High Court of Ireland Decisions

1. The Applicant is a very substantial farmer who, I am satisfied on the evidence, both rears steers for export and also to some degree acts as a dealer in buying in steers to fill export orders. At the relevant time, all his steers were sold by him to Dillon Livestock Exports Limited, which firm actually exported the steers to countries outside the European Union. Between 25th March, 1996 and 9th June, 1996 the Applicant sold two thousand one hundred and twenty five steers to Dillon Livestock Exports Limited for export. During the same period he sold one hundred and sixty eight steers to factories within the State for slaughter. It should be noted, however, that steers which are exported live in what is known as the live trade are lighter and leaner than those slaughtered in Ireland and are not considered to be fully "finished", in that if they were to be sold to the factories in Ireland they would probably be kept for a further two or three months and fattened.

2. On about 20th March, 1996 an announcement was made in the United Kingdom House of Commons by the Agricultural Secretary that there was a possible link between bovine spongiform encephalopathy (BSE) and crEutz-feld jakob disease in humans. This announcement had a catastrophic effect on the beef market throughout the European Community, and in particular in this State. At this time there were already premiums payable under EEC Commission Regulation No. 805/68 in respect of male bovine animals, designed to compensate producers for a reduction in intervention price, and by Council Regulation No. 1357/96 provision was made for additional payments to be made to further compensate producers for losses arising out of the BSE crisis. Specific sums were allotted to Member States, and Ireland was allotted sixteen million ECUs. Article 4(a) of the Council Regulation provided:-

3. I am quite satisfied on the facts that the Applicant is a producer within the meaning of this Article, notwithstanding the fact that he may also be a dealer, and it is common case that in those circumstances he is one of a class of persons intended to be benefited by the Regulations. It should be noted that the Regulation merely allots the specific sum to the Member States, and makes no provision as to how this sum is to be disbursed other than to provide that payments must be made by the Member States by

4. The Respondent decided that the moneys would be disbursed on the basis of a payment of a subsidy of £50 per animal on cattle marketed between 25th March and 9th June, 1996. As far as the public were concerned, advertisements appeared in the press in early August headed "BSE Compensation Package", the relevant portion of which reads:-

5. It was further provided that the closing date for receipt of completed application forms was 20th August, 1996.

6. These proceedings are concerned with the subsidy for steers sent for live export. The Applicant duly applied for an application form which was sent to him. On the first page it contained certain notes, in a question and answer format. The form also contained a number of terms and conditions.

7. In answer to the question "What animals are eligible?" the form states:-

8. The terms and conditions include the following:-

9. While this document refers to "the Scheme" , the evidence is that the only place in which such a Scheme is defined is in the application form itself.

10. In relation to that part of the package which gives compensation for heifers and young bulls slaughtered in licensed export premises and for heifers slaughtered in local abattoirs during the relevant period the Department produced what is called "help sheet and terms and conditions" . On this Help Sheet it is stated that the cattle eligible for the Scheme are:-

11. Notwithstanding this last comment, the terms and conditions contain the following in capital letters:-

12. These forms give at least some, even if conflicting, information to potential beneficiaries of the Schemes. I do find it astonishing, however, that Schemes administering the distribution of some £13 million are not more formalised. What is even more astonishing, however, is that in the case of steers slaughtered in licensed export premises there is no explanation whatever given to the public as to the conditions necessary to obtain the payment, as no application form was necessary, the payment being made automatically by way of a top-up under the 1996 de-seasonislation slaughter premium scheme.

13. This subarticle provides, so far as it is relevant:-

14. The Applicant's case here is that there is a discrimination between producers who export live steers and producers who sell live steers to the factories, for two reasons. Firstly, those who export live are restricted to receiving the payment for no more than ninety eligible animals, while there is no restriction on the number of steers which may be sent to the factory which will receive the payments. The second discrimination alleged is that it appears that animals exported live will only qualify if they were reared on the producers farm up to 25th March, 1996, while there is no such restriction in respect of steers sent to factories for slaughter. He argues that either of these discriminations constitutes a breach of

15. Article 40(3). The Respondent challenges the submission that there is any such discrimination, and also says that, in any event, producers of steers for live export and producers of steers for slaughter within the State are not competing producers, and

16. Article 40(3) does not apply to them. I propose to consider these points separately.

17. The evidence establishes that steers exported live are exported at a different stage of their development, in that they are not fully finished and are leaner and lighter than steers normally sent to the factories for slaughter in this country. The argument being made by the Respondent essentially is that they are two different products, one being a finished animal and the other being an unfinished animal. It seems to me that this is a very artificial distinction indeed. In both cases the animals are steers which are being produced for slaughter. Once the steer has reached a certain stage of development the producer may choose to sell the steer for export before it is fully finished, or he may choose to keep the steer until it is fully finished. That is a choice which he does not have to make until the animal has reached a certain stage. Furthermore, I am satisfied that, while it may be foolish financially for a farmer to take an unfinished animal to the factory for slaughter in the State, that does not mean that he cannot sell for slaughter in the State, it simply means he will not get as good a price as he would get selling that animal for live export. Indeed, a farmer may choose to sell some of his steers for export in an unfinished condition and to retain others until they are finished and send them to the factory here. The evidence in fact is that the Applicant exported two thousand one hundred and twenty five steers between the relevant dates, but also that he sold one hundred and sixty eight steers for slaughter in this country in respect of which he received a £50 payment for each steer. I am quite satisfied, therefore, that steer cattle sold for slaughter in the State and those sold for live shipment are the same product.

18. It is common case that the leading case on Article 40(3) is Royal Scholten-Honig -v- Intervention Board for Agricultural Produce (1978) ECR 2037. In that case it was stated at page 2072:-

19. I think it must be emphasised in considering the facts of this case that, at the time that the Applicant sold his steers for export, he was not aware that there was going to be a payment, either in respect of steers which were exported live or for steers which were slaughtered here. Neither was he aware that there was going to be a limitation of ninety head on the number of steers for which he could receive payment if they were exported live. These were matters which were decided retrospectively by the Respondent. I have no doubt that if the Applicant had sold his two thousand one hundred and twenty five steers to the factory he would have obtained a £50 payment in respect of each of them, while he has only received that payment in respect of ninety of them because he exported them live. In my view this is a clear discrimination between the producers who exported live and those who sold for slaughter in Ireland, and I think that the discrimination is all the more obvious because it was imposed retrospectively. The only question is whether that discrimination can be objectively justified at all which I will consider below.

20. I have some serious doubts as to whether the Scheme in respect of the export of live steers in fact had any such requirement. It is so stated in the notes which take a question and answer form on the first page, but it is not so stated in the Terms and Conditions, which to my mind constitute the detailed aspects of the Scheme. Those terms and conditions only state that the producer may be required to furnish proof of ownership of the animals on which the premium is being claimed, but there is nothing to say that there must be proof of ownership on 25th March, 1996. However, if there was any such requirement, it very clearly constituted a discrimination, in that there was no such requirement in respect of steers which were slaughtered in this country. Persons presenting steers to the factories might on occasion have to prove ownership at the time of presentation, but, as there was no scheme in respect of such steers, there clearly was no provision for ownership on 25th March. This means that persons could purchase a steer on 30th March, and sell it for slaughter on 31st March, and be entitled to the £50 payment. It has been said, as one of the justifications for any discrimination, that the Respondent was anxious only to benefit producers and not to benefit dealers, but the reality was that any dealer who sold for slaughter in Ireland got the premium without question.

21. As I have said, I have serious doubts as to whether there was any such requirement in respect of live exports, and the evidence is that if there was any such requirement, it was not enforced. However, such requirement, if it did exist, in my view clearly constituted discrimination.

22. The Respondent argues that there were two basic justifications for any discrimination which existed. Firstly, they argue, quite correctly, that the purpose of the regulation is to benefit producers, not dealers in cattle. They argue that if payment was only made on ninety head of steers being exported, it would effectively exclude dealers as they would be exporting in much larger numbers. I do not doubt that this was an objective of the Respondent, but in fact it was not successfully implemented. Dealers could sell to the factories in Ireland, without limit, while a large producer such as the Applicant was restricted. While I have no doubt that the Applicant could have been classified as a dealer in respect of some of the two thousand one hundred and twenty five steers which he sold for export, nevertheless, he was a producer, and all the evidence showed that he has the capability to keep and fatten a large number of cattle. Therefore, the restrictions which were imposed by the Respondent did not in fact achieve their object, and accordingly could not be objectively justified.

23. It is also said that there were administrative problems brought about by the very short time which the Respondent had to set up the Scheme, and, of course, the fact that it was retrospective. Again, I fully accept the extremely difficult position in which the Respondent found itself, particularly as all the money had to be disbursed within a period of just over two months. However, the question of practical problems was raised in the Royal Scholten-Honig case and ruled upon as follows at page 2081:-

24. While I appreciate that the comment there relates to the particular problems in that case, nevertheless I do think that in general administrative problems ought not to be an objective justification for discrimination. Indeed, I would have thought that the administration of the entire scheme would have been much simpler if there had been no discrimination, and all producers had been paid in respect of all steers sold during the relevant period. It is argued that as there was a limited amount of money to be disbursed, the effect of this might well have been that the payment would have to have been lower than £50, and I accept that. However, that is a matter primarily relevant to the question of damages, and not to the issue of justifying discrimination.

25. Accordingly, in my view, there has been discrimination in this case which is not objectively justified.

26. It is not argued by the Respondent that there is no right to damages for breach of a community regulation, but it is argued that for a number of reasons such a right does not arise in the present case. The limitations of such a right were clearly set out in Brasserie du Pecheur SA -v- Federal Republic of Germany (1996) ECR 1029. At page 1149 it is stated:-

27. The Respondent argues that this breach was not sufficiently serious to warrant damages being awarded. There is no authority quoted to me as to what constitutes a sufficiently serious breach of community law, but I would view this as a very serious breach, particularly in view of the fact that the regulation concerned was operating retrospectively. This means that the injured party had no opportunity to take steps to mitigate the loss, because at the time the steers were sold by the Applicant he did not know of the restrictions. The Applicant is a large producer, and while the loss, in my view, cannot be more than £50 per head, nevertheless that loss was incurred in respect of over two thousand animals, which amounts to a substantial sum of money for a farmer on any estimation. The Respondent attempts to minimise the seriousness of the situation by pointing to the difficulties under which it operated, but I do not think that that is a proper test. I think the question of seriousness must be examined objectively, and in any event if everybody had been treated equally, there would have been far less problems. I think that there has here been a serious breach in respect of which the Applicant is entitled to damages.

28. Considerable time has been spent in the course of the evidence and arguments in this case in considering whether the Applicant had been able to prove the number of cattle which he owned on 25th March, 1996, and the number of those cattle which he sold for export. However, as part of the discrimination is the supposed requirement of ownership on 25th March, 1996, and as there was no such requirement for steers sold to the factory for slaughter, it seems to me that this is an irrelevant consideration. There is no doubt that the Applicant sold two thousand one hundred and twenty five steers for export during the relevant period, and has only got paid a premium in respect of ninety of them. This means that he sold two thousand and thirty five steers in respect of which he did not receive the premium which he would have received had he sold those steers to the factory. That is the direct loss incurred by him as a result of the Defendant's default. I think the only question to be taken into account is whether the amount which he would have received had the premium been payable in respect of all animals sold during the relevant period would have been reduced because of the increased number of qualifying animals. I would accept that this is probably so to some extent, although to a minor extent, and I would propose, therefore, to award to the Plaintiff damages based on a loss of £45 per head in respect of two thousand and thirty five animals, which I believe amounts to £91,575.