TA Gwillim & Sons, R (on the application of) v The Welsh Ministers

Under Article 40 of the single-payment regulation, an adverse effect on production does not require an actual year-on-year fall. In a livestock case, production means the number of subsidy-eligible animals, but production is adversely affected where it is lower than it otherwise would have been because a planned increase was prevented or restricted. Agri-environmental commitments may cause that effect by restricting available land or its use. Precise quantification of the foregone increase is unnecessary, subject to any de minimis issue. The hardship derogation may therefore apply where such commitments make expansion or continued use of additional land unviable.

The claimant farming partnership sought judicial review of the Welsh Ministers’ refusal to substitute the period 1997–1999 for the 2000–2002 reference period when calculating agricultural payment entitlements. It argued that agri-environmental commitments affecting additional leased land had prevented its planned increase in livestock production. The Administrative Court in Wales allowed the claim and quashed the decision: [2009] EWHC 2946 (Admin). The Welsh Ministers appealed. The central issue was whether production could be adversely affected by a prevented or restricted increase, or only by an actual reduction in production.

The Court of Appeal unanimously dismissed the appeal. The Administrative Court had correctly quashed the Welsh Ministers’ decision, although the claimant’s separate contention that Article 40(5) applied without proof of adverse effect on production was not decided.

1. In the context of the claimant’s livestock production, production meant the number of animals eligible for subsidy. Land area was not itself production, although the amount of land available and the way it could be used could affect production.
2. The phrase ‘production was adversely affected’ was broad. It covered production during the reference period being lower than it otherwise would have been. An actual reduction from the preceding year was unnecessary. The phrase included a planned increase which agri-environmental commitments prevented or restricted. Precise quantification of the increase foregone was not required, although a de minimis issue might arise.
3. This interpretation was supported by the wording, structure and policy of Council Regulation (EC) No 1782/2003, including recital (24), which contemplated broad equivalence between payments under the old and new systems. It was also supported by legal-certainty considerations discussed in H.J. Nijemeisland v Minister van Landbouw, Natuur en Voedselkwaliteit Case C-170/08 and André Grootes v Amt für Landwirtschaft Parchim Case C-152/09, and by the contextual approach in Davidoff & Cie v Gofkid Ltd Case C-292/00; [2003] ECR I-389.
4. The judge had found the necessary causal link between the commitments, including actual restrictions and uncertainty about future restrictions, and the claimant’s production. The Ministers had not challenged that factual finding in the grounds or written argument and could not raise the issue for the first time on appeal. They could not go behind it when making the fresh decision.
5. No reference under Article 267 TFEU was necessary or appropriate. The decision was remitted for a fresh decision on the claimant’s application.

1. Court of Appeal (Civil Division): The Welsh Ministers’ appeal was dismissed. The order quashing the refusal decision was maintained, with a fresh decision required.
2. High Court of Justice, Administrative Court in Wales: His Honour Judge Jarman QC allowed the judicial review and quashed the Welsh Ministers’ decision: [2009] EWHC 2946 (Admin).