Important legal notice

61990C0084

European Court reports 1992 Page I-02009

Opinion of the Advocate-General

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My Lords,

3. As a result of their participation in the conversion scheme, the applicants did not produce milk in a relevant year for the allocation of a quota under Article 2 of Regulation No 857/84. However the Dents were successful in their application for a quota on grounds of "exceptional hardship", under paragraph 17 of Schedule 2 to the Dairy Produce Quotas Regulations 1984 (S.I. 1984 No 1047), a provision of national law which was intended to implement Article 4(1)(c) of Regulation 857/84. According to Article 4(1)(c), Member States may, in connection with the application of Article 2:

"grant producers undertaking farming as their main occupation an additional reference quantity ...".

The applicants were accordingly allocated a reference quantity of 873 600 litres, which I shall call the "hardship quota"; the quota was presumably awarded after the expiry of the conversion undertaking given by Mr and Mrs Dent. It is common ground that the hardship quota was awarded to the partnership of three persons consisting of Mr and Mrs Dent and their son.

"Where the producer has obtained a reference quantity pursuant to Article 3, points 1 and 2, and/or Article 4(1)(b) and (c), the special reference quantity ... shall be reduced by such quantity."

I shall refer to that provision as the "anti-cumulation rule". In the course of the main proceedings the Ministry accepted that the special quota should have been awarded to Mr and Mrs Dent jointly, rather than to Mr Dent individually. The Ministry continued however to maintain that it was entitled to deduct the full amount of the hardship quota, pursuant to the anti-cumulation rule.

5. In the main proceedings, the applicants maintained that no such reduction should be made, on the ground that the hardship quota was obtained pursuant to the national regulations rather than "pursuant to ... Article 4(1)(b) and (c)". The applicants submitted, furthermore, that the hardship quota was in any case obtained pursuant to Article 4(1)(c) alone, rather than pursuant to Article 4(1)(b) and (c), so that again the anti-cumulation rule did not apply. Finally, they argued that no reduction fell to be made because the hardship quota and the special quota were awarded to two different groups of persons, namely the partnership of three in the case of the former, Mr and Mrs Dent alone in the case of the latter; or alternatively that only two-thirds of the hardship quota should be deducted, on the ground that that proportion only of the hardship quota was attributable to Mr and Mrs Dent, the recipients of the special quota.

6. The Queen' s Bench Division of the High Court has accordingly referred two questions to the Court for a preliminary ruling:

(1) On the proper interpretation of the second subparagraph of Article 3a(2) of Council Regulation (EEC) No 857/84 of 31 March 1984 (as inserted by Council Regulation (EEC) No 764/89 of 20 March 1989), does the special reference quantity referred to in the first subparagraph of that paragraph fall to be reduced by the amount of a reference quantity obtained by the producer pursuant to provisions of national regulations (in casu, paragraph 17 of Schedule 2 to the Dairy Produce Quotas Regulations 1984) which implemented only Article 4(1)(c), and not Article 4(1)(b), of Regulation 857/84?

(2) On the proper interpretation of the said second subparagraph of Article 3a(2) of Regulation 857/84 (as inserted by Regulation 764/89), and having regard to the definition of "producer" in Article 12(c) of Regulation 857/84, where a special reference quantity is awarded to two persons (in casu, a husband and wife) who farm their holding in partnership with a third person (in casu, their son), does that special reference quantity fall to be reduced by the amount of a reference quantity (or a proportion thereof) where that reference quantity was awarded in respect of the same holding and otherwise falls within the said subparagraph but was obtained by the three persons as a partnership?

The first question

7. From the applicants' written observations submitted to the Court, it appears that they have abandoned the argument that the hardship quota was awarded pursuant to paragraph 17 of Schedule 2 to the Dairy Produce Quotas Regulations 1984 rather than pursuant to Article 4(1)(c) of Council Regulation No 857/84. It is clear in fact from the wording of paragraph 17 that the latter provision is intended to implement Article 4(1)(c) of Regulation No 857/84; thus, if the quota was awarded pursuant to paragraph 17, it is plain that it was awarded pursuant, equally, to Article 4(1)(c).

The second question

10. As we have seen, the anti-cumulation rule can apply, even where the hardship quota was awarded pursuant to national legislation implementing Article 4(1)(c) only of Regulation No 857/84. The next question which must be considered is whether the rule still applies where the authorities responsible for awarding the special quota purported to make the award to a group of two persons, rather than to the group of three persons who received the previous quota. It will be recalled that in the present case, the hardship quota was awarded to the partnership of three (the applicants together with their son), whereas the Ministry purported to award the special quota to Mr and Mrs Dent only.

11. The applicants submit that, since the special quota was awarded to the partnership of two, whereas the hardship quota was awarded to the partnership of three, the two amounts of quota were awarded to different "producers" within the meaning of Article 12(c) of Regulation No 857/84. It follows, in their submission, that no amount of the hardship quota falls to be deducted from the special quota. Alternatively, they argue that only two-thirds of the hardship quota falls to be deducted, on the ground that only that portion is attributable to the recipients of the special quota.

12. In its written observations, the United Kingdom Government suggests that, although the special quota was awarded in name to Mr and Mrs Dent only, it was in substance awarded to the group of persons farming the holding at the time of the award, and must hence be regarded as belonging to the partnership of three. Even if the two quotas are regarded as having been awarded to different groups, the United Kingdom submits that, since the same group of persons were farming the holding on each occasion, the full amount of the hardship quota falls to be deducted from the special quota. In response to a written question put by the Court, however, the United Kingdom confirmed that, in its view, the true position was that both quotas should be regarded as belonging in law to the group consisting of Mr and Mrs Dent and their son.

13. A quota cannot in my view be treated as awarded to one group of persons for the purposes of applying the anti-cumulation rule, but for other purposes as belonging to a different group of persons. If Michael Dent were indeed treated under national law as having no proprietary interest in the special quota, it is difficult to see why his interest in the hardship quota should be taken into account in applying the rule. However, it seems to me that in the present case both the hardship quota and the special quota must be regarded as having been awarded to the three persons farming the holding at the time each quota was awarded.

14. Article 12(c) of Regulation No 857/84 defines a producer as "a natural or legal person or group of natural or legal persons farming a holding located within the geographical territory of the Community ...". It is natural therefore to suppose that a quota must be awarded to the group of persons currently farming the holding. The question must however be considered whether that supposition remains valid in the case of the award of a special quota pursuant to Article 3a(1) of the regulation. Article 3a(1) provides that producers:

"- whose period of non-marketing or conversion, pursuant to the undertaking given under Regulation (EEC) No 1078/77, expires after 31 December 1983...

shall receive provisionally, if they so request ..., a special reference quantity..."

The wording of that provision might appear to suggest that a special quota can only be awarded to those producers who have in fact given an undertaking under Regulation No 1078/77. Thus, in the present case, it was Mr and Mrs Dent who gave the relevant undertaking, since their son joined the partnership only after the undertaking had been given. It might therefore be supposed that the special quota should be awarded to them, as opposed to the partnership of three which was farming the holding at the time of the award, and it appears that the respondent Ministry took such a view in the course of the main proceedings.

15. It should however be noted that, after Michael Dent joined the partnership, it would still have been a breach of the undertaking given by Mr and Mrs Dent if the partnership had begun to produce milk before the end of the conversion period. Thus, Article 3(2) of Regulation No 1078/77 provides as follows:

"The grant of the conversion premium shall be conditional upon an undertaking by the producer that:

(a) during the conversion period, neither milk nor milk products from his holding will be disposed of, whether for a consideration or free of charge;

(b) from the date on which his application is lodged until the end of the conversion period, he will comply with the conditions laid down in the first subparagraph of Article 2(2)(b);

The conditions laid down in the first subparagraph of Article 2(2)(b) include:

"- he will not allow his holding or any part thereof to be used by others for dairy farming".

The purpose of the award of a special quota under Article 3a(1) of Regulation No 857/84 is to enable a quota to be allocated to producers who were ineligible for a quota pursuant to Article 2 of the regulation because they were bound by a non-marketing or conversion undertaking. In my view, therefore, the benefit of Article 3a(1) must be taken to extend to producers who were similarly constrained, as a result of such undertakings, whether or not they were parties to the undertakings at the time the undertakings were given, and whether or not they would be personally liable under national law for any breach of such an undertaking. It is clear that the effect of a conversion undertaking given by the members of a partnership is not affected by, for instance, a change in the composition of the partnership in the course of the conversion period. It seems to me therefore that, in such a case, the "producer" who is entitled to the benefit of Article 3a(1) is the group of persons farming the holding at the time the special quota is awarded, and who as a result of the undertaking have been deprived of the opportunity of receiving a quota under Article 2.

16. It seems to me, moreover, that the position would be the same, even in the case of a partner who joined the partnership after the end of the conversion period. For in that case, equally, the new partner is affected by the conversion undertaking, by virtue of having joined a partnership which has been deprived of quota as a result of the giving of the undertaking.