Barachander Farm V. The Scottish Ministers
| Jurisdiction | Scotland |
| Judge | Lord Justice Clerk,Lord Johnston,Lord Wheatley |
| Neutral Citation | [2008] CSIH 15 |
| Court | Court of Session |
| Published date | 15 February 2008 |
| Year | 2008 |
| Date | 15 February 2008 |
| Docket Number | XA17/07 |
| SECOND DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Justice Clerk Lord Johnston Lord Wheatley | [2008] CSIH 15 XA17/07 OPINION OF THE LORD JUSTICE CLERK in SPECIAL CASE stated by THE SCOTTISH LAND COURT in the case of BARACHANDER FARM Appellants; against THE SCOTTISH MINISTERS Respondents: _______ |
For the appellants: Agnew of Lochnaw QC; Thorntons-Law
For the respondents: Johnston QC, O'Carroll; Solicitor to the Scottish Executive
15 February 2008
Introduction
[1] The appellants own Barachander Farm, Kilchrennan, Argyll, and trade under that name. The appeal arises from the decision of the respondents to refuse to pay to the appellants sheep annual premium (SAP) for 2003. The appellants unsuccessfully invoked the procedure open to them for review by the respondents of their decision. They then appealed to the Scottish Land Court. By Order dated 6 November 2006 the Land Court refused the appeal. The appellants now appeal against that Order under regulation 11 of the Agricultural Subsidies (Appeals) (Scotland) Regulations 2004 (SSI No. 381).
The Sheep Annual Premium Scheme
[2] The Sheep Annual Premium Scheme is based on the Integrated Administration and Control System (IACS) of the European Community and as such is governed by Commission Regulation (EC) 2419/2001 (the 2001 Regulation). A farmer who is eligible for SAP must undertake to keep the sheep on his holding during the "retention period" (ibid, art 2(p)). The retention period is 100 days. In 2003 it ran from 4 February to 15 May. The Scheme is administered in Scotland by the Scottish Executive Environment and Rural Affairs Department (SEERAD).Commission Regulation (EEC) No 2700/93 and Commission Regulation (EC) No 279/94
[3] Article 1(3) of Commission Regulation (EEC) No 2700/93 (the 1993 Regulation), the predecessor of the 2001 Regulation, defined the retention period as the period "during which the producer undertakes to keep on his holding the number of ewes and/or goats in respect of which the premium is requested ... " That undertaking created a difficulty for Member States whose farming practices included the grazing of livestock off the holding during the retention period. It was incompatible, so far as Scotland was concerned, with the traditional practice of away-wintering sheep in areas of milder climate.
[4] Commission Regulation (EC) No 279/94 (the 1994 Regulation) dealt with that difficulty. It expressly amended the 1993 Regulation in relation to contracts of agistment by allowing the producer, on certain conditions, to have stock located off the holding during the retention period. Part of the preamble was in the following terms:
"Whereas Commission Regulation (EEC) No 2700/93, as amended by Regulation (EC) No 80/94, pursuant to Council Regulation (EEC) No 3508/92, as amended by Regulation (EC) No 165/94, and Commission Regulation (EEC) No 3887/92 regarding the integrated administration and control system for certain Community aid schemes, provides for the obligation whereby, as from the 1994 marketing year, producers must keep the number of ewes and/or goats in respect of which the premium is applied for on his holding during the retention period; whereas the application of this rule in the sheepmeat and goatmeat sector would led to the discontinuation of a traditional practice in some Member States; whereas, therefore, provision should be made to allow those practices to be continued under certain conditions and, in that connection, to derogate from the definition of a holding as used in the context of the integrated administration and control system; whereas, in the case of animals placed in agistment, it is necessary to ensure that animals moved are identified in order to make possible their effective control and to notify in advance the periods and places where the movement is to be carried out ... "
Article 1 gave effect to this purpose by adding the following words to article 1(3) of the 1993 Regulation (supra):
"Before all or some of [the] ewes ... in respect of which the premium is requested are placed in agistment during the retention period, the animals concerned must be identified. Furthermore, as from the 1995 marketing year, the place (or places) of retention must be indicated in the premium application as well as, where applicable, the period (or periods) concerned. In the event of a change of place or date relating to that period, the producer shall give prior written notification thereof to the competent authority."
The respondents, acting through SEERAD, are the "competent authority." I shall discuss the expression "agistment" later.
Commission Regulation (EC) No 2419/2001
[5] Article 10 of the 2001 Regulation, which supersedes the Regulations that I have quoted, provides inter alia as follows.
"Requirements pertaining to livestock aid applications
1 A livestock aid application shall contain all information necessary to establish eligibility for the aid, in particular ...
(c) the number of animals of each type in respect of which any aid is applied for ...
(d) where applicable, an undertaking by the farmer to keep the animals referred to in point (c) on his holding during the retention period and information on the location or locations where the animals will be held including the period or periods concerned ...
If the animal is moved to another location during the retention period the farmer shall inform the competent authority in writing in advance."
[6] Article 36 specifies the basis of calculation of livestock aid applications. It provides inter alia as follows:
"(3) Without prejudice to articles 38 and 39, if the number of animals declared in an aid application exceeds that determined as a result of administrative or on-the-spot checks, the aid shall be calculated on the basis of the animals determined."
[7] Article 2(s) defines an "animal determined" as "an animal for which all conditions laid down in the rules for the granting of the aid have been met." Therefore if the farmer fails to give advance notice of a movement of animals to another location, the animals that he moves will cease to be "animals determined." Consequently SAP will not be payable in respect of them. But the movement of the animals will also constitute "irregularities" (art 38(2)), that is to say "any non-compliance with the relevant rules for the granting of the aid in question" (art 2(h)) and will therefore attract a penalty under article 38.
[8] Article 38, read with article 40, provides inter alia in relation to ovine aid schemes that where the number of animals declared in the application form exceeds the number determined by administrative or on-the-spot checks, the aid to which the farmer would have been entitled shall be reduced by a percentage for the period concerned or refused altogether.
Exemptions from the penalty regime
Force majeure
[9] When the IACS-based schemes were introduced, the sole exemption from the penalty regime was in the case of force majeure and exceptional circumstances. This exemption is now set out in article 48 of the 2001 Regulation. The appellants no longer rely on this provision.
Correction of an application
[10] Commission Regulation (EC) No 1678/98 amended the original Regulation of 1992. It permitted the farmer to correct errors in the application, other than those made intentionally or by serious negligence, on certain strict conditions. The present version of this provision is in article 44(2) of the 2001 Regulation (infra).
Lack of fault
[11] The exception for lack of fault was introduced by article 44(1) of the 2001 Regulation (infra). The appellants rely on it. It raises the central issue.
Article 44
[12] Article 44 provides inter alia as follows.
"1 The reductions and exclusions provided for in this Title shall not apply where the farmer submitted factually correct information or where he can show otherwise that he is not at fault.
2 The reductions and exclusions provided for in this Title shall not apply with regard to those parts of the aid application as to which the farmer informs the competent authority in writing that the aid application is incorrect or has become incorrect since it was lodged, provided that the farmer has not been informed of the competent authority's intention to carry out an on-the-spot check and that the authority has not already informed the farmer of any irregularity in the application."
The decision of the Land Court
The findings
[13] The Land Court heard evidence on the facts from the appellants' farm manager and their factor; and expert evidence on the practice of agistment and the operation of the SAP scheme from Mr J M McDiarmid, MBE, JP, an eminent farmer and arbiter.
[14] The Land Court found that in most of the years from 1983 until 2003 the appellants had their hoggs wintered with John W Bowman of Carnoch, Buckie, Banffshire. All of these contracts were entered into orally. They reflected current and historical Scottish practice. They did not specify what procedures were to be followed if there should be a change in circumstances during the wintering; nor did they set out the limits of Mr Bowman's discretion.
[15] In about September 2002 the appellants' farm manager telephoned Mr Bowman to confirm the arrangements for the coming winter. That call and subsequent calls in October resulted in an agreement that the appellant would send 237 hoggs for wintering to Cullen Farm, Buckie, the location specified by Mr Bowman. Mr Bowman gave the farm manager the code number for Cullen Farm. Sometime in October the hoggs were delivered there.
[16] In early 2003 the appellants' factor completed an application to SEERAD claiming SAP for 1087 animals, including the hoggs. The application form accurately specified Cullen Farm, with its code number, as the holding on which the hoggs were then located.
[17] By about 17 February 2003, there was no longer enough forage for the hoggs at Cullen. Mr Bowman moved them to Muiryhall Farm, a...
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