It is no secret that Scotland’s farming industry currently relies on substantial subsidies; these may make up around 70% of a farm’s income in some instances. Therefore, when a subsidy payment is unexpectedly refused, or a fine is imposed for non-compliance with the applicable rules, farms may face a substantial economic loss. Farmers should be aware that adverse subsidy decisions and administrative penalties need not be accepted without protest.
Alleged failure to notify
The recent case of Morrison v The Scottish Ministers was an appeal against an administrative penalty which concerned an alleged failure to notify the Scottish Animal Movement Unit (SAMU) of the movement of sheep between farms, resulting in ineligibility to receive funding from the Scottish Upland Sheep Support Scheme. The sheep were being moved between Mr Morrison’s farm and Mr MacKenzie’s farm. Although Mr Morrison owned the sheep, Mr MacKenzie looked after them. After an inspection by the Scottish Government Rural Payments and Inspection Division, it was discovered that 94 of his 426 sheep were ineligible for funding because of the alleged failure to notify the movement. Since this was more than 20% of the total number of sheep being claimed for, the whole claim was denied.
No requirement to check delivery
During the course of the case, it emerged that Mr MacKenzie’s wife was responsible for notifying SAMU that the sheep were being moved. It was established that she had a well understood system for posting the movement notification form and the Department had seen the duplicate and triplicate copies of the form which Mrs Mackenzie had sent. The Land Court found that there was nothing in the relevant regulations requiring her to check that the letter had been received by SAMU, as had been argued by the Scottish Ministers, and there was no reason to suspect that she had not posted it. The Court held that where a postal system is used, there is an inherent risk that letters may be lost and this must be accepted by the parties. The Court overturned the administrative penalty which had been imposed on the basis that the Morrisons were not at fault.
How could this affect me?
Farmers should be aware that a failure to notify the authorities of any movement of animals can result in a loss of funding. Although in this case the Court overturned the decision denying the Morrisons their support payments, it is best practice to keep track of all notification letters or emails sent in relation to animal transportation.
This case demonstrates that the Court will have regard to what is required of parties in the relevant regulations and that the Scottish Ministers’ interpretation of those regulations is not always correct. Looking at the bigger picture, adverse subsidy decisions need not be taken at face value; grounds for appeal are available (these will depend on the particular subsidy and nature of the refusal) and the individual facts and circumstances of each case will be considered by the relevant judicial body.