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1. This case raises the question as to whether and, if so, to what extent the purchaser reference quantity (or the milk quota as it is more commonly known) passed with the sale of property which took place pursuant to a contract of sale dated the 28th November, 1983.

2. Whether it was the result of mistaken policies or technological advances in the agricultural industry is irrelevant. It is sufficient to note that the European Economic Community recognised that the Community as a whole was suffering from surpluses as a result of imbalance between supply and demand for, amongst other things, milk and milk products. Various regulations were made which had the effect of introducing what was known as "a uniform co-responsibility levy on all milk delivered to dairies and on certain dairy products sold direct from the farm" with a view to correcting this imbalance. These measures did not resolve the problems.

3. In March of 1984 the Council of the European Communities decided to introduce an additional levy on quantities of milk delivered beyond a guaranteed threshold. The general scheme determined by the Council was to establish the figure for the quantity of milk or milk equivalent representing the level of internal consumption and then current export possibilities of the Community as a whole and, having done so, to distribute that figure among the Member States on the basis of milk deliveries within their territories during the 1981 calendar year. Among the many refinements made - no doubt as a result of protracted economic and political debate - to this simple concept was the provision that the base year for Ireland (and indeed Italy) should be the calendar year 1983. Whilst the scheme envisaged a Community target and national limits for the Member States, the fundamental concept was to penalise the producer who exceeded that part of the national quota or reference quantity ascribed to him.

4. This superlevy scheme was introduced by Council Regulation (EEC) No. 856/84 of the 31st March, 1984, and duly published in the Official Journal of the European Communities on the 1st April, 1984. That regulation, having clearly stated that its purpose was to curb the increase in production, went on to provide that the levy system could be implemented in each region of the territory of Member States in accordance with one or other of two formulas, the first of which imposed the levy on the producer in the first instance, and the other provided for the imposition of the levy on the purchaser of the milk or milk products in excess of the relevant reference quantity. However in the latter event there was express provision requiring the purchaser to pass on the levy to those producers who had increased their deliveries above the appropriate quota. Levies were also to be imposed on producers who sold quantities for direct consumption in excess of the reference quantity. General regulations (Council Regulation (EEC) No. 857/84) were duly made on the 31st March,1984, and published in the Official Journal. Article 2 of Regulation 857/84 provided that the reference quantity (or quota as it is referred to in practice) should be equal to the quantity of milk or milk equivalent delivered by the producer (where formula A was adopted) or purchased by the purchaser (where formula B was selected) in the base year subject to certain adjustments which are not material to the present case. The actual levy fell to be determined by the Commission at or as a substantial proportion of the target price for milk in accordance with art.1 of the Regulation 857/84. At this stage too it may be noted that by an administrative decision notified to the Commission on the 25th April,1984, this country elected to be treated as a single region to which formula B would apply.

5. Article 8 of Regulation 857/84 provided that where formula B applied:-

6. Article 10 provided (as had been required in principle by Regulation 804/68) that the purchaser liable for a levy (under formula B) should recover it through the price to be paid to the producers. However, the article to which attention in particular was directed was art.7, para.1 which provided as follows:-

7. In art.12 a number of terms used throughout the regulations were defined. "Purchaser" was defined as "an undertaking or grouping which purchases milk or other milk products either to treat or process them or to sell them to one or more undertakings treating or processing milk or other milk products." Effectively, therefore, purchasers in this country would be equated with the milk co-operative societies. The word "producer" was defined as:-

8. The word "holding" was in turn defined as:-

9. In the course of the evidence some dispute arose as to how far the public generally and the farming community in particular were aware of the negotiations leading up to the introduction of the superlevy. It would appear that informed journalists were commenting on the lines of the proposals ultimately adopted towards the end of 1983. However, the promulgation of the regulations in Ireland may be said to have occurred by an advertisement published in the national papers by the Department of Agriculture on the 7th April, 1984. That advertisement summarised the regulations in the following terms:-

10. On the l6th May, 1984, the Commission of the European Communities by Commission Regulation (EEC) No. 1371/84 made detailed rules for the application of the additional or superlevy. This Commission Regulation recited and invoked the Council Regulations (EEC) Nos. 804/68, 856/84 and 857/84 and in particular art. 7, para. 1 of the latter regulation. In art. 5 of the Commission Regulation (EEC) No. 1371/84 specific rules are provided to apply to the transfer of reference quantities granted to producers and purchasers in application of formulas A and B for the purposes of art. 7, para. 1 aforesaid. Those rules are as follows:-

11. It is the validity, effect and operation of this article which is crucial to the present case.

12. The national regulations dealing with the superlevy are entitled "European Communities (Milk Levy) Regulations, 1985" (S.I. No.416 of 1985) and were made by the Minister for Agriculture on the 12th December, 1985. The Minister purported to make these regulations in exercise of the powers conferred on him by (inter alia) s.3 of the European Communities Act, 1972. In passing it may be said that whilst criticism was directed at the Minister or his Department for failure to introduce national regulations at an earlier date, firstly, even at the present date other Member States have not as yet introduced appropriate national regulations, and secondly, there was a need for discussion between the Minister as the competent authority and the various bodies affected by the introduction of the scheme. Indeed there was a number of respects in which the evidence established clearly that the Minister was influenced by the representations made to him. One respect in which this was so was the allocation between the purchasers of the total national reference quantity. Apparently all of the parties potentially affected preferred a scheme under which the national quota was distributed in toto rather than a partial distribution plus the creation of a national reserve. Article 4 of the national regulations provided as follows:-

13. Article 12, para.1 of the national regulations contain detailed provisions making it a criminal offence for any person to dispose of land or to take a disposition of land without at the same time transferring and taking a transfer of the reference quantity or quota relevant to the land so disposed. Clearly those provisions are prospective in their operation. However, para.2 of art.12 goes on to provide that the provisions of paras.1 and 2 of art. 5 of Commission Regulation (EEC) No. 1371/84, that is to say, the express Community provision against disposing of land otherwise than in conjunction with the reference quantity, should be applicable with retrospective effect subject to the qualification that in respect of the period from the 1st January, 1983, to the 1st April, 1984, the provisions should not apply:-

14. Whilst the courts do approach retrospective provisions with some hesitation, the foregoing provision has the added complication that the draftsman appears to have purported to deal with the situation which would arise as a result of farmers not merely having anticipated the introduction of the superlevy regulations but also the inclusion of some provisions enabling the parties to regulate rights as between themselves to the quota enjoyed in relation to lands disposed of before the regulations came into effect.

15. Perhaps it would be possible to summarise the effect of the superlevy regulations by saying that in the first instance they fixed an EEC limit for the production of milk and milk products. Secondly, they determined a national (or where appropriate, regional) reference quantity. Thirdly, where formula B was adopted the competent authority (in Ireland the Minister for Agriculture) fixed the reference quantity for every purchaser (the co-operatives) by reference to the deliveries taken by them in the calendar year 1983 and fourthly, the purchasers in turn allocated a reference quantity or quota to the producer who was, as the definition already quoted indicates, a person "farming a holding and supplying milk to the purchaser". Again, the holding is defined as including "all of the production units" operated by the producer.

16. The sanction for overproduction, that is to say, the imposition of the additional levy, did not apply at all in any year unless the national quota was exceeded. If it was so exceeded the purchasers who had taken deliveries in excess of the quantities allocated to them by reference to their purchases in the year 1983 became liable to pay the levy to the Minister but the provisions already referred to then enabled (and indeed required) the co-operative to penalise the farmer who over-produced by recovering the levy from him. Looking at the procedure in reverse, therefore, one can see that it could happen that a farmer could over-produce or over-supply a particular creamery but, due to a shortfall by other producers, that the co-operative would not be in excess of its quota. Alternatively, the producer might escape liability because even if the particular co-operative had exceeded its limit its excess might be compensated for by a diminution in deliveries to other creameries.

17. The scheme to curb milk production was no doubt desirable. Perhaps it was inescapable but certainly it was revolutionary. The competent authority in every region within the EEC was in fact required to penalise each and every farmer/producer who sold milk after the 2nd April, 1984, or if he had produced and sold milk to penalise him if he increased his output beyond that achieved in the base year. Awesome though this problem was in Ireland (and perhaps Italy) it must have been greater still in the other Member States where the base year was 1981 rather than 1983 as it was in Ireland.

18. I confess I would have expected to find complex administrative machinery set up by statute to introduce and police this revolutionary regime. Virtually no such administrative machinery exists. The broad concept laid down by the EEC regulations and amplified to some extent by the national regulations contained in the statutory instrument already referred to provide the only legislative basis for the scheme and the actual work is carried out administratively by the officials of the Minister for Agriculture acting as the competent authority. Indeed the administrative basis of the scheme would appear to rest on a circular letter dated the 5th April,1984, from the Department of Agriculture and signed by Mr. Corry, who gave evidence in this case, and addressed to each registered creamery. This circular drew attention to the provisions of the milk superlevy scheme and called upon every creamery to make returns to the department of their total level of intake in the year 1983 on a quarterly as well as annual basis. The circular promised that upon receipt of those figures and following verification of the returns that the creamery would be notified of the quota applying to each creamery. It appears that the creameries in turn wrote to individual producers notifying them of their milk deliveries to that particular creamery for the year 1983 and their superlevy quota for the year 1984/5 based on the deliveries for the relevant year. Such notices were put in evidence and again it would appear astonishing that such crucial decisions could be made and recorded with such simplicity and informality. It is clear now but it must have been apparent even in 1984 that a substantial milk quota was one of those intangible rights so common in modern society such as intoxicating liquor licences or planning permissions which can transform the value of a holding into a different order of magnitude.

19. It is in the context of the legislative provisions discussed above that I now turn to consider the facts of the present case. Prior to April,1983, the plaintiff, Mr. Patrick Lawlor, was the owner of two farms in County Meath. The home farm was situate at Brownstown (hereinafter referred to as "the Brownstown farm") and the outfarm was situate at Burtonstown (and accordingly referred to as "the Burtonstown farm"). Each was a residential farm and each was unquestionably a dairy farm. By coincidence they were almost identical in area, the Brownstown farm being 90 acres and the Burtonstown farm 91 acres. They were some four miles apart but the quality of the ground was not significantly different. The Burtonstown farm had been acquired in 1978 for a sum of £220,000 and for financial reasons Mr. Lawlor decided in 1983 to dispose of that holding. The farm was put up for auction by Messrs. Patrick Smith & Son, auctioneers, on the 25th October, 1983, and was described in the general particulars as "a 90 acre residential dairy farm". A contract was subsequently signed by the third defendant (apparently on her own behalf and on behalf of the second defendant) and it is of some significance that in that contract the special conditions expressly excluded "milking equipment and feeders". There was, however, an offer by Mr. Lawlor set out in a letter of November, 1983, addressed to Mrs. Casey-Duffy offering to sell her for a sum of £11,000 the milking equipment all of which was then situate at the Burtonstown farm and described in the schedule to that letter. lit is common case that that offer was accepted by the purchasers. For the purposes of his dairy farming business Mr. Lawlor had entered into important contracts with Bailieborough Dairies Limited and Drogheda and Dundalk Dairies (registered as Ryan Dairies Limited) which gave him a guaranteed outlet for all or the greater part of his production. I accept that Mr. Lawlor offered the purchasers the benefit of part of these milk supply contracts and that this offer was declined by the purchasers. On the other hand I am satisfied that Mr. Lawlor and his wife are mistaken in saying that the purchasers had stated or indicated that they did not intend to engage in milk production. Furthermore, it is absolutely clear that the contract was not entered into on the basis of any such representation. The contract itself provided for the postponement of completion until certain contracts entered into by the purchasers in relation to their own lands had been completed. This clause and certain provisions with regard to interest consequential thereon gave rise to problems so that the actual transfer of the land by Mr. Lawlor to Mrs. Duffy was not executed until the 29th May, 1984, although the purchasers had been allowed into possession in February of that year.

20. By letter dated the 14th August, 1986, Mr. O'Donnell an officer in the Department of Agriculture wrote to the plaintiff referring to the sale of the Burtonstown farm and pointed out that the production of that farm together with the Brownstown farm and an additional 41 acres of land rented for milk production yielded 183, 753 gallons of milk which were supplied by Mr. Lawlor to the Bailieborough Co-operative and the Drogheda and Dundalk Dairies in the year 1983, and that this gave him a quota of 190,276 gallons. Mr. O'Donnell then went on to say:-

21. The foregoing letter is misleading in two respects. Firstly, it gives the impression that the quota to be transferred was based solely on the proportion of Mr. Lawlor's dairy holdings which had been disposed of and secondly, that the Department or Minister had the function of determining producer quotas.

22. In fact the Minister was brought into the matter, quite correctly, by Tir Laighean Co-op Limited who wrote to the Dairying Division of the Department on the 8th July, 1985, and the 3rd January, 1986. The purpose of the second letter was to secure an adjustment of that co-operative's quota as a result of the fact that the purchasers of the Burtonstown farm intended to transfer the output of that farm to Tir Laighean in place of the Drogheda and Dundalk Dairies. Undoubtedly such an adjustment falls within the Minister's responsibilities as it is his function to fix the quotas for the purchaser/co-operatives. It was following upon the correspondence with Tir Laighean that a representative of the Department, Mr. Eamon Mansfield, called upon the plaintiff. The purpose of his interviews with Mr. Lawlor, and indeed his inspection of the lands and the records relating to the herds which had been kept there, was to establish "the areas used for milk production" by Mr. Lawlor prior to the sale, and the proportion of those lands which had been included in the sale to the purchasers.

23. By January, 1986, Mr. Lawlor was fully conscious of the value of a milk quota. He was anxious to ensure that he would retain as large a fraction of his original quota as possible. Accordingly he argued that a substantially greater part of his 1983 milk production had been derived from the Brownstown farm than the Burtonstown farm. Indeed he procured, on the advice of Mr. Mansfield, letters from the co-operative societies concerned in support of that argument. In addition, however, expert evidence was given by Mr. R.A. Collins, a bachelor of agricultural science, in support of the contention that it was the home farm, the Brownstown farm, which was the more significant "area for the production of milk". Mr. Collins gave his evidence on the basis of information supplied to him by Mr. Lawlor and on a reconstruction of the disposition of Mr. Lawlor's herd throughout the year 1983 as between the two farms. Effectively it was contended that during 1983 there was a policy of transferring freshly calved cows from the Burtonstown farm to the Brownstown farm and replacing them with a similar number of cows at the end of their lactation. It was also contended that the calf replacements which were bred by Mr. Lawlor (who sold such replacements as exceeded his requirements) constituted part of a cattle business rather than a dairy business and that accordingly the area which they occupied in the Burtonstown farm was not an area of milk production.

24. It is fair to say that the arguments presented by Mr. Lawlor to the officials of the Department in 1986 were received not merely sympathetically but with an open mind. Indeed it is clear that some officials of the Department took the view that a higher proportion of the milk output should be apportioned to the Brownstown farm than the Burtonstown farm notwithstanding the fact that the two farms were virtually identical in area and similar in soil composition. The Department had in fact produced notes for the information of dairy produce inspectors, such as Mr. Mansfield, and having quoted the relevant Community regulations went on in a chapter entitled “Application of the Terms ‘Areas used for milk production ’” to provide as follows:-

25. Without questioning Mr. Collins's integrity there is - as he would recognise - a difficulty in fully accepting his conclusions, as there are no management or other records showing precisely how the herds were distributed amongst the various holdings in the year 1983. I would be slow to accept conclusions based upon a reconstruction of the events. With regard to the other point which was hotly contested, namely, whether replacement calves formed part of the dairy herd or a cattle business I have no doubt that the former is the correct answer in the context of the present dispute. Obviously stock in trade in any industry or business can be viewed differently for different purposes but it does seem to me that to exclude the fields occupied by calves bred primarily as replacements for a major dairy herd from the "'areas used for milk production" as that term is used in the relevant EEC regulations would be far too fine a distinction.

26. In my view the experts in the Department made a very careful and proper analysis of all of the relevant factors and in my view arrived at a correct conclusion as to the extent of the areas used for milk production. Indeed it seems to me that Mr. Mansfield was able to demonstrate the correctness of the Department's decision by comparing the gallonage achieved in the year 1983 with that achieved by Mr. Lawlor in 1985.

27. Accordingly it follows in my view that the adjustment which the Minister made in the reference quantities allocated to the purchaser/co-operatives concerned was correct and it would follow that a corresponding adjustment would properly be made by the co-operative to Mr. Lawlor as producer. I reject the case made on behalf of the plaintiff insofar as it is contended that the adjustment was incorrect in its conclusion or reached by procedures which were unfair.

28. Whist the challenge to the validity of the superlevy regulations, that is to say, both the Community regulations and the Ministerial regulations purporting to give effect thereto is both wide ranging and sophisticated, I think I may, without injustice, summarise it as follows:-

29. The constitutional argument on the part of the plaintiff is simple to this extent. It is said that the plaintiff had in April, 1984, a valuable property right consisting of a milk quota amounting to approximately 190,000 gallons. That such a quota was valuable is beyond dispute. The plaintiff then complains that by the domestic regulations made nearly two years later this valuable property right was reduced by approximately one half. That, it is said, is a flagrant abuse by the State, through subordinate legislation, of the plaintiffs property rights and a gross failure by the State to defend and vindicate those rights. In this context reference was made to the decision of the Supreme Court in The Housing (Private Rented Dwellings) Bill, 1981 [1983] IR 181 and in particular to a passage in the judgment of the former Chief Justice, at p. 191, as follows:-

30. The decision of Barrington J. in Brennan and Others v. The Attorney General [1983] ILRM 449 was invoked partly by way of precedent and partly as an illustration of laws which because of their arbitrary and unreasonable nature failed to vindicate the property rights of the citizen. The decision in Burke v. Minister for Labour [1979] IR 354 was cited in part as authority for the proposition, which I accept of course, that delegated legislation must accord with constitutional requirements and in particular for the general statement of Henchy J. in relation to delegated functions set out at p. 361 of the report as follows:-

31. It was recognised that the validity of the superlevy regulations and in particular para. 3 of article 5 of Commission Regulation (EEC) No. 1371/84 might have been challenged in the Court of Justice of the European Communities under Article 173 of the Treaty within the time limit specified in that Article or, alternatively, under Article 184 in accordance with the procedures laid down therein, notwithstanding the expiry of the period specified in Article 173. On the other hand it was accepted that it was not competent for this court to annul the particular regulation. Any challenge to the regulation in these proceedings would require a reference by this court to the Court of Justice of the European Communities under Article 177 of the Treaty.

32. In his challenge to the disputed regulation by reference to the Treaty, counsel on behalf of the plaintiff relied upon the following authorities: Germany v. Commission [1963] E.C.R. 63; Toepfer v. Commission [1965] E.C.R. 405; Bock v. Commission [1971] E.C.R. 897; Kaufhof v. Commission [ 1976] E.C.R. 431; Watson and Belmann [1976] E.C.R. 1185 and Racke v. Hauptzollamt Mainz [1979] E.C.R. 69.

33. Having regard to my limited function in relation to this aspect of the matter I do not propose to examine these authorities at any length. Perhaps it would be fair to say that these cases establish or illustrate the principle that retroactivity must in general be avoided in Community legislation and, secondly, that the means taken to achieve legislative aims must bear a reasonable correspondence or proportionality with the intended objective. These indeed are principles which are perhaps equally well established in our national system (see Burke v. Minister for Labour [1979] IR 354 and Hamilton v. Hamilton [1982] IR 466). In addition, however, it was contended on behalf of the plaintiff that the regulations of the Commission must be based on an appropriate statement of reasons and that they might be condemned if the recitals lacked an appropriate degree of clarity (see Germany v. Commission [1963] E.C.R. 63, above).

34. The defence, particularly that of the Minister, is based partly on fact and partly on law. The principal witness on behalf of the Minister was Mr. Michael Corry. He is a principal officer in the Department of Agriculture and he was intimately concerned with the negotiations and planning which resulted in the superlevy regulations. His expertise and his integrity were beyond question. Moreover, the fact that Mr. Corry was in a position to deal fully and candidly with all of the problems which he and his colleagues had foreseen or encountered, and the reasons for the courses which they adopted, distinguished the present from almost every other constitutional issue where the intention of the legislature is deduced or inferred ordinarily from the legislation itself and the arguments based thereon frequently owe more to the ingenuity of the lawyers than the intention of the legislators. The national interest which the Minister and perhaps successive Ministers for Agriculture sought to achieve was the maximum national reference quantity. As already explained there was a wide consensus that the national reference quantity should be fully allocated among purchasers. It was undesirable that the quota should be exceeded but on the other hand it was important that it should be fully utilised. Once the Community accepted the quota system it followed that the use by the farming community of its lands for dairy purposes must be interfered with to some extent. Mr. Corry believed it was clear from Council Regulation (EEC) No. 857/84 and in particular article 7 thereof that the quotas were to be "land based". That view is further supported by the definition of the words "producer" and "holding" in article 12 of the same regulation. Indeed the concept of milk quotas divorced from land would seem to me to be meaningless. Article 5 of Commission Regulation (EEC) No. 1371/84 and article 12, s.1 of the domestic regulations makes it clear that subsequent to the introduction of the regulations in any event the producers quota or an appropriate part thereof would pass with dairy lands. It was against that background that the Minister's advisers had to consider what regulations should be made in relation the sales of land which took place after the commencement of the base year and before the 2nd April, 1984. As Mr. Corry pointed out, if a hypothetical purchaser had paid the full value for the dairy land and received no quota there would be an outcry and, in the absence of a national reserve, there would be no means of remedying the injustice. If a vendor who sold part of his land retained the full quota in respect of the portion retained by him, this might indeed lead to greater efficiency, but that had been contrary to the intention of the Community in introducing the levy Mr. Corry and his colleagues were aware of course that sales had taken place during the base year, yet they believed - and in my view correctly - that some decision had to be made as to how the quota would be dealt with where all or part of a dairy farm was disposed of during the base year. To that extent Mr. Corry did not interpret article 5, para. 3 of Commission Regulation (EEC) No. 1371/84 as conferring on the State a discretion. It was necessary to make a decision as to how the pre-regulation sales would affect the allocation of quotas. The Department was aware of perhaps a dozen vendors who were in a similar position to that of the plaintiff in the present case.

35. The defendants contest at every level the argument presented on behalf of the plaintiff. It is said first that the plaintiff had no property right in the milk quota, secondly, that if it did constitute a property right it was not attacked and thirdly, that if the operation of the superlevy regulations did constitute an attack, then it was not unjustified. This indeed is the approach which was adopted by the Supreme Court in analysing the Rent Restrictions Act, 1960, in Blake v. The Attorney General [1982] IR 117 and in particular attention may be drawn to the comments of O'Higgins C.J. at pp. 139 and 140 of the report. However, the argument on behalf of the defendants goes even further. It is contended that the effect of the domestic regulations does not fall to be considered by reference to the standard of protection for property and other rights provided by Article 40, s. 3, sub-s. 2 of the Constitution because it conforms to the requirements of Article 43 thereof. The distinction between Article 43 and the relevant sub-article of Article 40 was discussed in Dreher v. Irish Land Commission [1984] ILRM 94 and in particular in a passage from the judgment of Walsh J. at p. 96 which was subsequently cited with approval by O'Higgins C.J. in O'Callaghan v. Commissioner for Public Works [1985] ILRM 364 and by Finlay C.J. in Electricity Supply Board v. Gormley [1985] IR 129. The particular passage from the judgment of Walsh J. is in the following terms:-

36. I do not doubt that at the present day a milk quota is a valuable intangible asset. Indeed there was clear evidence that the existence of an appropriate quota in relation to dairy land might well double the value thereof. It does seem to me that there is a fallacy in the plaintiff’s argument in basing his claim arising from an interference in the year 1984 on his right to a milk quota. The entire superlevy system from its inception on the 2nd April, 1984, was a massive interference with or limitation on the manner in which farmers could profitably make use of their lands. This was the far-reaching decision which was made with a view to curbing milk production and restoring the balance between production and consumption so that the Common Agricultural Policy could operate in the interests of all of the producers within the Member States. Far-reaching though these provisions were it seems to me quite clear that in their purpose and effect they amounted to a regulation or limitation on the use of lands by individual producers “with a view to reconciling their exercise with the exigencies of the common good”. The allocation of quotas in the first instance was merely the machinery by which milk production would be pegged back to the agreed levels. When quotas are determined for regional or national purposes clearly one may speak in tonnes or gallons. Likewise this is true under formula B where one is discussing quantities of milk or milk products delivered to purchasers within a given period, but when quotas are related - as ultimately they must be - to production by producers they must relate to the holdings on which the milk is produced. In the working out of the regulation the producer's quota is in the first instance related to the producer and the quantity of milk supplied by him to a purchaser in the base year but on any interpretation of the EEC regulations or the domestic regulations it is quite clear that the quota itself takes into account the fact that the milk is produced on the farmer's landholding. As the defendants contend and Mr. Corry believed the quotas were from their inception "land based".

37. Attention was drawn to the appropriate canons of interpretation of EEC legislation. In particular reference was made to the second edition of H.G. Schermers, Judicial Protection in the European Communities (1979) at pp.15-23 and the comments to be found therein on the teleological and schematic approaches to interpretation. With respect it seems to me that the principles of interpretation were most helpfully and authoritatively dealt with in the paper read by Professor Kutscher, the President of the Chamber at the Court of Justice in Luxembourg in 1976 on “ Methods of Interpretation as seen by a Judge at the Court of Justice”. I may quote at some length a passage from para. 1.36 of that paper as follows:-

38. It is interesting to note from his decision in Buchanan & Co. v. Babco Lido [1977] QB 208 at p. 213 that Lord Denning M.R. was equally impressed by Judge Kutscher’s paper and explained the European method of interpretation in the following terms:-

39. “They adopt a method which they call in English by strange words - at any rate they were strange to me - the “schematic and teleological” method of interpretation. It is not really so alarming as it sounds. All it means is that the judges do not go by the literal meaning of the words or by the grammatical structure of the sentence. They go by the design or purpose which lies behind it. When they come upon a situation which is to their minds within the spirit - but not the letter - of the legislation, they solve the problem by looking at the design and purpose of the legislature - at the effect which it was sought to achieve. They then interpret the legislation so as to produce the desired effect. This means that they fill in gaps, quite unashamedly, without hesitation. They ask simply: what is the sensible way of dealing with this situation so as to give effect to the presumed purpose of the legislation?"

40. It is proper to say, however, that the House of Lords on appeal from the Court of Appeal, reported at [1978] A.C. 141, made it clear that they did not share Lord Denning’s enthusiasm for the schematic or teleological approach nor did they find any justification for incorporating it in the English legal system.

41. It seems to me that in construing EEC regulations I am bound to apply the canons of interpretation so clearly adumbrated by Judge Kutscher in his paper, and with regard to domestic legislation it does seem to me that similar principles must be applicable at least insofar as it concerns the application of community regulations to this State. Moreover, it does seem to me that the teleological and schematic approach has for many years been adopted in this country - though not necessarily under that description - in the interpretation of the Constitution. The innumerable occasions in which the preamble to the Constitution has been invoked and in particular the desire therein expressed “to promote the common good, with due observance of Prudence, Justice and Charity, so that the dignity and freedom of the individual may be assured, true social order attained, the unity of our country restored and concord established with other nations" in seeking to "fill the gaps" in the Constitution is itself an obvious example of the teleological approach. Indeed in somewhat more mundane circumstances arising in the interpretation of the Family Home Protection Act, 1976, in Nestor v. Murphy [1979] IR 326, 329, Henchy J. expressly decided that the Court "must adopt what has been called a schematic or teleological approach."

42. If no national regulations had been made and if indeed art.5, para. 3 of Commission Regulation (EEC) No. 1371/84 had not been incorporated in the regulations (or indeed was invalid as the plaintiff contends) the court would be faced with the task of applying and interpreting the surviving superlevy regulations in accordance with the clearly established intention of the Community to curb milk production by penalising farmers in the Community who after the 2nd April, 1984, produced milk where they had not done so in the base year or, if they had been in milk production in that year, exceeded the quantities produced by them in that year. It was evident -particularly in those Member States where the base year was 1981 - that changes in ownership of dairy lands would have taken place between the commencement of the base year and the date on which the regulations became operative. This involves in one sense the interpretation of the prospective effect of the regulations. The true question as I see it, is “to whom is the quota to be allocated?” The farmer in, say, Germany who delivered several thousand gallons of milk to his purchaser in 1981 but died in 1982? The dairy farmer who subsequent to the base year sold the vast bulk of his holding at the full market price for dairy land and retained for himself a residence and pleasure grounds? What of the purchaser who buys the entire holding of the dairy farmer who had been in milk production throughout the base year? Is the vendor to be allocated a quota even though he possesses no land at all and the purchaser to be prevented from engaging in dairy production?

43. It seems to me that the scheme and purpose of the regulations would force any court to the conclusion that what the Community intended was that quotas should be allocated by reference to milk production on given holdings throughout the base year and that in the event of those holdings having changed hands or being subdivided between the base year and the coming into operation of the superlevy regulations that the persons acquiring the holdings should acquire also quotas appropriate to the amount and the nature of the lands acquired by them. I believe that this was inherent in the original scheme and that para. 3 of art. 5 aforesaid (or more particularly the second part of that paragraph) was little more than an aide memoire to the Member States reminding them of the need to make provision to cope with changes which have taken place subsequent to the commencement of the base year. Obviously the statutory regulations are better calculated than any judgment by a court to provide the precise detail to which administrators are entitled to have regard in administering a scheme of such complexity and importance. Nevertheless, it seems to me that in substance what has been described as "the retroactive effect" of article 5, para. 3 and the domestic milk levy regulations of December, 1985, introduced no new concept. The granting of the quotas was an action lying in the future and it was essentially a matter of interpretation of the regulations as to how one would identify the persons and in particular the producers to whom such quotas should be allocated. I believe that the disputed regulations did little more than clarify the intentions of the Community in this respect and provide somewhat clearer - though by no means perfect - machinery to enable the desired result to be achieved.

44. In these circumstances my conclusions may be summarised as follows:-

45. In these circumstances I would dismiss the plaintiff's claim.