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High Court of Justice in Northern Ireland Queen's Bench Division Decisions
You are here: BAILII >> Databases >> High Court of Justice in Northern Ireland Queen's Bench Division Decisions >> Intervention Board for Agriculture Produce v McFarland [2001] NIQB 47 (13 December 2001)
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Cite as: [2001] NIQB 47
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Neutral Citation no.[2001] NIQB 47
Ref:
COGC3546
Judgment: approved by the Court for handing down
Delivered:
13.12.2001
(subject to editorial corrections)
BETWEEN
Plaintiff
Defendant
COGHLIN J
JUDGMENT
The Intervention Board for Agricultural Produce ("the Board") is the body which was responsible for administering the Over Thirty Months Slaughter Scheme ("the OTMS scheme") in Northern Ireland and, in these proceedings, it seeks to recover the sum of £95,100, together with interest thereon, from the defendant representing the balance due in respect of advance payments made by the Board to the defendant under the OTMS scheme.
Background Facts
On 20 March 1996 the Secretary of State for health announced the possibility of a link between Bovine Spongiform Encephalopathy ("BSE") in cattle and a new variant of Creuzefeldt-Jakob Disease ("CJD") in humans, and, on the same day the Minister of Agriculture, Fisheries and Food announced the government's acceptance of scientific advice on measures to reduce the risk to human and animal health. A week later the European Commission banned the export of live cattle, beef and beef products from the United Kingdom. On 3April 1996 the Minister announced his decision to exclude all cattle over 30 months old from the food chain. At that point, the beef market in the United Kingdom found itself in crisis since most of the national breeding herd ceased to have any value. Of the approximately 40,000 animals presented each week for slaughter some 13,500 would have been animals over 30 months old and, from 3 April 1996, these animals had to be withdrawn from the process. These 13,500, whether dairy or beef animals, had come to the end of their productive life. As a result, the Ministry and the Intervention Board came under intense pressure to produce a quick response.
On 29 April 1996 the European Union implemented Commission Regulation (EC) 716/96 which created the OTMS scheme. The purpose of this scheme was to protect public health and to support the beef industry and it did so by providing financial support for the Board to purchase, slaughter and dispose of animals over 30 months old. The finance was provided by the European Community and the United Kingdom. The OTMS came into effect on 29 April 1996 but, while there was no real difficulty with the slaughtering capacity of the UK as a whole or of Northern Ireland in particular, it soon became clear that the overall existing facilities for rendering cattle were likely to be stretched to the limit. Inevitably, demand upon the OTMS was extremely high since it represented the only market opportunity for animals which were otherwise unsaleable but which nevertheless required to be tended by the farmers. Increasing pressure upon the rendering facilities both in the UK and in Northern Ireland soon produced a significant backlog of animals waiting to enter the scheme. Throughout 1996, 8 abattoirs were involved in slaughtering OTMS animals in Northern Ireland, a figure subsequently reduced to 2 when the crisis was over. In Northern Ireland there were only 3 facilities for rendering and, as in the rest of the UK, the Board was compelled to contract additional cold-store capacity. It has been estimated that by late May 1996 there were some 230,000 animals awaiting slaughter in the UK of which some 40,000 were located in Northern Ireland. This backlog was eventually cleared by the end of January/start of February 1997.
In May 1996 a UK government committee was created in order to monitor the BSE crisis. This committee was chaired by the Chancellor of the Duchy of Lancaster and included representatives from the Ministry of Agriculture, Fisheries and Food, the Board and the Department of Agriculture for Northern Ireland. As a result of concern about the size of the backlog of animals waiting to be processed through the OTMS the Committee instructed the Board to institute the Advance Payments Scheme ("APS"). Under this scheme a farmer could apply for an advance payment of £300 per animal which qualified for the OTMS on 15 June 1996. The cattle had to be kept on the holding until 15 July 1996 after which they could be sold for slaughter either directly to designated abattoirs or to local auction markets or collection centres. The Board distributed application forms for APS. The defendant completed an application form for APS, dated 15 July 1996, claiming advance payment in respect of 317 animals and, on 19 August 1996, the plaintiff paid £95,100 by way of advance payment into the defendant's bank account. These advance payments were to assist farmers with the costs of tending otherwise unsaleable animals waiting to be slaughtered in accordance with OTMS but remaining on the land because of the backlog. It was a condition of APS that any payments made thereunder were to be repaid to the Board in due course. The initial plan was for the abattoir at which OTMS animals were presented to deduct from the compensation paid to the farmer any sums advanced under APS. The guidance notes indicated that, if by 31 October 1996, the number of animals slaughtered was less than the number for which advance payments had been made, the farmer would be invoiced for the outstanding amount and, if this was not paid, the Board would take appropriate recovery action. The abattoir principally used by the defendant was Dungannon Meats and, in accordance with the practice originally envisaged for the scheme, that company withheld £22,500 in respect of 75 animals which it slaughtered for the defendant under OTMS prior to 31 October 1996. However, the Board encountered computer problems with the system of deducting advance payments at slaughter and this was abandoned in favour of recovery action by way of invoice issued by the Board. When this change occurred abattoirs holding sums deducted under the APS were instructed to return such sums to the Board but it appears that Dungannon Meats returned these sums to the producers, including the defendant, who was paid the £22,500. On 25 February 1997 the plaintiff furnished an invoice to the defendant in respect of £72,600 and, on 6 October 1997, this was followed by an invoice in respect of the £22,500 paid to the defendant by Dungannon Meats.
The Plaintiff's Claim
The plaintiff's claim is for £95,100 representing repayment of the sums advanced to the defendant under the APS, together with interest thereon, as invoiced to the defendant on 25 February and 6 October 1997. In the course of giving their evidence the witnesses on behalf of the plaintiff emphasised that, at all material times, it was made clear to the defendant that any sums received under APS would have to be repaid and, in particular, they relied upon condition 2 of the APS claim form and the paragraph contained in the associated guidance notes headed "Recovery of the Advance".
The plaintiff was represented by Mr Michael Stitt QC and Mr Desmond Marrinan.
The Defendant's Case
The case on behalf of the defendant was conducted by his son, Alan McFarland, who performed this task with considerable ability and admirable industry.
The defendant did not dispute that he had received the sum of £95,100 by way of payments under APS and accepted that, at all material times, he had appreciated that this was a loan which would have to be repaid in due course.
The defendant, James McFarland, his wife, Mildred McFarland, his sons Alan, Charles and Ian McFarland together with Alan's wife, Diane, each owned a herd of cattle. According to the defendant, after the announcement of the OTMS scheme a decision was taken to amalgamate into one herd all those cattle which would qualify for the scheme so as to reduce the danger of "flagging". Any herd with an incidence of BSE was "flagged" and thus, since the risk was greatest in cattle over 30 months old, it was considered sensible to combine these animals into one herd of some 500 cattle all of which were booked with the Banbridge Centre to be slaughtered under the OTMS. This booking was effected in April or May 1996 before APS came into existence. The defendant's intention was to replace the 500 animals to be slaughtered with a similar number of heifers in calf which would produce calves in the autumn of 1996. The defendant intended thereby to alter his calving "cycle" from the spring to the autumn. According to Mr Alan McFarland, the only factor which influenced the original decision was the prospect of compensation for the 500 animals through the OTMS. By 15 July 1996, the date upon which the defendant completed his APS application form, 317 of the original 500 cattle were left and between that date and 31 October 1996 a further 75 animals were slaughtered leaving 242 still on the land. The 75 animals which were slaughtered were replaced with 75 heifers in calf.
The defendant's case was that he relied upon representations made by the plaintiff that all cattle accepted into the APS would be off his land by 31 October 1996 thus affording him an opportunity to bring in the replacement heifers in calf. The defendant claimed that these representations were both written and oral, the former being contained in the APS application form and guidance notes while the latter were communicated by the plaintiff's staff manning the "helpline" telephone system. Ultimately, the 242 heifers which were not accepted for slaughter were put to the bull by the defendant as a result of which they would not have calved until 1997. The defendant quantified his counterclaim by valuing the 242 calves which he would have expected to have been produced by the replacement heifers at £400 each producing a total of £96,800 by way of set-off and counterclaim. In addition, he sought 4 years' interest at 8% upon this sum.
Conclusions
Both the defendant and his son agreed that the original decision to commit the 500 animals to the OTMS scheme was taken before the APS came into existence. Mr Alan McFarland confirmed that it was always their intention to replace these animals with heifers in calf and both accepted that the only relevant factor at the time of the original decision was the availability of compensation from the Board under the OTMS. The foundation upon which the defendant's counterclaim rested was their assertion that they had relied upon representations made by the plaintiff contained in both the documents and the statements by those manning the helpline that the balance of the cattle remaining after 15 July 1996 would be removed from their lands by 31 October 1996 enabling them to be replaced by heifers in calf the progeny of which would be born in the autumn of 1996 and would be ready for market in the spring/early summer of 1997. The defendant, James McFarland, was quite specific in stating that if he had not received a guarantee that the animals would be off his land by 31 October 1996 he would never have entered the APS at all. While the McFarlands may have entertained a general intention to replace the animals destined for OTMS with heifers in calf as and when they were accepted, I do not believe that they subsequently developed an intention to replace the balance of the cattle remaining after 15 July 1996 with heifers due to calf in the autumn of that year, in reliance upon the provisions of the APS, for the following reasons:
(1) Both the defendant and Alan McFarland maintained that, prior to the defendant completing the application form for APS dated 15 July 1996, they had received categorical guarantees and reassurance from the employees of the Board manning the helpline that the cattle would be removed from their lands by 31 October 1996. Mrs Bernadette Brown, who was called on behalf of the plaintiff, gave evidence as to the structure of the helpline and the selection of staff by whom it was operated. She considered that it was inconceivable that any of the staff manning the helpline would have given any such guarantee or specific reassurance indicating that, in the event of persistence, a caller would have been referred to the local abattoir or market. If a caller was unhappy with the helpline or the information or advice they received, they could instigate a complaints procedure which was dealt with by Mrs Brown. Mrs Brown confirmed that she had not dealt with any such complaint from the McFarlands. In the course of giving evidence Mr Alan McFarland maintained that during the 6 telephone calls made prior to the 15 July 1996, in which the guarantees were allegedly received from the helpline, he spoke to Sarah McGilway and Sarah Walker. When Mrs Brown was recalled to prove that neither woman had worked on the helpline, although Sarah McGilway had corresponded with the McFarlands in 1997, he was compelled to admit that he was mistaken.
(2) On 15 July 1996 the defendant enclosed a covering letter when forwarding his APS claim form to the Board. This letter made no reference whatsoever to any guarantee that the subject cattle would be removed from the McFarlands land by 31 October 1996, despite the defendants evidence that he would not have entered the scheme at all had it not been for such a guarantee. The letter did refer to the defendant suffering "severe cash flow problems" and to previous telephone calls to the Board but these were stated to have been made in the course of trying to obtain an application form and confirmation that a late application could be made. If the case made by the McFarlands is correct the net result is that, despite the earlier telephone calls, the defendant completely failed to include in this letter the single fundamental reason for which he was applying to participate in the scheme referring instead to "cash flow problems".
(3) When Alan McFarland gave evidence he maintained that the sum of £22,500 which his father had received from Dungannon Meats was paid by way of "apology" for the abattoir's failure to accept all of the McFarland cattle before 31 October 1996. When it was put to him by Mr Stitt QC in cross-examination that this was quite wrong and that this sum had been paid by Dungannon Meats as a result of a mistake when the Board's system was changing from deduction at the point of slaughter to the recovery system and his attention was drawn to the letter from the Board of 6 October 1997, Mr McFarland was compelled to concede that he "… did not know the basis for receipt of the £22,500". When he in turn was questioned in cross-examination about the receipt of the £22,500 the defendant himself admitted that he "hadn't a notion" why he had received the payment. The only conceivable reason for the defendant to put forward this "apology" evidence was to support a false claim that there had been an undertaking.
(4) If the basis for the defendant's counterclaim was correct then, at the latest, by 31 October 1996, the defendant must have appreciated that he had incurred a loss of almost £100,000 as a result of misrepresentation on the part of the Board. However, it appears that the defendant took no step whatsoever to seek compensation for this loss. The defendant conceded that he had a solicitor who had acted for him for many years but that he did not consult him about the loss. When asked about this in cross-examination Mr Alan McFarland stated that the thought of consulting the family solicitor "never crossed my mind". The issue of the loss sustained by the defendant was not raised on receipt of the invoices from the Board nor during the subsequent correspondence. A series of telephone calls took place between Mr Alan McFarland and the Board but in none of these did Mr McFarland refer to the loss which is the subject of the counterclaim. On 19 December 1997 the Board issued a writ claiming repayment of £95,100. The defendant did consult his solicitor but the defence delivered on 29 April 1998 was drafted as a simple denial of the issues and made no reference to any counterclaim. The counterclaim first appears in the amended defence and counterclaim delivered on 7 September 1998.
Accordingly, the defendant has not persuaded me on the balance of probabilities that he ever intended to specifically replace the 317 animals which he entered in the APS with heifers that would give birth in the autumn of 1996 or that he did so on the strength of any representations made by the Board whether by way of the helpline or in the terms of the relevant documents. The counterclaim must therefore fail. I would simply add that, in any event, the defendant did not satisfy me on a balance of probabilities that the Board had been negligent in devising or implementing the APS scheme and, even if I had been so satisfied I would have considered that the loss of potential calves claimed by the defendant was too remote and unforeseeable. Furthermore, I consider that the references to 31 October 1996 contained in the application form and the guidance notes, in the context of the scheme and the developing BSE crisis, were simply indicative of the intention of the Board, based upon the facts known to the Board at the time of publication and, therefore, did not amount to a legal misrepresentation. Even if these documents did constitute a representation by the Board that the defendant's animals would be admitted into the scheme and removed from his land by 31 October 1996, as I have already indicated, I am not satisfied on the balance of probabilities that any such representation was negligently made. Again, even if any such representation was negligent, I would have held that the damage claimed by the defendant was too remote and unforeseeable.
In the circumstances, there will be judgment for the plaintiff for £95,100 together with interest thereon.
IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND
BETWEEN
Plaintiff
Defendant