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Bloomsbury International Ltd v Sea Fish Industry Authority and DEFRA [2011] UKSC 25 has its origins in a claim brought by importers unhappy with the imposition of a levy. For the purpose of financing its activities, the Authority has the power, pursuant to the Fisheries Act 1981, to impose a levy on “persons engaged in the sea fish industry”.  The 1981 Act permits the charging of a levy on sea fish and sea fish products “landed” in the UK. The questions on the appeal were (i) whether (as the Authority and DEFRA claimed) this power extended to imposing a levy in respect of sea fish or parts of sea fish first brought to land outside the UK and only later imported into the UK, and if so (ii) whether such a levy amounted to a customs duty, contrary to Articles 28 and 30 of the Treaty on the Functioning of the European Union (not to be confused with Articles 28 and 30 of the old EC Treaty, which were concerned with free movement of goods).  On both issues, the Supreme Court differed from the Court of Appeal.

The first question involved the interpretation of the word “landed” in the 1981 Act.  Lord Mance (giving the leading judgment) held that it should be construed broadly to include sea fish and sea fish products first brought to land elsewhere and then imported into the UK.  He disagreed with the Court of Appeal’s view that the word “landed” should be given its normal meaning in a fisheries context: the notion of a ‘natural’ meaning was not always very helpful.  Lord Mance stated that “in matters of statutory construction, the statutory purpose and general scheme by which it is to be put into effect are of central importance.  They represent the context in which individual words are to be understood” (para 10).

In Lord Mance’s view, the 1981 Act was designed to extend to importers generally: the Authority was established to promote the efficiency of the sea fish industry, which was defined specifically so as to include importers of sea fish and sea fish products.  The narrow sense of the word “landed” would exclude most importers from the scope of the levy (para 11).  Moreover, levies had been imposed under predecessor legislation, and there was no suggestion of a change of policy under the 1981 Act (para 13).  The Supreme Court’s construction of “landed” was also consistent with section 4(8) of the 1981 Act, which provides that references to the landing of fish or fish products includes references to bringing them through the Channel Tunnel – it would be (as the Court of Appeal conceded) a “striking anomaly” if products brought in through the Channel Tunnel were treated as “landed” in the UK but not products brought in by sea or air.

Turning to the second question, Lord Mance held that the levy did not constitute a customs duty or a charge having equivalent effect and so was not contrary to Articles 28 and 30 TFEU.  He considered that the levy was not imposed on imported products solely or exclusively by reason of their crossing the frontier.  In the Court of Appeal, Richards LJ had considered that the scheme ran into difficulties in relation to sea fish products that were processed on land – he considered that such products that had been imported would generally be subject to the levy, whilst such domestic products would not (because products made from sea fish would not themselves be “landed” in the UK).  Lord Mance, however, considered that the Court of Appeal’s approach was founded on an unwarranted assumption that sea fish products both manufactured and sold in the UK would not be subject to the levy.  In fact, the sea fish content of both imported and domestic sea fish products will be subject to the levy, the latter as a result of its imposition on the sea fish or sea fish products used in their manufacture.  To the extent that the domestic products have been produced from sea fish or sea fish products upon which the levy has not been charged, then the subsequently manufactured sea fish products will bear the levy according to their sea fish content (para 43).

Contrary to the position in Case 132/78 Denkavit [1979] 3 CMLR 605 and Cases C-441/98 etc Kapniki Mikhailidis [2001] 1 CMLR 13, on which the Court of Appeal relied,

“the present scheme identifies, according to objective criteria, the time when sea fish or sea fish products can be said to enter the United Kingdom market on a commercial basis, following upon their production or importation and firsthand sale (in whichever order these events occur). In effect, it is as the judge said (para 125) “imposed when the sea fish is placed on the market and enters the supply chain”.” (para 47).

The scheme was not, therefore, an impermissible “compensatory charge”, as the Court of Appeal had found.  Instead, it was a general system of taxation applied systematically on an objective basis without regard to the origin of the products.

Comment

The Supreme Court’s judgment confirms the approach to statutory construction taken in previous cases, namely that the purpose of the legislation and the general scheme by which it is to be put into effect are very important – even if this leads to a construction which does not accord with the ‘normal’ meaning of a word.  As for the issue of EU law, it appears that an important factor was that the Regulations which imposed the levy provided, at least by implication, that domestic sea fish products whose constituent elements had not already been subject to the levy would themselves bear the levy according to their sea fish content.  To be fair to the Court of Appeal, this was not particularly clear from the wording of those Regulations: Lord Mance (perhaps rather charitably) described their wording as “not perfect” (para 44).

As noted in my case preview, the ability to impose such a levy is very important for the funding of the Authority itself: approximately 80% of its funding comes from the levy, and Lord Phillips pointed out in his concurring judgment that 75% of the levy income was, at the time of commencement of these proceedings, derived from imports.  He noted that:

“If the decision of the Court of Appeal is correct, the activities of the Authority must be drastically curtailed. Indeed, I would expect that the impact of potential claims for reimbursement of monies wrongfully levied would render the Authority insolvent” (para 57).

The Authority is now back on an even financial keel; its continued operation is no longer in doubt.