England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Rolls Building, 7 Rolls Buildings London EC4A 1NL
		21 May 2014

Mr. Justice Edwards-Stuart:

Introduction

1. Following the judgment handed down on 7 May 2014 on an application made by the Claimant which was heard on 18 December 2013, this judgment concerns the costs of the application and the appropriate form of relief. After the hearing on 18 December further evidence was put in by the Claimant and so the parties were asked to make additional submissions which the court duly received at the end of February 2014. The application sought a declaration that the European Commission ("the Commission"), which was given permission to intervene in this action, would be in contempt of court if it took certain action that would have the effect of interfering with orders granting interim relief that were made in this action on 26 July and 16 August 2013.
2. The action that the Claimant alleged the Commission was threatening to take took two forms. The first was steps by way of safeguard measures that the Commission was threatening to take if the Claimant were permitted to sell on the open market 51 tonnes of desinewed lamb that was in frozen storage. Following a hearing on 26 September 2013 I allowed the Claimant to sell that 51 tonnes of lamb.
3. The second involved a statement made by a representative of the Commission, a M. Poudelet, to the effect that if the Claimant sold desinewed meat produced from pork and poultry outside the UK it would have to be labelled as MSM. M. Poudelet also asked the FSA to guarantee this. M. Poudelet also said that my orders were "… valid only in the UK".
4. The Claimant's complaint was that these remarks had, or if similar remarks were continued, would have, the effect of undermining orders of the English court and that if officers of the Commission were to continue to make such remarks they would effectively amount to an attack on the decision of this Court. In written submissions prior to the hearing on 18 December 2013 the Claimant sought to amend its declaration^[1] by adding the words "… and would constitute a breach of the duty of sincere cooperation pursuant to TFEU Article 4(3)".
5. In my judgment I dealt with this further basis for the claim for relief. To avoid any doubt, I confirm that when handing down the judgment I formally gave leave to the Claimant to make that amendment to its application.
6. The outcome of the Claimant's application was that I rejected its submission that anything done by the Commission outside the territorial jurisdiction of the courts of England and Wales could be capable of amounting to a contempt of court under English law. That part of its application therefore failed and was dismissed.
7. However, since I considered that the Claimant's amended ground of relief raised a point of importance and that there would be no injustice to either the Defendant ("the FSA") or the Commission by dealing with it, I went on to make observations in relation to it. At paragraph 57 of my judgment I said this:

"As a corollary of the obligation that rests on national courts it seems to me that the duty of sincere cooperation owed by Commission institutions must extend to according full and proper respect to orders made by the courts of Member States that are intended to secure or preserve individual rights under Community law. In my view, the exercise of that duty involves avoiding conduct that is deliberately directed at undermining an order of a national court made after due enquiry into the relevant facts. All the more so where the Commission has intervened in the relevant proceedings before a national court and has been given a full opportunity to put forward its position."

8. I went on to say, at paragraph 58:

"... it is my view that if a product is lawfully produced in accordance with an order of a national court it follows that it is, in principle, entitled to be to be put into free circulation in other Member States unless and until the Court of Justice, or a national court acting within its own jurisdiction, declares otherwise. It is not in my view proper for a Commission institution itself to declare that the decision of the national court is of no effect outside the jurisdiction of the Member State concerned, if that is done in a manner that implies that the court order can just be ignored. That is the function of the appropriate court (whether that is a national court or the Court of Justice will depend on circumstances)."

And, at paragraph 59:

"In circumstances like those of the present case, and in a matter which concerns the labelling of a product, it is my view also that it would be improper for the Commission to inform representatives of the European meat industry that its members should not buy a particular product that has been lawfully produced in a member state pursuant to an order of a court of that state simply because it disagrees with that order."

9. However, I went on to observe that I considered that the Commission was entitled to inform the competent authorities of Member States of its interpretation of a particular Community regulation. Further, I said that the Commission could, if within its powers, take appropriate steps to ensure that the regulation (as interpreted by the Commission) is complied with in Member States.
10. Having regard to the overall history of the Commission's approach to the production of desinewed meat by the Claimant, I consider that the Claimant had reasonable grounds for apprehending that the Commission might step outside the ambit of what it could properly do within the confines of the principle of sincere cooperation. Indeed, I consider that the statements of M. Poudelet to which I referred in my judgment came very close to the limit. Further reiteration of those statements would probably have crossed it. I therefore decided that I should make no order on the amended application for a declaration, which may enable the Claimant to restore that part of its application to seek an appropriate declaration if the situation should justify it.
11. Looking at the position very broadly I consider that the circumstances called for some guidance from a national court as to what officers of the Commission could and could not do within the principle of sincere cooperation. To this extent therefore I consider that the Claimant was justified in bringing this question before the court.
12. However, there are two significant qualifications to this. The first is that the Claimant's application that the Commission would be in contempt of court was one that I held to be misconceived. Had the application stopped there, it would have been dismissed: see paragraphs 53 and 54 of my judgment.
13. The second is that by an application dated 21 November 2013, prior to the date on which the Claimant issued this application, the FSA sought to vary the order in relation to the 51 tonnes of desinewed lamb by limiting any sale to the FSA alone at a reasonable market price. The FSA's purpose in making this application was to pre-empt any steps by way of safeguard measures that the Commission might have in mind in relation to this 51 tonnes.
14. In my view, the FSA's proposal was a pragmatic response to the situation and I made that view known at the time by indicating that the Claimant should give serious consideration to the FSA's offer. However, the Claimant did not heed this indication and pressed on with its opposition to the FSA's application. I have already disposed of that application so the Claimant should not be penalised twice over for resisting it, but it is a matter that forms part of the background against which the current applications for costs must be considered.
15. I must bear in mind also the fact, stressed by the Commission, that the Claimant's application was framed in relation to conduct that had not yet occurred. At the times when the application was made and heard the only historic conduct of the Commission that remained in issue was the statement of M. Poudelet at the meeting on 22 November 2013. I have not found that this by itself amounted to a breach of the duty of sincere cooperation: I went no further than saying that the conduct of the Commission since the grant of interim relief was in some respects open to criticism.
16. It is against this background that the Claimant submits that it should have its costs paid by the Commission on an indemnity basis. The Commission, by contrast, submits that the Claimant should pay its costs on an indemnity basis. The Commission's primary position is that the Claimant's application for costs is so hopeless that it can be dismissed without any further analysis. But if that is wrong, it makes further and more detailed submissions. These are to this effect: first, that the application related to future conduct by the Commission which was in itself inappropriate; second, since the claim based on a breach of the duty of sincere cooperation was framed as being "in addition" to the original relief, the failure of the latter was fatal to the former; and, third, that the Claimant did not follow "even the spirit" of the Pre-Action Protocol for Judicial Review.
17. The FSA's position is that it should be awarded its costs of the application. It submits that it behaved responsibly and reasonably in participating in the defence of the Claimant's application and, since the Claimant's primary application was held to have been without legal foundation, it should be paid its costs of defending the application.

The position as between the Claimant and the Commission

18. Although, as the Commission points out, I made no declaration on the Claimant's application, I did make a number of observations on the principle of sincere cooperation as I saw it in the context of this case and the interrelationship between the decisions of national courts and the conduct of the Commission. Although I concluded that this was not an appropriate case for a declaration, I felt that there was a need for the court to set out its views on the scope of the duty of sincere cooperation as it applied in the circumstances of this case. That reflected the court's concern at the attitude that the Commission appeared to be adopting in response to the grant of interim relief. Indeed, in disposing of this application I said that I considered that the Commission's conduct since the grant of interim relief was in some respects open to criticism. At no stage during the application did the Commission put in any evidence to explain why the events relied on by the Claimant did not bear the inference that the Claimant was inviting the court to draw from them.
19. Looking at the matter in the round I do not think it can be said that the Claimant achieved nothing. On the contrary, I consider that, given the history, its application merited clarification by the court of the position in relation to the principle of sincere cooperation. However, the fact remains that the Claimant's primary application based on contempt of court was, as I have held, unjustified by any authority or established principle. In addition, I made no finding that the Commission had to date committed any act in breach of its duty of sincere cooperation. It has, I regret to say, been a feature of this application that the Claimant has pitched its case too high on almost every aspect of it.
20. In addition, any order for costs should reflect the court's disapproval of the Claimant's failure to mention the fact that it had a very substantial shareholder and was not the small privately owned company that it was effectively represented to be.
21. Whilst the Claimant did not secure any of the relief that it claimed, I did conclude that the situation merited clarification by the court, and I endeavoured to do that in the judgment. However, in the absence of any finding that the Commission was in breach of the duty of sincere cooperation, I do not think that it would be right to order the Commission to pay any part of the Claimant's costs. I should add that the Commission did not submit that I had no jurisdiction to make such an order. By contrast the conduct of the Commission has not been above criticism and I do not consider that it is entitled to demand that the Claimant should pay its costs, commendably modest though they are.
22. In all these circumstances I consider that there should be no order for costs as between the Claimant and the Commission.

The position between the Claimant and the FSA

23. The Claimant served its application on the FSA and in my view the FSA had little choice but to take part in defending the application. However, leaving the FSA's own earlier application on one side, the FSA was largely in the position it was by virtue of the conduct of the Commission and not anything done by the Claimant.
24. There are no applications for costs as between the FSA and the Commission and so I am concerned only with the costs position as between the FSA and the Claimant.
25. In these circumstances I consider that the Claimant should pay 50% of the FSA's costs of defending the application. As to the other 50%, I make no order.
26. I am not aware that the FSA has submitted a schedule of costs. So if its costs cannot be agreed, they must be determined by detailed assessment (on the standard basis).

Note 1    To be strictly accurate, the application was to amend the draft order reflecting the declaratory relief set out in the application notice. Although the text was preceded by the word “and” and not “and/or”, given the way in which the declaration was framed it was clearly open to the court to find that there was a breach of both limbs, a breach of only one of them or no breach at all.    [Back]