IESC 32 · Supreme 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

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

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.

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

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”.

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.

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”.

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.

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.

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.”

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

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

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.

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.

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 I.R.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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”.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.”

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.”

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.

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.”

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.

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.”

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

“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.”

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.”

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.

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. . . . ”

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.

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

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.”

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

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

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.”

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.”

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 hÉireann. 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.”

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

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 ...”

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 ...”

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.”

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.

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

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.

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.”

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.

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.

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.”

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.”

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.

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.

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.”

Reference was made also to Deutsche Milchkontor v. Germany (Cases 205 to 215/82) [1983] E.C.R. 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.”

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.”

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.

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.

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

2º 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.”

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

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).”

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.

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.

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.

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.

1Insofar 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]”

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]”

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.”

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]”

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

For the reasons stated I would dismiss the appeal.