Stody Estate Ltd v Secretary of State for Environment, Food And Rural Affairs

Under the cross-compliance regime, liability for a breach must be directly attributable to the farmer’s own intentional or negligent conduct. The regime does not impose ordinary vicarious liability for an employee’s acts. A breach committed by a third party, including an employee, may engage the penalty provisions, but only after assessing the farmer’s own culpability. Relevant matters may include instructions or encouragement, inadequate instruction or training, and failure to stop the conduct after becoming aware of it. An employee’s conviction, without further findings concerning the farmer’s fault, is insufficient to justify a penalty.

The claimant challenged a 55% reduction in its 2014 single farm payment. An employee had intentionally poisoned protected wild birds on the claimant’s estate and had been convicted of criminal offences. The Rural Payments Agency treated the employee’s conduct as an intentional cross-compliance breach attributable to the claimant.

The claimant argued that the decision unlawfully imposed vicarious liability and failed to investigate its own fault. The Secretary of State argued that the employee’s role and autonomy justified treating his conduct as that of the corporate farmer. The issue was whether the employee’s acts satisfied the requirement in Article 23 of Council Regulation (EC) No 73/2009 that the non-compliance be directly attributable to the farmer.

1. Claim allowed. The Minister’s decision was quashed.
2. Article 23 of Council Regulation (EC) No 73/2009 focuses on the culpability of the beneficiary of aid, namely the farmer itself. It does not impose vicarious liability for an employee’s intentional conduct.
3. The reasoning in Van der Ham v College van Gedeputeerde Staten van Zuid Holland (Case C-396/12) applies whether the third party is an independent contractor or an employee. The term “third party” is generic and includes any person other than the farmer.
4. A farmer may be penalised for a breach caused by a third party where the farmer’s own intentional or negligent conduct is established. That conduct may arise through the choice or monitoring of the third party, instructions given to the third party, inadequate instruction or training, or failure to take steps to stop the activity after becoming aware of it.
5. The statutory management requirement prohibiting intentional killing of wild birds describes an activity which must not occur on the farmer’s holding. The fact that a third party intentionally killed birds may therefore engage the penalty regime, but it does not by itself establish that the breach was directly attributable to the farmer.
6. The Secretary of State was not entitled to rely on the employee’s convictions without further inquiry into the claimant’s own fault. In the absence of any finding of fault by the claimant, there was no proper basis for imposing a penalty under Article 23.

The judgment records that the claimant appealed administratively to the Independent Agricultural Appeals Panel. The Panel rejected vicarious liability but recommended a 20% reduction. The matter was then referred to the Secretary of State, whose decision imposing a 55% reduction was challenged in this judicial review.