Phonographic Performance Ltd v Department of Trade and Industry & Anor

A claim for damages arising from a Member State’s continuing failure to implement a Community law obligation is founded on tort where the obligation operates as a statutory duty. If damage is an essential ingredient, each occasion on which the continuing breach causes damage gives rise to a fresh cause of action. Recovery remains limited to loss sustained within the applicable six-year period.

An ordinary action commenced within that period may still constitute an abuse where judicial review was also available. The court must assess all the circumstances, including delay and the nature of the remedy. The mere availability of judicial review, or deliberate delay within the limitation period, does not establish abuse. A non-discretionary Community law right to compensation is essentially a private law right which may properly be enforced by ordinary action.

The claimant administered performing rights in sound recordings. It alleged that the United Kingdom had failed to implement the right to equitable remuneration required by Article 8.2 of Council Directive 92/100/EEC because sections 67 and 72 of the Copyright, Designs and Patents Act 1988 continued to exempt specified uses from infringement.

The claimant sought declarations and Francovich damages. For preliminary-issue purposes, the Crown’s liability was assumed. The Crown contended that the only cause of action accrued when the implementation period expired and was barred by section 2 of the Limitation Act 1980. Alternatively, it alleged abuse of process, estoppel or laches because the claimant could have sought judicial review much earlier.

The preliminary issues were whether the continuing failure generated successive causes of action and whether pursuit by ordinary action was abusive.

1. The preliminary issues were answered in the negative. The claims were neither wholly statute-barred nor abuses of the court’s process. The particulars were to be confined to loss sustained during the six years before proceedings began.

2. The Community law claim was properly characterised in domestic law as a claim for breach of statutory duty arising from Article 8.2 of Council Directive 92/100/EEC and section 2(1) of the European Communities Act 1972. It was therefore an action founded on tort to which section 2 of the Limitation Act 1980 applied directly.

3. The State’s obligation did not cease when the implementation deadline expired. Its non-performance continued. The initial failure was not a unifying event to which every later loss had to be attributed. Each subsequent occasion on which the claimant was deprived of a right because the obligation remained unperformed involved the breach then occurring.

4. A Francovich claim requires a direct causal link between the breach and the claimant’s damage. It is therefore not actionable without proof of damage. The combination of a continuing breach and damage as an essential ingredient generated fresh causes of action as damage was sustained. The distinction between continuing breaches and the continuing consequences of a completed act, illustrated by Arkin v Borchard Lines Ltd [2000] EuLR 232 and Homburg Houtimport BV v Agrosin Private Ltd [2003] 1 Ll.L.R. 571, supported that conclusion.

5. Under Clark v Humberside University [2000] 1 WLR 1988, an ordinary action may be abusive even though judicial review was also available and the action was commenced within the limitation period. All relevant circumstances must be considered, including pre-action conduct, delay, the nature of the claim and which procedure was more appropriate. Neither the public-law subject matter nor the availability of judicial review establishes abuse by itself.

6. The right to compensation for sufficiently serious breach of Community law is a correlative, non-discretionary right. A damages claim enforcing it is essentially a private law claim and may ordinarily proceed by action. The claimant had consistently maintained its legal position, had made no representation that compensation was abandoned, and had induced no detrimental reliance. Deliberate delay, litigation uncertainty and evidential difficulties did not make the timely claims abusive.

High Court (Chancery Division): Lawrence Collins J ordered the trial of preliminary issues concerning limitation, abuse of process, estoppel and laches. The Vice-Chancellor answered those preliminary issues in the negative.