THE HIGH COURT
		1990 No. 2528 P

BETWEEN

FINTAN DUFF, LIAM FINLAY, THOMAS JULIAN, JAMES LYONS,
CATHERINE MALONEY, MICHAEL MCCARTHY, PATRICK MCCARTHY, JAMES O'REGAN AND PATRICK O'DONOVAN
		PLAINTIFFS
AND
THE MINISTER FOR AGRICULTURE AND FOOD, IRELAND AND
THE ATTORNEY GENERAL
		DEFENDANTS

Judgment of Ms. Justice Laffoy delivered on 25th March, 1999

BACKGROUND

	These proceedings, which were initiated in this Court by a Plenary Summons issued on 21st February, 1990, have been to the Supreme Court on an appeal from a judgment of this Court (Murphy J.) of 10th July, 1992.  On 14th January, 1993 the Supreme Court referred certain questions to the European Court of Justice pursuant to Article 177 of the Treaty of Rome, 1957.  The judgment of the Court of Justice was delivered on 15th February, 1996 answering the questions put to it by the Supreme Court.  The judgment of the Supreme Court on the appeal was delivered on 4th March, 1997.  By its Order of 7th March, 1997 the Supreme Court ordered that:-

	"....the proceedings be remitted to the High Court for the assessment of damages suffered by any of the Plaintiffs as a result of the mistake of law of the first named defendant as found by this Court."

The judgment of the High Court and the judgment delivered in the Supreme Court are reported as Duff -v- Minister for Agriculture (No. 2) [1997] 2 I.R. 22.  The judgment of the Court of Justice, with the opinion of the Advocate General of 8th June, 1995, is reported at [1996] E.C.R. 1-569.  
	The aspect of the matter currently before this Court is the assessment of damages in accordance with the Order of the Supreme Court.  
	At all times the core element in the Plaintiffs' claim has been the application to them of Article 3 of Council Regulation EEC/857/84 dated 31st March, 1984, which introduced the regime which is commonly referred to as "the milk super levy" regime and their contention that, as development farmers, they were entitled to additional "reference quantity" or, in colloquial terms additional "milk quota", under that Article.  Article 3 provided as follows:-

	"For the determination of the reference quantities referred to in Article 2 and in connection with the application of formulas (a) and (b) certain special situations shall be taken into account as follows:-
	1.	Producers who have adopted milk production development plans under Directive 72/159/EEC(3) lodged before 1st March, 1984, may obtain, according to the Member State's decision:-

		-	if the plan is still being implemented, a special reference quantity taking account of the milk and milk production quantities provided for in the development plan,

		-	if the plan has been implemented after 1st January, 1981, a special reference quantity taking into account the milk and milk product quantities which they delivered in the year during which the plan was completed.

		Investments carried out without a development plan can also be taken into account if the Member State has sufficient information. 

	2.	Member States may grant a specific reference quantity to young farmers setting up after 31st December, 1980.

	3.	Producers whose milk production during the reference year referred to under Article 2 has been affected by exceptional events occurring before or during that year shall obtain, on request, reference to another calendar year between the 1981 to 1983 period.  
	
		The following situations may justify application of the first subparagraph:-

		-	A serious natural disaster affecting the producers farm to a substantial extent,
		- 	The accidental destruction of the producers fodder resources or buildings used for dairy life stock,
		- 	An epizootic affecting all or part of the milk herd.

		Member States shall inform the Commission of cases of application of the first subparagraph.  Additions to the list of situations referred to in the second subparagraph may be made according to the procedure laid down in Article 30 of Regulation EEC/804/68."

In simple terms, the Plaintiffs' case at all times has been that they came within the category of dairy farmer referred to in the first indent of Article 3(1) and, as such, the first named defendant (the Minister) should have made provision for the allocation to them of additional quota over and above the allocation made to the generality of dairy farmers, which was based on actual deliveries in the calendar year 1983 together with an increment which I will detail later.  However, the Minister, wrongfully the Plaintiffs alleged, made no special provision for dairy farmers in the category referred to in Article 3(1).
	At the original hearing in this Court the Plaintiff's claim was dismissed. In dismissing it, Murphy J. held, in broad terms, that on the proper interpretation and application of Article 3(1) a Member State had a discretionary power to decide whether to allocate additional quota to the category of dairy farmers referred to therein and that the decision of the Minister in not exercising the discretionary power was based on national policy and was not susceptible to review by this Court unless the policy infringed constitutional rights of the citizen or was shown to involve an abuse of a fiduciary position, which was not the case.  An alternative claim by the Plaintiffs for damages for negligent advice given by the Minister's servants or agents was also dismissed.
	Broadly speaking, the following propositions of Community law emerged from the answers of the Court of Justice to the questions referred to it by the Supreme Court, namely:-

(a)	As a matter of construction, the first indent of Article 3(1) did not impose on Member States an obligation to grant a special reference quantity to producers who had adopted milk production development plans under Council Directive 72/159/EEC of 17th April, 1972 on the modernisation of farms; 

(b)	Under general principles of Community law, for example, the doctrine of legitimate expectation, no obligation was imposed on the competent national authority under the first indent of Article 3(1) to grant special reference quantities to producers who had adopted development plans, even where those plans had been approved by the competent authorities; and 

(c)	No question as to the validity of the first indent of Article 3.1 arose under general principles of Community law and fundamental rights.  
1In effect, the judgment of the Court of Justice ruled out any remedy for the Plaintiffs under Community Law.
	However, on the appeal, the Supreme Court, by a majority (O'Flaherty J., Blayney J. and Barrington J.), found a remedy in national law for the Plaintiffs.  In his judgment (at page 78 in the report), Barrington J. stated that, in answering the questions referred by the Supreme Court, the Court of Justice had followed generally the opinion of the Advocate-General.  He went on to quote from the opinion of the Advocate-General, including the following passage at paragraph 60:-

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

Barrington J. then commented as follows (at page 81 in the report):-

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

	The remedy under national law which the order of the Supreme Court affords the Plaintiffs is compensation by way of an award of damages for loss suffered as a result of the mistake of law of the Minister as found by the Supreme Court.  In order to identify the mistake of law it is necessary to consider the majority judgments of O'Flaherty and Barrington J., with both of whom Blayney J. agreed, in some depth.  The concept of a remedy in the form of an award of damages for the consequences of a mistake of law is novel and its application rare, if not unique to this case.  Therefore, this case being, as Mr. Clarke for the Plaintiffs put it, "almost sui generis", the only real source of guidance for this Court as to the proper approach to the task which has been remitted to it are the judgments of O'Flaherty J. and Barrington J.

JUDGMENT OF O'FLAHERTY J.

	Having referred to the relevant provisions of Council Regulation EEC/857/84, namely, Article 3 and Article 5, which provided that for the purpose of applying Articles 3 and 4 additional reference quantities might be granted only within the guaranteed quantity limit (in colloquial terms the national quota) and that these additional quantities "shall be drawn from a reserve constituted by the Member State within the above mentioned guaranteed quantity" (in other words from a national reserve within the national quota), O'Flaherty J. stated that the mistake of law that the Minister made was that he did not constitute a national reserve at all.  While on 7th July, 1984 the Minister had given notice that he intended to provide for the three special categories set out in Article 3 out of milk available within co-operatives and dairies as a result of producers ceasing or substantially reducing their deliveries (in other words out of unused quota - what has come to be known as "flexi milk"), he was subsequently apprised by the European Commission that the three special categories could only be provided for out of a national reserve, but there was no national reserve.  O'Flaherty J. then stated (at page 73 in the report):-

	"Everything has flowed from that fundamental mistake of law, in not establishing a national reserve, on the part of the Minister.  It is clear that he would have exercised his discretion in favour of the plaintiffs, because he had pledged himself to do so and he did not resign from that position until after he was told by the Commission that he could not avail of the flexi milk escape route."

	Different emphases were attached by Counsel for the Plaintiffs and Counsel for the Defendants respectively to the majority judgments in the Supreme Court.  On behalf of the Plaintiffs, Mr. Clarke emphasised that at page 74 O'Flaherty J. stated that, as a matter of national law, the Plaintiffs had a legitimate expectation that the Minister would honour his commitment that, if they modernised and developed their holdings, he would see them right and there was a provision at his disposal, the first indent of Article 3(1), with which he could keep to his commitment.  As a matter of national law on the facts proved, the Minister could hardly have done anything other than exercise his discretion in favour of the Plaintiffs.  However, through his mistake of law, the Minister put himself in a position where he could not come to exercise a discretion.  The result was that the persons entitled to expect that a discretion might be exercised in their favour were unable to get the benefit of that to which they had a legitimate expectation.  O'Flaherty J.'s conclusion was that the Plaintiffs should be "entitled to a remedy at the hands of the Minister for the wrongs they have suffered".  
	Relating the judgment of O'Flaherty J. to the task which this Court has to perform under the Order of the Supreme Court, in summary, he found that the mistake of law was the failure to establish the national reserve, in consequence of which the Minister was unable to exercise the discretion available to him under the first indent of Article 3(1) to allocate additional quota to the category of dairy farmers mentioned in that indent, which category includes the Plaintiffs.

JUDGMENT OF BARRINGTON J.

	At the outset of his judgment Barrington J. quoted the following passage from the judgment of Murphy J. (which appears at page 32 in the report) as summarising the position of the Plaintiffs:-

	"It seems to me that the evidence establishes beyond any dispute that the plaintiffs and perhaps many others in similar circumstances are in a very unfortunate position.  They planned their farming activities with the advice and assistance given under the National Farm Modernisation Scheme which in turn implemented the Community Modernisation of Farms Scheme.  In doing so these farmers made very substantial financial and personal investments which could only be justified by achieving or at least substantially achieving the output of milk projected by the schemes implemented by them respectively and of course selling that output at a price which would give a reasonable return on the investment."

On behalf of the Plaintiffs, Mr. Clarke urged that this Court's approach to its current task should be informed by that passage and, in particular, by the finding that the substantial financial and personal investments made by the Plaintiffs could only be justified by achieving or at least substantially achieving the output of milk projected in their respective plans.
	Barrington J. analysed Article 3 in the context of the Council Regulation as a whole and in particular in the context of recital 3 and Article 5.  He identified the three categories of dairy farmer who might qualify for additional quota under Article 3, namely:-

(i)	development farmers, such as the Plaintiffs,
(ii)	young farmers, and
(iii)	farmers whose herds had during the reference year suffered from some disease or natural disaster.

In his judgment (at page 83 in the report), he summarised the effect of Article 3, recital 3 and Article 5 in the following passage:-

	"This means that if any additional quota was to be granted to any of the three classes of farmers named in Art. 3, it had to be granted out of the reserve created under Art. 5 of the Regulation and not otherwise.  Moreover, the farmers whose herds had suffered some disease or natural disaster in the base year were entitled as of right to additional quota.  There were such farmers in Ireland.  The additional quota to which they were entitled could only be made available out of the national reserve.  Therefore, the Minister had no choice in the particular conditions prevailing in Ireland, but to create a national reserve so far as this third class of farmers was concerned.  At no time prior to the making of his decision did the Minister or his advisors appear to appreciate this fact and it was this failure, on their part, which led to the major mistake of law contained in the Minister's decision."

Barrington J. then went on to consider the Minister's decision in principle in relation to the division of Ireland's national quota and how provision was to be made for the special categories covered by Article 3, including farmers who had "invested heavily in milk production", which decision was communicated to the public in a press release issued by the Government Information Services on 31st May, 1984, which, for the sake of brevity, I will refer to as "the May 1984 notice", and he commented on the division in the following passage (at page 85 in the report):-

	"This press release indicated that the Minister had made three decisions none of which he was entitled in law to make in the circumstances actually prevailing in Ireland:-

	1.	He decided to divide the entire national milk quota between the dairies and the co-operative creameries.  
	2.	He decided not to create a national reserve. 
	3.	He decided to make the provision for the development farmers, the young farmers and the farmers with special difficulties arising from an outbreak of disease, out of what became referred to as 'flexi milk'...."

	Later, in the following passage (at page 87, in the report) Barrington J. commented on a notice published by the Minister on 7th July, 1984, which I will refer to as "the July 1984 notice", setting out his decision as to how the three special categories of farmers covered by Article 3 were to be catered for out of flexi milk and the rules to be applied in relation thereto:-

	"This attempt to implement the Minister's decision to provide for the development farmers, though well intentioned, was clearly in violation of Art. 5 of the Regulation which provides that additional quota 'shall be drawn from a reserve constituted by the Member State within the above-mentioned guaranteed quantity'.  Not only that but the Minister, by dividing up the whole of the national quota between the dairies and the co-operatives, had without realising what he was doing, placed himself in a position in which he could not provide for the development farmers, including the plaintiffs."

	Barrington J. went on to record that when the Minister's mistake was brought home to him on the Commission refusing to approve his proposal for catering for the special categories out of flexi milk, and pointing out that he had to make provision for the mandatory special category, i.e., farmers whose herds during the reference years suffered from disease or natural disaster, he was forced to do what he should have done in the first place, that is to say, establish a national reserve.  By a notice dated 17th November, 1984, which I will refer to as "the November 1984 notice", he announced his intention to make provision for that mandatory category out of the national reserve established for the purpose.  
	In setting out his conclusion (at page 89 et. seq., in the report) Barrington J. underlined the fact that the Minister did decide to provide for the development farmers, did decide to provide for them out of the national quota and did attempt to implement that decision.  He then went on to summarise how the Minister had gone wrong in the following passage which has been emphasised by Miss Finlay on behalf of the Defendants:-

	"As previously stated, the Plaintiffs could have had no legitimate expectation that the law would not be changed.  Neither could they have any right that the Minister would exercise his discretion under Art. 3.... in their favour.  Once the Minister had decided to give them a reference quantity out of the national quota the Minister had a duty, and they had a right to expect, that the Minister would implement this decision in a lawful manner.  The Minister in breach of his duty and of their rights attempted to implement his decision in a manner which was unlawful.  As a result the Plaintiffs did not receive the special reference quantities to which they were entitled and have, in consequence, suffered damage and loss."

Miss Finlay submitted that in the last sentence in the above quotation, Barrington J. was referring to the special reference quantities to which the Plaintiffs were entitled under the Minister's decision.  I have no doubt that this is a correct interpretation.  However, it is perhaps worth noting that it is quite clear from the judgment of Barrington J. that he identified the Minister's decision as the decision communicated in the May 1984 notice.  He characterised the July 1984 notice as an attempted implementation of that decision.  
	The fundamental error identified by Barrington J. was that the method by which the Minister chose to provide for the development farmers was unlawful; in other words, that he failed to establish a national reserve.  In essence, Barrington J. concluded that the Plaintiffs are entitled to redress for the damage and loss they have suffered in consequence of that mistake of law, but he recognised that it might not now be practicable for the Court or for the Minister to give them "the outlet for the sale of their milk which they were led by State agencies to believe that they would get".  Instead, the Court should grant them "damages for all damage and loss they have suffered as a result of the Minister's mistake of law".  
	Mr. Clarke emphasised the passage in the judgment of Barrington J. at page 90 in which he quoted from the July 1984 notice and the reference therein to "farmers who have invested heavily in milk production and who would be severely penalised if confined to the basic quota".  Barrington J. went on to state:-

	"'Severely penalised' are strong words and, when used in relation to innocent people, imply that they are victims of injustice.  The words are even stronger if one bears in mind the Minister's statement that the Irish case for an expanded national quota was in part based on the need to provide for development farmers."

	Relating the judgment of Barrington J. to the Order of the Supreme Court, in summary, he found that the fundamental mistake of law was the failure to establish the national reserve, in consequence of which the Minister was unable to implement his decision (that is to say, the decision communicated in the May 1984 notice) to allocate additional quota to the development farmers in exercise of his discretion under the first indent in Article 3(1).  
	In his judgment, Barrington J. quoted the May 1984 notice in its entirety, including the following paragraph which dealt with the categories of farmers covered by Article 3:-

	"Following further consultation with the farming organisations the Minister will shortly announce the arrangements under which co-operatives will make provision for producers with special difficulties arising from an outbreak of disease or similar problems, for new entrants, or for producers who have invested heavily in milk production.  Any such provision will have to come from within each co-operative out of milk released by suppliers who have ceased or substantially reduced deliveries."

When one excises the mistake of law from that statement what one is left with is a decision in principle to make provision for the categories of farmers with special needs referred to in Article 3 without defining the parameters of the provision.  As to the proper approach for this Court to adopt in assessing the damages to which the Plaintiffs are entitled, I do not discern any divergence of principle between the views expressed by O'Flaherty J. and Barrington J. in their respective judgments.

PRELIMINARY ISSUE

It was agreed by Counsel on both sides that in assessing the damages to which the Plaintiffs are entitled for the loss and damage they have suffered as a result of the Minister's mistake of law, the first issue for the Court is as follows:-

	"To determine, as a matter of probability, the formula according to which the Plaintiffs and other farmers who had invested heavily in milk production would have been allocated additional quota in 1984/85 if the Minister had not committed the error of law found by the Supreme Court in its judgments herein."

Being satisfied that the approach advocated was the correct approach, I acceded to the requests that the issue be tried as a preliminary issue.  This judgment is directed to the determination of that issue.  

THE FACTUAL CONTEXT IN 1984/85 AND WHAT THE MINISTER DID

	It is agreed that, in order to determine what course of action the Minister would have adopted had he not fallen into the mistake of law found by the Supreme Court, it is necessary to consider the factual context in which the Minister found himself in 1984 as a result of the introduction of the super levy regime and how he reacted in 1984/85.  However, Mr. Clarke suggested a caveat - that it must be borne in mind that the mistake of law permeated the Minister's actions almost from the outset.  He also suggested that, in deciding what weight is to be given to the opinions of the Minister's officials, it should be borne in mind that these opinions are necessarily coloured by events which should not have happened, but did happen, and cannot now be undone.
	It is clear from reading the reports of the earlier proceedings that much of the evidence adduced at the hearing of the preliminary issue had already been adduced at the original hearing in this Court in 1992 or had been agreed for the purposes of the agreed statement of facts which was referred to the Court of Justice.  Nonetheless, at the risk of repetition, it is necessary to outline the course of events in 1984/85 because no doubt the emphasis was different at the hearing of the preliminary issue.
	It is generally agreed that Ireland was accorded favourable treatment in the super levy regime.  Ireland's guaranteed quantity, i.e. national quota, was to be based on actual deliveries in the calendar year in 1983.  In addition, Ireland was allocated 245,000 tonnes (equivalent to approximately 52 million gallons) out of the community reserve.  As a result, Ireland's national quota rounded to millions of gallons, was 1,193 million gallons, which represented 104.6% of deliveries in the calendar year 1983.  Moreover, at the meeting of the Council of Ministers held in Brussels at the end of March 1984 it was decided that in the future, when distributing quantities added to the community reserve, priority would be given to Ireland.
	Having achieved a good deal for the Irish milk industry, the Minister was then faced with the task of distributing the national quota.  His approach was to canvass the views of the industry through consultation with the organisations representing the co-operatives and the dairies, the purchasers of the milk, and the farming organisations, which represented the farmers who produced the milk.  At an early stage, with the consensus of the industry representatives, it was decided to adopt the formula (b) method referred to in Article 3 of allocating the national quota, so that the quota was to be allocated to the purchasers, who, in turn, would distribute it amongst their producers, thus fixing liability for the super-levy at co-operative or dairy level and leaving room for compensation as between producers affiliated to a particular co-operative or dairy.  A decision then had to be made as to what, if any, part of the national quota would be put into a national reserve and the basis on which the quota being allocated would be divided.  
	What emerges from the evidence is that, prior to the May 1984 notice, one of the primary objectives of the Minister and of the industry was that the method of division should ensure that the quota available at national level was filled, so as to maximise Ireland's prospects of getting priority on distributions of community reserve in the future, as promised by the Council of Ministers.  There was no enthusiasm in the industry for withholding part of the national quota to create a national reserve.  The preponderance of opinion in the industry was that the entire of the national quota should be allocated, with a built in bias in favour of small producers on the division amongst the producers.  The most the co-operatives and dairies would countenance being withheld from the national quota to create the national reserve was 0.23%.  The farming organisations were opposed to any part of the national quota being withheld to create a national reserve and suggested that the national reserve be created by the implementation of a discontinuation premium system.  
	These views must be seen against the background of the then current belief that the special provision permitted for the special categories covered by Article 3 could be catered for by permanent allocation of the quota freed within a co-operative or dairy as a result of non delivery or substantially reduced delivery.  It would appear, however, that no real consideration was given to the extent to which the special needs of the special categories could be met under such arrangement.  However, as appears from a discussion paper which was circulated at a meeting of officials from the Minister's department and representatives of the milk industry held on 23rd May, 1984, it was envisaged that the special provision would be applied on the basis of an order of priority amongst the special categories inter se.  The farmers within Article 3(3) would have priority, those affected by animal disease (to whom I will refer as the "animal disease category") having priority over the remainder (to whom I will refer as the "other disaster category").  Next in line of priority would be the farmers who came within Article 3(2) (to whom I will refer as the "new entrant category").  At the bottom of the priority list were farmers who came within Article 3(1) who had invested heavily in milk production and would be unfairly penalised if confined to basic quota (to whom I will refer as the "investment category").  It was envisaged that the investment category would include the farmers involved in the rescue package.  It was also envisaged that the provision for the investment category would be subject to a limit related to the annual target in the relevant milk improvement plan.  It does not appear, however, that there was any in-depth analysis at that stage of the needs of the various categories inter se and, in particular, of the needs of the new entrant category vis-à-vis the investment category.  
	At that stage the consultation process was not specifically targeted at identifying and meeting the needs of the special categories, although Macra na Feirme, which represents young farmers, sought, unsuccessfully at that stage, to be involved in the consultation process and representations were made on behalf of the investment category by the Deputy Chief Executive of Agricultural Credit Corporation Limited (A.C.C.).
	While there seems to have been a general awareness that because of the parlous state of the national finances, monies would not be forthcoming from the exchequer to fund a cessation scheme, it would not appear that this method of creating a national reserve was considered to any degree.
	It is fair to say that the decision reflected in the May 1984 notice, which was the decision which the Supreme Court found to be erroneous in law, in general terms was in accordance with the views of the milk industry.  The entire of the national quota was to be allocated, the division at producer level reflecting a bias in favour of small producers.  No national reserve was to be created and the special categories were to be catered for out of flexi milk.
	The next major step was the publication of the July 1984 notice, which Barrington J. categorised as the Minister's attempt to implement the erroneous decision he had made in the previous May to provide for the special categories out of flexi milk.  What emerges from the evidence in relation to the interim period between the two notices is that the detail of the provision for the special categories was worked out against an expectation that the quantity of flexi milk which would be available would be 2% of national production.  It is also clear that what had been mooted in the discussions with the industry representatives before the May 1984 notice in relation to the detail, in particular, the classes within the special categories to be provided for and the order of priority to be applied in making provision for them was not regarded as having been "writ in stone".  The arrangements set out in the July 1984 notice, which were stated to be subject to the approval of the Commission, made provision for the animal disease category, but not the other disaster category, it clearly not being recognised that the provision for this latter category was mandatory, not discretionary.  It also made provision for the new entrant category and the investment category.  Flexi milk was to be distributed to the three categories on the basis of not less than 50% for the animal disease category, and not more than 25% each for the new entrant category and the investment category.  In other words, the investment category was accorded equal priority with the new entrant category.  If there was sufficient availability of flexi milk and sufficient demand from the three categories, co-operatives and dairies were to be obliged to allocate up to 2% of their quotas to the three categories.  Any other flexi milk available might be allocated to producers, especially young farmers, who were increasing their deliveries.  The terms of the July 1984 notice suggest to me that even by July 1984 no reliable data was available to the Minister of the amount of quota which would have been needed to make provision for the special categories or the extent to which 2% of national quota would have met the provision which the Minister was obliged and entitled to make under Article 3 for the special categories.  The generality of the evidence bears this out.
	The Commission did not approve of the arrangements set out in the July 1984 notice and by September 1984 the Minister had been apprised that the provisions of Article 3(3) were obligatory on member states, that such provision could only be made out of a national reserve and that permanent reallocations of quota, as had been proposed in the July 1984 notice, could not be made out of flexi milk.  Faced with this dilemma, the Minister had no alternative but to establish a national reserve to cater for the animal disease category and the other disaster category.  Indeed, after the publication of the July 1984 notice and before the bad news came from Brussels, there was a certain amount of clamour from the industry for the introduction of a cessation scheme under which the exchequer would fund the "buying in" of quota from which a national reserve would be established.  By the time the bad news came from Brussels the division of the entire national quota which had been announced in the May 1984 notice had been "fine tuned" and it was decided that the division at producer level would be on the basis that the reference quantity (quota):-

(1)	in the case of a producer who delivered less that 14,000 gallons in 1983 would be 1983 deliveries plus 497 gallons; and
(2)	in the case of a producer whose deliveries exceeded 14,000 gallons in 1983 would be 1983 deliveries plus 3.55% thereof.

While the notice of this decision sent to the co-operatives and dairies on 31st July, 1984 made it clear that the division was on a "tentative basis" until the arrangements in relation to the special categories had been cleared by the Commission, the division on this basis was never subsequently altered.  In my view, the only reasonable inference to be drawn from the evidence is that by September 1984 it would not have been politic or practical for the Minister to vary that decision in such a way as to "claw back" from the generality of producers quota which they had been told four months earlier had been allocated to them.
	In October 1984 the Minister sought the sanction of the Minister of Finance to introduce a milk cessation scheme to buy in 7 million gallons of quota at a total cost of £5 million to create a national reserve to provide for the animal disease category and the other disaster category.  The sanction was ultimately granted but subject to certain conditions, including a condition that the cost would be met by "suitable savings" on the allocations for the Department of Agriculture which had already been decided for the years 1985 to 1987.  
	The introduction of the milk cessation scheme was announced in the November 1984 notice.  The provision to be made for the animal disease category and the other disaster category out of the 7 million gallons of quota expected to become available under the cessation scheme was also announced in that notice.  As regards the other special categories, namely, the new entrant category and the investment category, it was announced that the Commission had ruled that permanent reallocation could not be made on the basis of reduced delivery by producers.  Co-operatives and dairies were asked to cater for these categories "on the basis of temporary allocations each year out of the milk that comes available within their areas as a result of reduction in deliveries by producers below the level of their individual quotas".  In relation to the investment category, it was announced that, in accordance with the guidelines already published, the temporary reallocation should "when added to his basic quota be subject to a maximum of the annual target in his improvement plan".  The November 1984 notice went on to state as follows:-

	"The distribution by purchasers of the milk available for re-allocation to the two categories must be carried out to a combined limit of 1% of the purchaser's total quota.  Any further milk arising from reduced deliveries is available to offset increases by producers generally who are increasing deliveries."

	In early 1985 the Minister came under renewed pressure to make permanent provision for the new entrant category.  Ultimately on 1st July, 1985 the Minister announced that permanent allocation for the new entrant category would be made from a national reserve to be established by "staggered" deductions from the quota which larger producers had enjoyed in the 1984/85 quota year, the deductions ranging in size from 0.25% from quotas between 20,000 and 30,000 gallons and 1.25% in the case of quotas which exceeded 80,000 gallons.  From the reserve thus created permanent additional quotas were to be allocated to new entrants who commenced milk deliveries between 1st January, 1983 and 21st May, 1984.  However, there was to be a cap on the additional quota, in that each beneficiary would benefit only up to the average delivery level of his co-operative or dairy.  The terms of the scheme were set out in a notice published by the Minister on 9th August, 1985, which I will refer to as "the August 1985 notice".
	Accordingly, by mid-1985 the Minister had made permanent provision under two of the sub-articles of Article 3: under Sub-article (2) for the new entrant category, in respect of which he had a discretion; and under Sub-article (3) for the mandatory animal disease category and other disaster category.  He never made permanent provision under Sub-article (1) for the investment category.
	The out-turn of the schemes implemented by the Minister under Sub-articles (2) and (3) of Article 3 is interesting, although this data became available much later.  
	Under the cessation scheme announced in the November 1984 notice 7.2 million gallons was surrendered and reallocated.  Producers in the animal disease category got 100% of the difference between the higher of their 1981 or 1982 deliveries and their 1983 deliveries and producers in the other disaster category got 52% of the same difference.  
	The "staggered" deductions made under the August 1985 notice released 5.7 million gallons which were reallocated on the basis that the producers in the new entrant category provided for under that scheme got 56.5% of the difference between 1984/85 deliveries and 1983 deliveries subject to the cap provided for in the scheme.  

THE FORMULA GENERALLY

	In my view there are two distinct elements in the approach the Minister would, as a matter of probability, have adopted in allocating additional quota to the investments category had he not fallen into the error of law identified by the Supreme Court.  
	First, he would have had to identify the "difference" he was permitted by Article 3(1) to take account of in granting a special reference quantity.  Secondly, he would have had to decide to what extent he was going to fill that difference or shortfall; whether he was going to fully fill it by granting additional quota equivalent to 100% of the difference or whether he was only going to partially fill it.  The first element, in my view, is primarily a matter of interpretation of Article 3 to ascertain what the Minister was empowered to do.  The second element raises broader issues - issues of what was feasible, practical and politic in the circumstances prevailing in 1984.  It involves consideration of the following questions:-

(a)	What would have been the size of the national reserve had it been set up?
(b)	In dividing the national reserve between the three categories who had a call on it under Article 3, what order of priority would the Minister have applied?
(c)	How much of the national reserve would have been available to provide for the investment category?
(d)	What would have been the demand from the investment category for special provision?  

	I think it is important to bear in mind that the Minister was under a certain time constraint when making the decisions he had to make in relation to Article 3.  The first quota year, 1984/85 commenced in April 1984.  Milk production is seasonal and about 80% of milk is produced in the months from April to October.  Commission Regulation EEC 1371/84, setting out the detailed rules in relation to the super-levy system, was not published until 16th May, 1984.

"DIFFERENCE" ELEMENT

	The farm modernisation schemes, which gave effect in this jurisdiction to Council Directive 72/159/EEC are described in outline in the judgment of Murphy J. (at pages 28 and 29 in the report).  From each dairy farmer's plan, which was drawn up in conjunction with his ACOT adviser, it is possible to ascertain his targeted milk production over the duration of the plan, usually five or six years.  Targeted milk production in any year represented the product of his projected cow numbers and projected milk yield per cow in that year.  While the projected yield may not have been expressly stated on the face of each plan, it can be ascertained by deconstructing the figures for gross margin shown in the plan, which were arrived at by using guidelines issued to ACOT advisers - a type of "ready reckoner" into which the projected yield was factored.  
	The Defendants case is that the Minister's decision to make provision under Article 3(1) would have been based on the difference between:-

(a)	targeted milk production (based on the product of projected cow numbers and projected yield) for the end of the plan
and
(b)	the greater of - 
	(i)	targeted milk production (based on the product of projected cow numbers and projected yield) for 1983, or
	(ii)	actual milk deliveries in 1983. 

	The Plaintiffs' opening position varied somewhat from their closing position on the "difference" element and this variation is largely attributable to terminology problems.  In any event, the Plaintiffs' opening position was that the Minister would have based the allocation on the difference between:-

(a)	actual milk production for the end year of the plan based on the formula X x Y where X is the lesser of:-
	(i)	actual cow numbers for the end year of the plan, or 
	(ii)	projected cow numbers for the end year of the plan 
	and Y is the actual yield per cow in the end year of the plan
and
(b)	the quota actually allocated for production in 1983, if any.  

The Plaintiffs' closing position was that, subject to two refinements, the Minister would have based his allocation on the difference between:-

(a)	targeted milk production for the end year of the plan based on the formula X x Y where:-
	(i)	X is the projected number of cows for the end year, and
	(ii)	Y is the yield actually achieved in the end year
and
(b)	the quota actually allocated for production in 1983.  
	
The first of the two refinements to that general approach suggested by the Plaintiffs was that a participant in the farm modernisation scheme who was certified by ACOT as not being in compliance with his development plan in 1983/1984 would only be allocated quota based on his deliveries in 1983.  I assume that this refinement was suggested because of a perceived inequity to which I will refer later.  Secondly, in the case of a participant whose actual cow numbers in the end year of the plan exceeded the projected cow numbers for that year, it was suggested that his targeted milk production should be based on his actual production in the end year adjusted in proportion to the projected number of cows in accordance with the following formula:-

	Projected Cow Numbers x Actual milk yield.
	Actual cow numbers.
	
	The first major area of disagreement between the Defendants and the Plaintiffs in relation to the "difference" element relates to the target figure for the end of plan and, broadly speaking, the divergence is that the Plaintiffs submit that the target figure should be based on actual yield, rather than planned yield, in the end year of the plan.  They justify this approach on the basis that the projected yield figures included in the plans were conservative and were mainly directed towards the classification of participants into one or other of the classes of participants provided for in the farm modernisation scheme.  In short, they submit that the projected yield figures were not true projections and were generally below what was generally regarded in the industry as achievable yield and what participants in the farm modernisation scheme were expected to achieve on the basis of their investment.  In my view, it is improbable that the Minister would have succumbed in 1984 to an argument that the target figure should have an "actual" component.  I think it highly improbable that he would have withheld any part of the national quota in any year to await completion of development plans.  Moreover, I have no doubt that he would have baulked at the practical and administrative difficulties which would have been involved in including an "actual" component in the target figure.  What I believe would have been foremost in the Minister's mind was the provision he was entitled to make for the investment category under the first indent of Article 3(1).  In Cornée -v- Co-operative Agricole Laitière de Loudeac (Cases 196-198/88), [1989] E.C.R. 2309, the Court of Justice in its judgment, having stated that it is clear that Article 3(1) grants Member States a discretionary power to decide whether special reference quantities should be allocated to the producers mentioned in that provision and, if so, to determine their size, in paragraph 14,  which is quoted in the judgment of Murphy J. (at page 35 in the report), stated as follows:-

	"The provision nevertheless requires that, when a Member State chooses to make use of the option of granting special reference quantities pursuant to the provision, the quantities allocated must 'take account' of the production objective provided for in the relevant plan, that is to say that the special reference quantity in question must bear a relation to the production objective.  That interpretation is in keeping with the duty which the Member States have, when implementing a common organisation of agricultural markets, to observe the prohibition of discrimination between Community producers, laid down in Article 40(3) of the Treaty."

It must be assumed that had the Minister exercised his discretion under Article 3(1) in 1984 he would have realised that under Community law what he had to take into account was the production objective provided for in development plans.  Therefore, I find that, as a matter of probability, that the target figure would have been based on the projected cow numbers and projected yield in the end year of plan and not on actual or notional herd size or yield.  
	The parties also disagree fundamentally as to the baseline of the "difference" element and, broadly speaking, the Defendants' contention is that it should be planned deliveries for 1983, assuming planned deliveries were greater than actual deliveries, whereas the Plaintiffs submit that it should be the actual deliveries in 1983 on which the quota, if any, which a development farmer acquired was based.  The Defendants' position is that when the super-levy scheme was introduced on 1st April, 1984 what it did was to potentially interfere with increases in production under development plans which were on-going at that date and accordingly, what the Minister would have done in applying Article 3(1) was to have regard to the planned increase in production from 1st April, 1984 until the end of plan as shown in the development plan because that was what potentially was interfered with by the super-levy system.  While I can appreciate the force of that argument, it seems to me that it does not take account of the fact that return, in the form of increased production, on an investment under a development plan does not occur at uniform rate and, as the evidence indicates, investment tends to be, as it were, "front-loaded", with the return coming later.  
	It was also suggested by the Defendants that there would be inequities inherent in using actual, as opposed to planned, production for 1983 as the baseline.  One such inequity was exemplified by comparing two farmers, farmer A and farmer B, involved in six year plans which commenced on 1st January, 1981 and were due to terminate on 31st December, 1986 and each of whose targeted production for end of plan was 60,000 gallons and each of whose planned production for 1983 was 30,000.  If actual production for 1983 is the baseline, and farmer A actually achieved 30,000 gallons in that year and farmer B actually achieved only 10,000 gallons in that year, the differential in the case of farmer A would be 20,000 gallons, whereas in the case of farmer B it would 50,000 gallons.  This is perceived as an inequity and it may well be an inequity, if farmer B's failure to achieve his 1983 target was due to some fault on his part.  However, I think it is improbable that the Minister or his advisers would have looked at the matter in this way in deciding on the baseline.  The focus at this juncture in these proceedings is on compensating the Plaintiffs for the failure to allocate additional quota to them in consequence of the mistake of law made in 1984.  The focus in 1984 would have been to "top up" a development farmer's basic quota.  I do not think that an assumption would have been made in 1984 that failure to have achieved a target in 1983 was indicative of some default on the part of the farmer.  It may well be that in the next round of these proceedings, when compensation is being assessed, an issue will arise as to whether somebody in farmer B's situation would have ever reached end target.  However, that is a separate issue for another day.  
	Such contemporaneous documentary evidence as exists suggests to me that had he exercised his discretion in favour of the investment category in 1983, the Minister would have used quota actually allocated, which was based on actual production in 1983, as the baseline for the differential.  Both the July 1984 notice and the November 1984 notice envisage an addition to "basic quota" for the investment category subject to a maximum based on targeted production in the development plan.  I think it is implicit in both notices that the baseline would be the basic quota, not an artificial baseline which did not reflect the then reality for dairy farmers in the investment category. 

EXTENT TO WHICH THE DIFFERENCE WOULD HAVE BEEN FILLED

	The Plaintiffs' case is that the Minister could have and would have given additional quota to fill the difference fully, that is to say, that the additional quota would have been equivalent to 100% of the difference.  The basis of this proposition was that there was no legal impediment to creating a national reserve which was large enough to make full provision for all of the special categories mentioned in Article 3.  Furthermore, it was argued that there was no practical impediment to creating a national reserve which would have achieved that purpose.  In particular, it was submitted that the Court should reject the Defendants' argument that it would have been politically impossible for the Minister to have failed to make a significant allocation above the 1983 production level to the generality of farmers.  The expectations of the farming organisations that the allocation would allow for an "across the board" increase over 1983 production levels was fuelled, it was suggested, to some extent by pronouncements made by the Minister on the basis of his erroneous view of the law.  The attitude of the farming organisations might have been different, it was suggested, if both the Minister and the representatives of the farming organisations were not labouring under a misapprehension as to the true legal position.  It was also submitted that it was not the case that an allocation based on an "across the board" increase on 1983 production levels was necessary to achieve policy objectives, particularly, the policy of filling the national quota.  An alternative proposition put forward by the Plaintiffs, albeit on the basis that it was unduly restrictive, was that the entirety of the additional allocation to Ireland from the Community reserve, which amounted to approximately 52 million gallons, could have been used to establish the national reserve to cater for the special categories mentioned in Article 3.  It was also submitted by the Plaintiffs that it was open to the Court to find that, had a proper case been made to the Department of Finance at the outset, a cessation scheme funded from exchequer might have been sanctioned, because the debate between the Minister for Agriculture and the Minister for Finance when sanction was sought in October 1984 was not so much fiscal as ideological, whether a cessation scheme was a proper method of intervention.  
	The Defendants' case is that the Minister would have allocated additional quota sufficient only to fill 17% of the differential and in reaching this conclusion the Defendants addressed the questions which I have outlined earlier as follows:-

(a)	In relation to the size of the national reserve which the Minister would have established, it is the Defendants' case that the Minister would have set aside 2% of the national quota, that is to say, 24 million gallons, to create the national reserve.  It was submitted that there is support for the proposition that this would have been the Minister's approach in the July 1984 notice in which it was stated that, subject to sufficient "flexi milk" being available, the co-operatives and the dairies were required to allocate up to 2% of their quotas to the animal disease category, the investment category and the new entrant category. 

(b)	In relation to the order of priority among the special categories, the Defendants' case is that the Minister would have accorded priority status to the various categories mentioned in Article 3 as follows: first, the animal disease category; secondly, the other disaster category; thirdly, the new entrant category; and last, the investment category.  
(c)	In relation to the portion of the national reserve, which would have been  available for the investment category, the Defendants' case is that having regard to the amount of quota which was absorbed by the provision made for - 

	(i)	the animal disease category and the other disaster category in 1984 (7.2 million gallons); and
	(ii)	the new entrant category in 1985 (5.7 million gallons),

	amounting to 13 million gallons in total, and assuming that the Minister would have accorded these categories the priority which the Defendants suggest and would have made the provision which was actually made for them in 1984 and 1985 respectively, the balance of the national reserve available to provide for the investment category would have been 11 million gallons.

(d)	As to the quantification of the demand for additional quota from the investment category, it is acknowledged by the Defendants that there was very little in the way of hard data available to the Minister in 1984 on the basis of which he could assess the needs of the investment category, which comprised two classes of dairy farmers, namely, farmers participating in the farm modernisation scheme and farmers participating in the scheme commonly known as the "rescue package", which was a State subsidised reduced interest scheme for farmers in severe financial difficulty introduced by the Minister in association with the Associated Banks and A.C.C. in 1982.  On the basis that the correct approach in relation to the differential was the approach advocated by the Defendants, namely, that it was the difference between the planned milk production for the end year of the plan and planned production for 1983, the Defendants' estimates of the quantity of quota which would have been needed to supply that difference are as follows:-

(i)	Dairy farmers who were planned under the farm
	modernisation scheme between January 
	1981 and the end of March 1984; 	27.80 million gallons.
(ii)	Dairy farmers who were planned under the farm 
	modernisation scheme in 1979 and 1980;	11.13 million gallons
(iii)	Dairy farmer participants in the rescue package;	27.50 million gallons
	Total:	66.43 million gallons

Some small deduction, in the order of 0.33 million gallons, might be made from the foregoing total to allow for overlap between categories, it is conceded.
	On the basis of their answers to the questions, which I have outlined, the Defendants' assessment of the extent to which the Minister would have met the differential is calculated at 17% as follows:-

	11 million gallons 
	________________             x 100 = 16.5% (rounded up at 17%)
	66.43 million gallons 

	There are a number of points to be made about the Defendants' quantification of the demand for additional quota for the investment category.  First, the Plaintiffs' estimation of the total requirement, based on the evidence of Dr. Nicholas Bielenberg, who was constrained to rely on such data as emerged from the Defendants' discovery, was in the region of 41 million gallons.  The difference between the Defendants' estimation of the total requirement and the Plaintiffs' is largely attributable to the fact that Dr. Bielenberg believes, on the basis of his own experience, that there was a substantial overlap between all of the special categories.  The reality, however, is that the Plaintiffs are not in a position to challenge most of the data relied on by the Defendants.  By way of general observation, I find the data on which the Defendants' estimates are based to be reliable and the methodology used by the Defendants in estimation to be reasonable.  
	Secondly, on the basis that what the Minister would have done, had he not fallen into error and had he exercised his discretion in favour of the investment category, is that he would have taken into account the difference between targeted milk production for the end year of the plan and actual production for 1983, as I have held it is probable he would have, the Defendants' foregoing estimates require adjustment.  For instance, the Defendants' estimation of the requirement of dairy farmers who were planned under the Farm Modernisation Scheme between January 1981 and the end of March 1984 at 27.8 million gallons assumes that actual production in 1983 represented only 85% of planned production, so that in using actual production as the baseline the total requirement for this category would have been 8.1 million gallons higher.  Similarly, the Defendants' estimation of the requirement of dairy farmer participants in the rescue package at 27.5 million gallons embodies an adjustment downwards of approximately 3.5 million gallons to take account of the divergence between actual achievement and target on the part of such participants, so that in using actual production as the baseline the total requirement for this category would have been 3.5 million gallons higher.  Accordingly, if the Defendants had used the actual production in 1983 as the baseline, it is to be assumed that they would have quantified the demand for additional quota from the investment category at an excess of 78 million gallons.  
	It is not an easy task to determine to what extent the Minister would have filled the differential in 1984, had he addressed the issue properly.  Factors other than strict legal principles would have come into play: matters of national policy, milk industry politics, and so forth.  On the basis of the evidence I do not think it probable that the Minister could have seen his way to meet the differential fully.  On the other hand, I do not think that he would have introduced a scheme which would have met only 17% of the differential.  
	Such a scheme would have highlighted a glaring disparity between the treatment of the investment category and the treatment of the other special categories.  The evidence does not suggest to me that the Minister would have accorded the lowest priority to the investment category.  While there would clearly have been justification for treating the animal disease category more favourably and, indeed, giving them a 100% allocation as in fact happened in late 1984, because of their mandatory status under Article 3 and also because of the evident sympathy for their plight in the industry generally, I cannot see how the Minister could have justified treating the investment category so disproportionately less favourable than the new entrant category.  The evidence from 1984 and, in particular, the July 1984 notice clearly indicates that the Minister's thinking at the time was that the investment category and the new entrant category were entitled to equal priority.  
	If one considers the position of the second named Plaintiff, Liam Finlay, who testified at the hearing of the preliminary issue, the inescapable conclusion is that provision which would have met only 17% of the differential would have appeared to be derisory in 1984.  In using the figures from Mr. Finlay's plan for the period from 1982 to 1986, as I propose, I must emphasise that I am using them on a crude basis for illustrative purposes only.  I am conscious that Mr. Finlay testified that he was not aware until 1992 that a projected yield of 700 gallons, per cow had been provided for in his plan and that, while his actual deliveries in 1983 were in the region of 16,500 to 17,000 gallons, he was allocated a quota of 22,000 gallons.  Leaving aside those matters, which are for another day, under Mr. Finlay's plan projected cow numbers for the end of plan were 50 and the projected yield was 700 gallons, so that his targeted milk production for the end of plan was 35,000 gallons.  If one takes the baseline, his quota based on his actual production for 1983, at 17,000 gallons for simplicity (roughly 16,500 gallons plus 3.55%), on the Defendants' case the additional quota which would have been allocated to him, but for the Minister's mistake of law, would have been 17% of 18,000 gallons or 3,060 gallons.  The effect of this provision would have been that he would have been able to produce milk without penalty up to a threshold of 20,060 gallons or 57% of the outcome which had been projected for him on the basis of the investment to be undertaken under his plan.  
	Had the Minister been devising a scheme to cover all the special categories out of a national reserve shortly after the introduction of the super levy system in 1984, in my view, it is probable that he would have devised a scheme which would have provided that the investment category would be allocated additional quota equivalent to 50% of the differential.  I must acknowledge that the only reasonable inference to be drawn from the evidence is that the Minister would have had to draw on a national reserve to an extent probably in the range of 30 million gallons to 40 million gallons to make such provision, which when coupled with the total requirements of the other special categories, for whom I consider it probable the Minister would have made the provision he actually made in 1984 and 1985, would have necessitated the establishment of a national reserve with a capacity in the range of 43 million gallons to 53 million gallons.  While the probability is that in making such provision, the Minister would have absorbed most if not all of Ireland's allocation from the Community reserve, had the Minister not been in the position in which he found himself in 1984, in short, to adopt the metaphor used by Barrington J., of having to "unscramble the egg", I think it is probable that he could have justified that approach to the industry.  In providing for the investment category, the Minister would have been providing for a considerably greater number of producers than were actually provided for when the other special categories in 1984 and 1985.  In all 5,372 producers were provided for under Article 3(2) and Article 3(3) in 1984 and 1985.  On the Defendants' figures, in excess of 13,000 producers would have been catered for had provision been made for the investment category under Article 3(1).  However, I think it would have been impossible for the Minister to draw on the portion of the national quota based on actual deliveries in 1983 to augment the national reserve, as this would have been unacceptable to the generality of dairy farmers.
	It is clear from the contemporary documentary evidence available that the perception of the Minister and his officials of dairy farmers within the investment category in 1984 was of a group of people who would be severely penalised if they were confined to basic quota.  If one resorts to the figures in Mr. Finlay's plan once again for illustrative purposes, provision of 50% of the differential for Mr. Finlay would have resulted in an additional allocation of 9,000 gallons to him, which on top of his basic quota, would have given him 26,000 gallons or 74% of the planned out-turn of his investment.  It is difficult to see how, had he been approaching the matter on a proper legal basis, the Minister could have stood over any lesser provision.  
	Finally, the evidence is not sufficiently cogent to lead to the conclusion that the Minister would have been justified in being concerned that such provision, more than any of the measures which were actually adopted in 1984/1985, would have jeopardised the national policy of filling quota, even though in the early years of the super-levy regime set off of deficits and surpluses as between purchasers at national level was not permitted.

DECISION
	The answer to the question posed in the preliminary issue is that, as a matter of probability, the Plaintiffs and other farmers who had invested heavily in milk production would have been allocated additional quota in 1984/85 if the Minister had not committed the error of law found by the Supreme Court in its judgments herein according to the following formula:-

	50% of the difference between:-

	(a)	targeted milk production (based on the product of projected cow numbers and projected milk yield) for the end of plan;
and
	(b)	the quota actually allocated for production in 1983, if any.