C-81/91

1. The plaintiff in the national proceedings, Otherwise, the sums already paid shall be Mr Twijnstra, is a farmer in the Netherlands. refunded by the predecessor. In 1980 he entered into an agreement for the slaughter or conversion of his dairy herd with the competent Dutch authority. Under 2. Where only part of a holding is trans- that agreement he undertook to deliver n o ferred, the applicant shall retain his right to milk from his holding during the period the premium if the person to whom he has from 10 April 1980 to 10 April 1985 in transferred the property undertakes in writ- return for a conversion premium. The agree- ing to continue to fulfil the undertakings ment was concluded in accordance with entered into by his predecessor. Otherwise, a Council Regulation (EEC) N o 1078/77 of proportion of the sums already paid shall be 17 May 1977 introducing a system of premi- refunded by the predecessor, such propor- ums for the non-marketing of milk and milk tion to be calculated by reference to the area products and for the conversion of dairy under forage transferred.' herds (OJ 1977 L 131, p. 1). At the beginning of January 1984 Mr Twijnstra sold part of the land covered by the agreement. The pur- chasers gave an undertaking not to use the 2. In 1988 Mr Twijnstra resumed milk pro- land for milk production before 10 April duction. In the meantime an additional levy 1985. They honoured that undertaking. Mr on milk production had been introduced by Twijnstra thus retained the conversion pre- Council Regulations (EEC) N o 856/84 (OJ mium in full, in accordance with Article 6 of 1984 L 90, p. 10) and N o 857/84 (OJ Regulation N o 1078/77, which provides: 1984 L 90, p. 13). Farmers were given a ref- erence quantity, based on their production in a specific period (known as the reference period), and the additional levy was charged on production in excess of the reference quantity. Those regulations did not origi- ' 1 . Any person who takes over an agricul- nally provide for the granting of a reference tural holding may undertake in writing to quantity to farmers who, like Mr Twijnstra, continue to carry out the undertakings given had produced no milk in the reference by his predecessor. period as a result of having entered into a non-marketing or conversion agreement. By judgments of 28 April 1988 in Case * Original language: English. 120/86 Mulder v Minister van Landbouw en

Visserij [1988] ECR 2321 and Case 4. On 22 June 1989 Mr Twijnstra applied for 170/86 von Deetzen v Hauptzottamt a special reference quantity. By decision of Hamburg-Jonas [1988] ECR 2355, the Court 11 August 1989 the Director for Agriculture, declared Regulation N o 857/84 invalid in so Nature and Outdoor Recreation in the prov- far as it failed to provide for the granting of a ince of Friesland awarded Mr Twijnstra a reference quantity to such persons, who had provisional reference quantity of 245 653 kg a legitimate expectation, according to the for the 1989/90 marketing year. Mr Twijnstra Court, that they would be allowed to resume contested that decision on the ground that milk production at the end of the period the reference quantity was not calculated on covered by a non-marketing or conversion the correct basis. The decision was con- agreement. firmed by the Minister for Agriculture, Con- servation and Fisheries, who is the defendant in the national proceedings. The defendant considered that the plaintiff was not entitled to a reference quantity of 60% of the whole of the quantity which he delivered in the 12 months preceding the application for a conversion premium. Instead he considered that that quantity must be reduced propor- tionately in respect of the land which Mr Twijnstra had sold in January 1984. The 3. Following the judgments in Mulder and defendant relied in that regard on Article von Deetzen the Council adopted Regu- 5(1) of the Beschikking superheffing SLOM- lation (EEC) N o 764/89 of 20 March deelnemers (Netherlands Decree on the 1989 (OJ 1989 L 84, p. 2), which added to application of the super-levy to participants Regulation N o 857/84 an Article 3a provid- in a scheme for the slaughter or conversion ing for a special reference quantity to be of dairy herds), which in his view correctly granted to farmers who had previously been implements the third subparagraph of Article unable to obtain one as a result of a non- 3a(2) of Regulation N o 857/84. marketing or conversion agreement. The spe- cial reference quantity was to be 60% of the quantity of milk delivered during the 12 months preceding the month in which the application for the non-marketing or conver- sion premium was made (Article 3a(2) of Regulation N o 857/84). By judgments of 5. The third subparagraph of Article 3a(2) of 11 December 1990 in Case C-189/89 Spagl v Regulation N o 857/84 provided (before its Hauptzottamt Rosenheim [1990] ECR amendment by Regulation N o 1639/91): I-4539 and Case C-217/89 Pastätter v Hauptzottamt Bad Reichenhall [1990] ECR I-4585 the Court declared that provision invalid in so far as it limited the special ref- erence quantity to 60% of the quantity delivered during the 12 months in question. On 13 June 1991 Council Regulation (EEC) N o 1639/91 (OJ 1991 L 150, p. 35) was 'Where the producer has transferred part of adopted for the purpose of implementing his holding during the non-marketing or those judgments. conversion period:

8. The College van Beroep voor het Bedrijf- 6. Article 5(1) of the Beschikking Superheff- sleven recognized that the first submission ing SLOM-deelnemers provides that, where was well founded in view of the Spagl and the producer transfers part of his holding Pastätter judgments, but considered that the during the non-marketing or conversion second submission raised a number of ques- period, the special reference quantity is to be tions concerning the interpretation and divided between the transferor and the trans- validity of Article 3a(2) of Regulation N o feree: the transferor is to be given a reference 857/84. It has referred the following ques- quantity corresponding to the extent to tions to the Court for a preliminary ruling which he retains obligations resulting from under Article 177 of the EEC Treaty: the non-marketing or conversion agreement, while the transferee is to be given a reference quantity corresponding to the extent to which he acquires rights and obligations '(1) Under circumstances such as those under the agreement. The effect of this pro- described in Section Two of this judgment vision appears to be that the transferee, pro- [i. e. the circumstances described in para- vided he has honoured the agreement, graphs 1 to 4 above], is it permissible to give receives a proportion of the special reference to the third subparagraph of Article 3a(2) of quantity corresponding to the proportion of Council Regulation (EEC) N o 857/84 an the holding acquired by him. The transfer- application which departs from the literal or's special reference quantity is reduced b y wording of that provision? the same amount.

(3) If Question 1 is answered in the negative: N o 1078/77. And the person to whom he sold part of the holding is not entided to a special reference quantity in respect of that land, since he did not acquire entidement to Does an application on the basis of the literal any part of the premium. wording of the aforesaid Community provi- sion mean that the transferee as defined in that provision can never claim a special ref- erence quantity or can only do so if he has guaranteed his right to a conversion pre- mium by means of a private-law agreement 11. However, the Dutch authorities propose with the transferor of land covered by a con- that Article 3a(2), third subparagraph, should version scheme? not be interpreted literally. Instead it should

lation: Article 3a(2), third subparagraph, of Regulation N o 857/84 implies that where part of a holding is transferred during the 9. It may be noted that similar questions non-marketing or conversion period the spe- have been raised by a German court — the cial reference quantity is to be apportioned Verwaltungsgericht Oldenburg — in Case between the transferor and the transferee on C-175/91 Ahlers and Grünefeld. the basis of the share of the premium to which each is entided; however, Article 6(2) of Regulation N o 1078/77 does not provide that the transferee of part of a holding Questions (1) and (2) acquires entitlement to a share of the pre-

The having sold part of his holding during the Dutch Government maintains that in view of period of validity of the conversion agree- the rationale of the provision in question the ment, since he retained the right to the pre- decisive criterion is the surface area of the mium by virtue of Article 6(2) of Regulation productive land held by the transferor and

the transferee respectively. In the proceed- 3a(2), third subparagraph, second indent, of ings before the national court the defendant Regulation N o 857/84. Minister argued that when the Council inserted Article 3a into Regulation N o 857/84 it must have been under the misap- prehension that the transferee of part of a holding covered by a non-marketing or con- version agreement automatically became entitled to a proportionate share of the pre- mium, provided that he assumed the transf- 13. The Council and Commission also eror's obligations under the agreement. maintain that, when Article 3a(2), third sub- paragraph, speaks of entitlement to the pre- mium, that is a reference to entitlement vis- à-vis the competent authority, not entitlement vis-à-vis the other party to the transfer by virtue of a private-law agreement. Thus the transferee of part of a holding does not acquire 'entitlement to the premium' within the meaning of that provision simply because the transferor undertakes to pay the 12. The Council and Commission deny, in premium to him. their written observations, that the Commu- nity legislature was under such a misappre- hension when Article 3a was added to Regu- lation N o 857/84. They contend that when that article speaks of entitlement to part of the premium being acquired by the trans- feree of part of a holding it is referring exclusively to the situation that occurs when 14. The Council and Commission contend a holding is disposed of through a series of that there is therefore no reason to depart partial transfers; the transferor loses the right from the literal meaning of Article 3a(2), to a proportion of the premium after each third subparagraph. The transferor of part of partial transfer unless the transferee under- the holding who retains the entitlement to takes to respect the non-marketing or con- the whole of the premium is entitled to the version agreement (Regulation N o 1078/77, whole of the special reference quantity and Article 6(2)); when the final parcel of land is the transferee is not entitled to any part of transferred, the transaction is treated as a the special reference quantity. The transferee transfer of the whole of the holding under has no legitimate expectation of receiving a Article 6(1) of Regulation N o 1078/77, with special reference quantity because he has not the result that the transferee, if he undertakes been induced by the Community to enter to honour the agreement, becomes entitled into a non-marketing or conversion agree- to the outstanding payments of premium, in ment. Although that may result in a pro- so far as the transferor has not already lost ducer being given a special reference quan- entitlement to the premium as a result of the tity based on his production on a holding far previous transfers. According to the Council larger than his present holding, that is not a and Commission, that is the only situation in serious consequence because Article 3a(l) which the transferee of part of the holding requires the producer to establish that he is can become entitled to part of the premium able to produce milk on his holding up to and that is the situation referred to in Article the reference quantity requested and Article

3a(3) requires him to establish that his deliv- 16. I remain unconvinced by the Council eries have attained 80% of the reference and Commission's attempt to explain away quantity in order for the provisional refer- the apparent incoherence of the applicable ence quantity to become definitive. legislation. Article 3a(2), third subparagraph, certainly seems to posit that the transferor and transferee are both entitled to a share of the premium and are therefore both eligible for a special reference quantity. The sugges- tion that the second indent of that provision applies only to the transferee of the final part of the holding after a series of partial trans- fers is particularly unconvincing. In such a situation the original producer would disap- pear from the stage entirely and the third subparagraph of Article 3a(2) does not seem 15. At the hearing the Agents for the Coun- to apply at all. In fact, that provision cil and Commission made it clear that, in assumes that the original producer is still their view, Article 3a is capable of conferring very much in the centre of the stage. It starts a special reference quantity on the transferee with the words: 'Where the producer has who takes the whole of the holding and on transferred part of his holding during the the transferee who takes the final portion of non-marketing or conversion period ...'. the holding after a series of partial transfers; That clearly implies that the producer has however, where there is such a series of par- retained part of the holding. If the author of tial transfers none of the transferees, other this provision had wished to legislate for the than the last in the series, may acquire a spe- situation that occurs when the producer has cial reference quantity under Article 3a(2). disposed of his entire holding during the The Council and Commission seek to justify non-marketing or conversion period, either the different treatment of the various catego- by a single operation or by a series of partial ries of transferee on the ground that, under transfers, he would surely have chosen Article 6(2) of Regulation N o 1078/77, the words more appropriate to his purpose. transferee of part of a holding does not become entitled to the premium and is not obliged, vis-à-vis the competent authority, to refrain from producing milk on the holding; he cannot therefore be said to have been induced by the Community to refrain from milk production and so does not have a legitimate expectation that he will be allowed to produce milk on the holding. On the other hand, the transferee of the whole hold- ing and the transferee who takes the last part 17. In spite of the incongruity of the appli- of the holding after a series of partial trans- cable legislation I do not see how the provi- fers may plead the principle of legitimate sion in question can be given an interpreta- expectations because they do become enti- tion, in the context of the present case, tled to part of the premium under Article which departs from the natural meaning of 6(1) of Regulation N o 1078/77 and become the terms used. Article 3a(2), third subpara- obliged, vis-à-vis the competent authority, to graph, first indent, states that 'the transfer- refrain from milk production on the holding. or's special reference quantity ... shall be

equal to 60% of the quantity for which enti- tation; it distorts the natural meaning of a tlement to the premium has been retained'. wholly unambiguous provision. The meaning of those words could not be plainer. A producer in Mr Twijnstra's situa- tion has retained entitlement to the whole of the premium and so qualifies for the whole of the special reference quantity. The pur- Questions (3) and (4) chasers of part of his holding did not acquire entitlement to any of the premium and so d o not qualify for a special reference quantity under Article 3a(2). 19. Questions (3) and (4) are concerned with the possible right of the transferee to a spe- cial reference quantity. It will be clear from what has been said above that Article 3a(2) of Regulation N o 857/84, in conjunction with Article 6(2) of Regulation N o 1078/77, does not make any provision for the granting 18. Arguably, that is not the most logical of a special reference quantity to a person solution, since it means that a producer who who acquires part of a holding covered by a has disposed of part of his holding during non-marketing or conversion agreement the non-marketing or conversion period may (except, on the analysis proposed by the be entitled to a special reference quantity Council and Commission, where the trans- which exceeds the amount that he can pro- feree acquires the final portion of the hold- duce on the land covered by the non- ing after a series of partial transfers). The marketing or conversion agreement. Argu- existence of a private-law agreement ably, it would have been more logical to whereby the transferor agrees to assign to apportion the special reference quantity the transferee his right to the premium or to between the transferor and the transferee o n pay him an equivalent sum of money cannot the basis of their respective shares of the land change matters. When Article 3a(2), third covered by the non-marketing or conversion subparagraph, second indent, speaks of the agreement. However, that is not the solution transferee's 'entitlement to the premium', adopted by the relevant legislation and such that must in my view be taken to mean enti- arguments cannot justify depriving M r tlement vis-à-vis the competent authority Twijnstra of the benefit of a provision which and cannot be construed as a reference to a clearly and unambiguously entides him to a contractual right against the transferor. As special reference quantity based on the we have seen, the transferee of part of a whole of his production in the 12 months holding cannot acquire entitlement, in that preceding his application for a conversion sense, to part of the premium under Article premium. Legislation which limits the pro- 6(2) of Regulation N o 1078/77. ducer's freedom to use his land for the pur- pose of a legitimate economic activity, even though the limitation is in principle justified in the general interest, should not be con- strued restrictively in a manner detrimental 20. If therefore the transferee of part of a to the interests of the producer. In any event, holding is to claim a special reference quan- the view taken by the Dutch Government tity, he will do so not on the basis of the amounts to more than a restrictive interpre- wording of Regulation N o 857/84 but solely

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