Penycoed Farming Partnership v Intervention Board For Agricultural Produce

Where a defendant succeeds in strike-out proceedings on the pleaded issue, the defendant may recover the costs of the application, appeal and related reference, even if the claim continues on a new legal basis requiring amendment. The costs analysis focuses on the issue actually litigated and decided. A later alternative route to recovery does not retrospectively make the original proceedings unsuccessful.

The claim concerned recovery of a levy on milk produced in excess of quota. Master Eyre dismissed an application to strike out the claim on 27 June 2000. The appeal led to a reference to the European Court of Justice. That court held that Articles 1 and 2 of Regulation 3950/92 did not permit direct recovery from the defendant, but identified a possible alternative route under Article 10 of the Treaty. The claimant sought to amend its pleadings accordingly. The central issue before the Court of Appeal was the appropriate costs order.

1. Outcome. The appeal was dismissed. The defendants were awarded the costs of the application before Master Eyre, the appeal to the Court of Appeal and the reference to the European Court of Justice. Legal aid assessment was also ordered for the relevant period.
2. The original strike-out proceedings had been argued on the basis of Articles 1 and 2 of Regulation 3950/92. On the assumed facts, those provisions did not permit direct recovery of the levy from the defendants. The European Court of Justice had identified a possible alternative route under Article 10 of the Treaty, which had not previously been pleaded and required amendment.
3. Lord Justice May held that, in substance, the defendants had succeeded in the strike-out proceedings on the issue that had been argued and referred. The fact that the claim could continue on an amended basis did not displace the usual costs consequence of success on that issue. The defendants were therefore entitled to their costs up to the amendment.
4. The costs-only issue was appropriately determined by Lord Justice May alone, although the earlier appeal had been heard by a three-judge constitution.

1. Court of Appeal (Civil Division): Following the reference and the later amendment application, the court dismissed the appeal and ordered the defendants’ costs: [2004] EWCA Civ 812.
2. Court of Justice of the European Communities: On 15 January 2004, the court held that Articles 1 and 2 of Regulation 3950/92 did not permit direct recovery, while identifying a possible alternative route under Article 10 of the Treaty.
3. High Court, Queen’s Bench Division: Master Eyre dismissed the strike-out application on 27 June 2000.