THE HIGH COURT

JUDICIAL REVIEW

RECORD NO. 693/2000

BETWEEN

ORGANIC TRUST LIMITED
APPLICANT

AND

THE MINISTER FOR AGRICULTURE, FOOD AND

RURAL DEVELOPMENT, IRELAND AND THE ATTORNEY GENERAL

RESPONDENTS

Judgment of Finnegan P. on the 12th day of February 2003.

Council Regulation (EEC) No. 2092/91 established a framework of Community rules on production, labelling and inspection in respect of organic farming products.  The Regulation required Member States to put in place an inspection system to be carried out by designated inspection authorities and/or by approved and supervised bodies.  Article 9 of the Regulation insofar as relevant for these proceedings provides as follows -

“9.1 Member States shall set up an inspection system operated by one or more designated inspection authorities and/or by approved private bodies to which operators producing, preparing or importing from third countries products referred to in Article 1 shall be subject.

9.6 After an inspection body has been approved, the competent authority shall

(d) withdraw approval of the inspection body where it fails to satisfy the requirements referred to in (a) and (b) or no longer fulfils the criteria indicated in paragraph 5 or fails to satisfy the requirements laid down in paragraphs 7, 8, 9 and 11”.

It is not suggested that the Applicant fails to satisfy or fulfil the requirements or criteria mentioned in Article 9.4(d).

On the 22nd January 1993 the Minister approved of the Applicant subject to a number of conditions:  it is not suggested that the Applicant has failed to comply with any of the conditions.

By letter dated 2nd August 2000 the Minister wrote to the Applicant informing it that a decision had been taken that the inspection of organic farming in accordance with Regulation 2092/91 (which was supplemented by Regulation 1804/99 which is not relevant for the purposes of these proceedings) would in future be carried out by a single body under the direction of the Department.  By further letter dated 18th August 2000 the Minister informed the Applicant as follows –

“The Department will shortly invite applications for the appointment of a single inspection body which will carry out the inspection function in accordance with Regulation 1804/99.  This inspection body will assume its functions with effect from 1 January 2001.  

As I said in my previous letter and repeated at our meeting today the bodies currently approved under Regulation 2092/91 will of course be welcome to apply, and it will also be open to them to consider combining their resources for the purpose of submitting a single application.  The Department itself will assume the functions of registration and certification and the inspection body will act as the Department’s agent.

In devising this new framework for the implementation of Regulation 1804/99 the Department took cognisance  in particular of the recommendations of the Agri Food 2010 Report and the Bord Bia Report on Prospects for Organic Food in Ireland.  This framework provides a basis on which the organic sector can fully exploit the opportunities that now exist for expansion and consolidation”.

The Agri Food 2010 Report contains the following recommendation –

A credible regulatory system must be put in place and the present confusion with competing inspection bodies ended”.

The Bord Bia Report on Prospects for Organic Food in Ireland records that there are three approved inspection bodies in Ireland each with its own certification symbol and each with its own standards for certification and that this leads to confusion among consumers.

In these proceedings the Applicant was given leave to challenge the decision of the Minister of the 2nd August 2000 on the following grounds –

1.	“The said withdrawal of approval was not done pursuant to any infringement of Article 9 of Regulation 2092/91 or of any other provision or departmental guideline by the Applicant or any of the members of the Applicant.  Article 9 provides a procedure for the withdrawal of approval in circumstances where there are manifest and persistent infringements of the requirements of the Regulation.

2.	No procedures were followed by the first named Respondent in withdrawing approval and no objective, proper or legal justification has been given for the withdrawal.

3.	By the manner in which he reached  the said decision the first named Respondent is bound by the corollary of the presumption of constitutionality in that all his decisions and adjudications must comply with constitutional and natural justice and fair procedures.  By the manner in which he made his decision in introducing the said scheme and extending the periods in which it has to come into effect, the first named Respondent manifestly offended the Applicant’s right to fair procedures and constitutional and natural justice and further offended the principles of legal certainty and proportionality in both National and European law.

4.	The Applicant has a legitimate expectation based on National and/or European law that the approval granted to it in 1993 under Article 9 will not be withdrawn except in accordance with Article 9 and for the grounds specified in Article 9.

5.	The decision to withdraw approval without justification and fair procedures is ultra vires the powers of the first named Respondent and consequently is null, void and without legal effect.

6.	The decision to withdraw the approval granted in 1993 manifestly affects the rights of the Applicant to continue their business despite their qualifications and experience.  This interference with the Applicant’s rights is a disproportionate infringement of the company’s rights and/or constitutes a disproportionate infringement of the constitutional rights of the employees of the company to earn a living thereby causing them loss and damage.

7.	No statutory authority exists to empower the first named Respondent to unilaterally withdraw approval for inspection and certification.  The proposed scheme and decisions of the first named Respondent envisage a single inspection authority with responsibility for the organic produce for the entire country.  This proposal is ultra vires the Respondent as there exists no express statutory authority for such a proposal.”

The Applicant contends that once approval is granted the only legal basis upon which the same can be withdrawn is that under Article 9 of Regulation 2092/91 where there have been manifest and persistent infringements of the requirements of the Regulations.  Further the Applicants accept that the Minister did not require any legislative authority for the approval of private bodies but contend that he did require such authority for the setting up of an inspection authority:  Article 9.1 required the Minister to set up an inspection system and while it required him to designate an inspection authority it did not require him to set up an inspection authority which is what the Minister now proposes and accordingly to do so implementing legislation is required to enable him to set up such body.  Further it is contended on behalf of the Applicant that no provision exists in the Regulation to introduce a scheme based on exclusivity.

Insofar as the Applicant argues that legislation is required to enable the Minister to set up a single authority it does so on the basis that the requirement to designate in Regulation 9 does not carry with it an obligation to set up an inspection authority or body and accordingly does not confer upon him a power to do so.  For the Respondents it is submitted that this objection is based on a number of mistaken assumptions.  First it is not necessary that an authority be set up at all in that the Minister can designate a natural person or an existing body including a body such as the Applicant as the single authority or body.  I am satisfied that the Respondent’s submission on this point is correct.  Further the Minister has not yet designated a single authority or body and it seems to me inappropriate at this time to speculate on what his decision in relation to this may be or on whether any such decision is within the powers conferred upon him by the Regulation.  

Whether the Minister is entitled to withdraw approval from the Applicant or to designate on the basis of exclusivity is first of all a matter of construction of Article 9 of the Regulation in order to determine the manner in which its detailed implementation can be effected by the member state.  Such implementation can be by administrative act.  See Maher v Minister for Agriculture, Food and Rural Development and Others, the Supreme Court, Unreported 30th March 2001.  Where implementation is by administrative act the test applicable is the same as that set out by O’Higgins C.J. in City View Press Limited v AnCo (1980) I.R. 381 –  “The test is whether the administrative act is more than the mere giving effect to the principles and policies of the Regulation”.    The policy underlying the regulation is stated therein in the following terms –

“Whereas a framework of Community rules on production, labelling and inspection will enable organic farming to be protected insofar as it will ensure conditions of fair competition between the producers of products bearing such indications and give the market for organic products a more distinctive profile by ensuring transparency at all stages of production and processing thereby improving the credibility of such products in the eyes of consumers”.

Article 9 of the Regulation requires the Member State to set up an inspection system operated by one or more designated inspection agencies and/or by approved private bodies.  In so providing if the Applicant’s argument is correct once the inspection system is set up be it with one or more approved agencies or private bodies this will be cast in stone and the number could not be augmented and could not be reduced save in accordance with Article 9.6.  However the Regulation in its terms purports to establish a framework of Community Rules with a view to improving the credibility of organic products in the eyes of consumers.  To construe Article 9 in the manner contended for by the Applicant would not be conducive to the objective of the Regulation.  It is appropriate to apply a purposive interpretation to Article 9.  The intention of Article 9 is that a system of inspection by approved agencies or private bodies should be established and maintained to achieve the Regulation’s objectives and policy and this requires that the inspection system be capable of modulation, amendment or alteration.  Thus if the Member State set up an inspection system in the first instance with a single approved private body on the Applicant’s submission a second private body could not be approved and the inspection system as initiated would operate indefinitely.   I am satisfied that the discretion given to the Member State by Article 9.1 is a continuing discretion and would enable the number of approved private bodies to be increased.  The discretion being a continuing one it is equally open to the Member State to reduce the number of approved private bodies if this is more conducive to the objective of the Regulation.  Article 9.6 does not limit the discretion of the Member State rather it imposes an obligation upon the Member State in certain circumstances therein set out to withdraw approval.  If in the first instance a single private body were approved and the discretion of the Member State limited to setting up an inspection system then on withdrawal of approval under Article 9(6) there would be no power to make a further appointment.  In these circumstances I am satisfied that Article 9.1 of the Regulation empowers the Member State from time to time to approve or withdraw approval from an agency or private body and that in withdrawing approval it is not confined to the circumstances listed in Article 9.6.  Further the words “by one or more” in Article 9.1 regulate not only the words “designated inspection authorities” but also the words “approved private bodies”:  accordingly there is express authority within the Regulation for the appointment on the basis of exclusivity:  accordingly I refuse the Applicant relief upon the grounds set out above at 1. and 7.

I next deal with the argument based on fair procedures.  The initial letter dealing with withdrawal of approval from the Applicant dated 2nd August 2000 is quoted above – in terms it informs the Applicant that a decision has been taken that inspection will be carried out by a single body.  This was however followed by a meeting on the 18th August 2002 and by further correspondence.  A further meeting was held on the 22nd September 2000 and following this meeting the Minister wrote to the Applicant setting out three alternative proposals as to how a unified inspection system to which all organic producers and processors would have access would be put in place.  The first of these was where the proposal was by a combination of two or all of the three then approved private bodies would be approved, the second  proposals  from any one or two of the said bodies and thirdly no proposal or no acceptable proposal under the first or second proposal.  Further meetings were held on the 5th October 2000 and 18th October 2000.   At this last meeting the Minister agreed to a meeting between the three approved private bodies, the Minister and a facilitator but this was aborted when the present proceedings were threatened by the Applicant.  I accept that the principles of constitutional and natural justice can apply in relation to an administrative decision but the extent to which they will apply will vary with the circumstances of the case.  While the initiating correspondence from the Minister discloses that a determination had been made the Minister nonetheless thereafter afforded every opportunity to the Applicant to make its case and indeed discussions between the Minister and the Applicants ceased only upon the Applicant determining to institute these proceedings.  In these circumstances I am satisfied that there has been no breach by the Minister of the requirements of constitutional and natural justice.   Included in the grounds in relation to natural and constitutional justice is the proposition that by extending the period before the determination that there should be a single inspection body should come into effect the Minister was in breach thereof.   I can see no basis upon which the Minister so acting can be said to infringe the right to fair procedures and constitutional and natural justice.  No argument was advanced to me at the hearing  that in so proceeding the principles of legal certainty and proportionality were offended.  Accordingly I refuse the Applicant relief at 3. and 5. above.

Again at the hearing the grounds of irrationality were not pursued.  However having regard to the Affidavits filed on behalf of the Respondent I am satisfied that the Minister’s decision was taken with a view to giving effect to the recommendations of the Agri Food 2010 Report and the Bord Bia Report on Prospects for Organic Food in Ireland and that these Reports provide a rational basis for the Minister’s decision within the principles enunciated in The State (Keegan) v The Stardust Victims Compensation Tribunal (1986) I.R. 642 and O’Keeffe v An Bord Pleanala and Ors (1993) 1 I.R. 39.   Insofar as the grounds set out above at 2. and 5. rely on irrationality I refuse the application.

No argument was addressed to me in relation to ground 6. –  disproportionality and infringement of constitutional right to earn a living and accordingly I refuse to grant relief on that ground.

The remaining ground is that at no. 4. above – legitimate expectation based on National and/or European law that the Applicant’s approval would not be withdrawn except in accordance with Article 9.6.  The Applicant does not submit that he has a right to a licence in perpetuity  but rather that approval should only be withdrawn for some or one of the reasons set out in Article 9.  In Amalgamated Property Company v Texas Bank (1982) Q.B.84 Denning M.R. said –

“When the parties to a transaction proceed on the basis of an underlying assumption – either or fact or law – whether due to misrepresentation or mistake it makes no difference – on which they have conducted dealings between them – neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow them to do so.  If one of them seeks to go back on it, the court will give the other such remedy as the equity of the case demands”.

In this case there is no evidence of such a common assumption.  There is nothing in the evidence before me to indicate that the Applicant’s assumption was in any way induced by the Minister.  Further in Tara Prospecting Limited & Another v Minister for Energy & Others (1993) I.L.R.M. 771 Costello J. summarised the legal principles of legitimate expectation.  Among these are the following –

1.	The existence of a legitimate expectation that a benefit will be conferred does not in itself give rise to any legal or equitable right to the benefit itself which can be enforced by an Order of Mandamus or otherwise.

2.	In cases involving the exercise of a discretionary statutory power the only legitimate expectation relating to the conferring of a benefit that can be inferred from words or conduct is a conditional one, namely, that the benefit will be conferred provided that at the time the Minister considers that it is a proper exercise of the statutory power in the light of current policy to grant it. Such a conditional expectation cannot give rise to an enforceable right to the benefit should it later be refused by the Minister in the public interest.

The Regulation with which I am concerned has direct effect in this jurisdiction and accordingly for present purposes is no different from domestic legislation.  On its true construction I have held that it confers a discretion on the Minister both in relation to the approval and withdrawal of approval of agencies and/or private bodies for the purposes of the Regulation.  There is evidence in the Report Agri Food 2010 and the Bord Bia Report on Prospects for Organic Food in Ireland of the policy justifying the Minister’s exercise of his discretion.   The doctrine of legitimate expectation cannot be called in aid to fetter that discretion.  Accordingly I refuse the Applicant relief on this ground also.

The Applicant fails upon each of the grounds relied upon.