H.J. Banks & Co. Ltd v The Coal Authority & Anor

A national court may determine alleged breaches of directly effective ECSC Treaty provisions despite earlier Commission decisions which do not conclusively determine the same issue. However, unlawful aid or discrimination does not retrospectively exonerate producers from royalties. An appeal may ultimately be dismissed where the European Court’s ruling defeats the pleaded defence and counterclaim, and the claimant has no realistic prospect of success on its existing pleadings. Permission to amend after expiry of limitation is available only where the new claim arises from the same or substantially the same facts. A fundamentally different case, requiring new allegations and expert evidence, does not satisfy that threshold.

The Coal Authority claimed unpaid royalties from H.J. Banks & Co. Ltd under section 36 licences. Banks defended the claim and counterclaimed against the Authority and the Secretary of State, alleging discrimination, unlawful aid and special charges contrary to Articles 4(b) and 4(c) of the ECSC Treaty.

Tuckey J. entered summary judgment for the Authority and struck out the counterclaim, holding that the matters had already been dealt with by Commission decisions and correspondence and could not be relitigated. Banks appealed. The Court of Appeal referred questions to the Court of Justice, which ruled that some Treaty provisions conferred enforceable rights, but that the pleaded royalty claims could not succeed. The central issues on the appeal were the effect of that ruling, the viability of the existing pleadings and whether Banks should be permitted to re-amend its case.

1. Appeal and effect of the European ruling. The Court of Justice’s answers showed that Tuckey J. had been wrong to strike out the defence and counterclaim as an abuse of process on the basis that the Commission had already decided the substance of Banks’s allegations. The appeal was initially capable of succeeding on that limited issue.
2. That did not preserve Banks’s pleaded case. The defence that the royalties were unenforceable because they involved discrimination between producers or special charges could not succeed in light of the Court of Justice’s answers. Banks accepted that its restitution counterclaim, based on the same alleged illegality, was likewise unsustainable.
3. The damages claims against the Coal Authority and the Secretary of State stood or fell together. They were treated as Factortame-type claims. Since Banks had not challenged the finding that any breach by the Secretary of State was insufficiently serious to found liability, there was no realistic prospect of success against the Authority either. The pleaded damages, principally repayment of royalties and related payments, would not flow from the limited breach capable of being established.
4. Proposed amendment. Under CPR Part 17.4, limitation had expired and the proposed claim could proceed only if it arose from the same or substantially the same facts as the existing claim. Although Goode v Martin [2001] EWCA Civ 1899, [2002] 1 All ER 620 recognised that those words may have an expanded meaning, Banks’s proposed state-aid and tender-process allegations were fundamentally new. They were not based on the same facts and permission to amend was refused.
5. The appeal was therefore dismissed. The judgment on the Authority’s claim stood and the counterclaim remained dismissed. Banks received the costs of the applications and hearing before Tuckey J.; the respondents received the other costs specified by the court, including the costs of the renewed Court of Appeal hearing.

• Queen’s Bench Division: Tuckey J. entered summary judgment for the Coal Authority and struck out Banks’s counterclaim on 20 December 1996.
• Court of Appeal: The court referred questions to the Court of Justice on 31 July 1998. After the ruling in case C-390/98 on 20 September 2001, the Court of Appeal dismissed the appeal, refused permission to re-amend and made consequential costs orders.