High Court of Ireland Decisions

1. The validity of the European Communities (Milk Quota) Regulations, 2000 (S.I. No. 94 of 2000 (referred to as “S.I. 2000”) made by the Minister for Agriculture Food and Rural Development (referred to as “the Minister”) pursuant to Section 3 of the European Communities Act, 1972 is challenged by the Applicants. In particular they challenge Regulation 5 (restrictions on the transfer of milk quota), Regulation 6 (exemption for certain family transactions), Regulation 7 (exemption for certain transactions where Minister grants a certificate to transfer quota), Regulation 26 (restructuring of milk quota) and Regulation 27 (temporary transfer of milk quota limited to one year only, two in exceptional circumstances). The Applicants claim that S.I. 2000 is not "necessitated" within the meaning of Article 29.4.7 of the Constitution; that the making of S.I. 2000 amounts to an exercise of legislative power contrary to Article 15.2.1 of the Constitution; that the right to a milk quota is a property right within the meaning of Article 40.3.2 and Article 43 of the Constitution and that the regulations contained in S.I. 2000 constitute an unjust attack on this right.

2. It was agreed that if the making of S.I. 2000 was "necessitated" within the meaning of Article 29.4.7 the action must fail ad limine.

3. As a preliminary issue I had to decide if the Applicants were to be entitled to adduce evidence of and rely on, (1) an amendment of certain words in the wording of Article 29.4.7 in its passage through the Oireachtas preliminary to its being submitted to the people in a referendum and, (2) the speech of the mover of the amendment in the Dail explaining why the amendment was being moved.

4. Mr. Hogan S.C. Counsel for the Applicants agreed that prior to the decision of the Supreme Court given by Costello P in D.P.P. -v- McDonagh [1996] I.R. 565 the courts would not look at speeches in the Oireachtas as an aid to interpretation but would look at the Act as passed and interpret the language used. He said that since McDonagh's case it has been the practice sanctioned by the Supreme Court to look at speeches in Parliament as an aid to interpretation. He cited the decisions of Mr. Justice Shanley in Re: National Irish Bank [1999] I.L.R.M. at 339, of Mr. Justice Kearns in Lawlor -v- Flood unreported 2nd July, 1999 and of Mr. Justice Geoghegan in Crilly -v- T & J Farrington Limited [2000] 1 ILRM 548 at 557.

5. Having considered the judgment of Costello P in the McDonagh case I am unable to conclude that it was intended that Oireachtas debates would be resorted to in the interpretation of statutes. For one thing Costello P. at 570 starts by saying:-

6. He could not have been referring to parliamentary debates because it is common case that prior to that judgment, parliamentary debates would not have been looked at. So whatever had been long established, it was not a practice of looking at parliamentary debates. What Costello P. goes on to consider is the legislative history of how a section in an Irish Act replicated a section in a United Kingdom Act and why the section came to be enacted in the U.K. following a controversial decision of the House of Lords followed by the recommendations of an Advisory Committee to enact declaratory provisions. Therefore it seems to me that the legislative history referred to by Costello P. was not intended to extend to or include the contents of a parliamentary debate either in this State or in the United Kingdom and did not in fact do so in the particular case. I did not accept it as authority for the admission of parliamentary debates as an aid to interpretation. Ms. Finlay SC Counsel for the Respondents further argued that neither the Dail legislative history nor the Dail debates should be admissible where the interpretation of the Constitution was involved. It is the people who enact the amendment to the Constitution and the intention of the Oireachtas cannot be presumed to be the intention of the people. She referred to Hanafin -v- Minister for the Environment [1996] 2 IR 321 at 430 where Hamilton C.J. stated:-

7. In ruling on the issue I held that the Dail debates were not admissible. My reasons for doing so were that I did not consider that D.P.P -v- McDonagh was authority for their admission as an aid to interpretation and secondly, in any case where a Constitutional amendment is concerned it is the people who are the legislators and their intention could only be ascertained through the actual words used, and not from any pronouncements contained in Oireachtas debates. People who voted were entitled to interpret the words used in their ordinary meaning without reference to any particular interpretation attributed to the words in the Oireachtas. The definitive interpretation is for the Supreme Court to make on the words actually used.

8. However I decided that Mr. Hogan could deduce evidence of the wording of the amendment de bene esse . The wording was changed from "consequent on" to "necessitated by the obligations of" so that Article 29.4.3 (now Article 29-4-7) reads:-

9. However this information did not avail him anything. He sought to use the amendment as relevant to the judgment of Murphy J. in Lawlor -v- The Minister for Agriculture [1990] 1 I.R. 356 at 377. Murphy J. used the word "consequent" in relation to Article 29.4.3 but the word was used in conjunction with "the general fulfilment of the obligations of membership". He was not seeking to interpret "necessitated by" as being the equivalent of "consequent on" - which of course it is not. They are two separate phrases with two separate meanings.

10. The milk quota scheme came into operation in Ireland in April, 1984 to curb milk production under Council Regulations 856/84 and 857/84 and was intended to last five years. Milk quotas (referred to as "reference quantities” in the Council regulations) were fixed by reference to 1983 production levels. A levy was imposed on excess production. It was extended on a number of occasions, the last being Council Regulation 1256/99 which extended the scheme to the year 2008.

11. From 1984 the milk quota was attached to land under S.I. 419 of 1985. It was an offence to sell or transfer land without its relevant milk quota. However, in 1987 there could be temporary leases of quotas without land and there was provision for a restructuring scheme which involved the payment of a premium to a person who ceased milk production in return for release of quota to the National Reserve for re-allocation by the Minister. There were other subsequent amending and supplementary Council Regulations.

12. The last Consolidating Council Regulation is No. 1256/1999. In the Composite Council Regulation No 3950/92 (as amended) the relevant Articles are Articles 6,7,8,8a and 9.

13. Article 6.1 is mandatory in form and provides that member states shall by 31 March authorise temporary transfers of milk quotas for twelve months. In the second paragraph it gives a number of discretions as follows:

14. Article 6.2 gives a discretion to decide not to implement paragraph 1 on the basis of certain criteria. This discretion was not exercised.

15. The temporary leasing rules are contained in Regulation 27 of S.I. 2000. This provides for the temporary transfer of milk quota not intended to be used during a milk quota year.

16. If the holder of a quota did not produce milk but made a temporary transfer of the quota during three successive years from April, 1997 that holder is only entitled to make a temporary transfer for one further year only. While that person may apply for one further year to the Minister he/she will only get permission under exceptional circumstances.

17. It is provided that the Minister may determine the categories of producers who may benefit from quota made available by way of temporary transfer.

18. Article 7(1) in the Consolidated Council Regulation provides that quotas shall be transferred with the holding on any sale, lease or transfer by inheritance to producers in accordance with detailed rules to be determined by the Member State but Article 8a(b) gives a discretion to a member state to decide not to apply the provisions on transfer of quotas in Article 7(1). This discretion is to be exercised "acting in compliance with the general principles of Community Law" and "with the aim of ensuring that reference quantities are solely attributed to active milk producers". The Minister decided not to apply the provisions in Article 7(1) and instead provided in Regulation 5 of S.I. 2000 that, subject to the exceptions provided in Regulations 6,7,8,9,10 and 11, where there is a transfer of land, the milk quota shall not be transferred to the transferee. If there is a transfer, the quota is added to the National Reserve unless Regulations 6,7,8,9,10,11,19,20,21 or 22 have been availed of. If the land and quota are transferred under Regulations 6,7 or 11 the quota remains attached to the land until 2008. If the land is subsequently transferred the quota goes to the National Reserve with certain exceptions.

19. One of the exceptions to the rule that the milk quota is not to be transferred with the land is under Regulation 6 where there is a sale, lease, gift or inheritance to a relative as defined and in this case the milk quota shall be transferred. Under Regulation 7 there is a second exception where a person who has produced milk in the last three years prior to the proposed transfer and during the last six months of that period applies to and obtains from the Minister a certificate to transfer that quota to a transferee in the case of a sale, gift or inheritance.

20. Article 8 of the Composite Council Regulation as amended by Regulation 1256/99 provides:-

21. At the end of Article 8 it is provided:

22. The restructuring of the milk quota is contained in Regulation 26 of S.I. 2000. Regulation 26 provides that the Minister may introduce a scheme for the surrender of milk quota at the end of each milk quota year and the re-allocation of the surrendered quota at the beginning of the subsequent milk quota year. This is to operate at collection area level in the case of delivery quota and at national level in the case of direct sales quota. The maximum payment for quota surrendered and re-allocation price shall be set by the Minister. A person who surrenders all or part of his/her milk quota under a milk quota re-structuring scheme will not be entitled to benefit from a re-allocation of quota under a subsequent milk quota restructuring scheme. The Minister may determine the categories of producers who may obtain quota available for re-allocation under a milk quota restructuring scheme. Details of the maximum price set by the Minister and the categories of producers who may obtain quota shall be published in a newspaper.

23. The first Applicant owns land at Mountpleasant, Cashel, Co. Tipperary comprising approximately 130 acres with a milk quota of approximately 28,170 gallons. There is a conflict of evidence as to the extent to which when the first Applicant formerly engaged in milk production and as to his entitlement to a milk quota but that is not relevant to the issues to be decided here. What is relevant is that he leased his land and milk quota to Maurice Ryan in or about 1996 for a term expiring on 31st March, 2000. They could not agree on terms for renewal. He complains that as he sees it the options under S.I. 2000 are to resume milk production (which he says is not feasible), to renew the lease with the former tenant (also not feasible) or temporarily lease the quota for one year at a maximum rental of 18.2p per gallon if he could obtain it. If he were to dispose of the quota his options would be to sell into the restructuring scheme at a maximum price of £1.36 per gallon, or to sell to the former licensee (not feasible) or to sell in a year’s time after one year temporary lease when he estimates the price would be less. He says £1.36 per gallon is less than the market value of the quota if he were able to sell it with the land. He said he wants to be able to retain his quota so his children now aged fourteen and sixteen can take up dairy farming.

24. The first Applicant does not fall into the category of "producer" as defined in Article 9(c) of Council Regulation 1256/1999 and Regulation 2(1) of S.I. 2000. Producer is defined as “a natural or legal person or a group of natural or legal persons farming a holding within the geographical territory of a member state selling milk or other milk products directly to the consumer and/or supplying the purchaser.”

25. Mr. Patrick Evans who swore the replying Affidavit of behalf of the Respondents estimates that the first Applicant has benefited to the extent of about £70,000 in respect of the leasing of his quota which probably significantly exceeds the benefit which would have been received by Mr. Ryan as the milk producer. He also points out that if the first Applicant sells the quota under the restructuring scheme his son or daughter would have priority to buy up to an equivalent level of quota from the future restructuring scheme provided that sufficient quota is available.

26. The second Applicant is joint owner with his wife of lands at Fethard, Co. Tipperary containing approximately 77 acres with a milk quota of approximately 24,404 gallons. He has not engaged in milk production for some years so is not a producer as defined. His income is derived from leasing some of his land and part of the quota and leasing the balance of his quota (9404 gallons) to Glanbia Creamery (Fethard Branch). The lease of land and milk quota was renewed on 1st April, 2000. He complains that he is no longer entitled to temporarily lease the balance of his milk quota without special permission from the Minister for one further year which is very unlikely. He is not entitled to enter into a new lease agreement for land and milk quota on the open market. He says that in order to avoid forfeiting the portion of his milk quota of 9,404 gallons without any compensation, he must resume milk production or sell under the restructuring scheme. He claims the maximum price of £1.36 per gallon under the restructuring scheme is less than the market value of the quota when sold with the land which he estimates to be £3.00 per gallon. The rent attributed to the quota under his lease of 15,000 gallons is 28p per gallon. He claims that 9,404 gallons of his quota is being effectively confiscated.

27. Mr. Evans says the Applicant ceased production in April, 1994 and estimates that he has received almost £46,000 in respect of the leasing of his quota since 1994. He sets out the various options which the Applicant reserves under S.I. 2000.

28. The third Applicant is the registered owner of the lands comprised in Folio 1042F of the register County Tipperary comprising approximately 20. acres statute measure. The lands were transferred to her by her mother on 31st October, 1996. The milk quota attaching to the lands amounts to approximately 11,844 gallons. She has temporarily leased this milk quota to the local creamery, Tipperary Co-op. Most of her income comes from leasing the milk quota. She was never a milk producer. She complains that she is no longer entitled to lease her milk quota temporarily unless she gets special permission from the Minister for one further year. She is not entitled to enter into a new lease agreement for land and milk quota on the open market. She says in order to avoid forfeiting her milk quota without compensation her only real option is to sell her milk quota under the restructuring scheme. She is not in a position to resume milk production. Mr Evans estimates that since 1994 the third Applicant (and/or her mother) have received almost £17,500 from leasing the quota.

29. It is argued on behalf of the Applicants (1) that the discretion and choices given to Member States under Council Regulation 1256/1999 means that S.I. 2000 is not necessitated by the obligations of E.U. membership. Therefore the Minister cannot rely on the indemnity given under Article 29.4.7 of the Constitution. (2) By exercising the discretions given in Regulation 1256/1999 the Minister is effectively legislating contrary to Article 15.2.1 of the Constitution. (3) That the milk quota is a property right and S.I. 2000 represents an unjust attack on those property rights.

30. Mr. Hogan cites the dictum of Denham J. in Meagher -v- The Minster for Agriculture and Food [1994] 1 I.R. 329 @ 366 (given in relation to a directive) that if the directive envisaged any choice of principle or policy it would require legislation by the Oireachtas.

31. This is to be distinguished from Lawlor -v- The Minister for Agriculture [1990] 1 I.R. 356 where Murphy J. upheld the European Communities (Milk Levy) Regulations, 1985 as being necessitated even though discretion was involved. He submitted the case was either wrongly decided or is not applicable. Murphy J. said (at p 370) that the word "necessitated" must include extra measures consequent upon membership and in general fulfilment of the obligations of membership even where there may be a choice or discretion vested in the State as to the particular manner in which it would meet the general spirit of its obligations of membership. Mr Hogan also submitted that the extent of the discretions in this case are much more wide ranging than those at issue in Lawlor -v- The Minister for Agriculture and Food .

32. The extent to which a Minister is entitled to exercise delegated power of secondary legislation has been dealt with in a number of cases. The principle established in City View Press Limited -v- Anco [1980] I.I.R. 381 has been followed in a series of cases. City View Press established that if the regulations merely give effect to principles and policies contained in the statute they are intra vires. This was followed in several cases including McDaid -v- Sheedy [1991] I.I.R.1, Lovett -v- Minister for Education [1997] I.L.R.M. 89, O'Neill -v- Minister for Agriculture and Food [1998] I.I.R. 435 and more recently in Laurentiu -v- Minister for Justice, Equality and Law Reform [2000] 1 ILRM 1. In the O'Neill case Murphy J. says that the requirement was to look at the legislation with a view to identifying the principles and policies laid down by the Oireachtas for achieving the identified purpose of the legislation. In McDaid -v- Sheedy Blayney J held that Section 1 of the Imposition of Duties Act, 1957 was unconstitutional since it gave the government a completely free hand as far as the making of customs and excise duties were concerned. Mr. Hogan submitted that the fact that a Council Regulation, as distinct from a directive, is in issue is not material. It was held by the European Court of Justice in SPA Eridania-Zuccherifici (1979 ECR 2749) that the fact that a regulation is directly applicable does not prevent the provisions of that regulation from empowering a member state to take implementing measures, in which case the detailed rules for the exercise of that power are governed by the public law of the member state in question.

33. Mr. Hogan submits that the aim of ensuring that quotas are solely attributed to milk producers referred to in Article 8(a) of Council Regulation 1256/99 is not declared to be a community objective which the regulation requires the member state to implement. He claims the Minister has made substantial policy choices which should have been made by the Oireachtas.

34. As to whether a milk quota is a property right it was accepted that so far as community law is concerned milk quotas do not constitute a property right (see R. -v- Ministry for Agriculture ex parte Bostock [1994] ECR 1-955 but he submitted that this does not prevent such a right being regarded as a property right for the purpose of Irish Constitutional Law. He cited the opinion of Advocate General Cosmas in Duff -v- The Minister for Agriculture [1996] ECR 1-569 where he stated that in an appropriate case principles of national law may ensure greater protection than that afforded by the general principles applicable in the community legal order. He submitted that if a milk quota is a property right S.I. 2000 infringes that right and the Minister could not prescribe a scheme manifestly in conflict with Articles 40.3.2 and 43 of the Constitution.

35. Ms. Finlay referred to the history of the milk quota scheme and the fact that the organisation of the market for milk has been tightly controlled in the European Community by Council Regulations which are directly applicable in all member states. The organisation of the market in milk requires implementing provisions but it is recognised that the position of milk producers (farmers) varies from area to area, requiring different responses for different areas. Accordingly the regulations empower member states to take certain limited decisions as to the precise way the milk market is to be regulated in each state. These limited discretions must be exercised with a view to achieving the overall objectives and aim of the common organisation of the milk market and so as to avoid discrimination among producers in the different parts of the community. She referred to recital 12 of Council Regulation 1255/1999 referring to a flexible framework of additional community payments in accordance with common criteria and in particular it says

36. From the outset of the scheme member states have been empowered to make certain choices as to precise implementation; for example: Council Regulation 856/84 authorised member states to choose between Formula A or Formula B as specified. Council Regulation 590/85 authorised member states to introduce a scheme of "flexi milk". Council Regulation 1899 of 1987 authorised member states to introduce a restructuring scheme. None of these were mandatory. Council Regulation 1256/99 (which amends Council Regulation 395/92) gives member states certain choices as to the precise implementation of the scheme for the purpose of achieving the regulation of the milk market. The scheme is tightly regulated requiring notification within a month of measures adopted for implementation (Article 8 Council Regulation 536/93) and an annual report as to the implementation of the scheme. Ms. Finlay submitted that the only amendment of substance is Article 8(a). Most of the discretions given to member states exist since Council Regulation 3950/92.

37. The super-levy/milk quota scheme has been implemented by Statutory Instruments made pursuant to Section 3 of the European Communities Act, 1972. These were S.I. 416 of 1985 amended by S.I. 51 of 1987, S.I. 143 of 1987 and S.I. 47 of 1989.

38. S.I. 416 of 1985 was repealed and replaced by S.I. 70 of 1994. This was repealed and replaced by S.I. 266 of 1995 which in turn was repealed and replaced by S.I. 2000.

39. Ms. Finlay submitted the regulations concerning the transfer of quotas are "necessitated" as construed by the Courts. "Necessitated" includes a situation where there exists a choice or a degree of discretion such as are at issue here. (see Lawlor -v- Minister for Agriculture [1990] I.R. 356 per Murphy J. in relation to the 1985 Milk Quota Regulations. Meagher -v- Minister for Agriculture [1994] I.R. 329 per Blayney J. and Denham J.) The Meagher case concerned a Directive which is not directly applicable but requires the State to choose a method of implementation. It was submitted that it followed from these cases that acts necessitated by the obligation of membership within the meaning of Article 29.4.7 of the Constitution includes a broader category of measures than those which can be traced to a precise legal obligation in community law and includes measures considered necessary for effective implementation of E.U. obligations even if there is some choice or discretion as to the form of such measures.

40. She cited by analogy Crotty -v- An Taoiseach [1987] IR 713 where Finlay C.J. referred to a construction of the Constitution which would not allow the state to join in amendments to the Treaty as long as they did not alter the essential scope of objectives of the community as being too narrow.

41. She submitted that the state was obliged to introduce implementing measures, the choices were set out fully in the Council Regulation and all the provisions in S.I. 2000 were authorised by Council Regulations. All were "necessitated".

42. If the Court did not accept that the regulations were "necessitated" the Minister was not legislating contrary to Article 15.2.1 of the Constitution but was exercising a delegated rule-making power for the purpose of implementing the levy/milk quota scheme as part of the common organisation of the milk market. All the essential policies and principles relating to the milk market are determined by the Council of Ministers. There must be an unified scheme but there are limited permissible variations as to how the scheme operates in each state. Theses choices must be exercised in accordance with the principles and policies of the common organisation of the milk market. The Minister does not have a free choice. He is obliged to exercise the powers conferred in accordance with the principles and policies established by Articles 33 and 34, 10(ex 5) 249 (ex 189), Council Regulation 1255/99, in particular recitals 2,3, and 4, Council Regulation 3590/92, Council Regulation 1256/99 in particular recitals 4,5 and 6, Council Regulation 536 of 1991 and the permitted transfer mechanisms in Council Regulations 125/99.

43. As to whether a milk quota is a property right within the meaning of Article 40.3 or Article 43 of the Constitution it is agreed that it is not a property right under E.U. Law ( Ministry for Agriculture ex parte Bostock [1994] E.C.R. 1955). The nature of rights conferred on persons holding a milk quota under Irish law must be identical to the nature of rights under community law. The ECJ has held that only farmers actually selling milk can be considered producers for the purpose of additional levy schemes and that rights conferred by milk quota do not include a right to dispose of the same for profit.

44. The first issue to be decided is whether the existence of a discretion in a Council Regulation takes the implementing measures out of the category of an act necessitated by the obligations of membership of the E.U. Clearly Murphy J. in Lawlor -v- Minister for Agriculture [1990] I.I.R 356 took the view that an act or measure would be necessitated "even where there may be choice or degree of discretion vested in the State as to the particular manner in which it would meet the general spirit of its obligation of membership".

45. In my view the discretions which are left in the member states are all within the principles and policies determined by the Council of Ministers in the organisation of the milk market in the European Union. The regulations in S.I. 2000 do not go beyond what is required. There are no principles or policies to be determined as they are embodied in the various development of the scheme since 1984.

46. Article 6.1 is mandatory (temporary transfer of milk quotas for twelve months). Article 6.2 gives a discretion not to implement it. In my view the failure to exercise the discretion is not the exercise of a discretion. It is simply a case of ignoring the discretion and proceeding with the mandatory implementation of Article 6.1.

47. The choices given in the implementation of mandatory leasing in the second paragraph of Article 6.1 do not constitute any departure from the overall policies of the milk levy scheme. It is provided that regard can be had to the category of producer, the transfer operations can be limited at the level of the producer within regions and the extent which transfers can be renewed may be determined.

48. In the case of Article 7 (1) this did involve the exercise of a discretion under Article 8 (a) not to implement it. This broke the link between land and milk quotas (subject to exceptions) and is contained in Regulation 5.1 of SI 2000. But the discretion had to be exercised, as stated in Article 8 (a), “ acting in compliance with the general principles of community law” and “with the aim of ensuring that reference quantities are solely attributed to active milk producers”.

49. The Minister was entitled to make the decision that quotas should go the active milk producers which was in accordance with the stated policy under the milk quota council Regulations.

50. The actions which could be taken under Article 8 of the council regulations were to be taken “ with a view to restructuring of milk production or to environmental improvements” and “taking account of the legitimate interests of the parties ”,

51. While the regulations are complicated they do take account of the legitimate interest of parties and they are framed with a view to completing the restructuring of milk production.

52. In my view, SI 2000 even though it involved the making of choices within the framework of the principles and policies of the milk quota scheme, was necessitated by the obligations of membership of the EU. Precisely because those choices were within the principles and policies of the milk quota scheme, it can equally well be viewed as permitted secondary legislation which is not contrary to Article 15.2.1 of the Constitution.

53. As to the claim that the right to a milk quota is a property right within the meaning of Article 40.3.2 and Article 43 of the Constitution, regard must be had to the decision of the European Court of Justice in R -v- Ministry of Agriculture ex parte Bostok (1994) ECR 1955 where it was held at p.1.984

54. The Applicants seek to establish that they have greater protection under the Constitution than under community law. In my view the nature of the milk quota which is created by European Law must bear the same meaning in domestic law as in the legal order of the European Union. The purpose of the creation of the milk quota system was to regulate and restructure milk production within the union. It was not for the creation of a new form of landlordism which would allow the owner of a quota to live off the rent obtained there from without producing a single gallon of milk. In my view this ground also fails.