Bloomsbury International Ltd & Ors v Sea Fish Industry Authority & Anor

The First Defendant (“the SFIA”) is a Non Departmental Public Body whose stated mission is “to support theseafood industry for a sustainable, profitable future”. According to its website, the SFIA:

“works across all sectors of the seafood industry to promote good quality, sustainable seafood.  Our research and projects are aimed at raising standards, improving efficiency and ensuring that our industry develops in a viable way.

We are the UK’s only cross-industry seafood body working with fishermen, processors, wholesalers, seafood farmers, fish friers, caterers, retailers and the import/export trade.

A Non Departmental Public Body (NDPB), we are sponsored by the four UK government fisheries departments and funded by a levy on seafood.”

The present proceedings concern the legality of the levy which funds the SFIA. The Claimants are a group of importing companies who challenge the legality of the levy in so far as it purports to apply to importers.

The SFIA was constituted and given power to impose a levy on sea fish and sea fish products under the Fisheries Act 1981 (“the 1981 Act”). This power is given effect by regulations made under the Act, currently the Sea Fish Industry Authority (Levy) Regulations 1995 (“the Regulations”). The SFIA is required by the 1981 Act to apply the proceeds of the levy for the purpose of promoting the efficiency of the sea fish industry and so as to serve the interests of that industry as a whole, having regard to the interests of consumers. The SFIA is also required by the 1981 Act not to discriminate against the sea fish industries of other member states of the EU.

The Claimants are all engaged in the UK sea fish industry, primarily as importers of sea fish and sea fish products. They have paid the levy to the SFIA as required by the Regulations. In this action they contend that the SFIA has no power to impose the levy on importers who import sea fish or sea fish products from abroad and (by proposed amendment) that the imposition of the levy on importers would be contrary to articles 23 and 25 of the EC Treaty.

If the Claimants succeed on either limb of their argument, they seek restitution from the SFIA in respect of the levy payments which they have made in the past either on the basis that there has been an ultra vires demand for payment of a levy or on the grounds of mistake. The Claimants either seek repayment of all levy payments made (on the basis that section 32(1)(c) of the Limitation Act 1980 applies to extend the limitation period) or repayment for six years prior to the commencement of proceedings (9 September 2008).

In addition to contending that there is no restitutionary claim since the Regulations are valid, the SFIA contends that the Claimants should not be entitled to restitution for mistake, since it has changed its position as a result of the payments. The SFIA also relies on the six year limitation period as barring any claim for levy paid before 9 September 2002.

To the extent that the Regulations are valid, the SFIA seeks payment of outstanding levy from the Claimants, since the Claimants have not made any payments of levy since commencing these proceedings.

The Second Defendant (“DEFRA”) is the sponsoring Department for the SFIA for England and has ultimate responsibility for the SFIA in its role as the UK Fisheries Department. DEFRA’s predecessor, MAFF, was the lead government department responsible for promoting the 1981 Act through Parliament and made the current secondary legislation thereunder.

DEFRA sought (and was permitted) to be joined as a party to proceedings that had been brought by the Claimants against the SFIA in view of the challenge made to the legality of legislation for which it was responsible.

DEFRA generally supports the position of the SFIA in these proceedings. In addition, it contends that it is an abuse of process for the Claimants to bring this claim by way of a private action, rather than through judicial review proceedings and it invites the Court to strike out the claim on this basis.

The Claimants request permission to make a further amendment to their claim to seek Francovich damages from DEFRA on the basis that the levy on imported fish was contrary to Articles 23 and 25 of the EC Treaty, which application is opposed by DEFRA.

The Claimants’ primary case is that, insofar as the Regulations seek to impose a levy on imported sea fish and sea fish products (Footnote: ¹), they are ultra vires and void, since the 1981 Act did not give the SFIA the power to impose a levy on imported sea fish.

This raises an issue of statutory construction, relating in particular to what the 1981 Act means in section 4(3) by stating that Regulations may impose a levy on sea fish “landed in the United Kingdom or trans-shipped within British fishery limits”.

The Claimants contend that section 4(3) of the Act defines the circumstances in which a levy may be imposed and that, giving the term “landed in the United Kingdom” its natural and proper meaning, it covers sea fish which have been caught and are then brought to land (for example, a fisherman landing his catch) in the UK. The term cannot extend to cover sea fish which have been caught and then brought to land outside the UK and are then imported into the UK.

The Defendants contend that section 4(3) is permissive rather than restrictive and that, in any event, on its true construction the term “landed” covers both sea fish which are brought to land for the first time and sea fish imported into the UK.

The Claimants’ alternative case (by proposed amendment) is that if the levy applies to imports then it would be contrary to Articles 23 and 25 of the EC Treaty (formerly Articles 9 and/or 12 of the Treaty of Rome), since it would be a charge having equivalent effect to a customs duty. The Claimants rely upon this both as an aid to construction on their first limb (since, if possible, the Act should be construed so as to be lawful) and as a separate ground for the Regulations being ultra vires and void insofar as they impose a levy on imported sea fish.

In response to this second limb, the Defendants contend that the levy is not a charge having equivalent effect to a customs duty. Further or alternatively, they contend that it is a charge relating to a system of internal taxation applied systematically and in accordance with the same criteria to domestic products and imported or exported products alike and is, therefore, permissible under Article 90 of the EC Treaty.

Whilst the SFIA was willing to consent to that amendment being made, DEFRA refused to consent and it was agreed that the application to amend should be adjourned to the trial. For reasons set out below, I give permission for this amendment to be made.

However, in the skeleton for the trial the Claimants sought to raise a further alternative case to the effect that the levy is incompatible with Articles 23 and/or 25 and/or Article 90 on the basis that domestic sea fish and sea fish products derive an exclusive benefit or a proportionately greater benefit from the levy than do imported products.

If the burden on domestic products is wholly offset then the charge is a charge on imported products alone and falls within Article 25. Alternatively, if the burden on domestic products is only partially offset but in a disproportionate manner then it discriminates against imported products in breach of Article 90. The case therefore depends upon an analysis of the benefits derived from the levy.

This further alternative case raises factual issues which the parties were not in a position to deal with at the trial and I ruled that it would not be tried at the hearing before me. The parties then agreed that the issue of permission to amend should be held over until after judgment had been given on the existing issues.

The hearing before me was an expedited trial pursuant to the Order made by Nicol J. on 12 February 2009 and concerned liability issues only. All parties served witness statements, but, since there was no material challenge to the content of those statements, none of the witnesses gave oral evidence.

The essential issues to be determined at this trial can be stated as follows:

The Preamble to the 1981 Act provides:

“An Act to establish a Sea Fish Industry Authority with the duty of promoting the efficiency of the sea fish industry in the United Kingdom…”

The most relevant sections of the 1981 Act are:

The Regulations materially provide:

Is the Claimants’ claim an abuse of process in that it seeks to raise a challenge to a public law act by means of a private law action depriving the Defendants of the protection guaranteed by CPR Part 54, and accordingly should the claim be struck out?

In these proceedings the Claimants assert a common law right in restitution for repayment of the levies they have paid.

In relation to their claim in restitution the Claimants rely on two causes of action:

The claim in restitution against the SFIA was originally the only claim in the proceedings. Subsequently DEFRA elected to join the proceedings and the Claimants now seek by amendment to advance an alternative claim for Frankovichdamages against DEFRA.

DEFRA (but not the SFIA) contend that the Claimants cannot pursue these private law claims by ordinary action, but can only do so through the judicial review procedure in reliance on the decision in O’Reilly v Mackman [1983] 2 AC 237.

In Clark v University of Lincolnshire and Humberside [2000] 1 WLR 1988 the Court of Appeal reviewed the relevance of O’Reilly v Mackman in the light of the changes made by the CPR. Lord Woolf MR stated as follows:

“34 The court's approach to what is an abuse of process has to be considered today in the light of the changes brought about by the CPR Those changes include a requirement that a party to proceedings should behave reasonably both before and after they have commenced proceedings. Parties are now under an obligation to help the court further the overriding objectives which include ensuring that cases are dealt with expeditiously and fairly: CPR., rr. 1.1(2)(d) and 1.3. They should not allow the choice of procedure to achieve procedural advantages…

…

39 The emphasis can therefore be said to have changed since O'Reilly v. Mackman [1983] 2 A.C. 237. What is likely to be important when proceedings are not brought … under Order 53, will not be whether the right procedure has been adopted but whether the protection provided by Order 53 has been flouted in circumstances which are inconsistent with the proceedings being able to be conducted justly in accordance with the general principles contained in Part 1. Those principles are now central to determining what is due process.” (emphasis added)

There have been a number of cases since O’Reilly v Mackman where a claimant who has a private law right has been held to be entitled to enforce that right by ordinary action even though the proceedings involve a challenge to a public law act or decision. As Lord Bridge stated in Roy v Kensington and Chelsea Family Practitioner Committee [1992] 1 AC 624, 628H-629A:

“where a litigant asserts his entitlement to a subsisting right in private law, whether by way of a claim or defence, the circumstance that the existence and extent of the private right may incidentally involve the examination of a public law issue cannot prevent the litigant from seeking to establish his right by action commenced by writ or originating summons”

In the Woolwich case itself Lord Slynn said at 200F:

“the revenue has contended that the proper procedure was for Woolwich to seek to challenge its decision not to pay interest by way of judicial review, although it would of course contend that no order should be made on such a review in the present case. I do not accept this. If a claim lies for money had and received, judicial review adds nothing. If the money fails in law to be repaid, a direct order for its repayment is more appropriate than a declaration that it should repay it or an order setting aside a refusal to repay.”

In Boddington v British Transport Police [1999] AC 143, 172G, Lord Steyn explained the developments since O’Reilly v Mackman as follows:

“Since O’Reilly v Mackman decisions of the House of Lords have made clear that the primary focus of the rule of procedural exclusivity is situations in which an individual’s aim was to challenge a public law act or decision. It does not apply in a civil case when an individual seeks to establish private law rights which cannot be determined without an examination of the validity of a public law decision”.

In the present case there can be little doubt that the Claimants are asserting an “entitlement to a subsisting right in private law” and are seeking “to establish private law rights”. They assert a common law right in restitution. That right arose on payment. It did not arise out of an administrative decision, nor are the Claimants seeking to set aside the decision of an administrative body. The only remedy claimed by the Claimants in the present case is a monetary remedy. They do not need to seek and do not seek any administrative law remedy or a declaration or injunction.

The present case is analogous to British Steel plc v. Customs & Excise Commrs. [1997] 2 All ER 366 in which it was held that a Woolwich claim could be made in an ordinary action for restitution and did not need to be made by way of judicial review. In that case Saville LJ at p379 emphasised the importance of concentrating on substance rather than form and expressed disquiet at the idea that the assertion of private law rights should depend on whether the correct form of action had been used.

DEFRA placed reliance upon the decision of Plender J. in Malcolm Morgan Jones (On Behalf Of The Estate Of Evan Jones In His Own Capacity) v PowysLocal Health Board et al [2008] EWHC 2562 (Admin) in which, following detailed submission on the “principle in O’Reilly v Mackman”, the question was put in terms of being whether:

DEFRA contends that in this case the examination of the public law issue of the vires of the Regulations is not incidental, but is fundamental to the claim made and is the “primary focus” or “dominant issue”.

Assuming without deciding that this is the appropriate test, in my judgment it is satisfied in this case for the reasons outlined in paragraph 35 above. Where such a right is being asserted the public law issue is incidental or collateral, despite its importance and the need for it to be addressed to establish the cause of action.

Looking at the matter more broadly, I do not consider that there is any question of the protections under Order 53 (now CPR Pt 54) being avoided “in circumstances which are inconsistent with the proceedings being able to be conducted justly”. This is not a case where an ordinary action has been brought in order to circumvent or flout those protections. The claim was brought by the Claimants against the SFIA in an ordinary action because the only claim being made was a private law claim for a monetary remedy (indeed under CPR Pt 54.3(2) a claim for judicial review cannot be made where only a monetary remedy is being sought). The SFIA took and take no objection to that claim being made in an ordinary action and indeed counterclaim in the action for unpaid levies. The vires of the Regulations therefore necessarily arises as part of the Claimants’ defence to that counterclaim regardless of their own claim. The claim form was issued in September 2008 and the claims have been brought to trial with expedition. DEFRA has been allowed to become a party to the proceedings and to make such submissions as they wish with regard to the vires of the Regulations. The main point DEFRA contends that it would wish to advance on any application for judicial review is that the claim has no real prospects of success, an argument that it can and does advance at this trial. In all the circumstances, there is no injustice or abuse in the claims proceeding by way of action.

For all these reasons I therefore reject DEFRA’s abuse of process argument.

Are the Regulations in so far as they authorise the imposition of a levy on sea fish which were landed outside the United Kingdom and then imported into the United Kingdom ultra vires section 4 of the 1981 Act ?

This raises two main sub-issues:

Does the SFIA have unfettered discretion to impose any levy it wishes on any person engaged in the sea fish industry or can a levy only be imposed that complies with section 4(3) of the 1981 Act?

Section 4(1) of the 1981 Act states that: “For the purpose of financing its activities the [SFIA] may impose a levy on persons engaged in the sea fish industry.”

Section 4(2) of the 1981 Act then materially states that “Any levy under this section shall be imposed by regulations...”.

Section 4(3) of the 1981 Act then states that “Regulations under this section may impose a levy either (a) in respect of the weight of sea fish or sea fish products landed in the United Kingdom or trans-shipped within British fishery limits at a prescribed rate which, in the case of sea fish, shall not exceed [2p] per kilogram; or (b) in respect of the value ....of sea fish or sea fish products landed or trans-shipped as aforesaid at a prescribed rate not exceeding 1 per cent of that value.”

DEFRA (but not the SFIA) take the position that the SFIA’s power to impose a levy is solely set out in section 4(1). Any limits on that levy raising power are contained in section 14(2), by reference to the persons on whom a levy may be imposed and the activities for which that levy may be imposed. As a result, under section 4(1) the SFIA is empowered by the 1981 Act to impose a levy inter alia on anybody who “carries on in the United Kingdom the business … of importing sea fish or sea fish products” for any activity carried out in pursuit of that business.

It is further submitted that section 4(3) does not limit the levy raising power because: (i) it is addressed to the amount of levy that may be imposed and the method by which it may be calculated rather than on what it may be levied; (ii) if the concept of “landed” in section 4(3) was of such importance as to delimit the otherwise general levy raising power conferred by section 4(3), this would have been made more clear and would not have been hidden in a subsection dealing with the method of calculating the amount of levy charged and the term “landed” would have been separately defined; and (iii) in any event, section 4(3) is permissive, not restrictive.

I agree with the Claimants that this argument is inconsistent with section 4(3) and that it results in an ill-defined and open-ended levy raising power. Section 4(3) is intended to limit the SFIA’s levy raising powers, at the minimum by imposing a cap on the levy that can be raised: either a cap of 2p per kilogram or 1% of value. The language of section 4(3) – in particular the reference to a levy being imposed either (a) on the basis of weight or (b) in respect of value – confirms that section 4(3) was intended to prescribe the only two ways that a levy could be imposed.

Given the terms of sections 4(2) and 4(3) of the 1981 Act, it clearly would not be open to the SFIA pursuant to section 4(1) of the 1981 Act to impose, for example, a levy of, say, £100 a head on each person engaged in the sea fish industry (a sort of sea fish “poll tax”).

In the same way that section 4(3) is clearly imposing a financial cap on the levy that can be raised, it is equally defining the circumstances in which a levy can be imposed, namely on “sea fish or sea fish products landed in the United Kingdom or trans-shipped within British fishery limits”. It would be bizarre if part of section 4(3) (which comprises a single sentence) was prescriptive, but the rest of the subsection was not.

Section 4(1) defines who may have a levy imposed on them; section 4(3) defines in respect of what the levy may be imposed. They are complementary provisions. I therefore reject DEFRA’s case on this issue.

If section 4(3) limits the levy raising powers of the SFIA, what is the proper construction of the term “sea fish or sea fish products landed in the United Kingdom”.

The term “landed” was not defined in the 1981 Act (prior to amendments to it) save that section 4(8)(b) of the 1981 Act stated that: “references to the landing of fish includes references to the collection for consumption of sea fish which have been bred, reared or cultivated in the course of fish farming whether in the sea or otherwise.”

Putting aside the special case of fish farming, the Claimants’ case is that in the context of “sea fish” as defined under section 14(1) of the 1981 Act, the natural and normal meaning of the term “landed” is to bring fish caught in the sea to land for the first time (“the narrower meaning”). Where fish have been landed in another country and are then transported into the UK, whether by road, rail, air, or sea, this would, in normal parlance, be described as importing the fish and not landing.

The Claimants contend that this normal distinction as a matter of language between the terms “landed” and “imported” is confirmed by the fact that the draftsman of the 1981 Act clearly recognises elsewhere in the 1981 Act that importing is a clear and distinct activity. For example, in section 14(2), the definition of the “sea fish industry” includes the business of “importing sea fish or sea fish products”. They further contend that this distinction between “landed” and “imported” is reflected in the legislation leading up to the 1981 Act.

The Defendants accept that the word “landed” may have this narrower meaning, but they contend that it may also have the wider meaning of being brought to land rather than brought to land “for the first time” and that in the context of the 1981 Act it means being brought on to the land of the UK by any means, whether road, rail, air or sea (“the wider meaning”).

The Defendants emphasise that the meaning of words depend on their context. As stated by Lord Hoffman in Charter Reinsurance Co Ltd v Fagan [1997] AC 313, 391C:

“I think that in some cases the notion of words having a natural meaning is not a very helpful one. Because the meaning of words is so sensitive to syntax and context, the natural meaning of words in one sentence may be quite unnatural in another. Thus a statement that words have a particular natural meaning may mean no more than that in many contexts they will have that meaning. In other contexts their meaning will be different but no less natural.”

I accept, as do the Defendants, that in many contexts the word “landed” will have the narrower meaning contended for by the Claimants. In the context of recreational fishing, for example, it is likely to have that meaning. It is equally likely to do so in the context of catches of fish made by commercial fishing vessels.

The Claimants provided a number of examples of the word “landed” having the narrower meaning in the context of legislation relating to fishing, and in particular the regulation of the catching of fish. Examples include:

In the context of those legislative provisions I would generally accept that the words “landed” or “landing” have the narrower meaning. However, what matters is whether it has that meaning in the specific context of the 1981 Act.

Looking first at the immediate context in which the word “landed” is used it is significant that in section 4(3) it relates not just to “sea fish” but also to “sea fish products”. “Sea fish products” will cover a wide range of processed products, and could include, for example, smoked fish, cured fish or fishmeal. Such products are not going to be landed directly from the fishing vessel that caught the fish. Processing ashore is bound to have occurred.

To counter this point the Claimants were driven to argue that “sea fish products” only covers products which had been through the limited amount of processing that can be done on board the fishing vessel itself, such as de-heading, gutting or filleting. However, the words used are general and unqualified and it is difficult to justify this implied restriction on their meaning. In terms of the imposition of and the benefits from a levy it is also difficult to discern why a marked distinction should be drawn between these different types of sea food products.

Looking next at the general context of the 1981 Act, the duty of the SFIA is to exercise its powers “for the purpose of promoting the efficiency of the sea fish industry” and to “serve the interests of the sea fish industry” (section 2(1)). For that purpose it is empowered to “impose a levy on persons engaged in the sea fish industry” (section 4(1)).

The “sea fish industry” is defined in section 14(2) and specifically includes persons who carry on in the UK the business of “importing sea fish or sea fish products”.

Importers are therefore included in the class of persons for whose benefit the SFIA is to exercise its powers and upon whom they are empowered to impose a levy. However, on the Claimants’ construction the vast majority of importers fall outside the levy scheme altogether.

The word “importing” means bringing sea fish into the United Kingdom, generally from another state (in which the sea fish must previously have been “landed” in the narrower sense argued for by the Claimants). On the Claimants’ construction, such an importer can never be liable to pay the levy for the levy is only payable on fish “landed” in the sense of bringing fish which have been caught to land for the first time.

The Claimants seek to get round this difficulty by suggesting that it would still cover foreign sea fish which was first landed in the UK. They contend that limiting the operation of the levy in this way is consistent with how it applies to UK caught sea fish. However, not only does this result in a very narrow class of importers, but since a purchaser of fish landed by a foreign vessel would already be covered by section 14(2)(b) as a wholesale purchaser or retail seller, there would be no need for a separate category of importers.

The effect of the Claimants’ construction is therefore largely if not completely to exclude importers from liability for the levy. This is inconsistent with the scheme of the 1981 Act as a whole, which includes importers as a class of persons for whose benefit the SFIA’s powers are to be exercised, and section 14(2) in particular, which demonstrates a clear intention that importers shall be liable for the levy.

Turning next to consider the context of other provisions of the 1981 Act, there are a number of provisions that strongly suggest that “landed” cannot sensibly have the narrower meaning contended for by the Claimants.

First, and most significantly, there is section 4(8) as amended which provides that:

“references to the landing of fish include references to the collection for consumption of sea fish which have been bred, reared or cultivated in the course of fish farming whether in the sea or otherwise [and references to the landing of fish or fish products include references to bringing them through the tunnel system as defined in the Channel Tunnel Act 1987].”

Even in its unamended form section 4(8) suggests an expanded meaning of the word “landed” since it is covers fish farmed fish which may never go near a port to be “landed”. However, the Channel Tunnel amendment suggests not only an expanded meaning but one which necessarily contradicts the narrower meaning. By definition, fish brought from France to the United Kingdom through the Channel Tunnel must first have been brought ashore in a state other than the United Kingdom.

The Claimants’ construction therefore produces the bizarre result that the 1981 Act covers sea fish imported by lorry carried by rail through the Channel Tunnel, but not sea fish carried by lorry on a Channel ferry. As the Claimants were constrained to accept, this would be anomalous.

As stated in Bennion onStatutory Interpretation (5^th ed, 2008), section 315, 287:

“The court seeks to avoid a construction that creates an anomaly or otherwise produces an irrational or illogical result”.

It is well established that, in general terms, the effect of an amendment to a statute should be ascertained by construing the amendedstatute. Thus what is to be looked at is the amended statute itself as if it were a free-standing piece of legislation and its meaning and effect ascertained by an examination of the language of that statute as amended: Inco Europe Ltd. v. First Choice Distribution [1999] 1 WLR 270, 272-273 per Hobhouse LJ (CA).

The Claimants sought to minimise the effect of the anomaly by contending that since the powers granted by the Channel Tunnel Act were limited to “things done or omitted or other matters arising anywhere within the tunnel system whether in England or France”, no amendment made pursuant to the Channel Tunnel Act could have the effect of changing the extent to which levy could lawfully be imposed in circumstances which did not involve the Channel Tunnel. Therefore, although the amendment creates an anomaly nothing in the amendment can or should change the construction of the term “landed” which would have applied prior to the amendment (other than in relation to Channel Tunnel).

The Claimants also referred to and relied upon Bennion section 82 dealing with consequential amendments in which it is stated at p297 that:

“Interpretation of consequential provisions It is presumed that Parliament, in making amendments to an Act dealing with one subject matter which are purely consequential on the passing of an Act dealing with a quite different subject matter, does not intend (as it were by a side wind) to make any fundamental change in the former Act”.

I do not accept that it is correct to interpret the amended Act through the prism of the amending Act. One interprets the Act as a whole as it now stands. As stressed in Bennion in the section relied upon by the Claimants, where, as here, there are specific consequential amendments the statute user “has the amended provision as a single text and does not need to puzzle out how the new Act has altered the law”.

In any event, the amendment would only be making a “fundamental change” to the 1981 Act if the narrower meaning of “landed” was correct. If, as the Defendants contend, “landed” always had the wider meaning, then the amendment makes perfect sense, both in its drafting and its effect.

The fact that the Channel Tunnel amendment clearly uses “landed” in its wider rather than its narrower meaning, and the anomalous consequences which would result if imports brought in by other means were not similarly subject to levies, therefore provide important support for the wider meaning.

The other provision of the 1981 Act of particular contextual importance is section 2(2A), which provides that:

“If any levy imposed under section 4 below has effect in relation to sea fish or sea fish products from the sea fish industries of member States other than the United Kingdom, the Authority shall so exercise its powers under this Part of the Act as to secure that benefits are conferred on those industries commensurate with any burden directly or indirectly borne by them in consequence of the levy”.

One would expect this provision to apply to the sea fish industries of member states generally, rather than to parts of such industries, and for “sea fish industries” to have a similarly wide meaning to that given to “the sea fish industry in the United Kingdom” under section 14(3).

If so, the provision would apply to, amongst other products, fish that have been brought ashore in another member state, processed and then imported into the UK, as borne out by the reference to “sea fish products from the sea fish industries of member States” (for sea fish products include those products that are prepared by processing in a factory on land) and to“sea fish industries of member States” (for sea fish industries include processors, importers and merchants – see section 14(3)).

In order to fit with their case on construction, the Claimants have to contend that the levy only applies to sea fish caught in the national waters of another member state or by vessels which are part of the sea fish industry of another member state, and that it excludes processors, importers and merchants in other member states. However, the provision was designed to eliminate discrimination in favour of the UK sea fish industry against sea fish industries of other member states. It makes little sense to construe the provision as going to eliminate discrimination against only one sector of the sea fish industries of other member states, namely, the catching sector.

For all these reasons, when one construes the word “landed” in the context of the 1981 Act as a whole, I have little doubt that the only sensible meaning to be given to the word landed is the wider meaning contended for by the Defendants, which on any view is a permissible meaning.

Turning to consider the context of the 1981 Act itself, the Claimants laid stress on the legislative history to the 1981 Act and the distinction drawn in prior legislation between “landed” and “imported”. They referred to various provisions in which this distinction had been drawn by the draftsmen.

There is a long standing historical basis for the charging of a levy and there is statutory evidence of a power to charge the fishing industry a levy going back to 1935. Section 1 of the Herring Industry Act 1935 established the Herring Industry Board. Section 2 of that Act provided the Board with a power to make a scheme developing and regulating the herring industry.

The Herring Industry Scheme 1935 was made under section 2 of the 1935 Act and came into force on 1^st June 1935. The 1935 Scheme applied throughout the UK. Paragraph 23 provided for a levy on “first sales of fresh herring”. Paragraph 2 defined “first sale” as “in relation to fresh herring, the first completed sale wholesale after the herring have been landed in or brought into the United Kingdom or, in the case of herring of British taking not landed in or brought into the United Kingdom, the first completed sale wholesale at sea, and “salesman” means the person who sells on a first sale”. The Claimants relied on the juxtaposition of “landed in” and “brought into”.

Section 7 of the White Fish and Herring Industries Act 1948 provided the Herring Industry Board with a power to make, vary or revoke schemes for the development and regulation of the herring industry.

The 1935 Scheme was continued in force until revoked by the Herring Industry Scheme 1951 which was made under Section 7 of the 1948 Act. The 1951 Scheme applied throughout the UK. A similar general levy provision was made in article 26 of the 1951 Scheme as had been in the 1935 Scheme. This provided the Board with a power to impose a general levy while article 27 provided for a special levy.

Section 1 of The Sea Fish Industry Act 1951 constituted the White Fish Authority. Section 19 of the 1951 Act defined “white fish” as any fish found in the sea except herring, salmon and migratory trout. Section 15 provided for a levy. Section 5(6) of the 1951 Act provided for a Regulation-making power, subject to Ministerial confirmation. Section 19 defined “white fish industry” as “the white fish industry in Great Britain; and a person shall be deemed to engage in the white fish industry if he carries on the business of operating fishing vessels for the catching or landing of white fish, or if he carries on in Great Britain the business of selling white fish by wholesale or by retail or of processing white fish (including the business of a fish fryer)”.

The White Fish Authority (General Levy) Regulations Confirmatory Order1951 came into force on 10^th December 1951. It applied in Great Britain only. A near identical replacement, the White Fish Authority (General Levy) Regulations Confirmatory Order 1952, extended the application to the UK and came into force on 9^th June, 1952. In both of these orders levy was to be paid on first-hand sale of white fish. “First-hand sale” was defined as:

“(a)

in relation to white fish which has been landed outside the United Kingdom, but which is purchased by a person carrying on business on the white fish industry and is imported or brought into the United Kingdom for the purposes of any such business, the first sale thereof (whether in the United Kingdom or elsewhere) to such a person as aforesaid;

(b)

in relation to any other white fish, the first sale thereof (other than a sale by retail) after it has been landed in the United Kingdom”.

The Claimants stressed the contrast between fish being “landed” and being “imported or brought into” the UK.

The White Fish Authority (General Levy) Regulations 1969 Confirmatory Order 1970 made similar provision to the 1952 order, the main exceptions being inclusion of provision for fish products and a schedule which provided for a levy differentiated by type of fish product. In this order “firsthand sale” was defined as:

“(a)

in relation to any white fish or white fish product which has been landed outside the United Kingdom and to any white fish product manufactured outside the United Kingdom from such white fish or white fish product which in either case is purchased by a person carrying on business in the white fish industry and is imported or brought into the United Kingdom for the purposes of any such business, the first sale thereof (whether in the United Kingdom or elsewhere) to such a person as aforesaid;

(b)

in relation to any other white fish product which is landed in the United Kingdom, the first sale thereof (other than a sale by retail) whether prior to or after it has been landed in the United Kingdom”.

Again the Claimants stressed the contrast between fish being “landed” and being “imported or brought into” the UK.

The Sea Fish Industry Act 1970 maintained the White Fish Authority and the Herring Industry Board. The 1970 order (in respect of white fish) and the 1951 Scheme (in respect of herring) continued in force.

Section 17 of the 1970 Act provided that the authority shall have the power to impose a general levy for the purposes of financing the discharge of their functions. Section 17(1) provided that:

“(1)

The Authority shall have power for the purpose of financing the discharge of their functions,-

(a)

to impose a general levy on persons engaged in the white fish industry-

(i)

in respect of white fish landed in Great Britain, at a prescribed rate not exceeding 2 d. for each stone of white fish landed; and

(ii)

in respect of white fish products so landed, at a prescribed rate in respect of each stone of the products;”

Section 17(8) provided:

“References in subsections (1) and (6) above to persons engaged in the white fish industry shall be construed as including references to persons carrying on in Great Britain the business of buying the products of white fish by wholesale or of importing white fish or their products.”

The 1970 Act therefore raised a similar tension to the 1981 Act between a levy imposing power in respect of fish “landed”, but which was apparently meant to apply to all persons engaged in the white fish industry, including importers. No one appears to have questioned the power to impose the levy on importers under the 1970 Act.

The 1970 order was revoked by the White Fish Authority (General Levy) Regulations 1980 Confirmatory Order 1980. The 1980 order consolidated existing legislation (the 1970 order having twice been amended) and made provision for trans-shipment of fish and fish products. Article 1 provided for the levy to be paid on purchase of white fish or a white fish product on firsthand sale. The definition of “Firsthand sale” included: “(a) in relation to any white fish or white fish product which has been landed outside the United Kingdom and any white fish product manufactured outside the United Kingdom from such white fish or white fish product which in either case is purchased by a person carrying on business in the white fish industry and is imported or brought into the United Kingdom for the purposes of any such business, the first sale thereof (whether in the United Kingdom or elsewhere) to such a person as aforesaid.”

The Claimants submit that this legislative history demonstrates a consistent and settled recognition of the distinction between fish being “landed” and “imported” and of them being treated as separate concepts. Reliance was placed upon Bennion Section 210 in which it is stated as follows (at pp599, 603):

“(3)

Under the Barras principle, where an Act uses a form of words with a previous legal history, this may be relevant in interpretation. The question is always whether or not Parliament intended to use the term in the sense given by this earlier history.

…

Acts in pari materia The following are in pari materia

…

d)

Other Acts which deal with the same subject matter on the same lines.

Here it must be remembered that the Latin word par or paris means equal, and not merely similar. Such Acts are sometimes described as forming a code. This does not mean that the Acts are codifying Acts however.

If the Acts are inpari materia it is assumed that uniformity of language and meaning was intended, attracting the same considerations as arise from the linguistic canon of construction that an Act is to be construed as a whole.”

I am not satisfied that it would be correct to regard the relevant Acts in the present case as being equal rather than similar. Further, much of the material relied upon arises out of the Regulations rather than the Acts. In relation to prior Acts the only one which uses comparable wording to that contained in section 4(3) of the 1981 Act is section 17 of the 1970 Act, but that begs the same question.

It is correct that historically the definition of first hand sales has frequently drawn a distinction between landing and importing, and the same point could be made in relation to the 1995 Regulations. However, one cannot derive from that practice the conclusion that throughout any legislation dealing with this subject matter, “landed” will always be used in its narrower meaning, regardless of context. It all depends on the specific context in which the word is being used.

One point that does clearly emerge from the legislative history is that under all these schemes levies have always been imposed on imports. That being so, the obvious question which arises is why Parliament should have intended to change that policy under the 1981 Act. This is particularly so in circumstances where on any view importers are treated under the 1981 Act as being part of the sea fish industry, as they had been under the earlier legislation. Although it was suggested that this may have been because the 1981 Act was primarily intended to benefit the UK catching industry and therefore to cover catching importers only, it is not possible to deduce this from the 1981 Act. The reality is that no good reason has been advanced for why there should have been such a major change in policy.

It is also striking that the language of section 4(3) of the 1981 Act is very similar to that of section 17(1) of the 1970 Act, under which levies were in practice imposed in importers. If there had been intended to be a change in policy one would therefore have expected different language to be used. Conversely, given that there had been no issue but that levies could be imposed on importers under the 1970 Act, if the intent was to carry on imposing levies on importers it is understandable why similar wording should be used in the 1981 Act.

If anything, I therefore consider that the legislative history and, in particular, the long history of imposing levies on importers and the lack of any convincing explanation for a sudden and marked change in policy in that regard, supports the Defendants’ case on construction.

DEFRA also sought to place reliance on background materials relating to the 1981 Act in support of the defence case on construction. In particular, it sought to rely on explanatory notes and explanatory memoranda. In this connection I was referred to Bennion Section 219:

It is therefore not necessary to show ambiguity before having regard to explanatory notes but their value is in identifying the contextual scene. They are not to be relied upon to seek to demonstrate the will of Parliament. In my judgment the notes sought to be relied upon by DEFRA did not go to contextual scene but rather to Parliamentary intent. As put in their pleadings, they were being relied upon as evidence that: “The intention of Parliament was that the levy raising power provided for by the legislation would apply to importers of sea fish and sea fish products”. I do not consider this is permissible and therefore have no regard to the explanatory notes or memoranda.

DEFRA also sought to rely on extracts from Hansard. As stated in Bennion Section 217:

In the present case I am not satisfied that there is sufficient ambiguity or obscurity about the meaning of the material provisions of the 1981 Act to justify recourse to Hansard and I therefore decline to have regard to it.

The Claimants’ final argument on construction was that Parliament, when enacting section 4(3) of the Act, cannot have intended or cannot be taken to have intended, that Regulations might provide that the levy could be imposed on imports of fish (as distinct from landings of fish) because the imposition of such a levy would be in breach of what were then Articles 9 and 12 of the Treaty of Rome (and what are now Articles 23 and 25 of the EC Treaty).

For reasons set out below, I do not accept that there would be such a breach and therefore this argument adds nothing. In any event, the argument proves too much since even on the Claimants’ construction some importers will be subject to levies.

In summary, I have reached the clear conclusion that section 4(3) has the wider meaning contended for by the Defendants and that the Regulations are not ultra vires the 1981 Act in so far as they authorise the imposition of a levy on imported sea fish or sea fish products.

DEFRA (but not the SFIA) opposed the Claimants’ proposed amendment to raise this issue. They contend that permission to amend should be refused because the claim (1) involves an abuse of process and (2) has no real prospect of success.

I have dealt with the abuse of process argument above. Leaving that aside, no prejudice has been identified by DEFRA if the amendment is allowed. The claim made is clearly well arguable, is not opposed by the SFIA, and in the circumstances I consider that it is appropriate to exercise my discretion to grant permission for the amendment to be made.

Article 23 of the EC Treaty provides:

“1.

The Community shall be based upon a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.

2.

The provisions of Article 25 and of Chapter 2 of this title shall apply to products originating in Member States and to products coming from third countries which are in free circulation in Member States. “

Article 25 of the EC Treaty gives effect to article 23 EC:

“Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.

There is no exception in the Treaty to justify charges contrary to article 25. Therefore if the levy imposed pursuant to the 1981 Act is a charge having equivalent effect (“CEE”) to such a duty then that levy insofar as it applies, would be incompatible with article 25.

The following relevant principles can be derived from the ECJ caselaw on articles 23 and 25:

The first issue to be considered is therefore whether the levy on imports is a charge imposed on goods by reason of the fact that they pass a frontier. The Claimants submit that it is. They contend that the chargeable event triggering the payment of the levy in the case of the imported product will be the actual importation of the product. This is because of part (b) of the definition of “firsthand sale” under the Regulations which provides that in order for there to be a “firsthand sale” in relation to any sea fish first landed outside the UK there must not only be a purchase by a person carrying on business as a UK importer but the sea fish must also have been imported or brought into the UK as well. This is set out in Regulation 2 which provides that:

“firsthand sale” means—

(a)

in relation to any sea fish or sea fish product which has been first landed in the United Kingdom the first sale thereof (other than a sale by retail) whether prior to or after landing in the United Kingdom;

(b)

in relation to any sea fish or sea fish product which has been first landed outside the United Kingdom and any sea fish product manufactured outside the United Kingdom from such sea fish or sea fish product which in either case is purchased by a person carrying on business in the sea fish industry and is imported or brought into the United Kingdom for the purposes of any such business, the first sale thereof (whether in the United Kingdom or elsewhere) to such a person as aforesaid;”

The Claimants contend that the sea fish in question cannot be imported into the UK by the UK importer unless and until he has become the owner of the fish in question; thus the purchase by that importer must always precede the moment at which the goods are imported into the UK. In the circumstances the effect of part (b) of that definition is to delay the moment at which the firsthand sale takes place until the moment of importation.

The Claimants place particular reliance upon the fact that Regulation relates to sea fish “which in either case is purchased by a person carrying on business in the sea fish industry and is imported or brought into the United Kingdom for the purposes of any such business”….They contend that this means that the importation had to be for the purpose of purchaser’s business and that he must therefore necessarily have already purchased the sea fish.

The Claimants also rely on their unchallenged witness evidence to the effect that as a matter of their practice purchase will invariably precede the importation of the fish.

There is no doubt that the chargeable event as defined by the Regulations which is relevant to the present case is the “firsthand sale” of the sea fish. This is spelt out by Regulation 4(1)(a).

“(1)

There shall be paid to the Authority subject to and in accordance with the provisions of these Regulations by every person engaged in the sea fish industry who—

Nor do I accept that under Regulation 2(b) purchase must necessarily precede importation. The sea fish has to be brought into the United Kingdom for the purpose of the sea fish industry business, but it does not have to be for the purpose of the importer’s business. Further, the Regulation itself contemplates a sale “in the United Kingdom” and whatever may be the position in practice it is clearly possible for a sale to be made subsequent to importation. The original owner of the sea fish may, for example, bring the sea fish into the United Kingdom in order to store it and sell it subsequently to suit market conditions. Equally, even if a contract for the purchase of the sea fish has been made prior to importation, payment may not be made and property not pass until after importation, it being acknowledged that the passing of property marks the moment of sale.

I therefore hold that the levy is not imposed on imports by reason of the fact that the sea fish passes a frontier. Even if it did, it would still not constitute a CEE if it formed part of a system of internal taxation applied systematically and in accordance with the same criteria to domestic products and imported or exported products alike.

A levy can be lawfully imposed on goods at the time at which they cross a border provided that “the allegedly comparable charge levied on national products is applied at the same rate, at the same marketing stage and on the basis of an identical chargeable event” - Kapniki Mikhailidis AE v. Idrima Kinonikon Asphaliseon (Jointed Cases C-441 & 442/98) [2001] CMLR 13 at [24]. It was accepted that on this issue the onus of proof rests on the SFIA.

The Claimants contend that:

As to (1), this depends on establishing that a different chargeable event applies to imported products, a submission that I have rejected above.

As to (2) and (3), if, as I have held, the levy is imposed on the first sale of the sea fish for all fish brought into the UK, whether brought ashore for the first time by fishermen or imported from another member state, it follows that the levy is imposed at the same marketing stage. In effect it is imposed when the sea fish is placed on the market and enters the supply chain. Further, if the products are not the same, then a different rate of levy can apply. In any event, the rate of levy paid on processed and unprocessed fish is proportionately the same. Section 4(4) requires that the burden of the levy shall not fall disproportionately on fish products, in excess of the burden placed on fish. The levy rate rises according to the proportion of inedible parts which are removed by processing. Thus the same total amount of levy should be payable on a fish irrespective of when sold in the UK it is gutted, headless, or filleted. I therefore reject the submission that the levy is imposed differently on domestic and imported fish/fish product.

I accordingly conclude that the Regulations and/or the Act in so far as they authorise the imposition of a levy on sea fish which were landed outside the United Kingdom and then imported into the United Kingdom are not void as contrary to Articles 23 and/or 25 of the EC Treaty.