by Hayek to remove this problematic contingency is to revert to a
very basic framework of, in effect, generalised private property as the sole basis of
all legitimate transfers of property.109 The sort of privacy Hayek has in mind is, as
it were, absolute, which vitally means that alienation of a private property right
will be determined by the voluntary choice of the owner. The problematic
contingency that I have tried to identify will be replaced by bright-line
ownership.110 Mr Watson would have the right to grow organic crops or to sell
that right on the terms he wished, and there would be no weaselling about balance
of competing uses or the special sensitivity of his crops, etc, which undermine that
To the list of criticisms one might make of Hayek, I would now like to add one
which I think is fundamental. This is that the empirical law of private nuisance
does not in fact have the bright-line quality he wishes but is, precisely, contingent.
It is not enough to dismiss this as the product of welfarist interference, for though it
is this, such interference is a natural response to the reciprocal nature of private
property. Private property is not, of course, a relationship of an owner to things –
let us concentrate on land. It is a relationship between citizens which determines
the extent of their respective uses of land, one such relationship being ownership.
As such, it is of the very nature of ownership that what it entails will be determined
by the normative and ultimately political structure of the society which recognises
103 ibid 326.
104 ibid 324.
105 ibid 325. However, in RvSomerset County Council ex parte Dixon [1998] Env LR Sedley J (as he
then was) saw a positive role for a concerned person with no conventional standing, particularly in a
case of environmental harm.
106 n 12 above, 323–324.
107 Despite McKinnon Industries vWalker [1951] 3 DLR 577.
108 (1889) 41 Ch D 88.
109 Hayek n 48 above, 65. The basic point is, so far as I am aware, derived from Hume. D. Hume,
Enquiries, 2nd edn (Oxford: Oxford University Press, 1975) appendix 3.
110 P.H. Aranson, ‘The Common Law as Central Economic Planning’ (1992) 3 Constitutional Political
Economy 289 and in MacCormick, ‘The Ethics of Legalism’ (1989) 2 Ratio Juris 184, 187.
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214 ßThe Modern Law Review Limited 2000
the ownership.111 ‘Property’, as much as ‘democracy’, ‘freedom’, etc, is an
essentially contested concept.112 All this is implicit in the accurate use of ‘rights’ in
F. H. Newark’s seminal definition of nuisance, quoted approvingly by Lord Goff in
Hunter vCanary Wharf Ltd113 (and by Wightman in his note):114
In true cases of nuisance the interest of the plaintiff which is invaded is not the interest of
bodily security but the interest of liberty to exercise rights over land in the amplest
It is obvious that the House of Lords in Hunter and the Court of Appeal in ex
parte Watson interpreted the amplest manner in which one can now exercise one’s
rights over land even which one owns as subject to determination by the state that
that exercise will increase the social welfare function as the state determines it. To
seek to extend the use of such rights does not address the pressing issue, which is
the removal of the unacceptable contingency of those rights. But equally, to
respond to this that one should have ‘private property’ or a market as something
which is absolute because it is distinct from state regulation is absurd.116 Private
property and the market can rest only on the foundation of shared normative
commitment to private property which, in all societies with a legal system, is
underwritten by the state.117 If we now wish to use the law of private nuisance to
govern at least some environmental harms, we must come to terms with the
paradox that has debilitated classical liberalism and recognise that without
extensive state support no appropriate market can be created.118 This is to say that
the market will itself be a regulatory mechanism backed by the state, but an
alternative to governance by administrative hierarchy. Eschewing collective
determination of social welfare in circumstances when such determination ismore
than normally unreliable, such a market would replace it with the encouragement
of citizens’ disaggregated determination of their own welfare. For this to work,
private nuisance will have to be a structure of bright-line rights which are alienable
only by those to whom they are granted only on the terms they decide. In its
transcendence of the redundant private/public and market/state dichotomies, it will,
in fact, not be very much like what now passes for private nuisance at all.
111 M. Radin, Reinterpreting Property (Chicago: University of Chicago Press, 1993) 11–18.
112 J. Waldron, The Right to Private Property (Oxford: Clarendon Press, 1988) 51. cf W. B. Gallie,
‘Essentially Contested Concepts’ (1955–56) 56 Proceedings of the Aristotelian Society 167.
113 n 8 above, 608.
114 Wightman n 26 above, 879.
115 F. H. Newark, ‘The Boundaries of Nuisance’ (1949) 65 LQR 480, 488–489. cf F. H. Newark ‘Non-
natural Use’ and Rylands vFletcher (1961) 24 MLR 557.
116 The argument I am trying to make about the political or social constitution of the domain of private
property, as opposed to an absolute notion of private property, has recently been conducted very
persuasively in C. Rotherham, ‘Conceptions of Property in Common Law Discourse’ (1998) 18 Legal
Studies 41.
117 H. L. A. Hart, The Concept of a Legal System, 2nd edn (Oxford: Clarendon Press, 1994) ch 5, s 3.
118 C. Sunstein, Free Markets and Social Justice (New York: Oxford University Press, 1997) 384.
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