C-165/95

General rules for the application of the levy The relevant provisions were adopted in Council Regulation (EEC) N o 857/84 of 31 March 1984. 5 That regu- lation was declared invalid by the Court in its judgments in Mulder and Von Deetzen 6 precisely because it did not provide for the allocation of a reference quantity to SLOM producers, 7 that is to say to those producers 2. Let me begin by recalling that, in order to who, having entered into a non-marketing or deal with the problem of overproduction of conversion agreement as provided for in milk, Council Regulation (EEC) N o 1078/77 Regulation N o 1078/77, had not produced of 17 May 1977 2 introduced a system of pre- any milk during the reference year. The miums for the non-marketing of milk and Court took the view that those producers milk products and for the conversion of were entitled to invoke the principle of the dairy herds. O n account of a persistent protection of legitimate expectations in order excessive imbalance between the supply and to be authorized to resume milk production demand of products in the milk sector, Article 5c of Council Regulation (EEC) N o 804/68 of 27 June 1968 on the common orga- 3 — OJ, English Special Edition 1968 (I), p. 176. nization of the market in milk and milk 4 — OJ 1984 L 90, p. 10. 5 — OJ 1984 L 90, p. 13. 6 — Case 120/86 Mulder v Minister van Landbouw en Vissera [1988] ECR 2321 and Case 170/86 Von Deetzen v Hauptzol- lamt Hamburg-Jonas [1988] ECR 2355. * Original language: Italian. 7 — The Dutch acronym SLOM stands for the Dutch 'slachtof- 1 — OJ 1993 L 187, p. 8. fers omschakeling', which literally means 'victims of recon- 2 — OJ 1977 L 131, p. 1. version'.

3. Having regard to the judgments in Mul- der and Von Deetzen, the Council, by Regu- lation (EEC) N o 764/89 of 20 March 1989, amended Regulation N o 857/84, s adding Article 3a, which lays down rules for the First, according to the first subparagraph of allocation of a special reference quantity Article 7(1) of Regulation N o 3950/92, 'Ref- (SLOM 1). That quantity was fixed at 60% erence quantities available on a holding shall of the quantity of milk delivered or sold by be transferred with the holding in the case of the producer in the 12 months preceding the sale, lease or transfer by inheritance to the month in which the application for the producers taking it over in accordance with non-marketing or conversion premium was detailed rules to be determined by the Mem- made. That provision was declared invalid by ber States taking account of the areas used the Court in so far as it restricted the special for dairy production or other objective crite- reference quantity to 60%. 9 ria and, where applicable, of any agreement between the parties. Any part of the refer- ence quantity which is not transferred with the holding shall be added to the national reserve.' 12 The Council therefore adopted Regulation (EEC) N o 1639/91 of 13 June 1991 1 0 (SLOM 2) which amended Article 3a of Regulation t N o 857/84 in the manner required by the Court, namely by removing the ceiling of 60%. The second relevant provision is Article 7, first paragraph, (2) of Commission Regu- lation (EEC) N o 1546/88 of 3 June 1988, 13 implementing Regulation No 857/84, according to which: 'Where one or several Finally, I would note that in the meantime parts of a holding are sold, leased or trans- Regulation N o 857/84 has been repealed and ferred by inheritance, the corresponding ref- replaced, as from 1 April 1993, by Council erence quantity shall be distributed among Regulation (EEC) N o 3950/92 of 28 Decem- the producers operating the holding in pro- ber 1992. » portion to the areas used for milk production

6. As a result of the Twijnstra judgment the Council adopted Regulation N o 2055/93 5. The provisions set out above concern the ('the Regulation'), on which this case turns, determination in general of reference quanti- and in which it amended the rules relating to ties in the case of transfer of a holding and the criteria for allocating and dividing special not specifically the particular situation in reference quantities (SLOM 3). which the transfer takes place during a non- marketing period. That last situation was governed by the third subparagraph of Article 3a(2) of Regulation N o 857/84, according to which the transferee of a hold- Article 1(2) of the Regulation lays down the ing belonging to a SLOM producer was criteria for apportioning between transferor entitled to a SLOM 1 quota only where he and transferee a reference quantity already had acquired the right to the original non- allocated pursuant to Article 3a of Regu- marketing premium. However, such a provi- lation N o 857/84. That subparagraph pro- sion led to transferees of part of a holding vides, so far as is relevant for the purposes of being unable to obtain a special reference this case, that 'the reference quantity shall be quantity, since under Article 6(2) of Regu- shared between the transferor and the part lation N o 1078/77 the transferee of part of a transferee (...) in proportion to the areas holding does not acquire any right to pre- under forage referred to in Article 1(1 )(d) of mium. Regulation (EEC) N o 1391/78 and trans- ferred in accordance with the provisions of Article 7 of Regulation (EEC) N o 3950/92'.

'(1) In determining a part transferee's 7. The applicants in the main proceedings entitlement to a reference quantity are cattle farmers who respectively have pur- under Articles 1(2) and 2 of Council chased (Mr Lay) and leased (Messrs Gage) Regulation (EEC) N o 2055/93, must a minority shares in mixed holdings subject in Member State, having regard to Regu- their entirety to non-marketing undertak- lation 2055/93 and the general principles ings. When they took over from the original of Community law on legitimate expec- owners, the applicants entered into similar tation, proportionality and respect for undertakings with the Ministry of Agricul- property, apportion the reference quan- ture, Fisheries and Food ('MAFF'), concern- tity between transferor and part trans- ing the part of the holding transferred, with- feree by ascertaining what proportion of out obtaining a non-marketing premium in the holding was used for milk produc- return. tion at the time the transferor entered into the non-marketing undertaking and then apportioning the reference quan- tity between the transferor and trans- feree in proportion to the percentage of land used for milk production trans- ferred to the part transferee? O n the applicants' request, MAFF granted them, between 1993 and 1994, a special refer- ence quantity of milk, calculated in propor- tion to the area of the holding purchased or leased. Before the High Court, the applicants challenged the ministerial measures, com- plaining that the quantity allocated to them (2) If the answer to Question 1 is in the had been determined without taking into negative, are Articles 1(2) and 2 of account the fact that the original owners had Council Regulation (EEC) N o 2055/93 carried on the rearing of catde for milk invalid as contravening the general

9. In spite of the somewhat complex nature of the applicable legislation, the basic ques- tion upon which the Court is called upon to give a ruling appears to be relatively simple. The questions referred by the national court seek to ascertain whether the term 'areas under forage' includes the parts of the hold- 10. Under the two provisions which the ing actually used by the transferor for milk Court is asked to interpret the special refer- production or whether it refers to all the ence quantity is to be apportioned (Article land comprised in the holding (Question 1). 1(2)) and allocated (Article 2) 'in proportion In the second case the Court is asked to give to the areas under forage referred to in a ruling on the validity of the provisions in Article 1(1 )(d) of Regulation (EEC) N o question from the point of view of breach of 1391/78'. For the purposes of those provi- the principles of the protection of legitimate sions of Commission Regulation (EEC) N o expectations, proportionality and respect for 1391/78 of 23 June 1978, 16 area under forage property (Question 2). Finally, should the means 'the total agricultural area farmed by a Court conclude that the provisions in ques- producer within the meaning of Article 5(a) tion are valid and that special reference of Regulation (EEC) N o 1078/77'; that quantities need not necessarily be deter- mined in proportion to the area actually given over to milk production, the national 16 — OJ 1978 L 167, p. 45.

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provision defines the term 'producer' in its and relevant for our purposes is not in fact turn as 'a farmer ... who ... raise[s] cattle'. the same as the definition in Regulation N o 857/84. 19

. .)'. Kingdom's argument that the expression in issue is in substance to be equated with the word 'holding' used in Article 12(c) of Regu- lation N o 857/84 capable of altering the terms of the problem: the definition of pro- ducer contained in Regulation N o 1078/77 It is impossible not to regard the explicit ref- erence to the provision quoted above as per- 17 — O n the other hand, in contrast to the arguments put for- mitting SLOM quantities to be treated in the ward by the applicants, I do not think that it is possible to take the use of the word 'forage' in the provision in ques- same way as Ordinary' quantities, when tion to be decisive. Indeed, while I recognize that the use of dealing with the apportionment of reference a word whose definition is 'vegetable products used as fod- der for catde' is highly significant, especially in the light of quantities where part of a holding is trans- its context, the fact none the less remains that the reference to 'areas under forage' in the provisions in question makes

both situations. ECR 1-255, in particular paragraph 17).

12. But that is not all. As may be seen from the fifth and eighth recitals in the preamble to the Regulation, the provisions at issue were adopted in order to comply with the principles laid down in Twijnstra with regard 13. I would add that it is curious, to say the to the question of apportioning reference least, for the institutions to deduce from the quantities between SLOM producers. In that fact that in Twijnstra the Court ruled that judgment the Court held that 'the entire sys- the special reference quantity is to be shared tem of reference quantities is based on the between transferor and transferee 'in propor- general principle, laid down in Article 7 of tion to the land retained and the land trans- Regulation (EEC) N o 857/84 and in Article ferred' (paragraph 27) that where SLOM 5 of Commission Regulation (EEC) N o quotas are concerned the principle takes the 1371/84 of 16 May 1984 laying down form of division in proportion merely to the detailed rules for the application of the addi- area of land transferred and not, as required tional levy referred to in Article 5c of Regu- by Article 7 of Regulation N o 3950/92 and lation (EEC) N o 804/68, which provides that in the case of partial transfer of a holding the reference quantity is to be granted to the 20 — Twijnstra, cited above in footnote 15, paragraph 25.

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21 — I would observe that those provisions replaced Article 7 of 23 — However, it is precisely on the basis of the fact that the rel- Regulation N o 857/84 and Article 5 of Regulation N o evant provisions use the expression 'areas under forage' 1371/84 respectively, that is to say the provisions which, in whereas Article 7 of Regulation N o 3950/92 refers to 'areas its judgment in Twijnstra, the Court took as the basis for its used for dairy production' that the Council and Commis- conclusion that the quantity should, in accordance with the sion and also the United Kingdom Government claim that general principle laid down in those provisions, be shared different sets of rules are concerned. in proportion to the land transferred. 24 — See Twijnstra, cited above in footnote 15, paragraph 25; 22 — It is crystal clear that where the entire farm is used for milk also, more generally, Case C-121/90 Posthumus [1991] ECR production, the proportion between the reference quantity 1-5833, in which the Court held that 'distribution must be transferred and the total quantity will be equal to the ratio effected strictly in proportion to the size of the areas of the between the area transferred and the total area of the hold- respective holdings in question which are used for milk ing. production' (paragraph 9; emphasis added).

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15. It remains to ascertain whether the inter- pretation suggested here runs the risk of proving impractical, as the United Kingdom Government claims, that is to say whether it is such as to render impossible any form of verification of the actual use of the land before the non-marketing premium was granted. Indeed, considering that Regulation N o 1078/77 does not, for the purposes of the 16. To my mind, authority to do so may grant of the premium, require information well be found both in the relevant general making it possible to deduce which part of provisions, which expressly empower the the holding was used for milk production, Member States to adopt different criteria, the authorities can legitimately claim that and in the provisions which are of specific they are not in possession of the relevant importance in this case: Article 1(2) of the particulars, which in this case go back to Regulation, as we have already seen, contains 1980. 26 a reference to Article 7 of Regulation N o 3950/92, while Article 2 expressly states that the reference quantity 'shall be established 25 — On this point, those institutions have in fact merely by the Member State in accordance with claimed, without however supplying any adequate explana- objective criteria'. Naturally, those criteria tion, that their interpretation is consistent with the global framework of the system established by the Community must meet the requirements laid down by legislature, which, they maintain, consciously differentiated the special reference quantity scheme from the Ordinary' the Court, which are that they should be scheme. Objectively verifiable criteria of general 26 — However, the United Kingdom Government acknowledges that it does possess those particulars concerning the holding application laid down in advance which are taken over by Mr Lay, precisely because the owner of that beyond the control of the operators con- holding inserted them, voluntarily, in his application for grant of the non-marketing premium. cerned and which relate to the properties of

17. In short, I consider that from a literal and systematic analysis of the provisions in point in this case the conclusion may reason- ably be drawn that, where part of a holding subject to a non-marketing undertaking is 18. The conclusions I have reached concern- transferred, the special reference quantity is ing the interpretation of the provisions at to be shared in proportion to the areas issue make it unnecessary for me to consider whether they may be invalid from the point of view of breach of the principles of protec- tion of legitimate expectations, proportional- 27 — Posthumus, cited above in footnote 24, paragraph 14. I hardly need point out that the Iastmentioned criterion puts the emphasis fair and square on the productive use to which the land is put, so that it might well be considered that Member Sutes cannot in any event refrain, or at least not entirely, from giving appropriate consideraron to the extent 28 — To this effect, see Case C-79/91 Knüfer [1992] ECR 1-6895, of the land used for milk production. paragraph 13.

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R v MAFĘ EX PARTE LAY AND OTHERS

ity and respect for property. I shall accord­ referred to in the Mulder and Von Deetzen ingly examine the matter very cursorily. judgments, to be able to re-use the Und transferred for the purpose of milk produc­ tion once the non-marketing period has ended. To exclude the transferee from that possibility would be to ignore the principle 29 of protection of legitimate expectations.'

20. I would note at the outset that the insti­ tutions and the United Kingdom Govern­ 19. Here, I might usefully point out that, ment appear to have a very narrow concep- again in the Twijnstra judgment, and thus in relation to SLOM producers, the Court has explicitly stated that 'the transferee may 29 — Twijnstra, cited it footnote 15, paragraph 23; emphasis legitimately expect, like the producers added.

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mate expectations. 21. To sum up, it must in my view be acknowledged that the provisions in ques- tion are contrary to the principle of protec- tion of legitimate expectations if they are interpreted as requiring the Member States, always and in any event, even where the actual use of the area of the holding trans- As to the effect of the judgment in Twijnstra, ferred has been proved, to share the available I think it sufficient to refer to the line of reference quantity between transferor and argument set out earlier, 30 and to confine transferee in proportion merely to the areas myself to repeating that different systems for of land retained and transferred respectively. SLOM and non-SLOM producers in relation This conclusion makes it unnecessary to to the apportionment of the available refer- consider the other grounds of invalidity put ence quantity did not in any way find accep- forward by the applicants in the main pro- tance in that judgment. The Court was ceedings. 32 guided, in arriving at the solution set out, by the principle of division in proportion to the areas used for milk production, as laid down 31 — See, above, point 14. in Article 7 of Regulation N o 857/84 (now 32 — I would add only that it does not seem to me possible to exclude out of hand that the application of different criteria Article 7 of Regulation N o 3950/92) and for apportionment in the case of SLOM producers may dis- Article 5 of Regulation N o 1371/84 (now criminate unjustifiably against them. While it is truecas the Court has reiterated on many occasions, that the principle Article 7 of Regulation N o 1546/88), that is of non-discrimination between producers or consumers, laid down in the second subparagraph of Article 40(3) of to say in provisions which lay down general the Treaty, requires that comparable situations are not to be rules for the apportionment of the reference treated differently unless such different treatment is objec- tively justified (to this effect, see most recently Case C-22/94 Irish Farmers Association [1997] ECR 1-1809, paragraph 34), it is reasonable to consider that the 'subjec- tive' difference on which the parties have insisted is not suf- ficient to justify different treatment for SLOM and non-

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Conclusion

22. In the light of the foregoing, I propose that the Court should reply as follows to the questions referred to it by the national court:

(1) Articles 1(2) and 2 of Regulation (EEC) N o 2055/93 must be interpreted as meaning that where part of a holding is transferred the special reference quan- tity must be shared between the transferor and the transferee in proportion to the part of the property used directly or indirectly for milk production at the time when the transferor entered into the non-marketing undertaking.

Articles 1(2) and 2 of Regulation (EEC) N o 2055/93 authorize the Member States to share the quantity between transferor and transferee in proportion to the areas of land retained and transferred respectively, and thus irrespective of the actual use to which they were put at the time when the transferor entered into the non-marketing undertaking, only where the Member State concerned does not have the necessary information and the transferee is not in a position to provide relevant evidence.