Scottish High Court of Justiciary Decisons

J. KELLY & SONS LIMITED v. THE MEAT AND LIVESTOCK COMMISSION FOR JUDICIAL REVIEW [2001] ScotHC 77 (7th August, 2001)

[1] For many years prior to January 2000 the petitioners owned and operated an abattoir at premises in Larkhall, Lanarkshire. Until 1996 livestock slaughtered there included animals, the flesh of which was intended for sale for human consumption.

[2] The respondents are a body corporate with perpetual succession established under Part I of the Agriculture Act 1967 with the general duty of promoting greater efficiency in the livestock industry and the livestock products industry and with certain particular functions specified in Schedule 1 to that Act. Under section 13(1) of the Act the respondents were authorised to submit to relevant Ministers a scheme (referred to as a "levy scheme") for the imposition of charges "for enabling the Commission to meet their expenses (including any sums to be paid into their reserve fund) so far as not met in any other way, and for the recovery of such charges by the Commission in such manner and from such persons as may be specified in the scheme". Section 13(2) provided -

By section 25(2) of the Act "slaughterhouse" was defined as having, in Scotland, the meaning given by the Slaughterhouses Act 1954. Section 16 of the latter Act defined "slaughterhouse" as meaning "any premises used for slaughtering animals the flesh of which is intended for sale for human consumption ...". The definition of "slaughterhouse" in section 25(2) of the 1967 Act was amended by section 59(1) and Paragraph 4 of Schedule 3 to the Food Safety Act 1990 to substitute, for Scotland, a reference to the definition of "slaughterhouse" given by section 22 of the Slaughter of Animals (Scotland) Act 1980. The latter section provided that "slaughterhouse" means "any building or place used for the killing of animals the flesh of which is intended for sale for human consumption".

[3] The respondents over time submitted various levy schemes to the relevant Ministers. One such scheme was duly confirmed by The Meat and Livestock Commission Levy Scheme (Confirmation) Order 1987 (1987 S.I.1303), which revoked certain earlier arrangements. The 1987 Order was made on 23 and came into force on 24 July 1987. It remained in force, subject to variations from time to time thereafter, until at least January 2000. None of these variations is material for present purposes.

[4] The levy scheme, which applied throughout Great Britain, was set out in the Schedule to the 1987 Order. By paragraph 2 of that Schedule it defined "slaughterer" as meaning "any person (including a local authority) having the control and management of a slaughterhouse in which livestock are slaughtered ..." and provided that a "slaughterhouse" had, in Scotland, the meaning given by section 16 of the 1954 Act. So far as appears, no variation of the Order has substituted the meaning of "slaughterhouse" given in section 22 of the 1980 Act for that in section 16 of the 1954 Act but the difference in wording is not important for present purposes.

Paragraph 3 provided -

Paragraph 4 provided -

Paragraph 5 provided:-

[5] In May 1996, against concerns about the risk to humans of bovine spongiform encephalopathy (BSE), the United Kingdom government introduced a ban on, among other things, the use of cattle over the age of 30 months for food, feed, cosmetic or pharmaceutical purposes. In that month the Government introduced the Over Thirty Months Scheme ("the OTMS") to provide for the slaughter and destruction of cattle which, as a result of the ban, could no longer enter the food or feed chain. The Intervention Board for Agricultural Produce ("the Intervention Board") was charged by the Government with operating the OTMS. The Intervention Board contracted with operators of commercial abattoirs to effect the slaughter and destruction of animals which met the criteria of the OTMS. Certain commercial arrangements were made between the Intervention Board and bodies operating commercial abattoirs.

[6] The petitioners aver that from May 1996 until January 2000 they participated in the OTMS as a dedicated approved abattoir. Subject to a question as to the exact commencement date of the petitioners' participation, this statement was not disputed before me. The petitioners did so initially in terms of a verbal agreement with the Intervention Board. This was superseded, following a tendering process, by a formal contract between them dated 28 July and 8 August 1997. That contract provided expressly that the contractor was not to use his premises within the contract period for the slaughter of any species for human consumption. That contract remained in force until it was terminated by the Intervention Board with effect from the end of January 2000. During the period from about May 1996 until January 2000 the petitioners, in furtherance of their agreements, informal and subsequently formal, with the Intervention Board, did not slaughter at their premises at Larkhall any animals the flesh of which was sold or was intended to be sold for human consumption.

[7] During the period prior to their participation in the OTMS the petitioners paid to the respondents on demand certain sums by way of levy under the scheme as established by the 1987 Order (as varied) ("the Scheme"). After their participation in the OTMS the petitioners continued to make levy payments to the respondents, it being assumed (apparently by both parties) that these payments continued to be exigible from the petitioners. The petitioners aver that the monthly payments so made by them on demand in the period between May 1996 and January 2000 were made in consequence of an unlawful imposition of levy by the respondents. In this petition for judicial review they seek among other orders a declarator that the imposition on them by the respondents of a levy pursuant to the Scheme and the retention of the monies so paid in the relevant period were unlawful and ultra vires of the respondents. They also seek repayment of the total amount (in excess of £600,000) so paid together with interest.

[8] The respondents contend that the imposition of the levy was not illegal or ultra vires. They further plead that the petitioners are barred by mora, taciturnity and acquiescence from obtaining any of the orders sought. They maintain that, in any event, the petitioners are not in the circumstances entitled to repayment of any sums paid by them by way of levy during the relevant period.

[9] The first issue between the parties is one of construction of the relative legislative provisions (primary and secondary). It is not in dispute that for a substantial period until at least May 1996 the abattoir at Larkhall was a "slaughterhouse" within the meaning of that expression as defined either by the Slaughterhouses Act 1954 or the Slaughter of Animals (Scotland) Act 1980. It was then premises (or a building or place) used for slaughtering (the killing of) animals

the flesh of which was intended for sale for human consumption. The petitioners at that time were a person having the control and management of a slaughterhouse in which livestock were slaughtered and were accordingly within a class of persons on whom a levy might be charged under a levy scheme duly made. The scheme in fact made included slaughterers as there defined as one of the classes on whom charges might be imposed under the Scheme. The petitioners as a person having control and management of a slaughterhouse as there defined were liable to pay such charges as were from time to time authorised under the Scheme.

[10] Their continued liability for such charges, however, in my view plainly depended on their continuing to fall within the scope of the legislative provisions. Only persons who are within a class or description specified under a scheme made under the powers conferred by section 13 of the 1967 Act may lawfully be charged. For present purposes only a person for the time being a "slaughterer" within the meaning of the Scheme is in a relevant class.

[11] Mr MacColl, junior counsel for the respondents, submitted that the petitioners' approach concentrated unduly on the description of the animal as against that of the premises. Once, he submitted, premises were a slaughterhouse they remained so notwithstanding participation in a scheme which precluded the slaughter there of animals the flesh of which was intended for sale for human consumption. He also relied on the circumstance that throughout the relevant period the premises remained (as required by paragraph 4.2.11 of the petitioners' contract with the Intervention Board) licensed as a slaughterhouse. Mr Campbell, senior counsel for the respondents, adopted that submission. He also drew attention to the proviso to paragraph 4(3) of the 1987 Order, questioning why such a derogation was necessary if the petitioners' argument was correct. The construction urged by the petitioners, while having a superficial attraction was, he argued, unduly technical. It failed to take account of circumstances in which an abattoir originally falling plainly within the definition of slaughterhouse was thereafter for some short time or from time to time devoted solely to the killing of animals otherwise than for human consumption.

[12] In my view, while it is possible to figure circumstances in which there might be uncertainty whether premises were a slaughterhouse and the person in control and management of them a slaughterer as defined, there can be no serious doubt but that for at least most of the period in question the Larkhall premises and the petitioners did not fall within the relevant definitions. There appears to be a question whether the premises were for about the first six weeks or so from May 1996 wholly dedicated to and compliant with the OTMS. However, it seems that thereafter they were so dedicated, with the result that the flesh of none of the animals killed in them thereafter until January 2000 was intended for sale for human consumption. In so far as that state of affairs existed, the petitioners were not, in my view, chargeable to levy under the Scheme since they were not a person authorised to be so charged. The requirement for compliance with the Fresh Meat (Hygiene and Inspection) Regulations 1995 meant only that the animals to be killed, notwithstanding that they were not to enter the food chain, still required to meet the standards of those Regulations. That requirement does not detract from the fact that the flesh of none of those animals was intended to be sold for human consumption. As regards the proviso to paragraph 4(3) of the 1987 Order, the fact that under the Scheme charges may not be levied on particular animals slaughtered in a slaughterhouse (such as those found to be unhealthy and so excluded from the food chain) does not detract from the proposition that premises where the only animals killed are animals whose flesh is not intended for sale for human consumption are not a slaughterhouse as defined. While questions may arise as to the relative scope of its application, the petitioners' contentions on the issue of legislative construction are, in my view, to be preferred.

[13] The remaining issues are (1) whether the petitioners are barred by mora, taciturnity and acquiescence from seeking any remedy in respect of the charges levied on them in the relevant period and (2) whether on other grounds the petitioners are not entitled to repayment of those charges, their claim for repayment being laid on the basis of the condictio indebiti.

[14] In support of their plea of mora the respondents make the following

averments -

The petitioners respond to those averments as follows -

The petitioners thereafter make certain calls for further specification by the respondents of their averments. The present petition was raised in November 2000.

[15] The only specific matter otherwise raised by the respondents in answer to the petitioners' claim for repayment relates to the nature of the payments made to the petitioners by the Intervention Board. The respondents aver -

Certain specific provisions of the contractual arrangements are then referred to. The petitioners respond to those averments by referring to certain other provisions of the contractual arrangements. They aver, among other matters -

[16] At the first hearing I was favoured with detailed argument on both sides in relation to mora and to the condictio indebiti. For reasons afterwards explained I have decided that neither of those issues can satisfactorily be resolved at this stage. It is, however, appropriate that I record the arguments addressed to me on them.

[17] Mr Lake, junior counsel for the petitioners, submitted that the respondents' averments were incapable relevantly of supporting their plea of mora. To found such a plea, he argued, a party must be able to aver and prove that the right now sought to be founded on had been known to the claimant, that there had been excessive or unreasonable delay in asserting that known right and that there had been a material alteration of circumstances to the detriment of the other party (Assets Co Ltd v Bain's Trustees (1904) 6F 692, especially per Lord President Kinross at p.705, per Lord Kinnear at pp.731-2 and per Lord Trayner at pp.739-40). Reference was also made to Hanlon v Traffic Commissioner 1988 S.L.T.802, where emphasis was laid on the petitioner there being unable to claim that he lacked any requisite knowledge. In the present case the respondents had no basis on averment for any contention that the petitioners had the requisite knowledge prior to February 2000. Nor was there anything to suggest that in the period between then and the raising of the petition in November 2000 the respondents had sustained any prejudice or detriment. Throughout that latter period they were on notice that the legality of the imposition of the levy on the petitioners was under challenge. In any event, the respondents' averments were, despite the first hearing having been delayed to allow them to provide full Answers, wholly lacking in necessary specification. There were no relevant averments of prejudice to the respondents or of acquiescence by the petitioners. Swan v Secretary of State for Scotland 1998 S.C.479 was referred to. The requirement that judicial review proceedings normally be raised promptly was related to the subject matter of such proceedings. While in some circumstances "good public administration" might be a factor (Uprichard v Fife Council 2000 S.C.L.R.949), it was not in isolation a sound basis for denying to a party a remedy. A wholesale adoption of the English doctrine of "good administration" would cut across the requirements of personal bar under Scots law as settled in Assets Co Ltd v Bain's Trustees. It would also, in relation to a money claim, innovate upon the policy of the Prescription and Limitation (Scotland) Act 1973. The respondents' plea of personal bar should be repelled and the related averments excluded from probation. On the matter of the condictio indebiti Mr Lake submitted that the relevant modern authorities were Morgan Guaranty Trust Co of New York v Lothian Regional Council 1995 S.C.151, Shilliday v Smith 1998 S.C.725 and Dollar Land Ltd v C.I.N. Properties Ltd 1998 S.C.(H.L.) 90. What was relevant was the equity between the parties to the litigation. In distinction from a claim in recompense, it was unnecessary to take into account any advantage the petitioners might have derived from a third party source such as by way of the inclusion in amounts received by them from the Intervention Board of any sums relative to levy. These amounts were in any event contractual and the contract sum did not separately provide for reimbursement of levy. The equities immediately and inevitably favoured the petitioners as soon as they had in error paid sums which they were not due to pay. The respondents were immediately enriched on receipt of monies to which they were not entitled. The equities were particularly striking in circumstances where a public body had without justification received monies from a private body.

[18] As a preamble to his submissions Mr MacColl explained that the respondents' functions included the promotion of the British livestock industry, the advertisement of meat and meat products in the United Kingdom and the promotion of the purchase and consumption abroad of UK meat. Their income was derived from three sources, (1) certain income from hygiene and other services provided by them, (2) monies received from the Intervention Board (for which the respondents acted in certain matters as agents) and (3) charges levied on the slaughter of animals. By far the largest portion of the respondents' annual income was from the last source. The Commission was not a profit making organisation but required to meet its expenditure out of income. It did not maintain significant reserves. Its expenditure was determined against its income, particularly its income from the levy. The maximum charges which might be levied were fixed under the Orders from time to time in force, though the Commission had been in use to set charges which were less than the maxima. The levy was split into two discrete elements, that for general expenses and that for species promotion expenses. The charges were leviable from the slaughterer per head of animal slaughtered; the slaughterer might in certain circumstances be able to recover the levy or part of it from other persons (paragraph 5 of the 1987 Order refers). Mr MacColl acknowledged that to bar a remedy on the ground of mora it was in general necessary to show something more than mere delay in pursuing the claim. Judicial review proceedings ought normally to be raised promptly (Swan v Secretary of State for Scotland, at p.487B-C). It was also necessary to have regard to the detriment to good administration presented in this case by the delay which had occurred (Uprichard v Fife Council). Here there had not only been delay between February 2000 and the raising of these proceedings in November but the petitioners had delayed from 1996, when they entered the OMTS, to challenge the charge made on them to levy. The financial affairs of the respondents had been organised on the basis that levy payments made by the petitioners and others in a like situation were available for application to the respondents' statutory purposes. The petitioners were well aware that they were being charged and were paying the levy and that they were operating under the OTMS. Any ignorance prior to February 2000 of a legal basis for resisting such charges did not prevent time running against them. Reference was made to Hanlon v Traffic Commissioner. Moreover, the petitioners had failed adequately to explain their delay in raising the proceedings after February 2000. Reference was made to McIntosh v Aberdeenshire Council 1999 S.L.T.93 and Kwik Save Stores Ltd v Secretary of State for Scotland 1999 S.L.T.193. A well established practice which had effect more widely than between the two parties to the dispute should not readily be open to challenge. Reference was made to Reg. v Dairy Tribunal, ex parte Caswell [1990] 2 A.C.738 and R. v Secretary of State for Trade and Industry, ex parte Greenpeace Ltd [1998] Env.L.R.415. The present circumstances were to be contrasted with those in King v East Ayrshire Council 1998 S.C.182. The observations of Lord Cameron of Lochbroom on the effect of delay in Atherton v Strathclyde Regional Council 1995 S.L.T.557 were also in point. On the face of the petitioners' pleadings the present proceedings were barred by mora and the petition should be refused on that ground. Failing that, the petition should be sent for a second hearing at which the factual issues bearing on this plea could be explored. If necessary, the respondents should be given an opportunity of expanding upon their averments of prejudice

[19] The submissions of junior counsel were adopted and developed by senior counsel respectively. Mr Glennie, senior counsel for the petitioners, cited additionally Singh v Secretary of State for Scotland 2000 S.L.T.533 and Noble v City of Glasgow Council 2001 S.L.T.2. He also referred to Countess-Dowager of Kintore v Earl of Kintore (1886) 13 R(H.L.)93 and to Clyde and Edwards - Judicial Review

at p.438, citing Rankine on Personal Bar at pp.179 et seq. On the matter of repetition Mr Glennie submitted that it would distort the due working out of remedies if the position of third parties were to be brought into account. In Morgan Guaranty Lord President Hope at p.166D had emphasised that it was considerations of equity between the parties which were important. It would be dangerous in this area to follow English cases (such as Lipkin Gorman) in so far at least as they innovated on Scottish authority. Moreover, Bell v Thomson did not sit easily with the modern Scottish cases. Mr Campbell submitted that the passage in Rankine was distinguishable as being in the context of homologation and retroactive ratification of unlawful acts by corporate bodies. He emphasised that the petitioners were a commercial body which, in contrast to the petitioner in King v East Ayrshire Council, could be expected to have ready access to legal advice. As to the claim for repayment, Mr Campbell submitted that the effect of Morgan Guaranty (other than the abolition of the rule concerning error of law) was that whether or not restitution of a payment would be ordered depended on what was equitable in all the circumstances and that there was no fixed or automatic rule that a payment received by someone not entitled to it must be returned. Among the issues for proof in this case was whether or not the levy element in the Intervention Board payment was simply part of an inclusive fee or rather, in effect, the Intervention Board meeting the levy. The public aspect of the situation gave greater scope for the refusal of a restitutionary remedy. The passage of time prior to February 2000 might also be relevant on this issue. It was also relevant to take into account what use the respondents had made of the monies received and to have regard to the non-profit making character of the respondents whose function was to serve the interests of the industry as a whole. The consequences for the respondents in terms of disruption and the like if restitution were ordered were also potentially relevant. Bell v Thomson was a useful pointer to the correct approach.

[20] I have come to the view that these remaining issues, which to some extent at least raise novel and difficult questions, cannot satisfactorily be resolved at this stage. The principal difficulty lies in the lack of specification by the respondents of their averments of prejudice. These are pled under reference to the plea of mora but may, if well founded, have implications for the adjustment of the equities on the substantive claim for repetition. The petitioners' counsel criticised these averments as lacking in specification. There is much force in that criticism but it would, in my view, be inappropriate to deny the respondents even at this stage the opportunity of laying, if they can, a more precise basis for their contentions. In the first place, it will be necessary for them to identify which other persons are in the same position as the petitioners in respect of having been charged and having paid levy in circumstances where the relative premises were wholly dedicated to the OTMS and to state whether any such parties have made or could yet enforce any claims for recovery of levy paid in error. The amount of such levy payments made, how they relate to the respondents' income as a whole over the period in question and the deployment of that income will also require to be identified. Greater specification ought to be given of the terms and of the consequences of the "budgetary and other decisions" said to have been taken on the basis that the relative monies were properly available to the respondents. So also will it be necessary to specify the basis on which it is said that, if other relevant persons seek (and obtain) recovery of levy paid in error, the respondents' ability to fulfil their statutory functions and obligations will be severely impaired. It will also be appropriate for the respondents to set out on averment the relevant relationship between them and the Intervention Board and the circumstances in which the Board came, if it did, to include in the price paid by it to the petitioners a sum in respect of levy. Subject to the respondents' satisfactorily responding to these requirements, I would be minded to allow them an inquiry into their contentions.

[21] It would be inappropriate in these circumstances potentially to embarrass such an inquiry by expressing now views on the legal issues which may then fall to be determined. A few observations may, however, be appropriate. While I would not be prepared to sustain the respondents' plea of mora without, at least, proof by them of relevant and material prejudice, I am not prepared to repel that plea at this stage on the ground that the respondents do not offer to prove that prior to February 2000 the petitioners had knowledge of the true legal position. Although in Assets Co Ltd v Bain's Trustees the Lord President (at p.705) speaks of delay "in asserting a known right" and Lord Trayner (at p.740) of delay "in prosecuting a known claim", it is clear on examination of the circumstances of that case that the ignorance in question was of a factual matter, namely, of the omission by the contributory from his statement of assets of two promissory-notes in favour of his sons. In Countess-Dowager of Kintore v Earl of Kintore, it is true, the ignorance appears essentially to have been on a matter of law (the availability of a claim to legitim) but at least the Lord Ordinary in that case (Lord Fraser) in discussing the plea (at (1884) 11R 1025) appears to recognise that there may be some circumstances in which it might be admitted even where there was ignorance of legal entitlement. The position where the subsequent claimant had full knowledge of all relevant facts and was ignorant only of their legal consequences does not, on the authorities cited to me, appear to have been authoritatively settled. Moreover, both those cases were concerned solely with private rights. Where matters affect the public interest, wider considerations may arise. This may impinge on the state of knowledge prerequisite to a plea of mora in such a case. Something may, on the other hand, turn on the remedy sought. At least in some circumstances the allowance of a money claim may be less open to successful challenge on the ground of mora (including any detriment to public administration) than allowance of a claim which would, say, affect settled planning arrangements. Much will turn on the particular circumstances. In so far as concerns the passage of time between February and November 2000, much may on this aspect turn on whether the respondents can demonstrate any relevant and material detriment in their position during that period.

[22] As to the substantive claim for repetition, the issue in the end of the day will turn on the adjustment of the equities. I am not prepared at this stage to hold that the provision within the price paid by the Intervention Board of an element in respect of a levy understood to be payable is an irrelevant consideration. While the emphasis in Morgan Guaranty is on equity between the parties, no issue arose in that case of involvement of a third party. Something may turn on the relationship in this connection between the respondents and the Intervention Board. The terms of the bargain (or bargains) between these parties will also require to be explored in more detail.

[23] In all the circumstances I shall order the respondents within six weeks of this interlocutor to give further specification of the matters referred to in paragraph [20] hereof. I shall put the case out By Order on a date shortly after the expiry of that period, when further procedure can be discussed. Although I have preferred the petitioners' argument on the issue of the construction of the legislation, I do not regard it as appropriate at this stage to grant decree of declarator. However, to reflect my decision on the issue of construction I shall now repel the respondents' fourth plea-in-law (which advances the proposition that the imposition of the levy was not illegal or ultra vires).