61987CJ0199_EN
Parties
Grounds
Decision on costs
Operative part
Parties
In Case 199/87
REFERENCE to the Court under Article 177 of the EEC Treaty by the Hoejesteret, Denmark, for a preliminary ruling in the proceedings pending before that court between
Mads Peder Jensen
and
Landbrugsministeriet ( Ministry of Agriculture )
on the interpretation of certain provisions of Council Regulation No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds ( Official Journal L 131, p . 1 ) and of Commission Regulation No 1391/78 of 23 June 1978 laying down amended rules for the application of the system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds ( Official Journal L 167, p . 45 ), as amended by Commission Regulation No 1799/79 of 13 August 1979 ( Official Journal L 206, p . 12 ),
THE COURT ( Third Chamber )
composed of : J . C . Moitinho de Almeida, President of Chamber, U . Everling and Y . Galmot, Judges,
Advocate General : Sir Gordon Slynn
Registrar : H . A . Ruehl, Principal Administrator
after considering the observations submitted on behalf of
Landsbrugsministeriet, by O . Fentz and F . Olsen,
the Commission of the European Communities, by D . Sorasio and I . Langermann,
having regard to the Report for the Hearing and further to the hearing on 19 April 1988,
after hearing the Opinion of the Advocate General delivered at the sitting on 29 June 1988,
gives the following
Judgment
Grounds
1 By order dated 23 June 1987, which was received at the Court on 26 June 1987, the Hoejesteret ( Supreme Court ), Denmark, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of certain provisions of Council Regulation No 1078/77 of 17 May 1977 introducing a system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds ( Official Journal L 131, p . 1 ) and of Commission Regulation No 1391/78 of 23 June 1978 laying down amended rules for the application of the system of premiums for the non-marketing of milk and milk products and for the conversion of dairy herds ( Official Journal L 167, p . 45 ), as amended by Commission Regulation No 1799/79 of 13 August 1979 ( Official Journal L 206, p . 12 ).
2 Those questions arose in proceedings between Mads Peder Jensen, the owner of an agricultural holding, and the Danish Ministry of Agriculture . On 12 September 1979, Mr Jensen concluded with that Ministry a contract for the non-marketing of milk and milk products for a period of five years . The premium which constituted the consideration for the undertaking given had to be refunded if the person to whom it had been paid did not fulfil his obligations under the premiums scheme or if a future purchaser of the holding did not himself undertake to fulfil the said obligations . Half of the premium at issue, which amounted in total to DKR 289 120, was paid at the beginning of the five-year non-marketing period and the remainder was to be paid in two equal instalments, each consisting of 25% of the premium, before the end of the third and fifth years respectively .
3 On 15 April 1981, the holding was sold at an auction held by court order to the Dansk Landbrugs Realkreditfond ( Danish Agricultural Credit Fund ) which subsequently sold it to a private individual . Since the latter did not agree to hold himself bound by Mr Jensen' s obligations under the non-marketing contract, the Ministry called upon the latter to refund the amount already paid by way of premium, namely DKR 144 560 .
4 Since Mr Jensen did not comply with that request, the Ministry brought an action against him before the Vestre Landsret ( Western Division of the High Court ). By judgment of 31 August 1983, the Vestre Landsret granted the Ministry' s application and Mr Jensen therefore appealed to the Hoejesteret, alleging essentially that the conditions for refund were not fulfilled . He argued principally that a breach of contract concerned only a voluntary transfer of ownership and not a transfer as a result of a forced sale by court order . In the alternative, he contended that the non-marketing contract had in any event been complied with for two years, that is to say, for 40% of its duration, and that 40% of the premium paid, namely DKR 115 648, should therefore be deducted from the amount of DKR 144 560 actually paid .
5 Since it considered that the resolution of the dispute depended on the interpretation of the Community rules concerning non-marketing premiums for milk, the Hoejesteret stayed the proceedings and referred the following questions to the Court for a preliminary ruling :
"( 1 ) Do the term 'taken over' (' overtager' ) in Article 6 ( 1 ) of Council Regulation No 1078/77, the term 'transfer' (' overdrager' ) in Article 8 ( 4 ) of Commission Regulation No 1307/77 and the term 'transfer' (' afstaar' ) in Article 9 ( 4 ) of Commission Regulation No 1391/78 also cover a situation in which an agricultural holding undergoes a change of ownership as the result of an auction by court order?
( 2 ) Is the situation in which an agricultural holding undergoes a change of ownership as the result of an auction by court order covered by the provisions on force majeure contained in Article 12 of Commission Regulation No 1391/78, amended by Article 1 of Commission Regulation No 1799/79?
3 . Must Articles 6 ( 1 ) and 11 ( 1 ) of Council Regulation No 1078/77 and Article 9 ( 1 ) of Commission Regulation No 1391/78, according to which the Member States shall take all necessary steps to recover any sums already paid in respect of the premium, be interpreted as meaning that a demand may be made only for the recovery of a sum which is proportionate to the period during which the undertakings under the premiums system were not complied with?"
6 Reference is made to the Report for the Hearing for a fuller account of the facts of the main proceedings, the course of the procedure and the observations submitted to the Court which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .
Legislative context of the dispute
7 In order to provide a useful reply to the questions referred to the Court reference must first be made to the applicable Community legislation .
8 In order to limit excess production of milk and milk products in the common market, Council Regulation No 1078/77 introduced a system of premiums for farmers who either agreed not to market milk and milk products ( non-marketing premium ) or to convert their dairy herds to meat production ( conversion premium ). The marketing premiums involved in this case are paid on demand to any milk producer who undertakes not to dispose of milk or milk products from his holding, whether for a consideration or free of charge, for a period of five years ( Articles 1 and 2 ).
9 Special rules are laid down for the case in which a holding is sold . Thus, Article 6 ( 1 ) of Regulation No 1078/77 provides that "any person who takes over an agricultural holding may undertake in writing to continue to carry out the undertakings given by his predecessor . In such a case, the sums already paid shall remain the property of the latter and the balance shall be paid to his successor ".
10 The first subparagraph of Article 11 ( 1 ) of the same regulation provides that, except in certain cases which do not arise here, the Member States are to "take the measures necessary for the recovery of premiums already paid, in cases where the undertakings provided for have not been fulfilled ".
11 In order to implement the rules laid down by the Council, the Commission adopted, inter alia, Regulation No 1391/78, which replaces the earlier Regulation, No 1307/77 of 15 June 1977 ( Official Journal 1977, L 150, p . 24 ). Article 9 ( 4 ) of Regulation No 1391/78 provides that "where the producer intends to transfer his holding, or part thereof, to another person, he shall first notify the competent authority and indicate to what extent, if any, the transferee is to take over his obligations under the premium scheme . ... The competent authority shall recover all sums already paid to the transferor ".
12 Article 12 of Regulation No 1391/78, as amended by Regulation No 1799/79, makes the rules for reimbursement more flexible in cases of force majeure . The first paragraph of that article permits the Member States, inter alia, not to recover the premiums already paid "where, by reason of a case of force majeure occurring after the day on which the application for a premium has been approved, the beneficiary or his successor ... is unable, or would be able only at the cost of excessive sacrifices, to fulfil an obligation arising from the system of premiums ". The second paragraph of the same article contains a list of situations likely to justify, inter alia, the non-recovery of premiums paid "without prejudice to specific circumstances to be taken into consideration in individual cases ". That list mentions the death of the beneficiary or his occupational incapacity, the compulsory purchase or accidental destruction of the holding, natural disasters and outbreaks of epizootic disease affecting the beneficiary' s stock .
First question
13 Having regard to the facts set out in the order for reference, the first question must be understood as seeking in substance to ascertain whether the term "taken over" in Article 6 ( 1 ) of Council Regulation No 1078/77 of 17 May 1977 and the term "transfer" in Article 9 ( 4 ) of Commission Regulation No 1391/78 of 23 June 1978 must be interpreted as referring also to a change in the ownership of an agricultural holding as the result of a forced sale by court order .
14 The Ministry and the Commission agree that both the terms of the articles mentioned above and the purpose which the premium scheme is intended to achieve require those provisions to be interpreted as referring to all forms of change in the ownership of an agricultural holding, regardless of the way in which the change occurs .
15 That view must be accepted . It follows from a literal interpretation of the terms "taken over" and "transfer" and from the corresponding terms in the other language versions, which are not accompanied by any qualifying term limiting their scope, that the provisions at issue apply to all cases in which the ownership of the agricultural holding at issue is transferred to a third party, regardless of the way in which the transfer occurs . The provisions in question must therefore be regarded as referring also to a change in the ownership of a holding as a result of a forced sale by court order .
16 The broad interpretation thus adopted is supported by the objective of the rules at issue, which is to ensure continued compliance with the undertakings entered into by the beneficiary of the premium by permitting the person who takes over the holding also to take over those undertakings, thereby discharging the person transferring ownership, with the effect that the latter can then be released from any obligation he might have to refund the premium he received .
17 The reply to the first question should therefore be that the terms "person who takes over" and "successor" in Article 6 ( 1 ) of Council Regulation No 1078/77 of 17 May 1977 and the term "transfer" in Article 9 ( 4 ) of Commission Regulation No 1391/78 of 23 June 1978 must be interpreted as meaning that they also refer to the change in ownership of an agricultural holding as the result of a forced sale by court order .
Second question
18 The second question seeks essentially to ascertain whether a change in the ownership of an agricultural holding as the result of a forced sale by court order constitutes a case of force majeure within the meaning of Article 12 of Commission Regulation No 1391/78 of 23 June 1978, as amended by Article 1 of Commission Regulation No 1799/79 of 13 August 1979 .
19 Both the Ministry and the Commission point out that a forced sale by court order does not appear in the list of situations, set out in Article 12 ( 2 ) of Regulation No 1391, which may be deemed to justify non-recovery of premiums paid by reason of force majeure . It is also not covered by the general concept of force majeure in Community law, to which Article 12 ( 1 ) of the said regulation refers, because that concept does not cover situations corresponding to normal economic risks . It is moreover accepted that the concept of force majeure is an exception to the principle that undertakings entered into must be carried out and for that reason it must be interpreted restrictively .
20 In that regard, it should be pointed out by way of a preliminary observation that Article 12 ( 2 ) of Regulation No 1391/78, as amended, sets out in a non-restrictive manner the situations which may be deemed to justify, inter alia, non-recovery of premiums already paid . The fact that that list does not refer to a forced sale by court order does not therefore prevent a sale of that kind from being taken into account under Article 12 ( 1 ) if the conditions laid down in the latter provision are fulfilled . It must therefore be considered whether the forced sale of a holding by court order could constitute a case of force majeure within the meaning of Article 12 ( 1 ).
21 As the Court has consistently held, the concept of force majeure must be understood in the sense of unusual and unforeseeable circumstances, beyond the trader' s control, the consequences of which could not have been avoided even if all due care had been exercised ( see the judgment of 22 January 1986 in Case 266/84 Denkavit France v FORMA (( 1986 )) ECR 164 ).
22 In accordance with that definition, the forced sale of a holding by court order cannot, as a general rule, constitute force majeure, in particular when the financial difficulties which caused the sale arise out of the normal economic risk which farmers must reasonably expect to run . A different appraisal may however be called for if the forced sale of the holding was brought about by an event so exceptional and so far beyond the control of the person concerned as to constitute for him unavoidable and unforeseeable circumstances within the meaning of the abovementioned case-law .
23 The assessments of fact necessary in order to determine whether those conditions are fulfilled are a matter for the national court in the light of the factors to be taken into account as defined by the Court .
24 For those reasons, the reply to the second question should therefore be that the change in ownership of an agricultural holding as the result of a forced sale by court order does not constitute a case of force majeure within the meaning of Article 12 of Commission Regulation No 1391/78 of 23 June 1978, as amended by Article 1 of Commission Regulation No 1799/79 of 13 August 1979, unless the forced sale of the holding is the consequence of an exceptional event beyond the control of the person farming the holding and thus constitutes for him an unforeseeable and unavoidable circumstance .
Third question
25 The third question seeks essentially to ascertain whether Articles 6 ( 1 ) and 11 ( 1 ) of Council Regulation No 1078/77 of 17 May 1977 and Article 9 ( 1 ) of Commission Regulation No 1391/78 of 23 June 1978 must be interpreted as meaning that where the undertakings under the premium scheme have not been complied with, the total amount of the premiums paid must be refunded or whether only an amount corresponding to the period during which the undertakings at issue were not complied with must be refunded .
26 The Ministry and the Commission agree that, with the exception of certain specific cases, in particular, force majeure, the rules at issue lay down the principle that the entire amount of the premiums paid must be refunded if the conditions under which it was paid have not been complied with during the entire five-year non-marketing period . The Commission adds that that interpretation is not contrary to the principle of proportionality since, where the undertakings involved are not complied with in part, only the complete refunding of the amount paid can ensure compliance with the rules by the producers concerned during the entire non-marketing period .
27 It should be noted that the terms of the provisions under consideration show clearly that where the obligations flowing from the premium scheme are not complied with, the entire amount of the premium paid must be refunded and not merely an amount proportionate to the period during which the undertakings were not complied with .
28 That interpretation cannot be invalidated by the fact that, according to Article 4 ( 1 ) of Regulation No 1078/77, the premium is to be paid in instalments of 50 and 25% during the first, third and fifth year of the non-marketing period respectively . As can be seen from the recitals in the preamble to the said regulation, the purpose of that form of payment is to facilitate checks on compliance with the obligations arising from the premium scheme . It is therefore not possible to infer from that provision any grounds for limiting the scope of the obligations under the scheme .
29 Nor, with regard to the aforesaid interpretation, may it be objected that rules requiring the refunding of all amounts paid where there has been a partial failure to comply with the undertakings entered into is disproportionate to the purpose to be achieved .
30 In that regard, it should be emphasized that the system of non-marketing premiums is intended to reduce the surpluses of milk and milk products on the market by encouraging farmers not to market such products for a given period . Viewed in the light of that objective, the rules show that the essential reason in law for the granting and definitive acquisition of the non-marketing premium is the actual cessation of all marketing of the said products during the entire five-year period provided for, with the consequence that any failure, even partial, to comply with such an undertaking makes the grant and continued enjoyment of the premium unjustified and deprives it of its legal basis . The argument alleging a breach of the principle of proportionality cannot therefore be accepted .
31 For those reasons, the reply to the third question should therefore be that Article 6 ( 1 ) and 11 ( 1 ) of Council Regulation No 1078/77 of 17 May 1977 and Article 9 ( 1 ) of Commission Regulation No 1391/78 of 23 June 1978 must be interpreted as meaning that in the case of partial failure to comply with the undertakings under the system of premium scheme, the amounts of premium paid must be refunded in their entirety .
Decision on costs
Costs
32 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable . Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court .
Operative part
On those grounds,
THE COURT ( Third Chamber ),
in answer to the questions submitted to it by the Hoejesteret, by order of 23 June 1987, hereby rules :
( 1 ) The terms "person who takes over" and "successor" in Article 6 ( 1 ) of Council Regulation No 1078/77 of 17 May 1987 and the term "transfer" in Article 9 ( 4 ) of Commission Regulation No 1391/78 of 23 June 1978 must be interpreted as meaning that they also refer to the change in ownership of an agricultural holding as the result of a forced sale by court order;
( 2 ) The change in ownership of an agricultural holding as the result of a forced sale by court order does not constitute a case of force majeure within the meaning of Article 12 of Commission Regulation No 1391/78 of 23 June 1978, as amended by Article 1 of Commission Regulation No 1799/79 of 13 August 1979, unless the forced sale of the holding is the consequence of an exceptional event beyond the control of the person farming the holding and thus constitutes for him an unforseeable and unavoidable circumstance;
( 3 ) Articles 6 ( 1 ) and 11 ( 1 ) of Council Regulation No 1078/77 of 17 May 1977 and Article 9 ( 1 ) of Commission Regulation No 1391/78 of 23 June 1978 must be interpreted as meaning that in the case of partial failure to comply with the undertakings under the premium scheme, the amounts of premium paid must be refunded in their entirety .