B e f o r e :
LORD JUSTICE WARD
LORD JUSTICE LAWS
and
LORD JUSTICE MANCE
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Between:
| | H.J. BANKS & CO. LTD.
| Appellant
|
| |
- and -
|
|
| | THE COAL AUTHORITY
THE SECRETARY OF STATE
| Respondents
|
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(Transcript of the Handed Down Judgment of
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Mark Hoskins (instructed by Eversheds, Dean Street, Newcastle) for the Appellant
David Vaughan Q.C. and David Lloyd Jones Q.C. (instructed by Sally Brook Shanahan, The Solicitor, The Coal Authority, 200 Lichfield Lane, Mansfield, Notts., NG18 4RG) for the Coal Authority
Richard Plender Q.C. and Aidan Robertson (instructed by the Treasury Solicitor) for the Secretary of State
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HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
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Lord Justice Ward :
- This could be the last round in a titanic struggle between H.J. Banks & Co. Ltd. (to whom I shall refer simply as “Banks”) and the Coal Authority and the Secretary of State for Trade and Industry. It is an appeal from the order of Tuckey J., as he then was, made on 20th December 1996 whereby summary judgment was entered for the Coal Authority against Banks and the counterclaim brought by Banks against the Coal Authority and the Secretary of State was struck out, Banks having to pay the costs. The judge gave leave to appeal and that appeal came before this court (coram Hirst L.J., Sir Christopher Staughton and me). On 31st July 1998 we referred four questions to the European Court of Justice and on 20th September 2001, the Court of Justice gave judgment and pronounced upon those four questions. Thus the matter comes back before us for the final determination of the appeal.
The Background.
- The background is set out in the judgment of Hirst L.J. and in the judgment of the Court of Justice in case C-390/98. I will set it out again as shortly as possible. After the nationalisation of the coal industry in 1946 virtually all coal reserves in the United Kingdom vested in the British Coal Corporation, formerly known as the National Coal Board. The Corporation was, however, empowered pursuant to section 36(2)(c) of the Coal Industry Nationalisation Act 1946 (added by virtue of the Opencast Coal Act 1958, s. 46(1) and subsequently amended by the Coal Industry Act 1990, s. 4(1)(b))to grant licences for opencast mining (the “section 36 licences”) to private operators who paid royalties to the Corporation in respect of the coal which they worked. Banks was such an operator.
- The industry was then privatised by the Coal Industry Act 1994. A new regulatory body, the Coal Authority, was created and all the unworked coal and coal mines previously vested in the British Coal Corporation were transferred to the Coal Authority. As from the restructuring date, 31st October 1994, mining operations were to be carried out either under new licences or leases (the “CIA licences” and “CIA leases”) or under the pre-existing section 36 licences.
- The actual restructuring of the coal industry took place in this way. With effect from the restructuring date, 31st October 1994, the Secretary of State granted British Coal Corporation the operating licences and directed the Coal Authority to grant leases it needed to carry on its pre-privatisation business including opencast mining but these licences and leases were granted for no consideration and the rent was a peppercorn. In December 1994 the operating business of the Corporation was distributed among various “successor companies” owned by the Crown, one of which was Central and Northern Mining Ltd. which was granted the entire English business of the Corporation, including its licences and leases and again for no consideration but for the peppercorn if called upon to pay it. Those successor companies including Central and Northern Mining Ltd. were then sold after an open competitive tendering process. Central and Northern Mining Ltd. was acquired by R.J.B. Mining plc and changed its name to R.J.B. Mining (U.K.) Ltd. It was not required to make any further payments for the right to work coal under the British Coal Corporation licences and leases which were transferred to it. Banks was aware of the proposals for that sale but did not tender.
- Banks carried on under its section 36 licences and continued paying its royalties, but now to the Coal Authority. Section 36 licence holders were given the option of converting them into licences under the 1994 Act and to acquire leases. Holders of those CIA licenses and leases had to pay a licence fee as well as production related rents or advance lump sum payments of some kind. All payments received by the Coal Authority were paid over to the Secretary of State except to the extent that the Authority is permitted by the Secretary of State to retain receipts as a contribution towards administration expenses. Banks exercised that option in relation to one site.
- Banks is a member of a trade association, the National Association of Licensed Opencast Operators (“NALOO”). Mr Banks was its chairman. In August 1994 NALOO complained to the Commission of the European Communities of preferential treatment by the British authorities to British Coal Corporation to the detriment of small private opencast mine operators. NALOO complained that the Corporation, with whom the NALOO members were in competition, had enjoyed discriminatory State aid since 1973 and that:-
“Commission intervention is urgently required to prevent the current privatisation plans exacerbating the abuses … If NALOO is correct there is a serious danger of British Coal merely being replaced by five regionally dominant aid advantaged companies and a serious risk of disappearance of the established private sector altogether.”
On 1st November 1994 the Commission issued its decision approving the privatisation proposals as being compatible with the objectives of its earlier Decision 3632/93 and with the proper functioning of the Common Market. On 21st December 1994 the Commission approved the acquisition by R.J.B. Mining of the share capital of the successor companies for which it had bid. On 4th May 1995 the Commission responded to NALOO’s complaint and concluded by saying:-
“In the light of these considerations and with regard to those matters raised in [the complaint] related to State aid, we do not consider that at present there are sufficient grounds for intervention by the Commission.”
In answer to a further query from NALOO’s solicitors, the Commission, in a letter dated 14th July 1995, clarified the response that it had given in its letter of 4th May 1995.
The Claim and Counterclaim.
- When Banks refused to pay royalties under the section 36 licences, these proceedings began with the issue of a writ on 24th January 1996 in which the Coal Authority claimed against Banks some £334,000 as payment of the royalties due from October 1995 to January 1996, and in a second writ a further sum of over £666,000 was claimed from February 1996 to the date of those proceedings. So it was a claim for over £1m.
- The defence to that claim was that the sums claimed were unlawful and therefore unenforceable for two reasons. The first was that the levying of the section 36 royalties on Banks was a measure or practice which discriminated between producers contrary to Article 4(b) of the ECSC Treaty and further or alternatively was contrary to the general principle of equality which is a fundamental principle of the law of the European Union. The particulars of the first ground were that whereas the Coal Authority levied section 36 royalties on Banks in respect of all coal which it extracted pursuant to such licences, the Coal Authority did not levy royalties equivalent to section 36 royalties or any royalties or any payments whatsoever on the successor companies in respect of their opencast mining operations carried out under the leases and licences granted on privatisation (save for the annual rent of one peppercorn if demanded). The second ground was that the section 36 royalties claimed by the Coal Authority from Banks constituted special charges imposed by an emanation of the State contrary to Article 4(c) of the ECSC Treaty which again affected unequally the production costs of Banks and the successor company.
- Banks made a counterclaim against the Coal Authority and the Secretary of State for Trade and Industry claiming in the first place restitution of the sum of about £863,000. That sum was made up first as to the section 36 royalties paid since the restructuring date, 31st October 1994 and secondly as to the licence fees, production rents and advance payments made under the CIA licences and leases. Banks contended that the levying of those royalties, rents and payments by the Coal Authority, and their receipt by the Secretary of State constituted a measure or practice which discriminated between producers contrary to Article 4(b) of the ECSC Treaty or alternatively contrary to the general principle of equality. Banks again relied on the disparity between the payments it was required to make and those the successor companies made in respect of their opencast mining operations under the leases and licences granted on privatisation. Alternatively it was again suggested that the royalties, rents and payments levied on Banks constituted special charges imposed by the State contrary to Article 4(c) of the ECSC Treaty and affected unequally the production costs of Banks and the successor companies. It was alleged that the payments were made pursuant to an ultra vires or unlawful demand and by mistake leading to the unjust enrichment of the Coal Authority and the Secretary of State.
- Banks also claimed damages against the Coal Authority and the Secretary of State alleging that in breach of the statutory duty imposed by section 2(1) of the European Communities Act 1972 and/or sections 2 and 3 of the 1994 Act or further or alternatively in breach of duties imposed under the ECSC Treaty the Coal Authority and the Secretary of State exercised their powers in a manner which was in breach of Articles 4(b) and/or 4(c) of the ECSC Treaty and/or the general principle of equality for similar reasons set out above. It was alleged that the rules of law infringed were intended to confer rights on individuals like Banks and the breaches were sufficiently serious to give rise to liability. The monies paid for royalties, rents and other payments were claimed as damages.
- Finally there was a claim for a declaration that the restructuring scheme made by the Secretary of State pursuant to the powers contained in the 1994 Act was unlawful and invalid insofar as it created conditional licences and options for leases in respect of prospective opencast mining, the grant of options in respect of opencast operations by the Secretary of State to the Corporation and/or the successor companies being contrary to Article 4(b) of the Treaty.
Tuckey J.’s Judgment.
- The applications before Tuckey J. were made by the Coal Authority for summary judgment on their claim and by the Coal Authority and the Secretary of State to strike out the counterclaim on the grounds that it disclosed no reasonable cause of action and/or was an abuse of process. He identified the following three broad issues before him to be:-
“1. Whether the matters complained of by Banks have already been the subject of decisions by the Commission of the European Communities (“the Commission”) and so should not be re-litigated in these proceedings.
2. Whether those parts of Article 4 relied on by Banks are of direct effect so as to permit Banks to litigate their complaints in this court.
3. Whether the claim for damages against the Secretary of State is sustainable in any event.”
By the time the matter had reached Tuckey J., Banks had abandoned its claim for the declaration that the Secretary of State had acted unlawfully in the exercise of his powers under the 1994 Act.
- As to the first issue it was contended by the Coal Authority and the Secretary of State that the Commission’s decisions approving the financial measures associated with privatisation made on 3rd November 1994, and approving the acquisition by R.J.B. made on 21st December 1994 and the rejection of NALOO’s formal complaints made in the letters of 4th May and 14th July 1995 dealt fully with the allegations in the defence and counterclaim and, relying on the principle in Henderson v Henderson (1843) 3 Hare 100, Banks could not now take points that could and should have been taken before the Commission and so it would be an abuse of process to allow Banks to litigate the complaints made in these proceedings. Tuckey J. held:-
“… if the substance of the allegations made have been dealt with by the Commission, the national court should prevent them from being re-litigated. … There can be no doubt that the Commission’s decision approving the financial measures associated with privatisation and the acquisition by R.J.B. were decisions for the purposes of Article 33. They could have been challenged by Banks in proceedings under Article 33, but were not. As to the Commission’s two letters rejecting NALOO’s formal complaint, the Treaty does not lay down what constitutes a decision, but I am satisfied that to the extent that the letters did deal with the matters raised in the formal complaint, they constituted a decision. So again, Banks had the right to challenge that decision by Article 33 proceedings, but did not do so. That being so, I do not need to deal with whether Article 35 applied.
So the real question on this issue is whether the substance of the allegation made by Banks in the proceedings has been the subject of a decision by the Commission. I think it has. …
Having regard to these conclusions and the history of this matter, I think it would be right to strike out Banks’ defence and counterclaim as an abuse of process.”
- In the light of that decision, Tuckey J. decided that it was unnecessary to decide the other two issues but that, as they had been fully argued, he dealt with them shortly.
- As to whether Articles 4(b) and (c) were of direct effect he concluded:-
“… if this issue had been critical to my final decision on the summonses, I would not have been able to resolve it with complete confidence myself and would have referred it to the European Court of Justice as Banks invited me to do.”
- As to the claim for damages against the Secretary of State he was prepared to assume that the rule of law infringed was intended to confer rights on individuals and secondly that there was a direct causal link between the breach and the damage sustained by the injured party. The argument centred on whether the breach was sufficiently serious, the decisive test being whether there was a manifest and grave disregard of the limits on the discretion being exercised. His conclusion was:-
“… Banks will not be able to show that any breach by the Secretary of State of Articles 4(b) and/or (c) was sufficiently serious to entitle them to damages and therefore I think it is right to strike out this part of their claim in any event on the basis that it discloses no reasonable cause of action.”
- As I read his judgment he did not expressly deal with the claim for damages against the Coal Authority. Nonetheless his conclusion was:-
“As there is no defence to the Authority’s claim they are entitled to summary judgment against Banks for the unpaid royalties claimed. Banks’ counterclaim will be struck out.”
- The order as drawn seems to have struck out the whole of the counterclaim against both the Authority and also the Secretary of State.
The Appeal to this Court.
- Banks appealed (but not against the strike out of the claim for damages against the Secretary of State) on grounds, in summary, that there were at least triable issues as to whether or not its complaint to the Commission covered the same ground as the proceedings before the court and whether or not there were decisions taken by the Commission precluding the court deciding the matters before it. It was also contended that, were leave to be given to defend, as it should have been, then the Court of Appeal should refer the question of direct effect to the European Court of Justice. The Coal Authority, supported by the Secretary of State, sought by a respondent’s notice to have the decision affirmed on other grounds including NALOO’s failure to challenge the Commission decisions. They contended that Articles 4(b) and/or (c) were not of direct effect. It was said that sections 2 and 3 of the Coal Industry Act 1994 did not give rise to any cause of action and that it was obvious that there was no infringement of the principle of non-discrimination or of equality.
The Judgment of the Court of Appeal given on 31st July 1998.
- After hearing argument for some two days, as I recollect, we concluded that it was necessary to refer the following questions to the Court of Justice for a preliminary ruling:-
“1. Is the difference of treatment referred to in the judgments of the Court of Appeal capable of constituting:
- “discrimination between producers” within Article 4(b) of the ECSC Treaty;
- a “special charge” within Article 4(c) of the same Treaty; and/or
- “aid” within Article 4(c) of the same Treaty or within Article 1 of Commission Decision 3632/93/ECSC (OJ 1993 L329, p. 12)?
2. Do paragraphs (b) or (c) of Article 4 of the ECSC Treaty or paragraphs (i) or (iv) of Article 9 of Commission Decision 3632/93/ECSC (OJ 1993 L329, p. 12) produce direct effects and confer on private undertakings the right, enforceable in national courts, to defend a claim for mining royalties made by a public body and to claim restitution of royalties paid to it, in particular in the absence of a Commission decision made pursuant to Article 67 or Article 88 of the ECSC Treaty or Commission Decision 3632/93/ECSC or otherwise to the effect that the matters alleged constitute “discrimination”, a “special charge” or “aid”?
3. If so, may a national court determine that there is “discrimination” within the meaning of paragraph (b) of Article 4 of the ECSC Treaty or a “special charge” within the meaning of paragraph (c) hereof or “aid” within the meaning of paragraph (c) thereof or of Article 1 of Commission Decision 3632/93/ECSC notwithstanding:
- Commission Decision 94/995/ECSC (OJ 1994 L379 p. 6);
- the Commission Decision of 21 December 1994 authorising the acquisition of Central and Northern Mining Ltd. by R.J.B. Mining plc;
- the communications sent by DG XVII of the Commission to NALOO dated 4 May and 14 July 1995?
4. As a matter of Community law, does the fact that Banks or NALOO did not:
a) challenge, under Article 33 of the ECSC Treaty, Commission Decision 94/995/ECSC or the Commission Decision of 21 December 1994 authorising the acquisition of Central and Northern Mining Ltd. by R.J.B. Mining plc or the letters sent by the Directorate-General XVII of the Commission to NALOO dated 4 May and 14 July 1995; and/or
b) invoke the procedure provided for in Article 95 of the ECSC Treaty in order to require the Commission to deal with the issues now raised in the proceedings before the national court
preclude Banks from raising alleged breaches of Article 4(b) or 4(c) of the ECSC Treaty, or of Community Decision 3632/93/ECSC in proceedings in the national courts?”
The Judgment of the Court of Justice of 20th September 2001 in case C-390/98.
The First Question.
- The Court of Justice drew distinctions between the concept of aid which appears in Article 4(c) and Article 1 of Decision No. 3632/93, the concept of special charge which also appears in Article 4(c) and the concept of discrimination between producers which appears in Article 4(b) of the same Treaty. It also drew a distinction between “the first period” with which it was concerned which began on 31st October 1994, the restructuring date, and which ended when the shares in the successor companies were transferred to the private undertakings, and “the second period” which began when those private undertakings took over the State companies. The court’s conclusion in respect of the first period was:-
“45. As regards the existence during the first period of discriminatory measures within the meaning of Article 4(b) of the ECSC Treaty, it is for the national court to assess whether substantial objective differences in the situation between, on the one hand, British Coal and the state companies which succeeded it and, on the other, the other operators, might justify that operational advantage in favour of the former and cause that advantage to escape classification as a discriminatory measure …
46. The answer to be given to the national court must therefore be that a situation such as that at issue in the main proceedings from the restructuring date until the transfer to the successful private tendering undertakings of the shares of the State companies which succeeded British Coal as operator implies the existence of aid, within the meaning of Article 4(c) of the ECSC Treaty, but not of special charges within the meaning of that provision. The same situation may constitute discrimination between producers, within the meaning of Article 4(b). That would be the case if significant objective differences in situation between, on the one hand, British Coal and the State companies which succeeded it as operator, and, on the other hand, the other operators, did not justify the differentiated treatment applied to the two categories of producers.”
- With regard to the second period the court pointed out that no operator had obtained or is currently obtaining its licences and leases without consideration. Those wishing to participate in the tender procedures had the opportunity to acquire those rights and the court went on to observe in paragraph 48, with the emphasis Banks wishes to add to the comment:-
“The documents before the court do not suggest that those [tender] procedures were not open, competitive and undiscriminatory.”
- The court held, again with Banks’ emphasis added:-
“50. Since the various formulae are, or were, accessible to all operators without discrimination, no distortion of competition can be inferred from such a system where several means of acquiring a single type of right co-exists. Moreover, the order for reference does not contain any evidence to indicate that access to the various formulae was, or would be, discriminatory.
51. The answer to be given to the national court must therefore be that a situation such as that at issue in the main proceedings, as from the time of the transfer of the shares of the State companies which succeeded British Coal as operator to the successful private tendering undertakings, does not reveal the existence of aid or special charges, within the meaning of Article 4(c) of the ECSC Treaty, or discrimination between producers within the meaning of Article 4(b) of the same Treaty, since access to the various means of acquiring the lease and licence rights was not, and is not discriminatory.”
The Second Question:
- The court held:-
“93. The reply to be given to the second question must therefore be that Article 4(b) of the ECSC Treaty, insofar as it concerns discrimination between producers, and the first sentence of Article 9(4) of Decision No. 3632/93 directly confer rights upon individuals which the national courts must protect. On the other hand, Article 4(c) of the ECSC Treaty, insofar as it concerns the compatibility of aid with the Common Market, does not itself create such rights. However, the national courts have jurisdiction to interpret the concept of aid for the purposes of Article 4(c) of the ECSC Treaty and Article 1 of Decision No. 3632/93, with a view to drawing the consequences from any infringement of the first sentence of Article 9(4) of that decision.
94. Further, as to the second question, in a situation such as that in the main proceedings, the finding of the existence of unlawful aid, on the ground that it was not authorised by the Commission at the time when it was granted, and, as the case may be, of discrimination between producers within the meaning of Article 4(b) of the ECSC Treaty, in that some producers were subject to the payment of royalties whereas others were exempt, cannot lead to producers who have been made subject to those royalties being retrospectively exonerated from them.”
- Banks would, however, draw mixed comfort from paragraph 80 of the judgment. The bad news was that:-
“… in view of the classification of the measure in question as aid, claims such as those made by Banks in the main proceedings cannot be accepted.”
The possible good news might be:-
“That is, however, without prejudice to any actions which British Coal’s former competitors might bring, if the conditions were met, for compensation for any damage caused to them by the competitive advantage enjoyed by British Coal and the State companies which succeeded it.”
The Third Question:
- The answer given in paragraph 107 to the third question was that:-
“… a national court is entitled to make a finding of the existence of discrimination between producers, within the meaning of Article 4(b) of the ECSC Treaty, or of aid, within the meaning of Article 4(c) of the ECSC Treaty and Article 1 of Decision No. 3632/93, by reason of the royalty system in question, and it may do so despite the adoption by the Commission
- of the Decision of 21 December 1994 and
- of the Decisions contained in the letters of 4 May and 14 July 1995.”
The Fourth Question:
- The answer to the fourth question was that the fact that Banks or NALOO did not bring an annulment action under Article 33 of the ECSC Treaty against the two Decisions and two letters of the Commission and did not bring an action under Article 35 of the Treaty to compel the Commission to adopt a position on alleged infringements of Article 4(b) did not preclude Banks from pleading those infringements before the national court.
The effect of the European Court of Justice decision on the issues pending in the Court of Appeal.
- In the light of the answers to the third and fourth questions, Tuckey J. is shown to have been wrong to have decided the first issue before him and thus disposed of the summonses before him on the basis which he did, namely, that the substance of the allegations made by Banks had already been the subject of decisions of the Commission and that it was an abuse of process to relitigate the matters complained of in the defence and counterclaim which should, accordingly, be struck out. On that limited basis the appeal should be allowed and the order for summary judgment and the strike out of the defence and counterclaim should both be set aside and the matter remitted to the Commercial Court to continue its way to a trial.
- Since Tuckey J.’s decision, the Civil Procedure Rules have come into operation and we must take those Rules into account in deciding what order should be made for the future conduct of this litigation. This court can and should where appropriate exercise robust case management in the interest of saving time and costs. It is, therefore, appropriate here to consider whether, if we simply send the matter back to the Commercial Court, we would on the pleadings as they stand merely delay the inevitable quietus which would await this litigation. In my judgment it is necessary in everyone’s interests and in the interests of the administration of justice to look critically at the case as it stands and if necessary to apply the coup de grace ourselves. So I turn to consider the fate of this action as presently constituted in the light of the judgment of the Court of Justice.
- The defence to the claim is that the sums claimed by the Coal Authority are unlawful and unenforceable. There is the alternative defence of set off on the grounds set out in the counterclaim. Banks pleads that the claim is unenforceable by reason either of the discrimination between producers in the levying of royalties from Banks, but not from the successor companies, said to be in contravention of Article 4(b), or of these royalties constituting special charges contrary to Article 4(c). As Mr Hoskins for Banks has had to acknowledge, that defence cannot succeed given the answers of the Court of Justice to the first and second questions.
- As far as the counterclaim is concerned, Banks concedes that the counterclaim against both the Coal Authority and the Secretary of State for restitution based upon the same illegality is likewise doomed to failure. That leaves only the claim for damages.
- Damages were claimed against both the Coal Authority and the Secretary of State. The case against the Coal Authority was that in breach of the statutory duty imposed upon it by section 2(1) of the European Communities Act 1972 and/or sections 2 and 3 of the 1994 Act, further or alternatively in breach of the duties imposed upon it under the ECSC Treaty, the Coal Authority had exercised its powers under section 2 and 3 of the 1994 Act in a manner which was in breach of Articles 4(b) and/or 4(c) of the ECSC Treaty and/or the general principle of equality. The particulars given were the same as those which related to the unenforceability namely discrimination between producers contrary to Article 4(b) and/or special charges under Article 4(c). The claim against the Secretary of State alleged that in breach of the statutory duty imposed upon him by section 2(1) of the European Communities Act 1972 or the Treaty the Secretary of State had adopted the restructuring schemes under the 1994 Act in such a way as to give rise to a breach of Articles 4(b) and/or 4(c) of the Treaty. The cases against the Coal Authority and the Secretary of State seem to me to stand and fall together. That was apparently the view taken at the hearing before Tuckey J. Mr Stephen Richards advanced the arguments on this aspect of the case for the Secretary of State and they were simply adopted by the Coal Authority. One way or another, the case against the Coal Authority seems to have taken the back seat for it was not expressly referred to. As I have set out, the judge found that Banks would not be able to show that any breach by the Secretary of State was sufficiently serious to entitle it to damages. So he struck out Banks’ counterclaim. The order as drawn struck out the counterclaim made against both the Coal Authority and the Secretary of State and there was no protest from Banks that that did not give effect to what the judge intended. As I have said, the argument was conducted as if the counterclaims stood and fell together.
- In their notice of appeal Banks applied for an order that the order striking out the counterclaim be set aside “save insofar as it struck out the counterclaim made by Banks against the Secretary of State …” Banks appears thereby to have acknowledged that it could not succeed in restoring the counterclaim against the Secretary of State. In the grounds of its appeal Banks did not expressly challenge the pivotal finding that any breach could not be shown to have been sufficiently serious to entitle it to damages. The challenge was made to the judge’s refusal to refer the question of direct effect to the Court of Justice. Because of its contention that the provisions were not of direct effect, the Coal Authority were submitting that Articles 4(b) and 4(c) could not be invoked before the national courts and that no reliance could be placed on section 2(1) of the European Communities Act 1972. The Coal Authority also submitted that if, which was far from clear, the claim based on sections 2 and 3 of the Coal Industry Act 1994 was still relied upon, no action would lie because of X v Bedfordshire County Council [1995] A.C. 633. The Coal Authority submitted that these are so obviously regulatory provisions that there can have been no intention to create a private law cause of action.
- For my part I cannot see any substantial difference between the claim made against the Secretary of State and the claim made against the Coal Authority. They are each a Factortame-type claim – see Brasserie du Pecheur S.A. v Federal Republic of Germany [1996] QB 404. If the breach was not sufficiently serious to found liability against the Secretary of State, and Banks has not challenged the validity of that finding by Tuckey J., I find it difficult to see why the finding does not prevail against the Coal Authority.
- Even if it does survive, it does not seem to me that it can survive the judgment of the Court of Justice so as to give any meaningful relief to Banks. Insofar as Banks relies on a breach of Article 4(c), the Court of Justice has held that there may have been discrimination between producers if significant objective differences did not justify the differentiated treatment applied to British Coal and the successor companies on the one hand and the other operators on the other hand. That is not the case pleaded in the original claim. On the material available to the European Court, and therefore the material that was before Tuckey J., there was no state aid, or special charges or general discrimination between producers, and on the pleaded case, Banks would again fail. As the final nail in the coffin, the damages claimed in the original pleadings being the return of the royalties etc., simply would not flow from any special breach that could be shown if the limited case revealed by the decision of the European Court of Justice were allowed to be run.
- My conclusion is, therefore, that on the pleadings as they stand in the amended defence and counterclaim, there is no realistic prospect of success for the claim for damages against the Coal Authority. Banks has come very close to conceding that much. When invited by this court to consider how this appeal should be disposed of, Banks wrote on 14th November 2001:-
“Although Banks were successful in relation to the majority of the issues raised [before the Court of Justice], Banks accepts that its failure on the first question is largely determinative of the action commenced against it. For commercial reasons, it does not intend to pursue a claim for damages in respect of the first period.”
- Without any re-amendment, there is in my judgment no realistic prospect of any success for Banks and the consequence would be that although Banks won the abuse of process point, the reference to Europe effectively puts paid to its defence and to its counterclaim and, on that robust view, I would dismiss the appeal.
Should Banks be permitted to re-amend the defence and counterclaim?
- Banks applied to this court for permission to re-amend the defence and counterclaim. Banks would also have been content, if successful in having the matter remitted to the court below, for the commercial judge to deal with the re-amendment. In my judgment it makes more sense for us to grapple with this question because enough time and costs have been expended on this case and no more should be wasted.
- The proposed amendments fundamentally alter Banks’ case. Whereas Banks had steadfastly disavowed the notion that state aid was involved, having taken that view before Tuckey J., repeated it to us in 1998 and rehearsed it again before the European Court, now Banks would seek to plead that the exoneration of British Coal and Central and Northern Mining Ltd. from the requirement to pay royalties in the first period constituted an un-notified aid within the meaning of Article 4(c). The previous allegations of special charges are now deleted. Whilst the discriminatory conduct continues to be said to be the exacting of royalties from Banks but not from the successor companies, the real change is to plead that:-
“The tender process by which the shares in the successor companies were sold was not open, competitive and undiscriminatory. Furthermore the conditions pursuant to which the plaintiff permitted conversion of s.36 licences to CIA licences and leases was not open, competitive and undiscriminatory.”
- So Banks seeks to set off the damages to which it is entitled “for the damage which has been caused to it by the competitive advantage enjoyed by its competitors in particular British Coal, Central and Northern Mining Ltd. and RJB Ltd.”
- The old case of seeking restitution is abandoned and all now depends on this new claim for damages. The allegation against the Coal Authority seeks to add the claim that there was no open competitive and undiscriminatory process for the conversion of section 36 licences to CIA licences. I see the force of Mr Vaughan Q.C.’s submission on behalf of the Coal Authority that even if that were so, it was an act of the Secretary of State not the Coal Authority. Banks seeks to reintroduce a claim for damages against the Secretary of State, notwithstanding the striking out of the original counterclaim, asserting against the Secretary of State in the proposed re-amendment that the charging of royalties etc. constituted an un-notified aid within the meaning of Article 4(c) and that there was discrimination contrary to Article 4(b) because the tender process for the sale of the shares in the successor companies was not open, competitive and undiscriminatory but was organised in a way as effectively to exclude smaller mining companies such as Banks from the bidding process and the pre-qualification criteria were never published and no reasons were given when rejecting applications for pre-qualification.
- The damages sought to be recovered are damages to compensate for the damage which has been caused to Banks by the advantage enjoyed by its competitors in particular British Coal, Central and Northern Mining and RJB Ltd. Quantification of the sums claimed is said to require expert evidence.
- To summarise the skeleton arguments submitted by the Coal Authority and by the Secretary of State in opposition to the proposed amendments, I hope I fairly put their objections as being on two bases. First, there is a not unexpected protest about the volte face by Banks from its steadfast denial until now that any state aid was involved at all. Secondly it is submitted that the case Banks now seeks to put forward could have been put forward originally and that, once again, it would be an abuse of process now to allow this new case to be pleaded. In countering the latter argument, Banks was relentlessly driven to establishing just how different its new case was.
- For my part I do not consider it necessary to examine either of those arguments in any substantial detail. The application for the amendment has to be considered on straightforward CPR principles. Part 17.4 governs the application. That provides as follows:-
“17.4(1) This rule applies where –
(a) A party applies to amend his statement of case in one of the ways mentioned in this rule; and
(b) A period of limitation has expired under –
(i) The Limitation Act 1980; …
(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”
- Thus the question for me is firstly whether or not a period of limitation will have expired. This is a claim for damages for breach of a statutory duty. The breaches against the Coal Authority and the Secretary of State would have occurred by the latest when the restructuring of the coal industry was achieved by the transfer of the shares to the successor companies some time after December 1994, or early in 1995, but at all events much more than six years ago.
- CPR 17.4(2) imposes a jurisdictional threshold which permits the court to allow an amendment only if the new claim arises out of the same facts or substantially the same facts as are already in issue. Those words may have an expanded meaning such as was given to them by Goode v Martin [2001] EWCA Civ 1899, [2002] 1 All ER 620 but nothing in that decision avails Banks. In my judgment the whole case now sought to be advanced is new. State aid is certainly a new allegation: Banks had previously done its best to say no question of state aid arose at all. None of the facts originally pleaded get close to the present suggestion that the tender process was not openly competitive or that the Secretary of State's conditions for conversion of the old section 36 licences was in some way discriminatory. One only has to compare the way damages was pleaded to see how far the case has changed. It is no longer simply claiming back what has been paid but needing expert evidence even to identify, still less to prove, that Banks has suffered a competitive disadvantage. In my judgment the old case and the new are chalk and cheese. Nothing in the old case which is capable of surviving on its own is sufficient to support the argument that the new claim arises out of the same facts or substantially the same facts. I would therefore refuse permission to amend.
- If the amendment cannot go forward to trial, then nothing should be permitted to survive and in my judgment this appeal must now be dismissed.
Costs.
- Not surprisingly the Coal Authority and Banks submit that costs should follow the event and that they should recover all of their costs of the action, of the proceedings before Tuckey J., in this court and in the Court of Justice. Banks contends that whether its appeal is allowed or not it should be awarded its costs of the proceedings both before Tuckey J. and the Court of Appeal and that the costs of the reference to Luxembourg should be costs in the case.
- Part 44.3 defines the court’s discretion and the circumstances to be taken into account where exercising that discretion. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party but the court may make a different order. CPR 44.3(4) provides:-
“In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –
(a) The conduct of all the parties;
(b) Whether a party has succeeded on part of his case, even if he has not been wholly successful; ...
(5) The conduct of the parties includes –
(a) Conduct before, as well as during the proceedings …
(b) Whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) The manner in which a party has pursued or defended his case or a particular allegation or issue;
(d) Whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.
(6) The orders which the court may make under this rule include an order that a party must pay –
(a) A proportion of the other party’s costs; …
(e) Costs relating to particular steps taken in the proceedings:
(f) Costs relating only to a distinct part of the proceedings …”
- In coming to my conclusion on the just order to make in this case, I bear very much in mind all the circumstances of the case but in particular the following matters:
i) On the material before Tuckey J. the application by the Coal Authority for summary judgment should have been dismissed and would have been dismissed with costs. The counterclaim for restitution would have survived.
ii) Banks ought to have succeeded in its appeal (or most of it) and again one would have expected costs to follow that event.
iii) Banks urged Tuckey J. to refer questions to the European Court of Justice but the Coal Authority and the Secretary of State resisted, as they resisted that suggestion when renewed before us. Their conduct in so doing is relevant. (I hasten to add that I am not suggesting that their opposition was in any sense reprehensible but the fact is they took a bad point).
iv) When the matters were decided by the Court of Justice there was substantial victory for Banks in the answers to questions 2, 3 and 4. But Banks did not gain much satisfaction from the answers to question 1.
v) The answers to question 1 have effectively resulted in the appeal which might have succeeded by virtue of the answers to questions 2, 3 and 4, in fact having to be dismissed for the reasons I have given.
vi) The application to re-amend has also been unsuccessful.
vii) In the final result Banks has won a number of important battles but nonetheless it has lost the war. That, I suppose, is the lesson of all litigation: you win some, you lose some. The question for me is not how to translate that into the score for a football match, which is very tempting in these weeks dominated by the World Cup, but how to achieve fairness and do justice between the parties.
- My conclusion is that because Banks enjoyed substantial success on the matters argued before Tuckey J. it should be entitled to the costs of those applications and that hearing. The result of our dismissing the appeal with the consequence that the judgment on the claim stands and the counterclaim stands dismissed is that the Coal Authority and the Secretary of State should otherwise have their costs in the action and counterclaim. As for the appeal to this court as heard by Hirst L.J., Sir Christopher Staughton and myself in 1998 and the costs of the reference to the European Court of Justice are concerned, despite the fact that Banks had substantial victories, the end result did it no good and the fair order in my judgment is to say no costs in respect of the earlier hearing in the Court of Appeal nor in respect of the reference. So far as the hearing before this constitution is concerned, Banks substantially lost the day and Banks should pay the costs of the Coal Authority and Secretary of State of this renewed hearing in the Court of Appeal.
- I would therefore dismiss the appeal and make those orders for costs.
Lord Justice Laws : I agree.
Lord Justice Mance : I also agree.
Order: appeal dismissed; final order to be handed down within a fortnight.
(Order does not form part of the approved judgment)
