Case No.CO/1956/2005

Neutral Citation Number: [2006] EWHC 1833 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice,
 Strand, London WC2A 2LL

Friday 21st July 2006

Before:

MR. JUSTICE CRANE

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BETWEEN:

THE QUEEN
(on the application of MARK A.B. HORVATH)
Claimant

and

THE SECRETARY OF STATE FOR
THE ENVIRONMENT, FOOD AND RURAL AFFAIRS
Defendant
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(Transcript of the Handed Down Judgment of
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Mr.Maurice Sheridan (instructed by Barker Gotelee) appeared for the Claimant.
Mr.Tim Eicke (instructed by DEFRA Legal Services) appeared for the Defendant.
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Judgment
Introduction

1.	The Claimant is a farmer, the managing partner of a family farming partnership in Suffolk.  He is eligible for payment entitlements in accordance with the Single Payment Scheme (“SPS”) under the Common Agricultural Policy (“CAP”) of the European Union.  There are public rights of way over his land.
2.	This is an application for judicial review of paragraphs 26 to 28 of the Schedule to the Common Agricultural Policy Single Payment and Support Schemes (Cross Compliance) (England) Regulations 2004 (“the England Regulations”).  Those paragraphs have now been replaced by identical paragraphs 27 to 30 of the equivalent 2005 Regulations, but nothing turns on the replacement.  I shall continue to refer to the paragraphs of the 2004 Regulations.
3.	The central issue is whether the Defendant, the Secretary of State for the Environment, Food and Rural Affairs, was entitled to include provisions relating to public rights of way among the factors that may lead to a reduction in a farmer’s SPS payment.  The issue could affect a large number of farmers and, although I have not been provided with any figures, significant sums of money.  
4.	A second issue is whether, if the Defendant was in principle so entitled, the inclusion of such provisions in regulations for England when no such provisions were included in regulations made in Wales, Scotland and Northern Ireland, renders the regulations unlawful.  It is common ground that matters relating to agriculture and to highways are within the competence of the devolved authorities in those other parts of the United Kingdom.
5.	The Defendant did not contest the granting of permission.  Davis J. ordered an Acknowledgement of Service and McCombe J. subsequently granted permission, except on the compensation claim.
6.	There are witness statements from the Claimant and Mr.Peter W.Danks of Reading Agricultural Consultants, on behalf of the Claimant, and from Mr.David Rigal, a Senior Sustainable Agricultural Advisor to the Department for the Environment, Food and Rural Affairs (“Defra”).
7.	Both Counsel submit that the matter is clear but each invites me, if there is doubt, to refer any relevant issue to the European Court of Justice.   I have borne in mind the guidance in R. v. International Stock Exchange, ex p. Else (1982) Ltd. [1993] QB 534, per Sir Thomas Bingham MR.

The Community legislation

8.	As a result of the Mid Term Review of the CAP, the EU adopted a policy of supporting farmers’ incomes by means of the SPS.  The Scheme is intended to provide farmers with a minimum guaranteed income, “decoupled” from production.  The entitlement is linked mainly to the size of their holding, but failure to fulfil “cross compliance” conditions may reduce or even eliminate the right to payment.
9.	The Scheme was established by Council Regulation (EC) No. 1782/2003, which entered into force on 28 October 2003.  Article 156 states that the Regulation “shall be binding in its entirety and directly applicable in all Member States”.
10.	Relevant parts of the preamble read as follows (the underlining largely follows passages particularly relied on by one or other Counsel):

“Having regard to the Treaty establishing the European Community, and in particular Articles 36, 37 and 299(2) thereof,
…
Whereas:
(1) Common conditions should be established for direct payments under the various income support schemes in the framework of the common agricultural policy.
(2) The full payment of direct aid should be linked to compliance with rules relating to agricultural land, agricultural production and activity.  Those rules should serve to incorporate in the common market organisations basic standards for the environment, food safety, animal health and welfare and good agricultural and environmental condition.  If those basic standards are not met, Member States should withdraw direct aid in whole or in part on the basis of criteria which are proportionate, objective and graduated.  Such withdrawal should be without prejudice to sanctions laid down now or in the future under other provisions of Community or national law.
(3) In order to avoid the abandonment of agricultural land and ensure that it is maintained in good agricultural and environmental condition, standards should be established which may or may not have a basis in provisions of the Member states.  It is therefore appropriate to establish a Community framework within which Member States may adopt standards taking account of the specific characteristics of the areas concerned, including soil and climatic conditions and existing farming systems (land use, crop rotation, farming practices) and farm structures.
…
(24) … it is necessary to complete the shift from production support to producer support by introducing a system of decoupled income support for each farm.  While decoupling will leave the actual amounts paid to farmers unchanged, it will significantly increase the effectiveness of the income aid.  It is, therefore, appropriate to make the single farm payment conditional upon cross-compliance with environmental (sic), food safety, animal health and welfare, as well as the maintenance of the farm in good agricultural and environmental condition”.

11.	Article 1 reads:

“This Regulation establishes:
-	common rules on direct payments under income support schemes in the framework of the common agricultural policy …;
-	an income support for farmers (hereinafter referred to as the ‘single payment scheme’);
… “.

12.	Article 2 provides definitions, including:

“(c) ‘agricultural activity’ means the production, rearing or growing of agricultural products including harvesting, milking, breeding animals and keeping animals for farming purposes, or maintaining the land in good agricultural and environmental condition as established under Article 5”.

13.	Chapter 1 is entitled “CROSS COMPLIANCE”.  Articles 3 and 4, so far as relevant, read as follows:

“Article 3

Main requirements

1.  A farmer receiving direct payments shall respect the statutory management requirements referred to in Annex III, according to the timetable fixed in that Annex, and the good agricultural and environmental condition established under Article 5.
…

Article 4

Statutory management requirements

1.  The statutory management requirements referred to in Annex III shall be established:
- public, animal and plant health,
- environment,
- animal welfare.”
…

14.	Annex III lists a number of articles from Council Directives and EC Regulations governing the three areas referred to in Article 4.  It should be noted that while some relate to farming methods, some do not: for example, under the heading “Environment” a Council Directive on the conservation of wild birds.
15.	Article 5 is central to the present case and reads:

“Good agricultural and environmental condition

	1. Member States shall ensure that all agricultural land, especially land which is no longer used for production purposes, is maintained in good agricultural and environmental condition.  Member States shall define, at national or regional level, minimum requirements for good agricultural and environmental condition on the basis of the framework set up in Annex IV, taking into account the specific characteristics of the areas concerned, including soil and climatic condition, existing farming systems, land use, crop rotation, farming practices, and farm structures.  This is without prejudice to the standards governing good agricultural practices as applied in the context of Council Regulation (EC) No 1257/1999 and to agri-environment measures applied above the reference level of good agricultural practices. 
…”.

16.	It is appropriate to set out Annex IV in full:

“Good agricultural and environmental condition referred to in Article 5

Issue	Standards	
Soil erosion:

Protect soil through appropriate measures	 - Minimum soil cover
 - Minimum land management reflecting site-specific conditions
 - Retain terraces	
Soil organic matter:

Maintain soil organic matter levels through appropriate practices	 - Standards for crop rotations where applicable
 - Arable stubble management	
Soil structure:

Maintain soil structure through appropriate measures	 - Appropriate machinery use	
Minimum level of maintenance:

Ensure a minimum level of maintenance and avoid the deterioration of habitats	 - Minimum livestock stocking rates or/and appropriate regimes
 - Protection of permanent pasture
 - Retention of landscape features
 - Avoiding the encroachment of unwanted vegetation on agricultural land”	

17.	Article 6.1 provides that where the statutory management requirements or good agricultural and environmental condition are not complied with, the total amount of direct payments is to be reduced or cancelled.  By 6.2, the reductions or exclusions referred to shall only apply if the non-compliance relates to

“(a) an agricultural activity, or
(b) an agricultural land of the holding, including the parcels on set aside”.

	Article 7 provides detailed rules for reduction or exclusion.  If non-compliance is intentional, there may be total exclusion from one or several aid schemes for more than one calendar year.
18.	Chapter 3 provides for payment entitlements.  Article 43 provides that normally a farmer shall receive a payment entitlement per hectare.  43.2 provides that the number of hectares shall further include, inter alia, “(b) all forage area in the reference period”.  By 43.3, ‘forage area’ shall not include, inter alia, “buildings, woods, ponds, paths”.  
19.	Article 44  (“Use of payment entitlements”) reads, in part:

“1. Any payment entitlement accompanied by an eligible hectare shall give right to the payment of the amount fixed for the payment entitlement.
2. ‘Eligible hectare’ shall mean any agricultural area of the holding taken up by arable land and permanent pasture except areas under permanent crops, forests or used for non-agricultural activities”.  

20.	Commission Regulation (EC) No 796/2004, laying down detailed rules for the implementation of cross-compliance and other matters, gives no real assistance on the issues before the court, apart from paragraph (56) of the Preamble, which reads:

“The system of reductions and exclusions envisaged in Regulation (EC) No 1782/2003 with regard to cross compliance obligations however targets at a different aim [sc. from combating irregularities and fraud], namely to set an incentive for farmers to respect the, already existing, legislation in the different fields of cross compliance”.

The Proposal for a Council Regulation

21.	Both parties point to differences between the draft contained in the Proposal for a Council Regulation and the actual Regulation.  I refer only to the more significant differences.
22.	In paragraph (2) of the draft Regulation the wording “and good agricultural conditions” became “good agricultural and environmental condition”.  Much turns on the significance of the added words “and environmental”.  The first sentence of paragraph (3) read, in the draft:

“In order to maintain land in good agricultural condition, standards should be established for a number of areas in which standards do not currently exist.”

23.	The last sentence of paragraph (22) of the draft (now paragraph (24)) reads:

“It is, therefore appropriate to make the single farm payment conditional upon cross-compliance with environmental, animal-welfare and food-quality criteria”.

24.	Originally Article 3 referred to “good agricultural conditions” rather than to “good agricultural and environmental condition”.  The relevant part of Article 5 simply read:

“Member States shall define good agricultural conditions taking into account the framework set up in Annex IV”.  

25.	In the draft Annex IV was a more extensive table.  The issues (e.g. Soil erosion) were identical, with the addition of “Soil salinisation”, although the wording of requirements such as “Protect soil through appropriate measures” differed in some cases.  The phrase “avoid the deterioration of habitats” already appeared.  The standards were more numerous.   “Retention of field boundaries and landscape features” became in the Regulation simply “Protection of landscape features”.   However, nothing was added to Annex IV in the actual Regulation that can be said to result from the additional words “and environmental” in Article 5, although Article 5.1 itself became much fuller.

The environment

26.	Both Counsel have referred to Articles 174 and 175 of the Treaty, which deal with Community policy on the environment.  
27.	Mr.Sheridan, Counsel for the Claimant, points out that the Council Regulation does not refer to those Articles in the Preamble.  In reply, Mr.Eicke, Counsel for the Defendant, refers me to Établissements Armand Mondiet SA v. Armement Islais SARL, Case C-405/92  [1993] ECR I-6133, where the European Court of Justice held:

“26.  The Court has consistently held … that Articles 130r and 130s [now Articles 174 and 175] of the Treaty are intended to confer powers on the Community to undertake specific action on environmental matters.  However, those articles leave intact the powers held by the Community under other provisions of the Treaty, even if the measures to be taken under the latter provisions pursue at the same time one of the objectives of environmental protection.
…
28. It follows that, even if considerations of environmental protection were a contributory factor in the decision to adopt the regulation at issue, that does not of itself mean that it must be covered by Article 130s of the Treaty”.

28.	I was also referred to European Parliament v. Council of the European Union (1999) C-164 and 165/97, in which the European Court was dealing with regulations relating to forests and said:

“13. It is clear from the provisions of the amended regulations that the aims of the Community schemes for the protection of forests are partly agricultural since they are intended in particular to contribute to safeguarding the productive potential of agriculture, and partly of a specifically environmental nature, since their primary objective is to maintain and monitor forest ecosystems.
14. In such circumstances it is necessary, in order to determine the appropriate legal basis, to consider whether the measures in question relate principally to a particular field of action, having only incidental effects on other policies, or whether both aspects are equally essential.  If the first hypothesis is correct, recourse to a single legal basis is sufficient …; if the second is correct, it is insufficient … and the institution is required to adopt the measure on the basis of both the provisions from which its competence derives … .  However, no such dual basis is possible where the procedures laid down for each legal basis are incompatible with each other … .
15. With more particular reference to the common agricultural policy and the Community environmental policy, there is nothing in the case-law to indicate that, in principle, one should take preference over the other.  It makes clear that a Community measure cannot be part of Community action on environmental matters merely because it takes account of requirements of protection referred to in Article 130r(2) of the EC Treaty … .  Articles 130r and 130s leave intact the powers held by the Community under other provisions of the Treaty and provide a legal basis only for specific action on environmental matters … .  In contrast, Article 130s of the Treaty must be the basis for provisions which fall specifically within the environmental policy …, even if they have an impact on the functioning of the internal market … or if their objective is the improvement of agricultural production … .

29.	I do not therefore consider it significant that the Council Regulation did not refer to Articles 174 and 175.  There can be no doubt that the preamble (in paragraph (2)) and Article 4 have regard to the environment.  Indeed the phrase “good agricultural and environmental condition” itself self-evidently involves some kind of environmental consideration.  Moreover, at least one of the matters listed in Annex IV, “avoid the deterioration of habitats” appears to me to be unequivocally an environmental issue.  

Regulatory Impact Assessment

30.	Mr.Sheridan relies on the contents of the Final Regulatory Impact Assessment of options for the implementation of cross compliance – Good Agricultural and Environmental Condition, dated July 2004, which was prepared prior to making of the England Regulations.  Paragraphs 234 to 247 deal with “Public Rights of Way (PROW)” .  It is noted that the Council Regulation requires “good agricultural and environmental condition (GAEC)” to be defined within the framework of Annex IV.  
31.	The most significant passages are these:

“235.  A rationale for including PROW is that they are generally represented on the land by a visible path (i.e. a landscape feature) which is related to habitat.
The retention of a path covered by a PROW may also avoid the deterioration of habitats – in some cases PROW contribute to the diversity of the habitat.
…
237.  The purpose of this proposal [i.e., the requirements that appear in the crucial paragraphs] will be to reinforce existing requirements in relation to public rights of way under the Rights of Way Act 1980 (HA) [a confused reference to the Highways Act 1980, as amended by the Rights of Way Act 1990].  However we do not consider that it is possible to require, as a condition of the Single Payment, compliance with the statutory right of access under the Countryside and Rights of Way Act 2000. …
238.  One point to note is that responsibility for maintaining a PROW … does not always fall on the landowner.   In many cases it may fall on the highway authority …
239.  Regardless of whether the way is publicly maintainable, landowners are often responsible for maintaining any stiles or gates crossing the way (s.146HA). …
240.  The Commission have also expressed doubts that, unless further habitat or landscape benefits can be identified, Rights of Way might be considered outside the scope of cross compliance measures.  Our Lawyers agree that there is a risk of losing a challenge brought against the inclusion of measures protecting paths which are PRoW in GAEC.  A challenge might be brought on the basis that paths which are PRoW are not ‘landscape features’ within Annex IV of the Council Regulation, and/or that the protection of paths which are PRoW does not contribute to keeping the land in good GAEC in the manner envisaged by the Council Regulation.  Our arguments on the second point would be strengthened if we can show some habitat benefit.  We can justify legally a decision to include in cross compliance the proposed measures protecting the paths as public rights of way, although we stand a high risk of being challenged, and perhaps a 50% chance of winning any case.  The consequences of losing a challenge are that the measure would have to be removed; there would be little financial loss. 
Economic Impacts – Farm Business
242.  Farmers are already expected to comply with these rules under legislation.  There is no extra cost to the farmer from this proposal.
Environmental Impacts
243. Public footpaths are a valuable feature of the countryside, important both to those who live in and visit the countryside.  This measure may result in an improvement in the condition of public rights of way bringing wider environmental benefits where poorly maintained paths result in widespread trampling of adjoining vegetation.
Broader  Rural Impacts
244. This may help to improve the percentage of footpaths in favourable condition and offer an enhancement to public access to the English countryside, particularly in locations favoured by day visitors or longer stay visitors such as walkers.
Regional Impacts
245. There may be some regional benefits where walkers, trekkers and mountaineers are an important contributor to the rural economy such as in upland areas and countryside around major settlements”.

32.	The reference to the Commission’s doubts is naturally relied on by Mr.Sheridan.  The statement of Mr.Rigal, based on what he has learned from others, is that these doubts consisted of brief initial comments by a Commission official, who has not been named, at a meeting in June 2004 with the Commission to discuss the implementation of cross-compliance by the United Kingdom.  Commission officials are said to have acknowledged after discussion that whether public rights of way could be considered “landscape features” was open to interpretation.  They are said to have indicated that they would expect to see a robust environmental argument in favour of the inclusion of public rights of way for the Commission to support the United Kingdom in any litigation on the issue.
33.	The doubts expressed point to a need to consider the England Regulations with care, but I accept that there was no considered opinion on behalf of the Commission.

The English legislation

34.	The England Regulations were made by Defra to give effect, for England only, to the Council Regulation.  Regulation 4(1) of the England Regulations stated:

“(1) The standards of good agricultural and environmental condition in Article 5(1) of the Council Regulation are set out in the Schedule”.

35.	The crucial paragraphs of the Schedule are these:

“Public rights of way
26. A farmer must not – 
	(a) without lawful authority or excuse, disturb the surface of a visible footpath, a visible bridleway, or any other visible highway which consists of or comprises a carriageway other than a made-up carriageway, so as to render it inconvenient for the exercise of a public right of way; or
	(b) without lawful authority or excuse, in any way wilfully obstruct the free passage along a visible highway.
27.  A farmer must maintain any stile, gate or similar structure, other than a structure to which section 146(5) of the Highways Act 1980 applies, across a visible footpath or bridleway in a safe condition, and to the standard of repair required to prevent unreasonable interference with the rights of persons using the footpath or bridleway.
28. – (1) Where a farmer has disturbed the surface of a visible footpath or bridleway (other than a field-edge path) as permitted under section 134 of the Highways Act 1980, he must, within the relevant period under section 134(7) of that Act, or within an extension of that period granted under section 134(8) of that Act –
	(a) so make good the surface of the path or bridleway to not less than its minimum width as to make it reasonably convenient for the exercise of a right of way; and
	(b) so indicate the line of the path or bridleway on the ground to not less than its minimum width that it is apparent to members of the public wishing to use it.”

36.	Paragraph 29 adopts definitions for “footpath” and other words from the 1980 Act.  “Visible” means “visible as a route to a person with normal eyesight walking or riding along it”.  It is not in dispute that paragraph 29 should share the fate of paragraphs 26 to 28 if those are quashed.
37.	The relevant provisions of the 1980 Act (as amended) can be summarised as follows.  Disturbance of the surface of a footpath, bridleway or other highway consisting of or comprising a carriageway other than a made-up carriageway is an offence under section 131A.  Section 134 permits the ploughing of footpaths and bridleways other than field-edge paths, but makes it an offence not to make it good within specified periods.  Obstruction of free passage along any highway is an offence under section 137.  By section 146(1) the owner of land is under a duty to maintain any such stile, gate or similar structure.   Thus paragraphs 26 to 28 largely mirror these provisions of the 1980 Act, but only in relation to visible rights of way.
38.	The 1980 Act applies to both England and Wales.  Different provisions apply to Scotland, where public rights of way have, it is pointed out, historically been less extensive, and to Northern Ireland.
39.	While many paragraphs of the Schedule deal with clearly agricultural matters, several arguably deal with matters that are either not exclusively agricultural or clearly not agricultural:  10 to 13 (hedgerows), 14 (stone walls), 15 and 16 (environmental impact assessments), 18 to 22 (sites of special scientific interest), 23 and 25 (tree preservation orders and felling of trees) and 24 (scheduled monuments).  Mr.Eicke comments that no complaint is made about any of those paragraphs.  Mr.Sheridan simply comments that the Claimant is entitled to limit his challenge to particular paragraphs to which he objects.

The validity of the England Regulations

40.	Mr.Sheridan points to the reference in the Preamble to “common conditions” and submits that the reference to “minimum requirements” in Article 5.1 implies that Member States cannot add to what the Council Regulation requires.  Farmers cannot be required to meet more than minimum requirements.  He submits that paragraphs 26 to 28 contain requirements that are more than minimum.  They exceed any margin of appreciation available to the United Kingdom.
41.	It is further claimed that even if paragraphs 26 to 28 in the England Regulations were not ultra vires, they are open to challenge as not proportionate.  It is said that they amount to an unnecessary and disproportionate interference with the property rights of the farmers affected by them, that they are not objectively justified, that they do not serve an end justified in the Council Regulation and give rise to ambiguity.
42.	Mr.Sheridan disclaims any reliance on the fact that a farmer can suffer a reduction in the entitlement as well as a criminal financial penalty for a breach of the Highways Act 1980.  However, he points out that the reduction is a penalty, described as such in the Explanatory Memorandum to the Proposal for the Council Regulation, and he submits that any such increase in the total penalty must be objectively justified.
43.	Mr.Sheridan further submits that none of the specific features actually mentioned in Article 5.1 include rights of way.  He submits that public rights of way are not “landscape features” as referred to in Annex IV.  Nor are they “farm structures”, which he submits is reference to how farms are organised, not to physical structures on a farm.  
44.	Moreover, he submits that the phrase “good agricultural and environmental condition” does not mean “good agricultural condition” and, as a free-standing requirement, “good environmental condition”.   The reference to “good agricultural and environmental condition” means a condition that relates to the condition of land as an agricultural resource and so maintaining its validity as agricultural land, and the reference to environmental condition is as to the environmental state of that agricultural land.  He submits that the “Broader Rural Impacts” and “Regional Impacts” referred to in the Impact Assessment cannot be relevant to “good agricultural and environmental condition”.  The requirements of paragraphs 26 to 28 are addressed, he submits, to an extraneous third party interest or benefit.  He submits that any environmental service to be delivered by farmers must be purchased through agri-environmental measures. I think that in effect he is submitting that good environmental condition must refer to environmental condition for agricultural purposes.  
45.	He prays in aid extracts from the European Commission DG Agriculture website.  It is sufficient to quote one paragraph:

“Apart from the principle that farmers should observe a minimum level of environmental standards as a condition for the full granting of direct payments (“cross-compliance”), another basic principle embodied in the Community strategy for the integration of environmental; considerations into the CAP is that, wherever the society desires that farmers deliver an environmental service beyond that baseline level, this service should be purchased through agri-environmental measures”..

46.	The passage from the website carries no particular authority.  It is, I accept, an accurate statement as far as it goes, but it begs the essential questions: whether paragraphs 26 to 28 fall within the minimum level or go beyond the baseline level.
47.	Mr.Sheridan points to the Nitrates Directive as addressing the preservation of land as an agricultural productive resource by allowing for the addition to the land of nitrates as fertiliser, but addresses its environmental condition and effect by limiting the total nitrates that may be added.  However, in my view the  example of the Nitrates Directive is not of great assistance in interpreting Article 5.1, since it is listed in Annex III under the heading “Environment” for the purposes of Article 4.
48.	Mr.Eicke submits that “good agricultural condition” and “good environmental condition” are separate requirements.
49.	He relies on the statement of Mr.Rigal, who gives examples of the environmental importance of public rights of way.  
50.	First, Mr.Rigal refers to the benefits of well maintained public rights of way in the reduction of trampling damage to adjoining  vegetation and habitats.  He cites examples from the Pennine Way and in woodland.  In my judgment this does not assist the Defendant.  The areas concerned are not agricultural land of the kind I am concerned with.  It may well be that a visible footpath will tend to discourage the trampling of crops on arable land, but that is not what Mr.Rigal is referring to and in any event Mr.Sheridan points out that such damage to a crop is not relevant to the agricultural or environmental condition of the land, since the crop is transient.
51.	Secondly, Mr.Rigal refers to the importance of well maintained public rights of way to relation to the maintenance and protection of hedgerows.  Thirdly, he relies of the existence of public rights of way as tending to create and preserve field margins.  In both cases that can assist in preserving habitats.  I accept that there is evidence of some potential benefit to habitats.
52.	Fourthly, Mr.Rigal relies on the benefit to those who carry out surveys of various kinds of wildlife of public rights of way.  I accept that there is benefit, but Mr.Danks is correct in pointing out that such surveys usually require wider access to land with the landowner’s permission.
53.	The second, third and fourth of Mr.Rigal’s examples provide some support for the environmental value of public rights of way in preserving habitats.
54.	The England Regulations cover only rights of way that are visible.   Mr.Eicke submits that such rights of way are “landscape features” for the purposes of Annex IV and which should therefore be “retained”.   I have no doubt that those who drafted the England Regulations so intended.  Mr.Sheridan submits that even visible rights of way, and even more so, stiles and gates, have an inherent lack of permanence and cannot be “landscape features”.  I am inclined to prefer Mr.Eicke’s submissions.  Landscape features may vary in their degree of permanence.  Even stiles and gates can in my view properly be so described.  Even if I am wrong about that, the maintenance of stiles and gates tends to render visible rights of way usable and hence to remain visible.  Mr.Eicke further submits that “farm structures” are physical structures on the land and that public rights of way can fall within the concept.
55.	Clearly Member States must have regard to Article 5.1 and use the framework set up in Annex IV as a basis for defining minimum requirements.  Clearly those requirements will vary because they are to take account of the specific characteristics of the areas concerned.  However, it is equally clear to me that if it is left to Member States, at regional level if they wish, to carry out this process of definition, the requirements will not necessarily (indeed, inevitably not) be defined in an identical way, even where characteristics are identical.  It cannot be expected that minimum requirements will be identical everywhere even when characteristics are identical.
56.	Mr.Eicke submits that paragraphs 26 to 28 cannot be struck down by the court unless the court can conclude that no reasonable Secretary of State could have arrived at the minimum requirements laid down.  He submits that if paragraphs 26 to 28 cannot stand, nor can several other paragraphs.
57.	In my judgment there are cogent arguments for the validity of the crucial paragraphs of the England Regulations.  My preliminary view is that the addition of the words “and environmental” were intended to widen the scope of the minimum requirements.  The reference in Annex IV to “habitats” is significant.  It appears to me that visible rights of way can properly be described as “landscape features”.  
58.	However, the matter is in my view sufficiently open to argument to justify a reference to the European Court of Justice.  In addition, if the England Regulations are in themselves valid, the discrimination issue should be the subject of a reference.

Discrimination

59.	Community law contains a principle of equality, derived in part from articles of the Treaty.  The principle gains support from Article 14 of the European Convention on Human Rights.
60.	Mr.Eicke submits that provided the implementing measures are intra vires and not in themselves irrational, the devolved authorities are entitled to adopt different standards to reflect regional differences in law and in policy.  He points out that Article 5.1 expressly requires Member States to define requirements at national or regional level.  He submits that the devolved authorities and Defra are not obliged to follow the lowest common denominator.  
61.	Mr.Eicke submits that discrimination can only arise if a decision is being made by the same discriminator.   As Laws J. stated in R. v. Ministry of Agriculture, Fisheries and Food, ex p. First City Trading Ltd. [1997] 1 CMLR 250 at paragraph 67, if a decision-maker treats apparently identical case differently, that may indicate irrationality in domestic law, and Community law may require the decision-maker to justify the apparent discrimination.  However, submits Mr.Eicke, those principles do not arise in the case of decisions by different decision-makers.  
62.	Mr.Eicke referred me to Federal Republic of Germany v. Commission of the European Communities (1990) Case C-8/88.  The case concerned inspection under the CAP in various Länder of Germany.  The Commission alleged that the Federal authorities failed to give detailed instruction to the Länder on the type and frequency of checks required and that the Länder had failed to lay down appropriate inspection procedures.  The European Court held (at paragraph 14) that there was no need to ascertain whether adequate instructions had been given.  Both federal and any other territorial authorities are bound to implement Community obligations.  The Court simply looks at whether the obligations have been implemented, in this case by the Länder.
63.	In Criminal proceedings v. Firma J. van Dam en Zonen and Others (1979) Cases C-185 to 204/78, the European Court was dealing with national rules enacted by the Netherlands fixing fishing quotas.  The Court held (at paragraph 10) that

“It cannot be held contrary to the principle of non-discrimination to apply national legislation, the compatibility of which with Community law is moreover not contested, because other Member states allegedly apply less strict rules.  Inequalities of this kind, if they exist, must be eliminated by means of the consultations … but they cannot be the foundation of a charge of discrimination with regard to the provisions made by a Member State which applies equally to any person under its jurisdiction, the regulations which it had adopted for fishing quotas”.

Discrimination on grounds of nationality would have been contrary to the Treaty.  Criminal proceedings v. Perfili, Case C-177/94 was to the same effect.
64.	Mr.Eicke submits that the same principle applies to differences in legislation between the component parts of a Member State.  He submits that the England Regulations apply to all those farming land in England regardless of nationality or residence.  
65.	He points to the different underlying legal position in Scotland in relation to public rights of way, although the same argument cannot be used for Wales.
66.	Mr.Sheridan relied on Marthe Klensch v. Secrétaire d’État à l’Agriculture et à la Viticulture (1986) C-201 and 202/85.  The case involved alleged discrimination between producers in Luxembourg.  The European Court said:

“8. Under Article 40(3) of the EEC Treaty the common organisation of the agricultural markets to be established in the context of the Common Agricultural Policy must ‘exclude any discrimination between producers or consumers within the Community’.  That provision covers all measures relating to the common organisation of agricultural markets, irrespective of the authority which lays them down.  Consequently, it is also binding on the Member States when they are implementing the said common organisation of the markets.
9. That finding is borne out by a consistent line of cases … in which the Court held that the prohibition of discrimination laid down in Article 40(3) of the EEC Treaty is merely a specific enunciation of the general principle of equality which is one of the fundamental principles of Community law.  That principle requires that similar situations shall not be treated differently unless differentiation is objectively justified.
10. Consequently, where Community rules leave Member States to choose between various methods of implementation, the Member States must comply with the principle stated in Article 40(3).  That principle applies, for instance, where several options are open to the Member States as in this case, where they may choose as the reference year 1981, or, subject to certain conditions, either 1982 or 1983.
11. It follows that in such circumstances a Member State may not choose an option whose implementation in its territory would be liable to create, directly or indirectly, discrimination between the producers concerned, within the meaning of Article 40(3) of the treaty, having regard to the specific conditions on its market and, in particular, to the structure of the agricultural activities carried out in its territory”.

67.	Mr.Eicke submits that Klensch was simply a case in which there was a deliberate decision to favour one producer.
68.	In Mulligan and others v. Minister for Agriculture and Food, Ireland (2002) C-313/99, the European Court considered the validity of a decision of a Minister in applying a “clawback” measure to a milk quota on the sale or lease of a dairy.   The Court held that clawback measures could in principle be introduced.  The Court continued:

“33. However, in order to provide a full answer to the national court, it is necessary to point out that this finding cannot lead to the conclusion that the Member States are authorised to introduce any type of clawback measure in any circumstances whatsoever.  It must be observed, first, that, having regard to the fact that the adoption of a national measure such as that at issue in the main proceedings falls within the scope of the common agricultural policy, such a measure cannot be established or applied in such a way as to compromise the objectives of that policy and, more particularly, those of the common organisations of the markets in the milk sector.
34. Second, … where the competent authorities of the Member States lay down or apply such measures they must do so on the basis of objective criteria.
35. Third, it is settled case-law that where Community rules leave Member states to choose between various methods of implementation, the Member States must exercise their discretion in compliance with the general principles of Community law (Joined Cases 201/85 and 202/85 Klensch and Others [1986] ECR 3477, paragraph 10).
36. Consequently, a clawback measure such as that at issue in the main proceedings must be established and applied in compliance with the principles of legal certainty and protection of legitimate expectations … .  Moreover, it must be proportionate to the aim pursued … and applied without discrimination (see, to that effect, in particular Klensch and Others, paragraph 8).  Similarly, such a measure must respect fundamental rights, such as the right to property … and the freedom to pursue a trade or profession … .”

69.	Further, Mr.Sheridan cites Romeu v. Commission of the European Communities (2005) Case T-298/02.  The case concerned the payment of expatriation allowances to officials of the Commission.  The European Court said:

“27. It is settled case-law that the requirement for a uniform application of Community law and the principle of equality require that the terms of a provision of Community law that makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an independent and uniform interpretation throughout the Community; that interpretation must take into account the context of the provision and the purpose of the relevant regulations.  In the absence of an express reference, the application of Community law may sometimes necessitate a reference to the laws of the Member States where the Community Court cannot identify in Community law or in the general principles of Community law criteria enabling it to define the meaning and scope of such a provision by way of independent interpretation … .
28. In the present case, Community law and, in particular, the Staff Regulations provide sufficient guidance to allow the scope of Article 4 of Annex VI to the Staff Regulations to be defined and, therefore, to establish an independent interpretation of the meaning of ‘State’ in relation to the different national laws, as accepted by the parties themselves in their written pleadings.
29. First, the Court has held that it is apparent from the general scheme of the Treaties that the term ‘Member State’, for the purposes of the institutional provisions, refers only to government authorities of the Member States and cannot include the governments of regions or autonomous communities, irrespective of the powers they may have.  If the contrary were true, it would undermine the institutional balance provided for by the Treaties, which, inter alia, govern the conditions under which the Member states, that is to say, the states party to the Treaties establishing the Communities and the Accession Treaties, participate in the functioning of the Community institutions … .”

70.	And in paragraph 35, the Court continued:

“That assessment [sc. of the meaning of ‘work done for another State’] cannot be called in question by the applicant’s argument based on the existence of an autonomous meaning of ‘State’ in Community law which encompasses decentralised bodies.  Although it is clear that, in accordance with the case-law cited by the applicant in the context of a failure of a Member state to fulfil its obligations, it can be considered that the authorities of a State which are charged with ensuring observance of the rules of Community law can be either central authorities and authorities of a federated State or territorial or decentralised authorities of that State within the sphere of their respective competence, it is also necessary to recall that an action following which the Court of Justice can declare that a Member State has failed to fulfil one of its obligations can only be brought against the government of that State, even if the failure to act is the result of the action or omission of the authorities of a federal State, a region or an autonomous community … .  That case-law thus cannot be relied upon in support of the applicant’s proposition for a broader interpretation of the meaning of ‘State’.”

71.	There is no doubt, as both counsel pointed out, that any actions of the authorities in other parts of the United Kingdom must be in accordance with Community law.  For Scotland the statutory provisions are sections 29(2)(d) and 57(2) of the Scotland Act 1998.  For Wales, the provisions are in section 106 of the Government of Wales Act 1998.
72.	For completeness, I refer to one aspect of the devolution legislation to which Counsel did not specifically refer.  In circulating my original draft judgment I gave the parties an opportunity to make written submissions, which were duly made.
73.	Section 57(1) of the Scotland Act 1998 provides as follows:

“Despite the transfer to Scottish Ministers by virtue of section 53 of functions in relation to observing and implementing obligations under Community law, any function of a Minister of the Crown in relation to any matter shall continue to be exercisable by him as regards Scotland for the purposes specified in section 2(2) of the European Communities Act”.

	Section 2(2) of the 1972 Act provides for the implementing of Community obligations.   A similar provision to that in the Scotland Act appears in Schedule 3, paragraph 5, of the Government of Wales Act 1998.   The situation is similar for Northern Ireland.
74.	Although United Kingdom Ministers retain the power in law to implement obligations under EC law, it has been agreed, in a statement of political intent, that the devolved administrations will in practice do so in connection with devolved matters:  see Devolution Memorandum of Understanding (January 2002) between the United Kingdom Government and the devolved administrations.
75.	As Romeu makes clear, the obligation to implement Community law is that of the United Kingdom.  Mr.Sheridan on behalf of the Claimant would now wish if necessary to rely on the existence of the retained powers of the United Kingdom Ministers.  
76.	Does Article 14 of the European Convention assist?  That depends first on whether Article 1 of the First Protocol applies.  
77.	Article 14 reads:

“The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, birth or other status”.

78.	In Dudgeon v, United Kingdom (1981) 4 EHHR 149, the European Court of Human Rights held that it was unnecessary to consider Article 14 of the Convention.  In his dissenting judgment, Judge Matscher remarked (at paragraph 21):

“The diversity of internal legislation inherent in a federal State can never, in itself, constitute discrimination, and it is unnecessary to justify it.  To claim the contrary would be to mistake totally the very essence of federalism”.

79.	In Magee v. United Kingdom (2001) 31 EHRR 35 the European Court of Human Rights considered Article 14 in the context of Article 6 and said:

“50. The Court recalls that Article 14 of the Convention protects against a discriminatory difference in treatment of persons in analogous positions in the exercise of the rights and freedoms recognised by the Convention and its Protocols.  It observes in this connection that in the constituent parts of the United Kingdom there is not always a uniform approach to legislation in particular areas.  Whether or not an individual can assert a right derived from legislation may accordingly depend on the geographical reach of the legislation at issue and the individual’s location at the time.  For the Court, in so far as there exists a difference in treatment of detained suspects under the 1988 [Northern Ireland] Order and the legislation of England and Wales on matters referred to by the applicant, that difference is not to be explained in terms of personal characteristics, such as national origin or association with a national minority, but on the geographical location where the individual is arrested and detained.  This permits legislation to take account of regional differences and characteristics of an objective and reasonable nature.  In the present case, such a difference does not amount to discriminatory treatment within the meaning of Article 14 of the Convention”.
 
80.	Article 14, it is agreed, cannot create a freestanding right.  It is restricted to discrimination in “the enjoyment of the rights and freedoms set forth” in the Convention.  It is submitted that Article 14 could be engaged in relation to Article 1 of the Protocol, which reads:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions.  No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties”.

81.	Of Article 1, in Stockholms Försçkrigns-Och Skadestandsjuridik AB v. Sweden, Case 38993/97, the European Court of Human Rights said, at paragraph 46:

“The first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest …  The three rules are not, however, ‘distinct’ in the sense of being unconnected.  The second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule”.

82.	In Middlebrook Mushrooms Ltd. v. The Agricultural Wages Board for England and Wales [2004] EWHC 1447 (Admin), Stanley Burnton J. considered whether a legal requirement for the payment of a minimum wage is within the ambit of Article 1, that is, whether it can amount an interference with the peaceful enjoyment by the employer of his possessions.  He held that it could.  
83.	In Wendenberg and others v. Germany (Application no. 71630/01), the European Court of Human Rights held inadmissible a complaint relating to the loss of future income, while holding that Article 1 did extend to law practices and their clientele, which constitute assets and therefore possessions within the meaning of the first sentence in Article 1.
84.	I have already quoted Article 44 of the Council Regulation.  Article 46 permits the transfer of payment entitlements to another farmer in certain circumstances “by sale or any other definitive transfer with or without land”.  In certain circumstances they may be transferred “by actual or anticipated inheritance”.  
85.	Mr.Eicke points out that actual payment is due only if certain conditions are met.  However, in my judgment, that might give rise to issues under the second and third rules in Article 1.  In the light of Article 44 and 46 of the Council Regulation, payment entitlements are within the ambit of Article 1. 
86.	I have come to the conclusion that it is necessary to refer the discrimination issue to the European Court of Justice.  There is authority in Klensch, Mulligan and Romeu, that tends to support the propositions that a Member State may not discriminate in such circumstances as this and that it is not necessarily an answer to say that a devolved authority has taken the decision and was entitled to do so.  The fact that the devolution legislation appears to reserve a right to make regulations to the United Kingdom government may be an additional consideration.

References and directions

87.	I discussed with Counsel at the end of the hearing my intention, if I decided that a reference was required, to prepare a full judgment in order to identify the issues requiring a reference.  
88.	I shall order references to the European Court on (1) whether the England Regulations at paragraphs 26 to 28 of the Schedule were within the powers of Defra, that is, whether they were both intra vires and proportionate and (2) whether, if the paragraphs were in principle valid, they offend against principles of equality and non-discrimination when compared with Regulations in Wales, Scotland and Northern Ireland.  
89.	I have considered written submissions by both Counsel about the form of the reference, in the light of the Practice Direction to CPR Part 68 (which incorporates the Information Note issued by the European Court).  In principle, subject to any submissions made when I hand down the judgment, I consider that a short order on the lines drafted by Mr.Eicke would be appropriate.  The judgment would be attached, as 68PD1.4 envisages.  I do not consider it necessary to produce what would in effect be a revised version of the judgment, as suggested by Mr.Sheridan.
90.	I therefore invited the preparation by Counsel of either an agreed order on these lines, incorporating the two questions to be referred, or, if not agreed, alternative versions of those questions.