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Inner House victory for Scottish berry growers

The Scottish Ministers v Angus Growers Limited [2012] CSIH 92

The First Division has upheld an earlier decision by the Scottish Land Court to the effect that Angus Growers Limited (“AG”), an association of Scottish berry growers, should not have had its entitlement to EU financial assistance withdrawn.

In March 2010, the Rural Payments Agency (“RPA”) decided to withdraw AG’s recognition as a producer organisation under the EU regime that provides financial assistance to fruit and vegetable growers.  The RPA’s decision was based on allegations that AG had failed to comply with certain criteria for recognition derived from Article 25 of Commission Regulation (EC) No. 1580/2007.  The decision meant that AG would no longer be entitled to financial assistance and that it would have to repay any assistance received since January 2008.  AG sought to have the decision overturned via an administrative appeal process involving first the RPA, then the Scottish Ministers, and culminating in an appeal to the Scottish Land Court which was heard in November 2011.  In a decision issued on 14 February 2012, the Scottish Land Court found that, although AG lacked an adequate formal system for control of its marketing agent (Angus Soft Fruits Ltd.), there had been no substantial failure to comply with the recognition criteria because sufficient control existed in practice.  In any event, there was no serious negligence on AG’s part.  Under Article 116(1) of Regulation 1580/2007, any failure to comply with the recognition criteria has to be both “substantial” and to result from “serious negligence” to justify withdrawal of recognition.

The Scottish Ministers appealed by Special Case to the Inner House, arguing that the failure identified by the Scottish Land Court was substantial and that it did arise out of serious negligence.

In his opinion, the Lord President gives a comprehensive account of the circumstances leading up to the RPA’s decision to de-recognise AG.  He observes that, although the Inner House had not been asked to overturn the Scottish Land Court’s decision on the point, in his view AG had not breached Regulation 1580/2007 at all.  Accordingly, the Lord President had little trouble in concluding that the Land Court had been correct to find there had been no “substantial” breach.  He also upheld the Land Court’s finding that AG was not guilty of “serious negligence”, observing that the Land Court’s proposed definition of “serious negligence” came remarkably close to that given by the Grand Chamber of the Court of Justice of the European Union in the Intertanko case (R (International Association of Independent Tanker Owners) v Secretary of State for Transport [2008] 3 CMLR 9), even though that particular authority had not been brought to the Land Court’s attention.

While “serious negligence” is a term that is occasionally found in European legislation, there is no direct equivalent in domestic law.  Intertanko was a reference from the High Court in England in a case involving criminal penalties that had been brought into force in implementation of Directive 2005/35/EC on ship-source pollution and the introduction of penalties for infringements.  One of the questions referred to the European Court was whether the term “serious negligence” was so vague that it breached the principle of legal certainty.  The Grand Chamber found that the principle had not been breached.   A concept like “serious negligence” applied to a variety of situations that legislators could not envisage or set out in detail in advance, but the concept itself was familiar to Member States’ legal systems.  All had recourse to the concept of negligence, which refers to an unintentional act or omission by which the person responsible breaches his duty of care, and some provided for “serious” negligence as referring to a patent breach of such a duty of care.  Accordingly (in a passage from Intertanko quoted by the Lord President):

“‘serious negligence’ ... must be understood as entailing an unintentional act or omission by which the person responsible commits a patent breach of the duty of care which he should have and could have complied with in view of his attributes, knowledge, abilities and individual situation.”

The Lord President was satisfied that the Inner House could rely on this definition for the purposes of interpreting “serious negligence” in the context of article 116 of Regulation 1580/2007.

Aside from Intertanko there is little by way of authority on the definition of “serious negligence” in European or domestic law.  The Angus Growers decision represents a rare, if not unique, example of the term being considered in the Scottish courts.

Hastie Stable advocate, Craig Watson, appeared as junior counsel for Angus Growers in the proceedings before the Inner House and before the Scottish Land Court.