Penycoed Farming Partnership v Intervention Board For Agricultural Produce

J U D G M E N T

1. LORD JUSTICE MAY: The matter now before the court began as an application to Master Eyre to strike out the claim. He dismissed that application on 27th June 2000. The defendant appealed against that decision and there was a hearing before this court consisting of Aldous LJ (as he then was), myself and Rix LJ resulting in a reference to the European Court of Justice on 31st May 2001. This court held a hearing of substance before the reference was made.

2. The claim is for payment of levy on milk produced in excess of quota. The facts are summarised in paragraphs 19 to 24 of the judgment of the European Court of Justice of 15th January 2004. I do not repeat them. This case, I am told, is one of a number of cases in which similar, though perhaps not identical, questions of fact arise.

3. The application which Master Eyre, this court and the European Court of Justice considered was on the basis that on the facts to which I have referred and on the assumption, not necessarily accepted by the defendant, that the defendant was a producer of milk, Articles 1 and 2 of Regulation 3950/92 did not permit the claimants to recover levy directly from the defendant. The European Court of Justice has upheld that submission (see paragraph 33 of its judgment). It has however propounded an alternative possible route to recovery of levy by the claimants from the defendants based on Article 10 of the Treaty. This was a basis for recovery which admittedly had not occurred to the claimants before the European Court of Justice propounded it.

4. The claimants seek leave to amend to plead their claim on the basis of Article 10. They accept that the particulars of claim considered by Master Eyre are now seen to be defective and that without the amendment by inference at least the claim could not succeed. They also accept that they had not anticipated the Article 10 lifeline thrown to them by the European Court of Justice.

5. The defendants do not now oppose the amendment, together with other uncontroversial amendments, but they say that they should be awarded their costs of the application to Master Eyre, their costs of the appeal to this court and of the reference to the European Court of Justice who reserved the question of costs to this court.

6. The claimants submit that an order should not be made to that extent and Mr Rhodri Thompson suggests that a proper order as to costs would be no order as to costs. Mr Stanley submits that the pleaded case in respect of which the application to strike out was made was a case based only on the regulation. It was only issues arising out of the regulation which were argued. On those issues the Court of Justice has decided in favour of the defendant. As to the lifeline, it was not thought of at an earlier stage and it needs additional facts to be pleaded. The application to strike out was a proper application and has in substance succeeded. The usual order as to costs should follow, the usual order being that the successful, as Mr Stanley would say, defendants should have their costs of the application and its consequential appeals and reference up to the date of the amendment. He says that it is consistent with the Civil Procedure Rules because the costs have been incurred on an issue, and only on an issue, where the defendants have succeeded.

7. Mr Rhodri Thompson accepts that claimants cannot have their costs, but he suggests that there was a distinction to be drawn between questions of substance and questions of pleading. As to the questions of substance, he has drawn my attention to some passages in written submissions and in the terms of the reference to the European Court of Justice. He suggests that these show that the issue of substance was whether levy could be claimed against these defendants in these circumstances. The claim is to proceed, admittedly on an amended basis, on a substance which has not or will not have been struck out. So he suggests there should be no order as to costs.

8. I have looked back at my notes of the hearing before this court which confirm that the issue which we were asked to consider and which we, as I see it, referred to the European Court of Justice was the issue concerning Articles 1 and 2 of the Council Regulation. It seems to me that in substance Mr Stanley is correct that these strike out proceedings have, but for the lifeline, been successful. The lifeline requires an amendment and in my judgment the defendants should have their costs of the application to Master Eyre, the appeal to this court and the reference to the European Court. Mr Stanley also asks for legal aid assessment in relation to that period when the defendant had a legal aid certificate and that will also be ordered.

9. I should say as a postscript that the parties have both agreed that the matter which I have decided, being costs only, is appropriate to be decided by me alone rather than by the full three court judge that heard the appeal.

10. Accordingly, there will be an order in the terms put forward, with modifications as to the costs order in accordance with the short judgment that I have just given. On that basis the appeal is dismissed.

Order: Appeal dismissed. Defendants to have costs of application to Master Eyre, appeal to this court and reference to European Court. Legal aid assessment for when the defendant had legal aid certificate ordered.