CELEX: 62005CJ0275
Milk and milk products
Article 5c of Regulation (EEC) No 804/68
Additional levy in the milk and milk products sector
Regulations (EEC) Nos 857/84, 590/85 and 1546/88
Transfer of the reference quantity following the return of part of a holding
Landlord who is not himself a producer of milk or milk products
Rural lease voluntarily brought to an end

The reference for a preliminary ruling concerns the interpretation of Article 7(1) of Council Regulation (EEC) No 857/84 of
31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68
in the milk and milk products sector (OJ 1984 L 90, p. 13), as amended by Council Regulation (EEC) No 590/85 of 26 February
1985 (OJ 1985 L 68, p. 1) (‘Regulation No 857/84’), and of points 2, 3 and 4 of the first subparagraph of Article 7 of Commission
Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred
to in Article 5c of Regulation (EEC) No 804/68 (OJ 1988 L 139, p. 12).
This reference was made in the course of proceedings between Mr Kibler jun. (‘the applicant in the main proceedings’), the
tenant of Mr Leiprecht (‘the landlord’) under a rural lease, and the Land Baden-Württemberg (‘the defendant in the main proceedings’)
regarding the transfer, in consequence of the voluntary termination of that lease, of the milk reference quantity to the landlord,
who is not himself a producer of milk or milk products. The interveners in support of the Land Baden-Württemberg are Mr Ott,
the sub-tenant of the applicant in the main proceedings, and the landlord.

Legal context

Community legislation
Article 7 of Regulation No 857/84 which was in force at the material time in the main proceedings states:
‘1. Where a holding is sold, leased or transferred by inheritance, all or part of the corresponding reference quantity shall
be transferred to the purchaser, tenant or heir according to procedures to be determined.
Where land is transferred to the public authorities and/or for public use, without prejudice to the second subparagraph of
paragraph 3, Member States may provide that all or part of the reference quantity corresponding to the holding or to the part
of the holding transferred shall be put at the disposal of the departing producer if he intends to continue milk production.
…’
Article 12 of Regulation No 857/84 states:
‘For the purposes of this regulation the following meanings shall apply:
…
(d) holding: all the production units operated by the producer and located within the geographical territory of the Community.’
According to the first subparagraph of Article 7 of Regulation No 1546/88:
‘For the purposes of applying Article 7 of Regulation (EEC) No 857/84 and without prejudice to paragraph 3 thereof, the following
rules shall apply to the transfer of reference quantities granted to producers and purchasers in application of formulas A
and B and of reference quantities granted to producers selling for direct consumption:
1.       Where an entire holding is sold, leased or transferred by inheritance, the corresponding reference quantity shall be transferred
in full to the producer who takes over the holding;
2.       Where one or several parts of a holding is sold, leased or transferred by inheritance, the corresponding reference quantity
shall be distributed among the producers operating the holding in proportion to the areas used for milk production or according
to other objective criteria laid down by Member States. Member States may disregard transferred parts the area of which used
for milk production is less than a minimum size which they shall determine. The part of the reference quantity corresponding
to that area may be added entirely to the reserve;
3.       The provisions of points 1 and 2 and of the fourth subparagraph shall be applicable under the various national rules, in other
cases of transfer which have comparable legal effects as far as producers are concerned;
4.       In the event of the application of the second subparagraph of Article 7(1) of Regulation (EEC) No 857/84, concerning the transfer
of land to the public authorities and/or for public use, and Article 7(4) of the said Regulation, concerning rural leases
which are due to expire and which cannot be extended on similar terms, all or part of the reference quantity corresponding
to the holding or to the part of the holding which is the subject of the transfer or of the said lease shall be put at the
disposal of the producer concerned if he intends to continue milk production, provided that the sum of the reference quantity
thus made available to him and the quantity corresponding to the holding which he takes over or on which he continues milk
production does not exceed the reference quantity which was available to him before the land was transferred or before the
lease expired.
Member States may apply the provisions of points 1, 2 and 4 in respect of transfers during and after the reference period.
In the event of the application of the first subparagraph of Article 7(3) of Regulation (EEC) No 857/84 and within the limit
laid down therein, the Member States may vary that part of the reference quantity added to the reserve, in accordance with
the criteria on the size of the holdings concerned.
The reference quantity corresponding to a holding or to one or more parts of a holding which the purchaser, lessee or heir
does not intend using for milk production may be added to the reserve.’
As set out in Article 7(1) of Council Regulation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the
milk and milk products sector (OJ 1992 L 405, p. 1):
‘Reference quantities available on a holding shall be transferred with the holding in the case of sale, lease or transfer
by inheritance to the producers taking it over in accordance with detailed rules to be determined by the Member States taking
account of the areas used for dairy production or other objective criteria and, where applicable, of any agreement between
the parties. Any part of the reference quantity which is not transferred with the holding shall be added to the national reserve.
…’

National legislation
Paragraph 7 of the German regulation on guaranteed quantities for milk (Milchgarantiemengenverordnung) headed ‘Sale, leasing,
transfer by inheritance’ provides:
‘The provisions contained in the measures specified in Paragraph 1 on the transfer of reference quantities shall also apply
to the leasing and sale of an entire holding or parts of a holding between relatives or spouses, to the transfer of farms
by way of anticipatory succession and to the transfer of the use of a holding or parts of a holding by way of statutory inheritance
or under a disposition on death, where the transfer has taken place in the period from 1 January 1983 to 1 April 1984.
(1a) If an entire holding is transferred, surrendered or returned under a contract of sale or lease, the reference quantity
being transferred shall, insofar as it has been allocated under the last subparagraph of Article 3a(1) and the second possibility
in the first sentence of Article 3a(3) of Regulation (EEC) No 857/84, be released to the Federal Republic of Germany if the
transfer takes place prior to the expiry of the deadline laid down for that purpose in the measures specified in Paragraph
1.
(2) If parts of a holding that are used for milk production are transferred or surrendered under a contract of sale or lease
after 1 April 1984 then, notwithstanding subparagraph 3, a proportion of the reference quantity that corresponds to that part
of the holding, but not exceeding 12 000 kg per hectare, shall also pass to the purchaser or tenant.
…
(3a) If parts of a holding that are used for milk production are returned to the landlord after 30 September 1984 under a
lease that was concluded prior to 2 April 1984, no reference quantity shall be transferred for an area surrendered of up to
5 hectares … The transfer of reference quantities under the first sentence shall not encompass reference quantities which,
under the fifth sentence of Paragraph 2a(4) in conjunction with Paragraph 2a(3) of the Milchaufgabevergütungsgesetz (Law on
payments for discontinuation of milk production), have been released and allocated to the lessee for consideration.
(3b) Where parts of a holding are returned to the landlord after 30 June 1986 under a lease that was concluded after 1 April
1984, the reference quantity the transfer of which has been certified on the surrender of the demised land under point 3 of
the first sentence of Paragraph 9(2) shall transfer unless it has been abandoned prior to the return of the demised land or
released in consideration of payment for the definitive discontinuation of milk production; however, the transfer shall not
exceed the reference quantity still accruing to the tenant prior to the return of the holding.
(4) Subparagraphs (1) to (3) shall also apply to legal relationships involving comparable legal effects.’

The main proceedings and the questions referred for a preliminary ruling
In 1980 the landlord leased an area of 4.01 hectares of grassland for milk-production to the father of the applicant in the
main proceedings. The applicant, who has in the meantime succeeded his father, terminated the rural lease on 30 November 1992.
Subsequently, the landlord let that grassland to a third party who was not a milk producer.
In 2002 the landlord applied to the Amt für Landwirtschaft, Landschafts- und Bodenkultur Ravensburg (Agency for agriculture,
countryside and soil cultivation, Ravensburg, ‘the ALLB’) for the grant of a certificate as to the proportion of the milk
reference quantity that had reverted to him as a result of the return of the property in November 1992. In his application
he stated that he himself was not a milk producer and added that he did not intend to take up such an activity.
In 2003, the ALLB granted to the landlord a certificate in which, firstly, it was stated that with effect from 1 April 2003
a reference quantity of 4 391.28 kg per hectare for the return of the 4.0166 ha of grassland used in milk production had been
assessed and, secondly, it was attested that he had been transferred a delivery reference quantity of 11 817 kg with a reference
fat content of 4.08%.
The applicant in the main proceedings and the landlord separately lodged objections to that certificate while Mr Ott sent
the ALLB a letter in which he informed it that the reference fat content had been incorrectly given.
By decision of 27 April 2004, the Regierungspräsidium Tübingen (Tübingen Regional Council) dismissed the objection by which
the applicant in the main proceedings had disputed the certificate granted to the landlord. In support of its decision, it
stated first that the assessment of the case should be based on the provisions of Community law in force on 30 November 1992,
namely Regulation No 857/84. Furthermore, it stated that Case C-401/99
Thomsen
[2002] ECR I-5775 did not concern the interpretation of Regulation No 857/84 and therefore could not apply in the present
case.
The applicant in the main proceedings brought an action against that decision before the Verwaltungsgericht Sigmaringen (Administrative
Court, Sigmaringen). In support of his action, he submitted that at the time when the grassland in question was returned neither
the landlord nor the successor to the applicant in the main proceedings were milk producers. According to him, Article 7(1)
of Regulation No 857/84 is to be interpreted in a manner consistent with
Thomsen
because it follows from the general meaning and purpose of the provisions concerning the additional levy on milk that a reference
quantity can be allocated to a farmer only if he has the status of a producer. Although
Thomsen
relates to the interpretation of Regulation No 3950/92, the concept of ‘producer’ used in that regulation is no different
from that in Regulation No 857/84. Lastly, he claimed that the decisions of the ALLB and of the Regierungspräsidium Tübingen
should be annulled.
The defendant in the main proceedings has claimed that the action should be dismissed. It stated that under Regulation No
857/84, the status as a milk producer of the assignee of the reference quantities is not relevant in the event of the expiry
of a lease. A link which requires that the assignee of the reference quantities is a milk producer appeared for the first
time only in Article 7(2) of Regulation No 3950/92. Furthermore, according to the relevant case-law of the Court and of the
Bundesverwaltungsgericht (German Federal Administrative Court), farmers have to have the status of milk producers only when
a reference quantity is first assigned.
In those circumstances, the Verwaltungsgericht Sigmaringen decided to stay the proceedings and to refer the following questions
to the Court of Justice for a preliminary ruling:
‘1.      Is national legislation of a Member State, which provides that on the return of a leased part of a holding the corresponding
reference quantity for the areas of the tenant’s holding used for milk production is to revert to the landlord along with
that part of the holding even if the landlord, at the time it is so returned, is no longer a milk producer, no longer intends
to take up milk production and also does not intend to grant a lease to another milk producer, in conformity with Article
7(1) of Regulation … No 857/84 … and with points 2, 3 and 4 of the first subparagraph of Article 7 of Regulation … No 1546/88?
2.      If the answer to the first question should be in the negative: Is national legislation of a Member State, which provides that
on the ending of a lease the reference quantity is to be retained in its entirety by the tenant of that part of the holding,
in conformity with Article 7(1) of Regulation … No 857/84 … and with point 4 of the first subparagraph of Article 7 of Regulation
… No 1546/88 even where the lease has been voluntarily brought to an end?’

The first question
By its question, the national court, in essence, seeks to ascertain whether, under Article 7(1) of Regulation No 857/84 and
points 2, 3 and 4 of the first subparagraph of Article 7 of Regulation No 1546/88, on the return of a leased part of a holding
the corresponding reference quantity for that part can revert to the landlord even if he is no longer a milk producer, does
not intend to carry out such an activity and does not intend to grant a lease for the undertaking concerned to a milk producer.
It must be borne in mind that on 30 November 1992, that is to say, the day on which the lease in the main proceedings was
brought to an end, the landlord was no longer a milk producer, did not intend to carry out such an activity and did not intend
to grant a lease for the undertaking concerned to a milk producer.
It is therefore necessary to examine whether the reference quantity attached to the holding in question may, in those circumstances,
nevertheless pass to the landlord on the basis of the Community legislation which applied at the material time in the main
proceedings.
It must be borne in mind that Regulation No 1546/88 implements Regulation No 857/84 and must be interpreted in a manner consistent
with Regulation No 857/84 even though for the purposes of Article 7(1) of Regulation No 857/84 that implementation is to be
‘according to procedures to be determined’. In that regard, it must be observed that the first subparagraph of Article 7(1)
of Regulation No 857/84 does not mention the term ‘producer’ whereas that term does appear in points 2, 3 and 4 of the first
subparagraph of Article 7 of Regulation No 1546/88.
Furthermore, it is important to point out, firstly, that it was apparent from the general scheme of the provisions concerning
the additional levy on milk of which Regulation No 857/84 was an integral part that a reference quantity could be allocated
to a farmer only if he had the status of a producer (Case C-341/89
Ballmann
[1991] ECR I-25, paragraph 9) and, secondly, that the Court has confirmed that principle in its case-law subsequent to the
amendments made to Regulation No 857/84 by repeatedly holding that, where a reference quantity has already been allocated,
a transferee who takes over the land must have the status of a producer in order for him to qualify for transfer of the reference
quantity attaching thereto (see, inter alia, Case C-15/95
EARL de Kerlast
[1997] ECR I-1961, paragraph 24, and
Thomsen
, paragraph 33). Therefore, an express reference to the term ‘producer’ in the first subparagraph of Article 7(1) of Regulation
No 857/84 cannot be required.
Doubt is in no way cast on that interpretation by the arguments of the German Government that, firstly, the reference quantity
is always transferred with the holding, even where the landlord does not have the status of a producer, unless the Member
States have exercised their  power to allocate in accordance with Article 7(4) of Regulation No 857/84 all or part of the
reference quantity to the departing lessee and, secondly, that in the case which gave rise to the judgment in Case 5/88
Wachauf
[1989] ECR 2609 the landlord  who took over the holding was not a producer. It is apparent from the term ‘holding’ referred
to in Article 12(1)(d) of Regulation No 857/84, which the Court has moreover interpreted in paragraph 11 of
Wachauf
, that for the purposes of that regulation, the holding is all the production units operated by the producer. Since the same
term is referred to in Article 7(1) of Regulation No 857/84 and points 2, 3 and 4 of the first subparagraph of Article 7 of
Regulation No 1546/88, those provisions must be interpreted uniformly. Furthermore, in so far as those provisions pursue the
same objective and given that the latter provision cited is the measure implementing the former, clearly, in the interests
of legal certainty, those provisions must be given a uniform interpretation.
Therefore, in so far as Regulations Nos 857/84 and 1546/88 provide that the transfer of reference quantities must always be
between producers and concern a dairy holding, an express derogation from Article 7(1) of Regulation No 857/84 aiming to transfer
the reference quantity to the national reserve or to a person other than the landlord, as suggested by the German Government,
cannot be accepted.
In the light of the foregoing considerations, the answer to the question must be that Article 7(1) of Regulation No 857/84
and points 2, 3 and 4 of the first subparagraph of Article 7 of Regulation No 1546/88 are to be interpreted as meaning that
on the return of a leased part of a holding the corresponding reference quantity for that part cannot pass to the landlord
if he is not a milk producer, does not intend to carry out such an activity and does not intend to grant a lease for the undertaking
concerned to a milk producer.

The second question
By the second question which it has referred for a preliminary ruling, the national court seeks to ascertain whether Article
7(1) of Regulation No 857/84 and point 4 of the first subparagraph of Article 7 of Regulation No 1546/88 preclude the reference
quantity from being retained by the tenant on the ending of a rural lease, where the lease has been voluntarily brought to
an end.
As the national court has stated, the applicant in the main proceedings cannot enjoy the protection provided for in point
4 of the first subparagraph of Article 7 of Regulation No 1546/88 as the lease has been voluntarily brought to an end. As
Advocate General Stix-Hackl observes at point 32 of her Opinion, no other provision in the regulations at issue permitting
the reference quantity to be retained by the tenant on the ending of the lease applies in the present case. As the reference
quantity in question cannot be allocated, it must, as the German Government and the Commission have observed, be added to
the national reserve.
That outcome is not, as the national court has itself observed, in conflict with the fundamental right to property since the
right to property safeguarded by the Community legal order does not include the right to dispose, for profit, of an advantage,
such as the reference quantities allocated in the context of the common organisation of a market, which does not derive from
the assets or occupational activity of the person concerned (Case C-2/92
Bostock
[1994] ECR I-955, paragraph 19).
In view of those considerations, the answer to the second question must be that Article 7(1) of Regulation No 857/84 and point
4 of the first subparagraph of Article 7 of Regulation No 1546/88 preclude the reference quantity from being retained by the
tenant on the ending of a rural lease, where the lease has been voluntarily brought to an end.

Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.
On those grounds, the Court (First Chamber) hereby rules:
1.
Article 7(1) of Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy
referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector, as amended by Council Regulation
(EEC) No 590/85 of 26 February 1985, and points 2, 3 and 4 of the first subparagraph of Article 7 of Commission Regulation
(EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article
5c of Regulation (EEC) No 804/68 are to be interpreted as meaning that on the return of a leased part of a holding the corresponding
reference quantity for that part cannot pass to the landlord if he is not a milk producer, does not intend to carry out such
an activity and does not intend to grant a lease for the undertaking concerned to a milk producer.
2.
Article 7(1) of Regulation No 857/84, as amended by Regulation No 590/85, and point 4 of the first subparagraph of Article
7 of Regulation No 1546/88 preclude the reference quantity from being retained by the tenant on the ending of a rural lease,
where the lease has been voluntarily brought to an end.
[Signatures]
*
Language of the case: German.