Food, farming and land quarterly - Autumn 2014

Newsletter
Autumn 2014
Food, Farming
and Land Quarterly
Comment
Welcome
Welcome to the latest
edition of Food, Farming
and Land Quarterly,
discussing current issues
in the food, farming and
land sector.
If you would like further
details on any of the areas
covered in this newsletter
then please contact one of
the contributors or visit our
website at www.burgessalmon.
com
Basic Payment Scheme: a cause for concern?
On 21 October the gates came down and the
RPA drew a line under transferring Single Payment
Entitlements. The gates will lift in early 2015 and
Basic Payment Scheme entitlements will be ushered
in. The feeling that something different is coming
has set in. How different will it be?
The fact that in England SPS entitlements are being
rolled over directly into BPS entitlements gives some
comfort. But anything involving a change of system
has the potential to crack under the pressure of a
launch, although surely there is less chance of that
this time? That seems to be a major worry and given
past experiences of the implementation of new IT
systems (and this is not a problem confined to the
RPA) this may in practice be where the greatest
problems emerge.
Greening is something that we’re seeing causing a
lot of work at farm level. There are still uncertainties
there, but as it feels like there’s been a focus on
it over the past few months it may be that the
greening requirements can be completed without
wrecking proper farming. There are some particular
concerns, such as on small farms, but perhaps the
new regulations can be made to work. There are
still unknown issues, and the Active Farmer test fits
that description perfectly - at the time of writing we
are still waiting for further guidance on its application
If land and entitlements are being transferred over
the next few months, advisers will be trying to work
out ways of minimising the risk of a bump in the
road causing an entitlement problem. The fact that
transfers of entitlements can be registered as
late as 15th May could easily be more of a curse
than a blessing without proper thought and a fully
operative RPA computer system.
In the recent case of Shortt v Secretary of State for
Communities and Local Government and another
[2014] EWHC 2480, the High Court considered
the meaning of ‘dependants’ in the context of an
agricultural occupancy condition (“AOC”). Mr and Mrs
Shortt occupied a farmhouse with 22 hectares of land.
It was subject to an AOC restricting the occupation of
the dwelling to persons employed or last employed in
agriculture and their dependants. Mrs Shortt kept 20
sheep on the farm followed by a pedigree breeding herd
of 15 cattle. The total labour contributed to the farm
was less than 20% of a full time worker and the farm
made a loss. Mr Shortt was a businessman and did not
work on the farm.
Mr and Mrs S Shortt applied for a certificate of lawful
use on the basis of ten years’ breach of the AOC. They
claimed that even though Mrs Shortt may have been
considered an agricultural worker, she did not financially
contribute to Mr Shortt and their two children and
they could not be described as her dependants. They
placed reliance on the case of Fawcett Properties Ltd
v Buckingham County Council [1961] AC 636, where
Lord Keith of Avonholm clarified the term ‘dependant’
as meaning: “persons living in family with the person
defined and dependent on him in whole or part of for
their subsistence and support”.
What does ‘dependant’ mean in an
agricultural occupational condition?
Continued overleaf
Contents
What does ‘dependant’ mean in an
agricultural occupational condition?
continued p2
Unfair trading in the food sector p2
Dealing with a knotty problem p3
Abstraction Management System
Reform - Government summary of
consultation responses p4
Agricultural state aid p5
British Legal Awards nominations
p5
Intestacy, or what you Will? p6
Do you have the right to rent? p7
Neonicotinoids and bees p8
Kevin Kennedy
Partner
+44 (0)117 307 6934
[email protected]
The local planning authority failed to determine the application and
Mr and Mrs Shortt appealed. The Inspector determining the appeal
held that the definition of ‘dependant’ was not limited to financial
dependency. Mr and Mrs Shortt challenged this decision. Mr Justice
Hickinbottom held that Lord Keith’s definition of “subsistence and
support” does not just refer to financial support and that the definition
of the term ‘dependant’ is largely context-specific. His view was that
it would include a spouse and minor children who are provided with
the usual family services and care and would not necessarily require
financial dependency. Therefore the Shortt and their two children
were dependants and the ACO had been offered, so no certificate
could be issued.
An important point to remember is that the interpretation of
dependants may vary from case to case and depend on the factual
circumstances and the particular wording of the AOC.
Continued from page one
Sarah Sutherland
Associate
+44 (0)117 307 6964
[email protected]
For more information please contact:
The European Commission adopted a Communication in July
encouraging Member States to look for ways to improve protection for
small producers and retailers against unfair trading practices (UTPs)
in the food supply chain. The food supply chain is not only crucial for
the daily life and well-being of consumers but is also important for the
economy as a whole, employing more than 47 million people in the
EU, many in SMEs, and representing about 7% of the EU gross value
added. The total market size of EU retail trade in food-related products
is estimated at €1.05 trillion. UTPs can be defined as practices that
grossly deviate from good commercial conduct, are contrary to good
faith and fair dealing and are unilaterally imposed by one trading partner
on the other and include:
„„avoiding or refusing to put essential commercial terms in writing
„„retroactive unilateral changes in the cost or price of products or services
„„transfer of unjustified or disproportionate risk to a contracting party
„„deliberately disrupting a delivery or reception schedule to obtain
unjustified advantages or
„„unilaterally terminating a commercial relationship without notice,
or subject to an unreasonably short notice period and without an
objectively justified reason.
The Commission in its Communication does not propose legislation at
EU level but suggests a “mixed approach” to dealing with UTPs. The
Commission’s approach has three parts:
1. It encourages participation in the Supply Chain Initiative which was
launched in September 2013;
2. It suggests that there should be EU wide standards for principles of
good practice; and
3. It stresses the importance of ensuring the effectiveness of
enforcement mechanisms at national level through the adoption of
minimum standards applicable throughout the EU.
The Commission will monitor and assess progress and intends to
present a report to the Council and the European Parliament at the end
of 2015 which may lead to further action at EU level.
Unfair trading in the food sector
Sian Edmunds
Partner
+44 (0)117 902 7187
[email protected]
For more information please contact:
2
The mere mention of Japanese knotweed can send shivers down the
spines of many property developers. However, recent publicity on the
new powers to be given to environment regulators as a result of the
Infrastructure Bill, currently in parliament, will have opened their eyes
to other species, such as the zebra mussel, the “killer shrimp”, the
Chinese mitten crab, Asian hornets or Brazilian rhubarb.
It is easy to trivialise the establishment of the species but we should not.
To tackle this increasingly large and costly problem - both in financial
terms (invasive species cost the EU about €12 billion a year in crop
losses and damage to infrastructure, says the European commission)
and the loss of important biodiversity and habitats - the EU reached a
deal earlier this year on a new invasive species regulation.
Controlling measures
The EU’s regulation comes into force from January 2015 and will ban
“intentionally or negligently importing, keeping, breeding, transporting,
selling, growing or releasing species of EU concern”. Under the
provisions, member states will have to analyse the pathways of
introduction of potential and listed invasive species and take action to
eradicate, control or contain them. The polluter will be forced to pay
for this action. Member states are also required to impose dissuasive,
effective and proportionate sanctions for breaches of the regulation.
Through the Wildlife and Countryside Act 1981 the UK has certain
controls on species, such as Japanese knotweed. However, much of
this regulation has revolved around controlling the spread of species as
opposed to eradication. The Law Commission review of wildlife law iin
England and Wales, which was published in February, concluded that
the existing legislation is not sufficient to control and eradicate invasive
non-native species. The commission recommended the introduction
of enhanced control procedures to allow environmental authorities and
bodies to make species control orders.
The commission explained that the Environment Agency, for example,
should first offer a species control agreement to the owner or occupier
of the land or premises in question. Only when an agreement proves
impractical or is not being properly performed should an order be
imposed. In most cases, the law does not allow those charged with
the management and control of wildlife to enter privately owned land
or premises to carry out operations to manage or eradicate invasive
non-native species without consent. However, the proposed change
provides powers of entry to enable regulators to investigate or monitor
a site, or to allow an order to be carried out.
The Infrastructure Bill puts the recommendations of the commission
in place by amending the existing Wildlife and Countryside Act. A new
schedule 9A will be inserted into the Act to empower environment
authorities to enter into “species control agreements” (SCA) with
owners of premises where the authority considers that an invasive
non-native species is present. An agreement will detail what needs to
be done to control or eradicate the species, who is going to do it and
the time by which the actions need to be carried out. Further powers
will be given to the environment authorities to make species control
orders (SCO). So if the owner of a premises has failed to comply with
or agree to an SCA, the authority can make an SCO. This can require
the owner to carry out species control operations or can allow the
authority itself to do so.
It is not entirely clear from the new provisions in the Wildlife and
Countryside Act who will pay for this work. In some cases, it may be
the environment In practice. Clearly, there will be a much stronger legal
requirement for authorities to deal with non-native species. How often
SCAs and SCOs will be used will depend on how many species are
listed as invasive and also on the resources the regulators can allocate
to the problem.
However, owners, leaseholders and purchasers of land need to
take this issue seriously. As many a developer will testify, the costs
associated with the eradication and disposal of even a familiar invasive
species, such as Japanese knotweed, can be significant. Equally
importantly is the delay it can cause to redevelopment.
The proposed legal changes must also surely mean that further
environmental studies will need to be carried out at the outset of the land
acquisition process to assess the risk and it may in time lead to contractual
indemnities and provisions being sought from purchasers or occupiers.
EU Regulation
The European commission set out its proposals last year for new
legislation to prevent and manage invasive alien species (lAS), noting
that there are more than 12,000 non-native species in Europe. Of
these, about 15% are invasive and they are rapidly growing in number.
In April 2014, the European parliament backed the proposals.
The legislation would require EU member states to ascertain the routes
of introduction and spread of lAS and set up surveillance systems and
action plans. Official checks at EU borders would also be stepped
up. For widespread lAS, member states would have to draw up
management plans. They would also be responsible for determining
penalties for breaches of the legislation. The proposals now need
approval by the European council.
For further information please contact:
Ross Fairley
Partner
+44 (0)117 902 6351
[email protected]
3
Dealing with a knotty problem
In July 2014 Defra and the Welsh Government published a Summary
of consultation responses to their proposals for water abstraction
reform. This is an area of key importance to many sectors – farmers
and landowners, water and sewerage companies, industry abstractors,
food and drink businesses, energy companies, hydropower
companies, horticulture businesses and many others.
The two governments say that the purpose of proposed reform is to
maximise the amount of water available to abstraction; to facilitate
trading; to provide certainty for abstractors; to protect water eco
systems; to promote efficient use of water through charging for actual
use; and to ensure that the new system is able to respond to longer
term changes in water availability.
However, the clue may be in the title of the consultation ‘Making the
most of every drop’. This is a legislative response to perceived water
scarcity. The two main options under review are “Current System Plus”
and “Water Shares”. Current System Plus would link water availability
to annual and daily volume constraints – more accurately measured
and defined, reducing abstractions in times of very low flows and
relaxing restrictions at times of plenty. The Water Shares option, which
seemed less popular with respondents, would be based on giving
abstractors a share in the water available in a whole catchment, and
therefore a shared incentive to save water.
Under both options, it is proposed to make water trading quicker and
easier, remove time limits on licences, make improvements to the
measurement of catchment availability of water, reform the system of
abstraction charges, pilot implementation in “enhanced catchments”
and manage the impact of discharges.
There are major changes of very considerable importance to a very
wide range of businesses, abstractors and users. The consultation
document from July 2014 talks about legislation ‘early in the next
Parliament’ with important policy arrangements in 2015. In Wales this
will take the form of completion of the final Water Strategy for Wales.
The UK is now on the run up to the next election, with a new Secretary
of State for the Environment, Food and Rural Affairs, so there may be
many changes and adjustments to the policies indicated in July 2014,
but it does seem clear that “business as usual” is most unlikely in the
area of water abstraction, and those affected should instead anticipate
fundamental reform.
Water Act 2014
The Water Act 2014, as amending legislation, is not an easy read, but
does contain more important provisions than first appear.
It aims to promote competition within the water industry; to increase
the resilience of water supplies to floods and droughts; and to promote
the availability of flood risk insurance for households.
It allows most business customers to switch their water and sewerage
supplier, with cross border arrangements with Scotland and easier
systems for sales of water between companies. Long-term resilience
becomes an new over-arching duty of OFWAT.
Many detailed provisions on areas such as environmental permitting for
abstraction and impounding, and promotion of sustainable drainage
or ‘SuDS’ schemes will have important localised impacts. The Act
provides a system of Retail Exit for (in particular) smaller companies to
contract out of their licence obligations in favour of licensed suppliers
in all or part of their areas. In many areas, the Act takes powers for
Ministers to make Regulations, issue Guidance and codes: the way in
which it is applied will be of high practical importance to this legislation.
The Act has provisions on new water and sewerage licensing (as an
alternative to water and sewerage undertakers); many detailed revisions
to the competition within the water retail market; the resilience duty
for OFWAT; some revisions to environmental regulation; a significant
system for Flood Reinsurance to be available to households based on
a levy; and other detailed provisions.
Abstraction Management System Reform -
Government summary of consultation responses
For further information please contact:
Michael Barlow
Partner
+44 (0)117 902 7708
[email protected]
William Wilson
Barrister
+44 (0)117 939 2289
[email protected]
4
Government aid can be vital to the success of businesses in the food
and farming industry. However, recipients of aid should always check
that such aid is compatible with State aid law. The consequences of
receiving illegal State aid can have serious financial consequences, and
under State aid law it is the recipient – rather than the government –
which ultimately picks up the tab.
The principle underlying the State aid rules is that government
assistance should not be used to distort competitive markets by
favouring a particular business to the detriment of its competitors.
The most recognisable forms of aid are direct grants and
subsidies, but many other less obvious measures can constitute
State aid: tax exemptions, guarantees, levies, favourable land
deals, “soft” loans, etc;. For example, the Agriculture and
Horticulture Development Board’s advertising and promotion
and technical support schemes have both been the subjects of
clearance decisions in the last five years.
A common misconception is that a government-run aid scheme is
necessarily compatible with State aid law. Unfortunately this is not
always the case, and aid recipients need to be aware that the main
commercial risk lies with them: if an aid is found to be incompatible
with State aid law, the recipient must repay the aid it has received
to the government, together with interest. The seriousness of an
illegal State aid investigation is compounded by the fact that such
investigations can occur several years after aid has been paid, during
which time significant interest is likely to have accrued.
Small amounts of aid might not be considered to constitute illegal State
aid. However, in the agriculture sector the ceiling for this exemption is
set at just €7,500 (approx. £6,000) for all aid received in any threeyear
period1. If that ceiling is exceeded, aid recipients are at risk of an
adverse State aid finding unless a relevant exemption applies. New
rules and guidelines on exemptions were introduced in June 2014 but
it is fair to say that this is a complex and evolving area of law2.
It is recommended that specialist legal advice should be sought if you
have concerns that aid you have received or intend to receive might
not be compatible with State aid law.
Agricultural state aid
1 NB: This measure is only available for SMEs which are defined by the Commission as
enterprises which employ fewer than 250 persons and which have an annual turnover not
exceeding €50m and/or an annual balance sheet not exceeding €43m.
2 On 25 June, the Commission announced that it had adopted a new Agricultural Block
Exemption Regulation (“ABER”) and State aid guidelines in relation to agriculture, forestry
and rural development. The new measures entered into force on 1 July 2014. The changes
introduced by the new ABER include a widening of the categories of exempt aid.
For further information please contact:
Brendan Ryan
Solicitor
+44 (0)117 307 6844
[email protected]
5
British Legal Awards nominations
The Burges Salmon team led by Alastair Morrison
(Rural Property) and Nick Graves (Corporate:
Real Estate Group) has been nominated for the
Property Team of the Year for the work done on the
Co-operative Group’s disposal of its 40,000 acre
farm holdings in England and Scotland, including
residential and commercial property, for £249 million
to the Wellcome Trust. Requiring a highly specialised
combination of legal expertise, transferring all of the
freehold property from a co-operative into a single
limited company and then selling the shares in that
company, the deal reflects our strength in the real
estate and food, farming and land sectors. During
the 9 months that we worked on the deal 7 partners
and 40 lawyers from the rural and commercial
property, corporate, employment, pensions, tax,
environment and commercial contracts areas of the
firm contributed as part of the team.
Burges Salmon
team leaders
Alastair Morrison
and Nick Graves
6
October 2014 will see the introduction of the Inheritance and
Trustee Powers Act 2014 which make significant changes to the
intestacy rules.
A common misconception is that if you don’t leave a Will everything
goes to your spouse – not so. Where there is no Will, or part of the
Will fails, the intestacy rules step in to distribute the estate: rather than
getting everything, spouses receive only part of the estate with the
remainder being divided differently depending on which other family
members survive.
Currently, if the deceased leaves a spouse and children, the spouse
receives all personal effects, a lump sum of £250,000, and a right to
receive income from half of any remaining assets for life. The other
half of the remaining assets is divided between the children (even
though they may be grown up and not need anything), and they will
also receive the other half after the death of the surviving spouse. If
there are no children but instead surviving parents or siblings, they will
receive the children’s share.
So, unless the whole value of the estate is fairly modest, spouses
would only inherit the entire estate where there are no descendants or
immediate family who survive.
Under the new rules, the spouse takes their interests outright, but
where there are children they will still receive the same share. The
crucial change is that where there are no children or grandchildren,
the surviving spouse will inherit everything: the rest of the family is
left out, even where parents or siblings survive. Though this is some
improvement, it is still unlikely to give people what they want.
The intestacy rules are inflexible in other ways too. They do not allow
any choice of executors or guardians, leave gifts (either of cash or
particular items) to particular people or charities, give any option to
establish trusts or take advantage of opportunities for tax efficiency.
Nor do they allow for anyone who is not a family member to benefit:
other dependents may have to rely on a claim against the estate to
get anything.
A properly drafted Will remains the best way to make sure that
chosen people benefit and how they do so, and that an estate can be
administered in the way you would wish.
Intestacy, or what you Will?
For further information please contact:
Jim Aveline
Partner
+44 (0)117 939 2283
[email protected]
Tim Williams
Solicitor
+44 (0)117 902 2780
[email protected]
7
Do you have the right to rent?
From as early as 1 December 2014, residential landlords who fail
to check if their tenants have the right to live in the UK will face the
prospect of fines of up to £3,000 per person.
The legislation is far reaching as it will cover most residential lettings
(both leases and licenses), although there are a number of exemptions
that may apply such as accommodation provided by an employer to an
employee in connection with their contract of employment.
Landlords who rent out residential property that doesn’t qualify as
an exemption will need to carry out “right to rent” checks for all new
tenancy agreements to determine whether their tenants (and all adults
who the landlord knows will be living at the property) have the right
to live in the UK legally. In most cases landlords will simply need to
check their tenant’s passport or biometric card as evidence of the
tenant’s identity and citizenship but, in a limited number of cases,
landlords can ask the Home Office to conduct a right to rent check
using an online form.
The Government has produced a draft code of practice which includes
helpful guidance for landlords affected by the introduction of the right
to rent checks. The code of practice can be accessed at https://www.
gov.uk/government/uploads/system/uploads/attachment_data/
file/350211/Landlords_scheme_-_draft_Code_of_Practice.pdf
Landlords must remember to check all tenants and occupiers to
avoid claims of race discrimination. Furthermore, if the landlord rents a
property to a person who only has a temporary right to live in the UK
(such as a student), the landlord will need to recheck their immigration
status when that temporary right exists. On a more positive note, if a
landlord lets properties through a letting agency, the obligations will
apply to the agency, not the landlord subject to anything in the contract
with the agency.
The Government has announced that the scheme is being
implemented on a phased geographical basis, and will only
apply to residential tenancy agreements entered on or after the
date of implementation in a particular area. From 1 December
2014, landlords in Birmingham, Walsall, Sandwell, Dudley and
Wolverhampton should carry out “right to rent checks” for new
tenancy agreements to determine whether tenants have the right
to live in the UK legally. It is not yet known when other areas will be
subject to the “right to rent” checks.
For further information, please see our briefing ‘Checks or cheques?
– Residential Landlords take note’ - http://www.burges-salmon.
com/practices/real_estate/publications/checks_or_cheques_
residential_landlords_duty_to_check_tenants_immigration.pdf
For further information please contact:
Huw Cooke
Senior Associate
+44 (0)117 902 7719
[email protected]
Neonicotinoids1 have been widely used as pesticides
since their development in the 1990s. Initially welcomed
by scientists (as they appeared to provide an improved
method of tackling some crop pests while being safer
for humans, large mammals and the environment) recent
studies have suggested that neonicotinoid exposure may
cause harm to bees.
As neonicotinoids are generally applied to seeds before
planting the pesticide remains in every part of the plant.
While this stops insects in the soil attacking the seed,
neonoicotinoids can then enter the nectar and pollen on
which bees feed.
Scientific evidence in inconclusive, however there is
concern that the agricultural use of neonicotinoids
has caused an increase in pesticide toxicity to bee
populations, causing negative effects on honey bee
performance and behaviour potentially leading to bee
colony collapse disorder.
Control of neonicotinoids
EC Regulation (EU) No 485/2013, adopted in May
2013, restricts the use of three neonicotinoid pesticides
(Clothianidin, Imidacloprid and Thiametoxam) for a
period of two years (from 1 December 2013). Once
new information is available, and at the latest within the
two years, the Commission will review the conditions of
approval of the three neonicotinoids to take into account
relevant scientific and technical developments.
The UK government’s position
The UK did not support the EU restrictions, as it argues
that the science behind the restriction is inconclusive,
and that removing these pesticides could have a
detrimental impact on crop yields. However, despite its
opposition, the UK has implemented the measures.
In March 2013, Defra released the findings of its
assessment on neonicotinoids and bees which
includes data from large-scale field studies done
in 2012 (“An assessment of key evidence about
Neonicotinoids and bees”).
The assessment concludes that whilst it cannot exclude
rare effects of neonicotinoids on bees in the field, it
suggested that effects on bees do not occur under
normal circumstances. This assessment also suggests
that laboratory based studies demonstrating sub-lethal
effects on bees from neonicotinoids did not replicate
realistic conditions, but extreme scenarios. Consequently,
it supports the view that the risk to bee populations from
neonicotinoids, as they are currently used, is low.
What if neonicotinoids are banned?
Although not something the UK government is likely to
suggest or support, further EU restrictions are possible.
If neonicotinoids are banned as opposed to restricted,
there is an argument farmers would be compelled to use
products that are much more harmful to the environment
and to a wider range of animals and that production of
crops may be compromised.
The effects of a ban on the use of neonicotinoids
would be most felt by the UK’s sugar-beet industry.
According to the NFU, approximately 92% of sugar
beet seed sown by UK growers was treated with
neonicotinoid insecticides in 2012 which helped
prevent the spread of viruses by aphids. The NFU is
of the opinion that the ban of neonicotinoids would
render the sugar-beet industry in the UK uneconomical
as sugar-beet growers would have no real alternative
pesticide, especially since aphids have developed
resistance to previously used pesticides.
The NFU and other industry groups are actively involved
in promoting integrated pest management strategies
(IPMs) in production systems. It remains uncertain
however, whether improved IPMs would be a suitable
alternative for the use of neonicotinoids.
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law. Although we have taken care
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Neonicotinoids and bees
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1 For example Acetamiprid, Thiacloprid, Clothianidin, Imidacloprid, and Thiamethoxam