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Case No. C.853/96

Misleading advice leading to an overpayment of allowances

1.1 Mr X complained that the Ministry of Agriculture Fisheries and Food (MAFF) gave wrong advice to his family's farming partnership about how the dissolution of that partnership might affect applications made in 1993 for premium payments under the Common Agricultural Policy (CAP). He contended that as a result family members had lost and had had to repay to MAFF significant amounts of premium and that MAFF had failed to acknowledge that they had given the wrong advice and that they had delayed in dealing with the case.

1.2 My investigation began in August 1996 once the Parliamentary Commissioner's predecessor had obtained comments from the Permanent Secretary of MAFF after the referral of the complaint by the Member. I have not put into this report every detail investigated by the Commissioner's staff; but I am satisfied that no matter of significance has been overlooked.

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Statutory and administrative background

1.3 The CAP is a European Union (EU) scheme under which farmers receive payments and allowances depending on the type and location of land they farm and animals owned. Following a reform of the scheme and new European legislation, in 1993 the Integrated Administration and Control System (IACS) was introduced under Article 1 of Council Regulation (EEC) No 3508/92. Since 1993 all farmers intending to make claims under the Arable Area Payments (AAP), Beef Special Premium (BSP) or Suckler Cow Premium (SCP) schemes have had to comply with IACS and, under Article 6(1), submit details of all the land they farm in the United Kingdom (UK) on an area aid application made to their relevant agriculture department. In 1993 area aid applications were not required for producers only claiming Sheep Annual Premium (SAP) and/or Hill Livestock Compensatory Allowance (HLCA). In England the control system is administered by MAFF and farmers submit their applications to their local Regional Service Centre (RSC). MAFF warned farmers that it was essential that they read and understood the IACS booklet before applying for aid under IACS controlled schemes in 1993. Under Article 4(2) of Commission Regulation (EEC) No 3887/92 all area aid applications had to give details of the land farmed at a specified date which, under Article 6(2) of Council Regulation (EEC) No 3508/92, was to be set by each member state. In the UK that date was 15 May 1993. The IACS booklet emphasised that and said that area aid applications made late would lead to a loss of or reduction in aid entitlements. It would not be possible to amend the area aid application after that date. If there were any subsequent relevant changes, for example if some of the land farmed was sold or let to another farmer or other land was rented from another farmer, applicants were advised to agree with the other farmer how to deal with the rights and obligations arising from the IACS area aid application. The booklet also told farmers that if they had problems understanding the rules of the new control system their RSC would offer help. However, it remained the applicant's responsibility to ensure that a fully completed and valid area aid application form was received by MAFF before the deadline. If applicants had any doubts about the treatment of changes to the land they farmed after 15 May 1993 it was suggested that they should consult a professional adviser. The booklet said that, if farmers were paid more aid than they were entitled to under the rules of a scheme, they would be required to reimburse the overpayment with interest for the period between the dates of the overpayment and the reimbursement. Interest would not be recovered if overpayments were due to MAFF error. If a farmer owes MAFF money because he or she has been overpaid or because he or she has breached a condition of a scheme under which he or she has been paid aid, and MAFF also owes money to the farmer, and the respective debts relate to aid schemes funded by the European Community (EC/EU) then, even if they relate to different schemes, MAFF can offset the debt to them by reducing the sums paid to the farmer by a corresponding amount.

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1.4 The BSP and SCP schemes were introduced to support the incomes of beef producers throughout the EC/EU. As part of the CAP reforms both became subject to IACS on 1 January 1993. Prior to the introduction of IACS, the Intervention Board Executive Agency (IBEA) administered a different beef premium scheme which paid premium at slaughter. Claims made by a producer at slaughter in the transitional period just before the BSP scheme started were added to claims made under the BSP scheme and linked to the associated IACS area aid application. Under the BSP scheme producers can claim premium payments twice in the lifetime of male cattle; once at between 8 months and 21 months of age and again when the animal is over 21 months old. BSP can be claimed on up to 90 animals per age category per producer in each scheme year (the 90 head limit). Animals which are the subject of a claim must be kept on the producer's holding for a retention period of two months from the day after the date the RSC receive a BSP claim. Subject to the observance of the 90 head limit, a producer may submit as many BSP claims in a year as he or she chooses. To claim BSP a producer must obtain an administrative document, known as a Cattle Identification Document (CID), from their RSC for each male animal for which a claim is to be made. For the 1993 scheme year payment of BSP could not be made before 1 November 1993, after which date an advance of 60 per cent of the amount claimed could be paid. The balance was paid after 1 April 1994. For the 1995 scheme year advance payments of 80 per cent of the amount claimed were due to be paid by 31 January 1996 where the retention period had been completed by 1 November 1995 and three months from the last day of the retention period if completed after 1 November. The balance was to be paid by 30 June 1996. Paragraph 18 of the 1993 BSP Notes for Guidance warned that, if a producer divided one business into two or more parts after 30 June 1992, MAFF would be obliged by the European legislation to treat those businesses as one business, unless the producer could satisfy MAFF that the division was not done principally to evade headage limits.

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1.5 Under the SCP scheme a producer can submit only one claim per year and entitlement to premium is restricted to the number of cattle for which the producer holds premium rights (known as quota). SCP is paid on suckler cows forming part of a regular breeding herd used for rearing calves for meat production. The animals must be kept on the holding for a six months' retention period. In the UK, the allocation of quota in 1993 was based on the number of animals for which a farmer received premium for the 1992 year, reduced by 1% to provide a national reserve of quota. Where suckler cow quota is transferred from one producer to another without a corresponding transfer of a holding, 15% of the transferors' quota is siphoned off and placed in the national reserve for reallocation to other producers. For the 1995 SCP scheme year advance payments of premium were to be made by 8 March 1996 with the balance due by 30 June. Animals on which SAP claims were made were required to be retained for a period of 100 consecutive days, starting on the day immediately following the last day of the application period for SAP. The relevant retention period for the 1993 scheme ran from midnight on 20 February 1993 until midnight on 31 May 1993.

1.6 Under Article 4(g) of Council Regulation (EEC) No 805/68, as amended by Council Regulation (EEC) No 2066/92, the amount of premium to which a producer might be entitled under the BSP and SCP schemes in any one scheme year is restricted by a stocking density limit which is calculated as livestock units per hectare of forage area (that is, subject to certain exceptions, the area of land available for feeding or grazing livestock). In 1993 the stocking density limit was 3.5 livestock units per hectare of the producer's available forage area (as shown in the IACS area aid application). The producer's milk quota, BSP, SCP and SAP claims are converted into livestock units and checked against that forage area. If the producer concerned does not submit an IACS area aid application his or her claim is limited to a total of only 15 livestock units. A breeding ewe on which SAP is claimed counts as 0.15 of a livestock unit; male cattle on which BSP is claimed count as 0.6 of a livestock unit if under two years at the date of claim or one livestock unit if older; suckler cows on which SCP is claimed count as 1 livestock unit each. If a producer has a stocking density of less than 1.4 livestock units per hectare of forage area he or she can receive a supplement, known as extensification premium, which is paid automatically at the same time as the final balance payments for BSP or SCP claims. Details of the stocking density rules were given in a booklet ‘CAP Reform in the Beef Sector' which was sent to all beef farmers in January 1993. The booklet also said that local MAFF staff would provide advice on the completion of forms but suggested that professional advice should be sought for more detailed questions on how the changes to the premium schemes would affect businesses. In addition the booklet warned that failure to submit forage area details (on the IACS area aid application) by 15 May 1993 could result in a partial or total loss of premium and that it was the producer's responsibility to determine whether or not he or she was exempt from the stocking density rules. Following advice received from the European Commission (the Commission), MAFF issued guidance notes to their RSCs on 19 October 1993 about dealing with changes to partnerships. The guidance did not relate specifically to situations such as that of the Xs but it said that when partnerships dissolved after having submitted an IACS area aid application the forage area would remain with the original partnership for the rest of the scheme year, but it might be possible in such circumstances for each constituent part of the original partnership to make premium claims for up to 15 livestock units in its own right. Legal advice should be sought from MAFF's Legal Department on any individual cases that arose. MAFF have said that before that guidance had been issued RSCs would have been expected to consult other RSCs or MAFF Headquarters in the case of queries.

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1.7 Under the terms of the AAP scheme in 1993, in general land was eligible for AAP if it had been in arable production, or farmed as part of an arable rotation, on 31 December 1991. The AAP scheme is also based on the IACS arrangements and in 1993 AAP could only be paid on crops that had been sown by 15 May. Entitlement to AAP when land changes hands during the cropping season is not specifically dealt with in the European legislation, but the Commission issued guidance on the matter. Acting in accordance with that guidance, where land was transferred during the cropping period and before 15 May, MAFF allowed the parties to decide between themselves which of them should apply for and receive AAP. For transfers after 15 May, AAP would be paid to the person who had submitted the valid application (ie to the occupier of the land before 15 May). If there was no agreement between the parties to the transfer as to who should claim AAP, payments were to be made to whoever claimed and met the conditions of the scheme, provided only one person claimed in respect of each field. If two applications were received for the same field, payment would be made to the person who had sowed the seed provided the conditions of the AAP scheme were complied with.

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Jurisdiction

1.8 The Parliamentary Commissioner is empowered to investigate administrative actions taken by or on behalf of those government departments, including MAFF, and other non-departmental public bodies listed under Schedule 2 to the Parliamentary Commissioner Act 1967. The Commission and the EC/EU are not within his jurisdiction. In this report I refer to European legislation and the actions of the Commission only to put into context the actions of MAFF to which this investigation has been confined.

Summary of case

1.9 Appendix A to the report sets out the main events surrounding Mr X's complaint. Appendix B lists the initials used and their meanings. For the sake of clarity I give the following summary of the events in the case. Before the introduction of IACS the X farming partnership (X1) told the local RSC (the RSC) that they were going to split up and they wondered how they should proceed with their IACS application. The RSC told them that the IACS form should reflect the business as at 15 May 1993 (the IACS closing date) and everything would be sorted out at a later date. The partnership split into two businesses, partnership X2 and partnership X3, on 1 June. The RSC were told. Both businesses submitted applications for BSP and SCP payments on their respective animals and partnership X1 were paid AAP. In January 1994 the RSC decided that as partnership X3 had not submitted a separate IACS form that business should be restricted to premium payments on 15 livestock units only. The Xs and their advisers objected and the RSC referred their case to MAFF Headquarters for consideration. BSP and SCP payments continued to be paid to partnership X2 and SCP was paid to partnership X3. In July 1994 the Commission suggested that in cases such as the Xs the former partners should continue to maintain their partnership in a notional sense for the rest of the scheme year. After much discussion, in September 1994 MAFF's Beef Division decided, on the basis of legal advice, that as the two businesses had not submitted any joint claims during the 1993 scheme year the concept of a notional continuing partnership was not relevant. In the absence of a valid IACS form for each business premium payments for each business would have to be restricted to 15 livestock units. On 16 November 1994 the RSC told partnership X2 that their overpayment to them amounted to £11,695.85 while that to partnership X3 was said to be £1,945.09. Following a meeting between the RSC and the Xs on 14 December 1994 the RSC asked MAFF headquarters to reconsider the Xs' case. After further discussion and legal advice MAFF decided that to remain consistent with their treatment of other cases they would not ask the Commission for advice as to whether the Commission's concept of a notional partnership could be applied retrospectively; and they told the RSC on 22 January 1996 that the overpayments would have to be recovered. On 18 April the RSC wrote and told each business that the original overpayment calculations had been wrong. Partnership X2 were said to owe £20,707.75 and partnership X3 £2,839.69. Both businesses under pressure from MAFF agreed to offset those overpayments against money owed to them for 1995 claims.

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The Permanent Secretary's comments on the complaint

1.10 The Permanent Secretary said that the timing of changes in the nature of a business could affect entitlements under the various CAP-related schemes. It was outside the scope of MAFF's responsibility to advise on business decisions. MAFF could advise only on the rules of the various schemes and tell applicants to seek their own legal advice. He accepted that MAFF had fallen below the standard by which they sought to administer the BSP and SCP schemes, because of the long delay in informing the Xs about their true 1993 eligibility. Much of that delay had been caused because officials had been concerned at the perceived arbitrariness of the effect of IACS on the Xs and had made efforts to investigate the scope for mitigating those effects. MAFF had apologised for that delay. The Permanent Secretary said that Mr X had provided no evidence of when and by whom allegedly wrong advice had been given to his family. It had not been possible therefore to investigate that fully. Further MAFF considered that it was reasonable to expect the Xs to have sought any such advice in writing. MAFF believed also that it was unreasonable to expect any one member of staff to be in a position to advise on the implications of the change in the nature of the original partnership because so many schemes were involved. The Permanent Secretary said that MAFF would not have been wrong in advising that the IACS application should be submitted by 15 May 1993 with details of the then existing partnership. MAFF had not been in a position to advise the Xs about the consequences of the partnership's dissolution until October 1994; advice had been sent to the two businesses the following month. MAFF had been correct in saying that each business could claim BSP on up to 90 animals, but that was subject to the requirement for the business concerned to submit an IACS application. Mr X had offered no evidence that that requirement had not been clear from the literature provided on the various schemes. MAFF had not sought to imply that the original partnership had split in order to claim BSP on an extra 90 animals, and had not suggested that an invalid IACS application had been submitted in May 1993. MAFF had had a responsibility to ensure that the new businesses had not been created in order to evade the headage limits as set out in the EC regulations and they had had to investigate whether the IACS area aid application that the original partnership had submitted was relevant or could be deemed relevant to the claims subsequently submitted by the two new split businesses. MAFF had not refused to provide the Xs with copies of records of telephone conversations because that would involve excessive work. They had considered that to do that would have been a major task, especially in view of the fact that they would have expected them to have kept their own records. Mr X's response to their reply had not provided MAFF with the specific details of the documents and records required, so a meeting had been arranged. Following that meeting an outcome had not been promised by Christmas. It had been hoped that might be possible but the RSC's letter of 22 December 1994 had explained it would not be. In conclusion the Permanent Secretary said that the Xs had not been unfairly penalised by MAFF, because MAFF had been constrained by EC regulations. The partnership split and its timing had not been brought about by the advice of MAFF. The consequences of that split on the eligibility of the businesses' claims for premium was entirely due to the application of EC regulations. MAFF had done all they reasonably could to protect the two businesses from the consequences of the original partnership's action. The withholding for a time of 1995 BSP and SCP payments had been appropriate as recovery of the Xs' overpayments had been outstanding from 1993.

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Later developments
 
1.11   Later MAFF admitted that when considering the case in the light of the Parliamentary Commissioner’s investigation they had noticed that they had made an error in their initial allocation of suckler cow quota as partnership X2 should not have been considered for quota purposes to be a continuation of the original partnership. They said the quota should have been allocated to partnership X1 which would then have been expected to transfer that quota to the two new businesses. That transfer might have incurred the levy on transfers of quota without a corresponding transfer of land, known as the siphon (paragraph 1.5), whereby 15 per cent of the initial quota allocation (that would be 33 units of quota valued at £120-£130 each) would have been placed in the national reserve. Neither partnership X1 nor partnership X2 would have benefited from the correct application of the rules and both might well have been disadvantaged. MAFF said they had fallen below the standards they should have applied, but they saw no purpose in correcting that error as to do so could not benefit the Xs. As for their decision not to ask the Commission whether the latter’s advice of July 1994 about notional partnerships could be applied retrospectively, MAFF said that the effect of doing that would have been to urge that a claim made by one producer could later be deemed to have been made by another producer, which would have been inconsistent with their understanding of the legal position. If the Commission had agreed to that request MAFF said they would have had to re-examine other cases which they had handled differently in accordance with their interpretation of the legislation. MAFF said also that there was no evidence that the original partnership split had been considered by them prior to them processing the AAP claim, but that as entitlement to that payment rested not on whether the same farmer had been farming the land with the arable crops claimed, but rather on whether the land in question was being so farmed, there had been no reason for them to consider it. They had been entitled in law to make the payments to partnership X2, because at least two members of the original partnership had remained and the name had not changed. MAFF had received no complaints about them making those payments. MAFF added that they would have accepted separate IACS forms from each of the two X businesses if the Xs had split the original partnership before 15 May 1993, but whether it would have been possible for them to have split the original partnership before then would have depended on their circumstances and wishes. Had they done so both businesses would have been eligible for AAP, BSP and SCP payments subject to the stocking density and headage limits and subject to there being sufficient animals of the appropriate ages and compliance with the rules of each scheme.

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Findings
 
1.12   At the heart of Mr X’s complaint is the fact that the family’s partnership was dissolved, with the full knowledge of MAFF, from 1 June 1993; that MAFF, without question, made BSP and SCP payments in January 1994; that even after questions about headage limits for SCP and BSP arose in January 1994, MAFF made further payments; and that only in November 1994 were the Xs told that MAFF had been making those payments on false assumptions and required to repay very substantial sums of £11,695 and £1,945 – revised upwards in April 1996 to £20,707 and £2,839. There is no doubt that both partnership X2 and partnership X3 have suffered a loss of cash, paid and received in good faith on both sides. The question is whether that loss amounts to an injustice arising from maladministration, for which a remedy is due.
 
1.13   I fully recognise that this was the first year of a new and very different system of agricultural support. It is therefore not surprising if neither MAFF, nor the Agricultural Development Advisory Service (ADAS - who are not the subject of this complaint) nor individual producers were fully aware of all the practical consequences of the new scheme. It would not however be fair if it were only producers who suffered the consequences of that unawareness. The Xs contend that their decision about when to split their farming business into two was based on advice they had received in telephone conversations with RSC staff before the IACS deadline of 15 May 1993. Neither the Xs nor MAFF have records of those calls. The Commissioner often decides in cases where the argument turns on the recollections of oral exchanges which took place some time previously that he can make no finding unless there is some independent or contemporary record of what was said. On the balance of probabilities, I accept the Xs’ recollection of those calls for the reasons which follow. First the Xs’ ADAS advisers have confirmed with the Commissioner’s staff that at the time of the calls the Xs had told them what advice the RSC had given them. Secondly, MAFF have accepted the possibility that RSC staff had said that the Xs’ IACS application should reflect the position of their business as at the 15 May deadline and that any queries arising would be resolved at a later date. Thirdly, at the time RSC staff were limited in the advice they were able to give. The advice about dealing with partnerships from the Commission was still 14 months in the future.

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1.14   It was in the Xs’ interests to obtain and follow advice from MAFF. The creation of the two new businesses would have been costly at any time with the need to transfer quota which incurred the siphon (paragraph 1.5) and surveying and other professional fees, but the Xs had also to consider the implications for some premium payments. They kept the various sections of the RSC informed of their plans throughout and, on the basis of further advice from the RSC, decided to split the partnership on 1 June 1993 at the end of the SAP retention period (paragraph 1.5) to avoid losing sheep premium. They were unaware – as evidently so were MAFF – of the later consequences that that action might have for BSP and SCP payments. If they had known, they could have decided to split the partnership before 15 May; each business could then have made two separate IACS applications and applied for premium payments on that basis (paragraph 1.11). While that would have had other implications, such as for SAP, the Xs would have been able to make an informed business decision based on the full facts. It seems to me that there was little more the Xs could have done to safeguard their financial position and that RSC’s failure to warn them of the possible consequences of splitting the partnership can be regarded as maladministration.
 
1.15   Following the division of the partnership in June 1993 the Xs were unaware for at least seven months of the problems that had been caused. Indeed from the actions of RSC staff they had no reason to believe that anything had gone wrong. AAP continued to be paid to partnership X1, even after the partnership had split, in accordance with the AAP rules (paragraphs 1.7 and 1.11). Those rules were inconsistent with those for BSP and SCP but staff of the RSC seemed unaware or uncertain of just how the rules for those schemes affected the Xs. According to Mr X the RSC told the Xs that the animals sold before the partnership split would be allocated to partnership X2 and that partnership X3 would also be able to claim BSP on up to 90 animals. When the RSC received BSP claims from each business taking each to the 90 head limit they did not query those claims. Later, even though the RSC had just been reminded of the split in the partnership, partnership X2 received the full allocation of suckler cow quota from partnership X1 without having to transfer formally that quota to the new business as they should have done (paragraphs 1.5 and 1.11) and they received SCP on that quota. Even after the RSC decided that partnership X3 should be subject to a 15 livestock unit limit (which partnership X3 had by then exceeded) the SCP section made a SCP payment to partnership X3. Partnership X2 continued to receive BSP and SCP payments until July 1994. I criticise the RSC’s failure to follow the BSP and SCP scheme rules and the lack of communication between various sections of the RSC that led to that. The effect was serious. It seems to me that by not raising any problems about the Xs’ claims for a considerable time, and by continuing to make payments to them even after the problems had been raised, the RSC gave them a reasonable expectation not only that the combined businesses were entitled to at least the same amount of BSP and SCP payments as the old partnership would have received but that each business could properly make claims for BSP and SCP in its own right.

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1.16   In July 1994 the Commission gave MAFF their advice on dealing with partnerships split after the IACS closing date. It was clear from the way that MAFF had framed their request for advice and from the Commission’s reply that both parties had in mind mitigating the worst effects of IACS on a split partnership which could be to wipe out a 90 head limit and substitute two 15 livestock units as a basis for BSP and SCP claims. It was no fault of the Xs that it was not technically possible, in 1994, to apply retrospectively the solution of maintaining a notional partnership for 1993. Nevertheless at this point, in November 1994 on the basis of legal advice that there was no scope for flexibility, MAFF decided to apply to the Xs the strict ruling that each business was entitled only to 15 livestock units each and to recover the premia they now believed they had erroneously overpaid. They did not appear to pay attention to the spirit of the Commission’s advice, which did not amend legislation, but merely clarified existing regulations; and did not apparently consider other avenues, such as going back to the Commission for further advice about the retrospective application of a notional partnership, or whether an ex gratia payment might be appropriate in the light of the Xs’ circumstances. They were, apparently, influenced by the possibility that action in the Xs’ case might set a precedent for other cases; but each case ought to have been treated on its own merits.
 
1.17   There then followed some 16 months of discussion and negotiation with the Xs, who in order to progress matters were willing to accept a 15 livestock unit limit for one of the businesses. As the Permanent Secretary has said (paragraph 1.10) that delay was to a significant extent caused because officials had been concerned at the perceived arbitrariness of the effect of IACS on the Xs and sought to mitigate it. But it was also because the Xs’ case became coupled with another case, because dealing with the Xs’ 1993 position became entangled with how partnerships should be dealt with in the future and because that in turn led to the possibility being canvassed that the Commission should be approached in order to allow the Xs’ BSP and SCP claims for 1993 to be dealt with retrospectively. (Such an approach never took place.) Ideas to mitigate the Xs’ predicament foundered on legal advice that they could not be implemented, and by April 1995 MAFF had moved no further towards finding a solution than they had been in February 1994 – when their legal advice was that there was no legal justification for MAFF allowing claims on the basis of 90 head, but making an ex gratia payment was, nevertheless, open to them. I criticise the time taken to reach a decision on what should be done about the Xs’ overpayment. The RSC were guilty of inefficiency when the calculation of the overpayments on 16 November 1994 failed to take into account the SAP payments that had been made to both businesses and the final SCP payment that had been made to partnership X3. I criticise that careless work which meant that the second notification of overpayment in April 1996 was nearly double the first.

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1.18   MAFF then added insult to injury. By recovering the money from the SCP and BSP payments due for 1995 the advance SCP payments for both businesses were delayed by more than five weeks with the balance paid a day late; the advance BSP payment for partnership X2 was delayed for more than 22 weeks with the balance delayed by five days; and the advance BSP payment for partnership X3 was delayed by nearly 12 weeks. I criticise those delays.
 
1.19   I put it to the Permanent Secretary that it was not in dispute that the Xs had acted totally in good faith throughout; that although no-one in MAFF in 1993 knew how the new IACS would affect partnerships, in practice the Xs had been led to expect that under IACS both businesses could continue to claim SCP and BSP and that the continued payments had reinforced their view; and that natural justice, as some MAFF staff had already noted, supported that conclusion. I noted that the Permanent Secretary had acknowledged that MAFF service had fallen below their expected standard in the administration of the BSP and SCP schemes. I invited him, in the light of the circumstances of the time and of the substantial maladministration I had identified, which had caused injustice to the Xs, to consider making an ex gratia payment equivalent to the disputed 1993 SCP and BSP payments, together with interest on the delayed 1995 payments. In reply he said that the case of the Xs had been a lengthy saga which had brought to light serious failings in the RSC’s handling of the Xs’ claims. He said that while the legal position so far as the consequences of the dissolution of the original partnership was clear with hindsight, at the time the issues were raised the consequences were less than clear. He apologised that information about the creation of the two new businesses had not been passed to all the relevant sections within the RSC. The Permanent Secretary noted my finding that on the balance of possibilities misleading advice had been given but said he believed that Mr X might have misinterpreted information given to him over the telephone by staff of the RSC. He said that the RSC had been at fault for not making contemporaneous notes of the alleged conversations, nor following them up in writing, as they had been instructed. He also accepted that, as the RSC had continued to make premium payments to the two new businesses even though they knew the original partnership had dissolved, they had created for the Xs a reasonable expectation that they were entitled to the premium claims each business had made in 1993. Taking together my finding of misleading advice, and the facts that the RSC were aware at the time the disputed claims were made that the partnership had been dissolved and had made erroneous payments for BSPS and SCPS, he accepted that that finding and those facts created a reasonable expectation that the new partnerships were entitled to that BSP and SCP payments, demonstrated maladministration, and justified payment on an ex gratia basis. He agreed therefore to make a payment of £21,687.04 to partnership X2, of which £5,051.54 (including £535.07 in interest payments) was the sum due to partnership X1 for the 71 steers on which premium had been claimed at slaughter, £205.62 was for interest on the delayed 1995 BSP payments and £239.09 for interest on the delayed 1995 SCP payments. For partnership X3 the Permanent Secretary agreed to make payments on the 90 animals for which the 1993 BSP claim had been made, and 72 animals for which the 1993 SCP claim had been made. The amount due to partnership X3 was £12,598.92, of which £78.32 was for interest on the delayed 1995 SCP payments and £37.79 was for interest on the delayed 1995 BSP payments. I welcome those offers.

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Conclusion
 
1.20   The Permanent Secretary apologised for the maladministration found in the investigation and agreed MAFF would pay partnership X2 £21,687.04 and partnership X3 £12,598.92. I consider those apologies and payments to be a wholly satisfactory outcome to Mr X’s justified complaint.
 
27 February 1998

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