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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Botswana Meat Commission (UK) Holdings Ltd, R (on the application of) v Rural Payments Agency [2005] EWHC 1163 (Admin) (17 June 2005) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2005/1163.html Cite as: [2005] EWHC 1163 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		17 June 2005

Mr Justice Collins:

1. In these proceedings the claimants challenge the refusal by the defendants (the RPA) to approve them for the purposes of the grant to them of a licence to import frozen beef in accordance with a tariff quota applied by virtue of the GATT agreement. The decision under attack was made on 27 August 2004, but this confirmed the refusal which had been made originally in June 2003. The licence in question was available for the 12 months from July 2003 to June 2004.
2. The claimants are wholly owned by the Botswana Meat Commission which is itself wholly owned by the Government of Botswana. They are concerned with the importation into the United Kingdom and elsewhere of chilled and frozen beef from Botswana. The managing director is a Mr Ove Nielsen. At the material time, Mr Nielsen was also the managing director (or, at least, that is how he described himself) of a company called Meat Corporation of Namibia (Netherlands) BV (which I shall call MCN). This company had been incorporated in Holland in 1991 in order to promote the sale of beef from Namibia. Its parent company is the Meat Corporation of Namibia, which exists by virtue of a Namibian Act of Parliament. MCN is managed by a board of directors appointed by the parent company after consultation with the Namibian Government.
3. For reasons which will become apparent, Mr Nielsen sought to resign from his directorship of MCN with effect from 1 May 2003. However, the provisions of Dutch company law prevented him from achieving his resignation until October 2003.
4. Both the claimants and MCN have for some years been importing frozen beef into the EU. As part of the GATT agreement, each year the EU opens a Community tariff quota for imports of frozen beef which allows licensees to pay an ad valorem duty of 20% instead of the substantially greater duty normally applicable to such imports from countries outside the EU. The quota is divided into two subquotas. Subquota I, which accounted for 35% of the quota, was for those who had imported beef under the same type of quota during the last three years. Both the claimants and MCN qualified under subquota I and had been granted the appropriate licences. Subquota II, which covered the balance of the quota, covered operators who were genuinely involved in importing or exporting beef from or to third countries. Prima facie, both the claimants and MCN qualified under this subquota.
5. However, there was an important limitation. The relevant Regulations provided that applicants must not be related. The subquota was limited and it would be unfair if entities which were not independent of each other were granted licences and thus got for themselves a larger share of the subquota. This limitation was first contained in the Regulations covering 2002/3, namely Commission Regulation 954/2002. Article 9(4) of those regulations, broadly speaking, required Member States to verify that applicants for subquota II licences were not related within the meaning of Article 143 of Regulation (EC) 2454/93. If applicants were related, no licence could be issued to any of them.
6. The Regulations for the year 2003/4 were Commission Regulation (EC) 780/2003. Preamble (2) noted that regulation 954/2002 had 'laid down, in particular, stricter criteria for participation so as to avoid registration of fictitious operators'. And the importance of ensuring that the licence holder was a genuine importer was emphasised by Preamble (15). Thus presentation of proof of involvement in the purchase, transport and import of the beef concerned had to be a primary requirement. Preambles (6) to (9) I should set out since they are particularly relevant to subquota II.

"(6) Operators who can show that they are genuinely involved in importing or exporting beef from or to third countries should be able to apply for approval under subquota II. Proof of that involvement calls for evidence to be presented of recent import o some significance.

(7) Where there are obvious reasons to suspect that fictitious operators have applied for registration, Member States should proceed to a more detailed examination of the applications.

(8) Penalties should be determined where fictitious operators have applied for registration or the approval was granted on the basis of forged or fraudulent documentation.

(9) If criteria for participation on the quota allocation are to be checked, applications must be submitted in the Member States where the operator is entered in the national VAT register".

7. The references to fictitious operators have led to submissions by the claimants that, since it was accepted that they were genuine importers, they could not be refused the grant of a licence. Article 8 of the Regulations provided: -

"Applications for import licences with regard to subquota II totalling 34,450 tonnes may be lodged only by operators who have been approved in advance for such purposes by the competent authority in the Member State where they are entered in the VAT register".

The RPA is the competent authority for the UK, where the claimants are entered in the VAT register. Applications had to be made "before 13:00 Brussels time on 23 May 2003" and a list of approved operators had to be sent to the Commission and the approved operators informed of their approval before 21 June 2003 (Article 10(1)). Article 10(2) provided: -

"Where it is subsequently established that the approval was based upon forged or fraudulent documentation, it shall be withdrawn together with any advantage already granted on the basis of it".

Article 11 provided that only approved operators should be allowed to apply for import licences under subquota II during the period 1 July 2003 to 30 June 2004. Such applications could be lodged in the first weeks of July 2003 and January 2004. The quantities available in each half year were 17,225 tonnes and a licence application could not exceed 5% of the available quantity for the period in question (Article 12).

8. Article 9 set out the requirements which had to be met in order that approval could be given. Since it is central to this claim, I should set it out in full.

"1. Approval may be granted to an operator who submits a request to the competent authority before 13:00, Brussels time, on 23 May 2003 accompanied by documentary proof that:

(a) he/she has been engaged on his/her own account in the commercial activity of importing into the Community, or exporting from the Community, beef falling within CN codes 0201, 0202 or 0206 29 91 during the years 2001 and 2002;

(b) by virtue of this activity:

–he/she has imported in the course of the two years concerned a minimum of 100 tonnes of such beef expressed in product weight, or

– he/she has exported in the course of the two years concerned a minimum of 220 tonnes of such beef expressed in product weight,

in, at least, two operations per year.

Operators who at 1 January 2003 have ceased their activities in the beef and veal sector shall not be approved for the purpose of this subquota.

2. In order to prove the commercial activity of his/her account as referred to in paragraph 1(a), the operator shall present documentary proofs in the form of commercial invoices and official accounts as well as any other documents showing to the satisfaction of the Member State concerned that the required commercial activity is related solely to the applicant concerned.

3. Proof of import or export shall be provided exclusively by means of customs documents of release for free circulation or export documents duly endorsed by the customs authorities.

4. Member States shall examine and verify the validity of the documentation presented.

5. Member States shall verify that applicants are not related to one another within the meaning of Article 143 of Commission regulation (EEC) No 2454/93(13), where

–in the proof of imports or exports referred to in paragraph 3, two or more applicants are entered as having the same postal address, or

– two or more applicants at the time of application are registered for VAT purposes on the same postal address, or

– Member States have grounds to suspect that applicants are connected in terms of management, staff or operation.

Where related applicants are consequently identified, all applications concerned shall be rejected unless the applicants concerned can provide further evidence to the satisfaction of the competent authority that they are independent from one another in terms of management, staff and all operations linked to their commercial or activity.

6. In application of paragraph 5, where a Memb4r State has grounds to suspect that an applicant is connected in terms o management, staff or operations with an applicant in another Member State, the two member States shall mutually verify whether a relationship exists within the meaning of Article 143 of Regulation (EEC) No 2454/93.

For this purpose Member States shall establish a list of applicants, containing their name and address, which shall be sent by fax to the Commission before 31 May 2003. The Commission shall subsequently distribute to all Member States the lists received.

7. A company for approval formed by a merger of companies each having rights to apply pursuant to paragraphs 1 to 3 shall enjoy the same rights as those former companies".

Article 143 of Commission regulation (EEC) No 2454/93 provides: -

"1. For the purposes of Articles 29(1)(d) and 30(2)(c) of the Code, persons shall be deemed to be related only if:

(a) they are officers or directors of one another's businesses;

(b) they are legally recognised partners in business;

(c) they are employer and employee;

(d) any person directly or indirectly owns, controls or holds 5% or more of the outstanding voting stock or shares of both of them;

(e) one of them directly or indirectly controls the other;

(f) both of them are directly or indirectly controlled by a third person;

(g) together they directly or indirectly control a third person; or

(h) they are members of the same family. Persons shall be deemed to be members of the same family only if they stand in any of the following relationship to one another;

– husband and wife,

– parent and child,

– brother and sister (whether by whole or half blood),

– grandparent and grandchild,

– uncle or aunt and nephew or niece,

– parent-in-law and son-in-law or daughter-in-law,

– brother-in-law and sister-in-law,

2. For the purposes of this title, persons who are associated in business with one another in that one is the sole agent, sole distributor or sole concessionaire, however described, of the other shall be deemed to be related only if they fall within the criteria of paragraph 1".

9. MCN had made application for approval in Holland. Thus the fact that Mr Nielsen was described as the managing director for both MCN and the claimants meant that the deeming provisions of Article 143 of the 1993 Regulation as applied by Article 9(5) of the 2003 Regulation pointed in the direction of rejection. At the very least, there was a real danger that this might occur and so it was that Mr Nielsen sought to be removed from his position at MCN. He was, as I have said, unsuccessful. As what happened showed, the claimants' and MCN's fears were justified.
10. There is a third entity which I should mention. This is Allied Meat Importers GMbH, registered in Germany (AMI). It too made an application for subquota II approval. AMI has an associated company in the UK which I shall call AMI Ltd. AMI Ltd was originally set up by the Botswana Meat Commission to market beef in Europe but is now used by other Southern African beef exporters as well, namely Namibia and Swaziland AMI Ltd, the claimants and MEATCO (namely Meat Corporation of Namibia (UK)Ltd, a sister company of MCN) all share an office address in North London. Equally, although this was not specifically relied on at the time of the refusal by the RPA, they seem to share other managers, covering finance and shipping.
11. On 17 June 2003, MCN received a fax from the Dutch Intervention Board (PVE) informing them that, in accordance with Article 9(6), checks had been made with other countries and the application had to be rejected because MCN was, according to Article 143 of the 2003 regulations, linked to AMI and to the claimants. On 18 June, MCN made representations to PVE asserting that there were no financial links or shared ownership. Notwithstanding this, PVE refused to alter their opinion, saying: -

"The PVE has not found any details which indicate that the companies are independent concerning management, personnel and all operations in connection with their trade and technical activities. This means that your application for recognition based on Art 9(5) and (6) is rejected".

12. The Dutch system provided for an appeal. This was pursued by MCN. In due course, the Dutch appellate body (which was part of the administrative organisation in Holland) allowed the appeal. I will come to that in due course.
13. In the meantime, on 18 June 2003 the claimants received an e-mail from the RPA. This read: -

"Under Art 9.6 of the … Regulation, we are obliged to verify whether a relationship exists between applications submitted in other Member States.

We have been approached by the Dutch and Germans who have grounds to suspect that the following companies are 'related' under Art 143 Reg 2454/93".

The claimants, MCN and AMI were then identified. The e-mail continued: -

"Therefore in order to avoid being rejected, you are invited to provide further evidence as per last part of Art 9.5 to prove that BMC (UK) is independent from MEATCO BV and AMI GMbH".

A time limit of 'close of play' on 19 June was imposed.

14. The response, which was sent the same afternoon, gave the same information as had been given to the PVE, making the same point that there were no financial links or shared ownership between the claimants and MCN. I should set out the response in full. It read:

"We are in receipt of your e-mail of today and note that you are trying to ascertain whether Meat Corporation of Namibia BV, Allied Meat Importers GMbH and Botswana Meat Commission (UK) Holdings are related under Art 143 reg. 2454/93.

In this connection we would like to state that Meat corporation of Namibia BV, has not been incorporated recently in order to qualify for GATT licence under sub quota II, but was actually incorporated 12 years ago, in August 1991, for the purposes of promoting the sale of beef from Namibia. The ultimate parent company is the Meat Corporation of Namibia limited, a Farmers Co-operative incorporated in Namibia and whose registered office is at Sheffield Street, PO Box 3881, Windhoek 9000, Namibia.

Botswana Meat Corporation (UK) Holdings Limited was also not incorporated recently in order to qualify for GATT licence under sub quota II, but was actually incorporated 25 years ago and the same applies to Allied Meat Importers GmbH which was incorporated in 1982 for the purposes of promoting the sale of beef from the Botswana Meat Commission in Botswana.

Botswana Meat Commission (UK) Holdings Ltd is a wholly owned subsidiary of the Botswana Meat Commission in Botswana, a statutory body owned by the Government of Botswana, and whose registered address is Private Bag 4, Lobatse, Botswana.

The management of the MCN group is through a Board of Directors appointed by the parent company in Namibia after consultation with the Namibian Government.

The management of the BMC group is through a board of directors appointed by the government of Botswana.

As can be clearly seen these are two separate and distinct groups of companies, one owned by the Botswana Government and the other owned by a Namibia Farmers Co-operative administered by the Namibia Government and there are absolutely no financial links or shared ownership between the two.

Both groups of companies operate separately and have totally separate and distinct auditors. PricewaterhouseCoopers for the BMC group and KPMG for the MCN group. Furthermore the two groups also use different banks and bank accounts.

If necessary we can supply financial statements from both groups from which it can clearly be seen that the Meat Corporation companies and the Botswana Meat Commission companies are completely independent, separate and distinct.

We trust that this information will enable you to avoid the rejection of the applications".,

AMI dropped out of the picture in this connection since its application in Germany was withdrawn. The RPA raised a query on 19 June in these terms:-

"… under Art 143 Reg 2454/93 persons shall be deemed to be related only if they are officers or directors of one another's businesses. Therefore, can you please explain why all these companies share the same Director, namely Mr Ove Kjaer Nielsen".

An immediate reply stated: -

"Mr Nielsen, as an EU national, acts as an unpaid director of those companies at the request of the Botswana and Namibian governments".

15. This was not as helpful an answer as was needed. The fact that Mr Nielsen was unpaid was not of itself in any way conclusive. Furthermore, in letters to the Head of Beef and Veal Division of the Commission of 30 June 2003, one from MCN and one from the claimants, both of which were in identical terms and signed by Mr Nielsen as Managing Director, he says that he was "the managing Director of the BMC Companies in the EU [i.e. the claimants] and also unpaid Managing Director of the Namibia owned EU Companies [i.e. MCN] but as he was on the verge of retirement anyway he had already in May resigned as Director of MCN. This appears to indicate that he was not unpaid in relation to his directorship of the claimants. There is still no detailed explanation of the structure of the two companies and how they fit in with AMI, whose managers seem to be common to the claimants and to MCN.
16. Having said that, the crucial point which is undisputed is that the claimants and MCN are two independent companies, one ultimately owned by the government of Botswana and the other by the government of Namibia. In the Dutch appeal decision, which was given on 14 January 2004 and which was in favour of MCN, it was accepted that there were no financial connections permitted between the two companies. AMI was used by both as a marketing agency. It was also necessary, to enable trade to be done with the EU, to have an EU national and EU based companies. It was convenient to use Mr Nielsen, but this did not compromise the independence of the two companies.
17. The Dutch appeal panel's material findings were as follows: -

"There is no legal or actual connection between MCN … and [the claimants]. They are two separate legal entities, which form separate parts of the MCN group of companies and of the BMC group of companies. This has become clear from the submitted documentation, indicating the structure of the MCN and BMC groups and showing that these groups are ultimately the property of the governments of Namibia and Botswana respectively. There is a connection between AMI GmbH … and BMC in London, because they both belong to the BMC group and between the companies that belong to the same group, but this has no bearing on this case. Even though MCN … and [the claimants] have the same Director, Mr O.K. Nielsen, the submitted documentation indicates that Mr Nielsen has no actual control over MCN … or [the claimants]. This control comes (ultimately) from the governments of Namibia and Botswana respectively. In the case of MCN and [the claimants], the Marketing Board believes that they have a company structure whereby non-liaised parties have the same director and work together. This is not the situation that article 143(1)(a) of Regulation 2454/93 describes".

The panel made the point that, since there was no connection within Article 143 of 2454/93, MCN did not have to prove its independence from the applicants in matters of management, staffing and all activities regarding trade and technical operations. It went on: -

"Furthermore, it has to be remarked that the clauses of Article 143 … have to be read against the background of the aims of … 780/2003. One of these aims is the prevention of applications by fictive traders and to make sure that more approved traders receive equal access to sub quota II. MCN and [the claimants] cannot be regarded as fictive traders".

18. The view taken by the defendants was and has remained that having Mr Nielsen as a common director was fatal to the success of the application. On 11 July 2003, the final rejection came in these words: -

"Your application has been rejected in view of there being a common Director for both the UK and Dutch applicant companies. The Regulation is specific in regard to independence and common Directors is one [of] the conditions against which I must reject your application. As I understand Dutch colleagues have done. I have no discretion in this matter and must implement the Regulations as they stand. I understand you have appealed direct to the Commission and I am copying your letter and my response to colleagues in DEFRA for them to discuss direct with the Commission".

19. In January 2004, following the Dutch appeal decision, the claimants applied for a licence for the second tranche of the 2003/4 subquota II. This was rejected by the defendants since Article 11 only permitted those approved for the year to obtain a licence. There followed a detailed letter from the claimant's solicitors. One of the points made was as follows: -

"The purpose of the Regulations as provided in the pre-amble, is to prevent the registration of fictitious operators and to prevent the speculative trade in licences (preamble N0: 2) neither of which criteria could by any stretch of the information be a risk which the Agency would run in granting a licence to our respected client".

The answer to this was in these terms: -

"We agree as to the purpose of the regulations, but do not consider that this prevents the application of the exclusion in the case of connected management and staff".

20. In subsequent correspondence, the claimants concentrated on the word fictitious. They were genuine traders and could not be described as fictitious. The defendants view remained as it had been, namely that the words of the Regulation were clear and any common management was fatal. Finally, on 27 August 2004, the defendants said they had asked the Commission whether, if it was decided that the claimants' arguments could succeed, it would be possible to 'cover the quantities required in respect of the licences applied for'. The Commission had confirmed that, as the quota for the year affected had ended, it would not. Thus the claim has become academic in the sense that, even if the decision to refuse approval was wrong, the claimants could not now import any beef under the 2003/4 subquota II. The quota is determined annually and the 2004 Regulations (1203/2004) do not contain a requirement to ensure that there is no relationship within Article 143/1993. Mr Ramsden says that there is a possibility of a claim for damages. He recognises that there will be considerable difficulties in his path, even if he persuades me that the defendants' construction of the Regulations was wrong, in the light of the Francovich principles which require a 'manifest and grave breach' of the claimants' rights.
21. The purpose behind any EU Regulation is of considerable importance in construing it. A purposive construction is always applied. In this case, it was considered necessary to ensure that only independent entities could obtain licences to enable them to import the limited quantities in the annual quota. It would be unfair if entities which were linked economically or were controlled by a single person, who would benefit from the trade in question, could obtain more than one licence. Since Article 9(1) and (2) (reflecting Recital 14 in the preamble) required proof of import or export of minimum quantities on at least two occasions per year in the past two years, the exclusion could not be aimed only at entities which were themselves not genuine. They would also be regarded as fictitious if they were not independent of one another. Article 9(5) in applying Article 143 of 2454/93 would make no sense at all if it could only apply to what might be called bogus entities, created in order to get an advantage in obtaining a licence to import more of the quota. Both counsel accepted that a useful test might be to determine whether the applicants were separate economic units. But Mr Saini submitted that the Regulations made it clear that those which had common staff or operations linked to their commercial or technical activity were to be regarded as not being separate.
22. Article 143 is a deeming provision. Mr Saini did not suggest that this meant that the existence of, for example, common staff created an irrebuttable presumption that the entities were related and so fell foul of Article 9(5) of the 2003 Regulations. Legislation by reference to provisions which were designed to deal with other matters always creates problems. Taken literally, Article 143(1)(a) applies to persons and not to the businesses of which they are officers or directors. This led the Dutch appeal panel to reach the following conclusion: -

"Even though the companies mentioned in the contested decision … have in common that Mr Nielsen is their Director, they are not connected as per Article 143(1)(a) …, which formed the basis of the contested decision … This is a logical conclusion based on the wording of this Regulation, because no persons have been found who are managers or Directors of each other's companies. This presupposes that there are two people, whereby A is a manager or Director of B's company and b is a manager or Director of A's company. This is quite a different situation than the one whereby two companies share the same Director, or in any case as long as we are not dealing with each other's companies".

23. The 2003 Regulations must prevail. The wording of Article 9(5) is clear and, as is obvious, an applicant must include both an individual and a corporate entity. The reference to management and staff of an applicant shows beyond any doubt that the literal meaning of Article 143 cannot apply. Thus the construction applied by the Dutch panel – its 'logical conclusion' based on Article 143 – is in my judgment wrong. The contrary was not argued before me by Mr Ramsden. Accordingly, there is a deemed relationship within the meaning of Article 143 where applicants have common directors or officers and Article 143(1)(a) must be construed to achieve this for Article 9(5) to make any sense.
24. The last sentence of article 9(5) is crucial. First, it shows that a deemed relationship can be disproved. The onus is on the applicant to establish that, despite the common address or grounds to suspect a connection in terms of management, staff or operation, there is no relationship which falls foul of Article 9(5). Applicants must therefore establish that they are 'independent from one another in terms of management, staff and all operations linked to their commercial or technical activity'. The key word is independent. It is proper to look to the preamble to gain assistance as to the intention and so the true construction of an Article. I have already identified the purpose: it is to ensure that the limited quota is shared out among truly independent entities. While fictitious is not limited to entities which have been established with a view to gaining a larger share of the quota, if the facts show that, despite some common management or staff, there is economic independence and there is no mutual benefit for either applicant in obtaining a share of the subquota, there will have been no contravention of Article 9(5).
25. I have no doubt that it would be very rare for applicants to be able to establish that, despite common management or staff, there was no relationship within the meaning of Article 9(5). Here Mr Nielsen's role was essentially similar to that of an agent employed to deal with certain necessary formalities. Having, for example, common storage facilities or marketing advisers would not normally mean that there was a prohibited relationship.
26. I appreciate that the literal meaning of Article 9(5) may seem to be inconsistent with what I believe is the correct approach. Mr Saini has accepted that the literal meaning of article 143(1)(a), as applied by Article 9(5), cannot be correct. A purposive construction is needed. If, as I have said, the focus is on the independence in economic terms of the applicants, the language of Article 9(5) is not given a particularly artificial meaning.
27. In the course of correspondence, the defendants raised various points which they said showed that there was a prohibited relationship. The original decision was clearly based solely upon the common directorship of Mr Nielsen. Mr Saini accepted that it would in those circumstances be difficult for him to uphold the validity of the decision if the further points were needed. In any event, some were manifestly bad. For example, reliance was placed on the use of the same cold storage company by each of the applicants. A common address in North London took the matter no further. The link with AMI, although not fully explained, did not affect economic independence.
28. For the reasons I have given, I am satisfied that, despite the common directorship of Mr Nielsen, the claimants were, once the key facts had been established, entitled to approval. But this does not mean that the decision was necessarily wrong in law when made. It was for the claimants to establish that they qualified notwithstanding that they were apparently caught by Article 9(5). While the assertions contained in their letter of 30 June 2003 were not wrong and have since been accepted, the situation was not in my view spelt out in sufficient detail. As against that, it is plain that the defendants took the erroneous view that they had no discretion and the common directorship was fatal. It seems likely that, even if the situation had been spelt out in detail, the decision would have been the same. This fundamental error of approach leads me to conclude that the decision was flawed.
29. Mr Saini has submitted that my decision is dictated by the true construction of Article 9. This is not free from doubt and so I should refer relevant questions to the European Court of Justice under Article 234 of the Treaty. I recognise that, although I have no doubt as to the correct construction, the issue is not so clear as to admit of no contradiction. But the 2003 Regulations covered only the year 2003/4 and the relevant provisions are not being re-enacted. Thus to refer would be to incur substantial extra costs for no sensible purpose.
30. The only issue is a possible claim for damages. While I have not heard argument on the point, I cannot see how the Francovich hurdle could be surmounted. The construction placed by the defendants on the Regulations was in my judgment wrong, but it was not unreasonable and it was certainly a possible construction.
31. I have a discretion whether to refer any question. I am satisfied that it is unnecessary and, indeed, undesirable for me to do so in the circumstances of this case. The claimants will have the satisfaction of knowing that a judge in this country has decided that Article 9 should have been construed so as to enable them to be granted the necessary approval. Beyond that, they will, I fear, gain little.
32. I will hear counsel as to the precise nature of any relief (if any) that I should grant.

MR JUSTICE COLLINS: I think I heard my clerk reading out some corrections which I spotted, and I am grateful to you both for drawing my attention to others which have already been corrected. The only other one I suddenly spotted is that I think your instructing solicitors are Rochman Landau, are they?

MR RAMSDEN: That is right. That is the only residual correction.

MR SAINI: My Lord, there are a couple. I did hear your Lordship's clerk mentioning the other ones. I noticed what was going on. At the end of paragraph 13, just above paragraph 14, there is a quotation. And in the quotation, "therefore in order to avoid ..." it should be MEATCO in that third line, rather than MATCO.

MR JUSTICE COLLINS: Oh yes.

MR SAINI: And equally, that same quotation, just above where it says the claimants MNC, it should be MCN rather than MNC. Just above the quotation that I have just referred my Lord to. MCN, rather than --

MR JUSTICE COLLINS: Oh, MCN. Yes, it should be. You are quite right, yes.

MR SAINI: And then finally, my Lord, the same page, the very bottom of the page, the last paragraph is repeated there so it comes out twice.

MR JUSTICE COLLINS: So it does. Yes, I am grateful. I am afraid I did not check the quotations as carefully as I should have done. Thank you very much. It is funny, I do not think I have ever handed down a judgment which has not had the odd typo. No matter how many times you read it, you miss them.

Anyway, right. So now what relief, if any, do you suggest is appropriate?

MR RAMSDEN: My Lord, we say a declaration is appropriate following the principle of reasoning in your judgment. We do not believe that an order quashing the decision or directing a new decision has any purpose.

MR JUSTICE COLLINS: Well, that cannot now have any purpose at all.

MR RAMSDEN: No. But it is important to my clients, for the reasons we foreshadowed in submissions at the substantive hearing, that having reached the view that the decision was flawed, that could be the subject of a formal judicial declaration and that is something of real value to them in their relations with the Commission.

MR JUSTICE COLLINS: Yes. Sometimes we do not grant a formal declaration. You simply say: well, look at these, these terms make clear what has been decided.

MR RAMSDEN: Yes.

MR JUSTICE COLLINS: I mean, it is really, is it not, paragraph 28 that is the key paragraph, is it not?

MR RAMSDEN: Yes, it is.

MR JUSTICE COLLINS: And it follows on the reasoning. Yes.

MR RAMSDEN: My Lord, we have had very limited chance to take instructions from our client. I think we would wish, if the court were minded to give us a declaration, that that is what we had. But in the circumstances, a declaration is the limit of the relief --

MR JUSTICE COLLINS: Oh, certainly nothing more.

MR RAMSDEN: -- we could properly ask for.

MR JUSTICE COLLINS: Sh all I see what Mr Saini has to say about that?

MR SAINI: My Lord, my only concern about that -- well, the judgment speaks for itself. But my only concern is that without having seen the precise declaration that is being sought, I am slightly reluctant to agree.

MR JUSTICE COLLINS: I am sorry that I did not say, as I should have done, that I will waive the one hour that you could take proper instructions; particularly as the form of relief was a little open. Is the sensible thing to do to, say, leave it to you to discuss the form of any declaration? I mean, in principle I do not see any reason why there should not be a declaration indeed if Mr Ramsden's clients want one.

MR SAINI: My Lord, I am sure it is just a question of knowing ...

MR JUSTICE COLLINS: I think the sensible thing is, shall I leave it to you to formulate and if possible agree? And if you do not agree, then you can put that to me probably on paper.

MR RAMSDEN: I think that is sensible for the reasons. We plainly have to talk to our client about the question of whether there is any real purpose in pursuing any further the question of damages. We obviously have my Lord's very strong points --

MR JUSTICE COLLINS: I think a slight indication.

MR RAMSDEN: Yes. And, my Lord, we will obviously ensure our client understands the significance of that.

MR JUSTICE COLLINS: I do not imagine it surprises you.

MR RAMSDEN: No, my Lord, it does not. And following from that, there may be issues as to costs. And again, if those cannot be resolved by agreement between Mr Saini and I and our respective clients, it may be necessary to deal with that at a short and further hearing.

MR JUSTICE COLLINS: Do you want to put that over until you have decided on the declaration?

MR RAMSDEN: My Lord, we would. Because I think there is correspondence which I do not think is all before the court.

MR JUSTICE COLLINS: Oh, I see.

MR RAMSDEN: Which might be relevant on the questions of costs. Because this issue of costs has again been canvassed in correspondence, and that correspondence might be relevant. So I would ask that we hold over. Mr Saini and I could look at the terms of declaration. And insofar as we cannot agree any of the matters that would conclude this application, we can make an application to return to my Lord in due course.

MR JUSTICE COLLINS: Mr Saini.

MR SAINI: My Lord, my only concern is that I have the question of costs today.

MR JUSTICE COLLINS: Well, I was wondering.

MR SAINI: And I am slightly reluctant -- a declaration, I am confident that my learned friend and I could agree that. I do not believe for one moment ... we are certainly not going to agree to pay them extra costs, even if they wanted the costs. And if he is pursuing a damages claim, what I was going to submit to my Lord is really it is appropriate for the judges at the final damages claim to determine that issue. That is one of the principal reasons we are fighting this case.

MR JUSTICE COLLINS: Yes. I do not see any reason in principle terms why I should not deal with the costs of this claim. If you pursue a damages claim in due course, then the costs of that can be dealt with by the appropriate judge.

MR RAMSDEN: Yes. My only concern about that is that I understand that there was a request on our behalf to the RPA, when they made the point about damages and this would be a Pyrrhic victory, we asked them to concede the point and they refused to do so.

MR JUSTICE COLLINS: I understand that there is -- I mean is that the correspondence?

MR RAMSDEN: That is the correspondence.

MR JUSTICE COLLINS: I do not imagine there is any issue about that. They have taken the view, and it is an understandable view, that the common directorship was fatal. That has always been the case. Indeed, that is the case that was argued essentially by Mr Saini; particularly the Managing Director. So it is not surprising that they took that view. I decided, rightly or wrongly, that that was not correct. So you won on that point.

MR RAMSDEN: Yes.

MR JUSTICE COLLINS: But whether, and I suppose that it is in the future. I mean, it could I think be relevant. Because even though the new regulations do not provide the same, they do look back to those who have had licences in the past.

MR RAMSDEN: Yes.

MR JUSTICE COLLINS: And if you can show the Commission or indeed anyone who is relevant that you ought to have had a licence and did not, then they obviously could help you in the future. I see that.

MR RAMSDEN: My Lord, I cannot stress too heavily how important that matter is.

MR JUSTICE COLLINS: I understand that.

MR RAMSDEN: As my Lord is aware, my client is essentially owned by the Government of Botswana. Their relationship and credibility in the eyes of the Commission are important to them.

MR JUSTICE COLLINS: No, I do understand. But is there any reason why you should not make an application for costs based on the acceptance that you did ask for but were refused a concession; that independently of any damages claim they have got it wrong? And the importance I am quite prepared to accept for your clients, of the findings that I have made.

MR RAMSDEN: Yes. Well, I will take the briefest instructions on that. (Pause). Yes, yes. There is no reason why not. My Lord, I can make these short points.

The approach of the RPA was not only to refuse the concession principle, but as my Lord observed in my Lord's judgment, although my Lord has found the information provided by my clients in relation to the enquiries raised by the RPA was not at times as helpful or as full as it could have been -- certainly early on -- by the time the solicitors became involved, a full picture was set out for them. And there was still no change of position.

And my Lord observed -- and we say rightly so -- that even if the full picture had been set out by our clients at the earliest opportunity, it is extremely doubtful whether the decision would have been any different. Because the RPA had rather chained themselves to the erroneous approach that my Lord has identified.

And so we say there could be no criticism, it sounds, in costs in relation to my clients' conduct. And certainly not after they had the benefit of assistance from my instructing solicitors who set out everything with absolute clarity.

MR JUSTICE COLLINS: Yes. The only thing one can say is you did rather concentrate on the fictitious part, taking it in my view too far. I mean, I accept that it was not the only point, but it was quite an important part of the reasoning that you argued.

MR RAMSDEN: Yes, we see that. But the arguments were developed to the extent my Lord saw them in the hearing, the issue was identified. And we say there is considerable significance in the refusal of the RPA to concede the issue of principle. Because as I think was clear from my skeleton argument on the last occasion, we recognised the considerable difficulties there are in establishing a claim to damages. But this point considerable tangible significance to my client.

My Lord, in those circumstances we say should have our costs of this application thus far. We have submitted and indeed served a cost schedule.

MR JUSTICE COLLINS: Yes, I have seen that.

MR RAMSDEN: Well, I am grateful.

MR JUSTICE COLLINS: Let us go into the question about it, if I decide in your favour on costs. I mean, I assume, Mr Saini, your off-hand view is no costs.

MR SAINI: Indeed, my Lord. Can I identify, my learned friend has mentioned the fictitious point but he has with respect downplayed that. We came to this hearing making skeleton argument applications, where my learned friend was saying that these regulations were only going to issue in fictitious tradings. We did not accept that instruction. That had to be resolved, and that has been resolved in our favour.

Secondly, there was another major issue involved, which is Article 9.5 of the 2003 regulation. My Lord will recall that my learned friend certainly in his application, although he was quite quick on this in terms of his submissions at the hearing itself, he was submitting originally that the Dutch Authority had correctly construed ... does my Lord recall Article 9.5. And my Lord has effectively disagreed with the Dutch Appellate Authority. My learned friend's application was based, it is clear on the --

MR JUSTICE COLLINS: Mr Ramsden did not pursue that.

MR SAINI: No, but on the claim form and certainly on the basis of this case.

MR JUSTICE COLLINS: What additional matter arose from that?

MR SAINI: Well, my Lord, again it was a question of: could the authority, having taken a certain view certainly on Article 9.3 of the 2003 regulations, could they have just accepted what was being said?

MR JUSTICE COLLINS: Oh yes, but they did not accept anything. The argument is you should have accepted at least that you got it wrong on the basis that I have suggested. I accept that the fictitious argument, if they pursue that, you will be right to say: no, not on that. But you could have entered into some negotiation as to the extent to which you were prepared to accept that you got it wrong. If you were prepared to accept it.

MR SAINI: My Lord, that would create a position where we would have the correspondence on the basis that -- we do not accept this.

MR JUSTICE COLLINS: I agree. I see the point.

MR SAINI: Clearly if my learned friend ... I do not want to get in the correspondence issues now, because I think we have --

MR JUSTICE COLLINS: I am not sure it is necessary.

MR SAINI: -- agreed that we try and review the matter here and now.

Finally, my Lord, there is the question of damages. Clearly one could see damages as a separate issue. But it would be necessary, my Lord's judgment would have been necessary and is going to be necessary as some of the material judges are eventually going to have to consider if there is a damages claim.

MR JUSTICE COLLINS: I doubt if there will be.

MR SAINI: My Lord has got the view that the matter was not as clear as, could we say, in the Factortame case and this probably was not a manifestly serious breach. So we say that my learned friend has a case on the value in this case; we do not seek to suggest that he has not done that. But the right view would be no question of costs.

MR JUSTICE COLLINS: Mr Ramsden, what I am inclined to do is to say that I think you should have some costs, not all of your costs. Because I think the fictitious point was quite an important point. I mean, I appreciate you did not develop it perhaps as fully as you might otherwise have done because you did not see the need in the circumstances. But from their point of view, it was an important aspect. As indeed, although less so, was the 9.5 point. Doing the best I can, I am thinking that the fair order is that you have half your costs.

MR RAMSDEN: My Lord, I --

MR JUSTICE COLLINS: You can seek to persuade me to be more generous if you wish.

MR RAMSDEN: My Lord, I just say this. Mr Saini postulates what would have happened had there been a constructive dialogue as to --

MR JUSTICE COLLINS: Who knows?

MR RAMSDEN: Well, the fact is there was no dialogue. The door was shut.

MR JUSTICE COLLINS: I understand that.

MR RAMSDEN: The door was shut in our face. That is all I can properly add. (Pause). My Lord, I am asked just to show you this document. I do not know whether my Lord has the hearings bundle.

MR JUSTICE COLLINS: Yes, I have.

MR RAMSDEN: May I ask my Lord just to look please at page 126.

MR JUSTICE COLLINS: Is that CB 126?

MR RAMSDEN: Yes, it is.

MR SAINI: Sorry, it is CB 235, looking at the --

MR JUSTICE COLLINS: Yes, because there are various ...

MR RAMSDEN: There are various paginations.

MR JUSTICE COLLINS: 235, hang on. Yes, I have got that.

MR RAMSDEN: My Lord.

MR JUSTICE COLLINS: It is your letter of the 22nd March 2004.

MR RAMSDEN: Yes. The significance of this, it was the first letter, the first substantive letter sent on the issue. And at 235, you can see the emphasis is on independence.

MR JUSTICE COLLINS: Yes, indeed. I accept that.

MR RAMSDEN: And my attention is drawn to the document that is accompanying it. So that is where we started.

MR JUSTICE COLLINS: And you say that should have triggered and could well have triggered a sensible, from your point of view, a sensible outcome.

MR RAMSDEN: From our point of view a sensible outcome. We certainly barked up the right tree initially. And I have to say, you can see from the debate that ensued which was very interesting, but there were a number of tangential points taken; not all of them by us, it has to be said. But we started very much focussed on what was the nub of the issue, what turned out to be the nub of the issue.

MR JUSTICE COLLINS: Yes, that clearly was of importance.

MR RAMSDEN: My Lord, that is what I draw your attention to. If that persuades you that 75 per cent is more appropriate, that is my closing brief.

MR JUSTICE COLLINS: Anything you want to add?

MR SAINI: My Lord, we submit that my Lord has come to a just result with 50 per cent, and we are content to stick with that.

MR JUSTICE COLLINS: I see the force of what Mr Ramsden has suggested. I shall compromise. I will increase it to 60 per cent.

MR RAMSDEN: My Lord, I am grateful. In that case, Mr Saini and I, I am sure, can agree a minute.

MR JUSTICE COLLINS: Oh yes, and a schedule of costs.

MR SAINI: Do you want to mediate --

MR RAMSDEN: My Lord, yes.

MR SAINI: Perhaps we should go through the schedule if we could.

MR JUSTICE COLLINS: I know that when asked for summary assessments, I am usually reluctant because I do not really have the full knowledge of --

MR SAINI: My Lord, can I just make a suggestion and my learned friend can ... my Lord, the total claimed is --

MR JUSTICE COLLINS: Remind me where. I have got it somewhere in the bundle.

MR SAINI: Perhaps I can just mention the figure. The total claim is £23,785.15.

MR JUSTICE COLLINS: £23,785.15. Yes.

MR SAINI: Sorry, is that including VAT?

MR RAMSDEN: Excludes VAT.

MR JUSTICE COLLINS: That does not, I suspect, include --

MR SAINI: I understand the client is not registered for VAT.

A SOLICITOR: We are.

MR JUSTICE COLLINS: That will not include today, obviously.

MR RAMSDEN: No.

MR JUSTICE COLLINS: Does that include the hearing?

MR RAMSDEN: It does include it. It includes everything up to this point.

MR JUSTICE COLLINS: Everything except today.

MR SAINI: My Lord, what I was going to suggest -- this is probably better a matter, if it goes that far, for the Costs Judge -- is that, of course the particular matter that concerned us is the second page, just near the bottom of the document. My Lord will see 25 hours and 36 minutes, £125 a hour. We say that was excessive. What I was going to suggest was rather than my Lord trying to do something now, is that --

MR JUSTICE COLLINS: It is very difficult.

MR SAINI: Indeed. What I was going to submit, my Lord, is that the just cause, given my Lord has come to a figure of 60 per cent, so a figure or payment on account could fix that; and that could be paid within the normal period of time. And then if my friend wants to pursue it to the Taxing Judge, then it is a matter for him. What I would say, my Lord, is that again this is not always a good way. That is about half of this. That may be accounted for by the fact that there would be other alternatives.

MR JUSTICE COLLINS: I have had experience of being in your position, Mr Saini.

MR SAINI: So what I was going to suggest, my Lord, is that a figure of 8 or £9,000 could be paid on account within the 14 day period. If my friend wants to pursue it further, then --

MR JUSTICE COLLINS: If he wants some money on account.

MR RAMSDEN: That is very fair. We are happy to take that from Mr Saini, and then we will take a view. So if my Lord makes the order for 60 per cent of our costs with a payment on account of 9, and the balance to be assessed if not agreed.

MR JUSTICE COLLINS: That seems sensible.

MR SAINI: My Lord.

MR RAMSDEN: Thank you very much.

MR JUSTICE COLLINS: All right.

MR RAMSDEN: And ensure we get a minute. My Lord, for reasons that might be mistaken, it will be impossible to do it today. But I will ensure that I speak to Mr Saini.

MR JUSTICE COLLINS: I cannot be here, I am afraid, for the rest of the day anyway. For various reasons, I am more not in attendance than in attendance over the next few days. All right, thank you very much both of you. And I am sorry you have not got a trip to Europe, at least not yet. All right.