Milk quotas — Alleged breach of scheme relating to ‘withholder’ monthly returns — Whether disciplinary committee of Milk Marketing Board has power to impose penalties where breach also involves ingredients of a crime
On June 6 1990
the disciplinary committee of the Milk Marketing Board decided that the
applicant registered milk producer should pay penalties of £3,200 under para
77(1)(c)(i) of the Milk Marketing Scheme and repay losses to the board of
£18,264 under section 10 of the Agricultural Marketing Act 1958. The committee
had found proved 16 charges arising out of the monthly returns which the
applicant, as a ‘withholder’, was required to make to the board for the period
January 1988 to March 1989. The judge in the court below granted an application
by way of judicial review of that decision and quashed it on the ground that
its decision involved making findings which also constituted criminal offences,
which could be tried only by the criminal courts. The board appealed.
allegations of breaches of the board’s scheme where, as here, (1) the
allegations amount to a criminal offence, which includes all the ingredients of
the breach of the scheme, plus extra crime requirements; and (2) if the crime
and the breach of the scheme share some ingredients, but each has separate
ingredients. The board had to prove that the applicant was under an obligation
to make a return and that in doing so he knowingly made a false statement as to
the quantity of milk produced by him; dishonesty is not an ingredient of this
alleged breach of the scheme although it is under section 2(1)(c) of the
Theft Act 1978.
No cases are
referred to in this report.
This was an
appeal by the appellant, Milk Marketing Board, from a decision of Hutchison J,
who on October 16 1992 granted the applicant/respondent, Stephen Brook,
judicial review of a decision of the Milk Marketing Board by its disciplinary
committee to impose fines and penalties on the applicant.
Stephen Coward
QC and Simeon Maskrey (instructed by Wedlake Bell) appeared for the appellant;
Cherie Booth (instructed by Beviss & Beckingsale, of Chard) represented the
respondent.
Giving
judgment, SIR TASKER WATKINS said: This is an appeal by the Milk
Marketing Board from the decision of Hutchison J on October 16 1992 granting an
application for judicial review by the applicant, Stephen Brook, to remove into
the High Court and quash a decision of the disciplinary committee of the board
on June 6 1990 that the applicant should pay penalties of £3,200 under para
77(1)(c)(i) of the Milk Marketing Scheme (as amended) and repay losses to the
board of £18,264.20 under section 10 of the Agricultural Marketing Act 1958,
‘the 1958 Act’.
A number of
grounds were relied upon by the applicant and before the learned judge. He
declined to give the applicant relief on the grounds of natural justice and
Wednesbury unreasonableness, but he accepted the submissions of Miss Cherie
Booth, on behalf of the applicant, that the disciplinary committee had no
jurisdiction to entertain the complaints preferred by the board against him.
Accordingly, he quashed the findings of the disciplinary committee and the
penalties which it had imposed upon the applicant.
The board
appeals against those decisions on the bases that:
(1) The
judge was wrong in law in holding that para 77(1)(d) of the scheme and/or
section 9(2) of the 1958 Act prevents the disciplinary committee from
entertaining any charge brought under para 77(1)(c)(i) of the scheme where,
even though the charge under the paragraph does not embrace the elements of
some other statutory offence, the real nature of what is alleged against a milk
producer constitutes some offence under a statutory provision, namely section
2(1)(c) of the Theft Act 1978.
(2) The judge was wrong in any event in finding
that what was alleged against the applicant was a dishonest falsification of
his records in order to avoid payment of contributions due to the board because
dishonesty and/or any such intention were not elements of the offence under
para 77(1)(c)(i) of the scheme and were not so alleged against the applicant.
(3) That the judge ought to have found that the
disciplinary committee had the power to find contraventions under para
77(1)(c)(i) of the scheme (and to impose fines and penalties accordingly),
because on its terms the contravention under the paragraph does not constitute
an offence under any other statute and, in particular, does not constitute an
offence under section 2(1)(c) of the 1978 Act, dishonesty and/or
intention to obtain any exemption and/or abatement of liability to make a
payment and/or the obtaining of any such exemption and/or abatement forming no
part of the contravention under the paragraph, but being essential conditions of
liability under the statutory offence.
The applicant
was charged, inter alia, as follows:
That you
knowingly made a false statement in reply to the Board’s demand under paragraph
75 of the Scheme for a return of the quantity of milk of your own production which
(i) you sold by retail or semi/retail, and (ii) you sold under your Producer
Processor Agreement in the month of June 1988.
There were 37
such charges levelled against the applicant arising out of the monthly returns
of his milk production that he was required to make to the board during the
period January 1998 to March 1989. The disciplinary committee found the case
proved in respect of the first 16 charges and dismissed the balance of them. It
fined the applicant £200 upon each of the 16 charges found proved and ordered
him to repay losses in the sum already mentioned under section 10 of the 1958
Act which provides:
Where a
contravention of a provision of a Scheme (being a contravention for which the
disciplinary committee have the duty to impose, and the board the duty to
recover, a penalty) causes loss to the board, the disciplinary committee may,
if the written statement of the charged served on the producer in accordance
with the provisions of subsection (4) of the last foregoing section embodies an
estimate by the board of the amount of the loss, together with a statement of
the grounds on which that estimate is based, require by their decision that the
producer shall pay to the board, in addition to any penalty imposed, such sum,
to be stated in the decision, as the committee may think fit, not exceeding the
sum which appears to the committee justly to represent the amount of the loss;
provided that
the sum so stated in the decision shall not exceed the amount in the said
estimate.
Prior to the
proceedings before the disciplinary committee, the applicant had been served
with an estimate of the board’s loss, which was calculated by assuming that all
the milk which the applicant has sold to the roundsmen, from whom the board had
obtained statements, was milk of his own production which had not been declared
on his monthly return.
In his usual
clear judgment, the judge, as he said, set the scene in a brief summary which I
gratefully adopt.
Under the
scheme all milk producers in England and Wales must be registered with the
board and are, in general, obliged to supply all their milk to the board,
unless it agrees otherwise. The board sells the milk thus supplied at differing
prices, depending on the use to which it is to be put. Milk destined for
drinking commands the highest price, known as the board selling price. Milk
intended for other uses is sold at lower prices.
The board
pools the proceeds of sales and, after deducting expenses and any moneys
required for reserves, distributes the proceeds to producers, who therefore
receive what is known as the average wholesale producers price (‘AWPP’).
However, the board permits certain producers to sell their milk otherwise than
to the board, such persons are commonly referred to as ‘withholders’, and fall
into two categories — producer retailers and producer processors. Obviously
such persons receive prices in excess of the AWPP. A mechanism, therefore,
exists for correcting the unfairness that would otherwise result, by requiring
withholders to pay to the board sums calculated on the difference between the
receipts on their direct sales and what they would have received at the AWPP
rate had they not been withholders.
It is of the
essence of this equalisation scheme that withholders should keep accurate
records of their direct sales and make accurate returns to the board. A failure
to do so may enable the withholder to secure an unfair advantage over the
producers who sell direct to the board.
The board’s
case against the applicant was that he had not made proper returns of his
sales, thereby securing an advantage by depriving the board of sums to which it
was entitled.
Para 71(1) of
the scheme, as material, states:
(c) If any registered producer
(i) fails without reasonable excuse to comply
with any demand made by the Board under paragraph 75, or knowingly makes any
false statement in reply thereto . . . then the Disciplinary Committee shall
impose upon him and the Board shall recover from him such monetary penalty (not
exceeding £200) as that Committee think just; . . .
(d) no such penalty shall be imposed in respect
of such a contravention as aforesaid which constitutes an offences under any
Act other than the Act of 1958.
The provision
in (d) the judge compared with section 9(2) of the 1958 Act, which states:
. . . every
Scheme shall require the disciplinary committee to impose on, and the board to
recover from, any registered producer who contravenes any provision of the
Scheme . . . such monetary penalties as may be specified by the scheme, so
however that no such penalty shall be imposed in respect of a contravention of
the scheme which constitutes an offence under this or any other Act.
Section 2(1)(c)
of the 1978 Act states:
. . . where a
person by any deception
(c) dishonestly obtains any exemption from or
abatement of liability to make a payment . . . he shall be guilty of an
offence.
The judge, in
addressing the submissions to him made by Miss Booth, which are succinctly set
out in her skeleton argument and were forcibly also submitted by her to us,
said that she had, in his view rightly, concentrated on the provisions of
section 9(2), rather than those of para 77(1)(d).
He summarised
her submissions in this way.
The board
alleged against the applicant that he had deliberately and dishonestly failed
to make full and accurate returns of his sales, with the object and effect of
depriving the board of the payments to which it was entitled and retaining
those moneys for himself. On the facts of this case, the board’s allegations
plainly imported dishonesty on the part of the applicant. Accordingly, the
charges in respect of which the disciplinary committee found the applicant
guilty fell squarely within section 2(1)(c) of the 1978 Act.
Miss Booth
also drew attention to the way in which the case was presented on behalf of the
board to the disciplinary committee, which involved the assertion that the
applicant had over a period of years deliberately made false statements as to
his milk production in order to avoid the levy. The case was never put on the
basis of incompetence or inadvertence, but that the applicant had been caught
in deliberately and dishonestly evading his liability to pay what was due.
The object of
section 9(2) of the 1958 Act is to ensure that criminal conduct is dealt with
by the criminal courts where all the safeguards of criminal procedure and jury
trial are available, and that the prohibition that it contains recognises that
the disciplinary committee is not an
body and Parliament clearly envisaged that it should have power to deal only
with minor infringements of the Act, but that in cases where serious offences
were involved an accused producer should be entitled to the full protection of
the law.
Miss Booth
further submitted that the substance of the charge before the board should be
looked at rather than its form, and that if at any time during the proceedings
it becomes apparent that a criminal offence is comprised in the allegation
made, then the disciplinary committee must decline jurisdiction and abort the
proceedings.
Finally, Miss
Booth argued that the prohibition against the imposition of a penalty contained
in section 9(2) means, in effect, that in cases where the contravention alleged
constitutes an offence under another statutory provision, the committee does
not have jurisdiction to try the charge at all.
The judge was
persuaded that Miss Booth was correct in submitting that the prohibition in
section 9(2) and in subpara 71(1)(d) prevents the disciplinary committee from
entertaining charges where, even though the formulation of the charge does not
embrace the elements of some other statutory offence, the real nature of what
is alleged is (‘constitutes’) some offence under a statutory provision. That,
he found, was the position in this case. So he held that the applicant had
established the jurisdiction point.
Earlier in his
judgment, the judge posed the question which he regarded as the crucial
question in the following way:
However, when
the prohibition in section 9(2) has to be considered in relation to other Acts
the question, does the contravention of the Scheme with which the producer is
charged constitute an offence under that Act? — presents real difficulties.
Does ‘constitutes’ mean that one must have regard merely to the way in which
the Board framed the charge to those elements which by their formulation the
board accept the obligation to prove; or is it necessary to consider the
substance of the charge, posing the question whether in that particular case
proof of the elements of the charge which the board accept the obligation to
discharge in fact involves proof of a further element or further elements which
constitutes some statutory offence?
I agree with
him that the matter of construction of subpara 77(1)(d) and section 9(2) of the
1958 Act is crucial to the question as to whether the board had jurisdiction to
hear the charges against the applicant. True it is that the judge analysed the
impact of the provisions of section 6 of the 1958 Act upon the overall issue of
jurisdiction, but for reasons which will appear I think that he was misguided
into doing so.
Admirably
presented though they were, in my judgment, the judge was in error in accepting
the arguments of Miss Booth and in the ultimate conclusion he reached. I have
been entirely persuaded of this by the submissions of Mr Stephen Coward QC, on
behalf of the board, which clearly emerged from his skeleton argument which is
accompanied by a what he calls a ‘pictorial analysis’ which lends further
clarity, if that be necessary, to his illumination of the error into which the
judge fell.
Mr Coward’s
examination of any conceivable impact which the provisions of section 6 of the
1958 Act can have upon the matter of jurisdiction results, in my judgment,
inevitably with the conclusion that it does not bear upon the essential matter
of construction, save to say that the 1958 Act, in section 6 and elsewhere,
creates criminal offences, each one of whom obviously has to be strictly proved
according to the ingredients of it, otherwise the board will have failed to
establish any charge of that kind brought against a milk producer. Section 9(2)
and para 71(1)(d) have to be looked at independently of all that and strictly construed.
Mr Coward
submitted, and I accept, that if a matter before the disciplinary committee
potentially overlaps with a criminal liability, but does not in fact or of
necessity require the proof of each and every ingredient of the criminal
offence, it does not constitute an offence under ‘any other Act’. The word
‘constitutes’, he said, in para 77(1)(d) means that a tribunal is debarred from
imposing a penalty on a registered producer if, but only if, the board, in
order to succeed, must establish each and every ingredient of the criminal
offence.
In the
‘pictorial analysis’, aided by very useful illustrations, the following
propositions, all of which I accept, appear. First, it is stated that if the
ingredients of the crime and the breach, that is to say the breach of Act or
scheme are identical, there is no power to hear the charge before the
disciplinary committee. Second, that if the breach includes all the ingredients
of the crime, plus extra breach ingredients, there is no power to hear. Third,
if the crime includes all the ingredients of the breach, plus extra crime
requirements, there is power to hear. And, fourth, if the crime and the breach
share some ingredients, but each has distinct ingredients, there is power to
hear.
Having regard
to the charge which the applicant faced, and of which in 16 instances the board
convicted him, it cannot possibly be said that the first two propositions
applied. It can rightly be said, in my judgment, that propositions three or
four, or both, did apply. The essential requisite as to construction was to
examine what it was the board had to prove in the charge it made. It had to
prove that the applicant was under an obligation to make a return to the board
that in doing so he knowingly made a false statement as to the quantity of milk
produced by him and which he had sold by retail, or semi-retail, and under his
producer processor agreement. Dishonesty is not an ingredient of this alleged
breach of the scheme. It is, of course, under section 2(1)(c) of the
1978 Act. Nothing which was said on behalf of the board to the disciplinary
committee with reference to the applicant’s conduct can serve, in my view, to
alter in any way what it is Parliament has clearly laid down as having to be
proved as a breach of the scheme. All that was necessary for the board to do
was to establish the ingredients of the charge arising out of the legislation,
no more and no less.
The judge
observed that it was a remarkable fact that, although a provision such as one
finds in section 9(2) of the 1958 Act has existed for some 60 years, so far as
the researches of counsel have been able to discover, there is no decision
which bears upon the point at issue in this case. I feel bound to say that I do
not find that at all surprising.
For these
reasons, I would allow the appeal.
STUART-SMITH and BUTLER-SLOSS LJJ agreed and did not add anything.
Appeal
allowed; leave to appeal to House of Lords refused.
