Grazing license — Transfer of milk quota to license — Licensee never occupying the land — Whether there was effective transfer of quota — Whether ministry had power to rescind registration of quota in name of transferee — High Court holding that license must be operating the holding before entitled to transfer of quota — Ministry entitled to alter register if holding never occupied — Ministry not entitled to vary decision on refusal to alter
The applicant was a farmer at Malpes, Cheshire. HVF were the owners of a farm at Onecote, Nr Leek, Staffordshire. The ministry, through the Milk Marketing Board was responsible for the administration of the milk quota. By a written agreement made on September 10 1986 HVF granted the applicant a grazing license in respect of 9.39 acres of their farm and to transfer a milk quota of 65,000 litres. On the expiration of the license to graze the quota would remain part of the applicant’s milk quota. The applicant was to pay £300 in respect of the grazing rights and a further £13,000 in respect of the milk quota.
There were provisions as to compensation in the event of a number of eventualities. There was also an arbitration clause in relation to disputes. The land remained vacant until January 1987 when HVF entered into physical occupation of it. In October 1986 the board, pursuant to the Dairy Produce Quotas Regulations 1986(SI 1986 No 470), registered the transfer of the milk quota to the applicant from HVF. The applicant believed that the temporary transfer of part of a holding was sufficient to enable the transfer of the milk quota from HVF to her and that it was not necessary for her to physically occupy the land. After they went into occupation of the land, HVF wrote to the board claiming that they were entitled to the milk quota because it had not been validly transferred to the applicant and they required the board to adjust the register.
On July 11 1988 the ministry refused to adjust the register because of the delay by HVF in questioning the validity of the registration; and because they had not submitted quota transfer forms claiming quota when the applicant’s grazing rights expired. It went on to say that under the 1986 Regulations the matter had to be decided by arbitration.
The arbitrator concluded that occupation of the land was necessary to entitle the applicant to acquire the milk quota. On April 25 1991 the board therefore proposed to adjust the register to transfer the quota back to HVF from the applicant arising from the agreement of six years before.
The applicant sought judicial review of the decision to revoke her registration. Article 7 of Council Regulation EEC 857/84 (as amended by regulation 590/85) provided that where a holding was sold, leased or transferred by inheritance, all or part of the corresponding reference quantity should be transferred to the purchaser, tenant or heir according to procedures to be determined. In the case of rural leases due to expire, where the lessee was not entitled to an extension of the lease on similar terms, member states might provide that all or part of the reference quantity corresponding to the holding which formed the subject of the lease should be put at the disposal of the departing lessee if he intended to continue milk production. Article 5(1) of Commission Regulation EEC 137/84 provided that where an entire holding was sold, leased or transferred by inheritance the corresponding reference quantity should be transferred in full to the producer who took over the holding. Article 5(2) provided that where one or several parts of a holding were sold, leased or transferred by inheritance, the corresponding reference quantity should be distributed among the producers operating the holding in proportion to the area used for milk production. Article 5 was amended by Commission Regulation 1043/85 and the ministry argued that the preamble to the regulation made it clear that a quota might not be transferred without the land. The question was whether the quota was transferred when the relevant legal rights were transferred or whether the quota was only transferred when the legal rights were exercised.
Held The applicant was not to be deprived of her quota.
1. Commission Regulation 1371/84, article 5(2) should be read as requiring the transferee to be operating a holding before he or she was entitled to the transfer of the dairy quota. There was nothing inconsistent between commission regulations and council regulations. They were to be read together: the commission regulations were laying down detailed rules to supplement the general rules provided by council regulations. Looked at in that light there was no conflict. The community regulations were clear and there was no need to seek the assistance of the European Court.
2. Regulation 8(1) of the Dairy Produce Quotas Regulations 1986 provided that a transferee had to notify the minister in writing of the date of change of occupation and the holding to which the occupation related and should submit to the ministry such evidence relating to that change of occupation and within such time as the minister might reasonably require. Under Regulation 8(7), the minister might provide such forms as he reasonably considered necessary for the purposes of the regulation. That regulation indicated that the minister was to look at the matter in the light of the evidence submitted to him and might require further evidence before registration.
3. The original decision to alter the register in favour of a transferee had to be made at an early stage in the transaction and was necessarily provisional. At that stage there might be a genuine intention to occupy the land and, based on that, the milk marketing board registered the transfer. If the transferee never in fact occupied the holding for some reason, it could not be that the minister was debarred thereafter from adjusting the register to take account of the fact that the holding had never been occupied. Accordingly it was open to the minister to alter the registration of October 1986.
4. However, by their letter of July 11 1988, the ministry was making a decision that in the light of the information that there had no occupation by the applicant, they were nevertheless not going to alter the register because of the delay of HVF. In the absence of some new fact which emerged between July 11 and April 1991 which entitled the minister to go back on his decision, the minister had no power to vary his decision of July 11 1988, or if he did have the power, it was not properly exercised.
5. The practice of making an agreement to graze with exclusive right of occupation but without actual occupation was common among those with milk quotas who thereby transferred the quotas without apparent demur by the ministry in accordance with para 9 of the Dairy Produce Quotas Amendment Regulations 1988. Both the applicant and HVF had proceeded on the basis that that was sufficient as a matter of law. It would be inequitable in any event in the light of that to deprive the applicant of her quota with the consequence that she would have to find a substantial sum to cover the additional levy for which she had become liable over the years.
Paul Morgan QC (instructed by Burges Salmon, of Bristol) appeared for the applicant; Peter Roth (instructed by the solicitor to the Ministry of Agriculture, Fisheries & Food) appeared for the Ministry.
