THE COURT

(Lord McGhie, Mr J A Smith)

INNES v THE SCOTTISH MINISTERS

(Application SLC 103/12 – Order of 7 March 2013)

AGRICULTURAL HOLDINGS – SUBSIDIES APPEALS – CROSS-COMPLIANCE – APPARENT FAILURE TO NOTIFY DEATHS – BRITISH CATTLE MOVEMENT SOCIETY – POSTAL FAILURE – SUFFICIENCY OF EVIDENCE – CATTLE IDENTIFICATION (SCOTLAND) REGULATIONS 2007 Sch 2 Para 3(3).

This was an appeal against a decision of Scottish Ministers imposing a penalty of 5% arising out of apparent failure to notify the deaths of 28 animals on a holding. The appellant accepted that there had been a failure in respect of three of the animals. They had gone missing and the appellant had failed to recognise what had to be done. In respect of the other animals it was recognised that the only issue related to whether or not the Court could be satisfied that the passports had been posted to the British Cattle Movement Society. Late in the hearing the appellant raised the question of whether the penalty was excessive. This had not been raised at an earlier stage and the witness best placed to deal with it had left the building without the matter having been put to her.

HELD there was adequate evidence that the passports had not in fact arrived at BCMS; the missing numbers were too high to be accounted for by errors of the post office particularly when it had to be assumed that all had been properly addressed; the appellant’s description of the system in place contradicted the version given in court; in all the circumstances the Court was not satisfied that the appellant had established that the passports had been properly despatched. The challenge to the penalty came too late but was in any event unfounded on a proper understanding of the respondents’ penalty matrix which was not, itself challenged.

The Note appended to the Court’s order is as follows:

[1] A hearing was held on 4 February 2013 to deal with an appeal by Norman Innes against a decision of Scottish Ministers imposing a penalty of 5% arising out of his apparent failure to notify the deaths of 28 animals on his holding. We allowed Mrs Innes, his wife, to represent the appellant and Ms Morag Ross, advocate, represented the respondents.

[2] The appellant accepted that there had been a failure in respect of three of the animals. They had gone missing and Mrs Innes explained that she had failed to recognise what had to be done. It is unnecessary to say more about these animals. In respect of the other animals it was recognised that the only issue related to whether or not we could be satisfied that the passports had been posted to the British Cattle Movement Society.

[3] In the course of the hearing mention was made of an issue relating to the amount of the penalty and we return to that below.

Findings in fact

[4] As the main issue was a narrow one we limit our findings to those providing an adequate factual background to the dispute. It is unnecessary to deal with the procedural stages of the case in any detail. We found the following facts admitted or proved:

1. The appellant and his wife live at Millbrae, Findhorn. He carries on business as Innes Farms. The farm is at Hellenamore, New Aberdour, near Fraserburgh which is about an hour and a half’s driving time away from their home. Additional land is rented seasonally.

2. A smaller suckler herd of 5 cows is maintained and a flock of 148 breeding sheep. It was unnecessary for us to make specific findings about total animal movements on and off the holding but, for indicative purposes, it may be noted that 27 cows were found on the holding at inspection in February 2012 and records showed sales of well over a hundred cattle in September 2011.

3. Mrs Innes attends to some of the office work from her home. However, various records are kept on the farm. The cattle passports are kept on the farm. Mrs Innes was seldom at the farm.

4. Mr Innes carried out general supervision at the farm. Mrs Innes told us that it would not be possible to say how often he was there. It might be once a week but sometimes, during busy spells, he might be there for weeks on end.

5. Routine work was carried out by a stockman. There had been a few since 2008 but Mrs Innes was unable to say how many. She did not attempt to identify any by name but did say one had been Polish.

6. The stockmen would record routine management details in a diary. Material from the diary could then be used to update other records. For example, Mr Innes would use the diary as a basis for updating medical records and to update movement records of internal movements: that is, movements between the farm and any rented fields. External movements on and off the farm would be recorded at Findhorn. Internal movements were not recorded there.

7. When a cow died, it was the stockman’s duty to record this in the diary and to notify details of the animal to the Knackers Yard when the carcass was sent for disposal. We discuss below the evidence relating to the stockman’s role in reporting deaths to BCMS.

8. It was not disputed that in respect of the appellant’s entitlement to certain support schemes there was a requirement of cross-compliance.

9. In particular the appellant had to comply with the provisions of the Cattle Identification (Scotland) Regulations 2007 as amended. Schedule 2 of the Regulations dealt with notification of animal deaths. After dealing with slaughterhouses, there was a provision which, read short, was in the following terms: “3. (3) In any other case when an animal dies, the keeper shall within 7 days of its death – notify the Scottish Ministers of its death … and (i) return the identification document for that animal to Scottish Ministers

10. It was accepted on behalf of the Scottish Ministers that return of the passports would also cover the requirement of notification. It was not disputed that the BCMS were the duly nominated agents of Scottish Ministers for the purposes of the relevant regulations. It was also accepted that it would be sufficient compliance to prove that the passport had been duly posted to BCMS. There was no requirement to post by recorded delivery or to obtain a receipt from the post office.

11. The Cattle Keepers Handbook in the version of March 2009 included the following as the final paragraph at 4.3: “If you return a passport to us, you must tell us the reason. You may want to use a form of post that can be traced. Passports do go missing in the post and this would help us to find out when and where the passport went missing”.

12. When the appellant and his wife received intimation of the intended inspection, Mrs Innes checked on-line with BCMS to see what their records said. She was surprised to see that they did not record the deaths of the 28 animals. She could not understand what had gone wrong. She discussed the matter fully with her husband. She made an electronic notification of the deaths on 10 and 11 February 2012, showing the dates recorded in the farm records.

13. Mrs Duncan started her inspection at the Findhorn office. The passports were there for inspection. She did not find passports relating to the dead animals. Mrs Innes gave a possible explanation for the missing passports by reference to foreign stockmen having to post them.

14. At the conclusion of the inspection Mr Innes was given an opportunity to make a written comment. He wrote: “As far as I am aware all passports for any dead animals was posted to BCMS by our stockman

The Essential Issue

[5] Various pieces of evidence had a bearing on the question of whether we could be satisfied that the passports had been duly posted. The start point is to consider the evidence of Mrs Anne Nicholson, a team leader from BCMS who explained their system for dealing with incoming mail. She explained how this was dealt with. She was unaware of any problems with their system. If a passport had been received it would have been entered on their HEAT system. This recorded all initial communications received by BCMS by post or telephone. There was no record of receipt of any of the 25 passports. It is unnecessary for us to go into the detail of the systems and records to which she spoke. If it fair to say that the appellant did not appear to challenge her evidence. Although there had been some reference in the written material to an allegation that the BCMS system was not reliable, no such assertion was made by Mrs Innes. We put the allegation to Mrs Nicholson in fairly broad terms. Mrs Nicholson said she was not aware of any difficulties with their systems. She was clear that there had been no relevant difficulties over the period in question. We were satisfied on the basis of this evidence that the passports did not reach BCMS. We understood Mrs Innes’s main contention to be that passports could get lost in the post.

[6] Mrs Innes said that when she had notice of the inspection and, on checking the BCMS computer, realised that so many deaths had not been recorded, she was appalled. She discussed the matter with her husband. She said she could not understand it. Without making too much of this, it may be said that if she had had a reliable system for posting her reaction might have been expected to be one of anger at the apparent inefficiency of BCMS rather than lack of understanding. However, there is no doubt that her evidence was that she and her husband discussed matters very fully. If they had a system whereby she was solely responsible for posting of the material, he could have been in no doubt about that before he ever spoke to Mrs Duncan. He made no attempt to explain his written “comment” by suggesting that he did not know how Mrs Innes dealt with office routine.

[7] Mrs Innes gave evidence of the system she said was followed. If a cow died on the holding the stockman would phone the knackers and would usually also phone her to give details. He would find out whether Mr Innes was likely to be at the farm so that he could take the passport back to her. If not the stockman had to post the passport to her. She had seen each stockman and explained this clearly to him. She would then check all the details and would personally post the passport back to BCMS. She did not always use the same post office. It was simply a matter of convenience. A variety of post offices might have been used. She stressed that her internal records were all completely accurate. This showed that the details had been passed to her. She accepted that it would have been possible to change the computer records at any time but it was not suggested to her that she had actually done this.

[8] Under cross-examination she said that occasionally her daughter might have posted the passports for her. She was asked whether she had ever said to Mrs Duncan that the foreigners had done the posting. She said she could not remember saying this.

[9] Mr Innes gave evidence in support of his wife’s account. He was quite indignant when it was suggested that his handwritten account was to be read as saying that the stockman had posted the passports directly to BCMS. He asserted that the comment was quite correct. It meant that the stockman posted the passports to Mrs Innes and that she was responsible for posting the passports to BCMS.

[10] Mrs Jennifer Duncan had carried out the inspection. She had spoken to both Mr and Mrs Innes. She did not think Mr Innes was there when she first spoke to Mrs Innes. She said she remembered Mrs Innes telling her that the passports were all put in a bag which the workers or foreigners were intended or intending to post. That was all she could remember about that. She did remember being able to check the actual death dates either from print-outs which Mrs Innes had prepared or from the computer screen itself. When she was cross-examined to the effect that Mrs Innes did not think she had said anything about foreigners posting the passports, she reflected and then said that she remembered Mrs Innes saying that the card from the passport was put in a bag for the stockman to post. That she said was her recollection. It was quite clear.

[11] Mr Kenneth Watt gave evidence of the review meeting and of the formal aspects of the process which are not in dispute. Mrs Innes had told him she posted all the passports.

[12] In cross examination, Mrs Innes raised with Mr Watt the question of the appropriateness of the 5% penalty. This had not been mentioned in the appellant’s written appeal papers. The challenge related to the matter of detail of the percentage of unreported deaths compared with the total number of cattle passing through the holding in the relevant period. It became clear that Mr Watt did not know precisely what period had been used and accordingly could not comment on the accuracy of the figure of 160 movements used in the calculation. This had not been in dispute as far as he understood it. Mrs Duncan would have known. She might have been able to clarify the matter. She had not been asked about this.

[13] We are anxious not to allow legal formalities to get in the way of a sound point and where a particular matter emerges clearly at a hearing we would be sympathetic to an invitation to consider it even without prior notice. However, it is important to stress that the need for proper notice is no mere formality. Parties prepare their evidence to meet the case they can reasonably expect to face. A person who was legally represented would not expect to be allowed to open a new issue at appeal. We allow party litigants considerable latitude but there are limits. In the present case it was not clear that the figure was wrong. The appellant had not led evidence to challenge it. But in any event, we are satisfied that it is unnecessary go beyond the response by Ms Ross on behalf of the respondents. She pointed out that the penalty was based on the higher of two alternatives. Under the penalty matrix, a figure would be taken based on the actual number of defaults. Another figure would be derived from the percentage of defaults compared with total movements. In the present case, the penalty of 5% had been part of a calculation based on the actual number of 28 defaults. That was the higher figure. Even if the comparative percentage figure was to be changed it would make no difference to the penalty. It is therefore unnecessary for us to look at the accuracy or otherwise of the figure used as total movements.

[14] On the substantive issue, we have not been satisfied that the available evidence allows a finding that the passports were invariably posted back by Mrs Innes. That is the proposition on which she relies. We recognise that it is supported by the evidence that her own computer records appeared to disclose that the deaths were duly recorded. But there are various matters casting doubt on it.

[15] In the first place, we consider the numbers involved are too many to be accounted for by reference to packets lost in the post. We heard no direct evidence of the percentage of material typically lost in the post. We accept that we should not proceed on the basis that the Postal Service is infallible. However, it must be assumed that any parcel or envelope sent was properly packed and labelled. That would be a basic duty incumbent on the sender. Our everyday experience suggests that where parcels are properly packed and clearly addressed the figure for unexplained missing items is far below anything that could explain the apparent defaults here. It may be added that although Mrs Innes appeared to be saying that each death was carefully dealt with individually and she did not draw particular attention to any grouping of deaths, we can see that there were occasions where there were several deaths in a short period and where it might have been the case that several passports would have been dealt with together. This might reduce the significance of the numbers to some extent. But we are satisfied that the excuse of postal failure cannot be accepted as an explanation for all the omissions. The numbers support the conclusion that the system was not a wholly reliable one.

[16] Mrs Innes made the point that the system she said she used was the same one as BCMS used to send material to farmers. But there is no formal criticism of the system she said she used. The advice to keep a proper record of posting was simply intended to help farmers in case a problem arose. The issue is whether we can be satisfied that she actually used it in relation to the deaths in question. It is irrelevant that BCMS used the same system. But it may be added that they would be responding to requests. The farmer would know to make further enquiry if something did not appear when expected.

[17] The evidence as to the appellant’s system for dealing with recording and notification of death was not of a failsafe system. On any view, the system relied on due diligence by stockmen. Mrs Innes was not able to say who the stockmen were or how many there had been over the period since 2008. She said she had not expected to be asked about this. But it was up to the appellant to show that there had been a robust system in place. At best her system appeared to rely on the passports being posted to her without delay by the various stockmen.

[18] However, the greatest element of doubt came from the confused accounts initially given by Mr Innes and his wife as to what the system actually was. Despite the protestations by Mr Innes we think that it is not possible to treat his written comment – at finding (11) above – as being intended to explain that the system in place was for the stockmen to send the passports to the office for checking and for Mrs Innes to be responsible for posting them to BCMS. His written explanation speaks for itself.

[19] We had no reason to doubt Mrs Duncan’s evidence that Mrs Innes’s first explanation to her was essentially to blame the foreign stockmen for the failure. At the least this casts doubt on the reliability of the appellant’s system. But it goes further. It casts doubt on the reliability of Mrs Innes’s emphatic evidence to us that she herself had complete responsibility for posting the passports to BCMS.

[20] There was some suggestion on behalf of the respondents that Mrs Innes’s failure to use the on-line checking facility in relation to deaths was a further pointer to her having an unreliable system. She said she used the system to report births and certain movements but never to check deaths. We did not hear enough about the detail of how the system appeared on screen to be able to rely on this as a ground of criticism. We are aware that people use computers in different ways. Having established a reliable way to report births etc., Mrs Innes might well have seen no need to explore further the operation of the programme to see how it dealt with deaths. We attach no weight to this point in this case.

[21] However, put shortly, there is no reliable evidence to rebut the presumption raised by evidence of non-receipt by the BCMS. We cannot make a finding that the appellant did indeed return all the passports to BCMS. The appeal turned on this and accordingly fails.