C-199/87

JENSEN v LANDBRUGSMINISTERIET

O P I N I O N O F ADVOCATE GENERAL SIR G O R D O N SLYNN delivered on 29 June 1988

My Lords, lease, termination of lease or by any other means unless the EC Directorate had previously been informed in writing of the name and address of the transferee, Mr Jensen, a farmer with a dairy herd in the western region of Denmark, applied for a non-marketing premium pursuant to Council Regulation (EEC) N o 1078/77 (Official Journal 1977, L 131, p. 1) intro- ducing a system of premiums for the (iv) to refund the premium paid together non-marketing of milk and milk products with interest thereon at a rate corre- and for the conversion of dairy herds. He sponding to 2 % above the discount entered into a contract with the EC Direc- rate established from time to time by torate of the Danish Ministry of Agri- the National Bank in the event of his culture, by which he undertook not to non-compliance with the undertakings market milk for a period of five years in given by him or if a transferee of the return for a non-marketing premium holding to which the undertakings calculated on the basis of his existing milk related did not take them over. production. By the terms of that contract, which bore an endorsement of approval dated 3 May 1979, but which he apparently signed on 12 September 1979, Mr Jensen undertook, inter alia: Mr Jensen was accordingly granted a non-marketing premium of DKR 289 120.12, of which he received half (DKR 144 560.06) as an initial instalment (i) not to sell, give away or otherwise on 23 November 1979. The balance of the dispose of milk or milk products from premium was to be payable in two equal the holding for a period of five years, instalments, each of 2 5 % of the total, before the end of the third and fifth years of the undertaking. The stock on the holding, consisting of some 45 to 50 cows, was subsequently sold for slaughter and the use (ii) not to allow others to use the holding of the holding changed to the rearing of or any part thereof for dairy bull calves. farming . . . ,

(3) Must Articles 6 (1) and 11 (1) of Council Regulation No 1078/77 and The Western Regional Court gave judgment Article 9 (1) of Commission Regu- for the Danish Ministry of Agriculture and lation N o 1391/78, according to which Mr Jensen appealed to the Højesteret (the the Member States shall take all Supreme Court). On appeal, the Danish necessary steps to recover any sums Ministry of Agriculture maintained that it already paid in respect of the premium, should be refunded the premium paid so far be interpreted as meaning that a in full, together with interest. Mr Jensen demand may be made only for the submitted that he was not in breach of his recovery of a sum which is contract, because his transfer of the holding proportionate to the period during was not a voluntary transfer, and that his which the undertakings under the appeal should therefore be allowed in full. premiums system were not complied In the alternative, he submitted that he with?' should only be held liable to repay that portion of the premium received which corresponded to the period of time during which his undertaking was not complied with, namely DKR 28 912.01. The Højesteret stayed proceedings and referred In Denmark, the conditions for the receipt the following questions to the Court: of the milk non-marketing premium

JENSEN v LANDBRUGSMINISTERIET

introduced by Regulation No 1078/77 are English text, 'where the recipient of a apparently set out in Notice N o 366 of 30 premium intends to transfer his holding, or June 1977 of the Ministry of Agriculture, as part thereof, to another person, he shall first amended by Notice of 5 July 1978, and are notify the competent authority and indicate reflected in the terms of the contract to what extent, if any, the transferee is to already referred to. take over his obligations under the premium s c h e m e . . . If necessary the competent authority shall recover all sums already paid to the transferor'.

Commission Regulation (EEC) N o 1307/77 (Official Journal 1977, L 150, p. 24) lays down detailed rules for the application of the premium system. Article 8 (1) provides Article 10 (1) of the regulation provides that, where the recipient of a premium fails that, 'In case of force majeure, the Member to prove to the satisfaction of the competent States may provide that the premiums authority that he has complied with the already paid shall not be recoverable even if obligations laid down in Article 2 . . . of the obligations under the scheme have not Regulation No 1078/77, the Member State been fulfilled and, if necessary, the concerned 'shall take all necessary steps to non-marketing . . . periodmay be suspended recover all sums already paid in respect of for a specific period and extended that premium'. Under Article 8 (4) of the accordingly'. Articles 10 (2) and 10 (3)

OPINION OF SIR GORDON SLYNN — CASE 199/87

each contain three particular situations Such measures may, according to the which may respectively be accepted as case, entail postponing the beginning of justifying provision for non-recovery of the the non-marketing . . . period . .. or the premium and provision for suspension of suspension of the obligations for a specific the relevant period. Finally, Article 10 (4) length of time during that period and the requires Member States to inform the non-recovery of the premiums already paid, Commission of all cases of force majeure which would have to be refunded in accepted as such by them. accordance with Article 9 (1)' (my emphasis).

Finally, Article 1 (1) of Commission Regu- The first question referred to the Court asks lation (EEC) N o 1799/79 (Official Journal whether 'takes over' in the Council Regu- 1979, L 206, p. 12) replaced Article 1 of lation (Article 6 (1) of Regulation No Regulation N o 1391/78 by a new text. As 1078/77) and 'transfer' in the two amended, Article 12 (1) states that: Commission regulations (Article 8 (4) of Regulation N o 1307/77 and Article 9 (4) of Regulation N o 1391/78) include a change of ownership of an agricultural holding as a result of an auction by court order. Neither of these terms is defined in the regulations. "Where, by reason of a case of force majeure occurring after the day on which the application for a premium has been approved, the beneficiary... is unable, or would be able only at the cost of excessive sacrifices, to fulfil an obligation arising out of the system of premiums, the Member Article 6 (1) of Regulation N o 1078/77 State concerned shall determine the seems in all language texts to be quite measures which it shall deem necessary with general and to raise the objective question regard to the circumstances invoked. whether an agricultural holding has in fact

JENSEN v LANDBRUGSMINISTERIET

As the Court held in Case 109/84 (Menges v The Danish text has in Regulation N o Land Nordrhein-Westfalen [1985] ECR 1307/77 language which I am told indicates 1289), 'The aim of reducing milk surpluses that the transfer must be voluntary ('Hvis or at least of preventing their increase den begunstigede helt eller delvis overdrager requires the obligations imposed on the reci- sin bedrift til andre . . . ' ) ; in Regulation N o pients of the premiums to be interpreted in 1391/78 the language used is more neutral the sense which is the most conducive to its ('Hvis producenten helt eller delvis afstår sin achievement' (paragraph 15 of the bedrift til en ander . . . ' ) . judgment, p. 1298; see also Case 77/79 Damas v Fonds d'orientation et de régulari- sation des marchés agricoles (FORMA) [1980] ECR 247, pp. 258 to 260, paragraphs 6 and 7 — a case concerning an earlier system of premiums, very similar to the present scheme). Unless read in this way, it seems to The French text requires that 'si le prod- me that the regulation could be used for ucteur cède son exploitation . . . à des tiers il transfers 'engineered' by means of an communique ce fait à l'avance' and the application for a court order so as to evade other language texts appear to be similar. It the duty to give notice and to repay the

OPINION OF SIR GORDON SLYNN — CASE 199/87

A forced sale by court order does not per se fall within that description. Such a sale may Be that as it may, I do not consider that a result from financial problems due to ineffi- forced sale by court order is within any of ciency or mismanagement or due to a the specific situations listed in Article 12. variety of other reasons. The answer to the 'Compulsory purchase' deals with the second question, as it is framed, in my view situation where national authorities take must be in the negative. However, the over the agricultural holding under, e. g. financial difficulties which led to the court statutory powers and cannot in my view be order may, in a particular case, be caused extended to cover a sale by court order on directly by an event which is itself within the application of creditors. In this regard it the definition of force majeure. In such a is to be observed that no Member State has case Member States may in my view apply notified the Commission that it considers a Article 12 of the regulation to permit the forced sale to come within the force majeure relevant postponement, suspension or provision. non-recovery of premiums paid. Whether the present could be such a situation does not emerge from the reference.

Does such a sale come within the general reference to force majeure in Article 12 (1) as a situation as the result of which the beneficiary cannot otherwise than at the cost of excessive sacrifices fulfil his obli- I turn finally to the third question asked by gations? The Court has stated that force the Højesteret which is, in essence, whether majeure 'must be understood in the sense of all the premium paid to Mr Jensen is unusual and unforeseeable circumstances, recoverable, or whether the principle of

Is the provision, which on the face of it provides for total recovery, itself dispropor- tionate — does it correspond to the Anicie 6 (1) of Regulation N o 1078/77 importance of the aim sought to be achieved clearly indicates that the amounts paid by and is it necessary to achieve that aim (Case way of premium must be repaid in full if the 266/84 Denkavit [1986] p. 168, at conditions of grant are not respected for the paragraph 17)? full five-year period. There is nothing in the text of Article 9 of Regulation N o 1391/78 which provides for a partial non-repayment related to the period during which the undertakings have been observed. Case 66/82 Fromangais SA v Fonds d'orientation et de régularisation des marchés agricoles (FORMA) [1983] ECR 395, at pp. 404 to 406, paragraphs 8 to 14 and 18, Case 147/81 Merkur Fleisch-Import GmbH v The fact that, in a later regulation Hauptzollamt Hamburg-Ericus [1982] ECR (Commission Regulation (EEC) No 1389, at p. 1397, paragraphs 11 and 12, 1300/84, Official Journal 1984, L 125, Case 272/81 Société RU-MI v Fonds p. 3) it was thought necessary to provide d'orientation et de régularisation des marchés expressly for a reduction in the amount of agricoles (FORMA) [1982] ECR 4167, at premium to be repaid during the first six p. 4180, paragraph 14, and Case 273/81 months of the non-commercialization or Société Laitière de Gacé v Fonds d'orientation conversion period in certain circumstances et de régularisation des marchés agricoles militates in favour of the view that (FORMA) [1982] ECR 4193 establish that, proportional reimbursement of the premium once the purpose to be achieved forms part already paid is not normally to be possible. of the general objectives or is of funda- mental importance to the proper functioning of the common agricultural policy, provisions which provide for identical consequences either for the total or partial Nor does the fact that, under Article 4 (1) failure of the beneficiary to carry out the of Regulation N o 1078/77, the non- operation which he undertook to carry out marketing premium is paid in three tranches (or indeed for carrying out that operation in my view provide any support for the outside prescribed time-limits) may be argument that only part of the premium regarded as in conformity with the principle received should be repaid if the undertaking of proportionality. is not complied with. As recital 5 and the text of Article 4 (1) itself make clear, the purpose of the system of payment by instalments is to facilitate checks on compliance with the obligations arising out It is therefore necessary to look at the aims of such undertakings and does not create and objective of the legislation governing any reduced liability to repay the premium the system of non-marketing and conversion

Accordingly, in my opinion the questions referred by the national court fall to be answered along the following lines:

'(1) The term "takes over" in Article 6 (1) of Council Regulation N o 1078/77, the term "transfer" in Article 8 (4) of Commission Regulation N o 1307/77 and the term "transfer" in Article 9 (4) of Commission Regulation N o 1391/78 cover a situation in which an agricultural holding undergoes a change of ownership as a result of an auction by court order.

(2) The situation in which an agricultural holding undergoes a change of ownership as a result of an auction by court order is not per se within the provisions on force majeure contained in Article 12 of Commission Regulation N o 1391/78, as amended by Article 1 of Commission Regulation N o 1799/79. However, when considering such a change of ownership, a Member

JENSEN v LANDBRUGSMINISTERIET

State and a national court are entitled to examine the chain of events leading up to the auction by court order, so as to establish whether any of those events themselves constitute a case of force majeure leading directly to the auction by court order. If so, the provisions relating to the non-recovery of the premium may be applied.

(3) Articles 6 (1) and 11 (1) of Council Regulation No 1078/77 and Article 9 (1) of Commission Regulation No 1391/78, according to which the Member States shall take all necessary steps to recover any sums already paid in respect of the premium, are not to be interpreted as meaning that a demand may be made only for the recovery of a sum which is proportionate to the period during which the undertakings under the premiums system were not complied with. In such circumstances, the whole of the premium already paid is recoverable.'