It's obviously terribly sad, but I don't know very many people who would leave their dogs in kennels for a month unless they absolutely had to. I hope it is because they knew that the dogs were very happy there.
If the dogs really were chasing/worrying the sheep then the farmer may have felt no option but to shoot them, and was legally within their rights to do so. I'm not quite sure how the owners 'know' that they posed no threat at all. We had a very very well trained collie who 99% of the time ignored sheep, but every now and then you could see his instincts come into play when he saw a lone sheep and he'd go all slinky and have to be called back sharpish. We thought that he just wanted them all in a nice neat pack, but apparently some dogs attack lone sheep so it might as easily have been that.
Farmers near us had to shoot a couple of dogs once, again someone's pets. From what I remember they lost a number of sheep from shock because the dogs had gone a bit manic and chased them about a fair bit. A quick google shows that it's not particularly unusual. Also I wonder how much attention the dogs were getting - collies get bored and stressed very easily, and both of the dogs were young, one really just a puppy really.
A four foot fence does not make a secure field. We had to prove we had at least a five foot fence around our yard before we were allowed to adopt our puppy, and that's the height of the fence at our local dog park too. I'm surprised a large kennel (from the picture it looked lot a lot of cages) didn't invest in better fencing really, especially as they knew that some dogs could and woudl jump its I'm sure it came as a truly horrible surprise to both kennel manager and owners but it was preventable.