Stody Estate Ltd v Secretary of State for Environment, Food And Rural Affairs, Court of Appeal - Administrative Court, March 06, 2018, [2018] EWHC 378 (Admin)

Issuing Organization:Administrative Court
Actores:Stody Estate Ltd v Secretary of State for Environment, Food And Rural Affairs
Resolution Date:March 06, 2018
 
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Neutral Citation Number: [2018] EWHC 378 (Admin)

Case No: CO/1951/2017

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: Tuesday 6 March 2018

Before:

MRS JUSTICE MAY DBE

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Between:

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Hugh Mercer QC and Jessica Wells (instructed by Hewitsons LLP) for the Claimant

George Peretz QC (instructed by Government Legal Department) for the Defendant

John Robb (instructed by the National Farmers' Union) for the Intervener

Hearing dates: 19 December 2017

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Mrs Justice May:

Introduction

1. The EU operates a system of payments to farmers in member states: the single farm payment scheme (``SPS''). The SPS is a direct support scheme for farmers under the EU's common agricultural policy. It is voluntary: farmers may apply for payments under the scheme and will be granted them if they satisfy certain eligibility criteria. Until 2003 the system was broadly one of payments in return for production; after 2003 it changed to one of incentivising conservation: payments were directed to the preservation of the environment, wildlife and habitats. In the UK, the SPS is administered by the Rural Payments Agency (``RPA'').

2. As is set out in more detail below, farmers seeking a payment under the SPS are obliged to comply with various requirements, called ``cross compliance'' requirements, consisting of statutory management requirements (``SMRs") directed at conserving wildlife and keeping the land in good agricultural and environmental condition. Payments under the SPS may be reduced or excluded where there is non-compliance with the SMRs (known as ``cross compliance breaches'').

3. This claim seeks to challenge the decision of the Minister for Agriculture, Fisheries and Food (``the Minister''), exercising the powers of the Secretary of State for the Environment, Food and Rural Affairs (``SoS''), to impose a penalty reduction on the Claimant's claim for a single farm payment in 2014, on the grounds that the intentional acts of an employee in poisoning wild birds gave rise to a relevant cross-compliance breach directly attributable to the Claimant (``the Decision''). The Decision was communicated by a letter dated 25 January 2017 from the RPA to the Claimant, and thereafter reaffirmed by letter dated 13 April 2017 from the SoS.

4. Permission for the Claimant's application was given on 22 August 2017 by Sir Stephen Silber sitting as a High Court Judge. By his order made on that occasion Sir Stephen also gave permission for the National Farmers' Union (``NFU'') to be joined as an Intervener.

Stody Estate and Allen Lambert

5. The Claimant (``Stody Estate'') is a company which owns and manages some 4200 acres of arable and grazing land and forestry in North Norfolk. Stody Estate has been farmed by the MacNicol family for approximately 75 years; Charles MacNicol is currently the Managing Director. The Estate Manager, Ross Haddow, is responsible for day to day management of the estate, assisted by 15 full-time employees with occasional casual labour as required.

6. Allen Lambert had been employed as keeper on the estate since 1990. His job was multi-faceted, encompassing all aspects of estate security, animal and fowl husbandry and vermin control. It included acting as gamekeeper in respect of an annual 10-day ``family shoot'', for the purposes of which some 2500 pheasant and partridge poults were brought in and reared on the estate each year. Mr Lambert and his wife lived in a tied house on the estate.

7. In April 2013 Mr Lambert was arrested on suspicion of poisoning raptors on the estate: 10 buzzards and 1 sparrowhawk. On 2 October 2014 he was convicted of criminal offences under s.1 of the Wildlife Conservation Act 1981 arising from the poisoning of such wild birds.

8. In September 2015, the RPA notified Stody Estate that it was to be held ``vicariously liable'' for Mr Lambert's actions in killing the wild birds, which constituted a breach of the applicable SMR. The RPA indicated that it had decided to apply a reduction of 75% to the Estate's payment for 2014, on the basis that the killing of the raptors on the estate had been an ``intentional'' breach.

9. Stody Estate appealed to the Independent Agricultural Appeals Panel (``IAAP''). Following a hearing, the IAAP decided that although Mr Lambert's actions had been intentional, his intention could not be attributed to Stody Estate; in accordance with the decision of the CJEU in Case C-396/12 Van der Ham v. College van Gedeputeerde Staten van Zuid Holland (``Van der Ham'') vicarious liability did not apply to European legislation. The IAAP concluded that some reduction was appropriate nevertheless and it recommended a 20% reduction.

10. The IAAP's decision and recommendation was referred to the SoS. By his Decision communicated in a letter to Stody Estate from Glenn Ford of the RPA dated 25 January 2017, the Minister, whilst taking into account a number of the findings of the IAAP exonerating Stody Estate itself from any involvement in Mr Lambert's actions, nevertheless concluded that the intentional acts of Mr Lambert acting within the scope of his employment were to be treated as those of the farmer, being Stody Estate. However, given the mitigating circumstances available to Stody Estate by reason of ``the extent to which the Estate took reasonable steps to prevent non-compliance and its approach to environmental issues'', the reduction to the annual payment was revised from 75% to 55%.

11. The issue for my decision is whether the Minister was entitled to penalise Stody Estate under the relevant EU law by virtue of intentional acts done by its employee.

The Regulatory framework

12. The principal regulation, establishing ``common rules for direct support schemes for farmers under the common agricultural policy'', is Council Regulation (EC) No 73/2009 (``Reg 73/2009'').

13. The relevant penalty provision is Article 23 of Reg 73/2009 (``Article 23''):

``Article 23 Reduction or exclusion from payments in the event of non-compliance with cross compliance rules

1. Where the statutory management requirements or good agricultural and environmental condition are not complied with at any time in a given calendar year...and the non-compliance in question is the result of an act or omission directly attributable to the farmer who submitted the aid application in the calendar year concerned, the total amount of direct payments granted or to be granted, following application of Articles 7, 10 and 11 to that farmer, shall be reduced or excluded in accordance with the detailed rules...

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