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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Maher v. Minister for Agriculture, Food and Rural Development [2001] IESC 32; [2001] 2 IR 139; [2001] 2 ILRM 481 (30 March 2001)
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Cite as: [2001] 2 IR 131, [2001] IESC 32, [2001] 2 ILRM 481, [2001] 2 IR 139

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Maher v. Minister for Agriculture, Food and Rural Development [2001] IESC 32; [2001] 2 IR 139; [2001] 2 ILRM 481 (30th March, 2001)

THE SUPREME COURT


KEANE C.J.
DENHAM J.
MURPHY J.
MURRAY J.
FENNELLY J.
340/2000



BETWEEN:

NICHOLAS PHILIP (OTHERWISE MARTIN) MAHER,
MALACHY BRETT AND RITA RYAN

APPELLANTS

AND

THE MINISTER FOR AGRICULTURE, FOOD AND RURAL DEVELOPMENT, IRELAND AND THE ATTORNEY GENERAL

RESPONDENTS


[JUDGMENTS FROM KEANE C.J., DENHAM J., MURRAY J. AND FENNELLY J.; MURPHY J. AGREED WITH DENHAM J.]



JUDGMENT delivered on the 30th day of March 2001 by Keane C.J.


Introduction


1. What has become known as the milk quota system has given rise to much litigation, both at the level of the member States and in the Courts of Justice of the European Communities. The present case arises out of the making by the first named respondent (hereafter “the Minister” ) of the European Communities (Milk Quota) Regulations 2000 (S.I. No. 94 of 2000) (hereafter “S.I. 2000” ). These provided for certain changes in the system which I shall endeavour to summarise at a later point. The validity of S.I. 2000 is challenged by the appellants on the ground that it constitutes the exercise of legislative power by the Minister contrary to Article 15.2.1 º of the Constitution, violates the property rights of the applicants guaranteed by the Constitution and is not afforded immunity by the provisions of Article 29.4.7 of the Constitution, providing for the consequences of our accession to the European Economic Communities. The appellants’ claim was dismissed in the High Court in a reserved judgment by Carroll J. and they have now appealed from that judgment and order to this court.


2. The milk quota scheme was first introduced in 1984 by the Council of EEC in order to cope with problems which had arisen from the implementation of the Common Agricultural Policy (hereafter “the CAP” ) established under the Treaty of Rome as it affected the market in dairy products. The measures establishing the scheme were, accordingly, part of the common organisation of the market in the milk sector in the EEC, deriving from the CAP and known as the COM.


3. One of the features of the COM was a guaranteed price for milk producers throughout the EEC. This ultimately had it as its consequence a supply of milk and milk products throughout the EEC which was hugely in excess of the demand, resulting in massive costs to the community and severe downward pressure on milk prices. Attempts to deal with the problem in other ways having proved abortive, the scheme adopted in 1984 provided for a ceiling on milk production in each of the member States and the allocation to individual producers of a ceiling on their annual production. This was effected by the imposition of what was described as a “super levy” on any producer who exceeded the ceiling which would render uneconomic the production of any milk in excess of the relevant figure. This was done by the allocation of what were called “reference quantities” to the individual producers which became known as “quotas” and it will be seen that it was an essential part of the scheme that the total of the quotas in any member State, including Ireland, should not exceed the quota allocated by the EEC to the member State in question.


4. The scheme was originally intended to run for five years up to the 31st March 1989, but was in fact successively extended up to the 31st March 1993. A new, but substantially similar, system was then adopted which expired on 31st March 2000.

5. While the scheme achieved its objective of halting the growth in milk production in the EEC, the quota was initially set at a level which was substantially above the consumption of milk and milk products in the EEC. Accordingly, there continued to be a surplus of milk in the community. Various methods were adopted by the EEC of dealing with the resultant problems. Eventually, what was called “Agenda 2000” was adopted by the EEC Commission with a view to preparing the dairy sector for the further problems which would arise from the enlargement of the European Union and the liberalisation of trade within the World Trade Organisation. The latter developments would mean, not merely a new threat of surpluses in milk production, but also an undermining of the effectiveness of the quota regime in maintaining milk prices.


6. Agenda 2000 proposed to continue the milk quota regime for six years to March 2006 and also envisaged other proposals which were of particular relevance to the present proceedings. These related to what was seen by the Commission as a particular problem, i.e. the extent of quotas held by persons who were no longer actively involved in the production of milk. Under the scheme as originally introduced, the milk quota was attached to the land and could only be transferred to another person if the land to which it was attached was being transferred to that person. An exception was introduced, however, in 1987 which enabled producers to lease any part of the quota which he or she did not intend to utilise in a particular year until the end of the milk quota year.


7. The new measures adopted by the EEC to give effect to Agenda 2000 required the member States to adopt detailed rules as to what was to happen in relation to the transfer of quotas. It also conferred certain discretions on the member States as to provisions which might or might not be included in any such detailed rules. The relevant rules in Ireland are contained in S.I. 2000 which is challenged in these proceedings.


8. The effect of S.I. 2000 is that, subject to certain exceptions, it is no longer possible for persons who are not actively engaged in milk production to transfer their quota with the land by way of sale. Nor, again, subject to certain exceptions, is it possible to lease a quota with the land. While a quota can be transferred upon the renewal of a lease of lands, a person who has not been involved in milk production for three years or more, can make a temporary lease or transfer of the quota for one further year and no more. The regulations also provided for a “restructuring scheme” under which a quota holder can offer all or part of his or her quota to the purchaser of the milk in return for payment. The maximum price is to be determined by the Minister. There are exceptions to these various requirements when the lands were being sold, leased, given to or inherited by a spouse or family member.


9. The first applicant in an affidavit said that he was the owner of 130 acres of land in Cashel, Co. Tipperary and that there was a milk quota attached to the lands which amounted to approximately 28,170 gallons. He said that as a result of borrowings which he had to make at high interest rates in the 1970s to develop his dairy business and the wiping out of his dairy herd by brucellosis between May and September 1980, he found it necessary to earn an income outside dairy farming. He and his wife, accordingly, in 1986 started up an oil distribution company and in the year 1996 he leased his lands and milk quota to one Maurice Ryan: the lease expired on the 31st March 2000. He said that, as a result of the introduction of S.I. 2000, if he wished to retain his quota, he had only three options:


(a) to resume milk production;
(b) to renew the lease to Mr. Ryan;
(c) to lease the quota temporarily for one year.

10. He said that neither of the first two options were available to him and the third would only enable him to retain the quota for a year. However, if he were to dispose of the milk quota, his options would be to sell it under the restructuring scheme at the maximum price fixed by the Minister of £1.36 per gallon or do the same in a year’s time, after temporarily leasing it for one year. He would also be entitled to sell it to his former lessee, Mr. Ryan, but the latter was not interested in acquiring it. He said that the figure fixed by the Minister did not represent the market value of the milk quota. He said that his two children were aged 14 and 16 and that he wished to retain his milk quota so that they could take up dairy farming in a few years’ time if they so chose.


11. The second applicant said that he was the joint owner with his wife of lands and premises at Fethard, Co. Tipperary together with the milk quota attaching to the lands: the lands comprised approximately 77 acres and the milk quota amounted to approximately 24,404 gallons. He said that some years ago he began to suffer from ill health and it became necessary for him to cease milk production and sell his cows. Since then most of his income had been earned from leasing some of the lands together with part of his milk quota and temporarily leasing the balance of the milk quota. He said that his only options as a result of the introduction of S.I. 2000 were to resume milk production or sell his quota under the restructuring scheme. He said that, as he was now nearly 76 and no longer in full health, he was not in a position to resume milk production. As to the sale of his quota under the restructuring scheme, his complaints were the same as those of the first applicant.


12. The third applicant is the owner of 20 acres of land at Clonoulty, Co. Tipperary together with the milk quota attaching to the lands amounting to 11,844 gallons. She said in her affidavit that for a number of years she had temporarily leased the quota to the local creamery and that most of her income had come from that temporary lease. Her only other income was the sale of weanling calves born in the winter/spring months and sold the following autumn/winter. As in the case of the other two applicants, she said that her only options as a result of S.I. 2000 were to resume milk production or sell her milk quota under the restructuring scheme and that she was not in a position to resume milk production as she could not afford the cost of installing a new milking parlour. Her complaints as to the option of selling under the restructuring scheme were to the same effect as those of the first and second named applicants.


The regulatory framework

13. The relevant EEC Regulations are Council Regulation (EEC) No. 3950/92 of 28th December 1992 as last amended by Council Regulation (EC) No. 1256/99 of 17th May 1999 (hereafter “the EC Regulations” ).

14. Article 6 requires member States, before a specified date, to authorise for a twelve month period temporary transfers of individual reference quantities which producers who were entitled thereto do not intend to use. It also provides that the member States may vary transfer operations depending on the category of producers or dairy production structures, may limit them at the level of the purchaser within regions and may determine to what extent transfer operations may be renewed. It also permits a member State to decide not to comply with this requirement, on the basis of certain criteria. The last mentioned discretion was not exercised in the case of Ireland.


15. Article 7.1 provides that

“Reference quantities available on a holding shall be transferred with the holding in the case of sale, lease or transfer by inheritance to the purchasers taking it over in accordance with the detailed rules to be determined by the member States taking account of the areas used for dairy production or other objective criteria and, where applicable, of any agreement between the parties.
“Any part of the reference quantity, which is not transferred with holding, shall be added to the national reserve ...”

16. As already noted, the detailed rules in Ireland are set out in S.I. 2000. However, Article 8a of the EC Regulations provided that

“Acting in compliance with the general principles of community law, member States may take the following measures, with the aim of ensuring that reference quantities are solely attributed to active milk producers: ...
(b) member States may decide not to apply the provisions on transfer of reference quantities in Article 7(1).”

17. The Minister availed of this power by providing as follows in Article 5(1) of S.I. 2000:-

“Subject to the exceptions provided for in Regulations 6, 7, 8, 9, 10 and 11, where any holding, or part thereof, is transferred the milk quota attached to that holding or part thereof shall not be transferred to the person to whom that transfer is made.”

18. Sub-paragraph (2) goes on to provide that, where there is a transfer of land to which the milk quota attaches, the milk quota is to be added to the “national reserve” unless one of the relevant exemptions in the regulations has been availed of. The concept of the “national reserve” , which has been a feature of the EEC milk quota scheme since its inception in 1984, means in effect that, where a milk quota ceases to be attached to a particular farm, it may remain available as part of the total quota to which the member State is entitled. Under S.I. 2000, such milk quotas become available to active milk producers, with priority being given to small and medium producers.


19. The exemptions provided for under S.I. 2000 from Article 5(1) must next be considered. Article 7, in effect, enables the Minister to grant a certificate of entitlement to transfer a milk quota to a person who satisfies him that he has been actively engaged in the production of milk for the previous three years. Article 6 enables the quota to be transferred to the spouse and defined members of the family of the transferor. Article 9 enables the lessee of land and a quota to purchase the leased quota with or without the land from the lessor on the termination of the lease, provided he or she is a producer. Article 10 provides for the transfer of the quota on a renewal of the lease. Article 12 provides for the transfer of the quota to the lessor where a lease of land which the milk quota attaches terminates.


20. Article 8 of the EC Regulations provides that

“With a view to completing restructuring of milk production or to environmental improvement, member States may take one or more of the following actions in accordance with detailed rules which they shall lay down taking account of the legitimate interests of the parties ...” .

21. There follow five options which were available to the member States. That contained in sub-paragraph (b) was availed of by the Minister in S.I. 2000 and was as follows:-

“... determine on the basis of objective criteria the conditions under which producers may obtain, in return for payment, at the beginning of a twelve month period, through allocation by the competent authority or by the body designated by that authority, of reference quantities released definitively at the end of the preceding twelve month period by other producers in return for compensation in one or more annual instalments equal to the above mentioned payment ...”

22. Article 26 of S.I. 2000 enables the Minister, pursuant to Article 8(b), to introduce a scheme called the “milk quota restructuring scheme” for the surrender of a milk quota at the end of each milk quota year and its reallocation at the beginning of the following year. Sub-paragraph (5) provides that the maximum payment for a surrendered quota and the reallocation price is to be set by the Minister.


23. The Minister also availed of the power conferred on the member State by Article 6.1 of the EC Regulations as to the temporary transfer of quotas which producers who were entitled thereto did not intend to use. Article 27 of

S.I. 2000 provides inter alia as follows:-
“(2) A person may, subject to paragraphs (3) and (4), offer for temporary transfer such part of his or her milk quota as he or she does not intend to use during that milk quota year.
(3) The holder of a quota who neither made milk deliveries to a purchaser, or sold milk or milk products directly for consumption, during any three successive milk quota years since 1st April 1997 and who made a temporary transfer of his or her quota under Regulation 16 of the Regulations of 1995 or under paragraph (2) during each of the three milk quota years in question shall not be entitled to make a temporary transfer under paragraph (2).
(4) A person who neither made milk deliveries to a purchaser or sold milk or milk products directly for consumption, has leased his or her land and milk quota for a period of three successive years or more, since April 1st, 1997 shall be entitled to make a temporary transfer of his or her quota under paragraph (2) for one year only.”

24. There follow provisions enabling the Minister to authorise a temporary transfer of the quota for one further milk quota year in “exceptional circumstances” .


25. Finally, it should be noted that recital (6) of the EC Regulation sets out the rationale of the relevant provisions of the EC Regulations as follows:-

“Whereas the experience with the additional levy scheme has shown that the transfer of reference quantities through legal constructions such as leases which do not necessarily lead to a permanent allocation of the reference quantities concerned to the transferee, can be an additional cost factor for milk production hampering the improvement of production structures;
Whereas in order to strengthen the reference quantities’ character as a means of regulating the market of milk and milk products, the member States should be authorised to allocate reference quantities, which have been transferred through leases or comparable legal means, to the national reserve for redistribution, on the basis of objective criteria, to active producers in particular, to those who have used them before;
Whereas member States should also have the right to organise the transfer of reference quantities in a different way than by means of individual transactions between producers;
Whereas it should be explicitly provided, in particular with a view to taking account adequately of existing legal rights, that, when using these authorisations, member States are to take the necessary measures to comply with the general principles of community law ...”

26. The factual background in Ireland against which the Minister, in purported exercise of the powers conferred on the member States, made S.I. 2000, was set out in an affidavit by Mr. Patrick Evans, an assistant principal officer in the milk policy division of the department of the Minister. He said that Ireland had had particular difficulties in relation to the milk quota scheme due to the large number of small and medium scale producers in the dairying sector. Of 31,500 active producers engaged in milk production in Ireland, 68% of the total had a milk quota of less than 35,000 gallons. He said that in view of the fact that milk production was far more profitable than beef, sheep or pig production, producers were constantly seeking to expand their dairying enterprise and that, as a result, the demand for milk quota in Ireland far exceeded the supply of such quota.

27. Mr. Evans said that this situation was compounded because of the leasing of land and quota, which represented between 9% and 10% of the national quota. A further 6% of the national quota was leased temporarily without land on an annual basis. In the result, a significant portion of the profit from milk production was transferred from the milk producer to the owner of the quota who, in most instances, was no longer involved in milk production. This was likely to increase because of the number of producers ceasing milk production and resulted generally in a less efficient dairying industry characterised by a lack of certainty and higher production costs. He said that it was standard practice for member States to consult with the Commission beforehand on the measures they might propose to adopt for the application of the milk quota regime in their respective territories and this procedure had been fully observed by Ireland.


28. Mr. Evans further deposed that the Minister had consulted with organisations representing the dairy industry and other interested parties before making a decision on the changes that should be introduced. He said that there was a general consensus that

(i) the new regime should reinforce the position of active milk producers;
(ii) the interests of small and medium scale producers should be favoured;
(iii) the permanent transfer of quota should be facilitated;
(iv) quota should be allocated at a reasonable cost.

29. Mr. Evans said that the Minister, in implementing the new regime by way of S.I. 2000, was of the view that the provisions were necessary in order to ensure that the objectives contained in the EC Regulations were achieved in Ireland. In particular, the changes were intended to ensure, as provided in Article 8a of the EC Regulations, that quotas were solely attributed to active milk producers.


30. Mr. Evans said that the first and second named appellants had benefited to the extent of approximately £70,000 and £46,000 respectively from their quotas, during periods when they were not active milk producers.


The applicable law

31. Article 32 of the Treaty of Rome under the title “Agriculture” provides that the common market is to extend to agriculture and trade in agricultural products and must be accompanied by the establishment of a common agricultural policy. The objectives of the CAP are set out in Article 33 as follows:

“(a) To increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour;
(b) Thus to ensure a fair standing of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
(c) To stabilise markets;
(d) To ensure the availability of supplies;
(e) To ensure the supplies for each consumer is at reasonable prices.”

32. Article 33.2 requires account to be taken of the particular nature of agricultural activity, resulting inter alia from the “social structure” of agriculture, in working out the CAP.


33. Article 34 provides for the establishment of a common organisation of agricultural markets and under Article 2 may include the measures required to attain the objectives set out in Article 33, including in particular the regulation of prices.


34. Article 5 provides that

“Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the community. They shall facilitate the achievement of the community’s tasks.
“They shall abstain from any measure which could jeopardise the attainments of the objectives of this Treaty.”

35. Article 189 establishes what might be called the legislative machinery of the community. It provides that

“In order to carry out their task, the Council and the Commission shall, in accordance with the provisions of this Treaty, make regulations, issue directives, take decisions, make recommendations or deliver opinions.
“A regulation shall have general application. It shall be binding in its entirety and directly applicable in all member States.
“A directive shall be binding, as the result to be achieved, upon each member State to which it is addressed, but shall leave to the national authorities the choice of form and methods ...”

36. Article 29.4.3º of the Constitution provided inter alia that the State might become a member of the European Economic Community established by the Treaty of Rome. Article 29.4.7º, as amended, provides that

“No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or of the communities [including the European Economic Community], or prevents laws enacted, acts done or measures by the European Union or the communities or by institutions thereof, or by bodies competent under the treaties established in the communities, from having the force of law in the State.”

37. Following the accession by Ireland to the European Communities, the European Communities Act 1972 (hereafter “the 1972 Act” ) was enacted by the Oireachtas. Section 2 provided that

“From the 1st day of January 1973, the treaties governing the European Communities and the existing and future acts adopted by the institutions of those communities shall be binding on the State and shall be part of the domestic law thereof under the conditions laid down in those treaties.”

Section 3 provided that
“(1) A Minister of State may make regulations for enabling s. 2 of this Act to have full effect.
(2) Regulations under this section may contain such incidental, supplementary and consequential provisions as appear to the Minister making the regulations to be necessary for the purpose of the regulations (including provisions repealing, amending or applying, with or without modification, other law, exclusive of this Act).
(3) Regulations made under this section shall not create an indictable offence.”

Section 4, as substituted by section 1 of the European Communities (Amendment) Act 1973, provided that regulations under the Act were to have statutory effect, but could be annulled where the Joint Committee on the Secondary Legislation of the European Communities so recommends to the Houses of the Oireachtas and also enables one-third of the members of Dáil Éireann or Seanad Éireann to requisition a meeting of either House where regulations are made and the Dáil and Seanad, as the case may be, stands adjourned for a period of more than ten days.

In Meagher .v. Minister for Agriculture , (1994) 1 IR 329 it was held by this court that s. 3 of the 1972 Act was not invalid having regard to the provisions of the Constitution.

38. The law of the European Communities can have legal effect in Ireland because of the making of Regulations which are directly applicable in each of the member States. The EC Regulation, on foot of which the Minister purported to make S.I. 2000, is such a regulation. It is, accordingly, to be distinguished from Directives, which have binding force as to the result to be achieved for each member State to which they are addressed, but which leave the member States free to choose the form and methods for implementing the directive. The jurisprudence of the Courts of Justice of the European Communities has, of course, established that the law of the communities, whether embodied in regulations or directives, must be given primacy, where it is applicable, over the domestic law of the member States.


39. It is claimed on behalf of the applicants in the present proceedings that S.I. 2000 was made in violation of certain provisions of the Constitution and that its making was not necessitated by the obligations of membership of the European Union or of the communities within the meaning of Article 29.4.7º of the Constitution. The first article relied on is Article 15.2.1º which provides that

“The sole and exclusive power of making laws for the State is hereby vested in the Oireachtas: no other legislative authority has power to make laws for the State.”

40. The second ground is that S.I. 2000 constitutes an unjust attack on the property rights of the applicants, in the form of their respective milk quotas, guaranteed by Articles 40.3.1º and 2º and 43 of the Constitution.


41. It was conceded on behalf of the appellants that, if the making of

42. S.I. 2000 was necessitated by the obligations of Ireland’s membership of the Communities within the meaning of Article 29.4.7º of the Constitution, the applicants could not succeed, even if the regulations were otherwise in violation of the Constitution.


The High Court judgment

43. In the High Court, the learned High Court judge held that the discretions which were left to the member States were within the principles and policies determined by the Council of Ministers in the organisation of the milk market in the European Union and that S.I. 2000 did not go beyond what was required by those principles and policies. She said that the decision of the Minister that quotas should go to active milk producers was in accordance with the stated policy of the Regulations. She was of the view that S.I. 2000 was necessitated by the obligations of membership of the EU. However, she was also of the view that, because the choices made in S.I. 2000 were within the principles and policies of the milk quota scheme, it could also be regarded as valid secondary legislation which was not contrary to Article 15.2.1º of the Constitution.


44. As to the claim that S.I. 2000 was in breach of the property rights of the appellants, the learned High Court held that it was clear from the jurisprudence of the European Court of Justice that the right to property safeguarded by the community legal order did not include the right to dispose for profit of an advantage such as a milk quota. She concluded that the nature of the milk quota, which was created by European law, must bear the same meaning in domestic law as in the legal order of the European Union.


45. The learned High Court judge had been urged by counsel for the appellants to have regard to the Dáil Debates on the Eleventh Amendment of the Constitution Bill in determining what was meant by the expression “necessitated by the obligations of membership ...” in Article 29.4.7º. She rejected the submission that she was entitled to have regard to what was said during the course of the Oireachtas debates, but had regard de bene esse to the fact that during the passage of the Bill through the Oireachtas the word “necessitated” was substituted for the word “consequent on” . However, she was also of the view that that did not assist the arguments advanced on behalf of the applicants as to the validity of S.I. 2000.

46. As already noted, the appellants have appealed from the judgment and order of the High Court. The respondents have served a notice to vary the judgment in so far as it could be construed as allowing the court to have regard to the amendment effected to the Eleventh Amendment of the Constitution Bill during its passage through the Oireachtas.


Submissions of the parties

47. Mr. Gerard Hogan S.C., on behalf of the applicants, did not invite the court to overrule its previous decision in Meagher to the effect that s. 3 of the 1972 Act was not invalid having regard to the provisions of the Constitution. He submitted, however, that in determining whether S.I. 2000 was itself “necessitated” by the obligations of EC membership and thus immune from constitutional scrutiny, the court should not follow in its entirety the reasoning by which the court arrived at its conclusions in that case. (It should be pointed out at this stage that the court in Meagher, having ruled on the constitutionality of s. 3 of the 1972 Act, went on to consider whether the specific regulations challenged in that case were intra vires and unanimously concluded that they were.) He said that, in so far as any of the judgments in that case suggested that the word “necessitated” should be equated to “convenient” or “desirable”, that reasoning should not now be followed. He submitted that the word “necessitated” clearly indicated that Article 29.4.7º allowed for the transfer of legislative, executive and juridical sovereignty to the European Union and the Communities only where this was a legal obligation resulting from membership of the EU and the Communities.


48. Mr. Hogan submitted that this approach to Article 29.4.7º was reinforced by the parliamentary history of the Third Amendment of the Constitution Bill, 1971: the words “consequent upon” originally used in the Bill had been replaced by “necessitated” at the committee stage. In the present case, the issue, accordingly, was as to whether the making of S.I. 2000 by the Minister in purported exercise of the powers conferred by s. 3 of the 1972 Act was a legal obligation deriving from our membership of the Communities and not simply a consequence of that membership.


49. Mr. Hogan further submitted that this construction of Article 29.4.7º was supported by the terms of Article 29.4.6º which provided that

“The State may exercise the options or discretions provided by or under Article 1.11, 2.5 and 2.15 [of the Amsterdam Treaty] and the Second and Fourth Protocols set out in the said Treaty but any such exercise shall be subject to the prior approval of both Houses of the Oireachtas.”

50. He submitted that this provision in the Constitution would have been quite unnecessary if legislative sovereignty could be surrendered to the European Union in the manner suggested by some of the reasoning in Meagher. Mr. Hogan further submitted that, having regard to the wide range of choices which a member State could make under the relevant Articles of the EC Regulation, it could not be said that, even adopting the reasoning of the court in Meagher, legislation in the form of a ministerial regulation was necessitated in this case by the obligations of EC membership and he cited in particular passages in the judgment of the court and of Denham J. in that case. He also cited the decision of Murphy J. as a High Court judge in Green .v. Minister for Agriculture (1990) 2 IR 17.


51. Mr. Hogan submitted that, assuming that S.I. 2000 was not shielded from constitutional scrutiny by virtue of Article 29.4.7º, it clearly violated Article 15.2.1º of the Constitution, since it constituted delegated legislation which went significantly further than simply giving detailed effect to principles and policies contained in a parent Act. He relied particularly in support of this proposition on the decisions of this court in Cityview Press Ltd. .v. AnCO , (1980) IR 381, O’Neill .v. Minister for Agriculture , (1997) 2 ILRM 435 and Laurentiu .v. Minister for Justice, Equality and Law Reform , (2000) 1 ILRM 1 and of the High Court in McDaid .v. Sheedy , (1991) 1 IR 1 and Lovett .v. Minister for Education , (1997) 1 ILRM 89.


52. Mr. Hogan submitted that, in determining whether S.I. 2000 was constitutionally valid, as being no more than the detailed implementation of principles and policies contained in parent legislation, it was immaterial that S.I. 2000 had been made in purported exercise of a power conferred by an EC Regulation, as distinct from a Directive, citing observations of the Court of Justice in Case 230/78 SPA Eridania - Zuccherifici . Mr. Hogan said that, while Mr. Evans in his affidavit had laid stress on the provisions of the Regulation enabling member States to take measures “with the aim of ensuring that reference quantities are solely attributed to milk producers” , it is nowhere said that this is a community objective which the regulation requires member States to implement: on the contrary, it simply enables member States who wish to pursue this policy objective so to do.


53. Mr. Hogan urged that it was clear from S.I. 2000 that the Minister had elected to make substantial and important policy choices, of which the most significant in practical terms was the effective breaking of the link between land and quota, save for family transactions. He said that the jurisprudence of the Court of Justice made it clear that, in areas where common rules applicable to all the member States are not laid down by a particular regulation, the member States in implementing the regulation in those areas are entitled to act in accordance with the procedural and substantive rules of their own national law, citing the decision of the Court of Justice in Kjell Kirllson .v. Svenska Jordbruksverket , Case C-292/97 (2000) ECR 1-2737. He also relied on Case C-258/93 Dominikanerinnen-Kloster altenhohenau , (1995) ECR 1-4069.


54. As to the claimed violation of the applicants’ property rights, Mr. Hogan accepted that the Court of Justice had generally taken the view that milk quotas do not constitute a property right so far as community law is concerned and referred in this context to R. .v. Ministry of Agriculture, xp. Bostock , Case C-2/92 (1994) ECR 1-955. However, that case was concerned with the right to dispose of a quota for profit, whereas the present case involved what was effectively a form of compulsory acquisition by the State of a quota at a price substantially less than the prevailing market value. He said that, in these circumstances, a milk quota might qualify for protection as a property right which the member States were obliged as a matter of community law to protect, citing the comments of the Advocate General in Damand .v. Haubtzollampt Trier , (KC-186/96) 1998 ECR 1-8529, 8541.


55. Mr. Hogan further submitted that, in any event, the dicta in Bostoch did not prevent such a right from being regarded as a property right for the purposes of Irish constitutional law. He pointed out that in Duff .v. Minister for Agriculture (KC-63/93 (1996) ECR 1569, the Advocate General had pointed out that the fact that the plaintiff’s legitimate expectations at community law level had not been infringed by the actions of the Minister did not prevent such a requirement being founded on principles of national law and that, in the event, that passage had enabled the plaintiff to succeed when the case returned to this court.


56. Mr. Hogan submitted that there was no valid reason why an intangible but valuable right such as a milk quota should not be regarded as a property right and, as such, it had been unquestionably violated by S.I. 2000.



57. On behalf of the respondents, Ms. Mary Finlay, S.C. submitted that, even if it were assumed that the making of S.I. 2000 by the Minister was not “necessitated” by the obligation of Ireland’s membership of the European Communities within the meaning of Article 29.4.7º of the Constitution, it was intra vires s. 3 of the 1972 Act as representing the detailed implementation of principles and policies set out in parent legislation, in accordance with the law as found by this court in Cityview Press Ltd. .v. AnCO and Laurentiu .v. Minister for Justice, Equality and Law Reform .


58. Ms. Finlay submitted that the EC Regulations, which had direct effect in Ireland, were the equivalent of parent legislation in that they enabled the member States to exercise certain discretions in regard to the implementation of the milk quota scheme generally throughout the European Union.


59. Ms. Finlay submitted that, in the context of the common organisation of the market in milk and milk products, it was recognised that the position of producers varied in different areas throughout the Community and that this required different responses in different areas. It was for that reason that the Regulations empowered the member States to take certain limited decisions as to the precise way in which the COM was to be implemented in each member State. Such discretions had, however, to be exercised at all times in accordance with the Regulations and with a view to achieving the overall objectives and aim of the COM and in such a way as to avoid discrimination between producers in different parts of the Community.


60. Ms. Finlay submitted that s. 3 of the 1972 Act authorised the Minister to make regulations for the purpose of enabling the EC Regulations as to the milk quota and super levy scheme to have full effect in Ireland and that was the sole purpose of S.I. 2000. Accordingly, prima facie , S.I. 2000 was intra vires the powers conferred on the Minister by s. 3 of the 1972 Act.


61. Ms. Finlay submitted that the super levy/milk quota regime was established by EC regulations and that the respective roles of the Council of Ministers and EC Commission on the one hand and the member States on the other hand in the COM was analogous to the respective roles of the Oireachtas and the Executive in relation to purely domestic legislation. All the essential policies and principles relating to the COM were determined by the Council of Ministers and what was left of the member States were detailed implementing rules and limited permissible variations. The position of the Minister was thus not the same as that of the relevant ministers in O’Neill .v. Minister for Agriculture and Laurentiu .v. Minister for Justice and the making of S.I. 2000 complied with the test laid down in Cityview Press Ltd. .v. AnCO .


62. Ms. Finlay submitted that it was not correct to say that the break in the link between land and quota “effected by the 1999 EC Regulation” and S.I. 2000 was a radical new departure, as suggested on behalf of the applicants. Since the introduction of the general rule in 1984 that quota should transfer with the land, a series of exceptions had been created and those introduced by the 1999 Regulation were only the last in the sequence. She further submitted that Article 7(1) expressly obliged the member States to lay down detailed rules: S.I. 2000 were such detailed rules. As to the decision not to provide for the automatic transfer of quotas with land, this could only be done for the purpose of ensuring that quotas were solely attributed to active milk producers and this was what S.I. 2000 was intended to achieve.


63. Ms. Finlay submitted that restructuring schemes had also been authorised in the member States by EC law since 1987. The actions that could be taken by member States with a view to completing restructuring of milk production were exhaustively set out in Article 8 of the EC Regulation and in making the detailed rules the member States were constrained by the express provisions of that Regulation and the overall aims and policies of the CAP, COM in milk and milk products, the additional levy scheme and the relevant EU instruments. Ms. Finlay submitted that in making Regulation 27 relating to the temporary leasing of quota, the Minister was acting in accordance with the express obligation under Article 6.1. It was merely the precise terms of a detailed temporary leasing scheme which were left to be specified by the member State and this was what had been done in S.I. 2000.


64. As to the submission that Article 40.3.2º and 43 had been violated by

65. S.I. 2000, Ms. Finlay submitted that it was clear that a milk quota was not a property right and the opinion of the Advocate General in Duff .v. Minister for Agriculture was not authority for the proposition that the nature of the rights conferred by a milk quota on the appellants were different in Irish law.

66. Ms. Finlay submitted that there was no question of anything in the nature of a compulsory acquisition by the State of a quota at less than the prevailing market price. The quota was not acquired in any sense by the State: in the present case, the applicants were all persons who were no longer engaged in active milk production and who were entitled to release their quota, which would then be reallocated to an active producer who would pay them the specified price. Each of the applicants was simply endeavouring to earn a greater profit from the milk quota currently held by them than was permissible under the S.I. 2000 and were not seeking to use the quota for the purpose for which it was intended, i.e. the production of milk up to the amount of the quota.


67. If, contrary to the submissions, it was found that any of the provisions of S.I. 2000 prima facie violated the Constitution, it was submitted that they were “necessitated” by the obligation of membership of the European Union or of the Communities and hence were entitled to the protection of Article. 29.4.7º of the Constitution. Ms. Finlay submitted that it was clear from the decision of this court in Meagher that the fact that the member State had been left some element of choice or discretion as to the precise form a particular measure should take was perfectly consistent with the measure being necessitated by the obligations of EC membership. Thus, in Meagher, although the relevant directive contained no express provision as to the creation of sanctions, the court accepted that the nature of the sanctions to be imposed, including the penalties, were properly determined by regulation. She submitted that the somewhat broader approach to the construction of the phrase “necessitated by the obligations of membership” than that being contended for on behalf of the appellants was also consistent with the decision of this court in Crotty .v. An Taoiseach (1987) IR 713.




68. Ms. Finlay said that the respondents strongly resisted the proposition advanced by the appellants that the reasoning in Meagher should be reconsidered at this stage by the court. Meagher had been a decision on the constitutionality of s. 3 of the 1972 Act and had been continuously relied on since then by the State, approximately 498 statutory instruments having been made by various ministers under s. 3 of the 1972 Act.


69. As to the notice to vary, Mr Paul Gardiner S.C. on behalf of the respondents submitted that the decision of this court in People (DPP) .v. McDonagh (1996) 1 IR was not authority for the proposition that the parliamentary history of a particular bill was an admissible aid to the interpretation of an amendment of the Constitution effected by way of referendum. He said that to hold otherwise would be to derogate from the primary role of the people in determining whether the Constitution should be amended which had been emphasised in two recent decisions of this court, McKenna v. An Taoiseach (No 2) (1995) 2 IR 10 and Hanafin .v. Minister for the Environment (1996) 2 IR 321. He submitted that it followed that the court was not entitled to have regard to the fact that the words “consequent upon” originally used in the Third Amendment of the Constitution Bill had been replaced by “necessitated” at the committee stage.


Conclusions

70. It is accepted in this case that, if the making by the Minister of S.I. 2000 was “necessitated” by the obligations of membership of the European Union or the European Economic Community, it could not be successfully challenged by the appellants. It would seem to follow that this should be the first issue to be addressed by this court.


71. As a result of the passage of the Eleventh Amendment of the Constitution, Article 29.4.3º empowered the State to become a member of inter alia the European Economic Community established by the Treaty of Rome. Article 29.4.5º ensured that laws enacted, acts done or measures adopted by the State which were necessitated by the obligations of membership of inter alia the EEC were not invalidated by any other provision of the Constitution. Section 2 of the 1972 Act, which provided that the treaties governing the European Communities and the existing and future acts adopted by the institutions of the communities were to be binding on the State and be part of its domestic law under the conditions laid down in the treaties, was clearly necessitated by the obligations of membership of those communities.


72. The result was a historic transfer of legislative, executive and judicial sovereignty to the European Communities and, as a result of further referenda, the European Union. In particular, the exclusive roles hitherto enjoyed by the Oireachtas in the legislative field and the courts in the administration of justice were significantly abridged. The developing jurisprudence of the European Court of Justice also made it clear that there existed effectively an autonomous European legal order and that the member States were obliged to acknowledge the primacy of Community law over national law in areas where it was applicable.


73. It was also, moreover, clear that the Member States envisaged that the communities established by treaties were to be dynamic in their nature and that the obligations of membership referred to in Article 29.4.5º would not be static.

74. In the result, a significant new volume of legislation became applicable in Ireland and binding on all the citizens either in the form of Directives which the State, as a result of its membership, was obliged to implement in domestic legislation, or Regulations which were directly applicable in Ireland and did not require such legislation for their implementation. Since, under the communities’ legal order, the method by which a Directive was implemented, as distinct from its substance, was to be determined by the Member State, the Directive itself would contain no indication as to which of the two normal methods employed in Ireland - an Act of the Oireachtas or a ministerial regulation - was to be employed. The Directives, in short, did not contain the enabling provision, commonplace in domestic Irish legislation, under which a minister or some other body so authorised by the Oireachtas can give detailed effect in the form of regulations to policies determined by the Oireachtas. That was not necessarily the case with Regulations which, of their nature, did not require implementation by either legislation or regulation. As the present case demonstrates, however, it was also possible for the Council of Ministers to issue regulations having direct effect in a Member State such as Ireland which, in defined areas, required or authorised the Member State to adopt its own rules whether by way of legislation or regulation. It is also, of course, obvious that in some instances, in the case of both Directives and Regulations, their detailed implementation can be effected by administrative acts rather than by legislation or regulation.


75. Accordingly, had s. 3 of the 1972 Act not been enacted by the Oireachtas, it would have been necessary for Directives to be implemented by an Act of the Oireachtas, since there would have been no parent legislation in this country enabling it to be done by way of regulations made by the appropriate minister. The same would apply to those Regulations in which the member States were required or authorised to adopt rules themselves for the purpose of implementing the Regulations. Thus, although a Directive did no more than require the member States to reduce or increase a tariff or duty by a specified sum, leaving no policy choice to be made by the Oireachtas, it would have been necessary for an Act to be passed if Ireland was to fulfil its obligation as a member of the community.


76. As already noted, s. 3 of the 1972 Act, giving Ministers the power to make regulations for the purposes of s. 2, was found to be constitutional by this court in Meagher. The judgments in the case were cited frequently in the course of the arguments in the present case and clearly require careful consideration.

77. The facts can be briefly summarised. Two Council Directives of the EEC prohibited the administration to animals of certain hormonal preparations for fattening purposes. The second Directive required the member States to ensure that official on-the-spot random controls were made for the presence of the prohibited substances and to conduct, through the appropriate authority, an investigation at the farm of origin to determine the reason for the presence of the substances. The Minister, in purported exercise of the powers conferred on him by s. 3 of the 1972 Act, made regulations providing that the possession of the proscribed substances was to be an offence. They also enabled a judge of the District Court or Peace Commissioner to issue a search warrant where there was reasonable ground for suspecting that a person was in possession of one of the prohibited substances. The Regulations further provided that the time limit under the Petty Sessions (Ireland) Act 1851, under which proceedings for summary offences had to be instituted within six months, was not to apply and that the proceedings could be commenced at any time within two years after the date of the offence.


78. The applicant was a farmer who was prosecuted under the regulations, following a search of his premises on foot of a search warrant granted by a District Court judge. He instituted proceedings seeking, inter alia , a declaration that the provisions of s. 3 were invalid having regard to the provisions of the Constitution, together with a declaration that the regulations were, in consequence, ultra vires . It was held in the High Court that so much of s. 3(2) of the 1972 Act as entitled a Minister by regulation to repeal or amend a previous law was unconstitutional and that, accordingly, the regulations were of no effect.


79. The Minister and the Attorney General then appealed to this court. The court considered first the constitutionality of s. 3 of the 1972 Act and allowed the appeal of the Minister and the Attorney General, the judgment of the court being delivered by Finlay C.J. It then went on to consider an alternative argument advanced on behalf of the applicant that, assuming s. 3 to be constitutionally valid, the regulations were nonetheless ultra vires .


80. Giving the judgment of the court, Finlay C.J. said that the obligation of membership would necessitate the facilitating of laws enacted, acts done or measures adopted in some instances at least - and possibly in a great majority of instances - by the making of ministerial regulation rather than legislation of the Oireachtas. In the result the power to make regulations conferred by s. 3(2) was immune from constitutional challenge.


81. There follows a passage in the judgment which is of critical importance in the context of the present case:

“Insofar as it may be possible to point to hypothetical instances of certain types of laws, measures or acts of the Community or Union which in their implementation or application within the national law might not, as to the method of implementation or application, be necessarily carried out by ministerial regulation, but rather should have been carried out by enactment of law by the Oireachtas, the court is satisfied, without deciding that such instances do occur, that the principles laid down by this court in the decision of East Donegal Co-operative Livestock Marts Limited v. Attorney General (1970) IR 317, must be applied to the construction of the impugned subsection in the manner in which it was applied by the decision of this court in Harvey v. the Minister for Social Welfare (1992) IR 232 to the construction of the section of the statute impugned in that case, namely, s. 75 of the Social Welfare Act, 1952. That principle is that it must be implied that the making of regulations by the Minister, as is permitted by the section, is intended by the Oireachtas to be conducted in accordance with the principles of constitutional justice, and therefore that it is to be implied that the Minister shall not in exercising the power of making regulations pursuant to the section, contravene any provisions of the Constitution.

“If therefore in such an instance challenge were to be made to the validity of the ministerial regulation, having regard to the absence of necessity for it to be carried out by regulations instead of legislation and having regard to the nature of the content of such regulation, it would have to be a challenge made on the basis that the regulation was invalid as ultra vires being an unconstitutional exercise by the Minister of the power constitutionally conferred upon him by the section.”

82. As that passage indicates, there are two broad categories of cases in which a regulation made in purported exercise of the powers conferred by s. 3 might be found to be ultra vires the powers conferred on Ministers by s. 3. The first category would be cases in which the making of the regulation was found not to be “necessitated” by the obligations of membership referred to in Article 29.4.5º and to have violated some constitutional right of the plaintiff. The challenge in such a case would be no different from the challenge mounted to an Act of the Oireachtas allegedly necessitated by the obligations of membership which prima facie violated a constitutional right of the plaintiff. The second category of cases in which such a challenge could be successfully mounted to a Regulation is where the implementation of a Directive or defined parts of an EC or EU Regulation by ministerial regulation rather than an Act of the Oireachtas would be in conflict with the exclusive legislative role of the Oireachtas under Article 15.1 and would not be saved by the provisions of Article 29.4.5º. That would arise in a case where the ministerial regulation went further than simply implementing details of principles or policies to be found in the Directive or Regulation in question and determined such principles or policies itself and the making of the Regulation in that form, rather than in the form of an Act of the Oireachtas, could not be regarded as necessitated by the obligations of membership. That this is what was intended to be conveyed by that passage in the judgment of the court is, I think, made clear when one comes to consider the judgments of the court on the vires issue in that case and, in particular, the judgment of Denham J.


83. Blayney J. (with whom Finlay C.J. and O’Flaherty and Egan JJ. agreed), pointed out in the first instance that the requirement in the Directive for on-the-spot random controls could not be effected unless power was given to enable a compulsory search to be made of farms where animals were kept. It followed that so much of the regulation as authorised the issuing of such warrants by the District Court was necessitated by the provisions of the Directive.


84. As to the extended time limit for the institution of criminal proceedings and the amendment purportedly affected for that purpose by the regulations of the time limit under the Petty Sessions Act, 1851, Blayney J. said that it was accepted that the creation of offences by the regulations was required for the implementation of the relevant Directives. He also pointed out that there was uncontested evidence that the six months’ limitation period for the institution of proceedings under the Petty Sessions (Ireland) Act, 1851 would in many instances be too short and he said that it followed that the Minister had power to provide for a longer period and so had power to extend the six months to two years.


85. Blayney J. went on to reject a submission by Counsel for the applicant in that case that, because Article 189 of the Treaty of Rome left to the State the choice of the form and methods of implementing a directive, what was done by way of implementation was not necessitated by the State’s obligation of membership. In a passage of some significance in the context of the present case, he added:-

“The article obliges the State to implement the directive and equally obliges the State, in exercise of the discretion given to it, to choose an appropriate method of implementation. If the State were free not to implement the directive, then clearly, if it were to do so, it would be a voluntary act not necessitated by the obligations of membership and would not be protected by Article 19.4.5 º of the Constitution. But the State is not free. It is obliged to implement the directive and so is obliged to choose a method of implementation and, provided the method it chooses is appropriate for the purpose of satisfying the obligation of the State and the measures it incorporates do not go beyond what is required to implement the directive, it is correctly characterised as being necessitated by the directive.”

86. In her judgment, Denham J, with whom Finlay C.J., O’Flaherty J. and Egan J. also agreed, said that the fact that the creation of a right of search and the amendment of the Petty Sessions (Ireland) Act, 1851 were “necessitated” under the Directive, was not the end of the matter. Article 189 left to the national authorities the choice of form and method and, in choosing the form or method, the Minister must have due regard, not merely to Article 29.4.3º of the Constitution, but also to Article 15.2. The learned judge went on:-

“If the Directive left to the national authority matters of principle or policy to be determined, then the ‘choice’ of the Minister would require legislation by the Oireachtas. But where there is no case made that principles or policies have to be determined the national authority, where the situation is that the principles and policies were determined in the Directive, then legislation by a delegated form, by regulation, is a valid choice ...”

87. She went on to point out that the appropriate test was as set out by O'Higgins C.J. in Cityview Press . She added:-

“Applying the test to this situation the test is whether the ministerial regulations under s. 3 of the Act of 1972 are more than the mere giving effect to principles and policies of the said Act and the Directives, which are part of domestic law as to the result to be achieved.”

88. In a passage which is again of significance in the context of the present case Denham J. said:-

“In the Directives herein the policies and principles have been determined. Thus there is no role of determining policies or principles for the Oireachtas. While the Directive must be implemented there is no policy or principle which can be altered by the Oireachtas, it was already binding as to the result to be achieved.

“That being the case the role of the Oireachtas in such a situation would be sterile. To require the Oireachtas to legislate would be artificial. It would be able solely to have a debate as to what has already been decided, which debate would act as a source of information. Such a sterile debate would take up Dáil and Seanad time and act only as a window on community directives for the members of the Oireachtas and the nation. That is not a role envisaged for the Oireachtas in the Constitution.”

89. It follows that, in the present case, the first enquiry must be as to whether the implementation of the EC Regulation by legislation, whether in primary or secondary form, was necessitated by the obligations of membership within the meaning of Article 29.4.5º of the Constitution. It is clear that it was.

90. Article 7.1 expressly required the making of detailed rules by the member States as to the transfer of quotas with a holding in the case of its sale, lease or transfer by inheritance to purchasers. To that extent at least, Ireland was under an obligation to adopt such detailed rules and it was not contended on behalf of the appellants that this could have been achieved by administrative decisions, rather than legislation, either primary or secondary in form, which was binding in law on all those affected whether as persons entitled to quotas, producers of milk or purchasers of milk or milk quotas.


91. The second enquiry in the present case is as to whether, given that the making of detailed rules in legislative form, to at least that extent, was necessitated by the obligations of membership, their being made in the form of S.I. 2000 other than by an Act was in conflict with the exclusive legislative role of the Oireachtas under Article 15.1 and was not necessitated by the obligations of membership.


92. As the submissions on behalf of the parties demonstrate, there are two routes by which a conclusion can be reached on this issue. One can initially decide whether the making of the regulation in the form of a statutory instrument rather than an Act of the Oireachtas was “necessitated” by the obligations of membership. If it was, then it is clearly unnecessary to consider whether it is in conflict with Article 15.2 or, for that matter the Articles guaranteeing the private property rights of the applicants. Alternatively, one can determine first whether it violates either Article 15.1 or the private property rights or both of them. If the latter course were adopted, and the conclusion were reached that no breach of the Constitution had been established, it would be unnecessary to consider whether enactment in the form of a regulation rather than by an Act was necessitated by the obligations of membership.


93. Ultimately, however, it is immaterial which of these alternative approaches is adopted, because it is almost beyond argument that the choice of a statutory instrument as a vehicle for the detailed rules rather than an Act was not in any sense necessitated by the obligations of community membership. There would appear to be no difference in principle between the obligation on a member State to implement a Directive and the corresponding obligation under a Regulation, such as the EC Regulation in the present case, to adopt detailed rules for the implementation of specified parts of the Regulation. In each case, while the member State is obliged to implement the Directive or the specified part of the Regulation, the choice of form and method for implementation is clearly a matter for the member State.


94. The law was stated as follows by the Court of Justice in Eridania .v. Minister of Agriculture and Forestry :

“The fact that a regulation is directly applicable does not prevent the provisions of that Regulation from empowering a community institution or a member State to take implementing measures. In the latter case the detailed rules for the exercise of that power are governed by the public law of the member State in question ; however, the direct applicability of the measure empowering the member States to take the national measures in question will mean that the national courts may ascertain whether such national measures are in accordance with the content of the community regulation.” (Emphasis added.)

95. I have already referred to the submission advanced on behalf of the appellants in this case that, in so far as the reasoning in Meagher suggested that the power to make Regulations under s. 3 of the 1972 Act could be availed of by a Minister where it was “convenient” or “desirable” so to do, it should not be followed. I am satisfied, however, that neither the judgment of the court nor the judgments of Blayney J. and Denham J. on the vires issue lend any support to the proposition that, in cases where it is convenient or desirable for the community measure to be implemented in the form of a Regulation rather than an Act, the making of the Regulation can for that reason alone be regarded as “necessitated” by the obligations of membership. Thus, while it appears from the judgment of the court that an argument was advanced on behalf of the respondents in that case that the necessity for “expedition” in the implementation of a Directive would justify its implementation in the form of Regulation rather than an Act, such a submission, as a general proposition, would, in my view, be unsustainable and derives no support from the judgments in Meagher. Doubtless, where no policy choices are left to the member State, expedition is one of the factors which may legitimately be taken into account in deciding to opt for the making of a Regulation rather than the enactment of primary legislation, but it would be a serious overstatement to say that it justifies the making of regulations rather than the enactment of an Act in the case of every Directive or EU Regulation and again that is clearly not consistent with what was held by this court in Meagher.


96. I have reached these conclusions without regard to the change of wording in the relevant bill from “consequent on” to “necessitated”.


97. It follows that, in the present case, it could not be said that the making of the rules in the form of S.I. 2000 rather than an Act was necessitated by the obligations of membership and the essential enquiry must be as to whether the Minister in making S.I. 2000 was in breach of Article 15.1 of the Constitution.


98. In determining that issue, it is accepted that the appropriate test is as set out by O’Higgins C.J. in Cityview Press where he stated:-

“In the view of this court, the test is whether that which is challenged as an unauthorised delegation of parliamentary power is more than a mere giving effect to principles and policies which are contained in the statute itself. If it be, then it is not authorised; for such would constitute a purported exercise of legislative power by an authority which is not permitted to do so under the Constitution. On the other hand, if it be within the permitted limits - if the law is laid down in the statute and details only are filled in or completed by the designated Minister or subordinate body - there is no unauthorised delegation of legislative power.”

99. However, in applying that test to a case in which the regulation is made in purported exercise of the powers of the Minister under s. 3 of the 1972 Act, it must be borne in mind that, while the parent statute is the 1972 Act, the relevant principles and policies cannot be derived from that Act, having regard to the very general terms in which it is couched. In each case, it is necessary to look to the Directive or Regulation and, it may be, the treaties in order to reach a conclusion as to whether the statutory instrument does no more than fill in the details of principles and policies contained in the EC or EU legislation.


100. Thus, there are no doubt many cases, of which Meagher was one, where no choice has to be made by the member State as to the appropriate policy to be implemented: the policy in that case was unmistakably the outlawing of the hormonal substances in question and the giving of the necessary powers of search and prosecution to the competent authorities in the member States. Nor had the State any discretion as to whether any particular part of the impugned Regulation was to be omitted. In the passage I have cited, Blayney J. emphasises that the implementation of the Directive in that case was in no sense a voluntary act by the member State.


101. In the present case, the EC Regulations, as already noted required the member States to adopt detailed rules as to the transfer of quotas with land and it also required the authorisation of temporary transfers of quotas which producers who were entitled thereto did not intend to use. However, in three areas, it was left to the member States to decide whether they elected to pursue specified courses of action. First, they could effectively derogate from the provisions of Article 7.1 by providing that quotas were not to be automatically transferred with a holding. They could only do so, however, in order to ensure that quotas were solely attributed to active milk producers. The Minister decided to make use of this option by providing in S.I. 2000 that, subject to certain exceptions, quotas were not to be automatically transferred with the land. Since one of the exceptions was in favour of active milk producers, there can be no doubt that the Minister, in making the Regulation in that form, could not be accused of having effected an impermissible derogation from the general provisions of Article 7.1. S.I. 2000 also allowed for exceptions in the case of sales or transfers to specified members of the family of the person entitled to the quota.


102. The member States were also entitled under Article 6 to determine to what extent transfer operations might be renewed. This was availed of by the Minister so as to restrict persons entitled to quotas who had leased their quotas for three successive years from making more than one further lease of the land and quota. Finally, Article 8 enabled the member States to take one or more of five courses of action with a view to completing restructuring of milk production or environmental improvement. One of these was availed of by the Minister to introduce the milk quota restructuring scheme.


103. It seems clear that, had the Minister taken the view that, in the Irish context, the number of persons leasing quotas was so insignificant that regulations designed to eliminate the practice were unnecessary and would only create hardship with little or no corresponding benefit to the operation of the COM in Ireland, he would have been making a valid choice in terms of the EC Regulation and, indeed, of the general policy of the CAP and the COM. If that were not the case, and the elimination of such practices was to be of universal application throughout the Community, no such option would have been afforded to the member States. The same considerations apply to the options as to restricting temporary leases and introducing a milk quota restructuring scheme. It is, of course, the case that, as the evidence of Mr. Evans demonstrates, the election by the Minister to make the choices that he did resulted from the fact that, whatever be the position in other member States, in Ireland the prevalence of the leasing practice was resulting in a less efficient dairying industry with higher production costs.


104. It is undoubtedly the case that the milk quota/super levy scheme is intended to be tightly regulated by the EC institutions and that the manner in which it operates in all the member States is regularly monitored by the Commission. However, that does not alter the fact that, in specific areas, the EC has decided that the manner in which it is to be implemented in the member States is to be left to the member States to determine.


105. As I have already indicated, a Directive, or in this case a Regulation, can be equated to the parent statute in which, in the case of domestic legislation, one would expect to find principles and policies laid down which were then to be implemented in detail by a form of delegated legislation. There is, however, manifestly a significant difference between a Directive or Regulation, which is applicable throughout the fifteen member States of the European Union, and an Act of the Oireachtas the effect of which is confined to a relatively small and homogeneous area within the European Union. In the case of a Regulation which is intended to apply in a number of different regions throughout the European Union in which the conditions of the dairying industry may vary widely, it is not surprising to find that the Regulation, in specified areas, leaves choices as to the nature of the implementing measures to be introduced by the member State. The issue in this case is as to whether the choice of the appropriate measures can be regarded as involving no determination of policy or principle, as that expression has been used in previous decisions of this court.


106. I have experienced some difficulty in arriving at a conclusion as to how this issue is to be resolved. Applying the reasoning which found favour in Meagher, it seems self-evident that there are choices to be made by Ireland, as a member State, in determining how it will implement the Regulation in those areas where it has been afforded a discretion. Once it is acknowledged that rules of this nature may be implemented in a manner requiring parliamentary scrutiny and that implementation by ministerial regulation is not necessitated by our membership of the European Union, it gives rise to natural misgivings to find that there is no role for the democratically elected institutions of the State, other than the limited one under s. 4 of the 1972 Act. I am, however, persuaded by the analysis carried out by Fennelly J. in the judgment that he will deliver that, in the case of the operation of the super levy scheme, the choices as to policy available to the member States have in truth been reduced almost to vanishing point. As he points out, the scheme which has given rise to these proceedings was essentially the creation of the European Union and, if one seeks to determine the principles and policies which underlie it, one must look, not to any parent legislation in Ireland, but to the treaties of the European Union and the Regulations and Directives which have established the complex machinery of the CAP and the common market in milk. It follows that the making of the Regulation was not an impermissible exercise of the legislative role of the Oireachtas and that the appellants’ contentions to the contrary are not well founded.


107. There remains the question as to whether the Regulations also constituted an unjust attack on the alleged property rights of the applicants in contravention of Articles 40.3.1º and 2 and 43 of the Constitution. I have no doubt that the Regulations do not violate any property rights within the meaning of the relevant articles of the Constitution. Even if one were to adopt the most expansive view of what is meant by a right of property within the meaning of those articles and extend it beyond the well accepted species of property under our law - real and personal property, including, under the latter category, choses in action - it could still in no sense be equated to a right of property.


108. It seems to me unnecessary in this context to consider whether rights in the nature of licences conferred by the law in relation to particular property, such as planning permissions or licences for the sale of alcohol, constitute property rights. The quotas to which the applicants were entitled in this case are not licences or permits which may enhance the value of property which they own or occupy. The applicants may produce as much milk as they please and require no licence from any authority so to do.


109. The attempts by the EEC to redress the consequences of the policy of guaranteeing the price of milk in the Community led to the super levy scheme, a regulatory regime intended to redress the imbalance in the market brought about by the guaranteed price policy. That in turn resulted in milk producers, including the applicants, being entitled to sell their milk up to a specified level without incurring the super levy which would make production uneconomic. Manifestly, such a regulation of the market in milk products could always be altered to the economic disadvantage of those, who, like the applicants, had previously benefited from it, but it is a singularly inapt use of language to describe that result as a violation of property rights.


110. The fact that the right in question may effectively be disposed for cash does not mean that it is a property right. A person who is standing in a queue to buy a particular commodity and gives up his place to someone else for cash would not appear to be doing anything unlawful, but he is most assuredly not disposing of a property right, merely his right to occupy that particular place on public or private land at that particular time. Nor do I find that any assistance is to be derived from comparisons with patents, trademarks or copyright rights, which under our legal system are nowadays generically described as “intellectual property rights” . Systems of law in developed societies invariably protect those who produce such intangible assets in the expectation of reward by creating a discrete structure of legal protection, embodied in our case in the relevant statutes. They are not remotely comparable in my view to the opportunities for profit presented by a regulatory scheme designed for the benefit of subsidised producers.


111. It is accordingly unnecessary, in this context, to consider whether, in any event, any supposed infringement of property rights under Irish law was necessitated by the obligations flowing from membership of the European Union.


112. The position under community law must also be considered, since it is clear that whether the rights of property safeguarded by the community legal order have been infringed in any particular case is a question to be determined in accordance with that law.


113. The law was made abundantly clear by the Court of Justice in R. .v. Minister of Agriculture, ex parte Bostock where it was said that:-

“The right to property safeguarded by the community legal order does not include the right to dispose, for profit, of an advantage, such as the reference quantities allocated in the context of the common organisation of a market, which does not derive from the assets or occupational activity of the person concerned.”

114. That statement of the law seems to me to accord in every important respect with the position under our Constitution. The comments of the Advocate General in Damand .v. Haubtzollampt Trier suggesting a different approach have not been endorsed by the Court of Justice.

115. Although it was urged on behalf of the applicants that Bostock did not wholly shut out the possibility of a claim based on what was claimed to be a compulsory acquisition of the right in question, it is clear that, if the entitlement to a milk quota is not a right of property, it is immaterial whether what was involved in this case constituted a compulsory acquisition of the right in question. Moreover, in circumstances where, as here, the applicants were fully entitled to continue availing of their milk quotas if they resumed milk production, however inconvenient or difficult that might have been in their individual circumstances, it could hardly be plausibly contended that any property right they might have had had been compulsorily acquired. Nor is the right in any event necessarily acquired by the State or any of its organs. While the Minister is entitled to fix a price for the transfer of the quota to another person which is below what it would fetch in the market, the applicants are hardly in a strong position to complain of such an interference with the forces of the market.


116. I would dismiss the appeal and affirm the order of the High Court.



THE SUPREME COURT

No 340/2000
Keane C.J.
Denham J.
Murphy J.
Murray J.
Fennelly J.




BETWEEN/
NICHOLAS PHILIP (otherwise MARTIN) MAHER,
MALACHY BRETT and RITA RYAN

APPLICANTS/APPELLANTS

and


THE MINISTER FOR AGRICULTURE, FOOD AND
RURAL DEVELOPMENT, IRELAND AND
THE ATTORNEY GENERAL

RESPONDENTS



Judgment of Mrs. Justice Denham delivered on 30th day of March, 2001.


1. Appeal

117. This case arises out of an application by Nicholas Philip (otherwise Martin) Maher, Malachy Brett and Rita Ryan, the applicants and appellants, hereinafter referred to as the applicants, against the Minister for Agriculture, Food and Rural Development, Ireland and the Attorney General, respondents, hereinafter referred to as the respondents. The application for relief was refused by the High Court (Carroll J.) on 16th December, 2000. Against that order and the judgment delivered on 15th December, 2000 the applicants have appealed to this Court. This application arises by way of judicial review. In essence it is the applicants’ case that the Minister for Agriculture, Food and Rural Development, hereinafter referred to as the Minister, did not have legal authority upon which to make the European Communities (Milk Quota) Regulations 2000 (S.I. No. 94 of 2000), hereinafter referred to as Regulations 2000.


2. Judicial Review

118. On 20th April, 2000 the High Court (O’Caoimh J.) granted leave to the applicants to apply by way of application for judicial review for the following reliefs:

1. A declaration that Regulations 2000 are ultra vires the Minister and have no legal force or effect.

2. A declaration that Regulations 2000 failed to respect the principle of separation of powers and the provisions of Articles 5, 6 and 15.2.1. of the Constitution of Ireland.

3. A declaration that article 8a of Council Regulation (E.E.C.) No. 3950/92 of the 28th December, 1992 as inserted by article 1(10) of Council Regulation (E.E.C.) No. 1256/1999 of the 17th May, 1999, does not entitle the Minister to introduce by secondary legislation, rather than primary legislation, the abolition of milk quota holders’ right to sell or lease a milk quota with land on the open market.

4. A declaration that the purported abolition by the Minister of a milk quota holder’s right to sell or lease a milk quota with land on the open market constitutes an unjust attack on the property rights of the applicants guaranteed by Article 40.3.1. and 2 and Article 43 of the Constitution of Ireland.

5. A declaration that the purported abolition by the Minister of a milk quota holder’s right to sell or lease a milk quota with land on the open market is a violation of the applicants’ rights under the European Convention on Human Rights, including article 6(1) and article 1 of the First Protocol thereof, which said rights form part of the general principles of law protected by the law of the European Union.

6. If necessary, an injunction, including such interim and interlocutory reliefs as may be appropriate, restraining the Minister from enforcing or attempting to enforce the provisions of Regulations 2000 in regard to any sale or lease of land and milk quota to which the applicants may become a party.


119. The respondents opposed the applicants’ application for judicial review, the main grounds of opposition being:

a) Regulations 2000 are intra vires the powers of the Minister under s. 3 of the European Communities Act, 1972.

b) The exclusive purpose of Regulations 2000 is to enable the regulations relating to the common organisation of the market in milk and milk products and in particular Council Regulation (E.E.C.) No. 3950/92 of the 28th December, 1992 as amended and Commission Regulation (E.E.C.) No. 536/93 of the 9th March, 1993 as amended to have full effect in Ireland and to provide for such incidental supplementary and consequential matters as appear to the Minister to be necessary for the purpose of Regulations 2000.

c) Regulation 3950/92 requires Member States to make detailed rules relating to the transfer of milk quotas pursuant to the transfer of ownership in the relevant lands or to or from the national reserve. Accordingly, detailed transfer rules are necessary for the purpose of giving effect to Regulation 3950/92. In the premises, the Minister is authorised by s. 3 of the European Communities Act, 1972 to make such detailed transfer rules by statutory instrument.

d) The respondents acknowledge that Regulation 3950/92 and in particular articles 7(1), 8 and 8a(b) confers discretion on Member States as to the rules relating to transfer of quotas but contend that such discretion is limited. The discretionary choices may only be exercised in relation to limited subject matter and only for the express purposes specified in Regulation 3950/92 and in accordance with the policy, principles and terms of the said regulation.

e) The discretions conferred on Member States by Regulation 3950/92 in relation to the transfer of quota with or without land, do not prevent the Minister giving full effect to Regulation 3950/92 in Ireland by statutory instrument made pursuant to s. 3 of the European Communities Act, 1972.

f) The respondents deny that the effect of Article 7(1) of Regulation 3950/92 as replaced by Article 1.(8) of Council Regulation (E.C.) No. 1256/1999 of the 17th May, 1999 and Article 8a(b) of Regulation 3950/92 (as inserted by Article 1.(10) of Regulation 1256/1999) is to return or vest legislative competence in the Member States in respect of key aspects of the milk quota/ super-levy regime including rules governing the transfer of milk quotas.

g) Without prejudice to the foregoing, the respondents contend that any provisions of Regulations 2000 which are not necessary for the purpose of
giving full effect to Regulation 3950/92 in Ireland do not contravene Article 15.2.1. of the Constitution.
. . .

h) The respondents deny that the principles and policies according to which the Minister is obliged to exercise the discretionary powers conferred on Ireland by Regulation 3950/92 in relation to the transfer of quota with or without land, are to be found exclusively in Article 7(1) and Article 8a(b). The said powers must be construed in accordance with Council Regulation (E.C.) No. 1255/1999 of 17th May, 1999, Regulation 3950/92, the amending Regulations and in particular Regulation 1256/1999 and the recitals to such Regulations.

i) Regulations 2000 contain only those provisions which the Minister considered necessary or appropriate, having regard to the current situation in the market in milk and milk products in Ireland for the purpose of giving full effect to the E.U. regulations relating to the common organisation of the market in milk and milk products and in particular Regulation 3950/92 as amended.

j) It is denied that the Minister in making Regulations 2000 contravened Articles 5 or 6 of the Constitution.

. . .

k) In the making of Regulations 2000 the Minister took into account the position and, in many instances, competing interests of different persons affected or potentially affected by Regulations 2000. The transfer provisions in Regulations 2000 represent the Minister’s determination as to the measures which are necessary and appropriate having regard to the differing interests involved in accordance with the limited discretion conferred on him by the E.U. regulations.

l) The respondents deny that the framework governing the transfer of milk quotas provided for in Regulations 2000 and in Regulation 3950/92 (as amended by Regulation 1256/1999) constituted an unjust attack on the applicants’ property rights under Article 40.3.1. and 2 and Article 43 of the Constitution of Ireland.

m) The respondents deny that a milk quota is a property right for the purpose of the provisions of the Constitution of Ireland. On the contrary, a milk quota is an instrument used as a market management mechanism as part of the common organisation of the market in the milk sector initially introduced by Council Regulation (E.E.C.) No. 856/84 of 31st March, 1984. The respondents contend that the right or entitlement to dispose for a profit of an advantage such as a milk quota allocated in the context of a common organisation of a market which does not derive from the assets or occupational activity of the person concerned does not constitute a property right under Article 40.3 and Article 43 of the Constitution of Ireland, under the law of the European Union or for the purposes of the European Convention on Human Rights and Fundamental Freedoms (the “European Convention”).


n) Further, or in the alternative if a milk quota is a property right as alleged (which is denied), the respondents deny that the measures governing the transfer of milk quotas contained in Regulations 2000 constitute an unjust attack on the applicants’ property rights in the manner alleged. On the contrary, the respondents contend that the said rights may be regulated in accordance with the principles of social adjustment and insofar as the applicants’ property rights have been restricted or delimited as alleged (which is denied), such restrictions and/or delimitation are justified by the exigencies of the common good in accordance with Article 43.2 of the Constitution. Furthermore the respondents contend that the alleged restrictions correspond to the objectives of the regime provided for by Regulation 3950/92 (as amended by Regulation 1256/1999).


3. The High Court

120. The application was heard in the High Court, judgment being delivered by Carroll J. on 15th December, 2000 as follows:-

“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.

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.

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.

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 S.I. 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”.

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

122. 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”.


123. 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.


124. In my view, S.I. 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 E.U. 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.


125. 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 (sic) (1994) E.C.R. 1955 where it was held at p. 1984:

“the right to property safeguarded by the community legal order does not include the right to dispose for profit of an advantage such as the reference quantities allocated in the context of the common organisation of a market which does not derive from the assets or occupational activity of the person concerned.”

126. 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.”




4. Grounds of Appeal

127. Against the order and judgment of the High Court the applicants have appealed on a number of grounds. The most important of these being the grounds that the learned trial judge erred:

1. In holding that the discretions left to the Member States under Council Regulation No. 3950/92 as amended by Council Regulation No. 1256/1999 are all within the principles and policies determined by the Council of Ministers in the organisation of the milk market in the European Union.


2. In holding that Regulations 2000 do not go beyond what is required to implement Council Regulation No. 3950/92, as amended by Council Regulation No. 1256/1999.

3. In holding that there were no principles or policies to be determined in Regulations 2000 as they are embodied in the various developments of the milk quota scheme since 1984.

4. In holding that the failure to exercise the discretion given in article 6(2) of Council Regulation No. 3950/92 is not the exercise of a discretion, but is simply the case of ignoring the discretion and proceeding with the mandatory implementation of Article 6(1) of the said regulations.

5. In holding that the choices given in the implementation of temporary leasing in the second paragraph of article 6(1) of Council Regulation No. 3950/92 do not constitute any departure from the overall policies of the milk levy scheme.

6. In holding that the Minister was entitled to make the decision that quotas should go to active milk producers which was in accordance with the stated policy under the milk quota Council regulations.

7. In holding that Regulations 2000 do take account of the legitimate interests of parties.

8. In holding that Regulations 2000 were necessitated by the obligations of membership of the European Union even though they involve the making of choices within the framework of the principles and policies of the milk quota scheme.

9. In holding that the choices were within the principles and policies of the milk quota scheme.

10. In holding that Regulations 2000 can be viewed as permitted secondary legislation which is not contrary to Article 15.2.1 of the Constitution.

11. In failing to hold that the effect of article 7(1) and article 8a(b) of Council Regulation No. 3950/92 is to return and vest legislative competence in the Member States in respect of key aspects of the milk quota regime, including the rules governing the transfer of milk quotas.

12. In failing to hold that neither Article 7(1) nor Article 8a(b) of the said Council regulation contained sufficient principles and policies to justify the making of Regulations 2000.



13. In failing to hold that the exercise of the discretions contained in Council Regulation No. 3950/92, as amended by Council Regulation No. 1256/1999, is not necessitated by the obligations of membership of the European Union or of the Communities.

14. In failing to hold that the making of Regulations 2000 contravenes Articles 5, 6 and 15.2.1. of the Constitution.

15. In failing to hold that Regulations 2000 constitute a purported exercise of legislative power by the Minister which is not permitted under the Constitution.

16. In failing to hold that the provisions of Regulations 2000 are ultra vires the first-named respondent and are of no legal force or effect.

17. In holding that the nature of a milk quota must bear the same meaning under the Constitution as in the legal order of the European Union and that a right to a milk quota is not a property right within the meaning of Article 40.3.2 and Article 43 of the Constitution.

18. In failing to hold that Regulations 2000 constitute an unjust attack on the property rights of the applicants guaranteed by Article 40.3 and Article 43 of the Constitution.


5. Submissions of the Applicants

128. Comprehensive written submissions were filed on behalf of the applicants which were supplemented by oral argument from counsel. Mr. Gerard Hogan, S.C., counsel for the applicants, highlighted the relevant regulations, focused on the ‘necessitated’ point, considered the matter of permissible delegated legislation, touched on the issue of parliamentary debates and made submissions on the property rights dimension.


129. Counsel referred to Article 29.7 of the Constitution of Ireland and submitted that the word “necessitated” therein is a straightforward word meaning legally obliged, a clear legal provision. Counsel argued that Article 29.4.6 of the Constitution has to be read in harmony with Article 29.4.7. He submitted that the object was to protect a national legislature as far as possible. Counsel argued that 29.4.7 is the general rule, that it must be necessitated, and 29.4.6 is an exception.


130. Counsel referred to what he submitted were three key authorities. He referred to Lawlor v. Minister for Agriculture , [1990] 1 I.R. 356 , which he argued was either wrongly decided or not applicable to the present case; Greene v. Minister for Agriculture [1990] 2 IR 17, which he distinguished; and Meagher v. Minister for Agriculture [1994] 1 I.R. 329 . Insofar as Meagher is an authority for an interpretation of “necessitated” which also extends the constitutional immunity to domestic measures which are simply “convenient” or “desirable” then he submitted that the appellants did not resile from respectfully submitting that such reasoning ought not now to be followed. He argued that such a conclusion is at odds with the plain language of Article 29.4.7. He submitted that the word “necessitated” is not ambiguous and plainly implies a legal obligation only. Even if “necessitated” were not so unambiguous, the Meagher interpretation, he submitted, is at odds with the underlying purpose of Article 29.4.7 which is to allow for the transfer of legislative, executive and judicial sovereignty to the European Union only where this is legally obligated. But that where it is not so obligated, Article 29.4.7 makes it equally plain that the Constitution reigns supreme. He argued further that the Constitution must be read harmoniously and in light of all the interlocking provisions especially the interaction of Article 29.4.6 and Article 29.4.7. He submitted that it is generally accepted that Article 29.4.6 was formulated to deal with the increasing strain which the flexibility provisions of the Treaty of Amsterdam and the increasing variable geometry of European law, of which the 1999 Council Regulations are just a specialised example, were placing on the necessitated obligations wording contained in Article 29.4.7. He submitted that Article 29.4.6 is designated to allow the State to exercise certain specific options and discretions arising under the Treaty of the European Union and the treaties establishing the European Communities provided that the prior approval of both Houses of the Oireachtas is forthcoming. He stressed that the fact that Article 29.4.6 permits the State to exercise certain options and discretions subject to the key parliamentary safeguards reinforces the submission that Article 29.4.7 ought not to be given an interpretation which would permit the further reduction of legislative sovereignty to the European Union in the absence of an expressed Union or Community legal obligation to this effect. Counsel submitted that in Meagher the Supreme Court upheld the constitutionality of s.3 of the European Communities Act, 1972 as necessitated by the obligations of Community membership on the ground that it was part of the necessary machinery which became a duty of the State upon its joining the Community and therefore necessitated by that membership; that the Court had envisaged circumstances in which the exercise of that power would be unconstitutional; and that the present case involved a challenge to the Minister’s powers to make regulations under s.3 of the Act of 1972. Counsel submitted that in this case the European Union legislation allowed a Member State significant choices in respect of fundamental principles and policies under the 1999 Council Regulations, and, accordingly, he submitted that the implementation of these provisions by means of a statutory instrument was not necessitated within the meaning of Article 29.4.7.


131. Counsel submitted that the 1999 Council Regulations confer such extensive concessions on Member States, together with a wide panoply of choices, that the exercise of the said discretions could not be said to be necessitated by the obligations of Community membership.


132. Thus counsel submitted that insofar as Meagher is an authority for the interpretation of the word ‘necessitated’ he submitted it was incorrect. However, he referred to the application of the double construction rule and the presumption that the Minister will not make regulations where the appropriate approach is legislation. Counsel argued that such is the case here. That the Minister in making this scheme by statutory instrument was exercising an unconstitutional power and hence in that way his argument comes within the Meagher decision as made.


133. Counsel submitted that there were no adequate principles and policies in European law to enable a statutory instrument to be made by the Minister. He submitted that it would be hard to describe Regulations 2000 by virtue of their size, range of decisions, range of choices, and range of policy aspects, as anything other than legislation. He submitted that it is clear from Regulations 2000, as far as land transfers and the operation of the restructuring scheme are concerned, the Minister had elected to make substantial and important policy choices. He gave the following examples:

a) The extent to which quotas would transfer with land upon a sale, lease or inheritance when deciding the category of cases in which the link between quota and land provided for in article 7(1) of the 1992 Regulations should not apply.
b) Whether or not to apply to provisions on the transfer of quotas in article 7(1) of the 1992 Council Regulations.
c) Whether or not to provide for a system under which all or part of the transferred quota reverts to the national reserve on the expiration of rural leases or other transactions involving comparable legal effects.
d) The extent to which inter family transfers of land and milk quota are exempt from the operation of the rule that (save in excepted cases) the quota is not reallocated with the sale of land.
e) The definition of an active milk producer and the extent to which such a person may transfer land with quota. He submitted that it is impossible to underestimate the practical significance of the first choice, the effective breaking of the link between land and quota save for family transactions.

134. Counsel also submitted that the Minister exercised substantial policy choices conferred by article 6(1) of the 1992 Regulations (as inserted by the 1999 Regulations) in that he had determined via article 27 of Regulations 2000: a) the category of persons entitled to lease quota on a temporary basis, b) the number of years for which they will be entitled to lease quota and c) the circumstances in which the Minister can derogate from the rules which he has prescribed. Counsel submitted that fundamental principles of Irish constitutional law require that policy decisions and choices must be made by the Oireachtas and not delegated to the Minister and his civil servants. He said that it was highly implausible that the drafters of Article 29.4.7 ever envisaged that the system of parliamentary democracy enshrined by Articles 5,6 and 15 of the Constitution would be undermined and that decisions of fundamental importance could be taken by the executive rather than the legislative branch of government.


135. At the core of counsel’s argument was the analysis that there is a renvoi back to national law. That if the State elects to take this action it must do so by legislation, as there is a renvoi back to the national state. Counsel submitted that the respondents had argued that in this situation the principles and policies are determined, that it is a Community policy. However, counsel argued that, it is clear from the language of article 8.a that this is not so. He referred to the use of the word “may”, and said that if the State wants to take the measures it can, but it is not an implementation of Community policy. Counsel argued that the Minister is legislating in this case, that the Minister is making far reaching radical changes, and that such changes may only be made by the Oireachtas. That here the Minister is making major policy decisions which may only be made by the Oireachtas.


136. Counsel for the applicants stressed that in this case what was for consideration was that European Union legislation had in reality transferred effective law making power back to the State. Counsel referred to the Meagher judgment and relied on the judgment of the Chief Justice where he pointed out that there could be cases where the appropriate mode to give effect to European legislation would not be a statutory instrument, on the East Donegal principle. He submitted that this is such a case.


137. Counsel submitted two representative examples of how there were no principles or policies and why the Minister is legislating. Firstly, he referred to articles 5 and 6 of the statutory instrument, the family transaction. He submitted that this is pure policy. On an analysis of the agricultural community he submitted that there is nothing similar in European law that speaks of that; he submitted that it was a policy judgment which in Ireland was reserved to the Oireachtas. Secondly, he referred to article 6 of the Council regulations, a mandatory system of temporary leasing. Here there is determination of the category of producer. A determination of how temporary leasing should run and for how long. He submitted that there was nothing in article 6 governing this.

138. Counsel made submissions on the extent to which a milk quota is a property right. Counsel submitted that a valuable permission is being effectively extinguished and that in a restructuring scheme there is a form of compulsory purchase where the Minister determines the price. He stated that the Minister is fixing the price substantially below the market price as of 1st April, 2000.


139. Counsel accepted that the European Court of Justice has generally taken a view that milk quotas do not constitute a property right so far as Community law is concerned. However, he submitted that the present case concerns a form of compulsory acquisition by the State of a quota at a price substantially less than the prevailing market value. In these circumstances a milk quota may qualify for protection as a property right which the Member States were obliged as a matter of Community law to protect and he referred to the comments of the Advocate General in Demand v. Hauptzollamt Trier (Case C-186/96) [1998] E.C.R. 1-8529, at p. 8541. Counsel argued that the decision in Bostock did not prevent such a right being regarded as a property right for the purposes of the Irish Constitution. He submitted that this was made clear by the opinion of Advocate General Cosmas in Duff v. Minister for Agriculture (Case C-63/93) [1996] E.C.R. 1-569. In Duff the European Court held that the plaintiff’s legitimate expectations at Community law level had not been infringed by the actions of the Minister, but the Advocate General observed at para. 60 that this did not prevent “such a requirement from being founded on principles of national law which, in an appropriate case, may ensure greater protection in this respect than that afforded by the general principles applicable in the Community legal order”.


140. Counsel pointed out that when the case returned to the Supreme Court both O’Flaherty J. and Barrington J. for the majority seized upon this passage to justify finding that the Minister had infringed the plaintiff’s rights as a matter of Irish public law. Counsel submitted that it would be unrealistic not to regard a milk quota as a valuable asset in its own right, as land itself. If, for example, a chose in action can be regarded as property ( Iarnród Éireann v. Ireland [1996] 3 I.R. 321) there seems little reason by which another valuable and tangible right such as a milk quota should not be so regarded. If a milk quota is such a right then he respectfully submitted that it follows inexorably that Regulations 2000 infringes that right. For example, no matter how excellent the public policy reasons, the Minister could not prescribe a scheme for the forfeiture of unused agricultural land at a price significantly below market value or which seriously inhibited the right to lease such an asset. Yet this is what has been proposed by Regulations 2000 and it is submitted that these provisions are manifestly in conflict with Articles 40.3.2 and 43 of the Constitution.


141. Counsel concluded that:-

a) Neither the making of Regulations 2000 nor their contents are necessitated by the obligations of Community membership within the meaning of Article 29.4.7.
b) Regulations 2000 are ultra vires the provisions of s. 3 of the Act of 1972 inasmuch as the Minister has made policy decisions of the utmost importance regarding the operation of the milk quota regime in Ireland. In doing so the Minister has legislated in contravention of the provisions of Article 15.2.1 of the Constitution.
c) A milk quota is a property right for the purposes of both Community law and Irish constitutional law and Regulations 2000 represent an unjust and unconstitutional attack on these property rights.

142. Counsel submitted that fundamentally this case is not about milk quotas, it is about the separation of powers between the executive and the legislature. It is an example of the democratic deficit. He submitted that the executive has usurped the role of the legislature. He submitted that the case requires the Court to protect the integrity of the democratic system and that key decisions of policy should not be made by the executive. Article 29.4.7 transfers sovereignty to the European Union to the extent legally required. If it is not required it is not necessitated.


6. Submissions on behalf of the Respondents

143. Ms. Mary Finlay, S.C., counsel for the respondents, submitted that it was fundamental to the Minister’s position that what is at issue is a European scheme which forms an integral part of the Common Organisation of the Market (C.O.M.) which is part of the Common Agricultural Policy (C.A.P.). She submitted that C.A.P. was created by treaty and that the C.O.M. in milk products is a European scheme created by regulation. Counsel submitted that the Court is required to look at what the Minister is authorised to do. The Minister was given choices as to details only. Counsel pointed out that the milk quota is exclusively within the Community province. There is no legislative function in Ireland.


144. Counsel submitted that insofar as the Supreme Court considers the method chosen by the State to provide detailed implementing rules it is governed by Irish law exclusively. This Court can only find what is the appropriate method by looking at the nature of the Community law that requires the details. Counsel submitted that the European Union regulations are part of the domestic law of Ireland and that they are similar to an enabling act of the Oireachtas. In this instance the regulations exist as part of Irish law and are analogous to an enabling act, that the principles and policies may be found in an enabling act or in regulations. Counsel relied on the principles and policy test. Counsel submitted that the question was whether as a matter of Irish public law the Minister had acted properly.


145. Counsel referred to the Meagher case and the reference therein to the fact that the East Donegal test applies. Counsel accepted that she had to satisfy the Court that the Minister was acting intra vires s.3 by making Regulations 2000 and that he could only do that if he was not invading the power of the Oireachtas under Article 15.2.1. of the Constitution.


146. Counsel submitted that the Minister was not breaching Article 15.2.1, the sole and exclusive power of making laws being vested in the Oireachtas, in this case. Counsel submitted that there was enabling legislation, being the relevant E.U. regulations and ss. 2 and 3 of the European Communities Act, 1972. Counsel submitted that the relevant provisions in considering the principles and policies are: 1) The Treaty provisions of Articles 32 to 38 inclusive, Article 10 (formerly Article 5), and the general obligation on the State to take measures to ensure fulfilment of obligations. 2) The Common Organisation of the Market, Council Regulation (E.C.) No. 1255/1999 of 17th May, 1999. 3) The milk quota regulations, especially Regulation (E.E.C.) No. 3950/92 of 28th December, 1992 and Council Regulation (E.C.) No. 1256/1999 of 17th May, 1999.


147. Ireland is obliged to have in place an effective detailed system for the application of the milk quota system in Ireland. The objective of the milk quota regulations is to put quotas into the hands of milk producers. That is an aim of the milk quota regulations. Therefore the Minister’s decision to take measures under Article 8a is part of his obligation to do so, it represents the implementation of the scheme.


148. Counsel referred to Mr. Hogan’s suggestion that the European Union regulations had returned legislative powers to the Member States, especially the 1999 Regulation. Counsel for the respondents said that no such legislative competence was returned. European law was the origin of the milk quota system. The competence rests exclusively with the European Union to make policy choices to achieve a single market. From the outset the European Union delegated detailed rules to the State. This has continued to date. The State has the function of making detailed rules. The European Union has delegated choices to the Member States. Counsel submitted that when the State is implementing European Union provisions the State is bound by obligations including fundamental rights and to seek to achieve the objectives of the scheme. In this case the Minister has power to make choices. The question for the Court is whether the choices, given to the Minister in the context of the European scheme, are general policy choices.


149. Counsel submitted that the purpose of the milk quota system is part of price stability in C.O.M. and to achieve a fair standard of living for dairy producers. The inter-relationship between the price of a gallon of milk and the quantity of the quota is important.


150. Counsel pointed out that there is a real prospect of the milk quota scheme ending in 2006. It is referred to in the Regulations. Counsel stated that none of plaintiffs are producers. All the plaintiffs have given up milk production. They are outside the parameters of the regulations. Counsel submitted that it is part of the objective of the regulations that persons actively producing milk are persons in whose hands the quota should rest.


151. Counsel did not make the case that the Minister is obliged to make these rules by statutory instrument. Counsel submitted that it was permissible for the Minister to do it by statutory instrument as the principles and policies are clearly set out in the European Union regulations. Counsel did not rely on the necessitated form. If it is not necessitated under Article 29.4.7 the Minister can only make regulations if it does not encroach on the Oireachtas. Counsel for the respondents argued that it did not because the principles and policies are in the regulations. Further, that under Article 10 of the Treaty there is an obligation on Ireland to effectively implement European Union schemes.


152. In relation to the submission that the milk quotas are property rights within the meaning of Article 40.3.2 and Article 43 of the Constitution and that Regulations 2000 constitute an unjust attack on same contrary to such constitutional provisions, counsel submitted that the argument was unstateable. It was submitted that the applicants’ right to a milk quota is not a property right within the meaning of the Constitution. A milk quota under Irish law must have a similar characteristic to that under Community law as it has been exclusively created by Community law. It is common case that the European Court of Justice has determined that the right to a milk quota is not a property right under Community law and, accordingly, it was contended that it is not a property right within the meaning of the Constitution. It was submitted that even if a milk quota is to be given a separate characteristic under Irish law, it is in accordance with Irish law a licence created by law and subject to an implied condition that the law may change the licence scheme or conditions attaching to such licence. The changes to such a scheme made by Regulations 2000 do not conflict with Article 40.3.2 or Article 43 of the Constitution. Further, it was submitted, Regulations 2000 being necessitated by the obligations of membership of the European Union, Articles 40.3.2 and 43 cannot be relied upon to invalidate any of the provisions thereof, by reason of Article 29.4.7.


7. Decision

153. The kernel of this case is the delegated legislation by the Minister. The question is whether this was a breach of Article 15.2.1 of the Constitution of Ireland. A decision on this matter determines the major issue.


7.i. Nature of the Milk Quota Scheme.

154. This case concerns Regulations 2000, being the European Communities ( Milk Quota) Regulations, 2000 (S.I. No. 94 of 2000). These regulations form part of a scheme relating to milk quotas throughout the European Union. The Minister in making Regulations 2000 did so pursuant to section 3 of the European Communities Act, 1972 for the purpose of giving effect in Ireland to Council Regulation (E.E.C.) No. 3950/92 of the 28th December, 1992 establishing an additional levy on milk and milk products (as amended by Council Regulation (E.E.C.) No. 1256/1999 of the 17th May, 1999) and Commission Regulation (E.E.C.) No. 536/93 of the 9th March, 1993 which laid down additional rules on the application of the additional levy.


155. The milk quotas scheme originates in policy established over many decades. After World War II farmers in Western Europe were managing farms in a traditional fashion. There was a need to modernise. The European Economic Community introduced price levels for products, including milk. Europe developed the Common Agricultural Policy (C.A.P.), which involved annual review of common prices in the Community. With this policy there was a rise in production and a secure price for producers for the quota. This C.A.P. was a market policy. A policy for a single market, managed centrally. The E.C. Treaty, Art. 33(1) (formerly 39(1)) sets out the objectives of the C.A.P. as follows:

“(a) to increase agricultural productivity by promoting technical progress and by ensuring the national development of agricultural production and the optimum utilisation of the factors of production, in particular labour;

(b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
(c) to stabilise markets;
(d) to assure the availability of supplies;
(e) to ensure that supplies reach consumers at reasonable prices.”


156. In applying the C.A.P. account must be taken of, in accordance with Article 33(2) (formerly 39(2)):

“(a) The particular nature of agricultural activity, which results from the social structure of agriculture and from structural and natural disparities between the various agricultural regions;
(b) the need to effect the appropriate adjustments by degrees;
(c) the fact that in the Member States agriculture constitutes a sector closely linked with the economy as a whole.”

157. The E.C. Treaty provides that to attain objectives (a) to (e), as set out above, a common organisation of agricultural markets must be established. This may be done in a variety of ways. The Community having established a common organisation of the market, Member States are obliged not to undermine that which is established.

158. The C.A.P. fixes prices in some products. This is done in a variety of ways to achieve the objectives of Community policy. The Community institutions have a discretion in the method of achieving the objective. In Balkan-Import-Export GmbH v. Hauptzollamt Berlin- Packhof (Case 5/73) [1973] E.C.R. 1091, at p. 1112 this was described as follows:

Article 39 of the Treaty sets out various objectives of the common agricultural policy. In pursuing these objectives, the Community Institutions must secure the permanent harmonization made necessary by any conflicts between these aims taken individually and, where necessary, allow only one of them temporary priority in order to satisfy the demands of the economic factors or conditions in view of which their decisions are made.”

159. The matters for determination on this appeal are issues of law - essentially the validity of Regulations 2000. However, the factual and legal background to the milk quota system is relevant and was before the High Court, and this Court, in the affidavit of Patrick Evans, Assistant Principal Officer in the Department of Agriculture, Food and Rural Development.

160. The context of the milk quota scheme was described by Patrick Evans, in his affidavit of 19th May, 2000, at paragraph 6:

“. . . The milk quota or super levy regime is an integral part of the common organisation of the market in the milk sector in the European Union.”

161. At paragraph 9 of his affidavit Mr. Evans describes the milk quota scheme:

162. “Each year the Commission carries out an analysis of the market situation and future outlook with regard to each of the agricultural products governed by a common organisation to the market. The Commission’s report of this market analysis is followed by whatever proposals the Commission considers necessary to provide for changes to ensure that the objectives of the regime in individual sectors continue to be met. These proposals are known as the “Price Proposals”. If adopted by the Council the proposals lead to the introduction of new Council regulations or amendments to existing regulations. From time to time the Commission makes proposals for major reforms of the operation of the C.A.P. In 1992, the Council adopted proposals known as the MacSharry Proposals for the reform of the C.A.P. These proposals initially contained certain provisions for the reform of the common organisation of the market in the milk sector. However, these were not adopted by the Council. The proposals ultimately adopted at that time led to very little change in the provisions governing the operation of the market in the milk sector. In 1998 the Commission made further proposals for further major reforms in the operation of the C.A.P. These were known as the Agenda 2000 proposals. The primary influence on the Commission in framing these latter proposals was the likely impact on the operation of the C.A.P. resulting from the expected enlargement of the European Union and of further trade liberalisation arising from negotiations within the World Trade Organisation which were due to commence in 1999. The Agenda 2000 proposals contained proposals for significant changes in the operation of the common organisation of the market in the milk sector.”


163. It was his view that:


“It should be apparent from the foregoing paragraphs that the operation of the common organisation of the market in the milk sector is tightly managed to help achieve market balance and is subject to a constant review. The milk quota/super
levy system has, since its introduction in 1984 before (sic) the most important mechanism for ensuring that the objectives of the C.O.M. are achieved.”


164. He made reference to the agreement reached and implemented in Council Regulations Nos. 1255/1999 and 1256/1999. He referred to article 8a of Regulation 3950/92 (as inserted by Article 1(10) of Regulation 1256/1999) and stated that this is the clear policy of the Member States - the Regulation provided a framework whereby Member States were given choices to ensure that milk quotas would be attributed to active milk producers.


165. The standard practice of this aspect of C.O.M. was explained by Mr. Evans at paragraph 30 of his affidavit thus:

“Under the provisions of Article 8 of Commission Regulation (E.E.C.) No. 536/93 Member States are obliged to inform the Commission of measures adopted for the application of Regulation 3950/92 or any amendment thereto within one month following their adoption. It has become standard practice in these circumstances for Member States to consult with the Commission beforehand on the measures they might propose to adopt for the application of the regime in their respective territories so as to prevent any adverse consequences. The Commission are particularly vigilant in scrutinising implementing measures adopted in Member States in connection with a common organisation of the market established by E.U. regulation. They do this so as to ensure both that the implementing measures are authorised by the relevant E.U. regulations and are not in any way inconsistent with the overall aims and objectives of the particular Common Organisation of the Market. The method of implementation of the Common Organisation of the Market in milk and milk products in Ireland is also subject to review by the European Court of Auditors. Detailed consultations took place between the Department and the Commission concerning the implementation of the changes to milk quota or super levy regime as introduced by Regulation 1256/1999. . . . ”

166. I accept the description of the management and practice of the milk quota scheme as given by Mr. Evans. It illustrates the level of centralised control from the Community institutions.


167. The milk quota scheme is governed fundamentally by Community provisions. The scheme is part of the Common Agricultural Policy and the Common Organisation of the Market. In both broad policies and practical direction it is centrally controlled in Europe.


7.ii. European Regulations

168. Community regulations are binding on Member States and are directly applicable within Member States. They are of general application. They are norms created by the Community. They are used extensively in relation to agriculture. As they are directly applicable they are part of national domestic law automatically: see Variola v. Amministrazione delle Finanze (Case 34/73) [1973] E.C.R., 981 at p. 990 where it was noted by the European Court of Justice that:

“The direct application of a Regulation means that its entry into force and its application in favour of or against those subject to it are independent of any measure of reception into national law. By virtue of the obligations arising from the Treaty and assumed on ratification, Member States are under a duty not to obstruct the direct applicability inherent in Regulations and other rules of Community law. Strict compliance with this obligation is an indispensable condition of simultaneous and uniform application of Community Regulations throughout the Community.

169. Regulations, being part of domestic law of the State, may be treated as instruments setting out policies and principles for subordinate legislation. If the principles and policies are set out in the Community regulations then there may be no role for the national parliament to determine principles and policies. If the principles and policies are established in law in the State, albeit in Community regulations rather than domestic legislation, then it is open to the Minister to make the required and technically detailed statutory instruments.


7.iii. Choice

170. Community law does not determine the mode of implementation of the milk quota scheme within the national state. Ireland has the choice of mode of implementation. That choice falls to be made in accordance with Irish public law.


7.iv. Irish Public Law

171. The relevant Irish public law is to be found in the Constitution of Ireland. Article 15.2.1 of the Constitution gives to the national parliament the sole and exclusive power of making laws for the State. No other legislative authority has power to make laws for the State. To this Constitution, as part of the general scheme of national entry to the European Community, have been added Article 29.4.6 and Article 29.4.7. Article 29.4.6 states:

“The State may exercise the options or discretions provided by or under Articles 1.11, 2.5 and 2.15 [of the Amsterdam Treaty] and the second and fourth Protocols set out in the said Treaty but any such exercise shall be subject to the prior approval of both Houses of the Oireachtas.”

172. Article 29.4.7 provides:


“No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or of the Communities, or prevents laws enacted, acts done or measures adopted by the European Union or by the Communities or by institutions thereof, or by bodies competent under the Treaties establishing the Communities, from having the force of law in the State.”

173. These matters were analysed in Meagher v. Minister for Agriculture [1994] 1 I.R. 329. In that case I stated at pp. 366-367:

“The separation of powers is a fundamental principle of Bunreacht na h Éireann. The power to legislate for the State is solely within the Oireachtas - save where that authority has been assigned under the Constitution to Community authorities and organs of the State to act in accordance with Community law as integrated into national law.

There was no question in this case that the principles and policies of the directives were not within the Treaties.

In the directives herein the policies and principles have been determined. Thus there is no role of determining policies or principles for the Oireachtas. While the directive must be implemented there is no policy or principle which can be altered by the Oireachtas, it is already binding as to the result to be achieved.

That being the case the role of the Oireachtas in such a situation would be sterile. To require the Oireachtas to legislate would be artificial. It would be able solely to have a debate as to what has already been decided, which debate would act as a source of information. Such a sterile debate would take up Daíl and Seanad time and act only as a window on Community directives for the members of the Oireachtas and the Nation. That is not a role envisaged for the Oireachtas in the Constitution.”

174. Applying the principles and policies test to this case, if the principles and policies are to be found in the European regulations then it is open to the Minister to proceed by way of statutory instrument. If there are choices to be made within a scheme then these choices may not be policy decisions. The exercise of a choice governed fully by a structure established in a policy document (such as a European regulation) is not the determination of a policy.


7.v. Milk Quota Regulations

175. The organisation of the milk market by regulations began decades ago and is continuing. In Regulations 2000 the Minister, purporting to exercise powers conferred on him by section 3 of the European Communities Act, 1972 and for the purpose of giving effect to Council Regulation (E.E.C.) No. 3950/92 of the 28th December, 1992 and Commission Regulation (E.E.C.) No. 536/93 of the 9th March, 1993 made Regulations 2000, being a statutory instrument. This followed on Council Regulation (E.C.) No. 1256/1999 of 17th May, 1999 amending Regulation (E.E.C.) No. 3950/92 of the 28th December, 1992 establishing an additional levy in the milk and milk products sector. The policies may be seen therein. For example, recital (2) states:

“Whereas the level of price support in the dairy sector will be gradually reduced by 15% in total over three marketing years from 1 July 2005; whereas the effects of this measure on internal consumption and export of milk and milk products justify a well balanced increase in the total reference quantity for milk in the Community following the respective price cuts on the one hand and targeting certain structural problems at an earlier stage on the other ...”

176. Further principles and policies are set out in recital (4):


“(4) Whereas the underuse of reference quantities by producers can prevent the sector of milk production from developing properly; whereas in order to avoid such practices Member States should have the possibility to decide in accordance with the general principles of Community law that, in cases of substantial underuse over a significant period of time, the unused reference quantities will revert to the national reserve with a view to their reallocation to other producers;

(5) Whereas in order to strengthen the possibilities for decentralised management of reference quantities for restructuring of milk production or environmental improvement Member States should be given the power to implement certain provisions in that context at the appropriate territorial level or in collection areas;

(6) Whereas the experience with the additional levy scheme has shown that the transfer of reference quantities through legal constructions such as leases which do not necessarily lead to a permanent allocation of the reference quantities concerned to the transferee, can be an additional cost factor for milk production hampering the improvement of production structures; whereas, in order to strengthen the reference quantities' character as a means of regulating the market of milk and milk products, the Member States should be authorised to allocate reference quantities, which have been transferred through leases or comparable legal means, to the national reserve for re-distribution, on the basis of
objective criteria, to active producers in particular to those who have used them before; whereas Member States should also have the right to organise the transfer of reference quantities in a different way than by the means of individual transactions between producers; whereas it should be explicitly provided, in particular with a view to taking account adequately of existing legal rights, that, when using these authorisations, Member States are to take the necessary measures to comply with the general principles of Community law ...”

177. These regulations have over the decades set out the policies of the milk quota scheme. They stress, as above, that the States make decisions “in accordance with the general principles of Community law.”


178. The regulations, the European provisions, relating to the milk quota scheme were referred to in written and oral submissions by the parties and copies provided to the Court. The European provisions contain extensive principles and policies. They are analysed fully by Fennelly J., with which analysis I agree.


179. The principles and policies of the milk quota scheme have been determined in the European provisions. The Minister in making Regulations 2000 was not determining principles and policies. The Minister was implementing the policies and principles in accordance with the general principles of Community law. The Minister was not purporting to legislate. Consequently, there was no breach of Article 15.2.1 of the Constitution of Ireland.


7.vi. Property Rights

180. The submissions of counsel in relation to this aspect of the case have been set out earlier. Whilst there were submissions that milk quota may qualify for protection as a property right which Member States are obliged as a matter of Community law to protect the stress put on this aspect of the submissions was that the dicta in Bostock did not prevent such right being regarded as a property right for the purposes of Irish Constitutional law.


181. The Community law was stated in R v. Ministry of Agriculture, ex parte Bostock (Case C-2/92) [1994] E.C.R . 1-955 where it was held at p. 984 that:

“The right to property safeguarded by the Community legal order does not include the right to dispose, for profit, of an advantage, such as the reference quantities allocated in the context of the common organisation of a market, which does not derive from the assets or occupational activity of the person concerned (judgment in Case C-44/89 Von Deetzen v. Hampzollant Oldenburg (Von Deetzen II) [1991] E.C.R. 1-5119, paragraph 27).
It follows that the protection of the right to property guaranteed by the Community legal order does not require a Member State to introduce a scheme for payment of compensation by a landlord to an outgoing tenant and does not confer a right to such compensation directly on the tenant.”

182. I am satisfied that this is a clear statement of law, which I apply. Milk quotas do not confer property rights under Community law. This was generally accepted by the applicants.

183. However, it was argued that while Bostock concerned the right to dispose of a quota for profit, the applicants’ case concerns a form of compulsory acquisition by the State of a quota at a price substantially less than the prevailing market price. In such circumstances, it was submitted, a milk quota may qualify for protection as a property right which States are obliged under Community law to protect. Reference was made to comments of the Advocate General in Demand v. Hauptzollamt Trier (Case C-186/96) [1998] E.C.R. 1-8529 at p. 8539 et seq. The Advocate General stated, inter alia :

“36. We have come a long way since classical Roman times, when property signified a power over a thing that was so direct and complete as to be indistinguishable from the thing itself. Nowadays a large proportion of transactions relate to things which, strictly speaking, are not things at all. They have been created in order to satisfy a specific socio-economic function and, more than any other good, depend on the legislative framework within which they are created and sustained. Take, for example, industrial patents. In order to protect industrial products and thus encourage invention, the legislature creates a new legal instrument and defines its content primarily according to its aims. In doing so the legislature is fully aware that economic dynamism will be sure to bring to light legal aspects of the new instrument which were not foreseen and probably not foreseeable. It will again be for the legislature or, as the case may be, the courts to define its limits and to adapt this foreign body to the workings of the law.

37. To my mind that is the situation as regards the so-called milk quotas. The Community legislature must have believed that it could simply regulate these instruments according to their purpose, namely to control milk production within the Community, and leave it to each Member State to resolve the complex private-law issues which the introduction of the new scheme would inevitably raise. Mindful of the significance of the new arrangement, however, it laid down two important conditions: the quota scheme was introduced on a temporary basis and the quotas were linked with dairy holdings. Both of these conditions have been gradually weakened, the first because the quota scheme has been consistently extended between 1984 and the present time and the second because the Member States have been given increasingly wider opportunities to authorise the transfer of reference quantities independently of the holding. Since 1 April 1993 Member States have even been able to authorise, subject to certain conditions, ‘the transfer of reference quantities between certain producer categories without transfer of the corresponding land’ (see point 20 above).

38. The national legislatures have used those opportunities in very different ways. While in England a veritable ‘quota market’ has flourished since the introduction of the scheme, the French rules do not even permit the temporary transfers provided for in Article 6 of Regulation 3950/92. In the absence of a coherent and stable legislative approach, it comes as no surprise that the characterisation of milk quotas by national courts has ranged from ‘valuable intangible asset’, or even ‘intangible asset susceptible of being leased or transferred, ownership of which constitutes a subjective right’, to the more modest ‘administrative restriction of production’ or ‘fiscal advantage akin to a subsidy’. Legal writers have already expressed doubts as to whether the quota is an immovable asset or a movable asset or whether it is possible to provide real securities over the actual quota rather than the milk production effected thereunder.

184. The justification for the indecisive and case-by-case approach which the Court of Justice tends to take in defining the criteria for protecting property interests is based, at least in part, on this wide range of views which the Community legislation has spawned within the legal orders of the Member States, in particular in the field of private law.


39. While the relative stability of the quota scheme over a given period helps to create a degree of legal certainty, the relaxation of the conditions governing the transfer of quotas reinforces the concept which traders legitimately have of the quota as an autonomous valuable asset. In those circumstances, and in spite of the great differences in regard to this matter between the individual national legal orders, I believe that milk quotas must currently be regarded as authentic intangible assets. However, since they were introduced for the purpose of regulating the market in milk, their content should be defined according to that purpose, which continues to be their raison d’ être.

40. For those reasons I consider that examination of the validity of the measures adopted within the framework of the regulation of the market in milk must be centred on their necessity and proportionality in the light of the aim which they were intended to pursue. The conclusions drawn from that examination will have to be applied to every holder of a reference quantity, irrespective of the means whereby those quantities were allocated (or, if one prefers, acquired).

41. Put another way, although the fact that milk quotas are in the nature of property may enhance their role in transactions to the point of protecting the subjective rights of those holding them, that aspect must not prevail over the paramount objective of regulating the market. Traders who deal in quotas (by means of the various transactions permitted under national law) must never lose sight of the fact that in the final analysis quotas are, in their essence and by virtue of their purpose, instruments for regulating the market on a temporary basis and that that this entails risks and uncertainty. That clearly does not mean that the legislature is completely free to dispose of those reference quantities as it pleases. It does mean, however, than when analysing the validity of any regulatory measure, such as the 4.5% reduction of the quantities free from levy, one must take into account the inherently regulatory nature of milk quotas before classifying those measures as expropriations. In economic terms, one might perhaps say that for a trader who holds a quota the intervention measures which affect that quota represent one more operating risk, closely linked with the situation on the market. That is a risk which the operator will have to bear, although only in consideration of the protection which the system affords him by guaranteeing a minimum price.

42. Milk quotas thus constitute instruments of market intervention which, through the process of the law, have become an item of property. The content of that item of property/instrument will clearly vary according to the various national legal systems. Some will require a closer link between the quota and a holding or will subject the transfer of the quota to various conditions. The quota is not thereby deprived of its character as an item or property, just as firearms or enriched uranium are not deprived of their character as items of property by the restrictions on transferring them. Those conditions will only provide a means of preventing, to some extent, the creation of ‘quota markets’.

43. The solution which I propose is, to my mind, not only the one which best reflects economic reality; it is the one which permits a more satisfactory protection of subjective rights. It is now less true than ever that ‘the right to property thus safeguarded within the Community legal order does not comprehend the right to dispose, for profit, of an advantage, such as the reference quantities allocated in the framework of the common organisation of a market, which does not derive from the assets or occupational activity of the person concerned’. That is what the Court appears to have meant by omitting that passage from the more recent Irish Farmers judgment. Unlike the approach it took in earlier cases, in that judgment the Court did not reject the allegation of violation of the right to property on the ground that quotas did not constitute assets. On the other hand, the Court stated that ‘conversion into a definitive reduction without compensation does not affect the actual substance of that right [to property] inasmuch as the Irish producers were able to continue to pursue their trade as milk producers’. That statement shows that the Court decided to approach the legal impact of intervention measures - which is what milk quotas are - on their own particular ground, that of the right to property. It only remains, therefore, to say so clearly.”

185. In spite of his eloquence the Court did not develop the right to a right to property but held:


“40. With regard more particularly to the right to property, which, according to the plaintiff in the main proceedings, has been infringed, the Court held, in paragraphs 28 and 29 of Irish Farmers’ Association, cited above, that the regulations in question form part of a body of legislation intended to remedy the surpluses on the milk market and therefore correspond to aims pursued by the Community in the general interest and that the conversion into a definitive reduction without compensation does not affect the actual substance of that right.

41. It must be added that, regardless of the legal nature to be attributed to an additional reference quantity, but having regard to the persistence of surpluses, a definitive withdrawal of 4.74% of an additional reference quantity appears to be appropriate and necessary to achieve the aim of that measure, namely an enduring reduction of the surpluses.

42. The Community legislature has not thus exceeded the bounds of the latitude available to it, the definitive reduction of 4.74% both of the initial quantity and of the additional quantity not being disproportionate to the aim pursued.”


186. Thus the Court did not follow the approach of the Advocate General on the property right issue. The Court’s judgment is based on to the intention grounding the milk quota, the aims of the Community in the general interest. The Court stressed the fact that such steps are necessary to achieve the aim, in the general interest.


187. Counsel for the applicant did not stress this aspect of the appeal. This was a correct approach. I am satisfied that a milk quota is not per se a property right under Community law.


188. However, the applicants submitted that milk quota is a property right under Irish constitutional law. The applicants have relied upon the opinion of Advocate General Cosmas in Duff v. Minister for Agriculture (Case C-63/93) [1996] E.C.R. 1-569 where he stated:

“60. It is, I think, useful to add that, although the above mentioned general principles of Community law can provide no basis for a requirement on the part of Member States to provide for the grant of special reference quantities to the producers referred to in the first indent of Article 3(1) of Regulation No. 857/84, there is nothing to prevent such a requirement from being founded on principles of national law which, in an appropriate case, may ensure greater protection in this respect than that afforded by the general principles applicable in the Community legal order.

61. That possibility in no way jeopardises the uniform application of Community legislation since the first indent of Article 3(1) of Regulation No. 857/84 specifically gave the Member States the possibility of adopting different solutions as regards the grant or otherwise of special reference quantities. It should, however, be emphasized that the application of a principle of national law in order to found such an obligation on the part of the relevant Member State is subject to exactly the same restrictions as those to which national law is in any event subject when it gives effect to provisions of Community law. Thus, that principle will have to be applied in exactly the same manner as it is applied in areas unconnected with Community law, whilst, furthermore, the application thereof must not lead to any substantive alteration of the rules governing the additional levy scheme on milk, jeopardize the effectiveness of the scheme or compromise the successful attainment of its objectives. It goes without saying that it is not for the Court [that is the European Court], but for the national court to examine whether there are any principles of national law capable of imposing on the relevant Member State an obligation to grant special reference quantities to the producers to whom the contested provision of Regulation No. 857/84 refers.”

189. Reference was made also to Deutsche Milchkontor v. Germany (Cases 205 to 215/82) [1983] ECR 2633 and in particular to paragraphs 30 to 33:


“30. The first point to be made in this regard is that the principles of the protection of legitimate expectation and assurance of legal certainty are part of the legal order of the Community. The fact that national legislation provides for the same principles to be observed in a matter such as the recovery of unduly paid Community aids cannot, therefore, be considered contrary to that same legal order. Moreover, it is clear from a study of the national laws of the Member States regarding the revocation of administrative decisions and the recovery of financial benefits which have been unduly paid by public authorities that the concern to strike a balance, albeit in different ways, between the principle of legality on the one hand and the principles of legal certainty and the protection of legitimate expectation on the other is common [to] the laws of the Member States.

31. Where the rules and procedures applied by the national authorities in the recovery of Community aids are the same as those which they apply in comparable cases concerning purely national financial benefits, there is in principle no reason to assume that those rules and procedures are contrary to the national authorities’ duty under Article 8 of Regulation No. 729/70 to recover sums irregularly granted and that consequently they reduce the effectiveness of Community law. This applies in particular to grounds for excluding recovery where these are related to the administration’s own conduct and it can therefore prevent them from occurring.

32. It should be added, however, that the principle that national legislation must be applied without discrimination compared to purely national procedures of the same kind requires the interest of the Community to be taken fully into consideration in the application of a provision which . . . requires the various interests in question, namely on the one hand the public interest in the revocation of the measure and on the other hand the protection of the legitimate expectation of the person to whom it is addressed, to be weighed up against one another before the decision is revoked.

33. The answer to the seventh question must therefore be that Community law does not prevent national law from having regard, in excluding the recovery of unduly-paid aids, to such considerations as the protection of legitimate expectation, the loss of unjustified enrichment, the passing of a time-limit or the fact that the administration knew, or was unaware owing to gross negligence on its part, that it was wrong in granting the aids in question, provided however that the conditions laid down are the same as for the recovery of purely national financial benefits and that the interests of the Community are taken fully into account.”

190. Of these paragraphs, Barrington J. held in Duff v. Minister for Agriculture (No.2) [1997] 2 I.R. 22 at p. 81 that:

“It appears to me that in these passages the Advocate-General has gone out of his way not to exclude the possibility that the plaintiffs may have a remedy in national law. Neither has he excluded the possibility that principles of Community law, such as legitimate expectation, may be invoked by the plaintiffs so long as there is no discrimination against Community funds (as compared to national funds) and so long as the interest of the Community are kept in sight.”


191. In that case the Supreme Court (O’Flaherty, Blayney and Barrington JJ., Hamilton C.J. and Keane J. dissenting) held that on the evidence the Minister had in fact decided to make provision for development farmers such as the plaintiffs, young farmers and disease-herd farmers. However, the Minister had made a mistake of law in seeking to provide for these categories of farmers other than by establishing a reserve under Article 5. The decision was accordingly illegal, and therefore it was not a question of reviewing the manner in which the Minister had reached his decision. The majority held that the plaintiffs were entitled to compensation for the Minister’s mistake of law. Thus the case may be distinguished as being grounded on the Minister’s mistake of law.


192. I am satisfied that in certain circumstances persons may have a greater protection of property rights at national law than under Community law. As to whether such a situation exists depends on the facts, circumstances and laws of each case.

193. The property rights under the Constitution of Ireland are enshrined in Article 40.3.2 and


194. Article 43. They provide:


Article 40.3.2
“The State shall, in particular, by its laws protect as best it may from unjust attack and, in the case of injustice done, vindicate the life, person, good name, and property rights of every citizen.”

Article 43
1. 1º The State acknowledges that man, in virtue of his rational being,
has the natural right, antecedent to positive law, to the private
ownership of external goods.

The State accordingly guarantees to pass no law attempting to
abolish the right of private ownership or the general right to transfer, bequeath, and inherit property.

2. 1º The State recognises, however, that the exercise of the rights
mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice.

2º The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good.”

195. To determine the precise right in issue under Irish law it is necessary to analyse the nature of milk quota in relation to constitutional property rights. There are a number of relevant factors to this analysis.


(a) The nature of milk quota scheme

196. The nature of the right conferred by a milk quota is to permit the holder to produce milk up to the quantity of the quota without the payment of a levy. Milk quotas form part of the levy scheme which is constantly subject to changes, including reduction in the amount of quota without compensation: Irish Farmers’ Association & Ors. V. Minister for Agriculture [1997] E.C.R. 1-1809. In that case, in relation to the issue of legitimate expectation, the nature of the constant adjustments of the scheme were addressed:

“According to the consistent case-law of the Court, in the sphere of the common organization of the markets, whose purpose involves constant adjustments to meet changes in the economic situation, economic operators cannot legitimately expect that they will not be subject to restrictions arising out of future rules of market or structural policy. The principle of the protection of legitimate expectations may be invoked as against Community rules only to the extent that the Community itself has previously created a situation which can give rise to a legitimate expectation (see Case C-177/90 Kühn v Landwirtschaftskammer Weser-Ems [1992] ECR I-35, paragraphs 13 and 14, and Case C-63/93 Duff and Others v Minister for Agriculture and Food, Ireland, and the Attorney General [1996] ECR I-569, paragraph 20).”


197. In relation to property rights the Court again stressed the nature of the scheme, referring to social function and to aims pursued by the Community in the general interest. It stated:


“Right to property
26. The plaintiffs in the main proceedings argue that the permanent withdrawal of 4.5% of their reference quantities without compensation infringes the right to property.

27. That argument cannot be upheld, either. The right to property is certainly one of the fundamental rights whose observance is ensured by the Court. Such rights are not, however, absolute rights but must be considered in relation to their social function. Consequently, restrictions may be imposed on the exercise of those rights, in particular in the context of a common organization of the markets, provided that those restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute, with regard to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of those rights ( Kühn, cited above, paragraph 16).

28. Having regard to those criteria, it must be held that, first, the regulations in question form part of a body of legislation intended to remedy the surpluses on the milk and milk products market and that they therefore correspond to aims pursued by the Community in the general interest.

29. Secondly, conversion into a definitive reduction without compensation does not affect the actual substance of that right inasmuch as the Irish producers were able to continue to pursue their trade or profession as milk producers. Moreover, the reduction in milk production led to an increase in the price of milk, thus compensating, at least in part, the loss suffered.”

(The applicants in this case are not producers, as is stressed later.)

(b) Genesis of milk quota scheme.

198. It is also appropriate to consider the genesis of the milk quota. The foundation of that right is in Community law. A milk quota is quintessentially a Community creation. It was created and is updated regularly by Community laws. On any analysis a milk quota is grounded in Community law. Community policy governs the development of milk quotas, indications of future policy have already been given. Because of this the fundamental principles of milk quotas will continue to be governed Community wide by Community law. Insofar as domestic law on milk quota exists, it is subject to the principles and policies established in Community law.


(c) Producers are a key factor.

199. It is of the essence of the milk quota scheme that quota is released by those ceasing to produce and reallocated to a producer. The facts of this case relating to the applicants are relevant. The applicants are not producers. They have earned monies from the quota, however. There are a number of options opened to each of them. They are not seeking to use the quota as producers themselves.


200. General principles of Community law do not prohibit the State treating a milk quota as a property right provided such approach is consistent with Community law. It must be in compliance with Community law. The domestic right in this case, however, is itself grounded in Community law, on the facts, circumstances and law. In analysing the rights under the milk quota scheme in Ireland the same characterisations should apply as under Community law. The essence of the right in this jurisdiction is not severable from the concept of the right under Community law. The right in issue arises in a scheme created with a view to the aims of the Community in the general interest. The nature of the right stemming as it does exclusively from the C.O.M. does not change. Any “right” which the applicants have is solely because of the milk quota regulations which enable them to produce a milk quota to a certain level with monetary consequences. It is a right created by Community law subject to a change in the scheme.


201. Insofar as it may be analysed as similar to a property right it is analogous to a licence and to Irish law in relation to such schemes. An analogy may be seen in Hempenstall v. Minister for the Environment [1994] 2 I.R. 20. The applicants were holders of taxi licences who claimed that certain regulations made by the Minister for the Environment under the Road Traffic Act, 1961 had had the effect of reducing the value of their taxi licences and that this constituted an unjust attack on their property rights. Costello J., in rejecting the applicants’ arguments, primarily on the ground that no diminution in the value of their licences had actually occurred, observed, at p. 28:

“. . . even if it were established that the making of the Regulations of 1992 resulted in a diminution in the value of the applicants’ taxi-plates this would not as a matter of law amount, in my opinion, to an attack on the applicants’ property rights. Property rights arising in licences created by law (enacted or delegated) are subject to the conditions created by law and to an implied condition that the law may change those conditions. Changes brought about by law may enhance the value of those property rights (as the Regulations of 1978 enhanced the value of taxi-plates by limiting the numbers to be issued and permitting their transfer) or they may diminish them (as the applicants say was the effect of the Regulations of 1992). But an amendment of the law which by changing the conditions under which a licence is held, reduces the commercial value of the licence cannot be regarded as an attack on the property right in the licence-it is the consequence of the implied condition which is an inherent part of the property right in the licence. [emphasis added]”


202. The learned High Court judge examined the issue of whether a change in the law can be said


to have been an “unjust attack”:

“Thirdly, a change in the law which has the effect of reducing property values cannot in itself amount to an infringement of constitutionally protected property rights. There are many instances in which legal changes may adversely affect property values (for example, new zoning regulations in the planning code and new legislation relating to the issue of intoxicating liquor licences) and such changes cannot be impugned as being constitutionally invalid unless some invalidity can be shown to exist apart from the resulting property value diminution. In this case no such invalidity can be shown. The object of the exercise of the Ministerial regulatory power is to benefit users of small public service vehicles. It has not been shown or even suggested that the Minister acted otherwise than in accordance with his statutory powers. Once he did so then it cannot be said that he has thereby “attacked” the applicants’ property rights because a diminution in the value may have resulted. [emphasis added]”


203. A similar approach was taken in a consideration of the liquor licensing scheme. In State (Pheasantry) v. Donnelly [1982] I.L.R.M. 512, the Court emphasised that the licence was granted subject to certain limitations and conditions. Carroll J. stated:

“The licence is a privilege granted by statute and regulated for the public good.”

204. The learned judge then continued, at p. 516:

“It is ab initio subject to various conditions ... There is no constitutional right to a liquor licence or a renewal thereof. There are only such rights as are given by statute subject to the limitations and conditions prescribed by statute. [emphasis added]”

205. Resonances of this line of reasoning may also be detected in cases such as Hand v. Dublin Corporation [1991] 1 I.R. 409 and Private Motorists Provident Society Ltd. v. Attorney General [1983] I.R. 339.


206. Thus in domestic law the right in a licence is subject to conditions created by law. This is an inherent aspect of the right in a licence. It is a right subject to the policies implemented by

provisions at national level. It is a scheme, a policy, in the general interest. By analogy in this case the Community provisions stand in the place of national legislation. The principles and policies of the milk quota scheme are therein provided. It is subject to the same analysis as to a licence created by statute. There are inherent aspects. It is subject to change. It is a scheme in the general interest.

207. The nature of a domestic right such as a licence is dependent on the law, usually statutory, which creates and develops the specific scheme. Behind the stated scheme is a policy being implemented through the legislation by the legislature. Such a scheme is in the public interest. It may be viewed through the concepts of the exigencies of the common good and proportionality.


208. The milk quota scheme at Community level is based on policy related to the market and to aims of the Community, which policies have been stated in treaties, regulations and cases. Policy changes and develops. Conditions and terms of the milk quota scheme change from year to year. Indeed, this is a scheme with a very ‘hands on’ supervision from central institutions. It is a policy with the general aim of the common good. The applicants have an advantage, a right, as a consequence of this policy. It is a right created in the public interest and subject to the public interest. It is a right to which the applicants know the terms and conditions and know of their variability. On this analysis the scheme is constitutionally permissible.


8. Conclusion

209. The mode of implementation of the detailed milk quota scheme in Ireland pursuant to European provisions is a matter of choice for Ireland. The choice is governed by Irish public law. It was not necessary that the State chose implementation by statutory instrument. However, that choice is valid under Irish public law as the European regulations are part of Irish law and may be regarded in the same way as an enabling statute of the Irish legislature.

210. Once the principles and policies are set out in the European regulations then Irish public law permits implementation by way of a statutory instrument of the principles and policies of the European regulations. The statutory instrument is not laying down principles and policies so it is not ultra vires . Further, as no principles or policies are being determined there is no requirement for the national legislature to legislate. Article 15.2.1 is not being defeated as the decisions of principles and policies have been made in the European regulations. The detailed implementation must be in accordance with the regulations. Indeed, the practice is that the implementation of the principles and policies of the milk quota scheme is overseen tightly from Europe.


211. This case is not about any democratic deficit in Ireland. If there is a democratic deficit it should be met prior to the making of the Community regulations. If any such deficit exists it cannot be addressed after the policies and principles have been established by the Community regulations. This is not a case of the executive usurping the role of the legislature. Once principles and policies have been established by Community regulations there is no role, certainly no meaningful role, for the national legislature.

212. The democratic system in Ireland functions through three branches of government. However, in addition, the State is subject to European institutions and provisions made therein. These regulations are directly applicable. These regulations are part of Irish law as a consequence of Ireland’s membership of the European Union. They are part of Irish law without any input from the three branches of government.


213. The principles and policies in relation to the milk quota were set down in the European provisions. These regulations are directly applicable in Ireland. They set out the principles and policies of the milk quota scheme. This scheme is a creation of the European Union and an important part of the Common Agricultural Policy and the Common Organisation of the Market. It is quintessentially a market device run from central institutions.


214. There was no necessity for legislation in the national parliament of Ireland as the principles

and policies are established in the regulations. Indeed, such an enactment might have caused an impediment of the common organisation of the market if it had strayed from the principles and policies in the regulations. Also, such an approach might have created the illusion that there were policies to be decided in the national parliament when in fact there were not. There was no renvoi to the national legislature.

215. There are choices to be made within the regulations. However, these choices are the exercise of a discretion within the principles and policies established. The fact that there is a discretion does not take it outside the principles and policies established - which have been established at European level. The discretion exercised is a limited one within the principles and policies established.

216. Thus the method chosen to implement Regulations 2000 was constitutional and not a breach of Article 15.2.1. It was not a violation of the separation of powers as the decisions had all been taken at European level. Indeed, to hold that the choice left to Ireland required legislation might well diminish the status of the national legislature; to require it to act as a body in decision making where the decisions as to principles and policies have been made,

and furthermore are carefully monitored, in European institutions.

217. The nature of the milk quota was established at European level, it is a creation of the European Union. The applicants have submitted that it is a property right under Irish constitutional law, that they are entitled to the protection of the Irish Constitution. I am satisfied that this is not so in this case. The nature of a milk quota is similar under Community and Irish law. Milk quota arises as a scheme under C.A.P. and C.O.M. to regulate the European market. It is a right to produce and sell milk to the amount of their quota. In fact none of the applicants are producers. It is a scheme the terms and conditions of which are constantly changing. Restructuring is an important aspect under Community principles and policies. It is a scheme in the general interest. Even if it is a property pursuant to the Articles of the Constitution of Ireland, it is subject to the exigencies of the common good and principles of proportionality, consequently also to the general aim of this scheme. Either way the applicants have not made out a case as claimed.


218. For the reasons stated I would dismiss the appeal.



THE SUPREME COURT
340/00
Keane, C.J.
Denham, J.
Murphy, J.
Murray, J
Fennelly, J.


BETWEEN
NICHOLAS PHILIP (OTHERWISE MARTIN) MAHER

MALACHY BRETT AND RITA RYAN
Applicants

AND

THE MINISTER FOR AGRICULTURE FOOD AND RURAL DEVELOPMENT

IRELAND AND THE ATTORNEY GENERAL

Respondents


Judgment delivered the 30th day of March, 2001, by Murray, J.

219. I have had the advantage of reading the judgment of Fennelly, J. and I agree with his reasoning and conclusions on the issue as to whether the national rules contained in the European Communities (milk quota) Regulations 2000 (S.I. No. 94/2000) (“The 2000 Regulations”), implemented for the purpose of community regulations ought to have been introduced by way of primary legislation in order to comply with the provisions of the Constitution in lieu of the statutory instrument adopted by the Minister.

220. Fennelly, J. has very clearly set out all the factual elements and applicable law , in particular the legal measures adopted at both community level and national level governing the milk quota system. Therefore, it is not necessary for me to make detailed reference to those matters and I do so only so far as it is necessary for the purpose of addressing the particular issues with which this judgment in concerned. Those issues are the claim made on behalf of each of the Applicants that the 2000 regulations infringed the property rights of the Applicants as guaranteed by the Constitution and, or alternatively, their property rights as protected by European Community law.

221. In this respect it was submitted on behalf of the Applicants that a milk quota should be treated as just as valuable an asset in its own right as land itself. In effect the Applicants were being required to sell their milk quota under the 2000 restructuring scheme to the Minister at a price fixed by him at a fraction of its market value. It was submitted that this was equivalent to the forfeiture of unused agriculture land at a price significantly below its market value and was in conflict with Article 40.3.2 and Article 43 of the Constitution.

222. Since the basis on which the milk quota could be sold into the restructuring scheme pursuant to the 2000 Regulations was a matter within the discretion of the national authorities it fell to be exercised in accordance with national law , the Minister was bound in so doing to respect the property rights of the Applicants as guaranteed by the Constitution.

223. It was also submitted that, even if a right derived from community law does not fall to be considered as a fundamental right within the meaning of that law, it does not follow that such a right cannot enjoy protection of the Constitution where it is expressly or implicitly recognised as a fundamental right.

224. As regards European community law, it was submitted that the right to property is one of the fundamental rights protected by community law. While it was accepted that the Court of Justice has generally taken the view that milk quotas do not constitute a property right so far as community law is concerned, as in the case of R -v- Ministry of Agriculture, ex-parte Bostock (C-2/92 [1994] ECR 1-955) it was submitted that Bostock concerned the right to dispose of a quota for profit whereas the present case concerns a form of compulsory acquisition by the state of a quota at a price substantially less than the prevailing market value. In this context a quota may qualify for protection as a property right which the member states in turn are obliged, as a matter of community law to protect. In support for this submission the Applicants relied on the opinion of the Advocate General in Demand -v- Hauptzollampt Trier (C-186/96 [1998] ECR 1-8529 at 8541). That opinion included the following statement at paragraph 42 “ Milk quotas thus constitute instruments of market intervention which through the process of the law, have become an item of property. The content of that item of property/instrument will clearly vary according to the various national legal systems. Some will require a closer link between the quota and the holding or will subject the transfer of the quota to various conditions. The quota is not thereby deprived of its character as an item of property, just as fire arms are enriched uranium or not deprived of their character as items of property by the restrictions on transferring them. These conditions will only provide a means of preventing, to some extent, the creation of ‘quota markets’ .”

225. For the Respondents it was submitted that the nature of rights conferred by the milk quota on the Applicants can be no different under Irish law than under Community law. The Respondents rely on the judgment of the Court of Justice in R -v- Ministry of Agriculture, ex-parte Bostock for the submission that so far as Community law is concerned a milk quota it is not a property right. It follows, in their submission, that it cannot be a property right under national law. Furthermore, on the facts of the case the Applicants are seeking no more than to earn a greater profit from the milk quota currently held by them than is allowed for by the 2000 Regulations. These milk quotas form part of the additional levy scheme which has been introduced for a limited period only and which has been the subject of constant changes including reductions in the amount of quota without compensation which has been upheld as permissible by the Court of Justice. It is not a property right in Community law.

226. In the alternative the Respondents argue that if the Applicants are to be considered as having a property right in their milk quota, it can be no greater than a property right and a licence to produce and deliver milk in the amount of their quota. The changes made by the 2000 Regulation does not interfere with this right since the quota must be regarded in Irish law as a licence or permit created by law and subject to an implied condition that the law may legitimately change the licence scheme or conditions attaching to such licence. Accordingly, the 2000 Regulations do not conflict with either Article 40.3.2 or 43 of the Constitution.


Decision:-

227. It is appropriate first of all to consider the submission on behalf of the Applicants that the State is entitled and indeed bound to respect constitutional guarantees for the respect of fundamental rights even where that right is derived from Community law in circumstances where the degree of protection to be afforded to such a right is left to the discretion of the member state. In support of that contention, the Appellants relied on the views expressed in an opinion of Advocate General Cosmas in Duff -v- Minister for Agriculture (C-63/93 [1996] ECR 1/569) where he held that the Plaintiff’s legitimate expectations at Community law level had not been infringed by the actions of the Minister, but this did not prevent “... such a requirement from been founded on principles of national law which, in an appropriate case, may ensure greater protection in this respect than that afforded by the general principles applicable in the community legal order .”

228. I do not consider that the proposition as framed and advanced on behalf of the Appellants needs to find its source in Community law. It seems to me that the view expressed by Advocate General Cosmas is no more than a reflection of the position in national law when member states exercise their legislative powers in a matter in which they have competence and a discretion as to the legal protection to be afforded to fundamental personal rights. In such circumstances the Member States have the power, or as the case may be, the duty to legislate in accordance with national law including constitutional law. One of the primary duties of the organs of government under our Constitution including the judicial organ of government is to ensure due observance of the Constitution, respect for the fundamental rights which it protects and where appropriate to defend and vindicate them, always with due regard to the precedence which the Constitution in effect accords to Community law and its fundamental principles by virtue of the relevant provisions of

Article 29.

229. Of course it is the case that a Member State when introducing legal measures at national level, which fall within the scope of community law, such as giving effect to a directive or regulation, must comply with community requirements with regard to the protection of fundamental rights which is an integral part of the community legal order. (C-222/84 Johnston -v- Chief Constable of the RUC [1986] ECR 1651 para. 18). This is so even if the measures taken are within the ambit of a discretion left to the member state. Whether such a measure respects the community protection of fundamental rights must be determined by community law alone.

230. However, where the State enacts a legislative measure in the exercise of a discretion conferred by community law it is not ipso facto absolved from ensuring that such legislation is compatible with the Constitution. This is self-evident from the terms of Article 29.4 which, inter alia , provides that no provision of the Constitution invalidates laws enacted or measures adopted by the State which are “necessitated” by the obligations of membership of the European Union or of the Communities. The discretion allowed to the Member State maybe so circumscribed by community law that the entire of any legislative measure taken by it or the exercise of such discretion is “necessitated”. This could arise where the exercise of a discretion conferred by community law was required to be exercised exclusively having regard to the policy considerations and objectives of the community measure and where considerations of national law would distort the proper exercise of such a discretion.

231. On the other hand, the discretion conferred by community law on the State when implementing legislative measures maybe sufficiently wide to permit the State to have full regard to the constitutional protection afforded to fundamental rights without impinging on the full effect and uniform application of community law. In such circumstances the State, in the exercise of such discretion, would be bound to respect personal and fundamental rights as guaranteed by the Constitution.

232. In this particular case it may well be that the discretion conferred on the Minister to cease to apply Article 7 (1) of Regulation (EEC) 3950/92 as amended by the insertion of Article 1 (10) of Regulation (EC) 1256 /99 of Article 8 a (b) is so circumscribed to be considered “necessitated” within the meaning of Article 29 of the Constitution. These concern the rules on the transfer of quotas. The position may be otherwise in respect of the power conferred on the Minister by the national regulations, the 2000 Regulations, to fix the maximum price per litre/gallon for which the price of milk quotas may be calculated.

233. However, it is not necessary to venture further into these issues unless the Applicants have established that they have a property right and that the constitutional guarantees have been infringed as they allege.





Property Rights - national law:-

234. The next question which arises is whether a right being asserted by the Appellants in these proceedings is a property right, and if so whether it has been infringed contrary to Article 40.3.2 or Article 43 of the Constitution.

235. First of all regard must be had to the general context in which the milk quota or super levy system has functioned and been regulated. It is an integral part of the Common Agriculture Policy the objectives of which are set out in Article 33 of the E.C. Treaty namely:-

(a) To increase agricultural productivity by promoting technical progress and by ensuring the rational development agricultural production and the optimum utilisation or the factors of production, in particular, labour;
(b) Thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
(c) To stabilise markets;
(d) To ensure the availability of supplies;
(e) To ensure that supplies reach consumers at reasonable prices.

236. Article 34 of the Treaty authorises the community to take all measures required to attain the above objectives and in particular measures concerning the “ regulation of prices, aids for the production and marketing of the various products, storage and carry over arrangements and common machinery for stabilising imports or exports.

237. The milk quota system is an integral part of the common organisation of the market in the milk sector. This common organisation of the milk sector market was introduced initially by council Regulation (EEC) No. 804/68 with a view to guaranteeing to producers a common target price with the support of certain intervention measures.

238. The basic common organisation of the market in the milk sector from its inception on the adoption of Council Regulation (EEC) no. 804/68 and its evolution to the present regime to which the 2000 Regulations apply has been clearly set out in the judgment of Fennelly, J. From a general point of view it is clear that the milk quota system as successively varied and amended was intended to achieve the objectives of the common organisation of the market in the milk sector and those of the Common Agricultural Policy. In particular it had among its primary objectives that of maintaining market balance and producers income. In a real sense it created an artificial market for milk products since the regime was designed at all times to counteract the negative effects of prevailing market forces in open unregulated national markets. A stable milk sector market has benefits for the consumer and thus for society for a whole but it can be fairly said that at least equal benefactors of the regulation of the market are those farmers who participate in the milk quota regime. This is highlighted by the recital in Council Regulation (EC) 1255/99 which recites as one of its fundamental objectives “to ensure a fair standard of living for the agricultural community.”

239. Thus by the various measures and mechanisms authorised by the Treaty, a particular and common organisation of the market of milk as a product was constructed. The market can be said to be particular in so far as that the conditions of trade, including the price of milk, are fashioned by the regulatory regime to the direct benefit of producers. The history of the establishment and evolution of the common organisation of the market in the milk sector, as outlined in the judgment of Fennelly, J. and elsewhere, demonstrates that the regulatory regime did not always achieve the objectives anticipated either because it did not have the full effect expected or because of intervening factors such as over production of milk. The common organisation of this market successively over the years has been subject to variations, refinements and amendments with a view to achieving the basic objectives of the Common Agricultural Policy. These changes have included reductions in the amount of quota without compensation (the legality of which was upheld by the Court of Justice in the Irish Farmers Association and Ors -v- Minister for Agriculture (C-22/94 [1997] ECR 1 1809 ). Such constant changes are an inherent feature of the common organisation of the market in the agricultural sector. As Mr Patrick Evans, official at the Department of Agriculture, Food and Rural Development, points out in paragraph 9 of his affidavit “ each year the commission carries out an analysis of the market situation and a future outlook with regard to each of the agricultural products governed by the common organisation to the market. The Commissions report of this market analysis is followed by any proposals the Commission considers necessary to provide for changes to ensure that the objectives of the regime in individual sectors continued to be met .” Neither the organisation nor the market which it governs can be assumed to remain static.

240. It seems to me that when changes are effected to a regime regulating the organisation of a product market, such as that which we have here, which are internally rational to the regime and the objectives to be achieved by it, those who participate as economic operators in that market must, in principle, accept such changes as an inherent element in that market in which they participate provided, at least, those changes do not affect other substantive rights independent of the regime and do not offend against fundamental principles such as non- discrimination.

241. If a person’s rights or activities under such a regulatory regime were to be abridged or limited for purposes external or extraneous to those of the regulatory regime, any question of compensation which might arise would have to be approached from a different perspective. Such could arise, for example, where a state authority compulsory acquired portion of a farmer’s lands for public road or public housing to the extent that his entitlement to be attributed or ability to use a quota was reduced or eliminated altogether. Obviously this does not arise in this case

242. The substantive independent right which has been put in issue in this case is what is claimed to be the Appellant’s fundamental right to the ownership of property. No issue has arisen concerning the breach of fundamental principles such as non-discrimination.

243. Whether the Applicant’s property rights as guaranteed by the Constitution have been breached falls to be considered in the light of the impact of the 2000 regulations on their position as persons who have been allocated a quota under the system and the disadvantage which they claim to suffer as a result of that impact.


The position of the Applicants :-

244. It is not contested, and it indeed it is part of their case, that each of the Applicants participated for a significant number of years in the milk quota regime and profited therefrom. It is also the case that each have profited, in varying degrees, from a leasing of their quota in respect of milk quantities of which they were not the actual producers.

245. As regards Mr Maher, the options now available to him in the light of the 2000 Regulations are as follows: -

(a) He can resume milk production and benefit fully from the milk quota regime;
(b) He can transfer the quota with land to a relative as defined in the 2000 Regulations. The quota which he leased to Mr Maurice Ryan since 1996 to March 31, 2000 can be sold to Mr Ryan, with or without the leased land;
(c) He can sell the quota under the 2000 milk quota restructuring scheme;

246. This would involve selling at the maximum price fixed by the Minister which is less than he would obtain on the market without a capped prices restraint.

(d) If he sells the quota under the restructuring scheme, his son or daughter will have priority to buy up an equivalent level of quota from future restructuring schemes provided that sufficient quota is available.

247. Mr Maher submits that the only real option to him are either to resume milk production or to sell his milk quota under the 2000 milk quota restructuring scheme. It was submitted that at present he is not in a position to resume milk production as this would be very expensive. Selling the quota to Mr Ryan is not a realistic option as he and Mr Ryan have not been able to agree on terms. In practice, it is claimed, he cannot keep the quota for any of his children and that the option of his children to buy an equivalent level of quota from a future restructuring scheme is subject not only to the availability of quota at that time but also subject to the operation of a restructuring scheme being in place. His only option therefore is to sell the quota under the 2000 milk quota restructuring scheme at a price less than the ‘market value’.

248. Mr Brett and his wife are an elderly couple depending on income from their quota. The options open to Mr Brett are:-

(a) Resume milk production
(b) Sell the quota under the 2000 milk quota restructuring scheme.

249. Because of their age it is not a realistic option for them to resume milk production and the only realistic option open to them is to sell under the restructuring scheme at a price less than the market value of the milk quota.

250. Ms Ryan it is contended is in much the same position. She could not afford at this stage, it is stated, to return to milk production and selling into the restructuring scheme is her only option leading again to a loss by comparison to what she could obtain if she was allowed to sell on the open market.

251. The common elements in the position of the three applicants is that none of them are active producers, all have the option of resuming production of milk on their respective farms and benefiting in full from the milk quota regime, but because of their personal circumstances the resumption of working their farm to produce milk is not a realistic option for them personally. In each case it is claimed that they are realistically only left with one option to sell into the restructuring scheme. This would involve selling at the capped price fixed by the Minister of £1.36 per gallon. In support of the first Applicant’s claim, evidence was tendered on his behalf by way of the affidavit of Mr Noel Corcoran, an auctioneer, to the effect that his milk quota had a value of £3.00 per gallon “on a sale on the open market”. It is not in dispute that, at least at the time of the High Court proceedings, the capped price fixed by the Minister was significantly less than what would be obtainable on the “open market.”

252. In their written and oral submissions the Applicants contended that it would be unrealistic not to regard a milk quota as valuable an asset in its own right as land itself, and that the resulting effect of the price fixed by the Minister was analogous to “to the forfeiture of unused agricultural land at a price significantly below market values or which seriously inhibited the right to lease such an asset. Such a consequence was manifestly in conflict with Articles 40.3.2 and 43 of the Constitution.”

253. First of all it should be said that the 2000 Regulations apply to all persons who were holders of a milk quota so to speak at the time of their entry into force and it is not in issue that they apply to all that class of persons in accordance with objective criteria.

254. Pursuant to those regulations, each of the Applicants is entitled, in common with all other holders of quotas, to retain the quotas attributed to them on resuming production of milk. It is for reasons wholly personal to them that they will not do so.

255. Their quotas are not being forfeited. That the Minister was entitled to make detailed rules concerning restrictions on transfer of quota with land with a view to implementing the community regulations is not in dispute (save obviously as to whether it ought to have been done by way of primary legislation or secondary legislation). In making such rules and in exercising the discretion provided for in Article 8a(b) of Regulation 3950/92 (as inserted by Article 1.10 of Regulation 1256/1999, the Minister was constrained by the objective of “ ensuring that reference quantities are solely attributed to active milk producers ”. As Fennelly, J. points out in his judgment, member state discretionary action is circumscribed by the objectives of the scheme authorising it and that “ in the instant circumstances, Member States are authorised to act only to achieve the aim of ensuring that reference quantities are attributed to producers ”.

256. In my view the adjustments implemented by the 2000 Regulations are internally rational to the objectives to be achieved by the regulatory regime. There is no forfeiture. There is no interference with a substantive right, such as property right.

257. The foregoing measures are no more than regulatory adjustments which are an inherent part of a particular organisation of any market. Clearly no economic operator who participates in such a market can legitimately expect it to remain in a static or frozen form and must accept the consequences of such inherent internal adjustment as governing his or her participation in that market.

258. It seems to me that on any view the interest of the Applicants in their quotas, however it is characterised, have not been substantively diminished subject only to the remaining question which has arisen with regard to sale under the 2000 restructuring scheme. In reality it is that question which has been the focal point of the Applicant’s complaint regarding infringement of their property rights. In doing so they have contrasted the price available in the restructuring scheme by virtue of the capped price fixed by the Minister and that which would be available on what, the first Applicant’s auctioneer referred to as, “ the open market ”. It may be said that “open market” is hardly an apt term since the market in milk and hence its price is a creature of the particular market conditions created by the regulatory regime itself. In reality it is the price which the sale of a quota, based on the maximum fixed price per gallon, (or litres), would obtain on that particular market as a construct of the regulatory regime, which is contested.

259. Article 26 (5) of the 2000 regulations is the provision which authorises the Minister to fix the capped or maximum payment for a quota surrendered in the 2000 Restructuring Scheme. It is also the provision which authorises the Minister to set the reallocation price. It is not this provision which is in issue with regard to the infringement of the Applicant’s property rights but rather the price fixed by the Minister pursuant to that provision and which he announced by way of departmental notice no. 94/1, namely that the maximum price for quota to be offered under the restructuring scheme is fixed at 30p per litre or approximately £1.36 per gallon. The uncontested evidence before the High Court, as set out in paragraph 39 of the affidavit of Mr Evans is that the maximum price was fixed having regard to the objectives contained in Article 8, (the allocation of quotas to active milk producers). In this regard Mr Evans added “ I say and believe that this was a fair price taking into account the interest of milk producers requiring additional quota and those person disposing of their quota. Most of quota surrendered and reallocated in accordance with the scheme will be reallocated to small and medium size producers. In most cases, producers finance the purchase of additional quota by raising loans from lending institutions. Many of the producers will have required quota in previous years, similarly financed. On the other hand, persons selling their quota under the restructuring scheme are likely to have benefited significantly from leasing their quota over a number of years with land or under temporary leasing schemes”

260. It is clear that the price fixed by the Minister is internally and rationally related to the functioning and the continuing existence of the common organisation of the milk market with a view to achieving it’s objectives. Non-active milk producers, such as the Applicants who have a quota and who for reasons personal to them do not wish to or cannot resume actual production of milk are allowed an opportunity to sell at a maximum price which takes account on the one hand of the needs of such persons and on the others of persons who wish to enter the system, acquire a quota or an additional quota and actively produce milk. The so called ‘market value’ relied upon by the Applicants is also an artificial product of the organised market in milk. The potential opportunity to sell at the “market price” generated by the functioning of the quota system to the exclusion of the regime now established by the 2000 regulations (including the price fixed by the Minister under those regulations) is not a property right. Property rights generates notions of proprietorship and dominion. In the context of this scheme I do not consider that the Applicant’s had a proprietary interest in the selling at the particular “market price” which they seek to rely on. For the reasons stated I consider that the Minister, in fixing the price which he did, has acted within the ambit of the common organisation of the milk market and a quota regime and if there can be said to be a market price it is that governed by the maximum price fixed by the Minister. To hold otherwise it would be to deny the Minister his right and duty to exercise his lawful regulatory powers to ensure the proper functioning of the system. It would also wrongfully attribute to the Applicant’s some proprietorial right to determine how the regulatory system in which they have participated should be operated.

261. For these reasons I am of the view that the property rights of the Applicants have not been infringed under national law.


Property Rights - community law: -

262. It is well established that the protection of fundamental rights is an integral part of the community legal order which Member States must respect. The right to property is one of those rights (C-4/73 Nold -v- Commission [1974] ECR 491, para 14 and C-4/79 Hauer -v- Land Rhinland Pfalz [1979] ECR 3727 , paras 17-30). Action on the part of Member States taken within the scope of community law has to comply with community requirements with regards to the protection of fundamental rights (C-22/84 Johnston-v- Chief Constable of the RUC [1986] ECR 1651 , para 18). In the Wachauf case the Court of Justice held that “ since those requirements are also binding on the Member States when they implement community rules, the Member States must, as far as possible, apply those rules in accordance with those requirements ” (C-5/88 Washauf [1989] ECR 2609 para19). The Hauer case made it clear that the compatibility of such measures with the fundamental rights as protected by the community must be determined autonomously in the light of community law alone. [at p.3744].

263. In this context the issue is whether the 2000 regulation made by the Minister infringes community law guarantees on the right to property.

264. Counsel for the Applicants have freely acknowledged that in the Bostock case (cited above) the Court of Justice held, in reaffirming an earlier decision, that “the right to property safeguarded by the community legal order does not include the right to dispose, for profit, of an advantage, such as the reference quantities allocated in the context of the common organisation of a market, which does not derive from the assets or occupational activity of the person concerned ...” (at p. 984)

265. That statement of the law still stands and nothing in the subsequent case law of the Court of Justice including its decision in Demand -v- Hauptzollampt Trier (cited above) has qualified it notwithstanding the views expressed by the Advocate General in that case.

266. The Applicants have argued that Bostock concerned the right to dispose of a quota for profit whereas this case is concerned with what is in effect a compulsory acquisition of the State of a quota at a price substantially less than the prevailing market price. As I have already held there is no forfeiture of the quota. It is the personal circumstances of the Applicants which prevent them from utilising the quota attributed to them. What they are concerned with is the price limitation on which they may sell that quota. In my view the situation of the Applicants is governed by the Court of Justice in the Bostock case.

267. There is in any case parallel jurisprudence of the Court of Justice in its approach to the assertion of property rights in the context of the common organisation of the market in the agricultural sector. In this approach the Court of Justice, without declaring that the rights in question are in fact property rights, has dealt with the issue by defining the proper restrictions which in any event maybe placed on the exercise of property rights in the context of a common organisation of the market. In Schrader (C-265/87 [1989] ECR 2237 , the Court stated “ both the right to property and the freedom to pursue a trade or profession ... do not constitute an unfettered prerogative, but must be viewed in the light of the social function of the activities protected thereunder. Consequently, the right to property and the freedom to pursue a trade or profession may be restricted, particularly in the context of a common organisation of the market, provided that those restrictions in fact correspond to objectives of general interest pursued by the community and that they do not constitute a disproportionate and intolerable interference which infringes upon the very substance of the rights guarantee ”.

268. This approach has been followed in successive cases and repeated in the Demand case where the Court stated, at paragraph 40, “ with regard to more particularly to right to property, which according to the Plaintiff in the main proceedings has been infringed, the Court held, in paragraphs 28 and 29 of Irish Farmers Associations , cited above, that the regulations in question form part of a body of legislation intended to remedy the surpluses on the milk market and therefore correspond to aims pursued by the community in the general interest and that the conversion into a definitive reduction without compensation does not affect the actual substance of that right ”.

269. In the ensuing paragraph it stated “ it must be added, regardless of the legal nature to be attributed to an additional reference quantity, but having regard to the persistence of surpluses, a definitive withdrawal of 4.74% of an additional reference quantity appears to be appropriate and necessary to achieve the aim of that measure, namely an enduring reduction of surpluses ”.

270. Having regard to the position of the Applicants as I have already outlined this case law also applies to their situation however their interest is regarded.

271. Accordingly I conclude that there are no property rights of the Applicants which have been infringed under community law.

272. The issue being clearly governed by decisions of the Court of Justice, there is no obligation to make a reference under the third paragraph of Article 234 of the E.C. Treaty (C-283/81 CILFIT -v- Ministry of Health [1982] ECR 3415, paras. 14,15).

273. Having regard to the conclusions which I have reached and those of Fennelly, J. in his judgment I would dismiss the appeal.



THE SUPREME COURT

Keane C.J.
Denham J
Murphy J.
Murray J.
Fennelly J.
340/2000
BETWEEN

NICHOLAS PHILIP (OTHERWISE MARTIN) MAHER
MALACHY BRETT AND RITA RYAN
APPLICANTS
AND
THE MINISTER FOR AGRICULTURE FOOD AND RURAL DEVELOPMENT IRELAND AND THE ATTORNEY GENERAL
RESPONDENTS


JUDGMENT delivered the 30th day of March, 2001 by FENNELLY J.

274. Each of the three applicants is a farmer in County Tipperary. Each is entitled to a reference quantity, commonly called a milk quota, for the production of milk on his or her holding. Each of the applicants has for a number of years, by reason of personal circumstances, leased either the relevant holding together with the milk quota or temporarily leased the milk quota itself. These arrangements permitted the applicants to continue to benefit from the milk quota entitlement without actively engaging in milk production. They were carried out in accordance with the milk-quota regulations in force.

275. The situation of the applicants was changed in the year 2000. The first respondent, the Minister for Agriculture Food and Rural Development (“the Minister”), made new regulations. The applicants may either have to resume active production or have their milk quotas sold for restructuring at a price determined by the Minister. They claim that this could not be done in the way the Minister did it, namely by regulations and without any act of the Oireachtas. Furthermore, the applicants say that their fundamental rights in respect of property have been infringed.

276. This case raises in a different form one of the issues which was decided by this Court in Meagher v Minister for Agriculture and Food and others [1994] 1 I.R. 329 ( “ Meagher” ) . It is necessary to consider further the relationship between European Community law and the constitutional prerogative of the Oireachtas as the sole law-making authority for the State.


Common Organisations of the Market

277. The Common Agricultural Policy of the European Community (“CAP”) is one of the foundations of the European Community. Although it is becoming normal to refer to the European Union, all the legal issues in the present case arise under the Treaty Establishing the European Community ( The EC Treaty). I will use the new numbering and form of numbering introduced by the Treaty of Amsterdam. Article 33EC states the objectives of the CAP, which include improved conditions of production, fair standards of living, stable markets and reasonable prices for consumers. It also provides that account should be taken of: “the particular nature of agricultural activity, which results from the social structure of agriculture and natural disparities between the various agricultural regions.”

278. The preferred mechanism for attainment of the objectives of the CAP is, as envisaged by Article 34EC, the common organisation of the market in individual product categories. A common organisation of the market “may include all measures required to attain the objectives set out in Article 33, in particular regulation of prices, aids for the production and marketing of the various products, storage and carryover arrangements and common machinery for stabilising imports and exports.” Article 37EC reserves the power to establish a common organisation of the market to the Council acting on a proposal from the Commission.

279. The basic common organisation of the market in milk products was laid down by Council Regulation (EEC) No 804/68 of 27 June 1968 (OJ English Special Edition 1968 (I), p. 176.) on the common organisation of the market in milk and milk products. Its aim was to guarantee to producers a common target price, supported by certain intervention measures.

280. This system failed, however, to resolve the more or less permanent market imbalance amounting to structural over-supply. The Community responded , inter alia, by introducing the so-called co-responsibility levy, via Council Regulation 1079/99 of 17 May 1977 (OJ 1977, L 131, p.60.) The levy was payable by producers at rates varying from 1.5% to 4% of the target price on all milk sold. (See Case 179/84 Bozzetti v Invernizzi [1985] ECR 2301.) Still the surpluses persisted.

281. This very serious situation furnished the setting for the introduction of what is commonly called either the super-levy or the milk quota system. Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) 804/68 ...... of 31 March 1984 ( Regulation 856/84 ) commences by reciting that the “market in milk products in the Community is suffering from structural surpluses as a result of an imbalance between supply and demand...” In particular, it records in the third recital in the preamble that:


“..despite application of [the] co-responsibility levy, quantities of milk delivered are increasing at a rate such that disposal of surpluses is imposing financial burdens and market difficulties which are jeopardising the very future of the common agricultural policy.”

282. The essentials of the new regime, as it existed up to 1987, are succinctly summarised, and described as “revolutionary,” in the judgment of Murphy J in Lawlor v Minister for Agriculture [1990] 1 I.R. 356, at page 362 ( “Lawlor”). Regulation 856/84 contains the basic elements of the scheme and Council Regulation (EEC) No 857/84 of 31 March 1984 adopts, as its title states “general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector.” The core of the new system was the establishment of a structure of reference quantities at Community, national and producer level. The additional levy or super-levy was designed to penalise excess production by requiring the producer to pay an amount per gallon, the "super-levy" on any excess such that he would incur a loss. Hence the need to relate milk quota to landholding. In the result, the so-called milk quota came to be perceived, rightly or wrongly, as a species of property right enjoyed by those producers who met the initial conditions, or some later adjustments, to be awarded one. The regime was originally introduced for a five-year period, but has been renewed for successive periods. At present it is due to expire on 31 March 2008, but subject to a specific undertaking by the Council to conduct a mid-term review with a view to allowing it to run out after 2006.

283. What is in controversy in the present case is the aspect of the regime that regulates the relationship between the ownership of agricultural land and the milk quota derived from it. The applicants complain of changes to the rules regarding the transfer of holdings with milk quota attached and the rules regarding temporary transfer of milk quotas. These changes followed the adoption of Council Regulation (EEC) No 3950/92 of 28 December 1992 but especially of Council Regulation (EC) No 1256/99 of 17th May 1999. I will consider these changes in detail later in this judgment.

284. The present case centres essentially on the exercise by the State, by means of secondary legislation, of a number of options or discretions conferred by the Community rules. It is important to note from the outset that it is not suggested, in any respect, that the State has committed any infringement of Community law by exceeding the scope of the discretion conferred by those rules. The national rules are contained in the European Communities (Milk Quota) Regulations 2000 ( S. I. No. 94 of 2000) (the “2000 Regulations”) made in exercise of the powers conferred by section 3 of the European Communities Act 1972. The 2000 Regulations make changes in the existing regime insofar as it attaches milk quota to land, make provision for the adding of milk quota so detached from land to the national reserve and provide for the phasing out of the system of temporary transfers.


How the applicants are affected

285. The first-named applicant owns 130 acres of land, of which 36.17 acres have a milk quota of 28,170 gallons. The latter was awarded to him in 1990 under the so-called “Mulder” arrangements. The latter point in no way affects his legal position, except that the “Mulder” quotas were awarded to milk producers who had gone out of production temporarily under a Community scheme and this may explain why this applicant has not for some years been actively engaged in milk production.

286. This applicant leased his land to one Maurice Ryan from 1996 to 2000 at £83 per acre and 25p per gallon. He complains that his options are now limited to :


- renewal of the lease to Maurice Ryan, but nobody else;
- sale of his milk quota to Maurice Ryan only;
- resumption of milk production (which, due to his personal circumstances he is unable or unwilling to do);
- temporary transfer of his milk quota for one year only.
- sale into restructuring, but at a price to be fixed by the Minister.

287. He wishes to keep his land with milk quota until one or more of his children, now aged 14 and 16, are of an age to enter dairy farming if they so wish. He objects to being compelled, as he sees it to sell his milk quota to the Minister at “a pittance” i.e. the price likely to be fixed by the Minister.

288. It may be added that this applicant, if he resumed active milk production, would be entitled, after an interval of three years to sell his land with milk quota just as before.

289. The second-named applicant jointly owns with his wife 77 acres with a milk quota of 24,404 gallons. He is 76 years of age. For reasons of ill-health he has for some years, in part leased his lands with milk quota and, for the remainder (9404 gallons), has temporarily leased the milk quota to the local co-operative creamery.

290. Since he is deprived of the right to continue the practice of temporary transfer and may not lease land and milk quota on the open market, he says his only options are:


- to resume production;
- to sell into the restructuring scheme.

291. The third-named applicant is the owner of twenty acres of land with milk quota of 11,844 gallons. She has for a number of years availed of the right of temporary transfer of the entire of this milk quota to the local co-op. She cannot continue the temporary transfer without the consent of the Minister. She sees her only options as being the resumption of milk production or sale into restructuring on the Minister’s terms.

292. The applicants say that they are placed at a disadvantage by being prevented from leasing land and milk quota and/or temporarily leasing milk quota (where relevant) at open market rates. In particular the Minister has indicated a price for the sale of milk quota into restructuring of £1.36 (said to be about to descend to £1.00) per gallon as against an open-market price of £3.00. This, they claim, amounts to a regime of compulsory purchase of their milk quota.


The Proceedings

293. The applicants applied for judicial review of the 2000 Regulations. Mr Patrick Evans, of the Milk Policy Division of the Department of Agriculture gave on affidavit a very comprehensive account of the milk quota system. The matter was heard by Miss Justice Carroll, in the High Court. The applicants argued that the aspects of the 2000 Regulations complained of, to the extent that they consisted of the exercise by the State of options, represented the making of policy choices and could not, therefore, be considered to be necessitated by membership of the European Communities for the purpose of Article 29.4.7 of the Constitution. Consequently, they could be enacted only by primary legislation. The right of a holder of milk quota to sell his land with quota attached could not be restricted or abolished by secondary legislation. Accordingly, the 2000 Regulations were introduced in contravention of Article 15.2.1 of the Constitution.

294. Miss Justice Carroll dismissed the claim of the applicants. She held that “the Minister was entitled to make the decision that quotas should go to active milk producers which was in accordance with the stated policy under the milk quota council Regulations.”


295. She explained her conclusion as follows:


" 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."

296. The applicants have appealed to this Court. The say principally that the learned trial judge erred in law in holding that the Minister was merely executing principles and policies laid down in Community regulations. They state rather that, in making the choices which he did, he made decisions which themselves involved policy choices which could be made only by primary legislation passed by the Oireachtas. They also state that the 2000 Regulations infringe their property rights as guaranteed by the Constitution and/or by Community law.


The applicants’ submissions

297. The applicants claim that the 2000 Regulations are not necessitated, principally because they consist of the exercise of choice, by the obligations of membership of the Community and secondly that they are not within the ambit of principles and policies laid down in the Community regulations.

298. It seems to me more logical to approach these two questions in the reverse order. Firstly, do the 2000 Regulations represent a valid exercise by the Minister of the powers delegated to him considering the Constitution, the European Communities Acts and the Community regulations? If they do, they are permitted and valid and the question of whether they are necessitated does not arise.

299. The applicants submitted that Regulation 1256/99 allowed Member States such broad discretion that it involved for this State the making of significant choices in respect of fundamental principles and policies. It amounted to the return of broad measures of legislative power to the Member States. Wherever Community law does not lay down common rules as part of the common organisation of the market in milk and milk products, the recent case-law of the Court of Justice shows that the national authorities “act in accordance with the procedural and substantive rules of their own national law...” ( Case C- 285/93 Dominikanerinnen-Kloster Altenhohenau v Hauptzollamt Rosenheim [1995] ECR I- 4069, paragraph 26; Case C-292/97 Kjell Karlsson and others v [2000] ECR I-2737). In any event, at a general level, national measures implementing a regulation provided for by the regulation itself are “governed by the public law of the Member State in question.” (Case 230/78 Eridania v Minister for Agriculture and Forestry [1979] ECR 2749, paragraph 33).

300. In such a situation and, in the light of the decision in Meagher, Article 15.2.1 of the Constitution requires that delegated legislation should not stray beyond the principles and policies laid down in the parent act. The constitutional constraints on secondary legislation could not be dispensed with. The applicants also relied on a range of decisions of the High Court and of this Court.

301. Insofar as land transfers and the operation of the restructuring scheme is concerned the Minister has made important policy choices in the 2000 Regulations:


- deciding whether to maintain the link between land and milk quota and on the cases in which the link would cease to apply;

- adopting rules to exempt inter-family transfers from the changes made;

- deciding on the reversion of milk quota to the national reserve in the case of expiring leases;

- deciding on the extent to which active milk producers could transfer land with quota;

- making choices between the five permitted methods of transfer of milk quota set out in Article 8 of Regulation 3950/92 as amended by Regulation 1256/99;

- determining the maximum payment for the surrender of milk quota;

302. The applicants lay special emphasis on the important policy choices made by the Minister in breaking the link between land and milk quota. They contest the existence of any Community policy to favour active milk producers. Article 8a confers a discretionary power only. The exercise of the latter must be subjected to the test laid down by this court in Cityview Press v An Comhairle Oiliuna [1980] I.R. 381. The relevant principles and policies must be set out in the governing statute. In the present instance, they are not set out in the Community Regulations so that the 2000 Regulations represent an impermissible exercise by the executive of legislative power and are, for that reason, invalid.

303. Moreover, the 2000 Regulations consist of the exercise of options or the making of choices of a fundamental kind. Even though the occasion for their making derives from Community legislation, they are not mandatory or obligatory. Hence, they are not “necessitated by the obligations of membership of the European Union or of the Communities.” Consequently, they do not benefit from the exemption conferred by Article 29.4.7 of the Constitution from scrutiny for any infringement of its other provisions, in particular Article 15.2.1. In this context, the Court was invited to consider the change made in the course of the legislative process leading to the passing by the people of the necessary constitutional amendment to permit accession by the State to membership of the Community from “consequent upon” to “necessitated” in the wording now found in Article 29.4.7 of the Constitution.

304. Although the Court in Meagher upheld the constitutionality of the European Communities Act, 1972, in conferring wide power on the State to implement provisions of Community law by using the forms of delegated legislation, the judgment of the Court in that case clearly envisaged circumstances in which an exercise of that power could be held to be unconstitutional. The applicants took issue with the judgments in Meagher and certain High Court judgments, as well as the judgment of the learned trial judge insofar as they gave a broad meaning to the expression, “necessitated.”

305. If the applicants fail in all of their arguments aimed at impugning the validity of the 2000 Regulations, they say that the latter constitute an improper invasion of their rights of property, specifically in their rights in respect of milk quota. As they represent the exercise of discretion, they are not "necessitated" and not protected by Article 29.4.7 from other provisions of the Constitution. They fairly concede that the case-law, specifically Case 2/92 R v Ministry of Agriculture, ex p. Bostock [1994] ECR I- 995, ("Bostock") is against them. Milk quota is not considered by the Court of Justice to be a property right. They cite a recent opinion of Advocate General Ruiz-Jarabo Colomer (Case C-186/96 Demand v Hauptzollamt Trier [1998] ECR I-8529) to suggest that change is possible. They also say that Community law does not prevent national law from offering a higher level of protection (Case C-63/93 Duff v Minister for Agriculture [1996] ECR I-569, Advocate General Cosmas’ Opinion, paragraph 60, and Duff v Minister for Agriculture [1997] I.R. 22.)


The respondents’ submissions

306. The respondents take issue with the applicants in respect both of the permissibility of the 2000 Regulations and their necessity.

307. The sole purpose of the 2000 Regulations was to give effect to Regulation 3950/92 and Regulation 1256/99. These have general application in Irish law by virtue of Article 249EC. Their role is analogous to an act of the Oireachtas and all relevant principles and policies are to be found in this basic enabling legislation. The 2000 Regulations are thus intra vires the powers conferred by section 3 of the European Communities Act, 1972 (“the act of 1972"). They were, in any event, necessitated by the obligations of membership of the European Community.

308. The respondents contend, in particular, that Regulation 3950/92 and Regulation 1256/99 disclose the existence of Community policies :


- favouring the putting of milk quota in the hands of active milk producers;
- reducing the costs of production;
- improving the structure of milk production.

309. The respondents contest, in particular, the applicants’ claim that a large body of legislative power has been returned to the Member States. All national rules must be approved by the Commission. In practice, they are always discussed in advance. The national rules at issue in this case are detailed rules and make limited permissible variations in the common organisation of the market.

310. Significant exceptions to the rule of the transfer of land with milk quota existed from 1984 and have been progressively extended. The changes made by Regulation 1256/99 were only the last in a series of exceptions. The Minister was constrained by the very precise objective set out in Article 8a, i.e., “the aim of ensuring that reference quantities are solely attributed to milk producers” as well as the general principles of Community law. Furthermore, the Minister has no power to determine the destiny of milk quota which he permits not to be transferred with land. It must, in accordance with Article 7(1), be added to the national reserve.

311. Similarly, restructuring has long been expressed as an objective of the Community regulations, as can be seen, in particular, from Article 8 of Regulation 3950/92 Restructuring has existed before and independently of changes in the rules regarding the transfer of quota.

312. This State has not exercised the option not to implement temporary transfer, as permitted by Article 6(2) of Regulation 3950/92 . It is accordingly implementing the mandatory obligation expressed in Article 6(1) to introduce a temporary leasing scheme within the scope of very limited options. Reliance is placed on the definition of producers to show that the Minister , in Regulation 27(3) was implementing Community policy. The Applicants are not producers.

313. In accordance with the case-law of the Court of Justice, in particular Bostock, the enjoyment of a reference quantity or milk quota does not amount to a property right.


The Constitution: the Oireachtas as Sole Legislator

314. The main issue is whether the 2000 Regulations represent impermissible and invalid legislation, taking the form of a statutory instrument, in circumstances where primary legislation is required. The Constitution, the act of 1972 and the EC Treaty all have a bearing on the issue. It is also necessary to consider the principal authorities, especially Meagher.

Article 15.2.1 of the Constitution provides:

“The sole and exclusive power of making laws for the State is hereby vested in the Oireachtas: no other legislative authority has power to make laws for the State.”

315. An enormous body of subordinate laws is, nonetheless, constantly passed by means of statutory instruments, regulations and orders. This type of delegated legislation is, by common accord, indispensable for the functioning of the modern state. The necessary regulation of many branches of social and economic activity involves the framing of rules at a level of detail that would inappropriately burden the capacity of the legislature. The evaluation of complex technical problems is better left to the implementing rules. They are not, in their nature such as to involve the concerns and take up the time of the legislature. Furthermore, there is frequently a need for a measure of flexibility and capacity for rapid adjustment to meet changing circumstances. Without suggesting that a different approach is required for the present case, by reason of the fact that it concerns the implementation of European Community legislation, it is obvious that the adoption of detailed rules regulating production and trade in agricultural products is a particularly notable example of the exigencies of this type of law-making. There is, for example, an obvious need to be able to react rapidly and often severely to sudden trading problems or so as to protect human and animal health in the face of the outbreak of disease.

316. On the other hand, it is obvious that secondary legislation largely by-passes parliamentary scrutiny and the democratic process. Thus, the courts have found it necessary to strike an appropriate balance between the protection of the exclusive law-making domain of the Oireachtas and the proper function of the executive. The distinction is a functional one, aimed at designating the proper bounds of legislative and executive power. Delegated legislation is permitted and does not infringe Article 15.2.1, provided that the principles and policies which it is the objective of the law to pursue can be discerned from the act passed by the Oireachtas so that the delegated power can only be exercised within the four walls of the law. This serves the double purpose of preserving the legislative prerogatives of the Oireachtas and assuring those affected by orders or regulations that the courts may be asked to police the bounds set by the law and, if necessary, to declare them to be ultra vires the powers of the Minister or other delegated authority.

Cityview Press remains the leading authority on the permissible bounds of delegation of legislative power. It concerned powers to impose a levy to finance ANC, the industrial training authority. ANC could, inter alia , fix the amount of the levy as well as the categories of persons who were bound to pay it. The judgment of the Court, given in response to a claim that the empowering statute was unconstitutional, was delivered by O’Higgins C.J.. The leading passage reads as follows:

“...the ultimate responsibility rests with the Courts to ensure that constitutional safeguards remain, and that the exclusive authority of the National Parliament in the field of law-making is not eroded by a delegation of power which is neither contemplated nor permitted by the Constitution. In discharging that responsibility, the Courts will have regard to where and by what authority the law in question purports to have been made. In the view of this Court, the test is whether that which is challenged as an unauthorised delegation of parliamentary power is more than a mere giving of effect to principles and policies which are contained in the statute itself. If it be, then it is not authorised; for such would constitute a purported exercise of legislative power by an authority which is not permitted to do so by the Constitution. On the other hand, if it be within the permitted limits- if the law is laid down in the statute and details only are filled in or completed by the designated Minister or subordinate body - there is no unauthorised delegation of legislative power.”

317. In the event, the Court held that the act in question contained “clear declarations of policies and aims” and that there had been no “unconstitutional delegation of authority.”

Apart from Meagher, the principal recent authority of this Court is Laurentiu v Minister for Justice [2000] I.L.R.M. 1. That case is notable for the discussion in the leading majority judgments of Denham and Keane JJ of the antecedents of the test based on principles and policies in the common law countries and its place in the constitutional scheme of separation of powers. Denham J stated at page 22:

“There are limits to permissible delegation by the organs created by the Constitution . The Oireachtas may not abdicate its power to legislate. To abdicate would be to impugn the constitutional scheme. The scheme envisages the powers (legislative, executive, judicial) being exercised by the three branches of government-not any other body. The framework of the Constitution, the separation of powers, the division of power, retains a system which divides by function the powers of government to enable checks and balances to benefit democratic government. Also, in accordance with the democratic basis of the Constitution, it is the people’s representatives who make the law, who determine the principles and policies. The checks and balances work as between the three branches of government- not elsewhere. Thus Article 15.2 must not be analysed in isolation but as part of the scheme of the separation of powers in the Constitution.”

318. This passage contains a proper emphasis on the essential part of the Oireachtas in preserving and assuring the democratic nature of the State. Article 15.2 also performs the function, recalled by Barrington J in his dissenting judgement of striking “a balance between the rights of individual citizens and the exigencies of the common good.”

319. As to the application of the test of principles and policies, Denham J went on to point out that: “Each case depends on its own facts and requires that the principles and policies ....be set out in the legislation.”

320. In the case in question, it was held that the Aliens Act, 1935 failed the test, since it contained no discernible principles or policies at all. The test, however, remains intact. It provides the basis for deciding whether a given legislative act abdicates the exclusive authority of the Oireachtas. It is intrinsic to the test, and is important in the present case, that the named executor of delegated authority has power and discretion to make decisions within the four walls of the governing statute. For example, The State (Sheehan v Government of Ireland [1987] I.R. 555 shows that a discretionary power may, in certain circumstances, be so expressed that the decision whether to exercise it at all may be postponed indefinitely .


Delegated legislation: Community Law

321. The case which is most material to the present discussion is Meagher and not merely because it concerned the implementation in Irish law of a directive adopted by the Community legislature.

322. Before embarking on a consideration of the relevance of Meagher to the present case, it is necessary to recall the changes to the constitutional and legal structure of this State resulting from membership of the European Communities and later the European Union and to refer to the provisions of the EC Treaty which are principally concerned. The import of Meagher cannot be considered in isolation.

323. The first important constitutional provision is Article 29.4.3 introduced by the Third Amendment to the Constitution in 1972 under which it was provided that “The State [might] become a member of the .........European Economic Community.” Article 29.4, paragraphs 3, 4, and 5, respectively authorised the State by means of successive constitutional amendments to ratify the Single European Act in 1987, the Treaty on European Union (the Maastricht Treaty) in 1992 and the Treaty of Amsterdam in 1997. It emerges clearly from the judgment of this Court in Crotty v An Taoiseach [1987] IR 713 that the legislative capacity of the Council (and, since then, increasingly the European Parliament as co-legislator) seriously encroaches on the legislative sovereignty of the State.

324. Article 29.4.7 provides in addition that:


“No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or the Communities, or prevents laws enacted, acts done or measures adopted by the European Union or by the Communities or by the institutions thereof, or by the bodies competent under the Treaties establishing the Communities, from having the full force of law in the State.”

325. The Community regulations giving effect to the common organisation of the market in milk and milk products are "first pillar Community measures, i.e. they were adopted under the EC Treaty. Accordingly, it is unnecessary, in the present case, to have regard to any acts or measures adopted under the Treaty on European Union. Furthermore, it is probable that the authority to ratify the respective Treaties, in particular, the EC Treaty provide sufficient basis, in Community law terms, for the full effect in Irish law of directly applicable Community measures, even without the additional protection provided by Article 29.4.7.

326. The first two paragraphs of Article 249EC provide:


“In order to carry out their task and in accordance with the provisions of this Treaty, the European Parliament acting jointly with the Council, the Council and the Commission shall make regulations and issue directives, take decisions, make recommendations or deliver opinions.

“A regulation shall have general application. It shall be binding in its entirety and directly applicable in all the Member States.”

327. The first paragraph of Article 10EC (formerly Article 5), which is also relevant, provides:


“ Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community’s tasks.”

328. Community regulations are directly applicable; their entry into force and their application are “independent of any measure adopting [them] into national law.” ( Case 94/77 Zerbone v Amministrazione delle Finanze dello Stato [1978] ECR 99, paragraph 23.) As Denham J. explains, in different words, they do not require any national act of implementation for their binding effect. Indeed, where they are, in their own terms, capable of being directly applied, it has been said that: “ Member States must not adopt or allow national institutions with a legislative power to adopt a measure by which the Community nature of a legal rule and the consequences which arise from it are obscured.” ( ibid. paragraph 26.)

329. Where, however, as frequently happens especially in the case of a common organisation of the market, regulations, in addition to being directly applicable, allow Member States discretion in their implementation, some national act of implementation or transposition will be required. Then the principle cited by the applicants from the judgment of the Court of Justice in Eridania comes in. The Court there, at paragraph 34 of the judgment, said:


“The fact that a regulation is directly applicable does not prevent the provisions of that regulation from empowering a Community institution or a Member State to take implementing measures. In the latter case the detailed rules for the exercise of that power are governed by the public law of the Member State in question; however, the direct applicability of the measure empowering the Member State to take the national measures in question will mean that the national courts may ascertain whether such national measures are in accordance with the content of the Community regulation.” .

330. Clearly, the last sentence refers to the right of the courts of the Member States to refer questions of interpretation to the Court of Justice pursuant to Article 234EC (then Article 177 of the Treaty).

331. Counsel for the applicants drew attention specifically to the remark of Advocate General, at page 2787:


"But where a provision in Community legislation confers a discretion on a Member State it is open to that Member State to enact legislation for the purpose of implementing that provision. To what extent such legislation may be necessary , o r administrative action may suffice, is a matter to be determined by that Member State ’s own law, including where appropriate its constitutional law. "

332. As was observed succinctly by Lord Hoffman, "Community law is indifferent to the internal arrangements of power within a member state." (R v Secretary of State for Heath [2001] 1 All ER, 850 at 860) .

333. These passages must be read with those, also cited by the applicant, from the more recent case-law on milk quotas. It will suffice to quote the following from the judgment in Dominikanerinnen-Kloster (paragraph 26):


“It should, first, be recalled that ........ the Court [has held] that according to the general principles on which Community law is based and which govern the relations between the Community and the Member States , it is for the Member States, by virtue of Article 5 of the Treaty, to ensure that Community regulations are implemented within their territory. In so far as Community law , including its general principles, does not include common rules to this effect, the national authorities when implementing Community regulations act in accordance with the procedural and substantive rules of their own national law; however, these national rules must be reconciled with the need to apply Community law uniformly so as to avoid unequal treatment of producers and traders. Furthermore, such rules must not have the effect of making it virtually impossible to implement Community regulations......”

334. The applicants claim that a broad measure of competence has been returned to the Member States will be examined on its merits by reference to Regulation 3950/92 and Regulation 1256/99. However, Member States have limited scope for independent action when dealing with milk quotas. They cannot take action to grant them to fill a gap left by the amendment of a Community Regulation (Case C-127/94 R v MAFF esp. Eckroyd [1996] ELR I - 2741.) I believe it is possible to say that the passages just quoted do not give any support to the applicants' claim that Member States act autonomously in making choices when implementing Community rules. They establish the following propositions.

335. Firstly, in the absence of common rules, or where Community law authorises such action, Member States may adopt their own national rules. Secondly, by virtue, inter alia, of Article 10EC (formerly Article 5 of the Treaty), Member States must ensure the implementation of Community regulations and take no action to undermine them. Thirdly, in doing so, they are implementing Community law, with the result that general principles of Community law, notably the principle of equal treatment but also the fundamental rights protected in the Community legal order must be respected. Fourthly, Community law is indifferent as to the national method of implementation ( subject to the principle of effectiveness as explained in the passage from Dominikanerinnen-Kloster as well as the principle of equivalence, i.e., that rights under Community law are treated no less favourably than those granted by national law). For present purposes, that indifference relates to the choice between legislation and regulation.

336. In summary, Member States, acting within the framework of Community regulations, exercise powers or discretions which are conferred on them for the furtherance of the objectives of the scheme in question. Community law does not require any particular form of implementation. That is a matter for the legal system of the Member State concerned, except that the implementation must not have the effect of impeding the effectiveness of Community law.

337. The European Communities Act, 1972 contains the following provisions:


"2. From the 1 st day of January, 1973, the treaties governing the European Communities and the existing and future acts adopted by the institutions of those Communities shall be binding on the State and shall be part of the domestic law thereof under the conditions laid down in those treaties."

"3.(1) A Minister of State may make regulations for enabling section 2 of this act to have full effect.

(2) Regulations under this section may contain such incidental, supplementary and consequential provisions as appear to the Minister making the regulations to be necessary for the purposes of the regulations (including provisions for the repealing, amending or applying, with or without modification, other law, exclusive of this Act."

338. Whatever view might be taken by the Court of Justice regarding the direct effect of treaty provisions or acts of secondary legislation, section 2 was clearly an essential part of the machinery for giving effect to those provisions as a matter of Irish law, in view of

339. Article 29.6 of the Constitution. For the purposes of the present case, it has the effect of making Articles 10EC and 249EC part of the law of the State.

340. It is the effect of section 3(1) which is in issue. The applicants accept, as they must, that the act of 1972, as was found in Meagher is compatible with the Constitution. However, they rely on the reiteration in the judgment of the Court, on that issue, of the principle that legislation must be so interpreted as not to be in conflict with the Constitution, in particular that an act cannot be interpreted so as to invade the exclusive legislative domain of the Oireachtas. Finlay C. J., delivering the judgment of the court stated at page 352:


“In so far as it may be possible to point to hypothetical instances of certain types of laws, measure or acts of the Community or Union which in their implementation or application within the national law might not, as to the method of implementation or application, be necessarily carried out by ministerial regulation, but rather should have been carried out by enactment of law by the Oireachtas, the Court is satisfied, without deciding that such instances do occur, that the principles laid down by this Court in the decision of East Donegal Co-Operative Livestock Marts Ltd. v. Attorney General [1970] I.R. 317, must be applied to the construction of the impugned subsection in the manner in which it was applied by the decision of this Court in Harvey v. The Minister for Social Welfare [1990] 2 I.R.. 232 to the construction of the section of the statute impugned in that case, namely, s. 75 of the Social Welfare Act, 1952. That principle is that it must be implied that the making of regulations by the Minister, as is permitted by the section, is intended by the Oireachtas to be conducted in accordance with the principles of constitutional justice, and therefore that it is to be implied that the Minister shall not in exercising the power of making regulations pursuant to the section, contravene any provision of the Constitution.
“If therefore in such an instance challenge were to be made to the validity of a ministerial regulation having regard to the absence of necessity for it to be carried out by regulation instead of legislation and having regard to the nature of the content of such regulation it would have to be a challenge made on the basis that the regulation was invalid as ultra vires being an unconstitutional exercise by the Minister of the power constitutionally conferred upon him by the section.”

341. The early part of this passage might be read as implying that, in some circumstances, the implementation of Community law is necessarily, by reasons of the demands of Community law itself, carried out by regulation. It is clear, however, from the second quoted paragraph that this reading is not what was intended; in any event, as shown above, Community law makes no such demands. The issue of “necessity” is appropriately considered by reference to the content, not the form, of the instrument.

342. Consequently, it is perfectly possible for the courts, at least at the level of general principle, to apply the principles and policies test laid down in the case-law on Article 15.2.1 without any conflict with Community law. That test is designed, as is clear from the judgment of Denham J in Laurentiu, to protect the democratic basis of government, a principle which finds expression in the EC Treaty and in the judgments of the Court of Justice. Article 6 of the Treaty on European Union records that:


“The Union is founded on the principles of liberty, democracy , respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States.”

343. The second part of the decision in Meagher deals with the application of the principles and policies test to the implementation by means of a regulation made under the act of 1972 of Community law in the form of a Council directive. Blayney and Denham JJ delivered individual judgments, with which Finlay C. J. and O’Flaherty and Egan JJ agreed.

344. The two directives at issue concerned the prohibition of use of certain animal-growth hormonal substances. The State had included respectively a power to search farms and an extension of the time fixed by statute for commencing prosecutions of offences in ministerial implementing regulations. Blayney J decided that the directives could not be implemented without the first provision and that an extension of the time for prosecution was necessary. He reiterated the principle of the supremacy of Community law over national law and held that the national measures in controversy were “necessitated by the directive.” His determination of the issue followed from an analysis of Community law provisions . The respondents argued in this case that, on a true analysis of the Community directives, Ireland as a Member State had discretion and was not bound to adopt the particular implementing measures and that the Court still found them to be “necessitated”. That is, in my view, to miss the point and to confuse the interpretation of Article 29.4.7 of the Constitution with the interpretation of Community law. The fact is that, rightly or wrongly, Blayney J held that the provisions in question were required by Community law . Denham J shortly expressed the same opinion (page 363). This result is the same as would have followed if questions of interpretation of the relevant provisions had been referred to the Court of Justice and the latter had ruled that the adoption of the two provisions in controversy constituted Community-law obligations of the State.

345. Denham J made it clear, however, that this was not the end of the matter. She said:


“If the directive left to the national authority matters of principle or policy to be determined then the “choice” of the Minister would require legislation by the Oireachtas. But where there is no case made that principles or policies have to be determined by the national authority, where the situation is that the principles and policies were determined in the directive, then legislation by a delegated form, by regulation, is a valid choice. The fact that an act of the Oireachtas has been affected by the policy in a directive, is a “result to be achieved” wherein there is now no choice between the policy and the national act . The policy of the directive must succeed. Thus where there is in fact no choice on a policy or a principle it is a matter appropriate for delegated legislation. If the directive or the minister envisaged any choice of principle or policy then it would require legislation by the Oireachtas.”

Meagher is clear authority for the proposition that, where a provision of Community law imposes obligations on the State, leaving no room (or perhaps no significant room) for choice, then Article 15.2.1 of the Constitution is not infringed by the use of ministerial regulation to implement it. Both the judgment of the Court and that of Denham J expressly preserve the force of that provision, as it has been interpreted, for cases where such an obligation does not exist. The “principles and policies” test applies mutatis mutandis where the delegated legislation represents an exercise of a power or discretion arising from Community-law secondary legislation. It applies with particular clarity to the case of directives where Article 249EC leaves the choice of forms and methods to the Member States. The question will not arise so frequently in the case of regulations since they are directly applicable without the need for national implementing measures. Where a regulation leaves open a range of choice, the test will apply. Each case will have to be decided on its own merits. The mere existence of a Community regulation implies some sort of Community policy. Article 253EC obliges the Community legislature to state in such acts “the reasons on which they are based.” Member State implementing measures come inherently within the scope of such a stated policy. However, the principle of the applicability of the test is a recognition of the possibility that the choices left to the Member States may be of such significance in their nature or scope or so unconnected with Community policies and aims that they require legislation and that resort to regulations in such cases would infringe Article 15.2.1. On its facts, Greene v Minister for Agriculture [1990] 2 I.L.R.M. could have been such a case, though Article 15.21 was not in issue. The Community rules allowed Member States to "lay down additional or restrictive conditions" one of which was held by Murphy J. to infringe Article 41 of the Constitution.

346. I should say that I fully agree with the judgment of the Chief Justice in his analysis of Meagher and with his conclusion that none of the measures impugned in this case was “necessitated by the obligations of membership.” I also agree, consequently, that the essential question is whether the Minister was in breach of Article 15.2.1 of the Constitution. If he was, the 2000 Regulations will be invalid, since, unlike those involved in Meagher, they are not "necessitated".


Applying the test

347. I will deal, firstly, with the change in the rules linking land and milk quota. From the outset, the Community rules envisaged that, in general, agricultural land used for milk production would be transferred only with the relevant milk quota attached. The original provision was Article 7(1) of Regulation 857/84, which provided:


Where an undertaking is sold, leased or transferred by inheritance, all or part of the corresponding reference quantity shall be transferred to the purchaser, tenant or heir according to procedures to be determined.”

348. There were differences between Formula A (where the milk quota is allocated to producers) and Formula B, adopted in Ireland, (where it is allocated to purchasers). However, rules were formulated to ensure that the same rules would apply where Formula B was adopted. (See Commission Regulation (EEC) No 1374/84, Article 5 and Murphy J in Lawlor, page 3640).

349. It may be noted that this provision was not founded on any explicit reasoning to be found in any of the recitals in the preamble to the regulation. The respondents’ argument that there were significant exceptions from the beginning to the rule of transfer of land with milk quota is not convincing. Article 7(3) merely provided part of the reference quantities might be added to the national reserve. Article 4, which was also invoked, authorised Member States to compensate milk “producers undertaking to discontinue milk production definitively” and to add the amounts so freed to the national reserve. Ireland did not, in fact, exercise these options. I am similarly unconvinced by a number of other examples of special exceptions which were cited from the years 1985 to 1987. It seems clear that the Community, as of 1984, opted firmly for a policy that land could be transferred only with the milk quota attached.

350. Regulation 857/84 was repealed by Council Regulation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sector. The fourteenth introductory recital to that Regulation states:

“Whereas when the additional levy system was brought in in 1984, the principle was established that when an undertaking was sold, leased or transferred by inheritance, the corresponding reference quantity was transferred to the purchaser, tenant or heir;
whereas this original decision should not be changed; whereas, however, national provisions to safeguard the legitimate interests of the parties should be implemented in all cases of transfer, where the parties are not in agreement;”

351. In the event, Article 7 was re-enacted by Regulation 3950/92 with some changes which are immaterial to the present case. Article 8 of Regulation 3950/92 provide for some other limited exceptions such as transfer to the national reserve when land is transferred for improvement of the environment. It also authorised Member States, with a view to restructuring of milk production, to permit transfer of reference quantities without the corresponding land “with the aim of improving the structure of milk production at the level of the holding.” Generally, however, the link between land and milk quota was maintained.

352. This prohibition on sale or transfer of land without milk quota, because it was effected by a regulation was, of course, directly applicable in Irish law and needed no further enactment to give it effect. It was, nonetheless, reinforced, as the applicants point out, by penal provisions in Regulation 12(1) of the European Communities (Milk Levy) Regulations, 1985 (S. I. No. 416 0f 1985) and by Regulation 4 of the European Communities (Milk Quota) Regulations , 1995 (S. I. No 266 of 1995)( the “1995 S.I.”)

353. Council Regulation (EC) No 1256/99 of 17 May 1999 amending Regulation (EEC) No Regulation 3950/92 ....... authorised radical change in the rules regarding the maintenance of the link between land and milk quota on sale or transfer.

354. Article 8 of Regulation 1256/99 replaces Article 7(1) of Regulation 3950/92 as follows:


“Reference quantities available on a holding shall be transferred with the holding in the case of sale, lease or transfer by inheritance to the producers taking it over in accordance with detailed rules to be determined by the Member States....”

355. At the same time, Article 1(10) of Regulation 1256/99 inserts a new Article 8a into Regulation 3950/92, which provides:


“Acting in compliance with the general principles of Community law, Member States may take the following measures, with the aim of ensuring that reference quantities are solely attributed to active milk producers:

(a).....

(b) Member States may decide not to apply the provisions on transfer of reference quantities in Article 7(1).”

356. The changes in the rules made by the Minister, the 2000 Regulations, regarding attachment of land to milk quota commence with Regulation 5(1) which provides, in relevant part:


“(1) Subject to the exceptions provided for in Regulations 6, 7, 8, 9, 10, and 11, where any holding, or part thereof, is transferred the milk quota attached to that holding or part thereof shall not be transferred to the person to whom the transfer is made;

“(2) Where there is a transfer of land to which milk quota attaches then, such milk quota shall be added to the national reserve unless Regulation 6, 7, 8, 9, 10, 11, 19, 20, 21, or 22 have been availed of ...”

357. This amounts to a clear and explicit decision by the State to avail of the power given by Community law to break the link between land and milk quota. There are a number of exceptions. The applicants say that both by deciding to exercise that option and in choosing the exceptions, the Minister was impermissibly legislating.

358. It is crucial to this issue to discern whether, in making this decision, the State is pursuing a Community objective or, recalling the applicants’ contention that power has been returned to the Member States, a purely national one. The power not to apply the provisions of Article 7(1) is given by Article 8a, inserted by Article 1(10) of Regulation 1256/99. That Article permits Member States to take such action “with the aim of ensuring that reference quantities are solely attributed to active milk producers...” This reflects policy expressed in the fourth recital in the preamble:


“Whereas the experience with the additional levy has shown that the transfer of reference quantities through legal constructions such as leases which do not necessarily lead to a permanent allocation of the reference quantities concerned to the transferee, can be an additional cost factor for milk production hampering the improvement of production structures; whereas, in order to strengthen the reference quantities character as a means of regulating the market of milk and milk products, the Member States should be authorised to allocate reference quantities, which have been transferred through leases or comparable legal means, to the national reserve for re-distribution, on the basis of objective criteria to active producers in particular to those who have used them before; whereas Member States should also have the right to organise the transfer of reference quantities in a different way than by the means of individual transactions between producers; whereas it should be explicitly provided, in particular with a view to taking account adequately of existing legal rights, that, when using these authorisations, Member States are to take the necessary measures to comply with the general principles of Community law;..”

359. I believe that this recital and the general scheme of the milk quota regime demonstrate that the State is acting as a delegate of the Community in making the choice to separate land and milk quota. As is shown by the case-law, the fact that Community regulations authorise the Member States to exercise discretion does not take action of the latter kind outside the scope of the Community regime. Member State discretionary action is circumscribed by the objectives of the scheme authorising it. The milk quota is itself a creature entirely of Community law. Member States are bound, by virtue of Article 10EC (formerly Article 5 of the Treaty), to ensure that Community law is implemented; national rules must comply with the general principles of Community law and the particular rules which apply. In the instant circumstances, Member States are authorised to act only to achieve the aim of ensuring that reference quantities are attributed to producers. Any action by the State in pursuit of a an unauthorised objective would be susceptible of challenge, by means of an infringement action pursuant to Article 226EC in the Court of Justice as being contrary to the terms of Regulation 1256/99.

360. Thus, applying the principles and policies test on the basis that Regulation 1256/99 stands in the place of an act of the Oireachtas, I believe that the State, in adopting Regulation 5 of the 2000 Regulations was exercising a power expressly conferred and for the purpose for which it was given.

361. In the light of that conclusion, it is probably not necessary to give separate consideration to the exceptions. They consist of modifications to the departure from the link of land and milk quota. However, they were argued as constituting distinct legislative choices.

362. The principal exceptions which have been canvassed in argument before the Court are those in Regulations 6, 7, 9 and 10. It will be sufficient to refer to these for the purpose of evaluating the extent and the nature of the legislative power exercised by the Minister in making the 2000 Regulations.

363. Regulation 6 provides that the “ milk quota attached to a holding shall be transferred” in the case of “sale, lease, gift or inheritance by a person to a relative of that person...,” a term defined in Regulation 6(2). It includes spouses, parents, children, brothers, sisters, grandparents, grandchildren, uncles and aunts. It is suggested that this also involves the making of a legislative choice not contemplated by Community law. It is not clear that the applicants have any independent interest in challenging this provision. It would not benefit them if it were annulled. Their claim is in reality that the Minister did not have the power, by regulation, to end the link of land to milk quota in the event of sale or transfer. For what it is worth, however, I believe that this exception would be held to fall comfortably within the power conferred on the Member States by the regulation. I have already referred to the inclusion of “the social structure of agriculture” among the considerations relevant to the common agricultural policy. If it is correct to say that Member States are authorised by Community law to restrict or end the rule that milk quota transfers with land, there is no basis – and none has been suggested – for saying that Community law would regard it as impermissible to make an exception for certain defined family transactions. The wording of Article 7(1) has at all times included “transfer by inheritance” among the cases where the link would apply. There is enough evidence in the case-law cited to the Court ( Case C-313/89 Rauh [1991] ECR I- 1647; Case C-44/89 von Deetzen v Hauptzollamt Oldenberg [1991] ECR I-5119 "von Deetzen” ) to show, not surprisingly, that the Court of Justice interprets provisions of Community law so as to favour family transactions. As already noted, Article 33EC requires account to be taken of “the social structure of agriculture,” which unarguably includes the family basis of farm ownership. The relaxation of the new rule to favour family transactions accords with that aim.

364. By virtue of Regulation 7, where a producer (or his legal personal representative) can obtain a certificate from the Minister, inter alia, that he has produced milk on the holding for a period of three years prior to the milk quota year in which the transfer is proposed, he may continue to transfer land with quota. This patently favours the active milk producer and accords with the objective of Article 8a and the sixth recital. This provision also demonstrates that removal of the land/milk-quota link is by no means as draconian as has been suggested. It remains open to each of the applicants, as they acknowledge, to resume production of milk on their own land and by this means and to regain the right to sell their land with milk quota.

365. Regulation 9 permits the purchase of land by a lessee of land and quota to be made with or without milk quota on the expiry or earlier determination of a lease. The lessee must, himself be a producer. This also favours the active milk producer.

366. Regulation 10 permits the renewal of an existing lease on its expiry, in which case the milk quota is transferred to the lessee for the term of the renewal. This provision cannot be the subject of complaint. Apart form favouring milk production, it represents the sort of fine regulatory choice which fits easily within the scope of action which can be taken without infringing Article 15.2.1 of the Constitution.

367. For these reasons, I do not think that the 2000 Regulations infringe Article 15.2.1 of the Constitution, in respect of the changes regarding the transfer of land with milk quota.

368. I should explain the purpose of the detailed consideration I have given to the Community provisions. It has never been contested that the 2000 Regulations were, in Community law terms, within the scope of the discretion available to the State. Therefore, I am not considering an issue of Community law. If I were, the court might be obliged to refer to the Court of Justice. I am judging, rather, whether the scope of the discretion conferred by Community law in regulations which become part of national law was so independent of principles and policies laid down by those Community regulations, as to place the State in conflict with Article 15.2.1 of the Constitution.

369. At this point, it is also necessary to consider the Communit y rules regarding temporary transfer of milk quotas. They, to some extent, also involve separation of land and milk quota. Temporary transfers were first authorised by Council Regulation (EEC) No 2998/87 of 5 October 1987 amending Council Regulation 804/68 ... This recites that “experience has shown that certain producers do not intend, over a 12-month period, using up all their individual reference quantities [and that] ... Member States should be authorised to place at the disposal of other producers for the 12-month period in question, the quantities which are not going to be used by other producers who are entitled thereto;” On this premise, Article 1 inserted a new Article 1a in Regulation 804/68 as follows:


“1a. Member States may authorise, at the beginning of each 12-month period and for the duration thereof temporary transfers of that part of the individual reference quantity which the producer who is entitled thereto does not intend to use .
Member State s may limit the transfer operations to certain categories of producers and on the basis of the milk production structure in the regions or collecting areas concerned.”

Regulation 3950/92 recited that “ ....the temporary transfer of parts of individual reference quantities in Member State s which authorised this ha [d] proven to be an improvement to the scheme [and that] this facility should therefore be extended to all producers [though its] implementation ........... should not stand in the way of further structural change and adjustment , nor fail to take account of the resulting administrative difficulties;”

370. Consequently, Article 6 of Regulation 3950/92 renewed the power to permit temporary transfer, transforming it, however, into an obligation, and adding that Member States might “determine to what extent transfer operations may be renewed.” Furthermore, Article 6(2) provided:


“Any Member State may decide not to implement paragraph 1 on the basis of one or both of the following criteria:

- the need to facilitate structural developments and adjustments,
- overriding administrative needs.”

The temporary transfer provisions were implemented in the State by Regulation 16 of the 1995 S.I. This delegated to the Minister the power to determine the categories of producers who might benefit and, more relevant to the present case, “the extent to which temporary transfers ......... [might] be renewed.” The public were to be informed by notices in a National newspaper.

371. Regulation 1256/99 made no significant change in the temporary transfer rules. It did, however, restate Article 6(1) of Regulation 3950/92 as follows:


“Before a date that they shall determine and by 31 March at the latest, Member States shall authorise, for the 12-month period concerned, temporary transfers of individual reference quantities which producers who are entitled thereto do not intend to use.”

372. Important restrictions are imposed, by Regulation 27 of the 2000 Regulations, on the system of temporary transfers as it has hitherto operated in the State.

373. Paragraphs (1) and (2) ostensibly preserve the right of a milk quota holder to make a temporary transfer of “such part of his or her milk quota as he or she does not intend to use during that milk quota year.” Paragraph (3), however, denies this right where the holder has “neither made milk deliveries to a purchaser, or sold milk or milk products directly for consumption, during any three successive milk quota years since 1 April 1997 and who made a temporary transfer of his quota under Regulation 16 of the Regulations of 1995 or under paragraph (2) during each of the 3 milk quota years in question..”


374. Paragraph (4), on the other hand permits a person who, likewise, has “neither made milk deliveries to a purchaser, or sold milk or milk products directly for consumption,” but has leased the land and milk quota for the same period to make a temporary transfer but for one year only.

375. Paragraph (5) enables the Minister, on application, to approve a temporary transfer for one further milk quota year only by a person affected by paragraph (3) or (4), where exceptional circumstances have caused the failure to deliver milk.

376. The respondents have made it clear that the State has not exercised the option granted by Article 6(2) of Regulation 3950/92 not to implement Article 6(1). Consequently, it is said, the State was obliged by Article 6(1) to “authorise ... temporary transfers of individual reference quantities which producers who are entitled thereto do not intend to use.” However, it is further argued that the applicants do not come within the definition of producer. That term is defined in Article 9 of Regulation 3950/92 as a “natural or legal person ...... farming a holding within the geographical territory of the Community :

- selling milk or milk products directly to the consumer,
- and/or supplying the purchaser.”

377. The respondents rely on the decision of the Court of Justice in Case C-152/95 Macon v Préfet de l’Aisne [1997] ECR I-5429. That case dealt with the identical definition in Article 12(c) of Regulation 857/84, where farmers, who had ceased milk production, (no explanation for this cessation appears in the report) sought compensation under a Community scheme for producers undertaking to discontinue production definitively. The Court of Justice held that the “term had not been given an independent meaning for the purposes of the rules on discontinuation of milk production.” (Paragraph 21). It held (paragraph 23):


“Only farmers actually selling milk or other milk products can ... be considered to be producers. By contrast farmers who have spontaneously ceased milk production are no longer producers for the purposes of Article 12(c) of Regulation 857/84.”

378. The Court, in that judgment recalled its judgment in Case C-341 Ballmann [1991] ECR I-25, where it had said: “the status of producer is accorded to any person who manages a holding, that is to say a set of production units ... and sells or delivers milk or milk products.”

379. Since consideration of this issue involves the interpretation of a provision of a Community regulation, the issue of the obligation of this Court to refer questions to the Court of Justice can arise. For the moment, I will say only that, in my view, the meaning of the term “producer” is quite clear. None of the applicants come within that definition. Therefore, they cannot rely on Article 6(1) of Regulation 3950/92 to claim the right to continue to make temporary transfers of their milk quotas. Accordingly, the Minister, in denying them that right by the terms of Regulation 27 was not making a choice between different options conferred by Regulation 3950/92. He was not entitled in Community law to grant the right to make temporary transfers to persons who were not producers. That is, of course, a conclusion of Community law which might have to be referred for preliminary ruling.

380. However, this Court, as a “court .... against whose decisions there is no judicial remedy under national law” is not obliged by Article 234EC to refer a question of interpretation to the Court of Justice, unless “a decision on that question is necessary to enable it to give judgment.” That is the situation which pertains in the present case, as I will explain.

381. As has been seen, Article 6 of Regulation 3950/92 authorises Member States to “determine to what extent transfer operations may be renewed.” The State was, on any view, entitled to determine that the right to make temporary transfers should be permitted for one further year only, unless exceptional circumstances were demonstrated. In making this decision, the Minister acting on behalf of the State was exercising a discretion conferred by Community regulations and for one of the policy reasons clearly stated by Community law. This is supported by the fourth recital in the preamble to Regulation 1256/99. It expresses the view that Member States “should have the possibility to decide in accordance with the general principles of Community law that, in cases of substantial under use [of milk quota ] over a significant period of time, the under used reference quantities will revert to the national reserve with a view to their reallocation to other producers;”

382. In my view, the Minister was entitled to decide, in the light of the general policy of favouring active producers that persons entitled to milk quotas, not in active production, but having used the facility of temporary transfer for three years past should be entitled to renew such temporary transfer for one further year only. In so doing, he was acting in accordance with principles and policies set out in the Community regulations.

383. The result of the foregoing is that:


1. The changes made in the rules regarding the link of milk quota to land on transfer constitute an exercise of discretions so closely linked to principles and policies laid down in Community law as not to require legislation for the purposes of Article 15.2.1 of the Constitution.

2. Although the applicants’ ability to make temporary transfers of their milk quotas is severely restricted by the 2000 Regulations, they have no right under Community law, from which such a right exclusively derives, to make such transfers. Although this involves a question of Community law, it is not necessary for this Court to decide the case on that basis, since, in this case also, the State was pursuing principles and policies laid down in Community law.


Property Rights

384. It is only in respect of the first of these issues that the applicants are in a position to maintain that their property rights have been infringed. It has been established since at least as early as the judgment of the Court of Justice in Case 11/70 Internationale Handellsgesellaschaft [1970] ECR 1125, that fundamental rights and in particular rights to property are protected in the Community legal order. In Case 44/79 Hauer v Land Rheinland-Pfalz [1979] ECR 3727, that court explained that such protection was inspired by the common constitutional traditions of the Member States and the European Convention for the Protection of Human Rights and Fundamental Freedoms. The court drew attention specifically to the German and Italian Constitutions and to Article 43 of the Constitution of Ireland. However, it is equally clear from this judgment that "the question of a possible infringement of fundamental rights by a measure of the Community institutions can only be judged in the light of Community law itself." (paragraph 14). The other named sources of fundamental-rights protection are integrated into the Community legal order. In Bostock, the Court of Justice said, citing its earlier decision to the same effect in Case C-44/89 Von Deetzen :


“The right to property safeguarded by the Community legal order does not include the right to dispose, for profit, of an advantage, such as the reference quantities allocated in the context of the common organisation of a market, which does not derive from the assets or occupational activity of the person concerned...”

385. In its judgment in Demand, the Court of Justice used the expression, “regardless of the legal nature to be attributed to an additional reference quantity,” when assessing and then rejecting a claim that Community provisions had infringed rights of property. As Murray J. explains in his judgment, when Member States exercise discretions conferred on them by Community law, as in this case, it is for Community law to decide whether they have infringed fundamental rights. The Court of Justice stated in Duff, at paragraph 29 that “the protection of fundamental rights in the Community legal order are also binding on the Member States when implementing Community rules.” (emphasis added). In that case, the Court of Justice considered both Community rules and the exercise of discretion at national level. It did not refer in its judgment to the point made by the Advocate General, in his Opinion, that national law might “in appropriate cases ... ensure greater protection ... than that afforded by the general principles applicable in the Community legal order.”

386. In my opinion, the applicants' complaint that their fundamental rights, whether or not described as property rights, have been infringed by the 2000 Regulations is unsustainable as a matter clearly decided in the constant case-law of the Court of Justice. Specifically, I cannot accept that their said rights were infringed by the State in exercising the discretion conferred on it to cease to apply Article 7(1) of Regulation 3950/92 (as amended) as introduced by the insertion by Article 1(10) of Regulation 1256/99 of Article 8a(b). I agree with the judgments of Denham and Murray JJ. on the issue of protection of property rights in milk quotas in Community law. I think that the position of the Court of Justice regarding claims based on infringements of property rights in milk quotas is clear beyond argument to the extent of being acte clair . On that basis - which was not seriously contested on behalf of the applicants - I do not think the Court is under an obligation to refer any question for preliminary ruling to the Court of Justice of the European Communities pursuant to Article 234EC.

387. In the present case the alleged infringements flow from the exercise of Member States' discretion within the framework and in pursuit of Community policies. In my view, the principle enunciated in Hauer applies to such a situation. It is not a case of the exercise of an autonomous power to impose restrictions permitted by Community law but in furtherance of national policies. If this was such a case, of course, Article 15.2.1 of the Constitution would apply and it would also follow that any law so enacted would be amenable to scrutiny by reference to other articles of the Constitution, specifically Article 43.

388. It need not follow that in every case an exercise of a power delegated by Community law which is valid in the sense of being within principles and policies laid down by the latter will survive scrutiny vis à vis other articles of the Constitution. It is difficult to envisage circumstances in which the exercise of a discretion would violate a provision of the Constitution protecting, for example, property rights without at the same time involving the invasion of the exclusive legislative role of the Oireachtas, but in principle that must be possible. I agree with Murray J. in his treatment of the issue of property rights.

389. In any event, in the circumstances, I would dismiss this appeal.






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