Supreme Court dismisses appeal where farmers claim milk quota regulations infringed property rights under EC Treaty.

THE SUPREME COURT

Keane C.J.

Denham J

Murphy J.

Murray J.

Fennelly J.

340/2000

BETWEEN

NICHOLAS PHILIP (OTHERWISE MARTIN) MAHER

MALACHY BRETT AND RITA RYAN

APPLICANTS

AND

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

RESPONDENTS

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

Each of the three applicants is a farmer in County Tipperary. Each is entitled to a reference quantity, commonly called a milk quota,

for the production of milk on his or her holding. Each of the applicants has for a number of years, by reason of personal

circumstances, leased either the relevant holding together with the milk quota or temporarily leased the milk quota itself. These

arrangements permitted the applicants to continue to benefit from the milk quota entitlement without actively engaging in milk

production. They were carried out in accordance with the milk-quota regulations in force.

The situation of the applicants was changed in the year 2000. The first respondent, the Minister for Agriculture Food and Rural

Development (“the Minister”), made new regulations. The applicants may either have to resume active production or have their milk

quotas sold for restructuring at a price determined by the Minister. They claim that this could not be done in the way the Minister did

it, namely by regulations and without any act of the Oireachtas. Furthermore, the applicants say that their fundamental rights in

respect of property have been infringed.

This case raises in a different form one of the issues which was decided by this Court in Meagher v Minister for Agriculture and Food

and others [1994] 1 I.R. 329 ( “Meagher” ). It is necessary to consider further the relationship between European Community law and

the constitutional prerogative of the Oireachtas as the sole law-making authority for the State.

Common Organisations of the Market

The Common Agricultural Policy of the European Community (“CAP”) is one of the foundations of the European Community. Although it

is becoming normal to refer to the European Union, all the legal issues in the present case arise under the Treaty Establishing the

European Community ( The EC Treaty). I will use the new numbering and form of numbering introduced by the Treaty of Amsterdam.

Article 33EC states the objectives of the CAP, which include improved conditions of production, fair standards of living, stable markets

and reasonable prices for consumers. It also provides that account should be taken of: “the particular nature of agricultural activity,

which results from the social structure of agriculture and natural disparities between the various agricultural regions.”

The preferred mechanism for attainment of the objectives of the CAP is, as envisaged by Article 34EC, the common organisation of

the market in individual product categories. A common organisation of the market “may include all measures required to attain the

objectives set out in Article 33, in particular regulation of prices, aids for the production and marketing of the various products,

storage and carryover arrangements and common machinery for stabilising imports and exports.” Article 37EC reserves the power

to establish a common organisation of the market to the Council acting on a proposal from the Commission.

The basic common organisation of the market in milk products was laid down by Council Regulation (EEC) No 804/68 of 27 June 1968

(OJ English Special Edition 1968 (I), p. 176.) on the common organisation of the market in milk and milk products. Its aim was to

guarantee to producers a common target price, supported by certain intervention measures.

This system failed, however, to resolve the more or less permanent market imbalance amounting to structural over-supply. The

Community responded, inter alia, by introducing the so-called co-responsibility levy, via Council Regulation 1079/99 of 17 May 1977

(OJ 1977, L 131, p.60.) The levy was payable by producers at rates varying from 1.5% to 4% of the target price on all milk sold. (See

Case 179/84 Bozzetti v Invernizzi [1985] ECR 2301.) Still the surpluses persisted.

This very serious situation furnished the setting for the introduction of what is commonly called either the super-levy or the milk

quota system. Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) 804/68 ...... of 31 March 1984 (

Regulation 856/84 ) commences by reciting that the “market in milk products in the Community is suffering from structural surpluses

as a result of an imbalance between supply and demand...” In particular, it records in the third recital in the preamble that:

“..despite application of [the] co-responsibility levy, quantities of milk delivered are increasing at a rate such that disposal of

surpluses is imposing financial burdens and market difficulties which are jeopardising the very future of the common

agricultural policy.”

The essentials of the new regime, as it existed up to 1987, are succinctly summarised, and described as “revolutionary,” in the

judgment of Murphy J in Lawlor v Minister for Agriculture [1990] 1 I.R. 356, at page 362 (“Lawlor”). Regulation 856/84 contains the

basic elements of the scheme and Council Regulation (EEC) No 857/84 of 31 March 1984 adopts, as its title states “general rules for

the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector.” The core of

the new system was the establishment of a structure of reference quantities at Community, national and producer level. The

additional levy or super-levy was designed to penalise excess production by requiring the producer to pay an amount per gallon, the

"super-levy" on any excess such that he would incur a loss. Hence the need to relate milk quota to landholding. In the result, the so-

called milk quota came to be perceived, rightly or wrongly, as a species of property right enjoyed by those producers who met the

initial conditions, or some later adjustments, to be awarded one. The regime was originally introduced for a five-year period, but has

been renewed for successive periods. At present it is due to expire on 31 March 2008, but subject to a specific undertaking by the

Council to conduct a mid-term review with a view to allowing it to run out after 2006.

What is in controversy in the present case is the aspect of the regime that regulates the relationship between the ownership of

agricultural land and the milk quota derived from it. The applicants complain of changes to the rules regarding the transfer of holdings

with milk quota attached and the rules regarding temporary transfer of milk quotas. These changes followed the adoption of Council

Regulation (EEC) No 3950/92 of 28 December 1992 but especially of Council Regulation (EC) No 1256/99 of 17th May 1999. I will

consider these changes in detail later in this judgment.

The present case centres essentially on the exercise by the State, by means of secondary legislation, of a number of options or

discretions conferred by the Community rules. It is important to note from the outset that it is not suggested, in any respect, that

the State has committed any infringement of Community law by exceeding the scope of the discretion conferred by those rules. The

national rules are contained in the European Communities (Milk Quota) Regulations 2000 ( S. I. No. 94 of 2000) (the “2000

Regulations”) made in exercise of the powers conferred by section 3 of the European Communities Act 1972. The 2000 Regulations

make changes in the existing regime insofar as it attaches milk quota to land, make provision for the adding of milk quota so detached

from land to the national reserve and provide for the phasing out of the system of temporary transfers.

How the applicants are affected

The first-named applicant owns 130 acres of land, of which 36.17 acres have a milk quota of 28,170 gallons. The latter was awarded

to him in 1990 under the so-called “Mulder” arrangements. The latter point in no way affects his legal position, except that the

“Mulder” quotas were awarded to milk producers who had gone out of production temporarily under a Community scheme and this may

explain why this applicant has not for some years been actively engaged in milk production.

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

options are now limited to :

- renewal of the lease to Maurice Ryan, but nobody else;

- sale of his milk quota to Maurice Ryan only;

- resumption of milk production (which, due to his personal circumstances he is unable or unwilling to do);

- temporary transfer of his milk quota for one year only.

- sale into restructuring, but at a price to be fixed by the Minister.

He wishes to keep his land with milk quota until one or more of his children, now aged 14 and 16, are of an age to enter dairy farming

if they so wish. He objects to being compelled, as he sees it to sell his milk quota to the Minister at “a pittance” i.e. the price likely to

be fixed by the Minister.

It may be added that this applicant, if he resumed active milk production, would be entitled, after an interval of three years to sell his

land with milk quota just as before.

The second-named applicant jointly owns with his wife 77 acres with a milk quota of 24,404 gallons. He is 76 years of age. For

reasons of ill-health he has for some years, in part leased his lands with milk quota and, for the remainder (9404 gallons), has

temporarily leased the milk quota to the local co-operative creamery.

Since he is deprived of the right to continue the practice of temporary transfer and may not lease land and milk quota on the open

market, he says his only options are:

- to resume production;

- to sell into the restructuring scheme.

The third-named applicant is the owner of twenty acres of land with milk quota of 11,844 gallons. She has for a number of years

availed of the right of temporary transfer of the entire of this milk quota to the local co-op. She cannot continue the temporary

transfer without the consent of the Minister. She sees her only options as being the resumption of milk production or sale into

restructuring on the Minister’s terms.

The applicants say that they are placed at a disadvantage by being prevented from leasing land and milk quota and/or temporarily

leasing milk quota (where relevant) at open market rates. In particular the Minister has indicated a price for the sale of milk quota into

restructuring of £1.36 (said to be about to descend to £1.00) per gallon as against an open-market price of £3.00. This, they claim,

amounts to a regime of compulsory purchase of their milk quota.

The Proceedings

The applicants applied for judicial review of the 2000 Regulations. Mr Patrick Evans, of the Milk Policy Division of the Department of

Agriculture gave on affidavit a very comprehensive account of the milk quota system. The matter was heard by Miss Justice Carroll, in

the High Court. The applicants argued that the aspects of the 2000 Regulations complained of, to the extent that they consisted of

the exercise by the State of options, represented the making of policy choices and could not, therefore, be considered to be

necessitated by membership of the European Communities for the purpose of Article 29.4.7 of the Constitution. Consequently, they

could be enacted only by primary legislation. The right of a holder of milk quota to sell his land with quota attached could not be

restricted or abolished by secondary legislation. Accordingly, the 2000 Regulations were introduced in contravention of Article 15.2.1

of the Constitution.

Miss Justice Carroll dismissed the claim of the applicants. She held that “the Minister was entitled to make the decision that quotas

should go to active milk producers which was in accordance with the stated policy under the milk quota council Regulations.”

She explained her conclusion as follows:

" In my view, SI 2000 even though it involved the making of choices within the framework of the principles and policies of the

milk quota scheme, was necessitated by the obligations of membership of the EU. Precisely because those choices were within

the principles and policies of the milk quota scheme, it can equally well be viewed as permitted secondary legislation which is

not contrary to Article 15.2.1 of the Constitution."

The applicants have appealed to this Court. The say principally that the learned trial judge erred in law in holding that the Minister

was merely executing principles and policies laid down in Community regulations. They state rather that, in making the choices which

he did, he made decisions which themselves involved policy choices which could be made only by primary legislation passed by the

Oireachtas. They also state that the 2000 Regulations infringe their property rights as guaranteed by the Constitution and/or by

Community law.

The applicants’ submissions

The applicants claim that the 2000 Regulations are not necessitated, principally because they consist of the exercise of choice, by

the obligations of membership of the Community and secondly that they are not within the ambit of principles and policies laid down in

the Community regulations.

It seems to me more logical to approach these two questions in the reverse order. Firstly, do the 2000 Regulations represent a valid

exercise by the Minister of the powers delegated to him considering the Constitution, the European Communities Acts and the

Community regulations? If they do, they are permitted and valid and the question of whether they are necessitated does not arise.

The applicants submitted that Regulation 1256/99 allowed Member States such broad discretion that it involved for this State the

making of significant choices in respect of fundamental principles and policies. It amounted to the return of broad measures of

legislative power to the Member States. Wherever Community law does not lay down common rules as part of the common

organisation of the market in milk and milk products, the recent case-law of the Court of Justice shows that the national authorities

“act in accordance with the procedural and substantive rules of their own national law...” ( Case C- 285/93 Dominikanerinnen-Kloster

Altenhohenau v Hauptzollamt Rosenheim [1995] ECR I- 4069, paragraph 26; Case C-292/97 Kjell Karlsson and others v [2000] ECR I-

2737). In any event, at a general level, national measures implementing a regulation provided for by the regulation itself are

“governed by the public law of the Member State in question.” (Case 230/78 Eridania v Minister for Agriculture and Forestry [1979]

ECR 2749, paragraph 33).

In such a situation and, in the light of the decision in Meagher, Article 15.2.1 of the Constitution requires that delegated legislation

should not stray beyond the principles and policies laid down in the parent act. The constitutional constraints on secondary legislation

could not be dispensed with. The applicants also relied on a range of decisions of the High Court and of this Court.

Insofar as land transfers and the operation of the restructuring scheme is concerned the Minister has made important policy choices

in the 2000 Regulations:

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

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

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

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

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

amended by Regulation 1256/99;

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

The applicants lay special emphasis on the important policy choices made by the Minister in breaking the link between land and milk

quota. They contest the existence of any Community policy to favour active milk producers. Article 8a confers a discretionary power

only. The exercise of the latter must be subjected to the test laid down by this court in Cityview Press v An Comhairle Oiliuna [1980]

I.R. 381. The relevant principles and policies must be set out in the governing statute. In the present instance, they are not set out

in the Community Regulations so that the 2000 Regulations represent an impermissible exercise by the executive of legislative power

and are, for that reason, invalid.

Moreover, the 2000 Regulations consist of the exercise of options or the making of choices of a fundamental kind. Even though the

occasion for their making derives from Community legislation, they are not mandatory or obligatory. Hence, they are not “necessitated

by the obligations of membership of the European Union or of the Communities.” Consequently, they do not benefit from the

exemption conferred by Article 29.4.7 of the Constitution from scrutiny for any infringement of its other provisions, in particular Article

15.2.1. In this context, the Court was invited to consider the change made in the course of the legislative process leading to the

passing by the people of the necessary constitutional amendment to permit accession by the State to membership of the Community

from “consequent upon” to “necessitated” in the wording now found in Article 29.4.7 of the Constitution.

Although the Court in Meagher upheld the constitutionality of the European Communities Act, 1972, in conferring wide power on the

State to implement provisions of Community law by using the forms of delegated legislation, the judgment of the Court in that case

clearly envisaged circumstances in which an exercise of that power could be held to be unconstitutional. The applicants took issue

with the judgments in Meagher and certain High Court judgments, as well as the judgment of the learned trial judge insofar as they

gave a broad meaning to the expression, “necessitated.”

If the applicants fail in all of their arguments aimed at impugning the validity of the 2000 Regulations, they say that the latter

constitute an improper invasion of their rights of property, specifically in their rights in respect of milk quota. As they represent the

exercise of discretion, they are not "necessitated" and not protected by Article 29.4.7 from other provisions of the Constitution. They

fairly concede that the case-law, specifically Case 2/92 R v Ministry of Agriculture, ex p. Bostock [1994] ECR I- 995, ("Bostock") is

against them. Milk quota is not considered by the Court of Justice to be a property right. They cite a recent opinion of Advocate

General Ruiz-Jarabo Colomer (Case C-186/96 Demand v Hauptzollamt Trier [1998] ECR I-8529) to suggest that change is possible.

They also say that Community law does not prevent national law from offering a higher level of protection (Case C-63/93 Duff v

Minister for Agriculture [1996] ECR I-569, Advocate General Cosmas’ Opinion, paragraph 60, and Duff v Minister for Agriculture [1997]

I.R. 22.)

The respondents’ submissions

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

The sole purpose of the 2000 Regulations was to give effect to Regulation 3950/92 and Regulation 1256/99. These have general

application in Irish law by virtue of Article 249EC. Their role is analogous to an act of the Oireachtas and all relevant principles and

policies are to be found in this basic enabling legislation. The 2000 Regulations are thus intra vires the powers conferred by section 3

of the European Communities Act, 1972 (“the act of 1972"). They were, in any event, necessitated by the obligations of membership

of the European Community.

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

:

- favouring the putting of milk quota in the hands of active milk producers;

- reducing the costs of production;

- improving the structure of milk production.

The respondents contest, in particular, the applicants’ claim that a large body of legislative power has been returned to the Member

States. All national rules must be approved by the Commission. In practice, they are always discussed in advance. The national rules

at issue in this case are detailed rules and make limited permissible variations in the common organisation of the market.

Significant exceptions to the rule of the transfer of land with milk quota existed from 1984 and have been progressively extended. The

changes made by Regulation 1256/99 were only the last in a series of exceptions. The Minister was constrained by the very precise

objective set out in Article 8a, i.e., “the aim of ensuring that reference quantities are solely attributed to milk producers” as well as

the general principles of Community law. Furthermore, the Minister has no power to determine the destiny of milk quota which he

permits not to be transferred with land. It must, in accordance with Article 7(1), be added to the national reserve.

Similarly, restructuring has long been expressed as an objective of the Community regulations, as can be seen, in particular, from

Article 8 of Regulation 3950/92 Restructuring has existed before and independently of changes in the rules regarding the transfer of

quota.

This State has not exercised the option not to implement temporary transfer, as permitted by Article 6(2) of Regulation 3950/92 . It is

accordingly implementing the mandatory obligation expressed in Article 6(1) to introduce a temporary leasing scheme within the scope

of very limited options. Reliance is placed on the definition of producers to show that the Minister , in Regulation 27(3) was

implementing Community policy. The Applicants are not producers.

In accordance with the case-law of the Court of Justice, in particular Bostock, the enjoyment of a reference quantity or milk quota

does not amount to a property right.

The Constitution: the Oireachtas as Sole Legislator

The main issue is whether the 2000 Regulations represent impermissible and invalid legislation, taking the form of a statutory

instrument, in circumstances where primary legislation is required. The Constitution, the act of 1972 and the EC Treaty all have a

bearing on the issue. It is also necessary to consider the principal authorities, especially Meagher.

Article 15.2.1 of the Constitution provides:

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

has power to make laws for the State.”

An enormous body of subordinate laws is, nonetheless, constantly passed by means of statutory instruments, regulations and orders.

This type of delegated legislation is, by common accord, indispensable for the functioning of the modern state. The necessary

regulation of many branches of social and economic activity involves the framing of rules at a level of detail that would inappropriately

burden the capacity of the legislature. The evaluation of complex technical problems is better left to the implementing rules. They are

not, in their nature such as to involve the concerns and take up the time of the legislature. Furthermore, there is frequently a need

for a measure of flexibility and capacity for rapid adjustment to meet changing circumstances. Without suggesting that a different

approach is required for the present case, by reason of the fact that it concerns the implementation of European Community

legislation, it is obvious that the adoption of detailed rules regulating production and trade in agricultural products is a particularly

notable example of the exigencies of this type of law-making. There is, for example, an obvious need to be able to react rapidly and

often severely to sudden trading problems or so as to protect human and animal health in the face of the outbreak of disease.

On the other hand, it is obvious that secondary legislation largely by-passes parliamentary scrutiny and the democratic process.

Thus, the courts have found it necessary to strike an appropriate balance between the protection of the exclusive law-making domain

of the Oireachtas and the proper function of the executive. The distinction is a functional one, aimed at designating the proper

bounds of legislative and executive power. Delegated legislation is permitted and does not infringe Article 15.2.1, provided that the

principles and policies which it is the objective of the law to pursue can be discerned from the act passed by the Oireachtas so that

the delegated power can only be exercised within the four walls of the law. This serves the double purpose of preserving the

legislative prerogatives of the Oireachtas and assuring those affected by orders or regulations that the courts may be asked to police

the bounds set by the law and, if necessary, to declare them to be ultra vires the powers of the Minister or other delegated

authority.

Cityview Press remains the leading authority on the permissible bounds of delegation of legislative power. It concerned powers to

impose a levy to finance ANC, the industrial training authority. ANC could, inter alia, fix the amount of the levy as well as the

categories of persons who were bound to pay it. The judgment of the Court, given in response to a claim that the empowering

statute was unconstitutional, was delivered by O’Higgins C.J.. The leading passage reads as follows:

“...the ultimate responsibility rests with the Courts to ensure that constitutional safeguards remain, and that the exclusive

authority of the National Parliament in the field of law-making is not eroded by a delegation of power which is neither

contemplated nor permitted by the Constitution. In discharging that responsibility, the Courts will have regard to where and

by what authority the law in question purports to have been made. In the view of this Court, the test is whether that which is

challenged as an unauthorised delegation of parliamentary power is more than a mere giving of effect to principles and policies

which are contained in the statute itself. If it be, then it is not authorised; for such would constitute a purported exercise of

legislative power by an authority which is not permitted to do so by the Constitution. On the other hand, if it be within the

permitted limits- if the law is laid down in the statute and details only are filled in or completed by the designated Minister or

subordinate body - there is no unauthorised delegation of legislative power.”

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

“unconstitutional delegation of authority.”

Apart from Meagher, the principal recent authority of this Court is Laurentiu v Minister for Justice [2000] I.L.R.M. 1. That case is

notable for the discussion in the leading majority judgments of Denham and Keane JJ of the antecedents of the test based on

principles and policies in the common law countries and its place in the constitutional scheme of separation of powers. Denham J

stated at page 22:

“There are limits to permissible delegation by the organs created by the Constitution . The Oireachtas may not abdicate its

power to legislate. To abdicate would be to impugn the constitutional scheme. The scheme envisages the powers (legislative,

executive, judicial) being exercised by the three branches of government-not any other body. The framework of the

Constitution, the separation of powers, the division of power, retains a system which divides by function the powers of

government to enable checks and balances to benefit democratic government. Also, in accordance with the democratic basis

of the Constitution, it is the people’s representatives who make the law, who determine the principles and policies. The checks

and balances work as between the three branches of government- not elsewhere. Thus Article 15.2 must not be analysed in

isolation but as part of the scheme of the separation of powers in the Constitution.”

This passage contains a proper emphasis on the essential part of the Oireachtas in preserving and assuring the democratic nature of

the State. Article 15.2 also performs the function, recalled by Barrington J in his dissenting judgement of striking “a balance between

the rights of individual citizens and the exigencies of the common good.”

As to the application of the test of principles and policies, Denham J went on to point out that: “Each case depends on its own facts

and requires that the principles and policies ....be set out in the legislation.”

In the case in question, it was held that the Aliens Act, 1935 failed the test, since it contained no discernible principles or policies at

all. The test, however, remains intact. It provides the basis for deciding whether a given legislative act abdicates the exclusive

authority of the Oireachtas. It is intrinsic to the test, and is important in the present case, that the named executor of delegated

authority has power and discretion to make decisions within the four walls of the governing statute. For example, The State (Sheehan

v Government of Ireland [1987] I.R. 555 shows that a discretionary power may, in certain circumstances, be so expressed that the

decision whether to exercise it at all may be postponed indefinitely .

Delegated legislation: Community Law

The case which is most material to the present discussion is Meagher and not merely because it concerned the implementation in Irish

law of a directive adopted by the Community legislature.

Before embarking on a consideration of the relevance of Meagher to the present case, it is necessary to recall the changes to the

constitutional and legal structure of this State resulting from membership of the European Communities and later the European Union

and to refer to the provisions of the EC Treaty which are principally concerned. The import of Meagher cannot be considered in

isolation.

The first important constitutional provision is Article 29.4.3 introduced by the Third Amendment to the Constitution in 1972 under

which it was provided that “The State [might] become a member of the .........European Economic Community.” Article 29.4,

paragraphs 3, 4, and 5, respectively authorised the State by means of successive constitutional amendments to ratify the Single

European Act in 1987, the Treaty on European Union (the Maastricht Treaty) in 1992 and the Treaty of Amsterdam in 1997. It

emerges clearly from the judgment of this Court in Crotty v An Taoiseach [1987] I.R. 713 that the legislative capacity of the Council

(and, since then, increasingly the European Parliament as co-legislator) seriously encroaches on the legislative sovereignty of the

State.

Article 29.4.7 provides in addition that:

“No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are

necessitated by the obligations of membership of the European Union or the Communities, or prevents laws enacted, acts

done or measures adopted by the European Union or by the Communities or by the institutions thereof, or by the bodies

competent under the Treaties establishing the Communities, from having the full force of law in the State.”

The Community regulations giving effect to the common organisation of the market in milk and milk products are "first pillar Community

measures, i.e. they were adopted under the EC Treaty. Accordingly, it is unnecessary, in the present case, to have regard to any

acts or measures adopted under the Treaty on European Union. Furthermore, it is probable that the authority to ratify the respective

Treaties, in particular, the EC Treaty provide sufficient basis, in Community law terms, for the full effect in Irish law of directly

applicable Community measures, even without the additional protection provided by Article 29.4.7.

The first two paragraphs of Article 249EC provide:

“In order to carry out their task and in accordance with the provisions of this Treaty, the European Parliament acting jointly

with the Council, the Council and the Commission shall make regulations and issue directives, take decisions, make

recommendations or deliver opinions.

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

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

“ Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations

arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the

achievement of the Community’s tasks.”

Community regulations are directly applicable; their entry into force and their application are “independent of any measure adopting

[them] into national law.” ( Case 94/77 Zerbone v Amministrazione delle Finanze dello Stato [1978] ECR 99, paragraph 23.) As

Denham J. explains, in different words, they do not require any national act of implementation for their binding effect. Indeed, where

they are, in their own terms, capable of being directly applied, it has been said that: “ Member States must not adopt or allow

national institutions with a legislative power to adopt a measure by which the Community nature of a legal rule and the

consequences which arise from it are obscured.” ( ibid. paragraph 26.)

Where, however, as frequently happens especially in the case of a common organisation of the market, regulations, in addition to

being directly applicable, allow Member States discretion in their implementation, some national act of implementation or transposition

will be required. Then the principle cited by the applicants from the judgment of the Court of Justice in Eridania comes in. The Court

there, at paragraph 34 of the judgment, said:

“The fact that a regulation is directly applicable does not prevent the provisions of that regulation from empowering a

Community institution or a Member State to take implementing measures. In the latter case the detailed rules for the exercise

of that power are governed by the public law of the Member State in question; however, the direct applicability of the

measure empowering the Member State to take the national measures in question will mean that the national courts may

ascertain whether such national measures are in accordance with the content of the Community regulation.” .

Clearly, the last sentence refers to the right of the courts of the Member States to refer questions of interpretation to the Court of

Justice pursuant to Article 234EC (then Article 177 of the Treaty).

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

"But where a provision in Community legislation confers a discretion on a Member State it is open to that Member State to

enact legislation for the purpose of implementing that provision. To what extent such legislation may be necessary, or

administrative action may suffice, is a matter to be determined by that Member State’s own law, including where appropriate

its constitutional law."

As was observed succinctly by Lord Hoffman, "Community law is indifferent to the internal arrangements of power within a member

state." (R v Secretary of State for Heath [2001] 1 All ER, 850 at 860).

These passages must be read with those, also cited by the applicant, from the more recent case-law on milk quotas. It will suffice to

quote the following from the judgment in Dominikanerinnen-Kloster (paragraph 26):

“It should, first, be recalled that ........ the Court [has held] that according to the general principles on which Community law

is based and which govern the relations between the Community and the Member States, it is for the Member States, by

virtue of Article 5 of the Treaty, to ensure that Community regulations are implemented within their territory. In so far as

Community law, including its general principles, does not include common rules to this effect, the national authorities when

implementing Community regulations act in accordance with the procedural and substantive rules of their own national law;

however, these national rules must be reconciled with the need to apply Community law uniformly so as to avoid unequal

treatment of producers and traders. Furthermore, such rules must not have the effect of making it virtually impossible to

implement Community regulations......”

The applicants claim that a broad measure of competence has been returned to the Member States will be examined on its merits by

reference to Regulation 3950/92 and Regulation 1256/99. However, Member States have limited scope for independent action when

dealing with milk quotas. They cannot take action to grant them to fill a gap left by the amendment of a Community Regulation (Case

C-127/94 R v MAFF esp. Eckroyd [1996] ELR I - 2741.) I believe it is possible to say that the passages just quoted do not give any

support to the applicants' claim that Member States act autonomously in making choices when implementing Community rules. They

establish the following propositions.

Firstly, in the absence of common rules, or where Community law authorises such action, Member States may adopt their own

national rules. Secondly, by virtue, inter alia, of Article 10EC (formerly Article 5 of the Treaty), Member States must ensure the

implementation of Community regulations and take no action to undermine them. Thirdly, in doing so, they are implementing

Community law, with the result that general principles of Community law, notably the principle of equal treatment but also the

fundamental rights protected in the Community legal order must be respected. Fourthly, Community law is indifferent as to the

national method of implementation ( subject to the principle of effectiveness as explained in the passage from Dominikanerinnen-

Kloster as well as the principle of equivalence, i.e., that rights under Community law are treated no less favourably than those

granted by national law). For present purposes, that indifference relates to the choice between legislation and regulation.

In summary, Member States, acting within the framework of Community regulations, exercise powers or discretions which are

conferred on them for the furtherance of the objectives of the scheme in question. Community law does not require any particular

form of implementation. That is a matter for the legal system of the Member State concerned, except that the implementation must

not have the effect of impeding the effectiveness of Community law.

The European Communities Act, 1972 contains the following provisions:

"2. From the 1st day of January, 1973, the treaties governing the European Communities and the existing and future acts

adopted by the institutions of those Communities shall be binding on the State and shall be part of the domestic law thereof

under the conditions laid down in those treaties."

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

(2) Regulations under this section may contain such incidental, supplementary and consequential provisions as appear to the

Minister making the regulations to be necessary for the purposes of the regulations (including provisions for the repealing,

amending or applying, with or without modification, other law, exclusive of this Act."

Whatever view might be taken by the Court of Justice regarding the direct effect of treaty provisions or acts of secondary legislation,

section 2 was clearly an essential part of the machinery for giving effect to those provisions as a matter of Irish law, in view of

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

law of the State.

It is the effect of section 3(1) which is in issue. The applicants accept, as they must, that the act of 1972, as was found in Meagher

is compatible with the Constitution. However, they rely on the reiteration in the judgment of the Court, on that issue, of the principle

that legislation must be so interpreted as not to be in conflict with the Constitution, in particular that an act cannot be interpreted so

as to invade the exclusive legislative domain of the Oireachtas. Finlay C. J., delivering the judgment of the court stated at page 352:

“In so far as it may be possible to point to hypothetical instances of certain types of laws, measure or acts of the Community

or Union which in their implementation or application within the national law might not, as to the method of implementation or

application, be necessarily carried out by ministerial regulation, but rather should have been carried out by enactment of law

by the Oireachtas, the Court is satisfied, without deciding that such instances do occur, that the principles laid down by this

Court in the decision of East Donegal Co-Operative Livestock Marts Ltd. v. Attorney General [1970] I.R. 317, must be applied

to the construction of the impugned subsection in the manner in which it was applied by the decision of this Court in Harvey v.

The Minister for Social Welfare [1990] 2 I.R.. 232 to the construction of the section of the statute impugned in that case,

namely, s. 75 of the Social Welfare Act, 1952. That principle is that it must be implied that the making of regulations by the

Minister, as is permitted by the section, is intended by the Oireachtas to be conducted in accordance with the principles of

constitutional justice, and therefore that it is to be implied that the Minister shall not in exercising the power of making

regulations pursuant to the section, contravene any provision of the Constitution.

“If therefore in such an instance challenge were to be made to the validity of a ministerial regulation having regard to the

absence of necessity for it to be carried out by regulation instead of legislation and having regard to the nature of the content

of such regulation it would have to be a challenge made on the basis that the regulation was invalid as ultra vires being an

unconstitutional exercise by the Minister of the power constitutionally conferred upon him by the section.”

The early part of this passage might be read as implying that, in some circumstances, the implementation of Community law is

necessarily, by reasons of the demands of Community law itself, carried out by regulation. It is clear, however, from the second

quoted paragraph that this reading is not what was intended; in any event, as shown above, Community law makes no such demands.

The issue of “necessity” is appropriately considered by reference to the content, not the form, of the instrument.

Consequently, it is perfectly possible for the courts, at least at the level of general principle, to apply the principles and policies test

laid down in the case-law on Article 15.2.1 without any conflict with Community law. That test is designed, as is clear from the

judgment of Denham J in Laurentiu, to protect the democratic basis of government, a principle which finds expression in the EC Treaty

and in the judgments of the Court of Justice. Article 6 of the Treaty on European Union records that:

“The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the

rule of law, principles which are common to the Member States.”

The second part of the decision in Meagher deals with the application of the principles and policies test to the implementation by

means of a regulation made under the act of 1972 of Community law in the form of a Council directive. Blayney and Denham JJ

delivered individual judgments, with which Finlay C. J. and O’Flaherty and Egan JJ agreed.

The two directives at issue concerned the prohibition of use of certain animal-growth hormonal substances. The State had included

respectively a power to search farms and an extension of the time fixed by statute for commencing prosecutions of offences in

ministerial implementing regulations. Blayney J decided that the directives could not be implemented without the first provision and

that an extension of the time for prosecution was necessary. He reiterated the principle of the supremacy of Community law over

national law and held that the national measures in controversy were “necessitated by the directive.” His determination of the issue

followed from an analysis of Community law provisions. The respondents argued in this case that, on a true analysis of the Community

directives, Ireland as a Member State had discretion and was not bound to adopt the particular implementing measures and that the

Court still found them to be “necessitated”. That is, in my view, to miss the point and to confuse the interpretation of Article 29.4.7

of the Constitution with the interpretation of Community law. The fact is that, rightly or wrongly, Blayney J held that the provisions in

question were required by Community law. Denham J shortly expressed the same opinion (page 363). This result is the same as would

have followed if questions of interpretation of the relevant provisions had been referred to the Court of Justice and the latter had

ruled that the adoption of the two provisions in controversy constituted Community-law obligations of the State.

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

“If the directive left to the national authority matters of principle or policy to be determined then the “choice” of the Minister

would require legislation by the Oireachtas. But where there is no case made that principles or policies have to be determined

by the national authority, where the situation is that the principles and policies were determined in the directive, then

legislation by a delegated form, by regulation, is a valid choice. The fact that an act of the Oireachtas has been affected by

the policy in a directive, is a “result to be achieved” wherein there is now no choice between the policy and the national act.

The policy of the directive must succeed. Thus where there is in fact no choice on a policy or a principle it is a matter

appropriate for delegated legislation. If the directive or the minister envisaged any choice of principle or policy then it would

require legislation by the Oireachtas.”

Meagher is clear authority for the proposition that, where a provision of Community law imposes obligations on the State, leaving no

room (or perhaps no significant room) for choice, then Article 15.2.1 of the Constitution is not infringed by the use of ministerial

regulation to implement it. Both the judgment of the Court and that of Denham J expressly preserve the force of that provision, as it

has been interpreted, for cases where such an obligation does not exist. The “principles and policies” test applies mutatis mutandis

where the delegated legislation represents an exercise of a power or discretion arising from Community-law secondary legislation. It

applies with particular clarity to the case of directives where Article 249EC leaves the choice of forms and methods to the Member

States. The question will not arise so frequently in the case of regulations since they are directly applicable without the need for

national implementing measures. Where a regulation leaves open a range of choice, the test will apply. Each case will have to be

decided on its own merits. The mere existence of a Community regulation implies some sort of Community policy. Article 253EC obliges

the Community legislature to state in such acts “the reasons on which they are based.” Member State implementing measures come

inherently within the scope of such a stated policy. However, the principle of the applicability of the test is a recognition of the

possibility that the choices left to the Member States may be of such significance in their nature or scope or so unconnected with

Community policies and aims that they require legislation and that resort to regulations in such cases would infringe Article 15.2.1. On

its facts, Greene v Minister for Agriculture [1990] 2 I.L.R.M. could have been such a case, though Article 15.21 was not in issue. The

Community rules allowed Member States to "lay down additional or restrictive conditions" one of which was held by Murphy J. to

infringe Article 41 of the Constitution.

I should say that I fully agree with the judgment of the Chief Justice in his analysis of Meagher and with his conclusion that none of

the measures impugned in this case was “necessitated by the obligations of membership.” I also agree, consequently, that the

essential question is whether the Minister was in breach of Article 15.2.1 of the Constitution. If he was, the 2000 Regulations will be

invalid, since, unlike those involved in Meagher, they are not "necessitated".

Applying the test

I will deal, firstly, with the change in the rules linking land and milk quota. From the outset, the Community rules envisaged that, in

general, agricultural land used for milk production would be transferred only with the relevant milk quota attached. The original

provision was Article 7(1) of Regulation 857/84, which provided:

“Where an undertaking is sold, leased or transferred by inheritance, all or part of the corresponding reference quantity shall be

transferred to the purchaser, tenant or heir according to procedures to be determined.”

There were differences between Formula A (where the milk quota is allocated to producers) and Formula B, adopted in Ireland, (where

it is allocated to purchasers). However, rules were formulated to ensure that the same rules would apply where Formula B was

adopted. (See Commission Regulation (EEC) No 1374/84, Article 5 and Murphy J in Lawlor, page 3640).

It may be noted that this provision was not founded on any explicit reasoning to be found in any of the recitals in the preamble to the

regulation. The respondents’ argument that there were significant exceptions from the beginning to the rule of transfer of land with

milk quota is not convincing. Article 7(3) merely provided part of the reference quantities might be added to the national reserve.

Article 4, which was also invoked, authorised Member States to compensate milk “producers undertaking to discontinue milk

production definitively” and to add the amounts so freed to the national reserve. Ireland did not, in fact, exercise these options. I am

similarly unconvinced by a number of other examples of special exceptions which were cited from the years 1985 to 1987. It seems

clear that the Community, as of 1984, opted firmly for a policy that land could be transferred only with the milk quota attached.

Regulation 857/84 was repealed by Council Regulation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the

milk and milk products sector. The fourteenth introductory recital to that Regulation states:

“Whereas when the additional levy system was brought in in 1984, the principle was established that when an undertaking was

sold, leased or transferred by inheritance, the corresponding reference quantity was transferred to the purchaser, tenant or

heir;

whereas this original decision should not be changed; whereas, however, national provisions to safeguard the legitimate

interests of the parties should be implemented in all cases of transfer, where the parties are not in agreement;”

In the event, Article 7 was re-enacted by Regulation 3950/92 with some changes which are immaterial to the present case. Article 8

of Regulation 3950/92 provide for some other limited exceptions such as transfer to the national reserve when land is transferred for

improvement of the environment. It also authorised Member States, with a view to restructuring of milk production, to permit transfer

of reference quantities without the corresponding land “with the aim of improving the structure of milk production at the level of the

holding.” Generally, however, the link between land and milk quota was maintained.

This prohibition on sale or transfer of land without milk quota, because it was effected by a regulation was, of course, directly

applicable in Irish law and needed no further enactment to give it effect. It was, nonetheless, reinforced, as the applicants point out,

by penal provisions in Regulation 12(1) of the European Communities (Milk Levy) Regulations, 1985 (S. I. No. 416 0f 1985) and by

Regulation 4 of the European Communities (Milk Quota) Regulations, 1995 (S. I. No 266 of 1995)( the “1995 S.I.”)

Council Regulation (EC) No 1256/99 of 17 May 1999 amending Regulation (EEC) No Regulation 3950/92 ....... authorised radical change

in the rules regarding the maintenance of the link between land and milk quota on sale or transfer.

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

“Reference quantities available on a holding shall be transferred with the holding in the case of sale, lease or transfer by

inheritance to the producers taking it over in accordance with detailed rules to be determined by the Member States....”

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

“Acting in compliance with the general principles of Community law, Member States may take the following measures, with the

aim of ensuring that reference quantities are solely attributed to active milk producers:

(a).....

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

The changes in the rules made by the Minister, the 2000 Regulations, regarding attachment of land to milk quota commence with

Regulation 5(1) which provides, in relevant part:

“(1) Subject to the exceptions provided for in Regulations 6, 7, 8, 9, 10, and 11, where any holding, or part thereof, is

transferred the milk quota attached to that holding or part thereof shall not be transferred to the person to whom the

transfer is made;

“(2) Where there is a transfer of land to which milk quota attaches then, such milk quota shall be added to the national

reserve unless Regulation 6, 7, 8, 9, 10, 11, 19, 20, 21, or 22 have been availed of ...”

This amounts to a clear and explicit decision by the State to avail of the power given by Community law to break the link between

land and milk quota. There are a number of exceptions. The applicants say that both by deciding to exercise that option and in

choosing the exceptions, the Minister was impermissibly legislating.

It is crucial to this issue to discern whether, in making this decision, the State is pursuing a Community objective or, recalling the

applicants’ contention that power has been returned to the Member States, a purely national one. The power not to apply the

provisions of Article 7(1) is given by Article 8a, inserted by Article 1(10) of Regulation 1256/99. That Article permits Member States to

take such action “with the aim of ensuring that reference quantities are solely attributed to active milk producers...” This reflects

policy expressed in the fourth recital in the preamble:

“Whereas the experience with the additional levy has shown that the transfer of reference quantities through legal

constructions such as leases which do not necessarily lead to a permanent allocation of the reference quantities concerned to

the transferee, can be an additional cost factor for milk production hampering the improvement of production structures;

whereas, in order to strengthen the reference quantities’ character as a means of regulating the market of milk and milk

products, the Member States should be authorised to allocate reference quantities, which have been transferred through

leases or comparable legal means, to the national reserve for re-distribution, on the basis of objective criteria to active

producers in particular to those who have used them before; whereas Member States should also have the right to organise

the transfer of reference quantities in a different way than by the means of individual transactions between producers;

whereas it should be explicitly provided, in particular with a view to taking account adequately of existing legal rights, that,

when using these authorisations, Member States are to take the necessary measures to comply with the general principles of

Community law;..”

I believe that this recital and the general scheme of the milk quota regime demonstrate that the State is acting as a delegate of the

Community in making the choice to separate land and milk quota. As is shown by the case-law, the fact that Community regulations

authorise the Member States to exercise discretion does not take action of the latter kind outside the scope of the Community

regime. Member State discretionary action is circumscribed by the objectives of the scheme authorising it. The milk quota is itself a

creature entirely of Community law. Member States are bound, by virtue of Article 10EC (formerly Article 5 of the Treaty), to ensure

that Community law is implemented; national rules must comply with the general principles of Community law and the particular rules

which apply. In the instant circumstances, Member States are authorised to act only to achieve the aim of ensuring that reference

quantities are attributed to producers. Any action by the State in pursuit of a an unauthorised objective would be susceptible of

challenge, by means of an infringement action pursuant to Article 226EC in the Court of Justice as being contrary to the terms of

Regulation 1256/99.

Thus, applying the principles and policies test on the basis that Regulation 1256/99 stands in the place of an act of the Oireachtas, I

believe that the State, in adopting Regulation 5 of the 2000 Regulations was exercising a power expressly conferred and for the

purpose for which it was given.

In the light of that conclusion, it is probably not necessary to give separate consideration to the exceptions. They consist of

modifications to the departure from the link of land and milk quota. However, they were argued as constituting distinct legislative

choices.

The principal exceptions which have been canvassed in argument before the Court are those in Regulations 6, 7, 9 and 10. It will be

sufficient to refer to these for the purpose of evaluating the extent and the nature of the legislative power exercised by the Minister

in making the 2000 Regulations.

Regulation 6 provides that the “ milk quota attached to a holding shall be transferred” in the case of “sale, lease, gift or inheritance

by a person to a relative of that person...,” a term defined in Regulation 6(2). It includes spouses, parents, children, brothers,

sisters, grandparents, grandchildren, uncles and aunts. It is suggested that this also involves the making of a legislative choice not

contemplated by Community law. It is not clear that the applicants have any independent interest in challenging this provision. It

would not benefit them if it were annulled. Their claim is in reality that the Minister did not have the power, by regulation, to end the

link of land to milk quota in the event of sale or transfer. For what it is worth, however, I believe that this exception would be held to

fall comfortably within the power conferred on the Member States by the regulation. I have already referred to the inclusion of “the

social structure of agriculture” among the considerations relevant to the common agricultural policy. If it is correct to say that

Member States are authorised by Community law to restrict or end the rule that milk quota transfers with land, there is no basis – and

none has been suggested – for saying that Community law would regard it as impermissible to make an exception for certain defined

family transactions. The wording of Article 7(1) has at all times included “transfer by inheritance” among the cases where the link

would apply. There is enough evidence in the case-law cited to the Court ( Case C-313/89 Rauh [1991] ECR I- 1647; Case C-44/89

von Deetzen v Hauptzollamt Oldenberg [1991] ECR I-5119 "von Deetzen”) to show, not surprisingly, that the Court of Justice

interprets provisions of Community law so as to favour family transactions. As already noted, Article 33EC requires account to be

taken of “the social structure of agriculture,” which unarguably includes the family basis of farm ownership. The relaxation of the new

rule to favour family transactions accords with that aim.

By virtue of Regulation 7, where a producer (or his legal personal representative) can obtain a certificate from the Minister, inter alia,

that he has produced milk on the holding for a period of three years prior to the milk quota year in which the transfer is proposed, he

may continue to transfer land with quota. This patently favours the active milk producer and accords with the objective of Article 8a

and the sixth recital. This provision also demonstrates that removal of the land/milk-quota link is by no means as draconian as has

been suggested. It remains open to each of the applicants, as they acknowledge, to resume production of milk on their own land and

by this means and to regain the right to sell their land with milk quota.

Regulation 9 permits the purchase of land by a lessee of land and quota to be made with or without milk quota on the expiry or earlier

determination of a lease. The lessee must, himself be a producer. This also favours the active milk producer.

Regulation 10 permits the renewal of an existing lease on its expiry, in which case the milk quota is transferred to the lessee for the

term of the renewal. This provision cannot be the subject of complaint. Apart form favouring milk production, it represents the sort of

fine regulatory choice which fits easily within the scope of action which can be taken without infringing Article 15.2.1 of the

Constitution.

For these reasons, I do not think that the 2000 Regulations infringe Article 15.2.1 of the Constitution, in respect of the changes

regarding the transfer of land with milk quota.

I should explain the purpose of the detailed consideration I have given to the Community provisions. It has never been contested that

the 2000 Regulations were, in Community law terms, within the scope of the discretion available to the State. Therefore, I am not

considering an issue of Community law. If I were, the court might be obliged to refer to the Court of Justice. I am judging, rather,

whether the scope of the discretion conferred by Community law in regulations which become part of national law was so independent

of principles and policies laid down by those Community regulations, as to place the State in conflict with Article 15.2.1 of the

Constitution.

At this point, it is also necessary to consider the Community rules regarding temporary transfer of milk quotas. They, to some extent,

also involve separation of land and milk quota. Temporary transfers were first authorised by Council Regulation (EEC) No 2998/87 of 5

October 1987 amending Council Regulation 804/68 ... This recites that “experience has shown that certain producers do not intend,

over a 12-month period, using up all their individual reference quantities [and that] ... Member States should be authorised to place

at the disposal of other producers for the 12-month period in question, the quantities which are not going to be used by other

producers who are entitled thereto;” On this premise, Article 1 inserted a new Article 1a in Regulation 804/68 as follows:

“1a. Member States may authorise, at the beginning of each 12-month period and for the duration thereof temporary

transfers of that part of the individual reference quantity which the producer who is entitled thereto does not intend to use.

Member States may limit the transfer operations to certain categories of producers and on the basis of the milk production

structure in the regions or collecting areas concerned.”

Regulation 3950/92 recited that “....the temporary transfer of parts of individual reference quantities in Member States which

authorised this ha[d] proven to be an improvement to the scheme [and that] this facility should therefore be extended to all

producers [though its] implementation ........... should not stand in the way of further structural change and adjustment, nor fail to

take account of the resulting administrative difficulties;”

Consequently, Article 6 of Regulation 3950/92 renewed the power to permit temporary transfer, transforming it, however, into an

obligation, and adding that Member States might “determine to what extent transfer operations may be renewed.” Furthermore,

Article 6(2) provided:

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

- the need to facilitate structural developments and adjustments,

- overriding administrative needs.”

The temporary transfer provisions were implemented in the State by Regulation 16 of the 1995 S.I. This delegated to the Minister the

power to determine the categories of producers who might benefit and, more relevant to the present case, “the extent to which

temporary transfers ......... [might] be renewed.” The public were to be informed by notices in a National newspaper.

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

3950/92 as follows:

“Before a date that they shall determine and by 31 March at the latest, Member States shall authorise, for the 12-month

period concerned, temporary transfers of individual reference quantities which producers who are entitled thereto do not

intend to use.”

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

operated in the State.

Paragraphs (1) and (2) ostensibly preserve the right of a milk quota holder to make a temporary transfer of “such part of his or her

milk quota as he or she does not intend to use during that milk quota year.” Paragraph (3), however, denies this right where the

holder has “neither made milk deliveries to a purchaser, or sold milk or milk products directly for consumption, during any three

successive milk quota years since 1 April 1997 and who made a temporary transfer of his quota under Regulation 16 of the

Regulations of 1995 or under paragraph (2) during each of the 3 milk quota years in question..”

Paragraph (4), on the other hand permits a person who, likewise, has “neither made milk deliveries to a purchaser, or sold milk or

milk products directly for consumption,” but has leased the land and milk quota for the same period to make a temporary transfer but

for one year only.

Paragraph (5) enables the Minister, on application, to approve a temporary transfer for one further milk quota year only by a person

affected by paragraph (3) or (4), where exceptional circumstances have caused the failure to deliver milk.

The respondents have made it clear that the State has not exercised the option granted by Article 6(2) of Regulation 3950/92 not to

implement Article 6(1). Consequently, it is said, the State was obliged by Article 6(1) to “authorise ... temporary transfers of

individual reference quantities which producers who are entitled thereto do not intend to use.” However, it is further argued that the

applicants do not come within the definition of producer. That term is defined in Article 9 of Regulation 3950/92 as a “natural or legal

person ...... farming a holding within the geographical territory of the Community :

- selling milk or milk products directly to the consumer,

- and/or supplying the purchaser.”

The respondents rely on the decision of the Court of Justice in Case C-152/95 Macon v Préfet de l’Aisne [1997] ECR I-5429. That

case dealt with the identical definition in Article 12(c) of Regulation 857/84, where farmers, who had ceased milk production, (no

explanation for this cessation appears in the report) sought compensation under a Community scheme for producers undertaking to

discontinue production definitively. The Court of Justice held that the “term had not been given an independent meaning for the

purposes of the rules on discontinuation of milk production.” (Paragraph 21). It held (paragraph 23):

“Only farmers actually selling milk or other milk products can ... be considered to be producers. By contrast farmers who have

spontaneously ceased milk production are no longer producers for the purposes of Article 12(c) of Regulation 857/84.”

The Court, in that judgment recalled its judgment in Case C-341 Ballmann [1991] ECR I-25, where it had said: “the status of producer

is accorded to any person who manages a holding, that is to say a set of production units ... and sells or delivers milk or milk

products.”

Since consideration of this issue involves the interpretation of a provision of a Community regulation, the issue of the obligation of this

Court to refer questions to the Court of Justice can arise. For the moment, I will say only that, in my view, the meaning of the term

“producer” is quite clear. None of the applicants come within that definition. Therefore, they cannot rely on Article 6(1) of Regulation

3950/92 to claim the right to continue to make temporary transfers of their milk quotas. Accordingly, the Minister, in denying them

that right by the terms of Regulation 27 was not making a choice between different options conferred by Regulation 3950/92. He was

not entitled in Community law to grant the right to make temporary transfers to persons who were not producers. That is, of course,

a conclusion of Community law which might have to be referred for preliminary ruling.

However, this Court, as a “court .... against whose decisions there is no judicial remedy under national law” is not obliged by Article

234EC to refer a question of interpretation to the Court of Justice, unless “a decision on that question is necessary to enable it to

give judgment.” That is the situation which pertains in the present case, as I will explain.

As has been seen, Article 6 of Regulation 3950/92 authorises Member States to “determine to what extent transfer operations may

be renewed.” The State was, on any view, entitled to determine that the right to make temporary transfers should be permitted for

one further year only, unless exceptional circumstances were demonstrated. In making this decision, the Minister acting on behalf of

the State was exercising a discretion conferred by Community regulations and for one of the policy reasons clearly stated by

Community law. This is supported by the fourth recital in the preamble to Regulation 1256/99. It expresses the view that Member

States “should have the possibility to decide in accordance with the general principles of Community law that, in cases of substantial

under use [of milk quota ] over a significant period of time, the under used reference quantities will revert to the national reserve

with a view to their reallocation to other producers;”

In my view, the Minister was entitled to decide, in the light of the general policy of favouring active producers that persons entitled

to milk quotas, not in active production, but having used the facility of temporary transfer for three years past should be entitled to

renew such temporary transfer for one further year only. In so doing, he was acting in accordance with principles and policies set out

in the Community regulations.

The result of the foregoing is that:

1. The changes made in the rules regarding the link of milk quota to land on transfer constitute an exercise of discretions so

closely linked to principles and policies laid down in Community law as not to require legislation for the purposes of Article 15.2.1

of the Constitution.

2. Although the applicants’ ability to make temporary transfers of their milk quotas is severely restricted by the 2000

Regulations, they have no right under Community law, from which such a right exclusively derives, to make such transfers.

Although this involves a question of Community law, it is not necessary for this Court to decide the case on that basis, since, in

this case also, the State was pursuing principles and policies laid down in Community law.

Property Rights

It is only in respect of the first of these issues that the applicants are in a position to maintain that their property rights have been

infringed. It has been established since at least as early as the judgment of the Court of Justice in Case 11/70 Internationale

Handellsgesellaschaft [1970] ECR 1125, that fundamental rights and in particular rights to property are protected in the Community

legal order. In Case 44/79 Hauer v Land Rheinland-Pfalz [1979] ECR 3727, that court explained that such protection was inspired by

the common constitutional traditions of the Member States and the European Convention for the Protection of Human Rights and

Fundamental Freedoms. The court drew attention specifically to the German and Italian Constitutions and to Article 43 of the

Constitution of Ireland. However, it is equally clear from this judgment that "the question of a possible infringement of fundamental

rights by a measure of the Community institutions can only be judged in the light of Community law itself." (paragraph 14). The other

named sources of fundamental-rights protection are integrated into the Community legal order. In Bostock, the Court of Justice said,

citing its earlier decision to the same effect in Case C-44/89 Von Deetzen:

“The right to property safeguarded by the Community legal order does not include the right to dispose, for profit, of an

advantage, such as the reference quantities allocated in the context of the common organisation of a market, which does not

derive from the assets or occupational activity of the person concerned...”

In its judgment in Demand, the Court of Justice used the expression, “regardless of the legal nature to be attributed to an additional

reference quantity,” when assessing and then rejecting a claim that Community provisions had infringed rights of property. As Murray

J. explains in his judgment, when Member States exercise discretions conferred on them by Community law, as in this case, it is for

Community law to decide whether they have infringed fundamental rights. The Court of Justice stated in Duff, at paragraph 29 that

“the protection of fundamental rights in the Community legal order are also binding on the Member States when implementing

Community rules.” (emphasis added). In that case, the Court of Justice considered both Community rules and the exercise of

discretion at national level. It did not refer in its judgment to the point made by the Advocate General, in his Opinion, that national

law might “in appropriate cases ... ensure greater protection ... than that afforded by the general principles applicable in the

Community legal order.”

1 In my opinion, the applicants' complaint that their fundamental rights, whether or not described as property rights, have been

infringed by the 2000 Regulations is unsustainable as a matter clearly decided in the constant case-law of the Court of Justice.

Specifically, I cannot accept that their said rights were infringed by the State in exercising the discretion conferred on it to cease to

apply Article 7(1) of Regulation 3950/92 (as amended) as introduced by the insertion by Article 1(10) of Regulation 1256/99 of Article

8a(b). I agree with the judgments of Denham and Murray JJ. on the issue of protection of property rights in milk quotas in Community

law. I think that the position of the Court of Justice regarding claims based on infringements of property rights in milk quotas is clear

beyond argument to the extent of being acte clair. On that basis - which was not seriously contested on behalf of the applicants - I

do not think the Court is under an obligation to refer any question for preliminary ruling to the Court of Justice of the European

Communities pursuant to Article 234EC.

In the present case the alleged infringements flow from the exercise of Member States' discretion within the framework and in pursuit

of Community policies. In my view, the principle enunciated in Hauer applies to such a situation. It is not a case of the exercise of an

autonomous power to impose restrictions permitted by Community law but in furtherance of national policies. If this was such a case,

of course, Article 15.2.1 of the Constitution would apply and it would also follow that any law so enacted would be amenable to

scrutiny by reference to other articles of the Constitution, specifically Article 43.

It need not follow that in every case an exercise of a power delegated by Community law which is valid in the sense of being within

principles and policies laid down by the latter will survive scrutiny vis à vis other articles of the Constitution. It is difficult to envisage

circumstances in which the exercise of a discretion would violate a provision of the Constitution protecting, for example, property

rights without at the same time involving the invasion of the exclusive legislative role of the Oireachtas, but in principle that must be

possible. I agree with Murray J. in his treatment of the issue of property rights.

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