Department of Environment, Food & Rural Affairs v Maltco 3 Ltd & Anor

The limitation period in Article 3(1) of Council Regulation 2988/95 applies to proceedings for recovery of sums as administrative measures as well as to penalty proceedings. The fact that measures are not penalties does not exclude them from that limitation regime.

An interrupting act must be notified to the person concerned and identify one or more specific irregularities. A general audit notice covering all payments over an extended period is insufficient on its own. Whether separate notices can be read together may require fact-finding. The appeal was allowed on the first issue and dismissed on the second.

The claimant, DEFRA, succeeded to the Intervention Board for Agricultural Produce and brought proceedings against Maltco 3 Ltd, Crisp Malting Group Ltd and another exporter to recover alleged overpayments of export refunds under Community legislation implementing the common agricultural policy.

Davis J determined limitation issues as preliminary issues and made orders on 26 March 2003. He held that Council Regulation 2988/95 did not govern claims concerning GSP irregularities arising from exports before 1 April 1995, and that the evidence did not safely establish any interrupting acts. DEFRA appealed. The central questions were whether Article 3(1) applied to those recovery claims and whether specified letters interrupted the limitation period.

Disposition. The appeal was allowed on the first issue and dismissed on the second. Lord Justice Chadwick gave the judgment; Lord Justices Longmore and Maurice Kay agreed.

1. Scope of Article 3(1). Article 3(1) of Council Regulation 2988/95 had to be read with Article 1(2). Title II distinguished administrative measures under Article 4 from administrative penalties under Article 5, and Article 4(4) stated that measures were not penalties. That distinction did not, however, confine Article 3(1)'s reference to proceedings to proceedings for penalties. Its limitation period applied to proceedings concerning both measures and penalties.
2. Binding European authority. The Court of First Instance in Peix (T-125/01) held that Article 3 applied whether the competent authority's action was an Article 4 measure or an Article 5 penalty, without needing to decide the classification. Under section 3(1) of the European Communities Act 1972, read with section 1(2) and Schedule 1, that decision was binding in relation to the meaning of the Community instrument. The order under paragraph 1(i) was therefore reversed.
3. Interrupting acts. The court considered the opinion of Advocate-General Tizzano in Herbert Handlbauer GMBH (C278/02). An interrupting notification must relate to one or more particular irregularities or specific behaviour. A notice referring without distinction to all operations over a relatively extended period did not meet that requirement. This accorded with Davis J's test, which DEFRA no longer challenged.
4. The letter of 28 January 1997 might have been sufficiently specific, but proceedings were not commenced within four years of it. The letter of 6 October 1998 did not satisfy the test standing alone. It remained possible that evidence of the surrounding circumstances would justify reading the letters together. That required a fact-finding exercise in which the exporter had an opportunity to adduce evidence. Davis J was correct on the second issue. No order as to costs was made in the Maltco appeal.

1. Court of Appeal (Civil Division): Allowed DEFRA's appeal concerning the scope of Article 3(1) of Council Regulation 2988/95, but dismissed the appeal concerning interrupting acts.
2. High Court (Queen's Bench Division): Davis J determined limitation issues as preliminary issues and ordered on 26 March 2003 that Article 3(1) did not govern the pre-1 April 1995 GSP claims, while leaving the remaining interruption issues for determination after disclosure and oral evidence.