Grazing farmer ordered to make payments to landowners in dispute over Basic Payment Scheme subsidy entitlement

About this case:

• Citation:
  [2022] CSOH 76
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Clark

Golden Lane Securities Ltd and Christopher Moran & Co Ltd, two companies responsible for the letting out of land on the Cabrach Estate in Moray, sought payment from tenant Roderick Scarborough, averring that he had failed to include all entitlements owed to them in his rental payments. The defender contended that he was not in breach of the 2015 agreement and counterclaimed for overpayments of rent he averred were due to him.

The case was heard by Lord Clark in the Outer House of the Court of Session. Thomson KC and Massaro, advocate, appeared for the pursuers and MacColl KC for the defender.

Greening payments

Between 1994 and 2014, the defender had entered into yearly grazing agreements in respect of land on the Cabrach Estate. From 2002, these agreements were made with the first pursuer, which managed the property on behalf of companies ultimately owned by Dr Christopher Moran and whose principal shareholder was the second pursuer.

As a result of the introduction of the Basic Payment Scheme in 2015, applicants required to establish that they were an active farmer in relation to a plot land in order to receive payment. To that end, separate meetings were held on behalf of the individual graziers to discuss certain matters. On 26 March 2015, the defender met with Jamie Moran, a director of the pursuers, and Douglas Ogilvie, a land agent for the estate, to discuss how to handle the new scheme.

The pursuers contended that the agreement reached with the defender was that he would pay them 50% of the subsidies he received under the BPS and would transfer his entitlements to the payments to the Estate in the event that he stopped grazing the land. However, the defender contended that the agreed rent was 50% of the basic payments but not 50% of the greening or convergence payments made under the scheme.

Counsel for the pursuers invited the court to find the witness evidence of Mr Moran and Mr Ogilvie to be credible and reliable as to the content of the agreement. In contrast, the evidence of the defender was inconsistent, and he had demonstrated himself to be someone who would provide an incredible account when it suited him to do so.

Part of the denominator

In his decision, Lord Clark observed: “As happens in any criminal or civil case, there may be parts of [a] witness’s evidence which are accepted and others that are not. In my view it is appropriate to test the key elements in his evidence based on consistency with the evidence of others and inherent probability.”

On the evidence of Mr Ogilvie, he said: “I accept his evidence that discussions with Jamie Moran prior to the meetings on 26 March 2015 dealt with the need for return of entitlements to be agreed, and that the matter was raised and agreed in the meetings with the defender and other graziers on that day. There is the inconsistency with the evidence of [defender’s witness] Mr Sheed, but as noted above that does not materially affect the evidence about what occurred at the meeting with the defender.”

In contrast, Lord Clark said of the defender’s evidence: “In addition to inconsistency with the evidence of Jamie Moran and Douglas Ogilvie, there is nothing in any of the productions which provides support for the defender’s position that the issue of returning the entitlements was not discussed, let alone agreed upon, at the meeting. Further, reference to previous written agreements featured several times in the defender’s account of events, appearing to be his understanding of how agreement could be reached.”

Drawing all of the evidence together, he continued: “I conclude that the defender calculated and paid the rent on the basis that it included the greening component of the BPS simply because that is indeed what was agreed at the meeting on 26 March 2015. There is however an issue about a ‘convergence’ payment. At the date of the meeting, this was not a component of the BPS. It is correct that a convergence payment was only made to someone who was in receipt of payments under the BPS in 2019.”

Lord Clark concluded: “There is some force in the view that the expressions ‘BPS’ or ‘subsidies’ cover any payment that comes in or might come in under the scheme. But, on balance, and based on the relatively limited evidence about the agreement, I am unable to conclude that the parties intended that any additional form of payment added to scheme in the future formed part of the denominator. The convergence payments made available in 2019 are not therefore covered by the 2015 agreement, although they are of course open to future agreement.”

Accordingly, the pursuer’s claims in respect of amounts not paid by the defender from 2015 to 2018 succeeded, with the convergence payments not to be included, and the defender’s counterclaim failed.