Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. On 1 January 1985 Siegfried Rauh took over his parents' agricultural holding as future heir under the terms of a contract of usufruct concluded with his parents.
2. In return for payment of a non-marketing premium his parents had undertaken, under the system established by Council Regulation (EEC) No 1078/77, (1) not to market milk or milk products during a period of five years expiring on 21 December 1984.
3. By the end of the non-marketing period, that is to say, when the farm was transferred, sufficient cows had been reared for milk production to be resumed immediately.
4. In 1985 Mr Rauh was refused a milk reference quantity for the first time on the grounds that there had been no milk production on the holding during the reference year 1983 and that there was no provision for the grant of such a reference quantity on any other basis where milk production was resumed following the expiry of a non-marketing period.
5. In the Court' s judgments of 28 April 1988 in Mulder (2) and Von Deetzen, (3) however, the Court held:
"Council Regulation (EEC) No 857/84 of 31 March 1984, as supplemented by Commission Regulation (EEC) No 1371/84 of 16 May 1984, is invalid in so far as it does not provide for the allocation of a reference quantity to producers who, pursuant to an undertaking entered into under Council Regulation (EEC) No 1078/77 of 17 May 1977, did not deliver milk during the reference year adopted by the Member State concerned".
6. In order to comply with those judgments the Council amended Regulation (EEC) No 857/84 (4) by inserting Article 3a which, subject to certain conditions, enables a special reference quantity to be granted to such producers.
7. Article 3a(1) is as follows:
"Producers referred to in the third paragraph of Article 12(c):
- whose period of non-marketing or conversion, pursuant to the undertaking given under Regulation (EEC) No 1078/77, expires after 31 December 1983, or after 30 September 1983 in Member States where the milk collection in the months April to September is at least twice that of the months October to the March of the following year;
- who have not received a reference quantity under the terms laid down pursuant to Article 5(4)(b) and/or Article 9(2) of Regulation (EEC) No 1546/88 and/or, with regard to the person to whom the premium is transferred, pursuant to Article 2 of this Regulation,
shall receive provisionally, if they so request within three months from 29 March 1989, a special reference quantity and provided that such producers:
(a) did not cease farming within the meaning of Article 2(3) and (4) of Regulation (EEC) No 1078/88 or transfer the whole of their dairy enterprise before the end of the non-marketing or conversion period;
(b) establish in support of their request, to the satisfaction of the competent authority, that they are able to produce on their holding up to the reference quantity requested;
(c) undertake to sell milk or other products direct to the consumer and/or to deliver milk to a buyer;
(d) undertake, as regards the special reference quantity, not to apply for assistance under any programme for the abandonment of reference quantities until the end of the additional levy scheme."
8. In reliance on that provision Mr Rauh made a fresh application but, by decision of 24 August 1989, the competent German authority again refused to grant a reference quantity on the grounds that he had taken over the holding only after the expiry of the non-marketing period.
9. Mr Rauh brought proceedings before the Finanzgericht Muenchen which has expressed serious doubts as to the lawfulness of the competent German authorities' refusal and referred the questions set out hereinafter to the Court of Justice.
Question 1
10. The first question is as follows:
"1. Where a dairy farm is transferred by inheritance or a similar transaction, are producers who did not take over the holding until after the expiry of the non-marketing undertaking also entitled to receive a special reference quantity under Article 3a of Council Regulation (EEC) No 857/84 of 31 March 1984, as amended by Council Regulation (EEC) No 764/89 of 20 March 1989?"
11. The plaintiff in the main proceedings, the Finanzgericht Muenchen and the Council of the European Communities consider that the first question must be answered in the affirmative.
12. The Commission, on the other hand, considers that a special reference quantity falls to be granted only if the holding has already been given a special reference quantity or if the predecessor in title has established that he did in fact intend and was able to resume milk production.
13. For details of the various positions I would refer to the Report for the Hearing.
14. It is not - and could not be - contested that Article 3a(1) expressly envisages only two categories of successors in title who can seek the grant of a special reference quantity, namely:
- producers who originally entered into the non-marketing undertaking and who, on the expiry of their non-marketing undertaking after 31 December 1983, were unable to resume milk production for lack of any express provision enabling them to be granted a reference quantity;
- producers who took over all or part of the dairy holding from the original entitled persons during the non-marketing period and also took over that obligation.
15. An heir who took over the holding before the expiry of the non-marketing undertaking falls within the latter category; he is therefore eligible for a special reference quantity.
16. An heir who takes over the holding after the end of the undertaking and after the grant of a special reference quantity to his predecessor in title may have that quota transferred to him pursuant to Article 7(1) of Regulation No 857/84 which is worded as follows:
"Where an undertaking is sold, leased or transferred by inheritance, all or part of the corresponding reference quantity shall be transferred to the purchaser, tenant or heir according to procedures to be determined."
17. Article 7(3) of Commission Regulation (EEC) No 1546/88 (5) provides, moreover, that the abovementioned provisions are "applicable under the various national rules, in other cases of transfer which have comparable legal effects as far as producers are concerned".
18. What then of an heir in Mr Rauh' s position?
19. The Commission lays stress on the fact that the two categories under Article 3a both relate to operators who have contractually undertaken not to market milk for a certain period. Since the Court has found in the two judgments cited above that such persons may, by virtue of the principle of protection of legitimate expectations, expect to resume milk production after the expiry of the non-marketing period, they are entitled to be granted a reference quantity. According to the Commission the right to obtain a reference quantity must thus be construed as the counterpart to the existence of the non-marketing undertaking. However, the plaintiff in the main proceedings has never entered into such an obligation since, at the time of the succession, the non-marketing period had already expired and the obligation had come to an end. The Commission concludes that he should not be entitled to obtain a reference quantity.
20. In support of its view the Commission further relies on Article 7a of Regulation No 1546/88, cited above, which is as follows:
"The special reference quantity granted under the conditions laid down in Article 3a of Regulation (EEC) No 857/84 shall, in the event of the transfer of the holding by inheritance or by any similar transaction, be transferred in accordance with the first and third subparagraphs of Article 7 provided that the producer to whom the holding is transferred in whole or in part undertakes in writing to comply with the undertakings of his predecessor. Article 3a(4) of Regulation (EEC) No 857/84 shall continue to apply to the special reference quantity thus transferred. ..."
21. It should be noted in passing that the undertakings referred to in that provision can only be those referred to in Article 3a(1)(b), (c) and (d) and not the non-marketing undertaking.
22. I have, however, strong reservations regarding the Commission' s view for a number of reasons.
23. First of all I entertain serious doubts as to the validity of recourse, for the purposes of the interpretation of a higher rule, namely the Council Regulation, to the lower ranking rule, namely Article 7a of the Commission Regulation, a provision implementing the Council Regulation.
24. Secondly Article 7a relates only to reference quantities already granted whereas we are here concerned with resolving a question on which the provisions are silent, namely the case where no such reference quantity had been granted at the time when the transfer of the holding by inheritance or by any similar transaction took place.
25. Finally the Commission' s view would amount to prolonging the effects on the producer (in this instance, Mr Rauh' s father) of his non-marketing undertaking. It would render it impossible for the producer to transfer his right to reference quantities after the expiry of the non-marketing period whereas he would have had no difficulty in transferring all his rights to his successor if he had not entered into a non-marketing undertaking.
26. The basic principle underlying the judgments which Article 3a was adopted to implement is precisely the opposite, namely that a producer who has entered into a non-marketing undertaking did so for a limited duration and cannot have to bear the consequences after the expiry of that period.
27. In paragraph 24 of the abovementioned judgment in Mulder, the Court held that:
"Where such a producer, as in the present case, has been encouraged by a Community measure to suspend marketing for a limited period in the general interest and against payment of a premium he may legitimately expect not to be subject, upon the expiry of his undertaking, to restrictions which specifically affect him precisely because he availed himself of the possibilities offered by the Community provisions".
28. The words "à la fin de son engagement" used in the French text of the Mulder judgment cannot be interpreted as meaning "before the expiry" since the version in Dutch, which is the language of the case, uses the words "na afloop van zijn verbintenis" which means "after the expiry of his undertaking". A producer thus continues to enjoy a right to a reference quantity after the expiry of the non-marketing period. That also follows from the conditions laid down in Article 3a(1)(a) under which a person requesting a special reference quantity must not have transferred the whole of his dairy enterprise before the end of the non-marketing period. That provision necessarily implies that a reference quantity can in practice be granted only after the end of the non-marketing period.
29. However since Article 3a was not introduced until 1989, Mr Rauh' s father was not able to request the grant of such a quantity after 21 December 1984, when his non-marketing undertaking expired. He could have done so within a period of three months as from the date of publication of the regulation adopting Article 3a (as is expressly laid down by that provision). However by then he had already transferred the holding to his son.
30. In my view, therefore, the question is whether the right to that reference quantity formed part of the body of rights and obligations which Mr Rauh' s father transferred to his son in the course of the transaction which took place, which was similar to an inheritance.
31. That view finds support, first of all, in the general principle that the heir steps into the shoes of his predecessor and takes over all his predecessor' s assets.
32. Reference may also be made to Article 7 of Regulation No 857/84 which uses the expression "corresponding reference quantity". Prior to the transaction similar to an inheritance, there existed an expectancy of a "corresponding reference quantity" and that expectancy passed to the heir. In other words the expression "producer" in Article 3a(1), interpreted in the light of the general principle referred to above and of Article 7, must be construed in the sense of "the producer or his heir".
33. My reasoning is therefore different from that of the Council which deduces the heir' s right from the second indent of Article 3a(1). Our conclusions are, however, the same. Like the Council, I can see no objective reason for treating the case of an heir who has taken over a holding after the special reference quantity was granted to his predecessor from the similar case of an heir who takes over a holding after the expiry of the non-marketing period but before the grant of the reference quantity to his predecessor.
34. Two observations made by the Commission call for comment. I consider first that the reason drawn from the aims of the rules which is relied on by the Commission in support of its view, namely the need to prevent a producer from requesting a reference quantity merely in order to increase the commercial value of the holding he intends to dispose of, cannot apply in the case of succession.
35. Secondly, having taken the view that the heir is entitled to a reference quantity, I do not consider it necessary to examine, as the Commission suggests by way of a concession from its general view, whether the heir' s predecessor in title did indeed intend and was indeed able to resume milk production. But for what it is worth, it should be noted that in the main proceedings, the predecessor in title did in any event restore the holding to such a state that his son could easily have resumed production immediately, which amounts to the same thing.
36. For all those reasons I suggest that the following answer be given to the first question:
Article 3a of Council regulation No 857/84 must be interpreted as also allowing, subject to the conditions laid down therein, a special reference quantity to be granted to an heir who has taken over the dairy holding of his predecessor only after the expiry of the predecessor' s non-marketing undertaking.
37. The second question is as follows:
"If not: Is Council Regulation (EEC) No 857/84 of 31 March 1984, as amended by Council Regulation (EEC) No 764/89 of 20 March 1989, valid in so far as where a dairy farm is transferred by inheritance or a similar transaction producers who did not take over the holding until after the expiry of the non-marketing undertaking are not entitled to receive a special reference quantity?"
38. Should the Court hold that Regulation No 857/84 is not to be given a broad interpretation, as proposed above, I consider that the second question should be answered in the affirmative.
39. In the Mulder and Von Deetzen judgments the Court held that where a producer has been encouraged by a Community measure to suspend marketing of milk for a limited period in the general interest and against payment of a premium, he may legitimately expect not to be subject, upon the expiry of his undertaking, to restrictions which specifically affect him precisely because he availed himself of the possibilities offered by the Community provisions (paragraph 24 of the Mulder judgment and paragraph 13 of the Von Deetzen judgment).
40. Similarly such a producer could legitimately expect to be able to transfer to his heir a holding which was again permitted to market milk. To deny him that possibility would be contrary to the principle of the protection of legitimate expectations.
41. However, since I believe that it is possible, albeit at the cost of a certain interpretive effort, to answer the first question in the affirmative, I suggest that the Court rule that the second question is redundant.
Conclusion
42. For all the reasons set out above I suggest that the following answers be given to the questions asked by the Finanzgericht Muenchen:
"(1) Article 3a of Council Regulation No 857/84 must be interpreted as also allowing, subject to the conditions laid down therein, a special reference quantity to be granted to an heir who has taken over the dairy holding of his predecessor only after the expiry of the predecessor' s non-marketing undertaking.
(2) In view of the answer given to the first question, the second question is redundant."
(*) Original language: French.
(1). Council Regulation (EEC) 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 (OJ 1977 L 131, p. 1).
(2). Case 120/86 Mulder v Minister van Landbouw en Visserij [1988] ECR 2321.
(3). Case 170/86 Von Deetzen v Hauptzollamt Hamburg-Jonas [1988] ECR 2355.
(4). Council Regulation (EEC) No 764/89 of 20 March 1989 amending Regulation (EEC) No 857/84 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1989 L 84, p. 2).
(5). Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1988 L 139, p. 12).
Translation
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