Tribunal’s determination — Informing applicants of reasons for determination — Applicants challenging tribunal for failure to indicate how it arrived at its conclusions — Applicants not given opportunity to deal with objections — Two-stage approach necessary in establishing past production and future sales — Whether tribunal adopting correct approach — Whether applicants’ evidence on projected sales taken into account — Determination of tribunal set aside — Matter remitted to fresh tribunal for rehearing
The applicant firm was a family partnership engaged in dairy farming at Matts Hill Farm, Hartlip, Sittingbourne, Kent. In 1988 in response to the advent of milk quotas, C, the then senior partner, decided to diversify into the production and sale of ice cream.
In 1989 plant was purchased for the new enterprise, the purchase being financed in part by a farm diversification grant and in part by the sale of some of the milking herd and of the wholesale quota. By 1989, due to C’s death and the winding up of his estate, the ice cream business had not yet got off the ground. By February 1991, as a result of the UK government having to bow to European pressure and to extend the quota system to additional milk products such as ice cream, the 1991 regulations were introduced. They provided for primary quotas to be awarded to established producers and for secondary quotas to be awarded to producers who could show that they were committed to developing their production. Those seeking a secondary quota award had to apply to the Dairy Produce Quota Tribunal to make its award within para 6 to Schedule 9 of the Dairy Produce Quota Regulations 1991. Inter alia the tribunal had to determine the quantity of ice cream reasonably expected to be produced from milk produced on the applicants’ farm, their facilities, and the quantity of ice cream that might reasonably be expected to be sold.
At the hearing one of the partners and his son attended. The applicants sought a secondary quota of 425,000 ltrs. The determination in para 7 stated that while having the greatest sympathy with the applicants, who had struggled to keep the farm enterprise going following C’s death in the middle of a diversification scheme and expending considerable sums on plant for producing ice cream, the only figures available were for sales in 1990 and 1991 and an estimate for the future. No production or sales anywhere approaching such quantities as put forward had been achieved. The evidence was wholly insufficient to reach any reasonable determination in excess of 6,237 ltrs for 1991.
The grounds of complaint were inter alia that the tribunal misunderstood its function in law in that it misconstrued para 6 of Schedule 9 so as to limit itself to historically achieved sales of ice cream as distinct from evidence of reasonably anticipated sales, and, further, that if the tribunal had had any serious doubts about any aspect of the evidence put forward by the applicants, it should have given them an opportunity to deal with it.
Held The application was granted.
1. With regard to the submission that the tribunal had misunderstood its function and had made a fundamental error of law in limiting itself to achieved rather than anticipated sales, the court was unable to accept that submission. It was clear that the concept of a secondary quota had come into existence in order to do justice to those who had already financially committed themselves to enter or to expand into the market for additional milk products. From reading the determination as a whole, the tribunal was well aware that it could not ignore past and present performance on which forecasts were usually based. The regulations furthermore positively required the tribunal to have regard to any commitment to supply.
2. The court could also not accept the argument that the evidence was all one way so that the tribunal’s refusal to accept was unreasonable. The evidence was bound to be all one way because of the nature of the proceedings and no adjudicating body was bound to accept all of the evidence placed before it.
3. However, where a tribunal did give reasons justice required that those reasons should explain — however briefly — why it was that all or part of the evidence, which had been all one way, was found to be unacceptable. By the end of the hearing more was required of the tribunal than a simple assertion that the applicants had failed to discharge the onus of proof. Moreover, parts of the contents of the two affidavits which had been put in evidence by the respondents did cause the court to consider whether the tribunal arrived at its decision by a proper route and without having paid regard to irrelevant considerations or considerations which would not have been regarded as relevant unless the applicants or their solicitors had been given an opportunity to deal with them.
4. In its decision, it was incumbent on the tribunal to deal with the problem posed by para 6(1)(a) of Schedule 9, in other words to ask itself what quantity of ice cream made from milk produced on the applicant’s farm might reasonably be expected to be produced annually, using the available plant. Because the next subparagraph in the Schedule deals with sale, the question posed by para 6(1)(a) ought to have been answered without regard to sales potential with the focus at that stage being simply on productive capacity. The segregation of production capacity and sales potential seemed of some importance not only because it accorded with the schedule but also because it enabled an unsuccessful applicant or an only partially successful applicant to know why he had failed.
5. In the present case the tribunal did not adopt that two-stage approach, but instead moved straight from the theoretical capacity of the plant to the question of sales. Actual capacity was therefore never properly addressed.
6. The determination would still not have been undermined, however, if there had been a proper approach to the question of potential sales but that approach was also flawed. The question to be decided was the quantity of ice cream that might reasonably be expected to be sold by direct sale annually. Inevitably therefore the focus had to be on the future although regard had to be given to any established pattern of sales. No doubt certain producers could show a steadily rising production rate year by year over several years which could greatly assist the tribunal, but that was not the case here. In order to justify their assertion that over a relatively short period they could build up sales to match the capacity of the plant the applicants relied on factors such as their investment, their retail business experience, the nationwide potential for ice cream and their pilot scheme — among other factors. Yet when the tribunal came to address itself to potential sales those factors were not mentioned. Only past production was taken into account and it was in line with that the determination was made.
7. The determination had to be set aside because it failed to tell the applicants in broad outline and in simple terms by what process of reasoning the tribunal arrived at the conclusion that 6,237 ltrs was in line with that that the determination was made.
7. The determination had to be set aside because it failed to tell the applicants in broad outline and in simple terms by what process of reasoning the tribunal arrived at the conclusion that 6,237 ltrs was the appropriate figure to adopt.
Joanne Moss (instructed by Brachers, of Maidstone) appeared for the applicants; Nicholas Paines (instructed by the solicitor to the Ministry of Agriculture, Fisheries and Food) appeared for the tribunal.
