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England and Wales High Court (Technology and Construction Court) Decisions

You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> R v Secretary of State for Transport ex parte Factortame Ltd (No. 7) [2000] EWHC Technology 179 (27 November 2000)
URL: http://www.bailii.org/ew/cases/EWHC/TCC/2000/179.html
Cite as: [2000] EWHC Technology 179, [2001] WLR 942, [2001] 1 WLR 942, [2001] 1 CMLR 47, [2001] Eu LR 207

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		Neutral Citation Number: [2000] EWHC Technology 179
		No. 1999 TCC 546

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION TECHNOLOGY AND CONSTRUCTION COURT

Court No. 9
St Dunstan's House

133-137 Fetter Lane

London EC4A 1HD

27th November 2000

B e f o r e :

HIS HONOUR JUDGE JOHN TOULMIN CMG QC
____________________

	R E G I N A
	- v -
	THE SECRETARY OF STATE FOR TRANSPORT (Now The Secretary of State for the Environment, Transport and the Regions) (Respondents) ex parte FACTORTAME LIMITED AND OTHERS (Applicants)

____________________

____________________

MR S MALES QC and MR C KIMMINS, instructed by Thomas Cooper Stibbard, appeared on behalf of the "TCS" Applicants.

MR A GOURGEY and MR J MIDDLEBURGH, instructed by Edwin Coe, appeared on behalf of the "EC" Applicants.

MR D FRIEDMAN QC, MRS M HALL and MS R ANSELL, instructed by Treasury Solicitors, appeared on behalf of the Respondents.

MR D MARKS, instructed by Grant & Horton, appeared on behalf of the O'Connors.

MR JAMES FLYNN, instructed by Brooks & Co, appeared on behalf of the Haytons.

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

This is the judgment on preliminary issues in advance of the main damages hearing of the remaining Factortame applicants due to take place in January 2001.

The parties have raised a number of preliminary issues of general fundamental importance, on some of which there is no decided authority.

I am particularly grateful to counsel on all sides for their considerable assistance.

The issues are in three broad categories. The first issue relates to applications to add additional parties to the proceedings. This raises the specific issues of whether or not the Limitation Act 1980 applies to individual claims against the Government for breaches of European law and, if it does apply, whether the period of limitation is 6 years or 12 years. It also raises the fundamental question of
"What is an action founded on tort?"
The parties are agreed that if the Limitation Act applies, time runs from either 1st April 1989, the date when the Merchant Shipping Act 1988 took effect, or 10th July 1990, when the offending part of the legislation was revoked. It makes no difference for the purpose of these applications which is the correct date and I am not asked to make a finding on this question. It is only if the six-year limitation period applies that the applications are outside the limitation period.

The second series of issues arise only if I find that a limitation period of six years applies. Even if the six-year period applies, a number of existing applicants contend that they are entitled to add claims for damages in respect of vessels for which they have previously made no claim and/or are entitled to make claims in a different capacity to their existing claims. This involves a consideration of section 35 of the Limitation Act 1980 and paragraph 17.4 of the Civil Procedure Rules.

The third broad category relates to claims brought by various TCS applicants for injury to feelings/distress and aggravated damages on the general ground that their claims under European law are broadly equivalent to domestic claims under the Race Relations Act 1976 for discrimination on the grounds of nationality, in respect of which they say that both damages for distress and aggravated damages would be recoverable. It is agreed that I should decide only whether in principle such a claim could be made, leaving detailed questions to the trial.

In the course of the oral hearings, I granted a number of applications from the applicants; some others were withdrawn by the applicants. There are a number of other issues which are of importance to the parties but not of general legal importance. I shall deal with those in a short further judgment.

Preliminary. The history of the Factortame legislation.

A number of fishermen from Spain have claimed against the United Kingdom Government for loss and damage as a result of the United Kingdom's breaches of European Community law in enacting the 1988 Merchant Shipping Act ("the 1988 Act") and the consequential Regulations on the ground that the Act and the Regulations discriminated against non-UK and particularly Spanish owners of fishing vessels which had licences to fish in United Kingdom waters. These claims have been made both through the fishermen's companies and also on their own behalf.

By a Notice of Motion dated 22nd December 1988 applications were made for judicial review of the Secretary of State for Transport's regulations which had the effect on 31st March 1989 of terminating the registration of fishing vessels owned, controlled and duly registered as British fishing vessels prior to 1st December 1988 unless certain conditions, later held to be discriminatory, were met.

A total of 69 applicants (including Factortame Limited) were identified in the annex. Although the annex showed all the applicants as being owners of the vessels, the applicants were described as including "the managers of the aforesaid vessels and the shareholders and directors of the said owners and managers".

The claim for interim relief was appealed through the English courts. On 18th May 1989, the House of Lords declined to grant interim relief but ordered a reference under Article 177 of the EC Treaty (now Article 234) to the European Court of Justice for a preliminary ruling on the question of whether Community law obliged or empowered a national court to grant interim relief in such circumstances -- see Factortame 1 [1990] 2 AC 85. On 10th October 1989, the President of the European Court of Justice made an order for interim measures, pending judgment in these proceedings, and suspended the application of the nationality requirements in the 1988 Act and the Regulations. Pursuant to that order, the United Kingdom adopted provisions amending the registration system from 2nd November 1989.

On 19th June 1990, the European Court of Justice, in what came to be known as Factortame 2 [1991] AC 603, answered the question referred to them: that the United Kingdom Government was required to grant interim measures in those circumstances.

On 9th July 1990, the House of Lords decided that the applicants should be granted interim relief and so informed them. They gave their reasons on 11th October 1990 -- see [1991] 1 AC 603 at 645. On 10th July 1990, the Government reversed the discriminatory legislation.

In Factortame 3 [1992] 1 QB 680 (judgment given on 25th July 1991), the European Court of Justice held that it was contrary to Community law and in particular to Article 52 of the EEC Treaty (now Article 43) for a Member State to impose nationality requirements relating to registration of vessels which constituted obstacles to freedom of establishment within the EEC (now described as the "EU").

Article 52 applied because (page 735):
"22. Where the vessel constituted an instrument for pursuing an economic activity which involves a fixed establishment in the Member State concerned, the registration of that vessel cannot be dissociated from the exercise of freedom of establishment."

On 2nd October 1991, the Divisional Court ordered inter alia:
"(3) In respect of their claim for damages, the applicants are within eight weeks to give detailed particulars of their claim, setting out in a Statement of Claim or Points of Claim: (i) the cause of action or actions on which each of the applicants rely; (ii) the nature of each applicant's interest in each vessel; and (iii) the Heads of Damage under which the claims are made."

On 24th January 1992, pursuant to that order, a statement of applicants' claim for damages was served on behalf of 47 applicants. The applicants were companies and individual owners of the vessels. Some had been named in the original Notice of Application for Judicial Review, others had not been identified in the notice. The pleading did not include any claims for damages on behalf of shareholders or directors, although the pleadings referred to the allegation that shareholders and directors had been denied rights of establishment.

On 16th November 1992, the Divisional Court gave leave for new parties to be added as applicants. The order provided that:
"(i) Such of the companies and individuals referred to in the Amended Statement of Claim in the annex hereto, together with the shareholders and directors in such companies as are not already applicants and/or claimants be given leave to be joined as applicants and/or claimants for damages on condition that (ii) leave be given for the Statement of Claim herein to be amended as set out in the annex hereto."

The amended statement of applicant's claim for damages identified the claimants as:
"1(a) The vessel-owning and vessel-managing companies specified in schedule A, together with the shareholders and directors in such companies and (b) the shareholders in the vessel-owning companies listed in schedule B hereto."

Schedule A listed in its final form 84 companies. All but three of the companies were vessel-owners. Those three (Cmaine Shipping Limited, D-Tect Securities Limited and Portfish Limited) were managers. Schedule B identified Mr and Mrs O'Connor as applicants 85 to 97. The companies in which they held shares and the vessels owned by those companies were specifically identified.

Two days later, on 18th November 1992, there was a further hearing before the Divisional Court. In the course of this hearing applications by new parties to be added as applicants were dealt with. Leave was given to Pesca Fisheries to be joined as the 83rd applicant. Mr Barling, QC, referred to a possible 84th applicant.

Glidewell LJ said, addressing counsel for the respondents:
"Mr Richards, it is important that there should be finality. I would be minded to say that, unless you are informed of all details regarding that vessel by the end of normal working hours today, the Minute of Order will be drawn up in accordance with the intimation already given."

There were a few claims notified in 1995, but otherwise this completed the claims made before those which were made earlier this year, partly in response to advertisements, setting a deadline for new claims to be included in these proceedings

The European Court of Justice, in Francovich [1991] ECR 5357, [1995] ICR 722, had decided in 1991 the important principles of Community law which were later developed in Factortame 4 [1996] QB 404:
"37. It is a principle of Community law that the Member States are obliged to make good loss and damage caused to individuals by breaches of Community law for which they can be held responsible."

Three conditions were required to be met:
"40. The first of those conditions is that the result prescribed by the Directive should entail the grant of rights to individuals. The second condition is that it should be possible to identify the content of those rights on the basis of the provisions of the directive. Finally, the third condition is the existence of a causal link between the breach of the State's obligation and the loss and damage suffered by the injured parties."

The court went on to emphasise that, in the absence of Community legislation, it is for each Member State to designate the appropriate courts and to ensure that there was an effective remedy which was not less favourable than those relating to existing domestic claims

In Factortame 4, decided on 5th March 1996, the European Court of Justice developed further the right of individuals to recover damages for a breach by the Government of European law.

At paragraph 51 of the judgment, the court held that three conditions must be met: (1) the rule of law infringed must be intended to confer rights on individuals; (2) the breach must be sufficiently serious; and, (3), there must be a causal link between the breach of the obligation resting on the State and the damage sustained by injured parties -- see Brasserie du Pecheur v Federal Republic of Germany [1996] QB 404 at 499.

On 31st July 1997, the Divisional Court found that the UK Government's breaches of Community law were sufficiently serious to give rise to a right by the applicants to damages, provided the first and last conditions were met. Those damages could not include exemplary damages. The finding in relation to exemplary damages was not appealed -- see Factortame 5 [1997] EuLR 475

This decision was upheld by the Court of Appeal in Factortame 5 [1998] EuLR 456. Judgment was given on 6th July 1998. The Court of Appeal remitted the case to this court for the assessment of damages.

On 28th October 1999, the House of Lords dismissed the Government's appeal -- see [1999] 3 WLR 1062. I heard the claims of the first 15 claimants, in what became known as the "fast-track", in a trial which started on 6th March 2000. The last of the claims was settled on 15th May 2000, just before the end of the trial. I am due to hear the rest of the claims in a trial starting on 15th January 2001. The first issue.

The broad issue is: does the Limitation Act 1980 apply and, if so, what is the applicable period of limitation? The specific issues relating to the Limitation Act (if it applies at all) are agreed to be:

1. Is the limitation period six years by virtue of section 2 of the Limitation Act 1980, ie is it an action founded on tort within the meaning of that section? This involves the following sub-issues: 1.1. What is meant by "an action founded on tort"? 1.2. What is the correct categorisation of the cause of action in this case? 1.3. What is the significance, if any, of the fact that the source of the obligation is the European Treaty rather than domestic law? (I have deliberately rephrased this question.) 1.4. What is the significance, if any, of the fact that the 1980 Limitation Act was passed before the decision which established the State's liability in cases of this sort?

2. If the period of limitation is not six years by virtue of section 2 of the Limitation Act, is the limitation period six years by virtue of section 9 of the 1980 Act?

3. If the period of limitation is not six years by virtue of sections 2 or 9 of the 1980 Act, is it 12 years by virtue of section 8 of the 1980 Act or is there no period of limitation?

It is agreed, rightly, that if a limitation period of six years does apply, such a period of limitation would not offend against the Community law principles of equivalence and effectiveness.

It is necessary, first, to consider the nature of the right that is being claimed by analysing the right as formulated in the Factortame litigation in the ECJ, secondly, to consider other relevant cases before the ECJ and, thirdly, to consider the right as formulated by the English courts in Factortame and other relevant cases.

I shall then consider how Community law rights are incorporated into English law, the specific provisions of the 1980 Limitation Act and then I shall set out my conclusions. The Factortame litigation in the European Court of Justice (ECJ).

This section is also particularly relevant to the issue of damages for distress and aggravated damages, which I shall discuss later.

As has already appeared, the ECJ reached its conclusions in two stages. In Factortame 3 [1992] 1 QB 680, the ECJ concluded that the United Kingdom Government was in breach of Article 52 of the EEC Treaty in imposing nationality requirements relating to the registration of vessels which constituted unlawful obstacles to freedom of establishment within the EC.

In Factortame 4 [1996] QB 404, the court held that individuals were entitled to recover damages in respect of the breach, provided the three conditions were met.

In Factortame 3, [1992] 1 QB 680 at 751, the court held: 1. It was for the Member States to determine, in accordance with the general rules of international law, the conditions which must be fulfilled in order for a vessel to be registered on their registers and granted the right to fly their flag. But, in exercising their power, the Member States must comply with the rules of Community law.

2. It was contrary to the provisions of Community law, and in particular to Article 52 of the EEC Treaty, (Article 43) for a Member State to stipulate as conditions for the fishing vessel in its national register

(a) that the legal owners and beneficial owners and the charterers, managers and operators of the vessel must be nationals of that Member State or companies incorporated in that Member State and in the latter case that at least 75 per cent of the shares in the company must be owned by nationals of that Member State or by companies fulfilling the same requirements and 75 per cent of the directors of the company must be nationals of that Member State; and

(b) that the said legal owners, charterers and managers, operators, shareholders and directors, as the case may be, must be resident and domiciled in the Member State.

In Brasserie du Pecheur v Federal Republic of Germany (Factortame 4) [1996] 1 QB 404, the ECJ analysed the conditions under which an individual was entitled to obtain damages for a breach of Community law by a Member State.

The court said at paragraph 25 of the judgment (page 496) that the existence and extent of state liability for damage in suing as a result of a breach of obligations incumbent on the State by virtue of Community law were questions of Treaty interpretation which fell within the jurisdiction of the European Court.

It noted (paragraph 27, page 496) that it must make its ruling by reference to the fundamental principles of the Community legal system and, where necessary, by reference to general principles common to the legal systems of the Member States.

At page 496 of the judgment, the court explained how the liability for Member States arises: 50. "29. The principle of the noncontractual liability of the Community expressly laid down in Article 215 of the Treaty (now Article 288) is simply an expression of the general principle familiar to the legal systems of the Member States that an unlawful act or omission gives rise to an obligation to make good the damage caused. That provision also reflects the obligation on public authorities to make good damage caused in performance of their duties."

Article 215 of the Treaty says that in the case of noncontractual liability the Community shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or its servants in the performance of their duties.

This principle is further explained in paragraph 42 of the judgment in Factortame 4:
"42. The conditions under which the State may incur liability for damage caused to individuals by a breach of Community law cannot, in the absence of particular justification, differ from those governing the liability of the Community in like circumstances. The protection of the rights which individuals derive from Community law cannot vary depending on whether a national authority or a Community authority is responsible for the damage."

The general principle of the liability of a Member State is therefore derived from general principles familiar to the legal systems of the Member States. The extent of the liability is the same as that for which a Community authority or its servants would be liable.

At paragraph 39 of the judgment (page 497), the court identified the following specific reasons for its decision:
"first, the full effectiveness of Community rules and the effective protection of the rights which they confer and, secondly, the obligation to cooperate imposed on Member States by Article 5 of the Treaty (now Article 10 -- obligation on all Member States to ensure the fulfillment of all obligations arising out of the Treaty".)

Paragraph 51 of the judgment (page 499) sets out the all-important three conditions to which I have already referred.

The court made it clear at paragraph 58 that the national courts have the sole jurisdiction to find the facts and to decide how to characterise the breaches of Community law. The court emphasised (paragraph 65) that it is for the national courts to determine whether there is a causal link between the breach of obligation borne by the State and the damage sustained by the injured parties.

At page 506, the court ruled as follows:
"(2) Where a breach of Community law by a Member State is attributable to the national legislature, acting in a field in which it has a wide discretion to make legislative choices, individuals suffering loss or injury are entitled to reparation where the rule or Community law breached is intended to confer rights on them, the breach is sufficiently serious and there is a direct causal link between the breach and the damage sustained by the individuals. Subject to that reservation, the State must make good the consequences of the loss and damage caused by the breach of Community law attributable to it in accordance with its national law on liability. However, the conditions laid down by the applicable national laws must not be less favourable than those relating to similar domestic claims or framed in such a way as in practice to make it impossible or excessively difficult to obtain reparation."
"(3) Pursuant to the national legislation which it applies, reparation of loss or damage cannot be made conditional on fault (intentional or negligent) on the part of the organ of the State responsible for the breach, going beyond that of a serious breach of Community law."

In (4) the court warned that:
"National legislation, which generally limits the damage for which reparation may be granted to damage done to certain specifically protected individual interests, not including loss of profit by individuals, is not compatible with Community law. Moreover, it must be possible to award specific damages, such as the exemplary damages provided for English law pursuant to claims or actions founded on Community law, if such damages may be awarded pursuant to similar claims or actions founded on domestic law."

The remedy against the State is framed on the basis of a remedy which is given to individuals in all Member States to obtain reparation for damages which the State has caused. Community law has laid down conditions, some of which are similar to those under the English law of tort, ie a requirement that the legislation is intended to confer rights on individuals, that the State is in breach of those obligations and that the individual suffered loss as a result of the State's breach.

The courts pointedly rejected common law requirements of fault (intentional or negligent) and substituted its own requirement that the breach should be sufficiently serious. The court made it clear that remedies were a matter for the national court but must comply with the principles of equivalence and effectiveness.

Other EC authorities.

It is clear that the right of an individual to claim damages against the State for breaches of Community law was not fully understood at the time when the Limitation Act 1980 was enacted.

In Rewe [1981] ECR 1805 at 1838 (judgment 7th July 1981), the court held at paragraph 44:
"Although the treaty has made it possible in a number of instances for private persons to bring direct actions, where appropriate, before the Court of Justice, it was not intended to create new remedies to ensure the observance of Community law other than those laid down by national law."

It was not until Francovich [1991] ECR 5357 (see above) that the European Court of Justice gave a right to individuals to recover damages against the State for the State's failure to implement a directive, provided the appropriate conditions were fulfilled.

The court said at paragraph 41:
"Those conditions are sufficient to give rise to a right on the part of individuals to obtain reparation, a right founded directly on Community law."

This finding must be read in the light of the explanation given in paragraph 42 of Factortame 4; that the individuals derive their rights from Community law, but the means of enforcing those rights are derived from the principle of the Member States, that an unlawful act or omission gives rise to an obligation to make good the damage caused.

I note in passing that in Palmisani [1997] ECR 4025 (following Rewe [1976] ECR 1989, which emphasised the need for legal certainty in tax legislation), the ECJ held that a Member State has the power to impose a time limit within which an individual may bring proceedings to recover damages against a Member State, provided the period of limitation does not offend against the principles of equivalence and effectiveness. The principle that there must be an end to litigation is one which is acknowledged in all Member States.

Finally, in Norbrook [1998] ECR 153, the ECJ reiterated the three conditions set out in Factortame 4. The court went on, at paragraph 111, to confirm:

"It has been settled case law since the judgment in Factortame and others cited above (paragraphs 41 to 43) that, subject to the existence of a right to obtain reparation, which is founded directly on Community law, where the three conditions mentioned above have been met, it is on the basis of the rules of national law on liability that the State must make reparation for the consequences of loss and damaged caused, with the proviso that the condition for reparation of loss and damage laid down in the national legislation must not be less favourable than those relating to similar domestic claims and must not be so framed as to make it in practice impossible or excessively difficult to obtain reparation."

I conclude that, viewed from the standpoint of the ECJ, the remedy is framed as a remedy for breach of Community law which is available to individuals when the three conditions are met.

Two of those conditions, (a) that the rule of law infringed must be intended to confer rights on individuals and (b) there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties, are ones which are familiar in the English law concept of tort.

The third condition, that the breach is sufficiently serious, was intended to replace common law tort notions of fault -- see Factortame 4 [1996] 1 QB 506

The European Communities Act 1972.

In 1972, at the time of the United Kingdom's accession to the Treaty of Rome and in order to enact the Treaty into English law, Parliament passed the European Communities Act 1972.

Section 2 provided:
"2(1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties and all such remedies and procedures from time to time provided for by or under the Treaties as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom, shall be recognised and available in law and be enforced, allowed and followed accordingly, and the expression 'enforceable Community right' and similar expressions shall be read as referring to one to which this subsection applies."

Subsection 4 makes it clear that the directly applicable Community provisions are to prevail over existing and future Acts of Parliament and reinforces the binding nature of legally enforceable rights and obligations imposed by Community law. The domestic statute in imposing such obligations acts as a bridge or conduit enabling obligations imposed by Community law to become part of United Kingdom domestic law. It is the means by which enforceable Community rights become requirements of domestic law.

As Neill LJ put it in Biggs v Somerset County Council [1996] ICR 364:
"Section 2 of the European Communities Act established the primacy of Community law in English law."

The English decisions to which I now refer must be considered with this in mind. Guidance from the English Courts' decisions in Factortame.

In Factortame 5 [1997] EuLR 475, the English courts address two questions: first, whether the Government's breaches of Community law were sufficiently serious to give rise to an entitlement by the applicants to damages and, secondly, whether the applicants are entitled to recover exemplary damages.

They answered the first question "yes" and the second question "no."

At page 530, the court analysed the claim as follows:
"In Community law, the liability of a State for a breach of Community law is described as non-contractual. In English law, there has been some debate as to the correct nature of the liability for a breach of Community law. In our judgment, it is best understood as a breach of statutory duty. The reasons which lead us to this conclusion are fully set out in the judgment of Mann J in Bourgoin v The Ministry of Agriculture [1986] QB 727-734.

That case was concerned with the revocation of a licence to import frozen turkeys from France, which the ECJ held to be a breach of Article 30 of the Treaty (now Article 28, prohibiting quantitative restrictions on imports). He reviewed the authorities and followed what had been said by Lord Diplock in Garden Cottage Foods Limited v Milk Marketing Board [1984] AC 130 at 141. A breach of the duty imposed by Article 86 (now Article 82) not to abuse a dominant position in the Common Market, or a substantial part of it, can thus be categorised in English law as a breach of statutory duty imposed for the benefit of private individuals to whom loss is caused by a breach of that duty."

At page 733 (in Bourgoin) Mann J said:
"Accordingly, I hold that a contravention of Article 30 which causes damages to a person gives to that person an action for damages for breach of statutory duty, the duty being one imposed by Article 30 (as interpreted by the European Court) and section 2(1) of the Act of 1972 when read in conjunction."

The court in Factortame 5 went on to emphasise that it was on the question of remedies that the decision of the Court of Appeal in Bourgoin had been overtaken by later decisions and in particular Francovich (see also Kirklees Metropolitan Borough Council v Wickes Building Supplies Limited [1993] AC 227 at 281).

The Divisional Court went on:
"Thus, whilst it can be said that the cause of action is sui generis, it is of the character of a breach of statutory duty. The United Kingdom and its organs and agencies have not performed a duty which they were statutorily required to perform."

The judgment then goes on to deal with the issue of exemplary damages as if the cause of action were a breach of statutory duty.

This exposition, while extremely helpful, is not conclusive, since the judgment starts by saying that the cause of action is for a breach of Community law and ends by saying that it is sui generis, with a character of a breach of statutory duty.

The nature of the remedy was considered further by the House of Lords in R v Secretary of State ex parte Factortame [1999] 3 WLR 1062 (Factortame 5).

At page 1079 Lord Slynn of Hadley said:
"The deliberate adoption of legislation which was clearly discriminatory on the grounds of nationality and which inevitably violated Article 52 of the Treaty (since it prevented establishment in the United Kingdom) was a manifest breach of fundamental Treaty obligations. It was a grave breach of the Treaty, both intrinsically and as regards the consequences it was bound or at least was most likely to have on the respondents. It has not been shown to have been excusable."

He went on to conclude that the domicile and residence provisions in the 1988 Act also constituted serious breaches of the Treaty.

He concluded as follows:
"I therefore conclude that the United Kingdom's breach of its Community obligations by imposing or applying the conditions of nationality, domicile and residence in and pursuant to the Merchant Shipping Act 1988 was a sufficiently serious breach so as to entitle the respondents to compensation for damage directly caused by that breach. I consider also the United Kingdom was in breach of Community law by failing to give effect to the order of the President of the European Court of 10th October 1989 until 2nd November 1989 and that this also constituted a serious breach of Community obligations, which would, had they not succeeded on the first ground, have entitled Rawlings (Trawling) Limited to compensation directly caused by that breach."

In his speech at page 1083, Lord Hope of Craighead noted that paragraph 55 of the judgment of the ECJ in Factortame 3 attempted to set out factors which the domestic court might wish to take into account in reaching a conclusion as to whether the breach was sufficiently serious. He made it clear that such matters were for the national court and not for the European Court.

He went on at page 1083E:
"It is a novel task for the courts of this country to have to assess whether a breach is sufficiently serious to entitle a party who has suffered loss as a result of it to damages. The general rule is that where a breach of duty has been established and a causal link between the breach and the loss suffered has been proved, the injured party is entitled to damages. In the present context, however, the rules are different. The facts must be examined in order that the court may determine whether the breach of Community law was of such a kind that damages should be awarded as compensation for the loss."

From the passages in the two speeches, I derive the following conclusions. First, the breaches by the United Kingdom Government amount to breaches of Community obligations. Secondly, that although the nature of the breaches can be characterised as breaches of duty or obligations, the assessment of those breaches is undertaken in a way which is novel under English law.

Other English decisions.

Other English cases have analysed breaches of Community law in terms of breach of statutory duty, misfeasance in public office and actions sui generis.

I have already referred to the judgment of the Divisional Court in Factortame 5, where the court concluded that liability for breach of Community law was best understood as a breach of statutory duty and where the court referred to the speeches of the House of Lords in Garden Cottage Foods Limited v Milk Marketing Board [1984] 1 AC 130.

In Garden Cottage Foods Limited v Milk Marketing Board [1984] 1 AC 130, Lord Wilberforce, at page 151, dissented from the view of the other Law Lords, as expressed in the speech of Lord Diplock, that a breach of Community law was properly characterised as a breach of statutory duty.

He said that the point had not been argued fully and it was at least arguable that on a proper construction of section 2 of the European Communities Act 1972, rights arising under the Treaty were to be available in the United Kingdom as "enforceable Community rights" and not rights arising under English law. In such a case, it was arguable that Community law, which the English court would be applying, is sui generis.

The applicants say that Lord Wilberforce's tentative formula is the correct one and that a new remedy was created sui generis outside the provisions of the Limitation Act 1980.

They say that I am entitled to take this view because Garden Cottage Foods was decided before Factortame and Francovich and Lord Wilberforce's formulation is consistent with the way in which the law has developed since Garden Cottage Foods.

Before considering other formulations of the categorisation of breaches of Community law as English law rights, it is convenient to consider breach of statutory duty under English law.

In X (minors) v Bedfordshire County Council [1995] 2 AC 633 at 730, Lord Browne-Wilkinson analysed breach of duty in English law as a public law right which by itself gives rise to no claim in damages. It is the common law which gives a private right to damages.

He went on:
"Private law claims for damages can be classified into four different categories: viz (A) actions for breach of statutory duty simpliciter (ie irrespective of carelessness); (B) actions based solely on the careless performance of a statutory duty in the absence of any other common law right of action; (C) actions based on a common law duty of care arising either from the imposition of the statutory duty or from the performance of it; (D) Misfeasance in public office ..."

Lord Browne-Wilkinson defined misfeasance in public office as the failure to exercise or the exercise of statutory powers either with the intention to injure the plaintiff or in the knowledge that the conduct is unlawful.

He went on:
"Breach of statutory duty simpliciter. This category comprises those cases where the Statement of Claim alleges simply (i) the statutory duty, (ii) a breach of that duty, causing (iii) damage to the plaintiff ..."

"The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However, a private cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty."

At page 734 of the judgment, he emphasised that in order to found a cause of action flowing from the careless exercise of statutory powers or duties, the plaintiff has to show that the circumstances are such as to raise a duty of care at common law.

In Banque de Bruxelles v Eagle Star [1997] AC 191 at 211, Lord Hoffmann made a similar analysis. He emphasised that a duty of a care does not exist in the abstract:

"A plaintiff who sues for breach of duty imposed by law (whether in contract or in tort or under statute) must do more than prove that the defendant has failed to comply: he must show that duty is owed to him and that it was a duty in respect of the kind of loss which he suffered."

At page 213, Lord Hoffmann said:
"Rules which make the wrongdoer liable for all the consequences of his wrongful conduct are exceptional and need to be justified by some special policy. Normally the law limits liability to those consequences which are attributable to that which made the Act wrongful."

Both Lord Browne-Wilkinson and Lord Hoffmann analysed breach of statutory duty in English law in terms of duty, breach and damage which are recognisable to individual claimants for damage against the State for a breach of Community law, subject to the Community requirement that the breach should be sufficiently serious.

There is no general right to damages for breach, either under Community law, where serious breach is required, or under common law principles of negligence. Where there is a right to damages it is to be assessed under the common law rules. Lord Hoffmann classifies all breaches of duty imposed by law within the categories of contract, tort or under statute.

It is interesting to consider the following cases with this analysis in mind.

In Three Rivers District Council v The Bank of England (3) [1996] 3 All ER 558, Clarke J considered the question of whether an action for breach of Community law could properly be characterised as an action founded on tort, but in the event he did not have to reach a conclusion on this question.

At page 624, he said that in order to recover damages for breaches of Community law, including the failure properly to transpose an EC directive, the claimant must establish a relevant right.

He went on:
"If he does so, the court has now laid down clear rules which must be met. These criteria are different from the criteria which must be established on any view of the tort of misfeasance in public office. 116. It will be a matter for future consideration whether in such a case the claimant's remedy is properly to be regarded as a remedy for that tort. It appears to me that, in such a case, the claim should not be regarded as a claim for the tort of misfeasance in public office but rather as a claim of a different type, not known to the common law; namely, a claim for damage for breach of duty imposed by Community law or for the infringement of a right conferred by Community law. 117. That view seems to me to be consistent with the dicta of Lord Goff in Kirklees [1992] 3 All ER 717 at 734 when discussing the decision of the majority of Court of Appeal in Bourgoin."

The passage of Lord Goff's speech to which Clarke J was referring was the passage quoting, with approval, paragraphs 33 to 37 of the judgment in Francovich in the European Court of Justice and in particular paragraphs 35 to 37:

"35. It follows that the principle of the liability of the State for damage to individuals caused by a breach of Community law for which it is responsible is inherent in the scheme of the Treaty. 120. 36. The obligation on Member States to make good the damage is also based on Article 5 of the Treaty under which the Member States are bound to take all appropriate measures, whether general or particular, to ensure fulfillment of the obligations arising under Community law.

37. It follows from the foregoing that Community law lays down a principle according to which a Member State is obliged to make good the damage to individuals caused by a breach of Community law for which it is responsible."

Clarke J's analysis was supported by the House of Lords -- see [2000] 2 WLR 1220.

In the House of Lords, Lord Hope of Craighead said, at page 1242, that there were two approaches. First, that United Kingdom legislation properly construed implemented the directive; the other that it did not fully implement the directive, with the consequence that the United Kingdom courts must have direct recourse to it and that the rights of redress were wider under Community law than those dependent on bad faith or the common law action of misfeasance in public office.

Lord Steyn, at 1235, and Lord Millett, at 1273, agreed that the requirement of the mental element in misfeasance in public office meant that it was not an appropriate way of characterising State liability for breaches of Community law.

Lord Millett set out the elements of the tort of misfeasance in public office as follows:
"The tort is an intentional tort which can be committed only by a public official. From this, two things follow. First, the tort cannot be committed negligently or inadvertently. Secondly, the core concept is abuse of power. This involves other concepts such as dishonesty, bad faith and improper purpose ... they are all subjective states of mind ... It is important to bear in mind that excess of power is not the same as abuse of power, nor is breach of duty the same as abuse of power. The two must be kept separate from breach of statutory duty, which does not necessarily found a cause of action."

I conclude from this that whatever categorisation is appropriate in this case it is not that of misfeasance in public office

Finally, in Arkin v Borchard Lines [2000] UK CLR 504, Colman J accepted that a claim for damages for breach of Article 85 or 86 of the Treaty (now articles 81 or 82) was properly classified as a right of action analogous to a claim for breach of statutory duty which arises where the breach causes damage to the defendant. An Irish case.

Although the classification of the remedy of individuals to recover damages against the State has not been decided in the courts in the United Kingdom, it has been decided in the Irish High Court in Tate v Minister of Social Welfare [1995] 1 ILRM 507. The case concerned the implementation of Council Directive 79/7/EEC which requires the Member States to afford equal treatment to men and women in social security matters.

Carroll J found that the plaintiff had suffered discrimination by reason of the fact that the regulations enacted in Ireland did not implement fully the rights granted under the directive. The learned judge held that Community law had domestic effect by reason of Article 29.4 of the Irish Constitution and section 2 of the European Communities Act 1972 (which was the Irish counterpart of the United Kingdom legislation and in identical terms). The issue of damages for distress does not appear to have arisen.

At page 522 of the judgment Carroll J characterised the wrong committed by the State in failing fully to implement the directive as:
"... a wrong arising from Community law which has domestic effect. It is not a breach of Constitutional rights; it is not a breach of statutory duty and it is not a breach of the duty of care. It is a breach of a duty to implement the directive and approximates to a breach of Constitutional duty."

Carroll J then went on to address the question of whether the Statute of Limitations 1957 applied to this type of claim and in particular where the claims were barred by section 11(2)(g) of the statute, namely:
"Subject to paragraphs b) and c) of this subsection, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued."

This provision is in identical terms to section 2 of the 1980 Limitation Act.

Carroll J held at page 525:
"I do not accept that the breach of obligation by the State to implement the directive is a breach of statutory duty. It is, as I already said earlier, a wrong arising from Community law which has domestic effect and approximates to a breach of Constitutional duty ... Just as the word 'tort' in the Statute of Limitations is sufficiently wide to embrace breach of statutory duty even though not specifically mentioned, so also in my opinion the word 'tort' is sufficiently wide to cover breaches of obligations of the State under Community law. There is nothing strange in describing the State's duty do fulfil its obligations under the Treaty as a tort. Therefore I am satisfied that section 11(2) of the Statute of Limitations does apply to a breach of obligations to observe Community law."

This important decision suggests clearly that one possible answer to the first question is that the breach of duty of the Government falls within the definition of an action founded on tort and leads into consideration of the Limitation Act itself. The applicants say that the intervention of the Irish Constitution is decisive and that the Irish case is of no relevance to this case. The Limitation Act 1980.

I shall consider first the general policy and scheme of the Act and then section 2 of the Limitation Act, which must be construed with the general purpose of the Statute in mind.

The long title of the Statute is "an Act to consolidate the Limitation Acts 1939 to 1980".

It is a consolidating Statute whose purpose is to bring together in one Act of Parliament the Limitation Acts of 1939, 1963, 1975 and the Limitation Amendment Act 1980. It is not therefore intended to change the existing law, and I am entitled to consider previous Limitation Acts and cases decided under them.

The Act is the successor to the Limitation Act of 1623. The general purpose of imposing a limit on the time within which proceedings may be brought before the court was described by Lord Atkinson in Board of Trade v Cayzer Irvine & Co [1927] AC 610 at 638 in these terms:

"The whole purpose of this Limitation Act is to apply to persons having good causes of action which they could, if so disposed, enforce and to deprive them of the power of enforcing them after they have lain by for the number of years respectively and omitted to enforce them. They are thus deprived of a remedy which they have omitted to use."

In the Ampthill Peerage Case [1977] AC 547 at 575, Lord Simon of Glaisdale explained the reasoning behind the Statute of Limitations 1939 as amended in these terms:

"There is a fundamental principle of English law generally expressed by a Latin maxim (going back to Coke's commentaries on Littleton p330) which can be translated; `It is in the interest of society that there should be some end to litigation.' This fundamental principle finds expression in many forms. Parliament has passed statutes (the last only last year) limiting the time within which actions at law must be brought. Truth may be thus shut out; but society considers that truth may be bought at too high a price; the truth bought at such expense is the negation of justice."

This policy is equally applicable to claims against public authorities for sums payable by them pursuant to statute -- see CEGB v Halifax Corporation [1963] AC 785.

The avowed purpose of the Limitation Amendment Act 1980 consolidated into the Limitation Act 1980 was as the Law Commission reaffirmed in 1977 (a) to protect defendants from stale claims; (b) to encourage claimants to institute proceedings without unreasonable delay and thus enable actions to be tried at a time when the recollections of the witnesses was still clear; and (c) to enable a person to feel confident after a lapse of a given time that an incident which may have led to a claim is finally closed.

This principle is well understood in both common law countries and civil law countries and, as we have seen, was upheld by the European Court of Justice in Palmisani [1977] ECR 4025.

That this general principle was intended to apply to all actions brought in the English courts is clear from section 1 and the scheme of the Limitation Act

Section 1 of the Limitation Act 1980 provides:
"1 -- (1) This Part of this Act gives the ordinary time limits for bringing actions of the various classes mentioned in the following provisions of this Part. 147. "
(2) The ordinary time limits given in this Part of this Act or subject to extension or exclusion in accordance with the provisions of Part II of this Act."

Part I sets out the time limits for actions founded on tort, section 2; conversion of chattels, section 3; theft, section 4; contract, section 5; loans, section 6; enforcement of arbitration awards, section 7; actions on a specialty, section 8; sums recoverable by statute, section 9; contribution, section 10; personal injuries or death, sections 11 to 14; and actions relating to land, sections 15 to 27. This includes actions relating to trust property and mortgages and time limits for enforcing a judgment.

Part II deals with the extension or exclusion of ordinary time limits dealing with disability; acknowledgment or part payment; fraud, concealment and mistake; discretionary exclusion of time limits for actions in respect of personal injury or death.

Part III is concerned with miscellaneous and general matters, including the application of the Act to arbitrators, section 34; new claims in pending actions, section 35; and equitable remedies, section 36.

This last provision provides that the time limits under the Act in sections 2, 5, 7, 8, 9 and 24 shall not apply to equitable remedies including specific performance and injunction and preserve the court's equitable jurisdiction to refuse equitable relief to an applicant on the grounds of acquiescence or otherwise.

Neither the 1980 Act nor the earlier 1939 Act defines tort or action founded on tort, although it does define personal injuries, settled land and trust.

I conclude therefore that the approach to considering section 2 of the Limitation Act 1980 must be to give the term "action founded on tort" a wide construction.

Section 2, headed "Time limit for actions founded on tort", says:
"2. An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued."

The crucial question in this case is: what is "an action founded on tort?" It raises the fundamental question of: what is a tort?

It is surprising that, although this has been discussed by learned textbook writers, there is no settled authority on the point.

The 17th edition of Clerk & Lindsell on the law of torts (soon to be superceded by the 18th edition) concludes at paragraph 1-01 that "no entirely satisfactory definition can be offered."

It cites Professor Winfield's classic definition in 1931:
"Tortious liability arises from a breach of duty primarily fixed by the law; such duty is towards persons generally and its heads are redressable by an action for unliquidated damages."

The learned editors readily acknowledge that this was intended as a description and may not now be entirely accurate.

At paragraph 1.04 and 1.05 Clerk & Lindsell goes on to say that where an individual enjoys a remedy for damages for breach of Community law, such a remedy is often referred to as a "Eurotort".

There is no decided legal authority on the point, and the question remains: is it properly so classified and, if so, is a "Eurotort" a tort for the purposes of section 2 of the Limitation Act 1980?

The claimants say that whatever you call it the action is sui generis and outside section 2 of the Act.

The respondents say that it is properly so classified and within the terms of section 2. Conclusion.

Two questions must be considered. Can the cause of action be classified as an action founded on tort because it is founded on a breach of statutory duty?

Secondly, can it be so classified because the cause of action itself comes within a proper definition of the word "tort"? The expression "cause of action" is extremely wide and encompasses all proceedings in a court of law, and certainly applies to these proceedings; see Hillingdon Borough Council v ARC Ltd [1997] 3 All ER 506 at 518.

An action for breach of English statutory duty is properly classified as an action founded on tort. It is argued that this can be properly extended to breaches of Community law by the Government in these circumstances. The breach relied on in relation to breaches of the Treaty is the Government's breach of its obligations under section 2(1) of the European Communities Act 1972 which requires domestic law to give effect to all rights, powers, liabilities, obligations and restrictions arising out of the Treaties and provides that where there is an enforceable Community right it should be enforceable as a matter of domestic law.

In this case so the argument runs there is an enforceable Community right which the Government is required to enforce, namely not to impede free movement of individuals who have rights under Article 52 of the Treaty. It is in breach of its obligations in failing to do so.

The European Communities Act 1972 was intended to and does provide a conduit or bridge by which Community obligations are translated into domestic law. It is conceded that it does not define the primary obligation in the way in which United Kingdom statutes said to come within the definition of tort do. Nevertheless it can be argued that it would be within the all inclusive nature of the Limitation Act and consistent with its purpose to hold that what was being alleged was indeed a breach of statutory duty and therefore within the classification of an action founded on tort.

This answer is somewhat unsatisfactory in that it does not address the fundamental problem of whether or not an action by an individual against a government for breach of Community law can properly be described as an action founded on tort. Nevertheless, giving the statute the widest construction in accordance with its purpose, a combination of a breach of Article 52 of the Treaty and section 2(1) of the European Communities Act 1972 does amount to a breach of statutory duty which is within section 2 of the Limitation Act.

This does not absolve me from answering the fundamental question. I start from the fact that the term "action founded on tort" is not defined in section 2 of the Limitation Act and that it is within the purpose of the Act that the words should be given a wide construction.

Following the approach suggested by Lord Hoffmann in Banque de Bruxelles [1997] AC at 211, I define a tort as:
"A breach of non-contractual duty which gives a private law right to the party injured to recover compensatory damages at common law from the party causing the injury."

This covers not only the present case but those few torts in English law where violation of a plaintiff's interest without proof of actual damage is sufficient to found a claim in tort.

This definition is also consistent with the judgment of the ECJ in Factortame 4 [1996] 1 QB 404 cited above which sets out the general principles of non-contractual liability familiar to all Member States.

It is also consistent with Lord Browne-Wilkinson analysis in X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 730, which emphasises in particular that it is the common law which gives a private right to damages.

The ECJ has emphasised that, while it is Community law which establishes obligations under the Treaty, it is for the Member State to afford a remedy which is effective and equivalent to comparable domestic remedies. It is also for the Member State to decide whether the breach of Community law is sufficiently serious.

The definition which I formulated differentiates between a section 2 right, where damages are compensatory at common law, and a section 9 right, where quantum of damages is fixed by statute. It is consistent with the purpose of the Act and with the guidance which I have derived from the authorities. It may well be that the term "Eurotort" is apt to describe the particular characteristics in Factortame 4 [1996] 1 QB 404 at 506 to differentiate it from the somewhat different requirements under English domestic law.

The fact that the source of the obligations is European law makes no difference to the analysis. The conduit or bridge of section 2(1) of the European Communities Act translates the obligations into English law and renders it an English law obligation. The definition in section 2 of the 1980 Limitation Act properly construed is wide enough to encompass it.

Equally, the fact that the precise nature of the Government's obligation was not fully defined until 1996 makes no difference. The Limitation Act is drafted in wide terms consistent with its purpose. It would be well understood by the drafters of the Act that the classification of torts has always included new rights, e.g. the tort of conspiracy. It has never been suggested that the Limitation Act did not apply because the new cause of action arose out of a new type of obligation which had arisen since the last enactment or amendment of the Statute of Limitations and in respect of which the claimant was entitled to relief.

I conclude therefore that section 2 of the Limitation Act 1980 applies to all new claims since 10th July 1996.

Relationship between Sections 2, 8 and 9 of the Limitation Act 1980.

Section 8 of the Limitation Act 1980 provides as follows:

"8(1) An action upon a specialty shall not be brought after the expiration of twelve years from the date on which the action accrued. 181. "

(2) Subsection (1) above shall not affect any action for which a shorter period of limitation is prescribed by any other provision of this Act."

Section 9 of the Limitation Act provides as follows (insofar as it is relevant):
"9 -- (1) An action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued."

A specialty is a contract or other obligation contained in a document under seal. An action for money recoverable by statute is an action upon a specialty. But for the exemption in section 8(2) of the Limitation Act 1980, the limitation period would have been 12 years.

Since I have held that section 2 of the Limitation Act applies, and since the same period of limitation of six years applies under section 9(1), a discussion as to whether section 9 also applies in the present action is largely academic. In my view the two sections were intended to be comprehensive but were not intended to overlap.

I therefore construe the words "any sums recoverable by virtue of any enactment" in section 9 as referring to cases where those sums which are recoverable by the claimant are specified in or directly ascertainable from the enactment. This is to be contrasted with damages recoverable under section 2 which are compensatory damages assessed under common law principles and which cannot therefore be directly ascertained from the statute.

Within the meaning of the word "enactment" I would include any provision of Community legislation by reference to which compensation could be directly calculated. Such legislation would be incorporated into English law by virtue of section 2(1) of the European Communities Act 1972 with which it would have to be read. In the present cases the sums are ascertainable by common law principles and fall within section 2 of the Limitation Act. Issues of principle arising out of section 35 of the Limitation Act 1980.

The preliminary issues raise the two fundamental questions of whether applications can be made by existing applicants to add claims for additional vessels and whether existing applicants can make claims in a different capacity.

Section 35 of the Limitation Act 1980 provides as follows:

"35 -- (1) For the purposes of this Act any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced -- "

(b) in the case of any other new claim, (ie not made in or by way of third party proceedings) on the same date as the original action."

Section 35(2) makes it clear that any new claim includes (a) the addition or substitution of a new cause of action; or (b) the addition or substitution of a new party.

Section 35(3) provides:
"(3) Except as provided by ... rules of court, neither the High Court nor any County Court shall allow a new claim within subsection 1(b) above, other than an original set-off or counterclaim to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim ..."

Rules of Court must satisfy the conditions set out in subsection (5):

"a) in the case of a claim involving a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action.

"b) in the case of a claim involving a new party if the addition or substitution of the new party is necessary for the determination of the original action."

The relevant Rule of Court is CPR 17.4, which provides that where a period of limitation has expired under the Limitation Act 1980:
"(2) The Court may allow an amendment whose effect will be to add or substitute a new claim but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."

Mr Males on behalf of the TCS applicants makes a submission in which the Edwin Coe applicants join, that the amendments do not raise a new cause of action. He submits that the existing cause of action is for breach of European Community law caused by the Merchant Shipping Act 1988 or arising out of the Merchant Shipping Act 1988 and is a single cause of action and not multiple different causes of action. He says that the only new element in relation to the application is to add in new vessels.

He goes on to say that, if I am against him in that submission, the new claims (if I categorise them as such) arise out of substantially the same facts as are already in issue in the original action and that I should exercise my discretion in the claimant's favour to enable the court to do justice in accordance with the overall justice of the case.

Mr Friedman for the respondents submits that both the claims in respect of new vessels and the claims by applicants in a different capacity are new claims and do not arise out of the same or substantially the same facts. The respondent's fall-back position is that, if the matter depends on my discretion, I should not exercise it in favour of the applicants in view of the time that has elapsed since the limitation period expired. The law.

It is common ground that there is no change in the law from that which prevailed before the implementation of the CPR; see International Distillers and Vintners v Hildebrand UK Ltd The Times January 25 2000. Therefore the law as expressed before May 1999 is relevant.

The classic definition of "cause of action" is that set out by Brett J in Cooke v Gill [1873] LR 8 CP at 116:
"'Cause of action' has been held from the earliest time to mean every fact which is material to be proved to entitle the plaintiff to succeed -- every fact which the defendant would have a right to traverse."

In Paragon Finance v Thackerar [1999] 1 All ER 400 at 406 by way of illustration Millett LJ said after citing this definition:
"In my judgment, it is incontrovertible that an amendment to make a new allegation of intentional wrongdoing by pleading fraud, conspiracy to defraud, fraudulent breach of trust or intentional breach of fiduciary duty where previously no intentional wrong doing has been alleged, constitutes a new cause of action."

An alternative definition of a "cause of action" is that set out by May LJ in Steamship Mutual v Trollope and Colls [1986] 33 BLR 77 at 91 and since often cited:

"It is sufficient for the purpose of this judgment merely to quote a short dictum from the judgment of Diplock LJ (as he then was) in the case of Letang v Cooper. It is unnecessary to refer to the facts of that case. On the question `what is a cause of action' the learned Lord Justice said this: "

`A cause of action is simply a factual situation, the existence of which entitled one person to obtain from the court a remedy against another person.'"

In Steamship Mutual v Trollope and Colls at page 93 May LJ approved the decision in Brickfield Properties v Newton [1971] 1 WLR 862 a case where the architects alleged negligence in design was held to constitute a different cause of action to his alleged negligence in supervising the construction of the building.

Lord Justice May held that a proposed amendment to a claim alleging defects in the central heating system in order to allege defects in the wall ties constituted a new cause of action.

At page 98 he explained his approach:
"I do not think one can look only at the duty on a party but one must look also to the nature and extent of the breach relied on as well as the nature and extent of the damage complained of in deciding whether as a matter of degree a new cause of action is sought to be relied on. The mere fact that one is considering what are, as it is said after all, only different defects to the same building does not necessarily mean that they are constituents of one and the same cause of action. Thus I conclude that whether there is a new cause of action is a mixed question of law and fact."

The Casper Trader [1991] 2 Lloyds Reports 237 arose out of a fire. A number of allegations were pleaded that the fire was caused by the builders. The plaintiffs sought to add a claim that the builders owed a duty of reasonable care and skill and that the work should be reasonably fit for the purpose. There was no amendment to the claim for damages.

Webster J had no difficulty in considering that there was sufficient overlap with the existing claim and allowed the amendment.

Staughton LJ in the Court of Appeal (page 246) said that sufficient overlap is little more than a paraphrase for the requirement that the facts must be substantially the same. He then went on to consider the phrase "if it is just to do so". He said that the court must take into account the fact that the defendant will be deprived of an accrued defence. He said:
"The court may grant leave if it thinks that it is just to do so after taking into account together with all other relevant factors."

The Court of Appeal upheld Webster J's decision. It rejected other amendments which sought to add an allegation of breach of duty in the design and the carrying out of the modifications framed in the alternative in contract and tort.

Finally in Lloyds Bank v Rogers [1999] 38 EG 187 where a pleading made no claim for a monetary judgment, although it set out the essential particulars which would have justified such a claim, the Court of Appeal held that it was not necessarily a new cause of action since it did not raise any new issues between the parties.

At page 85 Auld LJ in considering the distinction between a new claim and a new cause of action said:
"That the draftsmen of section 35 and order 20 rule 5 had the distinction in mind is underlined by their respective provisions for new claims by reference to substituted new causes of action as well as additional new causes of action. The remedy claimed -- any claim -- may or may not be the same. What makes the claim 'a new claim' is the newness of the substituted cause of action. Thus a claim for damages is a new claim even if in the same amount as originally claimed if the claimant seeks by amendment to justify it on a different factual basis from that originally pleaded. But it is not, even if made for the first time, if it does not involve the addition or substitution of an allegation of new facts constituting such a new cause of action."

Evans LJ disagreed with Auld LJ on this issue but agreed with the result. He said:
"I would hold that amending the particulars of claim to include a claim for sums due as principal and interest under the guarantee adds causes of action that are 'new claims' under section 35 and order 20 rule 5 respectively. They are different causes of action from the claim for possession of the appellant's property under the legal charge and guarantee which was the only claim first made ..."
Conclusions.

I conclude therefore that the following principles apply. First, the provisions must be construed in accordance with the words of the section of the Act and the provisions of the CPR, and in accordance with the overall purpose of the Act. This means the special provisions must be construed as exceptions to the general rule that no new claims must be introduced once the limitation period specified in the Act has expired.

Secondly, a cause of action means every fact which is material to be proved to entitle the plaintiff to succeed -- every fact which the defendant would have a right to traverse (challenge).

Thirdly, "any claim" includes the addition or substitution of a new cause of action or the addition or the substitution of a new party.

Fourthly, if the court is satisfied that the claim involves a new cause of action, the court must consider whether it arises out of the same or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.

Applying these tests in the present case, it is clear that the claims by existing applicants for loss and damage in respect of additional vessels are new causes of action. The facts which the applicants need to prove are specific to those vessels and relate to complicated claims which need to be proved in order that the claims can succeed.

Permission to amend can only be given if I conclude that the applicants can bring themselves within CPR 17.4. The new claims do not arise out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has claimed a remedy in the proceedings. They arise out of different facts and circumstances relating to those particular vessels.

It is of course correct to say that in terms of issues some of the underlying claims in respect of the new vessels have much in common with existing claims. But they inevitably do not arise out of the same or substantially the same facts because the facts are specific to each vessel and must be considered specifically in relation to each vessel.

In relation to the application to add claims for existing claimants in a different capacity, it is clear that these are also new claims which require the addition of new parties.

With reference to section 35(5)(b) of the 1980 Act the new parties are not necessary to determine the claims in the original actions. The new claims by the parties claiming in a different capacity inevitably involve new claims which will be proved on the basis of new facts. I therefore also refuse these applications.

In relation to both these heads of claim, if I had a discretion in the matter I should refuse to exercise it in the applicants' favour. The limitation period expired at the latest in 1996. These claims were made for the first time in about September 2000 and were heard promptly in October 2000 in respect of a trial starting in January 2001. They are simply too late. Damages for distress/injury to feelings and aggravated damages.

Although other issues were originally included as preliminary issues, the parties are agreed that the only issue for determination at this stage is whether in principle claims can be made by shareholders and directors for damage for injury to feelings and aggravated damages.

The applicants contend that the courts have already held that they have suffered discrimination on the grounds of their nationality contrary to Article 52 (now Article 43) and Article 6 (now Article 12) of the Treaty. They say that this is comparable with the fundamental discrimination prohibited by the Race Relations Act 1976. They say that section 57(4) of the 1976 Act permits the court to award damages for distress and aggravated damages and that therefore these remedies should in principle be available to these applicants.

They go on to say the court should not need much persuasion in these circumstances to conclude that the anger, distress and anguish caused by the Merchant Shipping Act 1988, which discriminated against the applicants on the grounds of their nationality, had injured their feelings -- see Ministry of Defence v Cannock [1995] 2 All ER 449.

They also say that, where damage for injury to feelings is recoverable, aggravated damages which are compensatory in nature are available where a defendant has acted in a high-handed, insulting and oppressive manner -- see Alexander v Home Office [1988] 1 WLR 968.

Finally they contend that aggravated damages are in principle available to them on the basis of the existing findings by the European Court of Justice and the English courts, and do not depend upon proof of malice.

The respondents say that damages for injury to feelings are not normally recoverable in English law. They argue that the remedy in damages is one for English law subject to the principles of effectiveness and equivalence. They contend that it is necessary to consider the nature of the breach of Article 52 of the Treaty, and that if one does so it is clear that it is concerned exclusively with the economic and not social activity and is not comparable with a breach under the Race Relations Act 1976 or the Sex Discrimination Act 1975. In summary, the respondents say that there is no statutory equivalent in English law to a breach of Article 52 of the Treaty and that neither damages for distress nor aggravated damages are payable in these cases but only damages for economic loss. General principles of English domestic law.

The general rule is that damages for injury to feelings or mental distress -- grief, fear, anger and the like -- will not be awarded under English law unless the injury to feelings has resulted in physical or mental harm -- see Devlin J's judgment in Behrens v Bertram Mills Circus [1957] 2 QB 1 at page 28. In the case of mental harm, the mental harm complained of must amount to a recognisable psychiatric illness -- see Lord Lloyd in Page v Smith [1996] 1 AC 155 at 189.

The circumstances in which damages can be awarded as injury to feelings and as aggravated damages as exceptions to the general rule have been developed in a line of cases starting with Rookes v Barnard [1964] AC 1129 and Broome v Cassell [1972] AC 1027.

The starting point is the well-known passage in Lord Devlin's speech in Rookes v Barnard at page 1221:
"Moreover it is well established that in cases where damages are at large, the jury (or the judge if the award is left to him) can take into account the motive and conduct of the defendant when they aggravate the injury done to the Plaintiff. There may be malevolence or spite or the manner of committing the wrong may be such as to injure the Plaintiff's proper feelings of injury and pride. These are matters which the jury can take into account in assessing the appropriate compensation. Indeed, when one examines cases in which large damages have been awarded for conduct of this sort it is not at all easy to say whether the idea of compensation or punishment has prevailed."

In McCarey v Associated Newspapers No. 2 [1964] 3 All ER 947 at 957 Pearson LJ said that:
"Damages may also include the natural grief and distress which he may feel at being spoken of in defamatory terms and if there has been any kind of high-handed, oppressive, insulting or contumelious behaviour by the defendant which increases the mental pain and suffering which is caused by the defamation and which may constitute injury to the plaintiff's self-confidence -- those are proper elements to be taken into account where damages are at large."

In Broome v Cassell [1972] AC 1027 at 1085 Lord Reid described aggravated damages in these terms:

"Damages for any tort are or ought to be fixed at a sum which will compensate the plaintiff, so far as money can do it, for all the injury he has suffered. When the injury is material and has been ascertained, it is generally possible to assess damages with some precision. But that is not so where he has been caused mental distress or where his reputation has been attacked -- where, to use the traditional phrase, he has been held up to hatred, ridicule and contempt. Not only is it impossible to ascertain how far other people's minds have been affected, it is almost impossible to equate the damage to a sum of money. Any one person trying to fix a sum as compensation will probably find in his mind a wide bracket within which any sum could be regarded by him as not unreasonable -- and different people will come to different conclusions. So in the end there will probably be a wide gap between the sum which on an objective view could be regarded as the most to which the plaintiff is entitled to compensation.

"It has long been recognised that in determining what sum within that bracket should be awarded, a jury, or other tribunal, is entitled to have regard to the conduct of the defendant. He may have behaved in a high-handed, malicious, insulting or oppressive manner in committing the tort or he or his counsel may have aggravated the injury by what they there said. That would justify going to the top of the bracket and awarding as damages the largest sum that could fairly be awarded as compensation."

In Broome v Cassell [1972] AC 1027 at 1124, Lord Diplock set out three categories for which damages are at large, the third of which relates to exemplary damages.

The second category is particularly relevant:
"(2) additional compensation for the injured feelings of the plaintiff where his sense of injury resulting from the wrongful physical act is justifiably heightened by the manner in which or motive for which the defendant did it."

It is important to place these observations in context. They relate to the tort of defamation where holding up the plaintiff to hatred, ridicule and contempt is an integral part of the tort and where it is foreseeable that such conduct will result in distress and injury to feelings as a direct result of the defendant's conduct. The observations are also made in the context of giving guidance to juries in defamation actions where the bracket of damages which they could legitimately award is extremely wide.

In Alexander v Home Office [1988] 1 WLR 968 at 975 May LJ, referring to Lord Diplock's second category in Broome v Cassell, said:
"Nevertheless damages for this relatively new tort of unlawful racial discrimination are at large, that is to say they are not limited to pecuniary loss that can be specifically proved. Further even when exemplary or punitive damages are not sought nevertheless compensatory damages may and in some instances should include an element of aggravated damages where, for example, the defendant may have behaved in a high-handed, malicious, insulting or oppressive manner in committing the act of discrimination."

He went on:
"Although damages for racial discrimination will in many cases be analogous to those for defamation they are not necessarily the same. In the latter case the principal injury to be compensated is that to the plaintiff's reputation; I doubt whether this will play a large part in the former. On the other hand, if the plaintiff knows of the racial discrimination and that he has thereby been held up to hatred, ridicule and contempt then the injury to his feelings will be an important part of his damages. That the injury to feelings must have resulted from the knowledge of discrimination is clear from the decision of this court in Skyrail Oceanic Ltd v Colman [1981] ICR 864."

Apart from the damages arising from the statutory tort, May LJ held that a number of factors could legitimately be taken into account by the judge in aggravation of the compensatory damages to which the plaintiff was entitled. These included:

"f) The aggravation of these factors: ii) by a persistent abuse of power on the part of the State authority charged by law with the duty of seeking to reform and deal equitably with the plaintiff;

iii) by the high-handed conduct of a defendant in whose sole power the plaintiff was;

iv) by the attempt, persisted in to the end of the proceedings to justify the defendant's treatment of the plaintiff by injurious and untrue allegations against him and in favour of other white prisoners;

v) by the conspicuous want of any withdrawal or apology for the damaging and unjustifiable reports used by the defendant to the plaintiff's detriment."

While it is helpful to set out these considerations, it is essential to put them in the context of that particular case. It concerned prison officers and officials in the Home Office who discriminated against a prisoner in a way that was found to be racially motivated. The Home Office then sought to justify the unfounded allegations against him by injurious and untrue allegations and by continuing that conduct to the end of the proceedings. It is easy to see how such behaviour aggravated the initial injury.

In AB v South West Water Services [1993] QB 507 the Court of Appeal considered the nature and development of aggravated damages.

At page 527 Stuart-Smith LJ pointed out the distinction between ordinary compensatory damages and damages for distress in a case where the claimant claimed that the defendants had aggravated the feelings of the claimant by their conduct in continuing to permit the claimant to drink contaminated drinking water.

He said:
" Likewise if uncertainty as to the true position caused by the defendant's lack of frankness following the initial incident led to real anxiety and distress that is an element for which they are entitled to compensation under general damages for suffering. But anger and indignation is not a proper subject for compensation; it is neither pain nor suffering."

In his judgment at page 532 Sir Thomas Bingham MR considered the development of the concept of damages for distress and aggravated damages in these terms:
"The question is whether in addition to that full compensatory measure (of conventional damages) the plaintiffs have pleaded a sustainable claim for additional compensation by way of aggravated damages. This is claimed in paragraph 27 on the basis that the plaintiff's feelings of indignation were aroused by the defendant's high-handed way of dealing with the incident. I know of no precedent for awarding damages for indignation aroused by a defendant's conduct.

Defamation cases in which a plaintiff's damages are increased by the defendant's conduct of the litigation (as by aggressive cross-examination of the plaintiff or persistence in a groundless plea of justification) are not in my view a true exception since injury to the plaintiff's feelings and self esteem is an important part of the damage for which compensation is awarded.

In very many other tort actions (and for that matter in contract, boundary disputes, partnership actions and other disputes) the plaintiff is indignant at the conduct of the defendant (or his insurers). An award of damages does not follow nor in my judgment should it since this is not damage directly caused by the defendant's tortious conduct and this is not damage which the law has ever recognised."

This judgment reaffirms the general rule set out in Behrens v Bertram Mills Circus and identifies, as a separate category where damages for distress may be recoverable, torts where injury to the plaintiff's feelings and self-esteem is an integral part of the damage for which compensation is awarded. To this may be added aggravated damages where the defendant's conduct after the tortious act has aggravated the damage which the plaintiff has suffered.

In Ministry of Defence v Cannock [1995] 2 All ER 449 at 480 in the Employment Appeal Tribunal Morison J emphasised that tribunals were well used to making assessments of damages for distress in respect of sex discrimination by one person against another.

He emphasised that compensation for injury to feelings was not automatic but had to be proved:
"It will often be easy to prove in the sense that the tribunal will not take much persuasion that the anger, distress and affront caused by the act of discrimination has injured the applicant's feelings but it is not invariably so."

The nature of this discrimination is a claim brought by individual plaintiffs against individual defendants who are acting unlawfully in breach of legislation passed by Parliament.

In Thompson v Commissioner of Police [1997] 2 All ER 762 at 775 Lord Woolf MR, in the course of setting out the method of assessment of damages against police officers for unlawful conduct against members of the public, set out the guidelines which a judge should give when summing up the case to the jury in relation to aggravated damages:

"(8) If the case is one in which aggravated damages are claimed and could properly be awarded, the nature of aggravated damages should be explained to a jury. Such damages can be awarded where there are aggravating features about a case which would result in the plaintiff not receiving sufficient compensation for the injury suffered if the award were restricted to a basic award. Aggravating features can include humiliating circumstances at the time of the arrest or the prosecution which shows that they behaved in a high-handed, insulting, malicious or oppressive manner either in relation to the arrest or the imprisonment or in conducting the prosecution. Aggravating features can also include the way the litigation and the trial are conducted."

"Aggravating features listed take account of the passages in the speeches of Lord Reid in Broomes Case [1972] AC 1027 at 1085 and Pearson LJ in McCarey v Associated Newspapers No. 2 [1964] 3 All ER 947 at 957, which I have already cited."

He went on:
"It should be strongly emphasised to the jury that the total figure for basic and aggravated damages should not exceed what they consider is compensation for the injury which the plaintiff has suffered. It should also be explained that if aggravated damages are awarded such damages though compensatory and not intended to be a punishment will in fact contain a penal element as far as the defendant is concerned."

In summary I conclude that the following general principles apply:

1. The general rule remains that damages for injury to feelings or distress will not normally be awarded in English law unless the injury to feelings has resulted in physical or mental harm.

2. Damages to compensate a claimant for distress caused as a direct consequence of the tort are confined to those torts where the claimant's loss of self-esteem is an important part of the damages for which compensation is awarded. This is the case in defamation actions and actions brought under the Race Relations Act and the Sex Discrimination Act.

3. In cases involving unlawful discrimination, damages must be proved but will in appropriate cases be readily inferred.

4. In cases where damages for distress have been awarded, aggravated damages may also be awarded where the defendant has behaved in a high-handed, insulting, malicious or oppressive manner subsequent to the tortious act but only to compensate the claimant for the unnecessary additional distress which the claimant has been caused and not to punish the defendant. Damages: European Law Principles

The general principles of European law can be put into a series of propositions: 1. An individual has a remedy under Community law when three conditions are met. a) the rule of law infringed must be intended to confer rights on individuals b) the breach must be sufficiently serious, and c) the injured party must establish a causal link between the breach of obligation by the State and the damage which the injured party has sustained -- see Brasserie du Pecheur (Factortame 4) [1996] QB 404 at 499.

2. Where the State must make good the damage sustained by individuals the conditions for recovery must be no less favourable than those relating to similar domestic claims or be framed in such a way as in practice to make it impossible or excessively difficult to obtain reparation (principle of equivalence and effectiveness) -- see Factortame 4 at 502.

3. At page 506 of the ECJ's judgment in Factortame 4 the court emphasised that the applicants would be entitled to specific damages such as exemplary damages (including presumably damages for distress and aggravated damages) if such damages could be awarded pursuant to similar actions or claims founded on English law.

4. The Divisional Court held in Factortame 5 [1997] EuLR 475 at 530 that exemplary damages could only be awarded for torts in respect of which they would have been awarded before the decision in Rookes v Barnard. This head of damage was not available in these proceedings. That decision was not appealed.

5. The Divisional Court in Factortame 5 left open the question of whether damages for distress and/or aggravated damages could be awarded to the claimants [1997] EuLR at 527.

6. The House of Lords in Factortame 5 [1997] 3 WLR 1062 held that the adoption of legislation in breach of unambiguous and fundamental Articles of the Treaty was a sufficiently serious breach to satisfy the second requirement in Factortame 4 (that the breach was sufficiently serious) and therefore entitled the applicants to recover damages for losses directly covered by the breach. It was not asked to and did not express any opinion on the availability of damages for distress or aggravated damages. Previous observations on the gravity of the Government's conduct.

The applicants say that the previous observations make it clear that the defendant's conduct is analogous to a breach of the Race Relations Act 1976 and that therefore they are entitled in principle to recover damages for distress. They say that the seriousness of the allegations is clear from the findings of the Divisional Court, the Court of Appeal and the House of Lords.

The Divisional Court referred to four factors which in particular constituted sufficiently serious breaches of the relevant Articles of the Treaty:

1. Discrimination on the grounds of nationality was the intended effect of the domicile and residence conditions

2. The Government was aware that the imposition of the conditions must necessarily injure the applicants because they were intended to ensure that the applicants would no longer fish against the British quota

3. The United Kingdom decided to achieve its objective through primary legislation. This made challenge to the legislation difficult. Furthermore, hopes were expressed that no damages could be awarded against the Government for breaches of Community law if such were eventually established

4. The United Kingdom Government went ahead with the legislation despite the fact that the Commission had expressed the view that it was unlawful under Community law. This was clear from the letter from Mr Fitchew of 28th March 1988. Mr Fitchew was at the time a very senior civil servant in the Commission. His letter went so far as to threaten that the Commission would bring infringement proceedings under Article 169 of the Treaty.

The Court of Appeal [1998] EuLR 456 at 473 said:
"The ECJ clearly regarded the condition relating to nationality as being a breach of Community law falling into a special class. This is readily understandable in view of the terms of Art 6 of the Treaty which specifically provide

'Within the scope of application of the Treaty and without prejudice to any special provisions contained therein, any discrimination on the grounds of nationality is prohibited'."

The court endorsed the status of the requirements of Article 6 expressed by Advocate-General Jacobs in the Phil Collins Case [1993] ECR 1-5145 at 5162 where he said:
"9 The prohibition of discrimination on the grounds of nationality is the single most important principle of Community law. It is the leit motiv of the EC Treaty."

In the House of Lords Lord Slynn of Hadley said at page 1076:
"The nationality condition was obviously discriminatory and in breach of Article 52 ... as Factortame No. 2 [1992] QB 680 had found."

He went on at page 1076:
"It is to be noted that in Factortame 3 [1996] QB 4041 at 500, para 61 the European Court stated bluntly that the nationality condition constituted direct discrimination which was manifestly contrary to Community law."

Lord Slynn concluded at page 1079:
"Accordingly despite the arguments of the United Kingdom and the advice it received it seems to me clear that the deliberate adoption of legislation which was clearly discriminatory on the grounds of nationality and which inevitably violated Article 52 of the Treaty (since it prevented establishment in the United Kingdom) was a manifest breach of fundamental Treaty obligations. It was a grave breach of the Treaty, both intrinsically and as regards the consequences it was bound, or at the least was most likely to have an adverse effect on the respondents ... What was done therefore in regard to nationality plainly constituted a sufficiently serious breach for the purposes of the second condition of liability."

Lord Slynn went on to say that discrimination on the grounds of domicile and residence was also sufficiently serious. He concluded that it was somewhat artificial to separate out the various conditions which should be treated as cumulative.

Lord Hope of Craighead agreed. At page 1083 he affirmed that it was for the national courts to decide how to categorise the breaches of Community law which are in issue. But he had no doubt that the breaches were sufficiently serious to entitle the claimants to damages. He came to this conclusion on three grounds:

1. The three conditions of nationality, domicile and residence in section 14 of the Merchant Shipping Act 1988 constituted direct breaches of the fundamental principles of the Treaty

2. The potential for causing obvious and immediate damage to those who are likely to suffer loss as a result of it was clear

3. The methods which were used to achieve the result amounted to serious breaches of the Treaty.

Lord Hope concluded at page 1084:
"This then was more than a trivial or technical breach of the Community obligations. The words 'manifest' or 'grave' are not easy adjectives to apply in this context. But I have no difficulty at all in seeing what was done here as a breach which was sufficiently serious as to entitle the respondents to compensation by way of damages for such loss as they can show flowed directly from the breach. If damages were not held recoverable in this case, it would be hard to envisage any case short of one involving bad faith where damages would be recoverable."

At page 1084 Lord Hope found that "the government's good faith is not in question". At page 1089 Lord Clyde specifically agreed.

I adopt the above conclusions as encapsulating the conclusions of the judges of the House of Lords. Lord Nicholls of Birkenhead and Lord Slynn specifically endorsed the reasons given by Lord Hope. The speeches of Lords Hoffman and Clyde are consistent with it.

The issues to be decided.

a) Taking into account the specific purpose of Article 52, are the damages confined to economic damages? b) Is the Race Relations Act 1976 the appropriate equivalent under English law? c) If it is, can the applicants in principle recover damages for distress and/or aggravated damages? a) The general purpose of the Treaty and the specific purpose of Article 52.

This issue does not involve a detailed examination of English law. It asks the question whether or not Article 52, taken with Article 7 and Article 221, on its true construction contemplates anything more than economic loss.

Article 52 (now Article 43) provided:
"Within the framework of the provisions set out below, restrictions on freedom of establishment of nationals of a member state in the territory of another Member State shall be [prohibited] abolished by progressive stages in the course of the transitional period. Such [prohibition] progressive abolition shall also apply to restrictions on the setting up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of [any] another Member State.
"Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings in particular companies or firms within the meaning of the second paragraph of Article 58 [Article 48] under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the chapter relating to capital."

Article 7, which became Article 6 in the Maastricht Treaty signed on 7th February 1992, with minor amendments is now Article 12 in the Treaty of Amsterdam. It is in Part One of the Treaty headed
"Principles".
It provides that:
"Within the scope of application of this Treaty and without prejudice to any special provision contained therein, any discrimination on the grounds of nationality shall be prohibited.

"The Council may, on a proposal from the Commission and in co-operation with the European Parliament, adopt by a qualified majority rules to prohibit such discrimination."

The second paragraph was added by Article 6(2) of the single European Act 1986. Article 221 (now Article 294) requires Member States to accord nationals of other Member States equal treatment as regards participation in the capital of companies or firms.

The relationship between Article 7 and Article 52 is that Article 7 is within the basic principles of the Treaty to be applied within the scope of application of the Treaty and therefore within the application of Article 52.

As was made clear in the decision of the Commission v UK C 246/89 dated 4th October 1991, at paragraph 17 of its ruling, Article 7 had been implemented in Article 52 of the Treaty in the specific domain governed by that Article, and that consequently any rules incompatible with Article 52 were also incompatible with Article 7 of the Treaty.

The court concluded in paragraph 39 that the United Kingdom had failed to fulfil its obligations incumbent upon it by Articles 7, 52 and 221 of the Treaty. It was clear to the court that the breach was a breach of one of the basic principles of the Treaty.

In Factortame 4 [1996] 1 QB 404 at 506 the Court of Justice issued a warning to the United Kingdom court in a passage which I have already quoted:
"National legislation which generally limits the damage for which reparation may be granted to certain specifically protected individual interests not including loss of profit by individuals is not compatible with Community law. Moreover it must be possible to award specific damages such as the exemplary damages provided for by English law pursuant to claims or actions founded on Community law if such damages may be awarded pursuant to similar claims or actions founded on domestic law."

The Government's claim, not I think advanced in the last round of proceedings before the English courts, is that, on a proper analysis of Article 52, damages for injury to feelings and aggravated damages are not available because the Treaty as a whole and Article 52 in particular is concerned with economic matters. This is not to be confused with economic torts in English law, which is a totally different concept. Facilitating the right of freedom of establishment under Article 52 as an economic matter is to be equated with normal torts under English law which only allow compensatory damages.

It seems to me that this analysis which I have expressed in my own words has much merit. It is supported by specific finding in paragraph 22 of the ECJ's judgment in Factortame 3 (see paragraph 15 above). It involves an analysis of the purpose and effect of the Treaty at the relevant time, although it would not necessarily provide the same answer after the amendments in the Treaty of Amsterdam which import social provisions into the Treaty and in particular the new Article 13, which empowers the Council to take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. Is the Race Relations Act 1976 the appropriate equivalent under English law?

In my view, the starting point is the nature of the breach of Article 52. This provides for the right of nationals of one Member State to establish themselves in another Member State. This, as I have already said, is not couched in terms which are comparable to the test of Sir Thomas Bingham MR in AB v South West Water. A breach of Article 52 cannot be said to be comparable to a tort under English law where the claimant's loss of self-esteem is an important part of the compensation for which damages are awarded.

Part of the answer to the question lies in the fact that "nationality" within Article 7 of the Treaty does not have the same connotation of hatred, ridicule and contempt as can be applied to the term within the Race Relations Act; see Nabadda v Westminster City Council [2000] ICR 957 per Buxton LJ. It has been used widely to enforce economic rights to free movement of persons to exercise their rights of establishment within the European Union in a whole variety of circumstances.

If one considers the precise nature of the breach of Community law by the Government using the same test, one reaches the same result. The nature of the breaches of Community law within the Merchant Shipping Act 1988 were held in Factortame 3 [1992] 1 QB 680 at 751 (quoted again for ease of reference) to be as follows:

"a) that the legal owners and beneficial owners and the charterers, managers and operators of the vessel must be nationals of that Member State or companies incorporated in that Member State and in the latter case that at least 75 per cent of the shares in the company must be owned by nationals of that Member State or by companies fulfilling the same requirements 75 per cent of the directors of the company must be nationals of that Member State; and

"b) that the said legal owners, charterers and managers, operators, shareholders and directors, as the case may be, must be resident and domiciled in the Member State."

The group of persons adversely affected was substantial in number, and no individual so affected can reasonably claim to have suffered personal loss of self-esteem by being included in the category. The terms of "hatred, ridicule and contempt" in the sense which they are used in relation to the English law of defamation or the Race Relations legislation are simply not applicable.

This is not to the say that the Government was not in serious breach of the Treaty; it was, but the English case law has made it clear repeatedly that the right to recover damages for distress is not available as a punishment on the defendant but to permit claimants to recover compensatory damages in particular and limited circumstances.

Since I have concluded that the claimants have no right in principle to recover damages for distress, I do not need to consider the question of aggravated damages which are ancillary to damages for distress. It is sufficient to say that in Thompson v Commissioner of Police [1997] 2 All ER 762 at 775 Lord Woolf in summarising the well established authorities emphasised that such damages can only be awarded if the plaintiff did not receive sufficient compensation from the injury if the award was restricted to a basic award. A party can only recover such additional damages for conduct which would not otherwise be compensated. The Race Relations Act 1976.

Even if the Race Relations Act 1976 had been the appropriate comparator, the claimants would still not have been entitled to recover damages for distress or aggravated damages.

The Race Relations Act 1976 provides that:
"1(1) A person discriminates against another in any circumstances relevant for the purposes of any provisions of this act if:
"(a) on racial grounds he treats that other less favourably than he treats or would treat other persons.

"(b) he applies to that other a request or condition which he applies or would apply equally to persons not of the same racial group as that other ..."

Section 3(1) defines a racial group as:
"A group of persons defined by reference to race, nationality or national origins."

There is considerable doubt as to whether the expression "nationality" under the Act means the same as it does under Community law.

In Nabadda v Westminster City Council [2000] ICR 951 at 957, at paragraph 12 of his judgment, Buxton LJ said:
"While it is correct that section 3(1) of the Act repeated the definition of racial grounds in section 1(1) of the Race Relations Act 1968 but with the addition of the word 'nationality', that was not done with Article 6 (of the Treaty) in mind. Rather it was generally understood at the time of the Act of 1976 that the addition was made to offset the effect of the House of Lords' decision in Ealing London Borough Council v Race Relations Board [1972] AC 342 that 'national' in the expression 'national origins' meant national in the sense of race and not of citizenship."

If this is correct, the Race Relations Act 1976 does not cover the type of discrimination which is inherent in the Merchant Shipping Act 1988 and the regulations. Such a view would be consistent with common sense. The term "nationality" in relation to free movement of persons, goods and services and to the right of establishment is much wider and does not have the same connotation as nationality as it is used in the Race Relations Act.

On the basis that the comparison does not fail at this stage, I go on to consider the scheme of the Act and the relevant provisions. The argument proceeds on the basis that the applicants are a group of persons defined by reference to nationality and therefore prima facie come within the scope of the Act.

The scheme of the Act is to set out in Part III the prohibited acts of discrimination -- section 20, to which I shall return, is particularly relevant. Section 57 of the Act provides that unlawful discrimination may be the subject of civil proceedings in like manner as any other claim in tort. It provides specifically that damages for an unlawful act of discrimination may include compensation for injury to feelings "whether or not they include compensation under any other head".

The Act specifies under section 75 that the Act of Parliament applies to an act done by a minister of the Crown or a government department as it applies to a private person and that acts done under statutory authority under section 41 are exempt from the provisions of the Act.

Under section 20 of the Act it is unlawful for any person concerned with the provision of goods, facilities or services to the public to discriminate against a person who seeks to obtain or use those goods, facilities and services by:
"a) refusing or deliberately omitting to provide him with any of them."

Section 20(2) provides that the following are examples of the facilities and services mentioned in subsection (1): (g) the services of any profession or trade or any local or other public authority."

The wording of section 20 is identical to the wording of section 29 of the Sex Discrimination Act 1975. In Amin [1983] 2 AC 818 the House of Lords considered the section in the context of a United Kingdom passport holder resident in Bombay who applied to an entry clearance officer in Bombay for a special entry voucher to enable her to settle in the United Kingdom. She was refused on the grounds that she was not the head of the household.

Lord Fraser of Tullybelton said at page 835:

"My Lords, I accept that the examples in section 29(2) are not exhaustive of section 1. Section 29, as a whole, seems to me to apply to the direct provision of facilities or services and not to the mere grant of permission to use facilities ...

"Example (g) seems to me to be contemplating things such as medical services, library facilities which can be directly provided by local or public authorities. So in Savjani Templeman J took the view that the Inland Revenue performed two separate functions -- first a duty of collecting revenue and secondly a service of providing taxpayers with information ..."

At page 835:
"In the present case the entry clearance officer in Bombay was in my opinion not providing a service for would-be immigrants; rather he was performing a duty of controlling them."

In Farah v Commissioner of Police [1997] 1 All ER 289 the Court of Appeal held that police officers came within the class of persons in section 20(2)(g) when they were providing services to the public. Section 57 of the Race Relations Act 1976 provides that:

"(1) A claim by any person (`the claimant') that another person (`the respondent') (a) has committed an act of discrimination which is unlawful by virtue of Part III ... may be the subject of civil proceedings in like manner as any other claim in tort ... 327. "(4) For the avoidance of doubt it is hereby declared that damages in respect of an unlawful act of discrimination may include injury to feelings, whether or not they include compensation under any other head."

Section 57(4) has prompted the submission that if damages for distress are available under the Race Relations Act they should be available in this case. Under this section awards of damages for distress have become commonplace in race relations cases; see e.g. Ministry of Defence v Cannock [1995] 2 All ER 449 at 480.

The main sections dealing with the relationship between the legislation and the Crown are set out in section 75 and 41 of the Race Relations Act 1976.

Section 75 provides:
"(1) This act applies -- "
a) to an act done by or for purposes of a Minister of the Crown or government department; or
"b) to an act done on behalf of the Crown by a statutory body, or a person holding a statutory office, as it applies to an act done by a private person."
In Amin Lord Fraser of Tullybelton explained the equivalent section 85 of the Sex Discrimination Act 1975 as follows:
"That section puts an act done on behalf of the Crown on a par with an act done by a private person and it does not in terms restrict the comparison to an act of the same kind done by a private person. But in my opinion it applies only to acts done on behalf of the Crown which are of a kind similar to acts that might be done by a private person. It does not mean that the Act is to apply to any act of any kind done on behalf of the Crown by a person holding statutory office.

"There must be acts (which include deliberate omissions -- see section 82(1) [section 78(1) in the Race Relations Act 1976] done in the formulating or carrying out of government policy which are quite different in kind from any act that would ever be done by a private person and to which the Act does not apply. I would respectfully agree with the observations made by Woolf J in Home Office v Commission for Racial Equality [1982] QB 385 at 395.

"Part V of the Act of 1975 [the Sex Discrimination Act; my explanation] makes exceptions for certain acts including acts done for the purpose of national security (section 52) and for acts which are 'necessary' in order to comply with statutory requirements (section 51). These exceptions will no doubt be effective to protect acts of a kind that would otherwise be unlawful under the Act but they do not in my view obviate the necessity for construing section 29 as applying only to acts that could be done by private persons."

In this case it is clear that in enacting the Merchant Shipping Act 1988 the Government was performing an act which was quite different in kind from any act which could be done by a private person. Indeed, in the case of primary legislation, while it is carried through the legislature by the Government, the Act of Parliament is enacted by the Queen in Parliament under the Royal Prerogative.

This requirement that a claim for compensation against the Crown can only be made in respect of acts that could be done by private persons is reinforced by and consistent with section 41 of the 1976 Race Relations Act:

"41(1) Nothing in Parts II to IV shall render unlawful any act of discrimination done --
"a) in pursuance of any enactment or Order in Council; or "
b) in pursuance of any instrument made under any enactment by a Minister of the Crown; or
"c) in order to comply with any condition or requirement imposed by a Minister of the Crown (whether before or after the passing of this Act) by virtue of any enactment."

In Hampson v Department of Education and Science [1990] 2 All ER 513 the House of Lords held that statutory protection under section 41 extended to acts done in the necessary performance of an express obligation contained in the instrument but not to acts done in the exercise for power or discretion conferred by instrument.

The Crown's immunity was reinforced by the enforcement provisions. Section 53 provides:
"(1) except as provided by this Act no proceedings, whether civil or criminal, shall lie against any person in respect of an act by reason that the act is unlawful by virtue of a provision of this Act.

"(2) subsection 1 does not preclude the making of an order of certiorari, mandamus or prohibition."

Section 53 was also explained in Hampson v Department of Education and Science [1990] 2 All ER 513.

At page 521, Lord Lowry said:
"The remedies of certiorari, mandamus and prohibition where expressly preserved by section 53(2) of the 1976 Act despite the general limitation imposed by section 53(1) and no doubt with a view to allaying any misgivings which might attend the prospect of such widespread immunity."

Section 53(2) enables any public misuse of power of the Government and its servants to be challenged by the public law prerogative writ. This is a separate remedy to the private law remedy being claimed by these claimants in this action.

Conclusion.

I conclude that the Government is not liable in principle to pay damages to the claimants for injury to feelings and aggravated damages for the following reasons:

1. Damages for distress are not normally awarded under English law.

2. They can only be awarded in relation to those torts where the claimant's self-esteem is an important and integral part of the damage for which compensation is awarded.

3. They can only be awarded in respect of torts committed by private persons or by Government officials acting in circumstances where the claimant could recover damage if the act was done by a private person.

4. At the time of the breach Article 52 of the Treaty incorporating Article 7 granted rights to persons entitled to benefit from its provisions which were economic in nature. These Articles of the Treaty were not concerned with social rights which were matters exclusively within the competence of the Member States. Therefore only economic damages are recoverable in this case for a breach of Article 52.

5. If contrary to the finding in 4 it is open to the claimant in principle to recover damages under the Treaty, it is not open to them in this case because the group which had in it 100 persons and probably more is distinguishable from the individual cases of discrimination where a loss of the claimant's self-esteem was a foreseeable part of the damage that the claimants would suffer.

6. The Race Relations Act 1976 is not a comparator for a group such as were discriminated against in the Merchant Shipping Act for the reasons set out in 5 above.

7. If the Race Relations Act 1976 is an apt comparator, it does not assist the claimants because it contains a specific exemption from claims for damages for acts done by or in pursuance of any enactment or Order in Council (section 41 and section 57). Liability under the Act is confined to acts by the Crown, Crown servants and statutory bodies which are comparable to acts done by private persons. The enactment of primary legislation is not comparable to an act done by a private person.

I conclude therefore that damages for distress/injury to feelings and aggravated damages are not available in principle to the claimants in this case.

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