FULL COURT

(Lord McGhie, D J Houston, A Macdonald)

STEPHEN v SCOTTISH MINISTERS

(Application RN SLC/32/07 – Order of 3 September 2008)

AGRICULTURE – AGRICULTURAL SUBSIDIES APPEAL – SUCKLER COW PREMIUM SCHEME – REQUIREMENT OF A SPECIFIED RATIO OF HEIFERS –“HEIFER” DEFINED BY REGULATION – DEFINITION CONTRARY TO COMMON UNDERSTANDING – ALTERNATIVE ANIMALS AVAILABLE TO REPLACE FORMER HEIFERS – REGULATIONS PERMITTING REPLACEMENT – DUE TO MISUNDERSTANDING NO ATTEMPT TO REPLACE – WHETHER LATE INTIMATION OF POSSIBLE REPLACEMENTS COULD BE RELIED ON – COUNCIL REGULATION EC NO. 1254/1999 Arts. 3(g) and 6; COMMISSION REGULATION EC NO. 2419/2001 Arts. 10 and 36, 37, 38.

It was a stated condition of the Suckler Cow Premium Scheme 2003 that a claimant required to include a minimum of 5% heifers throughout the retention period. A heifer was defined in the E.C. Regulations for the purposes of the scheme as a female bovine animal from the age of 8 months which had not calved. In common with many Scottish farmers, Mr Stephen understood the word in a different way. There were variations in the way the word was understood. He made a claim for SCP in relation to 215 animals including 20 such heifers. Of these heifers, 15 calved within the retention period. Because he did not realise that they had ceased to be heifers for the purposes of the Scheme he took no steps to replace the animals which calved. He had on his holding a substantial number of maiden heifers for which no claims had been made. The respondents reduced the applicant’s claim to a total of 109 animals being the number in respect of which the ratio of 5% could be maintained by reference to the remaining claimed heifers. About 2% of Scottish farmers claiming under the SCPS 2003 found themselves in a similar position and this was treated as a test case. The existence of the maiden heifers and the change of status of the 15 claimed animals were capable of being found from the records held by the British Cattle Movement Service (“BCMS”), under the Cattle Tracing System (“CTS”). The respondents had access to these records which were maintained on their behalf. It was argued that because he had animals which could have replaced the animals which ceased to qualify the situation should be looked at as if the element of non-compliance by Mr Stephen was simply a failure to notify replacements in a formal way. It was said that the Department should accept late intimation after the claim had been checked because they held the information necessary to check the claim at that stage. The failure to give formal intimation at an earlier stage, if not wholly excusable, was such a modest failure that a smaller deduction should have been made. The Guidance had not given any warning that failure to comply with the condition would lead to loss of premium. It had just given warning of possible penalties.

HELD (1) It was clear that producers were entitled to receive a grant only if they complied with the provisions of the scheme and the appellant had not complied with the condition which would have entitled him to payment in respect of 215 animals. (2) There was no basis upon which the respondents could treat the other animals as if they had been included in the claim so as to make up the shortfall; (3) The express provision in the Regulations for intimation of replacements within a specified period meant that it was not possible to imply any right to make such intimation at a much later stage after the difficulty had been detected; (4) The administrative importance of avoiding a duplication of the checking process was sufficient justification for a strict rule having regard to the overall scale of the IACS scheme; (5) The obvious effect of failure to meet a condition might have been a complete loss of premium but the respondents’ approach could be justified as based on the number which matched the necessary percentage of heifers determined; (6) The indirect notification through the CTS showing that certain animals were no longer heifers meant that such animals could properly be treated as having been removed from the claim. So there was no penalty. Without such notification there would have been a requirement of penalty as well as reduction of premium to reflect the reduced numbers qualifying; (5) As this was consistent with the Commission Guidance in AIN-6 there was no need for any concern as to over-payment and as the appellant had not demonstrated any other sound approach, the respondents’ approach should stand.

OBSERVED although there was a hint of something unfair in the respondents being able to use information to check a claim without being able to use the same information to support or validate a claim, the issue was not one of validating a claim. There was a clear difference between making a claim and being able to make a claim.


See full decision: SLC/32/07