(Sheriff MacLeod, Mr A Macdonald)
(Application SLC 174/12 – decision of 3 December 2013)
RURAL PAYMENTS - APPEAL AGAINST PENALTY - CLAIM ERRONEOUSLY MADE FOR WORK NOT CARRIED OUT - WHETHER APPLICANTS LIABLE FOR FAULT OF AGENTS - WHETHER “OBVIOUS ERROR” - ARTS 3.4 AND 30.1 OF EUROPEAN COMMISSION REGULATION (EU) No 65/2011
The appellants had entered into a Rural Development Contract with the respondents under the latter’s Scottish Rural Development Programme. The contract involved, among other things, the erection of fences alongside hedges. It was administered on the appellants’ behalf by a firm of agricultural consultants acting as their agents. In drawing up a claim for payment an employee of said agents innocently omitted to remove from an electronic spreadsheet reference to two fences which, although part of the contract, had not been erected by the time the claim was submitted. The error came to light only after an on-the-spot inspection under the relevant regulations. The inspection was unannounced save for a telephone call from the inspector to the appellants’ Managing Director on the morning it was going to be carried out. In the course of that telephone conversation there was reference to the two fences but the terms of the conversation were not clearly proved in evidence. On inspection the fact that the fences had not been erected became clear. The respondents subsequently having imposed a penalty for over-declaration, the appellants appealed in terms of the Rural Payment (Appeals) (Scotland) Regulations 2009, arguing that no penalty should have been imposed because (a) they had not been at fault in terms of Article 30.1 of European Commission Regulation (EU) No 65/2011, the fault having been on the part of their agents, and (b) the error was an obvious error in terms of Art 3.4 of said Regulation, the inspector having been told about it before carrying out the inspection.
HELD appeal refused. Neither defence applied. An applicant for support of this kind was liable for fault on the part of his agent (Barachander Farm v Scottish Ministers 2008 SC 341 followed), there was no obvious error on the face of the application and, even if the appellants’ Managing Director did tell the inspector that the fences had been claimed in error during said telephone call (which the court, on the evidence, doubted) it was by that time too late to amend the claim because of the provisions of Art 3.3 of said Regulation.
The Note which accompanied the Court’s Order was as follows:-
 This is an appeal under the Rural Payments (Appeals) (Scotland) Regulations 2009. The appellants are a limited company who farm the Home Farm, Philorth, Fraserburgh. The respondents are the Scottish Ministers. The appeal is against a decision of the respondents dated 20 July 2012 to impose a penalty by way of deduction from the payment otherwise due to the appellants that year under the respondents’ Scottish Rural Development Programme (“SRDP”). A review of that decision requested by the appellants under Reg 5 of said Regulations resulted in the decision being upheld. The appellants have now appealed to this Court in terms of Reg 8.
 On or around 28 November 2011 the appellants entered into a Rural Development Contract with the respondents under the Rural Development Contracts (Rural Priorities) (Scotland) Regulations 2008 SSI 2008/100. These Regulations supplement, domestically, European Council Regulation (EC) No 1698/2005 which laid down general rules governing rural development in the European Community, as it then was. Regulation EC 1968/2005 was supplemented at European level, initially by Commission Regulation (EC) No 1975/2006, laying down detailed rules for its implementation, and then, with effect from 1 January 2011, by Commission Regulation (EU) No 65/2011 (“the 2011 Regulation”) which governs this case.
 Said contract provided for the carrying out of certain works by the appellants over a period of 15 years. What was to be done in each year was specified in the contract and performance of that work would attract annual payments under the SRDP.
 The work for 2012 included the erection of certain fences, including stock fences at locations B1, B33 and B65 on a map of the farm. In circumstances which appear more fully from the narration of the evidence below, the appellants claimed for the erection of these fences in their claim for that year. On 17 July 2012 Ms Nicola Ward, one of the respondents’ inspectors based at their local area office at Thainstone, telephoned the appellants to advise them that she was going to carry out an “on-the-spot” inspection of the farm that day. Such inspections are provided for by Article 10.2 of the 2011 Regulation. She spoke to Mr Ronald Anderson, a director of the appellants. In the course of that conversation Mr Anderson mentioned that two fences had not been erected. Inspection found that the fences at B1 and B65 had not been erected and that only half (one side of what should have been double sided fencing) of the length claimed for B33 had been erected.
 In that situation there was a disparity between the sum claimed by the appellants and what they were found entitled to on inspection and a penalty by way of deduction of £10,036 from the payment otherwise due to the appellants in 2012 ( letter from the respondents to the appellants dated 10 September 2012, production 3). That is the penalty appealed against.
 In their pleadings the appellants set out two defences. First they say that, in terms of the proviso to Article 30.1 of the 2011 Regulation, they are not at fault for the inclusion of the ineligible amount, that having been the fault of their agents, Buchan Agricultural Consultants Ltd (“BAC”). Secondly, they say that, Mr Anderson having told Ms Ward that two of the fences had not been erected prior to her inspection, the situation is one of “obvious error” in terms of Article 3.4 of the Regulation.
 We heard the appeal at Edinburgh on 19 November 2013, when the appellants were represented by Dr Gerald Banks of BAC, whom we have allowed to appear on behalf of clients in previous appeals of this kind, and the respondents by Mr Alasdair Burnet, advocate. The appeal took the form of evidence followed by submissions. A Joint Minute was lodged agreeing certain matters.
 The following parts of the 2011 Regulation are relevant:-
“3. An application for support, payment claim or other declaration may be totally or partially withdrawn at any time. Evidence of such withdrawal shall be recorded by the competent authority.
If the competent authority has … given notice to the beneficiary of its intention to carry out an on-the-spot check, which subsequently reveals irregularities, withdrawals shall not be authorised in respect of the parts affected by the irregularities.
4. Applications for support, payment claims and other declarations may be adjusted at any time after their submission in cases of obvious errors recognised by the competent authority.”
“1. Payments shall be calculated on the basis of what is found to be eligible during the administrative checks.
The Member State shall examine the payment claim received from the beneficiary, and establish the amounts that are eligible for support. It shall establish:
(a) the amount that is payable to the beneficiary based solely on the payment claim;
(b) the amount that is payable to the beneficiary after an examination of the eligibility of the payment claim.
If the amount established pursuant to point (a) exceeds the amount established pursuant to point (b) by more than 3%, a reduction shall be applied to the amount established pursuant to point (b). The amount of the reduction shall be the difference between those two amounts.
However, no reduction shall be applied if the beneficiary can demonstrate that he/she is not at fault for the inclusion of the ineligible amount.
2. Where a beneficiary is found to have intentionally made a false declaration, the operation in question shall be excluded from support from the EAFRD and any amounts already paid for that operation shall be recovered. Moreover, the beneficiary shall be excluded from receiving support under the same measure for the calendar year of finding and for the following calendar year.”
Barachander Farm v The Scottish Ministers 2008 SC 341
Seaton Brick and Tile Co Limited v Mitchell (1900) 2 F 550
Sinclair v The Scottish Ministers 2011/SLC/88/08
Stephen v The Scottish Ministers 2008 SLCR 107
Peter Strawson Limited v The Secretary of State for Environment, Food and Rural Affairs  EWHC 3286 (Admin)
 For the appellants, evidence was given by Mr Ronald Taylor Anderson, one of their directors, and Ms Hannah Guild, who was employed by BAC at the material time and had completed the appellants’ claim form. For the respondents, evidence was given by Ms Nicola Jane Ward, the inspector who carried out the on-the-spot check, and Mr Andrew Walter Mitchell, the respondents’ Deputy Scheme Manager for Rural Priorities within the SRDP. The witnesses were all credible and reliable. Indeed there was nothing in the way of conflict in their evidence. We need not narrate it at length. We will confine ourselves to the parts which explain what happened in more detail.
 Mr Anderson spoke to being a director of the appellants, described the nature of their farming business and confirmed that they had entered into an SRDP contract. The work in connection with that contract had all been carried out by Dr Banks, in the sense that he, or his firm, had drawn up the scheme of work, engaged and supervised contractors and submitted the 2012 claim form to the respondents Rural Payments and Inspections Directorate (“RPID”). When the 2012 claim had been submitted he had received a copy which he would have checked “vaguely”. On 17 July 2012 he had been telephoned by Nicola Ward who had told him that she was coming that morning to inspect the work claimed for. He had explained to her that there was no problem about that but that there were two areas where hedges had been planted but the stock fences protecting them had not been erected. He had explained that the reason for that was that there were growing crops in these fields and that the fences would be erected as soon as the crops had been harvested. His understanding, as he told Ms Ward, was that these fences had not been claimed for in the 2012 application. Following that phone call he had telephoned Dr Banks who confirmed that understanding. At lunchtime Nicola Ward had come to see him and confirmed that she had discovered that at least one fence had been claimed for which had not been erected. Mr Anderson had then pointed out to her the location of the other fence which was still to be erected.
 In cross-examination Mr Anderson confirmed his understanding of the appellants’ agreement with the respondents as being a contract. He had been aware of the potential consequences of claiming for work that had not been done. He confirmed that he had authorised BAC to submit applications for payment on the appellants’ behalf. For the purposes of doing so, Hannah Guild had come to the farm to inspect the work done. He had not seen her but he was aware that she had come. Shown production 5 and 9, which are copies of the relevant claim form, he could not remember having seen a copy previously. When he had told Dr Banks in evidence that he had seen and vaguely checked the claim form he had in fact been thinking of the contract itself, not the claim form. He had left everything to Dr Banks but all parties had known that the hedging had been done but not the fencing at these particular locations. He had been aware, however, that a claim form had been submitted. That was because Dr Banks had phoned him to tell him so and had told him that two fences had been omitted and would be claimed later, once they had been erected.
 The next thing he had been aware of was the telephone call from Nicola Ward. He had told her the works had been completed except for said fences. The reason he had then phoned Dr Banks was simply to tell him that the Department were coming to check the scheme. Dr Banks had told him that there was no problem because the work which had not been done had not been claimed for. He had therefore been surprised to be told by Nicola Ward that these fences had been claimed for. That had been the first he had been aware that the unerected fences had been claimed for.
 Ms Guild had worked for BAC from November 2011 until the end of July 2012 when she had left their employment to commence training as a rural chartered surveyor with Dunecht Estate. At BAC she had been a trainee agricultural consultant. She had worked on the appellants’ 2012 environmental scheme claim. In February she had gone out to measure the capital items which had been carried out. She had put together a Master Claim Form, in the form of a spreadsheet, production 6. It listed all the measurements taken on site. It had been created on the basis of the contract. It included all the work specified in the contract. It was used for checking measurements on site. Items which were being claimed were shown highlighted on the form. Everything highlighted should be in the claim form. She had prepared the 2012 claim form, production 5. She had taken out of the Master Plan items which had not been completed and put these on a new draft claim form, production 18, which would be submitted once these items had been carried out. She had accidentally failed to take two items out of production 5 but she had put them in production 18, showing that the intention had been to claim for them later, when the work had been done. The farmer here had been provided with a copy of production 5 by post but she had never spoken to the farmer about the claim.
 Production 5 had been completed on 25 June. The office had been quiet at that time. Dr Banks had been away at the Highland Show and a couple of people had been on holiday. She could not remember specifically what she had been doing that day, apart from completing the appellants’ claim form. She could only assume she had been distracted by something at some point. It had taken her a good bit of time to check and double-check the measurements on the farm. She thought she might have got carried away checking measurements and had forgotten to remove these two items from the claim. Dr Banks had not been available to check the form.
 In cross-examination Ms Guild confirmed that she had signed production 5 on behalf of BAC. It referred to BAC having authority to submit claim forms for the appellants. Having carried out measurements in February, she had begun to draft the claim in April but had no intention of submitting it until later. Mr Anderson and the fencing contractor fed back to Dr Banks how work was progressing and that information was used for updating the draft claim form. Dr Banks had told her what to take out before going to the Highland Show. She could not remember if she had double-checked with Mr Anderson but she would have taken her instructions from Dr Banks. She thought the copy of the claim form sent to Mr Anderson had been accompanied only by a “With Compliments” slip. She did not think there had been a covering letter asking him to check the form. She confirmed that the Master Spreadsheet would have been kept in the office, not sent in to RPID along with the claim form. She had left the employment of BAC on the last day of July 2012 but had been on holiday prior to that. No one had asked her what had happened. The first she had known that the over-claim had been made was about a fortnight ago.
 Ms Ward confirmed that she had carried out the inspection. She had telephoned Mr Anderson to tell him that his hedging and fencing claim had been selected for inspection and that she would be at the farm in an hour. He had said that that was all right, that two fields had not been fenced because the crops in them had not been combined but that there should not be a problem because he was fairly sure they had not been claimed.
 She had not seen Mr Anderson until lunchtime. By that time she had found out that at least one of the fences claimed had not been erected. Production 14 was her inspection report. She identified the three items found to be in breach. B1 and B65 had no stock fence and B33 had a rabbit fence on both sides but a stock fence on only one. Her report included a note that Mr Anderson had not realised that his agent had claimed for these fences. She had written the letter of 20 July, production 2. She agreed that it referred to European Commission (EC) No 1975/2006. She had had no further involvement in the case.
 In cross-examination Dr Banks read to the witness Article 4 of Reg 1975/2006, which contains an obvious error provision similar to that quoted above from Article 3 of the 2011 Regulation. She confirmed that her inspection had been unannounced. She confirmed that Mr Anderson had told her about the fences not having been completed and that he had said that as far as he was concerned they had not been claimed. He had told her that before the inspection had commenced but the witness pointed out that Mr Anderson had not been on the phone her to tell her that: she had been on the phone to him to tell him about the inspection. An inspection was “unannounced” in terms of RPID guidance if less than three hours’ notice of it was given.
 Mr Mitchell is Deputy Scheme Manager for Rural Priorities within the SRDP. That involves the oversight of the process, central collation of applications, dealing with financial matters and issuing guidance to area offices where needed.
 What was relevant of his evidence is largely confined to his, and his department’s, understanding of obvious error. He was asked about that by Dr Banks. The guidance they worked to was that for something to constitute an obvious error the error had to be obvious from an examination of the claim form itself. Ultimately all mistakes which led to penalties were errors and once they were identified they could, at that point, perhaps be described as obvious but not all errors were obvious errors for the purposes of the regulations. For these purposes an obvious error had to be obvious from the claim form itself.
 Shown production 2, he confirmed that, so far as he was aware, the application of penalties in this case had been based on Regulation 1975/2006. He confirmed that Article 4.3 allowed applications for support and payment to be adjusted at any time after submission in cases of obvious error recognised by the competent authority. But other Articles said applications could not be changed once an inspection had been announced. He was aware that Mr Anderson had told Nicola Ward that a fence had not been erected but not that he had told her the fence had not been claimed. Having been taken to an error in the report of the review hearing which preceded this appeal, production 7, the witness repeated that any error was obvious after the event but that to constitute obvious error it had to be obvious from the claim form. That was the guidance handed down by the European Commission. Production 12 – a working document produced by the Commission – embodied that guidance. An example of obvious error would be where a person claimed the same field twice. In many cases applicants were unaware they had made an obvious error because RPID staff would spot it and correct it without reverting to the claimant.
 Asked about production 12 in re-examination, Mr Mitchell explained that the document had been produced because other member states had asked for guidance as to what they could accept as obvious error in 2002. It had been prepared in relation to Commission Regulation (EC) No 2419/2001 but it had been applied to various other regulations since then. Its principles still applied. In terms of Article 4.3 of Reg 1975/2006 the entity that had to recognise the obvious error was the competent authority. He confirmed that Reg 65/2011 had replaced Reg 1975/2006. Article 4.3 of the latter had been replaced by Article 3.4 of the former and it was Article 3.4 which had been in force at the material time.
 Dr Banks began his submissions by saying that he was disappointed that things had come to this. The role of the Scottish Government was to support Scottish agriculture, not to penalise farmers when no penalty was justified. This matter should have been resolved on 17 July 2012 when Nicola Ward had become aware that these fences had not been erected and were not being claimed. The claim for payment had been made honestly and without any intention to claim incorrect lengths of fencing. Hannah Guild had measured every hedge and fence so that the IACS form could be submitted correctly. She had honestly and correctly prepared a claim form in April with the correct lengths of hedges and of the fences associated with them. The claim form had not been submitted in April because the fencing was not complete. It had been left until June but by then it had become clear, because of weather, ground and crop conditions that the fences would harm the crops and be of no benefit. It had been a clerical error not to remove these fences from the claim form. Production 18 showed that they were to be claimed separately, once the work had been done. The work had subsequently been done, the relevant claim had been submitted but it had not been paid yet.
 The letter of 20 July made clear, by its reference to Reg 1975/2006, that Article 4.3 applied, allowing adjustments of applications at any time in cases of obvious error recognised by the competent authority. The regulation did not go further than that, so the question was whether this was an error which was obvious to the competent authority. In the appellants’ view, once Nicola Ward had been told that these fences should not be on the claim form an obvious error arose. The situation should have been deemed one of obvious error by her and the application amended accordingly. The decision letter made no reference to the 2011 Regulation. Article 3.3 of the 2011 Regulation, as well as providing for obvious error, provided for applications to be withdrawn, in whole or part, before notice has been given of an intention to carry out an on-the-spot check. The inspection report itself clearly showed that this had been an unannounced inspection. It was not, therefore, to be taken as having started until Nicola Ward arrived on the farm. Two hours prior to that she had been informed that these fences were not being claimed. That part of the claim had, therefore, been timeously removed. The fact that the inspection was unannounced meant that no notice of an intention to carry it out had been given.
 In these circumstances the imposition of a significant penalty was contrary to natural justice. The only error had been a clerical one: a failure to remove two lines from one form and transfer them to a later claim form. Application of this penalty showed the Department to be more concerned with catching farmers out for minor errors rather than supporting the industry. We should find that RPID should have adjusted the claim on 17 July following Mr Anderson’s correction. The penalty for field B33 was not being challenged.
 In his introductory remarks Mr Burnet made clear that his clients were not insinuating bad faith on the part of either the appellants or BAC. The penalties had arisen because of errors made and they should stand notwithstanding a finding of good faith by the court.
 He had understood the Grounds of Appeal to be advancing two substantive grounds and one in relation to the size of penalty. The first substantive ground was obvious error. That had been argued by Dr Banks. The second was that the penalties should not apply because there had been no fault on the part of the farmer. That had not been argued. The Court, being of the same understanding as Mr Burnet, clarified with Dr Banks as to whether this ground of appeal was being insisted upon. After discussion Dr Banks confirmed that it was: the appellants were at fault in relation to B33 but not so in respect of B1 and B65. The proviso to Article 30 was, therefore, being relied upon. Dr Banks was given the opportunity of making further submissions on that aspect of the appeal but he declined.
 We also sought clarification of whether the amount of the penalty was being challenged. Dr Banks said that he could not understand how the penalty imposed had been calculated. If it was valid at all it should, on his understanding, have been higher. Standing that such was his position we proceeded on the basis that the amount of the penalty was not being challenged.
 Mr Burnet then moved on to the legislative background. He satisfied us that the 2011 Regulation was the relevant Regulation; para 2 of the Preamble to it showed that Regulation 1975/2006 was being repealed and replaced.
 In relation to Article 3.4 of the 2011 Regulation, it was important not to overlook the words “recognised by the competent authority”. The error had to be an obvious one in the eyes of the competent authority, in this case the Scottish Ministers. This one was not.
 Dr Banks seemed to be conjoining two aspects of Article 3, the provision relating to rectification of an error by the applicant at para 3 and the obvious error provision at para 4. Article 3.3 could not apply because here notice had been given of an intention to carry out an on-the-spot check. The fact that this particular inspection was internally classified by RPID as an “unannounced inspection” was neither here nor there. The fact was that notice of it had been given in Nicola Ward’s telephone call on the morning of 17 July. That notice having been given it was then too late for Mr Anderson to withdraw any part of the claim.
 As to obvious error, Mr Burnet relied on Working Document AGR 49533/2002, production 12, (“The Working Document”) containing the European Commission’s said guidance. It was still applicable. We should read it in detail but the general rule which emerged from it was that the error should be in the application form. There was no error on the face of the form here. There was no contradiction on the face of the form. It was internally coherent. Conflicting information may well have existed elsewhere but it had not been communicated to RPID.This was not, therefore, one of those situations, examples of which are given in the Working Document, where checks throw up contradictions or inconsistencies which require to be investigated.
 In terms of authorities, reference was made to Peter Strawson Ltd v The Secretary of State for Environment Food and Rural Affairs, supra. Paras 35 to 43 emphasised the importance of protecting the integrity of the system and deterring fraud. The case showed that one could have a situation which called for something slightly less strict than insistence on an error on the face of the document but made clear that such cases would be exceptional; para 42. A less strict approach was more likely to be taken when the error made was against the interests of the claimant rather than where the error stood to benefit him. In Stephen v Scottish Ministers, supra, this court had recognised that it was for the competent authority to take the decision as to whether the error was obvious. The court had gone on to say that where the error could not be discerned on the face of the application careful consideration would be required and that it was not to be expected that the obvious error provision [in that case Article 12 of Regulation 2419/2001 which was, so far as is relevant, in identical terms to the present provision] would be capable of application where any significant degree of investigation was required to disclose it. In the present case the claim form was perfectly coherent and there was no basis for further enquiry.
 In both Sinclair v Scottish Ministers and Barachander Farm v Scottish Ministers, supra, the liability of the applicant for his adviser’s or agister’s actions had been made clear, in the latter case by the Inner House of the Court of Session. The present case was completely analogous to Barachander. No bad faith was being imputed to Mr Anderson, nor was it being said that he personally had submitted an incorrect claim. The evidence showed that he had to a large degree delegated responsibility to Dr Banks and his company but that did not absolve him from responsibility for the claim. Assuming he had received the copy of the application form sent to him, he should have checked it but he was in any event, whether he had checked it or not, responsible for what had been submitted. It would be extremely damaging to the overall system if an applicant could avoid penalties by delegating submission of claim forms to third parties.
 Reference was made to Seaton Brick and Tile Co Limited v Mitchell, supra, in relation to the liability of principals for the acts of their agents. Clearly BAC had been the appellants’ agents here.
 It was, in Mr Burnet’s submission, inherently risky to draft a claim form with everything on it. One had to be very careful as to what was being submitted. It had to be checked carefully but in this case it was not clear what system was in place for checking. It was clear that no information had been given to the competent authority here in advance of 17 July. By then, Ms Ward having contacted Mr Anderson to tell him she was coming to inspect the farm, it was too late to change anything. A provision which allowed one to change a claim once one knew that an inspection was to be carried out was open to abuse. It was not entirely clear whether Dr Banks was relying on obvious error or withdrawal of the claim but, in any event, neither availed him on the facts of the case. The case was neither one of obvious error nor one in which the appellants could avoid penalty because the fault had been on the part of their agents. The appeal should be refused.
 In a brief response Dr Banks drew our attention to page 4, para 4, of the Working Document, which refers to good faith on the part of the farmer. The evidence here showed that Mr Anderson had acted in good faith. There was no question of fraud or dishonesty. That should be taken into account. Likewise, para 5 attached some significance to the absence of risk of fraud. Nicola Ward had no doubt taken the information given to her by Mr Anderson on board but she had not acted on it. There had been an opportunity to remove the relevant items from the application at that point. It should have been taken.
 The authorities referred to were not strictly comparable, as one might expect in this type of case. The point the appellants had been making throughout was that there had never been any intention to over-claim and that there had never been any risk of fraud. The application of the penalty, however calculated, was completely unfair and contrary to natural justice.
 Given the absence of bad faith on the part of the appellants and their agents in this case it is easy to understand the passion with which Dr Banks argued that this matter should have been resolved on the morning of 17 July. One also understands why it is being said that the penalty is out of proportion to the culpability of the mistake made. The mistake made by Ms Guild was a mistake of the sort anyone could make, given the number of items being claimed for in the application. What was more culpable in our view was that there was no system in place for the checking of forms before submission. Possibly that was down to Dr Banks’ temporary absence from the office at the time.
 However, none of that bears on our task. We have to apply the law. And, in our view, the law on the grounds of appeal advanced by Dr Banks is quite clear. We deal with them as follows.
 Although the major plank of Dr Banks’s submission under Article 3 was obvious error (Article 3.4), it is convenient to deal with his point about adjustment of the application under Article 3.3 before we get to that. Dr Banks’ argument on this point was that since Nicola Ward’s inspection was an unannounced inspection it was still open to the appellants to adjust their application when Ms Ward phoned Mr Anderson on the morning of 17 July. We understood Dr Banks to be submitting that the information given to Ms Ward by Mr Anderson at that time amounted to withdrawal of the claim for fences which had not been erected, if, in fact, such claim had been made. That is not what our note of the evidence – as set out above – records but for present purposes we will proceed on that basis.
 This submission has no merit. So far as we are aware the term “unannounced inspection” is not a term used or recognised in the European Regulations dealing with this area. Certainly Dr Banks did not refer us to any such provision. The term is, rather, one used by the respondents for administrative purposes to describe an inspection of which less than three hours’ notice is given. That usage does not in any way affect the meaning of the words of Article 3.3. These words could not be clearer. They refer to the competent authority having “given notice to the beneficiary of its intention to carry out an on-the-spot check”. That is precisely what Ms Ward was doing when she spoke to Mr Anderson on the phone on the morning of 17 July. That was the point of her call. The fact that she was coming immediately is irrelevant. What matters is that she told Mr Anderson of her intention to carry out an on-the-spot check. Accordingly, even if their conversation is capable of being construed as Mr Anderson wanting to adjust the application by removing reference to items not carried out (which we doubt), it came too late. By that time notice of the intention to inspect had been given. Accordingly the appellants were not entitled at that point to amend their application in relation to matters in respect of which irregularities were found on inspection. This argument is therefore repelled.
 Of course, if there was an obvious error in terms of Article 30.4 none of that would matter: such an error can be corrected at any time. However we are satisfied that this case is not a case of obvious error. There was no error in the claim form which was either obvious on the face of the form or which the respondents could have discovered by any amount of checking or cross-checking, save for checking with the applicants or their agents, something for which there was no call given that the form was perfectly clear and coherent, requiring no further enquiry.
 The error is said to have become obvious on the 17 July 2012 when Nicola Ward was told that Mr Anderson understood that the fences which had not been completed had not been claimed. That is not the pointing out of an error. On the contrary, what Mr Anderson was saying was that there should be no error in the form because only work which had been completed had been claimed. Accordingly no question of obvious error arises at that point. It was only when Nicola Ward found, by inspection, that work which had not been carried out had indeed been claimed that she became aware that there was an error in the form. That error was not obvious until she detected it. Such an error, discovered only on inspection, cannot be regarded as an obvious error within the meaning of Article 3 because that would subvert the regime by which the European Union seeks to protect the integrity of the system and detect and deter fraud, albeit there is no question of fraud in this case.
 The Working Document to which reference was made does allow for the possibility that an error becomes obvious only at an on-the-spot check (page 3, para numbered 2). But the examples given are of the numbering of land parcels on a land register or on maps; innocuous things that become obvious only when one is carrying out an inspection on the ground. Claims for work not done cannot fall into that category. That is because they are not, on the face of them, innocuous. They may be an attempt at fraud. And the detection and deterrence of fraud is what the whole checking and inspection regime is all about, as the case of Strawson, to name but one of the several authorities which make that clear, tells us.
 In Strawson the learned judge held that there had been an obvious error. In doing so he accepted that, in the interests of reducing fraud, the interpretation of the obvious error provision required a strict approach; paras 40-41. As part of that he said this: “It is of course essential for there to be no grey area within which the dishonest can benefit from fraud if undetected but, if found out, escape by relying on mistake or other error” (para 41). The claimant in Strawson was not in that grey area because he stood to make no gain by what he had done.
 The Working Document referred to is not, of course, binding on us but it is appropriate to give it some weight as guidance given by the Commission to Member States of the European Union as to how they should apply obvious error provisions. It is guidance as to what competent authorities are to recognise as obvious errors, to use the language of Article 3.4. Paragraph 4 of the Working Document says this:-
“The competent authority has to be convinced that the error is genuine i.e. that the farmer acted in good faith. There should be no possibility that fraud or dishonesty is involved, and the onus is on the farmer in the first instance to show that there has been an obvious error. If a farmer makes the same or a similar mistake on more than one occasion, the scope for consideration as an obvious error becomes more restricted.”
 In this case, if we understood Mr Burnet correctly, it is accepted that the farmer acted in good faith or, as would be more accurate given that the farmer did not really act at all, that there was no bad faith. It is not suggested that what happened was done dishonestly or with the intention of making a fraudulent claim. But, while it is true to say that there was no attempt at fraud or dishonesty in this case, it is not true to say that there is no possibility of fraud or dishonesty in this sort of situation. This kind of situation is, rather, within the grey area spoken of in Strawson, in which a dishonest claimant could benefit from fraud if undetected and should not, if found out, be allowed to escape by relying on error. Dr Banks argued that there was no possibility of fraud in this case because it was known that all schemes involving claims of more than £20,000 were inspected. Accordingly false claims would always be discovered. Accordingly there was no point in making them. In our view, however, the matter has to be looked at systemically. One has to ask whether the kind of error made is the kind which might be made fraudulently. There is no more obvious example of such an error than claiming for work which has not been done. In our opinion the obvious error provision of Article 3 cannot be used to excuse such an error.
 That disposes of the obvious error argument. But looking at the appellants’ position in this appeal more generally, what it comes to is that erroneous claims made inadvertently (and therefore without bad faith) should not be penalised. That submission has to be rejected. It is not how the 2011 Regulation discriminates between intentional and unintentional error. What the 2011 Regulation provides is the foresaid system whereby claims can be withdrawn at any time before the competent authority informs the beneficiary of irregularities in the application documents or gives notice of an intention to carry out an on-the-spot check. Once the guillotine of intimation of irregularities or of an inspection comes down, withdrawal of the parts of the claim affected by irregularities already intimated or subsequently discovered is not permitted; Article 3.3. Beyond that point a decision has to be made as to whether a penalty is to be imposed. In the present case there is a mandatory penalty in terms of Article 30. That penalty does not apply where the applicant can demonstrate that he is not at fault. We come to that part of the appellants’ case below. Then comes para 2 of Article 30, which we have set out above and which imposes more severe penalties on applicants found to have made false declarations intentionally. So the more severe penalty in para 2 applies in the case of intentional error and unintentional error is penalised as provided for in para 1. Inadvertence is not a defence against the lesser penalty.
 Although it might be thought that failure to make it their business to check the claim being made in their name infers fault on the part of the appellants, we are asked to view this case as one in which the fault which led to the penalty was on the part of BAC. That raises the question whether a claimant can avoid penalties for breach of the relevant regulations by delegating responsibility to an agent. That question has been authoritatively decided in this context by the decision of the Court of Session in Barachander,in which the Court held that the appellants, who were livestock farmers, were liable for fault on the part of their agister. Although that case was concerned with different European regulations, what was said by the Court in Barachander is equally applicable in this case. What Lord Justice-Clerk Gill, as he then was, said in that case included this:-
“ In my opinion, the submission of counsel for the appellants is unsound. The 2001 Regulation seeks to deter and to penalise the unauthorised movement of stock during the retention period (Gerken v Amt fur Agrarstrucktur Verden, paras 42, 42). If the argument for the appellants were correct, the result would be that if a farmer by his own act committed a breach of Art 10(1), he would incur a penalty; but if his agister caused the same breach, he would not.I cannot see how such a result would be in keeping with the objectives of Arts 36 and 38. It would frustrate the purposes of the scheme and undermine its effective operation. It cannot, in my view, have been the intention underlying the 2001 Regulation.”
 The same illogicality – of a farmer being penalised when it is his own fault but not being penalised when it is his agent’s – arises in this case. Furthermore, although from a legal point of view it is beside the point, the appellants knew very well that they would be liable for the actings of their agents. The productions contain an “Authorisation for a named Agent to complete forms and/or receive payments on behalf of a business or an individual” form dated 17 and 19 March 2008 (production 10, item 3 of the Joint Minute) which appoints BAC as agents for the appellants and which records, among other things, that the appellants “understand that any information given by the agent will be deemed to have been provided by this business [i.e. by the appellants] and that this business will be subject to any penalties for non-compliance with the regulations and scheme rules which apply”.
 For the foregoing reasons the appeal is refused.
 Before concluding we wish to say something about Dr Banks’ criticism of how Nicola Ward dealt with the information given to her by Mr Anderson on the morning of 17 July. His submission was that Ms Ward should have dealt with the matter by (i) identifying the fences which had not been erected, (ii) checking whether they had been claimed and (iii), on finding that they had been, deleting them from the claim. That having been done, Dr Banks submitted, matters should have been left at that with no further procedure and no question of penalty.
 That may seem like a common sense approach to take in a situation where the problem is an inadvertent mistake. But such a course was not open to Ms Ward under the 2011 Regulation. As will already be clear from what we have said in relation to the grounds of appeal, that was because (a) the information came to her only after she had intimated her intention to inspect, (b) it was not a case of obvious error and (c) even inadvertent errors are to be penalised in terms of Article 30. Accordingly what Ms Ward did was correct and no criticism attaches to her.
 We have allowed 21 days within which parties can lodge motions and submissions on expenses.