SOUTH LANARKSHIRE COUNCIL AGAINST GSR DISTRIBUTIONS LTD
SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW
B2794/14
2015SCGLA37
JUDGMENT
of
SHERIFF S. REID, Esq.,
in the
SUMMARY APPLICATION
under the Food Safety Act 1990, Section 9
by
SOUTH LANARKSHIRE COUNCIL
PURSUER
against
GSR DISTRIBUTIONS LTD
RESPONDENT
______________________________
Act: Mr G. Stewart, South Lanarkshire Council Legal Services, Hamilton
Alt: Mr M. Campbell, Campbell Mair, Glasgow
GLASGOW, 6th May 2015.
The sheriff, having resumed consideration of the cause:-
FINDS IN FACT
(1) The pursuer is a local authority constituted under the Local Government etc. (Scotland) Act 1994; it is a food authority in terms of the Food Safety Act 1990; and it is an enforcement authority in terms of the Food Hygiene (Scotland) Regulations 2006 for the area of South Lanarkshire.
(2) The defender is a private limited company trading under the name “Spice Way” from premises at 201 Glasgow Road, Rutherglen G73 1SU (“the premises”), situated within the area of South Lanarkshire.
(3) The premises are used inter alia as a processing, storage and distribution facility for food products intended for human consumption.
(4) On 10 September 2014, Karen Wardrope and Sheena Redmond, both being authorised environmental health officers of the pursuer (“the authorised officers”), attended at the defender’s premises for the purpose of carrying out an inspection in exercise of their statutory functions under the Food Safety Act 1990.
(5) As at 10 September 2014, the defender’s operations at the premises included the cutting, boning, handling and processing of food of animal origin.
(6) As at 10 September 2014, the competent authority, namely the Food Standards Agency, had neither approved nor granted provisional approval to the operation by the defender of a cutting plant within the premises.
(7) On 10 September 2014, food of animal origin, which had been cut, boned and processed on the premises (“the detained food”), was found by the authorised officers during their inspection of the premises.
(8) The detained food is more particularly described in the inventory headed “Appendix 1” forming item 5/6 of process.
(9) On 10 September 2014, in the exercise of powers conferred by Regulation 27 of the Food Hygiene (Scotland) Regulations 2006, Karen Wardrope, an authorised officer of the pursuer, certified that the detained food had not been produced, processed or distributed in compliance with “the Hygiene Regulations”, in respect that it had been processed in a cutting plant that had not been approved by the Food Standards Agency; and a certificate to that effect (“the Regulation 27 certificate”) was served upon the defender on 10 September 2014.
(10) On 10 September 2014, a detention of food notice (reference number EHN/DET/01926) (“the detention notice”) in respect of the detained food was served upon the defender by one of the authorised officers.
(11) On 10 September 2014, a remedial action notice (reference number EHN/RAN/001924) (“the remedial notice”) was served upon the defender by one of the authorised officers.
(12) On 12 September 2014, the detained food was seized by the pursuer; and the pursuer informed the defender by notice (“the food condemnation warning notice”) of its intention to apply to the sheriff for the detained food to be condemned.
(13) Item 5/1 of process is a true copy of the Regulation 27 certificate; item 5/2 of process is a true copy of the detention notice; item 5/3 of process is a true copy of the remedial action notice; and item 5/5 of process is a true copy of the food condemnation warning notice.
FINDS IN FACT AND IN LAW:
(1) As at 10 September 2014, the defender was operating a cutting plant within the premises, as defined within Annex 1, paragraph 1.17 of Regulation (EC) 853/2004.
(2) On or about 10 September 2014, the principal operation or activity carried on by the defender from the premises et separatim from the cutting plant within the premises was wholesale in nature, namely the handling, processing, storage and distribution of food (including food of animal origin) to another “food business” or “establishment” (as defined by Article 3.2 of Regulation (EC) No. 178/2002 and Article 2.1(c) of Regulation (EC) No. 852/2004).
(3) On or about 10 September 2014, the principal operation or activity carried on by the defender from the premises et separatim from the cutting plant within the premises was not retail in nature. Specifically, the principal operation or activity carried on therefrom was not the handling and/or processing of food, and its storage, at the point of sale or delivery to the final consumer (as defined by Article 3.18 of Regulation (EC) No. 178/2002).
(4) On or about 10 September 2014, the defender occasionally engaged in retail activity from the premises et separatim from the cutting plant within the premises, by supplying food direct to final consumers as defined by Article 3.18 of Regulation (EC) No. 178/2002) (including, but not limited to, food of animal origin that had been handled, processed and stored in the cutting plant within the premises).
(5) However, as at on or about 10 September 2014, such retail activity (as is referred to in finding (4), above) was immaterial in volume, value and frequency in the context of the defender’s principal operation and activity carried on from the premises et separatim from the cutting plant within the premises.
(6) The defender has failed to establish on the balance of probabilities (i) that, as at on or about 10 September 2014, it was engaged, to any material extent, in retail operations or activities from the premises et separatim from the cutting plant within the premises; (ii) that, as at on or about 10 September 2014, the premises et separatim the cutting plant within the premises were a “retail establishment”; (iii) that, as at on or about 10 September 2014, the defender’s wholesale supply of food of animal origin from the premises et separatim from the cutting plant within the premises was to “other retail establishments only”; and (iv) that, as at on or about 10 September 2014, such supply of food of animal origin to other retail establishments was a “marginal, localised and restricted activity”, all in terms of Article 1.5(b)(ii) of Regulation (EC) No. 853/2004.
FINDS IN LAW:
(1) As at 10 September 2014, Regulation (EC) No. 853/2004 applied to the operation and activities of the defender from the premises et separatim from the cutting plant within the premises.
(2) As at 10 September 2014, the defender was not entitled to claim exemption, under Article 1.5, from the application of Regulation (EC) No. 853/2004.
(3) The defender’s operation of the cutting plant within the premises on or about 10 September 2014, without the approval or provisional approval of the Food Standards Agency, as the competent authority, constitutes a breach of Article 4(2) of Regulation (EC) 853/2004.
(4) For the purposes of Regulation 27 of the Food Hygiene (Scotland) Regulations 2006, the detained food was not handled or processed by the defender in compliance with “the Hygiene Regulations” (as that term is defined by Regulation 2(1) of the Food Hygiene (Scotland) Regulations 2006), in respect that it was cut, boned, handled and processed by the pursuer in a cutting plant that had not been approved by the Food Standards Agency, in breach of Article 4(2) of Regulation (EC) 853/2004.
(5) The certification of the pursuer’s authorised officer, on 10 September 2014, pursuant to Regulation 27 of the Food Hygiene (Scotland) Regulations 2006, that the detained food had not been produced, processed or distributed in compliance with the Hygiene Regulations, was justified.
(6) The Regulation 27 certificate served upon the defender on 10 September 2014 was, and is, valid, proper and effective.
(7) The detained food, having been validly and properly certified by the pursuer’s authorised officer as not having been produced, processed or distributed in compliance with the Hygiene Regulations, is to be treated, for the purposes of section 9 of the Food Safety Act 1990, as failing to comply with food safety requirements.
(8) In respect that the detained food is to be treated as failing to comply with food safety requirements, it must be condemned and an order made for the food to be destroyed, or so disposed of as to prevent it from being used for human consumption.
ACCORDINGLY (1) Finds and Declares that the food seized by the pursuer on 12 September 2014 and more particularly described in the inventory headed “Appendix 1” (forming item 5/6 of process) fails to comply with food safety requirements, in terms of Regulation 27 of the Food Hygiene (Scotland) Regulations 2006; (2) Condemns the said food, in terms of section 9(6) of the Food Safety Act 1990; (3) Orders that the said food be destroyed, or so disposed of by the pursuer as to prevent it from being used for human consumption, in terms of section 9(6)(a) of the Food Safety Act 1990; (4) Orders that the expenses reasonably incurred by the pursuer in connection with the destruction or disposal of the said food be defrayed by the defender in terms of section 9(6)(b) of the Food Safety Act 1990; and (5) Reserves the issue of judicial expenses meantime and appoints parties to be heard thereon on a date to be hereafter assigned.
Sheriff
NOTE:
Summary
[1] This summary application proceeds under the Food Safety Act 1990 (“the 1990 Act”).
[2] The pursuer is the relevant food authority and enforcement authority for the area of South Lanarkshire. It alleges that certain food seized on the defender’s premises fails to comply with “the Hygiene Regulations”, in terms of Regulations 2 & 27 of the Food Hygiene (Scotland) Regulations 2006, and with “food safety requirements”, for the purposes of section 9 of the Food Safety Act 1990 (“the 1990 Act”). As a result, the pursuer seeks orders to condemn and destroy the food in terms of section 9(6) of the 1990 Act.
[3] The alleged non-compliance is technical in nature.
[4] The defender operates a large food storage and distribution business. Within its premises, there is a cutting plant. Meat is cut and boned there. The pursuer asserts that the defender is not allowed to operate such a cutting plant without prior approval from the Food Standards Agency, in terms of Regulation (EC) 853/2004. For the purposes of the Food Hygiene (Scotland) Regulations 2006, the operation of such a cutting plant, without approval, is said to constitute non-compliance with “the Hygiene Regulations” (which term is defined as including Regulation (EC) 853/2004); an authorised officer has purportedly certified such non-compliance, under Regulation 27(2) of the Food Hygiene (Scotland) Regulations 2006; and the deemed effect, in law, of such a certification, if valid, is that the food to which the certificate relates is to be treated as “failing to comply with food safety requirements” for the purposes of section 9 of the Food Safety Act 1990, thereby rendering it susceptible to condemnation and destruction.
[5] Condemnation and destruction can only be ordered (in Scotland) by a sheriff. If it appears to the sheriff, on the basis of such evidence as he considers appropriate in the circumstances, that any food falling to be dealt with by him under section 9 of the 1990 Act “fails to comply with food safety requirements”, he shall condemn the food and make various ancillary orders regarding its disposal and the payment of expenses.
[6] For its part, the defender’s primary position is that it is exempt from the application of Regulation (EC) 853/2004, by virtue of Article 1.5(b)(ii) thereof. Put briefly, the defender submits that supplies of food of animal origin from its cutting plant are a “marginal, localised and restricted activity” in the context of the defender’s food business as a whole. As a result, no approval is said to be required from the Food Standards Agency for the operation of the defender’s cutting plant at the premises. Consequently, there is said to be no breach of the Hygiene Regulations, no deemed failure to comply with “food safety requirements”, and the food is not liable to be condemned. The defender seeks reduction ope exceptionis of the authorised officer’s purported certification.
[7] Ultimately, in my judgment the key disputed issue turns upon the proper interpretation of the exemption in Article 1.5 of Regulation (EC) 853/2004 and a determination of the true nature of the defender’s business, specifically the extent to which the defender is engaged in retail or wholesale activities.
Procedural history
[8] The application was lodged on 16 September 2014. A hearing was assigned for 19 September 2014.
[9] On 19 September 2014, answers were lodged at the bar. The defender’s answers included a preliminary plea to the relevancy of the pursuer’s averments (plea-in-law 1). On the defender’s opposed motion, the hearing was discharged to allow further time for enquiries by the defender. A fresh hearing was assigned for 3 October 2014.
[10] On 3 October 2014, of consent, the hearing proceeded by way of submissions only on the defender’s preliminary plea. Having heard parties’ submissions, I repelled the defender’s preliminary plea (plea-in-law number 1) and allowed parties a proof of their respective averments.
[11] The application called before me at proof on 22 October 2014, 13 & 14 November 2014 and 9 January 2015. Having heard closing submissions on 9 January 2015, I made avizandum.
The evidence
[12] For the pursuer, I heard evidence from Craig Brown, Karen Wardrope, Sheena Redmond and Loretta Will, all employees of the pursuer.
[13] For the defender, I heard evidence from Saeed Hussain (the defender’s director and majority shareholder) and James O’Reilly (the defender’s general manager).
Craig Brown
[14] Mr Brown is employed by South Lanarkshire Council as Environmental Services Manager. He has held this position since August 2012. He has been an environmental officer since 1987 and the defender’s lead food officer since 2009. He described relevant formal qualifications and extensive experience with other local authorities in the field of environmental health.
[15] Throughout his evidence Mr Brown used the term “wholesale” to refer to activities involving sale or supply from one business to another business; and he used the term “retail” to refer to activities involving sale or supply direct to the final consumer. While this was regarded by him as a convenient shorthand, he considered that it was also consistent with the distinction defined in the relevant legislation.
[16] Mr Brown testified that environmental health officers within his team attended at the defender’s premises on 10 September 2014 and reported their findings to him. The officers reported that, upon inspection, the defender was found to be operating a “meat cutting plant” without approval by the Food Standards Agency (“FSA”). According to the reports received by him, the defender’s marketing manager (Mr Naaem Khan) had told the authorised officers that the pursuer did not carry out any retail activity from the premises; that a substantial quantity of meat was found in the premises that was intended for wholesale supply to the trade; and that, on being asked by the pursuer’s authorised officers to produce proof of the defender’s retail activity, the defender’s staff were unable to do so. Some records had been exhibited to the pursuer’s authorised officers (including viewing records on a computer screen over the shoulder of Mr O’Reilly) but the officers concluded that these documents evidenced wholesale or “business to business” sales (notably to a related business called Halal Direct Scotland (“HDS”)), not supply by the defender direct to the final consumer. One of the defender’s authorised officers, Sheena Redmond, had reported having seen computer records showing two or three supposed cash sales by the defender; only one such sale disclosed a customer’s name, but that customer was another food business; and the other two documents did not disclose the identity of the customer. Mr Brown spoke to the inferences drawn by him from inter alia the quantities of food referred to in these invoices, concluding that they were not to be typical of the amounts supplied to a final consumer. He spoke of his own attendance at the defender’s premises on 11 September 2014.
[17] Mr Brown explained his understanding of the operation of the so-called “retail exemption” in Article 1.5 of Regulation (EC) 853/2004. He testified that no sufficient evidence was exhibited to him or his officers of retail activity by the defender (involving direct sales to the final consumer); that the defender did not, therefore, require to consider whether the remaining exemption criteria were satisfied; and that no such evidence had since been exhibited by the defender.
[18] In cross-examination, Mr Brown was challenged as to the inferences to be drawn from the defender’s invoices. He acknowledged that he had no knowledge or experience of the shopping habits of the Muslin community (specifically whether such communities may buy larger amounts for domestic use). He acknowledged that there appeared to be an error in the detention of food notice (item 5/2 of process). Reference was made to documents bearing to be invoices in the defender’s third inventory of productions (items 6/3/4 to 6/3/7 of process). Mr Brown was referred to previous inspection reports dated 15 May 2013 and 9 October 2013 (items 6/3/2 & 6/3/3 of process) of the defender’s premises. He acknowledged that neither report addressed the issue of FSA approval. He speculated as to the reasons for that omission. Reference was also made to the trading terms of a third party (Booker Ltd)((item 6/3/1).
Karen Stewart Wardrope
[19] Karen Stewart Wardrope has been employed by the pursuer as an environmental health officer since 2006 (and, since February 2014, as a team leader). She spoke of previous extensive experience and relevant formal qualifications. She spoke to her understanding of the regime for regulation of food premises including the operation of Regulation (EC) 853/2004 and of the so-called “retail” exemption therein.
[20] Prior to 10 September 2014, Ms Wardrope had no prior knowledge or experience of the defender. She described her attendance at the defender’s premises on 10 September 2014 with her colleague (Sheena Redmond) to carry out an inspection. They asked to speak to the person in charge. They were introduced to Naeem Khan (who described himself as the marketing manager). He was initially reluctant to allow the officers access, purportedly on health and safety grounds due to moving vehicles within the premises. On being allowed access, in response to initial questions Mr Khan stated: “We do not do retail”. Further standard documentation was requested; the defender’s employees were unable to provide it at that stage; the officers were asked to return later that day (when Mr O’Reilly, the defender’s managing director, and Mr Hussain, the director, were due to be present); and the officers acceded to that request. The officers reported their preliminary findings to Mr Brown. They prepared draft documentation but Ms Wardrope testified that no final decision had been reached. The officers returned to the defender’s premises later that day (at about 4pm) and remained there until after 8pm, seeking to obtain records and information from the defender in order to complete their inspection. She described the circumstances in which, over a period of several hours, in order to establish the extent of the defender’s retail activity, Mr O’Reilly and Mr Hussain exhibited 10 invoices to the authorised officers bearing to be issued by Halal Direct Scotland (“HDS”). A handful of other invoices was exhibited (on a computer screen), none of which were said by the witness to persuade her that any retail activity (in the sense of direct supply to the final consumer) was carried on by the defender. She spoke to her perception of a degree of obstruction from the defender.
[21] Ms Wardrope spoke to the copy invoices of the defender now forming items 6/3/4 to 6/3/7 and 6/4/11 of process. None of these invoices had been exhibited to her and Mrs Redmond on 10 September 2014 or subsequently. She opined on the content.
[22] In cross-examination, Ms Wardrope was challenged upon her interpretation of the defender’s invoices (notably items 6/3/4 to 6/3/7 and 6/4/11 of process). She acknowledged that she had no knowledge of the purchasing habits of the Asian community. She testified that the burden lay upon the defender to prove that there was a “genuine retail element” to its business. She acknowledged that the defender appeared to carry out cash transactions, making use of a cash drawer on the premises. She testified that the defender’s employees had told her that the defender also occasionally supplied some business customers with meat “at the back door” in exchange for cash. She was not satisfied that the defender supplied direct to the final consumer.
[23] Ms Wardrope acknowledged that she had not considered whether the defender’s activities fell within the “marginal, localised and restricted” elements of the retail exemption. Instead, she had concluded that the defender was not eligible to claim the benefit of the retail exemption at all, because the defender had failed to establish any genuine retail element to its business.
[24] In re-examination, the witness clarified that her reference to “genuine retail element” derived from Annexes 5 & 6 to the FSA Guidance Note (item 15 of process, page 46).
Sheena Redmond
[25] Sheena Redmond is an environmental health officer, employed by the pursuer since August 2007. She spoke to her extensive relevant experience and formal qualifications.
[26] Her evidence corresponded in content with that of Ms Wardrope, both in examination-in-chief and cross-examination.
Julia Docherty
[27] Julia Doherty is an environmental health officer employed with the pursuer since 1998. She spoke to the service upon the defender of the food condemnation warning notice (item 5/4 of process) on 12 September 2014.
James O’Reilly
[28] James O’Reilly is the defender’s general manager. He has held this position for seven years. He claimed to have a detailed knowledge of the defender’s operations and a good working knowledge of the relevant legislation affecting the business.
[29] He spoke to the nature of the defenders’ operations. The defender supplies to the Asian community, particularly those from the Indian subcontinent, Bangladesh and the Middle East. Many of the defenders’ customers are Asian restaurants and high street retail shops. Often, members of the public come into the premises to buy food (including meat products). He described his experience of their shopping practices and habits. Cash transactions were not uncommon. The defender had no cash register, but instead operated a cash drawer.
[30] He spoke to various invoices lodged for the defenders, said to have been exhibited to the pursuer’s inspectors on 10 September 2014, and purportedly evidencing sales to “final consumers”. He reached this conclusion by analysis of the nature and quantity of goods sold. He had no direct knowledge of the specific transactions or customers to which the invoices related.
[31] He spoke to the “marginal” and “localised” criteria in the retail exemption. Reference was made to item 6/1/7 of process. He testified that processed meat sales by the defenders account for only 9.31% of the defender’s total food sales. Sales of meat processed on site was estimated by Mr O’Reilly to be less than half of that figure. The defender’s sales of processed meat never exceeded a quarter of the defender’s total food sales in any year. Meat processed by the defender was said to be supplied only within a 30 mile radius of the pursuer’s geographical boundary line.
[32] Mr O’Reilly spoke to the terms and conditions of Booker Ltd (item 6/3/1 of process) and to previous inspection reports. He also sought to clarify the limited roles and responsibility of the defender’s marketing manager, Mr Khan.
[33] In cross-examination, Mr O’Reilly confirmed that the majority of the defenders’ customers are in the restaurant trade. He was unable to provide any percentage apportionment or split between business customers and “final consumer” customers, nor did the defender maintain records to allow that apportionment to be calculated. He described the defender’s business as a “wholesale/retail cash and carry” business.
[34] Mr O’Reilly testified that there had been no change in the structure of the defender’s business since May 2013. He disputed that the setting up of HDS in 2014 was such a material change. He acknowledged that, at the date of the inspection, he had erroneously believed that sales by the defender to HDS illustrated “indirect supply by [the defender] to final consumers”.
[35] He testified that the pursuer’s inspectors had been unclear and evasive in their questioning; he denied that the defender had been obstructive to the inspectors; he insisted that the inspectors had unreasonably refused to look at, or be satisfied with, invoices offered to them by the defender, purportedly evidencing final consumer sales.
[36] Mr O’Reilly conceded that if a customer turned up in person at the defender’s premises neither he nor the defender’s staff would know whether that person was purchasing for the purposes of a business or for personal final consumption, nor was any enquiry made of the customer to that effect, and no record of such information was kept. He acknowledged that probably more than 908 sale transactions were carried out on the date of the inspection. He was unable to say how many of the total transactions that day involved sales to businesses (as opposed to sales to final consumers). He agreed the majority would be to trade.
[37] In re-examination, Mr O’Reilly insisted that the defender fell within the retail exemption. On average, the defender would never supply in excess of two tonnes of cut meat per annum. He acknowledged that it would be “virtually impossible” to determine whether goods were being purchased from the defender for final consumption, though he insisted that, from his experience of the defenders’ business and the shopping habits of the defender’s customer base, he could tell whether the transactions evidenced by the invoices lodged by the defender were with final consumers.
Saeed Hussain
[38] Saeed Hussain is the defender’s sole director. He testified that the defender operates as an Asian sector food specialist, supplying to the Asian cuisine catering trade (including Bangladeshi, Indian, Pakistani and Chinese food businesses). The defender’s customer base includes final consumers (“household customers”) because of the specialist nature of the foods supplied by the defender. He spoke of his experience and understanding of the purchasing habits of his Asian non-trade customer base, notably the type and volume of meat (and other food) products purchased by them. He left compliance and regulatory issues to his general manager, Mr O’Reilly.
[39] He spoke of his general recollection of pursuer’s inspection visit on 10 September 2014; and to the invoices lodged for the defender, purportedly evidencing sales to “household customers” (notably items 6/3/4 to 6/3/6 and 6/3/11). He could not recall whether items 6/3/4 or 6/3/11 had been shown to the pursuers’ inspectors on the date of the inspection. He had left that detail to his general manager, Mr O’Reilly.
[40] Mr Hussain spoke to the pursuer’s previous inspection forms (items 6/3/2 & 6/3/3 of process), of which he was “vaguely” aware. The handling of such inspections was left to his general manager, Mr O’Reilly.
[41] The calculation of the defender’s meat sales (item 6/1/7 of process) had been left to his general manager, Mr O’Reilly. The figures produced by Mr O’Reilly were consistent with Mr Hussain’s broad understanding.
[42] In cross-examination, the witness testified that the defender’s main customer base was restaurants and Asian retail shops. He estimated that “probably 90%” of the overall customer base would be business customers. He could not give an exact figure. He insisted that the defender also supplies to the final consumer, but that the defender’s primary business was “non-retail”.
[43] Mr Hussain sought to explain the circumstances in which his marketing manager had allegedly provided information to the pursuer’s inspectors. He spoke to the defender’s relationship with HDS, an on-line food business supplying the final consumer. He alleged that the pursuer’s inspectors had already made up their minds when they returned to the defenders’ premises in the late afternoon of 10 September 2014 (because they had brought pre-printed enforcement forms with them). He could not recall the detail of his discussions with the pursuer’s officers on 11 September 2014
[44] Mr Hussain expressed the opinion that as long as the defender was supplying some final consumers, and were amenable to do so, then that allowed the defender to claim the benefit of the retail exemption.
[45] In re-examination, Mr Hussain acknowledged that his company was described, in documents registered at Companies House, as a wholesaler. However, he also referred to the defender’s memorandum of association (item 6/39 of process) which stated that any business could be carried on by the defender.
Closing submissions for the pursuer
[46] Detailed written submissions were lodged for, and adopted by, the pursuer.
[47] The pursuer’s agent characterised the issue before the court as a single question: does the meat detained and seized by the pursuer on 12 September 2014 fall to be condemned and destroyed? Reference was made to the Food Safety Act 1990, section 9(1) and to Regulation (EC) 853/2004. To answer that question, it was necessary to consider whether the defender’s business could properly be described as “retail”, such as to afford them access to the exemption in Regulation (EC) 853/2004. The pursuer’s agent submitted that, on the evidence available, such retail activity as was carried on by the defender was minimal. Reference was made to the definition of “retail” in Article 3 of Regulation (EC) 178/2002; to Regulation (EC) 852/2004 and Regulation (EC) 853/2004; and to a guidance document issued by the European Commission (item 5/22 of process). It was submitted that the defender’s interpretation, if correct, would blur the distinction between “wholesale” and “retail” operations, leading to absurd outcomes. On a proper interpretation, the pursuer’s agent submitted that the exemption in Article 1.5 of Regulation (EC) 853/2004 could be invoked only if the primary activity of the relevant establishment or unit was retail (i.e. supply to the final consumer); in which event, the wholesale activity of the operator required to be marginal, localised and restricted.
[48] The pursuer’s agent submitted that the defender was primarily a wholesaler; and that the defender’s annual meat sales represented an incidental element of the defender’s wholesale business. Further, it was submitted that the circumstances of the defender’s business were adequately explored at the date of the inspection and that the inspectors acted properly throughout.
[49] It was submitted that the defender’s meat cutting plant should have been registered with the Food Standards Agency at the date of the inspection by virtue of Regulation (EC) 853/2004; and that, absent such registration, the food processed in that plant failed to comply with “the Hygiene Regulations”, in terms of Regulations 2 & 27 of the Food Hygiene (Scotland) Regulations 2006, and with “food safety requirements”, for the purposes of section 9 of the Food Safety Act 1990. As a consequence, the court was obliged to condemn the food and order its destruction.
[50] The phrase “genuine retail element” which appeared in Annex 6 of the Food Standards Agency guidance document was not replicated in the legislation. The pursuer’s agent submitted that this wording was not authoritative and should be ignored.
Closing submissions for the defender
[51] The defender’s agent also lodged and adopted detailed written submissions.
[52] The defender sought reduction ope exceptionis of the pursuer’s certificate dated 10 September 2014 and dismissal of the application. In summary, firstly, it was submitted that the defender’s business did not require “approval” by the Food Standard Agency because it was entitled to claim the benefit of the so-called “retail exemption” referred to in Article 1(5) of Regulation (EC) 853/2004. The defender’s interpretation of that exemption differed from the pursuer’s interpretation. The defender was characterised as a “wholesale outlet” (within the definition of “retail” in Article 7 of Regulation (EC) 178/2002); there was said to be a “genuine retail element” to the defender’s business, thereby entitling it to claim the benefit of the retail exemption; and, on the evidence, the defender’s supplies of cut meat were said to be a marginal, localised and restricted part of its business. Reference was made to the Food Law Code of Practice (Scotland) published by the Food Standards Agency and a guidance document on the implementation of certain provisions of Regulation (EC) 853/2004. It was submitted that the pursuer’s Regulation 27 certificate dated 10 September 2014 was not justified because of the manner in which the inspection was carried out. Reference was made to the circumstances in which the enforcement documentation was drafted; deficiencies in the enforcement documentation; premature presumptions and “value judgments” allegedly made by the pursuer’s inspectors; alleged “observer bias” of the pursuer’s inspectors; the allegedly unjustified dismissal by the pursuer’s inspectors of evidence of retail activity by the defender; an alleged preoccupation of the pursuer’s inspectors with irrelevant detail (such as the absence of a cash register); unfounded suspicions regarding the authenticity of documents exhibited by the defender; the admitted ignorance of the pursuer’s inspectors of the defender’s household customers and their purchasing habits; and the allegedly hasty and inadequate consideration given to the nature of the defender’s business generally.
[53] The defender submitted that there was (and is) a genuine retail element to its business; that this was adequately evidenced to the pursuer’s inspectors; and that the proportion of meat supplied by the defender, in comparison with the rest of its food business, was marginal, localised and restricted.
[54] Reference was made to Litster v Forth Dry Dock and Engineering Co Ltd 1989 SLT 540; R v Secretary of State for Transport ex parte Factortame [1990] 3 CMLR 1.
Discussion
[55] Food safety is regulated by an intricate web of European and national legislation. From the perspective of the European Union, the free movement of safe and wholesome food is viewed as an essential aspect of the internal market and as contributing significantly to the health and well-being of citizens, as well as to their social and economic interests. For that reason, EU legislation is designed to approximate differing concepts, principles and procedures across member states and to impose broadly uniform food safety requirements aimed at achieving a high level of protection of human life and health (Regulation (EC) No. 178/2002, Preambles (1) to (5)).
[56] The present proceedings involve consideration of three EU Regulations (of the European Parliament and Council) and two UK enactments. The EU legislation is Regulation (EC) No. 853/2004, Regulation (EC) 852/2004 and Regulation (EC) 178/2002; the UK legislation is the Food Safety Act 1990 and the Food Hygiene (Scotland) Regulations 2006.
[57] Looking at each in turn, Regulation (EC) 178/2002 lays down general principles and requirements of food law, such as the principle of traceability of food “from farm to fork”, through all stages of production, processing and distribution; the so-called precautionary principle (whereby provisional risk management measures may be taken where the possibility of harmful health effects is identified but scientific uncertainty persists); and the articulation of basic food safety requirements. The significance of this Regulation to the present dispute is that it provides the definitions of certain key words, notably “retail”, “final consumer”, “food business” and “food business operator”.
[58] Regulation (EC) 852/2004 lays down specific hygiene rules for all food business operators. Food business operators must ensure that all stages of production, processing and distribution of food under their control satisfy the hygiene requirements laid down in this Regulation. The Regulation imposes a sweeping array of obligations, ranging for example from the general requirement to keep food premises clean and maintained (Annex II, Chapter I, paragraph 1) to the specific requirement to install easily-washable insect-proof screens on windows opening to the outside environment (Annex II, Chapter II, paragraph 1(d)). Of particular significance to the present dispute, this Regulation provides the definition of “establishment”.
[59] The EU legislators recognised, though, that certain foodstuffs, particularly food of animal origin, presented specific hazards to human health, requiring the setting of specific hygiene rules. Accordingly, Regulation (EC) 853/2004 was enacted to lay down specific hygiene rules for food of animal origin, to “supplement” those laid down by Regulation (EC) 852/2004 (Article 1.1).
[60] These supplementary rules are extensive, regulating such intricate details as the washing of frogs’ legs and the removal of the pancreas of snails after killing. The relevant supplementary requirement for the present dispute is that certain establishments (including “cutting plants”) handling products of animal origin must be approved by the “competent authority” (Article 4(2), Regulation (EC) 853/2004). In the United Kingdom, that competent authority is the Food Standards Agency.
[61] Importantly, however, it was intended that, with certain exceptions, Regulation (EC) 853/2004 should “generally apply to wholesale activities” only, and not to “retail” (Recital (12) & Article 1.5(a)). That is because the sweeping requirements of the earlier Regulation (EC) 852/2004 were considered to be “generally sufficient to ensure food safety in establishments carrying out retail activities” (Recital (12)).
[62] However, in some circumstances, Regulation (EC) 853/2004 does apply to “retail”, subject to certain exemptions.
The proper interpretation of the retailer’s wholesale exemption
[63] That brings us to the nub of the issue in the present case.
[64] The pursuer claims that Regulation (EC) 853/2004 applies to the defender’s operation of its meat cutting plant, with the result that approval of the Food Standards Agency is required. The defender insists that its activities fall within an exemption conferred by Article 1.5(b)(ii) of the Regulation, and that no such approval is required.
[65] The answer turns upon the proper interpretation of the exemption provision. The key provision is Article 1.5 of the Regulation. Article 1.5(a) states:-
“(a) Unless expressly indicated to the contrary, this Regulation shall not apply to
retail.”
However, Article 1.5(b) continues:-
“(b) However, this Regulation shall apply to retail when operations are carried
out with a view to the supply of food of animal origin to another establishment,
unless: …. the supply of food of animal origin from the retail establishment is to
other retail establishments only and, in accordance with national law, is a
marginal, localised and restricted activity.”
[66] The Regulation (Article 2) adopts the definitions in Regulation (EC) No. 178/2002 and in Regulation (EC) 852/2004. Thus, the word “retail” means:
“the handling and/or processing of food and its storage at the point of sale or delivery to the final consumer, and includes distribution terminals, catering operations, factory canteens, institutional catering, restaurants and other similar food service operations, shops, supermarket distribution centres and wholesale outlets” (Regulation (EC) No. 178/2002, Article 3.7).
A “final consumer” means:-
“the ultimate consumer of foodstuff who will not use the food as part of any food business operation or activity” (Regulation (EC) No. 178/2002, Article 3.18).
“Establishment” means “any unit of a food business” (Regulation (EC) 852/2004, Article 2.1(c)) and “food business” means:-
“any undertaking, whether for profit or not and whether public or private, carrying out any of the activities related to any stage of production, processing and distribution of food” (Regulation (EC) No. 178/2002, Article 3.2)
[67] In my judgment, properly interpreted, Article 1.5(b)(ii) provides an exemption for a food business (or unit of a food business) whose principal operation or activity is retail (that is, in short, the supply of food direct to the final consumer) but which also engages in a “marginal, localised and restricted” wholesale supply of food of animal origin to other retail establishments. In other words, a food business (or unit of such a business) which principally supplies the final consumer (and whose business is, therefore, “retail” in nature), but which also has a de minimis wholesale side-line in supplying food of animal origin to other retail establishments (being other food businesses or units thereof that themselves principally supply the final consumer) is exempt from the requirements of Regulation (EC) 853/2004.
[68] That means that the Article 1.5 exemption can be invoked by the operator of a food business (or unit thereof) principally engaged in “the handling and/or processing of food and its storage at the point of sale or delivery to the final consumer” (i.e. “retail”), in respect of wholesale (i.e. non-retail) activities of such a retailer to “other retail establishments” (that is, to food businesses that are engaged principally in supply direct to the final consumer), where such wholesale activities are a “marginal, localised and restricted” part of the retailer’s activities.
[69] I reach this conclusion for the following reasons. Firstly, in my judgment the ordinary meaning of the words used in, and the structure of, the exemption provision in Article 1.5 plainly point to that conclusion. The provision can be broken down into three constituent parts. Part 1 (in Article 1.5(a)) states that the Regulation shall not apply to “retail”, that is, in short, to the activity of supplying to the final consumer. However, part 2 (in Article 1.5(a)) then expressly applies the Regulation to retail – but only when “operations are carried out with a view to the supply of food of animal origin to another establishment”. In other words, it applies to retail, only where there is also some element of wholesale activity. (Since “establishment” is defined as meaning any unit of a food business, and a food business cannot, by definition, be a final consumer, it is plain that this explicit application of the Regulation to “retail” is only triggered when wholesale operations are also being undertaken by the retail food business (or unit thereof), comprising “the supply of food of animal origin to another establishment”.) Lastly, part 3 (in Article 1.5(b)(ii)) then expressly dis-applies the Regulation again, but only if those wholesale operations (i.e. the supply of food of animal origin to another establishment) are confined to supply “from the retail establishment” to “other retail establishments” and those wholesale operations are a “marginal, localised and restricted activity”.
[70] The words “from the retail establishment… to other retail establishments” (in Article 1.5(b)(ii)) are especially illuminating. The use of the definite article confirms that the establishment in respect of which exemption is sought must itself be a “retail establishment”; that conclusion is then reinforced by the immediately-following reference to “other retail establishments”; and the definition of the exempted supplies (of food of animal origin) as being between such retail establishments indicates that the exemption provision is intended to deal with wholesale (business-to-business) supplies.
[71] I acknowledge that Article 1.5 does not explicitly state that, in order to enjoy the benefit of the exemption therein, the principal operation or activity of the food business (or unit) must be retail (i.e. supply to the final consumer). However, in my judgment such a quantitative criterion (and a comparative approach) is necessarily implied by the terms of Article 1.5(b)(ii), which requires that the supply (in respect of which the exemption is claimed) is “marginal”. This begs the question: marginal to what? The wording of the exemption necessarily involves a comparison between the retail and the wholesale activities in question; and, in its terms, requires that the latter is marginal to the former. (Likewise, since the wholesale supply in respect of which the exemption is claimed must be “restricted”, one is compelled to compare the nature of the wholesale supply with the nature of the (broader) retail activities of the food business (or unit thereof, as the case may be) to determine whether the wholesale supply is indeed “restricted” in nature.)
[72] Secondly, a purposive approach must be applied to the interpretation of EU legislation of this nature in order to give effect to the spirit, and achieve the objective or purpose, of the legislation. In my judgment, the interpretation of the exemption provision, as set out above, is consistent with that approach. The objectives of the Regulation, and the textual context of the exemption provision, are more fully narrated in the Recitals. Recital (12) records:-
“This Regulation should generally apply to wholesale activities (that is, when a retail establishment carries out operations with a view to supplying food of animal origin to another establishment).”
Recital (13) then introduces the concept of the exemption. It states:-
“Member States should have some discretion to extend or limit the application of the requirements of this Regulation to retail under national law. However, they may limit their application only….when the supply of food of animal origin from a retail establishment to another retail establishment is a marginal, localised and restricted activity. Such supply should therefore be only a small part of the establishment’s business; the establishments supplied should be situated in its immediate vicinity; and the supply should concern only certain types of products or establishments.”
[73] These Recitals make the spirit or objective of the Regulation clear. It is intended to generally apply to wholesale activities. However, according to the Recitals, it is also intended to apply to retail operators (that is, food businesses or units thereof that supply direct to the final consumer) when the retail operator engages in certain specific wholesale activities (namely, the supply food of animal origin to “other retail establishments”). In that event, Regulation (EC) 853/2004 will apply to those retail operators. However, those retail operators may be exempted from the application of the Regulation if those wholesale supplies are a small part of the retailer’s business (“marginal”); the wholesale supplies are within the immediate vicinity (“localised”); and involve only certain types of products or establishments (“restricted”). (In that event, of course, the earlier Regulation 852/2004 would continue to apply.)
[74] It can be inferred that the purpose of the exemption is to allow a retail food business (or unit thereof), which principally supplies direct to the final consumer, to trade locally, at a de minimis level, with other retail food businesses, without attracting the full burden and rigour of Regulation (EC) 853/2004. The underlying rationale is that the risk to public health from such limited local wholesale trade involving no long-distance transportation or scattered distribution, and between food business operators who will, in any event, be subject to the stringent hygiene requirements of Regulation (EC) 852/2004, is minimal and acceptable in the interests of encouraging local commerce.
[75] Thus, a High Street retail butcher (subject to Regulation (EC) 852/2004), supplying principally to the final consumer, would be at liberty to supply some meat to local restaurants, canteens or caterers, without attracting the application of the supplementary requirements of Regulation (EC) 853/2004, provided such wholesale supplies were a marginal, localised and restricted activity to the principal retail business. If those wholesale supplies begin to exceed the threshold margins, Regulation (EC) 853/2004 will be engaged because greater regulatory scrutiny of the operation then becomes necessary in the interests of public health.
[76] Or a slaughter-house operating solely on a wholesale basis may decide to open a shop (in which the cutting and boning of meat is carried out) selling directly to the final consumer. The slaughterhouse itself would attract the application of Regulation (EC) 853/2004 (as its activities are wholesale), but the shop (if established as a demarcated “unit” of the food business) would not attract the application of that Regulation as its sole activity is retail. However, if the shop was then used to make wholesale supplies (to other retail establishments such as other shops, restaurants, or retail food outlets, it would find itself subject to Regulation (EC) 853/2004 unless the operator can establish that those wholesale supplies are a “marginal, localised and restricted activity” of the shop.
[77] Or a cash and carry, with a small butchery on site, engaged principally in bulk food supplies to trade customers, will be subject to Regulation (EC) 853/2004 because its principal activity is wholesale in nature. The butchery may also, at times, supply final consumers direct, but that, of itself, does not engage the Article 1.5(b) exemption. That is because the exemption, in its terms, requires that there be a “retail establishment” which supplies food of animal origin to “other retail establishments” (Article 1.5(b)(ii)); and that those supplies (which, by definition, are wholesale) are a marginal, localised and restricted activity of the larger retail operation. If the cash and carry business was to be restructured so that the butchery is properly identifiable as a discrete, demarcated “unit” of the food business, selling principally to final consumers, then (as with the example of the slaughter-house shop, above) that “unit” would be at liberty to make limited wholesale supplies (to other retail establishments such as shops, restaurants, or retail food outlets) without attracting the application of Regulation (EC) 853/2004 provided the operator can establish that those wholesale supplies are a “marginal, localised and restricted activity” of the retail butchery.
[78] Throughout the parties’ evidence and submissions (and, indeed, in various non- published commentaries on Regulation (EC) 853/2004), the exemption afforded by Article 1.5 was referred to, by way of a convenient short-hand, as “the retail exemption”. On reflection, it seems to me that that short-hand is potentially misleading. The exemption (specifically in Article 1.5(b)(ii)) may more accurately be described, not as a “retail exemption”, but as a “retailer’s wholesale exemption”. Properly understood, it is an exemption available to a retailer who engages in restricted, local, de minimis wholesale supplies of food of animal origin to other retail establishments.
The nature of the defender’s principal activity
[79] Having determined the nature and scope of the exemption, the application of law to the facts of the present case is a comparatively straight-forward exercise.
[80] Firstly, in my judgment, the evidence established that, on or about 10 September
2014, the principal operation or activity carried on by the defender from the premises was wholesale (or non-retail) in nature, namely the handling, processing, storage and distribution of food (including food of animal origin) to other food businesses or establishments (as defined by Article 3.2 of Regulation (EC) No. 178/2002 and Article 2.1(c) of Regulation (EC) No. 852/2004). That means that the defender’s premises are not a “retail establishment” (in terms of Article 1.5(b)(ii)). While both Mr O’Reilly (the defender’s general manager) and Mr Hussain (the defender’s director) insisted that the defender also supplied final consumers, Mr O’Reilly confirmed in cross-examination that the majority of the defender’s customers are in the restaurant trade and that supply to the final consumer was not the “primary purpose” of the defender’s business; and Mr Hussain, in examination in chief, testified that the defender operated as an Asian sector food specialist supplying to the Asian cuisine catering trade; that the defender’s primary business was “non-retail”, that the defender’s main customer base was “restaurants and Asian retail shops”, and that “probably 90%” of the overall customer base comprised business customers. Other adminicles of evidence, taken cumulatively, tended to support the conclusion that the defender was principally involved in a non-retail operation. The defender’s premises are situated in an industrial estate; the premises were acknowledged by the defender’s witnesses to be akin to a warehouse storage facility, with forklift trucks operating in the aisles; members of the public attending at the premises to purchase goods must seek first permission at the defender’s reception office to look around the aisles on which goods are stored; there are no cash registers on the premises; cash taken from customers transacting on the premises is kept in a drawer; no till receipts are issued to customers (instead, they receive an invoice); the defender is described as a “wholesaler” in the defender’s own submissions lodged at Companies House; and the defender’s website advertises the business as a supplier to the catering/restaurant trade.
[81] Linked to this, no evidence was led that the cutting plant was a separate “unit” of the defender’s business, still less a separate retail unit (in the sense that its principal activity was retail). There was no evidence of any corporate, financial, accounting, record-keeping or other structural demarcation or segregation of the cutting plant to distinguish it as a retail establishment distinct from the defender’s wholesale operation. Interestingly, the calculations in item 6/1/7 of process produced by the defender bearing to evidence the quantities of food of animal origin sold by the defender (presented as a percentage of the overall food sales of the business) also did not attempt to distinguish the defender’s cutting plant supplies from sales of other meat products, still less did it distinguish retail from wholesale supplies. This tended to support the conclusion that the cutting plant was not a separate unit, retail or otherwise, of the business. In any event, there was no evidence to vouch the contrary proposition.
[82] Secondly, I was satisfied, on the evidence of Mr O’Reilly and Mr Hussain, that, on or about 10 September 2014, the defender did indeed occasionally engage in retail activity from the premises (including from the cutting plant within the premises), by supplying food direct to final consumers (as defined by Article 3.18 of Regulation (EC) No. 178/2002) including, but not limited to, food of animal origin that had been handled, processed and stored in the cutting plant within the premises. Both Mr O’Reilly and Mr Hussain spoke in consistent terms of such transactions taking place, of the demographic of those final consumers, and of their shopping habits.
[83] However, I am also satisfied that, as at the relevant date, such retail activity was immaterial in volume, value and frequency in the context of the pursuer’s principal operation and activity carried on from the premises et separatim from the cutting plant within the premises. I reach that conclusion on the basis of the following evidence. In cross-examination, Mr Hussain estimated that “probably 90%” of the defender’s overall customer base comprised business customers, though he conceded he could not give an exact figure. If this estimate is accurate, at most only a modest 10% of the customer base comprises final consumers. Moreover, having regard to the sequential numbering on the invoices produced by the defender, Mr O’Reilly explicitly acknowledged in cross-examination that probably more than 908 transactions were carried out on the date of the inspection alone. Despite that volume, the defender produced evidence purportedly vouching only three final consumer supplies that day. Indeed, in total, in relation to the period around the relevant date, the defender has produced evidence purportedly vouching only four final consumer supplies, all at trifling volumes and values in the context of the defender’s business. For the reasons explained below, I did not accept that those four documents established sales to final consumers. Nevertheless, even if I had been willing to accept those documents at face value, in my judgment the volume, value and frequency of such activity was plainly immaterial in the context of the principal wholesale operation and activity carried on from the premises. Such minimal final consumer supplies as were occasionally made do not make the defender’s operation “retail” in nature, and do not make the defender’s premises a “retail establishment” in terms of Article 1.5(b)(ii).
[84] By themselves, these conclusions are sufficient to defeat the application of the exemption. In respect that the defender’s principal activity is wholesale (or, put another way, that the defender does not operate a “retail establishment”), it is simply not eligible to claim the exemption afforded by Article 1.5(b).
Failure to prove other exemption criteria
[85] Thirdly, in my judgment the defender has failed to establish the other qualifying criteria within the exemption provision. Specifically, the defender has failed to prove (i) that, as at on or about 10 September 2014, the defender’s supply of food of animal origin from the premises was to “other retail establishments only”; and (ii) that, as at on or about 10 September 2014, such supply of food of animal origin to other retail establishments was a “marginal, localised and restricted activity” (Regulation (EC) No. 853/2004, Article 1.5(b)(ii)).
[86] To explain, the defender seeks to rely upon Article 1.5(b)(ii) which, in its terms, constitutes an exception to, or exemption from, the application of Regulation (EC) 853/2004. If no evidence were to be led to establish the constituent elements of the exemption, the defender would be unsuccessful. Therefore, the onus of proof falls upon the defender to establish that the exemption applies. That is consistent with:
“the orthodox principle (common to both the criminal and the civil law) that exceptions etc., are to be set up by those who rely on them” (Nimmo v Alexander Cowan & Sons Ltd 1967 SC (HL) 79 per Lord Wilberforce at 109).
Besides, the facts bearing upon the relevant exemption criteria (not least of the allegedly marginal, localised and restricted nature of the supply) lie peculiarly within the knowledge of the defender. That tends to support the conclusion that the persuasive burden falls upon that party.
[87] Broadly speaking, Article 1.5(b) creates three hurdles for the defender to overcome, in order to disapply the Regulation. The defender must satisfy the court (i) that it operates a “retail establishment”; (ii) that the defender’s wholesale supply of food of animal origin from the premises is to “other retail establishments only”; and (iii) that such supply of food of animal origin to other retail establishments is a “marginal, localised and restricted activity”.
[88] I have already addressed hurdle (i), above.
[89] In respect of hurdles (ii) & (iii), I concluded that the evidence led by the defender was inadequate in quality to discharge the evidential burden upon the defender, for the reasons explained below.
Wholesale supplies to “other retail establishments only”
[90] In its terms, the exemption requires that the defender’s wholesale supply of food of animal origin (i.e. “the supply of food of animal origin to another establishment”, per Article 1.5(b)) is to “other retail establishments only”. Of necessity, in order to establish the exclusivity of the wholesale supply, evidence is required of the nature of the activities of the defender’s customers (for food of animal origin) or, at least, a reliable representative sample thereof.
[91] Looking first at Mr Hussain’s evidence, in my judgment his testimony was general, impressionistic and, at times, somewhat casual in nature. While he was strident in his expressions of general opinion, when tested in cross-examination he did not display any persuasive grasp of, or attention to, the subtler details relevant to the issues in dispute. Any questions requiring detailed explanation or substantiation were deflected by him onto his subordinates, specifically Mr O’Reilly, as the general manager. Specifically, nothing Mr Hussain said was sufficient in qualitative detail to establish the identity or activities of the businesses to which the defender’s supplies (of food of animal origin) were made (that is, whether those businesses were “retail establishments only”). At best, he was able to testify that the defender’s “main” customer base was “restaurants and Asian retail shops”; and that the customer base included final consumers. But that was not the same as asserting that the wholesale supplies of food of animal origin were exclusively to retail businesses, merely that the “main” customer base comprised retail businesses. His testimony did not preclude the possibility that supplies of food of animal origin were also made to non-retail establishments (such as other wholesalers or intermediaries). Specifically, no detailed or vouched breakdown was produced, or spoken to by him, clarifying the nature of the customer base at around the relevant date (for food of animal origin); no detailed or vouched breakdown was produced, or spoken to by him, clarifying the nature of the transactions (or even a satisfactory representative sample of transactions) involving supply of food of animal origin at around the relevant date; and no evidence was led that the defender had any checks, systems or records in place to identify the nature of the defender’s customers’ activities (that is, whether the customers to whom these products were sold were engaged in, for example, wholesale, retail, or mixed wholesale & retail activities, or were purchasing solely for private consumption). Such information as Mr Hussain was able to provide on all these issues was impressionistic and unvouched. The picture that emerged was that, in truth, no systematic enquiries are made, and no records are kept, of the operations or activities of the customer base that purchases food of animal origin from the defender. I entirely accept (as Mr Hussain and Mr O’Reilly insisted) that there is no obligation upon the defender to do so. The defender is free to sell to any customer that is willing to buy. A customer does not require to be interrogated as to the intended use of the products purchased. However, that is not the point. If the defender wishes to enjoy the benefit of the exemption in Article.1.5, the onus falls upon it to discharge the evidential burden of establishing that its wholesale supplies (of food of animal origin) are indeed “to retail establishments only”. To discharge that evidential burden, the defender has to do something more than make broad-brush guesses as to the nature of its customers’ activities based upon an ex post facto review of a handful of invoices that may or may not be representative of the defender’s wholesale activity at around the relevant date. Mr Hussain’s approach to the identification of final consumer transactions was indicative of his rather casual, unscientific, broad-brush approach. His purported identification of sales to final consumers was based upon little more than rough and ready guess-work, based on his life experience, proceeding upon a cursory assessment, after the event, of a selection of invoices from an indeterminate pool (issued in transactions of which, by his own concession, he had no direct knowledge).
[92] On this particular issue, Mr O’Reilly’s testimony was equally general and unvouched (for example, by a representative sample of invoices of wholesale activities). In addition, I approached Mr O’Reilly’s evidence (specifically on the nature of the defender’s activities) with some caution. That is because his testimony disclosed a basic misunderstanding of the meaning of “retail” and, more generally, of the operation of the exemption. In my judgment, this rendered his evidence on these fundamental issues unreliable. For example, in cross-examination, he conceded that, up to at least the date of the pursuer’s inspection on 10 September 2014, he had regarded the defender’s supply of cut meat to Halal Direct Scotland (“HDS”) as an example of “indirect supply by [the defender] to the final consumer”. (Such business-to-business supply would, of course, be wholesale in nature.) More generally, his understanding of the exemption provision was that it could be invoked provided the defender’s business had an element of genuine retail sales (however tiny); and provided cut meat sales were a small part of the defender’s overall business. He could not quantify the size of the alleged “retail” element of the defender’s business and he acknowledged that no system was maintained by the defender to allow that calculation to be carried out. Nevertheless, Mr O’Reilly insisted in cross-examination that the defender’s business was properly described as a “wholesale/retail cash and carry” and as a “wholesaler/retailer”. While that may be a fair broad description of the defender’s business in lay terms, for the purposes of the proper application of Regulation (EC) 853/2004 this analysis was flawed. Put shortly, for the purposes of Regulation (EC) 853/2004, the exemption applies to wholesale meat supplies that are a marginal part of a business whose activities are principally retail in nature; it does not apply, as Mr O’Reilly erroneously understood, to any meat supplies (wholesale or retail) that are a marginal part of a business whose activities are principally wholesale in nature. Lastly, in evidence-in-chief Mr O’Reilly identified invoice no. 116983 (item 6/3/11 of process) as an invoice that was exhibited to the pursuer’s inspectors on 10 September 2014, purportedly evidencing a sale to a final consumer. Mr O’Reilly also identified his hand-writing on the document reading “Shown to the officers on 10/9/2014”. However, in cross-examination, Mr O’Reilly belatedly came to realise that this document was in fact dated 10 October 2014, a full month after the date of the inspection, and therefore could not have been exhibited to the authorised officers on 10 September 2014. His explanation for the discrepancy was convoluted and unpersuasive.
[93] Taken cumulatively, in my judgment these material errors tended to undermine the overall reliability of his testimony.
“Marginal” activity
[94] Evidence was led from Mr O’Reilly seeking to establish that the defender’s supplies of food of animal origin were “marginal” to the total food sales of the business. He spoke to a calculation made by him, VAT Returns and computer-printed documents entitled “Product Period Profit (by transaction)” lodged in process (items 6/1/7 to 6/1/13 of process).
[95] In essence, Mr O’Reilly’s testimony was that the value of the defender’s processed/cut meat sales represented less than 10% of the value of total food sales of the defender. This evidence was certainly of better quality (being more specific and better vouched) than the testimony of Mr Hussain on this point (as discussed below). Nevertheless in one material aspect it was incomplete. It did not cover the relevant date (10 September 2014) or a proximate period (or an anniversary thereof). To explain, Mr O’Reilly’s key calculation (item 6/1/7), and the related VAT Return (item 6/1/8) and itemised product breakdown (item 6/1/9) upon which the calculation was based, all related to the quarterly period from 1 April 2014 to 30 June 2014. They pre-dated, by almost a full trading quarter, the date of the inspection on 10 September 2014.
[96] In order to discharge the burden of establishing the exemption criteria, I would have expected to see similar evidential material covering the trading quarter leading up to the relevant date (or, if that could not be made available, similar material covering the preceding anniversary of the quarter leading up to the relevant date and the succeeding quarters thereafter). In the event, while Mr O’Reilly was able to speak to trading figures for two preceding quarters (1 January 2014 to 31 March 2014: items 6/1/10 & 6/1/11; and 1 October 2013 to 31 December 2013: items 6/1/12 & 6/1/13), none of these records covered the relevant date (10 September 2014), or the quarter leading up to the relevant date (1 July 2014 to 30 September 2014), or the preceding anniversary of that quarter (1 July 2014 to 30 September 2014).
[97] In my judgment the omission is of significance because in cross-examination Mr O’Reilly candidly acknowledged that it was “impossible” to state how much trade (in quantity or value) was attributable to final consumer (i.e. retail) sales by the defender; that there was even “no average day” by which to make such an estimate; and, critically, that the volume of meat sales by the defender would “fluctuate” depending upon “seasons and festivals”.
[98] I take it to be within judicial knowledge that a significant Muslim festival, namely Ramadan, takes place each year, recently during the summer months, over a period of 30 days, leading to the major festival of Eid; and that religious observance of Ramadan involves inter alia the communal breaking of fast at dusk and at the end of Ramadan.
[99] It is not unreasonable to infer that the defender’s sales of food of animal origin may well be materially affected during the period covering Ramadan and Eid.
[100] The result is that sales figures for the summer months (July, August & September) are likely to be acutely relevant and material, not only because the date of the inspection falls within that trading quarter, but also because that quarter coincides with the major Muslim festivals of Ramadan and Eid. Yet, surprisingly, that quarter did not feature in either the 2014 sales records or in the 2013 sales records that were produced by the defender. When he gave evidence, Mr O’Reilly testified that the sales figures for the quarter from 1 July to 30 September 2014 were not yet available. I did not find that to be a persuasive explanation. He gave his evidence on 14 November 2014, over two months after the date of the inspection (and a month and a half after the end of the relevant quarter). Besides, Mr Hussain, the defender’s director, did not give his evidence until 9 January 2015, by which date, on any view, the relevant sales figures ought to have been available.
[101] For his part, Mr Hussain acknowledged that he did not prepare the financial documentation (items 6/1/7 to 6/1/13 of process). He did not speak to the detail, presentation or provenance of those figures. He had not personally undertaken a review of the relevant financial and sales records. He left that detail to Mr O’Reilly. Consistent with the general casual nature of his testimony, he was content to confirm that he agreed with the overall outcome of the calculation (in item 6/1/7). In my judgment, his evidence added little weight to Mr O’Reilly’s evidence in this regard.
[102] As a result, in my judgment the evidence led of the defender’s sales activity at or around the relevant date (10 September 2014), and in the trading quarter within which it occurred, was materially incomplete and did not constitute a reliable basis upon which to conclude that the defender has discharged the onus of proving that, at or around the relevant date, its supplies of meat of animal origin were indeed marginal to its overall business.
“Localised” activity
[103] With reference to the “localised” element of the exemption, Mr O’Reilly’s testimony was brief and general in nature. He testified that the defender’s supplies from the butchery were all within a 30 mile radius though, interestingly, he calculated that 30 mile radius from a point close to the border of the South Lanarkshire Council territory, rather than from the defender’s premises themselves. At first blush that seemed to me to be a peculiar approach to the interpretation of this criterion. The exemption requires that the wholesale supply of food of animal origin is a localised activity of the defender. I would have expected the word “localised” to mean “local to the source of the supply” (being, in this case, the defender’s premises) and not “local to the furthest boundary of the local authority in whose territory the source of supply is located”. Adopting the latter interpretation, the word “localised” attains, in practice, an elastic and arbitrarily variable meaning depending upon the geographical extent of the enforcement authority in which the business happens to be located. Food businesses in, say, the Western Isles, would potentially be at liberty to supply over vast distances, whereas businesses in geographically smaller local authorities would be more restrained in the extent of their wholesale trade. Mr O’Reilly’s interpretation does not sit comfortably with the spirit of a Regulation that seeks to achieve uniformity in food hygiene regulation.
[104] That said, in fairness, it must be recorded that the source of Mr O’Reilly’s interpretation is a document entitled “Guidance for local authority authorised officers on the approval of establishments” published by the Food Standards Agency in February 2012 (item 5/16 of process). This document bears to have been issued as guidance to help local authorities, though it “does not provide authoritative interpretations of the law” (page 9, paragraph 2). Besides, no issue was taken with the interpretation adopted by Mr O’Reilly. Accordingly, in those circumstances, and absent submissions on the matter, I reserve judgment on the proper interpretation of the word “localised”.
[105] Nevertheless, for broadly similar reasons to those referred to in paragraph [96] et seq., above, in my judgment the evidence led of the extent of the defender’s supplies of food of animal origin at or around the relevant date (10 September 2014) was materially incomplete and did not constitute a reliable basis upon which to conclude that the defender has discharged the onus of proving that those supplies were indeed “localised”. That is because no evidence was led of any representative sample of wholesale supplies or deliveries at or around the relevant date (or in the trading quarter leading up to it). As a result I was not satisfied that I had a fair and reliable picture of the true geographical extent of the defender’s wholesale meat supplies. All that was presented was Mr O’Reilly’s unvouched general assertion that the defender’s meat deliveries did not extend beyond the stated radius; and one invoice (item 6/3/7/1) of a single delivery to restaurant premises in Edinburgh on 10 September 2014. I was not satisfied that that single invoice constituted a reliable representative sample of the geographical extent of the defender’s wholesale supplies on or about the relevant date (or in the trading quarter within which that date fell); or that Mr O’Reilly’s general assertion plugged the evidential gap.
[106] Mr Hussain was candid in conceding that he could not speak to the geographical extent of the distribution of food of animal origin processed on the premises. Those delivery issues were left to Mr O’Reilly to organise. Therefore, his evidence added nothing to the contention that, at or around the relevant date, the defender’s wholesale supplies of food of animal origin were “localised”.
Restricted activity
[107] No evidence was led from Mr Hussain or Mr O’Reilly to support the conclusion that the defender’s wholesale supplies of food of animal origin were “restricted” (for example, in the type of product, or the identity of the recipient, or otherwise).
[108] In summary, I was faced with a fairly flimsy and unsatisfactory evidential basis upon which to determine whether the defender’s wholesale supplies of food of animal origin satisfied the criteria that they were exclusively to “retail establishments” and that they were a “marginal, localised and restricted activity” of the defender. In my judgment, having regard to the quality of the evidence on these issues, the defender failed to discharge the evidential burden of proving the constituent elements of the exemption founded upon by it.
Is the defender operating a “wholesale outlet” (and “retail establishment”)?
[109] The defender’s agent submitted that the defender was properly classified as a “wholesale outlet”.
[110] The significance of that classification is that “wholesale outlets” are expressly included within the definition of “retail” in Regulation (EC) 178/2004, Article 3.7. Accordingly, he argued, in terms of Article 1.5 of Regulation (EC) 853/2004 the defender was a “retail establishment” (a composite term not otherwise specifically defined in the Regulations); that the defender supplied other “retail establishments” (mostly in the restaurant trade); and that the defender’s supplies of meat of animal origin from its cutting plant were a marginal, localised and restricted part of its overall food business.
[111] It was an attractive argument, but I was not persuaded that it was correct.
[112] Article 3.7 of Regulation (EC) 178/2004 (read in the context of Article 1.5 of Regulation (EC) 853/2004) deems certain specific business operations to be included within the definition of “retail”, such as catering operations, factory canteens, restaurants, supermarket distribution centres and, lastly, “wholesale outlets”. However, a “wholesale outlet” does not become “retail” merely because it is an outlet of a wholesale business. That would merge, and render meaningless, the distinction between retail and wholesale that runs through Regulation (EC) 853/2004. In order to qualify as “retail”, the principal operation of the establishment must still be direct supply to the final consumer. All of the particular business models listed in the definition are capable, depending on the circumstances, of being involved in direct supply to the final consumer. For example, an outlet may be a “unit” of a wholesale business; that unit may be principally engaged in direct supply to the final consumer; and, therefore, that unit would properly be regarded as a “wholesale outlet” within the meaning of the definition of “retail”.
[113] That approach is consistent with a straight-forward application of the ejusdem generis principle and a purposive interpretation (ensuring that the distinction between the concepts of retail and wholesale activity is not lost or blurred). The former principle of construction is that wide words associated in a statutory text with more limited words are taken to be restricted by implication to matters of the same limited character. Thus, the wide residuary term “wholesale outlets” in Article 3.7 of Regulation (EC) 178/2004, which appears at the end of a list or string of terms describing certain business operations themselves all bearing to be included within a limited defined genus or category (namely, “the handling/processing of food…at the point of sale or delivery to the final consumer”), must be taken to be restricted or curtailed in its wider meaning to matters of the same kind or nature (ejusdem generis) as the preceding genus or category. Therefore, “wholesale outlets” in this context must be restricted in its meaning to a unit of a wholesale business that is engaged (exclusively or at least principally) in direct supply to the final consumer.
[114] For those reasons, I was not persuaded that the defender was a wholesale outlet within the definition of “retail” or, by extension, that the defender was a “retail establishment”. A retail establishment (a composite term not otherwise specifically defined) is merely an establishment engaged (exclusively, or at least principally) in “retail” activity.
Miscellaneous issues
[115] A number of miscellaneous issues arose in the course of evidence and submissions. So far as material, I shall deal with each in turn.
Alleged defect in the detention notice
[116] It was submitted that the detention notice (item 5/2 of process) was defective and invalid by reason of an ex facie defect, namely, that it was undated.
[117] It is correct that the notice does not bear a date. Instead a telephone number appears to have been inserted in the place where a date should appear.
[118] The date is, undoubtedly, an important feature as it will inform the recipient of the relevant timescale for further enforcement action. However, in my judgment, this defect in the detention notice is not material to the outcome of the present application.
[119] Firstly, on a technical point, the defender does not seek reduction ope exceptionis of the allegedly defective detention notice. Instead, the defender seeks to reduce the (ex facie valid) certificate (item 5/1 of process) issued under Regulation 27 of the Food Hygiene (Scotland) Regulations 2006.
[120] Secondly, this application is founded primarily upon the Regulation 27 certificate; that certificate is ex facie valid and unimpeachable; and the subsistence of that certificate carries with it the evidential presumption (in Regulation 27(2)) that, for the purposes of section 9 of the Food Safety Act 1990, the certified food fails to comply with food safety requirements. Any alleged error in the detention notice (issued under the 1990 Act) does not have the effect of vitiating the certificate (issued under the 2006 Regulations). The two instruments perform different functions and are not co-dependent. The purpose of the detention notice is substantive, to prevent distribution of the food. The purpose of the Regulation 27 certificate is evidential.
[121] Thirdly, the role of the sheriff in an application under section 9(6) of the 1990 Act is to determine whether the food “fails to comply with food safety requirements”. It is not to determine whether the food has been validly detained. For as long as the certificate subsists, the food is deemed to fail to comply with food safety requirements.
[122] Lastly, in my judgment, the ex facie defect in the detention notice is not material in the circumstances of this case, and is certainly not such as to vitiate the notice. The detention notice must be interpreted within in its factual matrix. That factual matrix necessarily includes the defender’s undisputed knowledge of the inspection, and the outcome of the inspection, on 10 September 2014; the defender’s knowledge that the detention notice was, as a matter of fact, hand-delivered to the defender on 10 September 2014; the defender’s knowledge of the delivery of the Regulation 27 certificate (item 5/1) on the same day (bearing the date “10 September 2014”); the defender’s knowledge of the delivery of the remedial action notice (item 5/3 of process) on the same day (also dated “10 September 2014”). In light of that factual matrix, the only sensible, commercial interpretation that could be applied to the detention notice is that the numbers appearing in the place reserved for the date were erroneously inserted and that the actual date of the detention notice is 10 September 2014, being the date upon which the inspection occurred notice, the date when the detention notice was actually delivered to the defender, and the date when the related and accompanying notices were delivered and dated. There was no suggestion that, in fact, the defender did not know the actual date of service of the notice the defender or was confused. Viewed objectively, the defender could have been under no misapprehension as to the relevant date.
The status of guidance documents
[123] Both parties referred to publications bearing to interpret, comment upon or supplement the EC Regulations. Reference was made to a Guidance Document issued by the European Commission on the implementation of certain provisions of Regulation (EC) 853/2004 (item 5/22 of process); a document entitled “Guidance for local authority authorised officers on the approval of establishments” published by the Food Standards Agency in February 2012 (item 5/16 of process); and a document entitled “Food Law Code of Practice (Scotland)” bearing to be issued by the Food Standards Agency pursuant to the 1990 Act and various regulations.
[124] I concluded that none of the documents was of material assistance and attached no weight to them. The first document bears to have been issued “for information purposes only”, it has not been adopted or approved by the European Commission, and it explicitly acknowledges that it “has no legal status” (paragraph 1). The second document bears to be “guidance” for local authorities only and records that it does not provide “authoritative interpretations of the law”. The third document appears to have some statutory provenance. However, I was referred to no provision conferring any specific binding, persuasive or authoritative status upon it. Besides, in its content, it offered little assistance to the resolution of the issues in dispute in the present case.
The relevant date for determination of the validity of the certificate
[125] In the course of the evidence and submissions an issue arose as to the relevant date upon which the validity of the Regulation 27 certificate was to be determined. To clarify, the pursuer submitted that if, as at the date of the inspection, the pursuer’s authorised officers had acted properly, on the basis of the evidence then exhibited to them, then the Regulation 27 certificate was unimpeachable. In contrast, the defender submitted that, even if the pursuer’s authorised officers could be said to have acted properly on the basis of the documents exhibited to them as at the date of inspection (which was not admitted), the Regulation 27 certificate was still susceptible to reduction ope exceptionis if the defender could subsequently establish, at proof, that, as at the date of the inspection, the retailer’s wholesale exemption was applicable. Put another way, even if, at the date of inspection, the defender for whatever reason had failed to exhibit sufficient evidence to persuade the authorised officers of the application of the retailer’s wholesale exemption, nevertheless it remained open to the defender to produce that evidence to the sheriff at proof, provided that evidence established that the retailer’s wholesale exemption was indeed applicable at the date of the inspection.
[126] In my judgment, the defender’s analysis is correct. The pursuer’s analysis is too narrow.
[127] The pursuer’s authorised officers have wide powers of entry and inspection. It is not difficult to envisage a situation in which an authorised officer carries out an unannounced inspection at a small food business, on a day perhaps when the relevant senior personnel, familiar with the regulatory position, are absent. It may be, in such a hypothetical case, that the staff within the premises, through no fault of their own, are simply unable, at the date of the inspection (or even in the 21 day period thereafter, as referred to in section 9(3) of the 1990 Act), to collate and exhibit sufficient evidence to satisfy the authorised officers of the application of the retailer’s wholesale exemption. Nevertheless, it would still be open to the food business operator to lead such evidence before the sheriff. Of course, the evidence must relate to activities on and/or in the proximate period preceding the date of the inspection; and any delay by the food business operator in producing the relevant evidence may have an impact upon, for example, the quantification of statutory compensation or liability for judicial expenses.
[128] This approach is justified by the broad terms of section 9(6) of the 1990 Act which requires the sheriff to determine whether the food fails to comply with food safety requirements “on the basis of such evidence as he considers appropriate in the circumstances”. The sheriff is not constrained to admit evidence only of events on the date of the inspection.
Events on the date of inspection
[129] Lastly, much time was taken up in evidence examining the minutiae of events on 10 & 11 September 2014, such as what evidence was sought by the pursuer’s authorised officers and which documents were exhibited by the defender on that date.
[130] In my judgment, this evidence was ultimately of no material significance to the determination of the key disputed issues.
[131] However, for completeness, I should record that I preferred and accepted the evidence of the pursuer’s witnesses on the whole issues of fact surrounding the visits and discussions on 10 & 11 September 2014. That is because the pursuer’s first three witnesses (Mr Brown, Ms Wardrope and Ms Redmond) were all highly impressive witnesses, well-qualified and experienced, careful and measured in their recollections, and detailed, precise and informed throughout their evidence. Their testimony was internally and mutually consistent, and withstood sustained cross-examination. This was to be contrasted with the deficiencies in the evidence for the defender, as discussed above.
[132] In summary, I accepted, as credible and reliable, the pursuer’s evidence regarding the detailed narration of events on 10 & 11 September 2014; of the factual findings of the authorised officers; of their discussions with the defender’s staff and officers, with third parties, and with each other; of the tone and content of their requests for information and of the defender’s reactions and responses thereto; of the paucity of evidence exhibited to the authorised officers; and of the process by which the Regulation 27 certificate (and other statutory notices) came to be served.
Decision
[133] In the circumstances, I shall grant the orders as craved, condemn the food and order its destruction. I shall reserve meantime the issue of judicial expenses to be dealt with at a hearing to be assigned in due course.