Island Ferries Teoranta v Min for Communications and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Cooke
• Judgment Date: 18 October 2011
• Neutral Citation: [2011] IEHC 388
• Docket Number: [No. 3195 P/2005]
• Court: High Court
• Date: 18 October 2011

Island Ferries Teoranta v Min for Communications & Ors

MR JUSTICE COOKE

APPROVED TEXT

COMPETITION

BETWEEN

ISLAND FERRIES TEORANTA

PLAINTIFF

AND

THE MINISTER FOR COMMUNICATIONS, MARINE AND NATURAL RESOURCES, IRELAND AND THE ATTORNEY GENERAL AND THE MINISTER FOR AGRICULTURE, FISHERIES AND FOOD

DEFENDANTS

[2011] IEHC 388

[No. 3195 P/2005]

THE HIGH COURT

COMPETITION LAW

Undertaking

Dominant position - Essential facility - Abuse of dominant position - Excessive pricing - Cross-subsidisation - Inter-state trade - Competition Act 2002 (No14), ss 3(1) and 5 - Treaty on the Functioning of the European Union, Articles 102 and 106 - Statute - Power - Exercise of statutory power - Ultra vires - Reasonableness - Proportionality - Purpose - Charges - Passenger ferry services - Change to per capita passenger charges - Actual cost of providing facilities - Use actually made of harbour - Charges intended to generate funds - Deficits in overall management and operation of all fishery harbour centres - Whether Order ultra vires - Whether Minister acted in excess of statutory power - Fishery Harbour Centres (Rates and Charges) Order 2003 (SI 493/2003) - Fishery Harbour Centres Act 1968 (No18), s 4 - Fishery Harbour Centres Act 1980 (No 22) - Declaration that charges were invalid granted (2005/3195P - Cooke J - 18/10/2011) [2011] IEHC 388

Island Ferries Teo v Minister for Communications, Marine and Natural Resources

Facts: The plaintiff company was the owner and operator of vessels engaged in passenger services and sought to challenge charges made by the defendant under the provisions of the Fishery Harbour Centres Acts 1968-1980 and the Fishery Harbour Centres (Rates and Charges) Order 2003 (SI No. 493 of 2003). The plaintiff challenged the legality of the 2003 Order and had refused to pay the charges imposed thereunder on the basis that it was ultra vires the powers of the Minister, that the Minister acted unlawfully in imposing charges in breach of the Competition Act 2002 and alternatively that the order and provisions of the Act of 1968 were unconstitutional.

Held by Cooke J. that the Order was ultra vires and could not have been contemplated in the conferred charging power pursuant to s.4(2)(b) of the Act as it had a manifestly severe and unreasonably oppressive impact on the plaintiff company in particular. It imposed an immediate and dramatic increase in operating costs. The Minister had imposed the charges to generate revenue cumulatively from all harbour centres and not just on the basis of distinct facilities and uses of the harbour in question, pursuant to s.4(2). The purpose of the Minister was not to fix a fair and reasonable price but to generate funds. As regards the claim pursuant to the Competition Act 2002, the Minister was clearly an undertaking and the imposition of the charge on one class of harbour user would have infringed the provisions of s. 5 thereof.

Reporter: E.F.

COMPETITION ACT 2002 S3(1)

COMPETITION ACT 2002 S5

FISHERY HARBOUR CENTRES ACT 1980

FISHERY HARBOUR CENTRES ACT 1968 S2

FISHERY HARBOUR CENTRES ACT 1968 S4

FISHERY HARBOUR CENTRES ACT 1968 S4(5)

FISHERY HARBOUR CENTRES ACT 1968 S9

FISHERY HARBOUR CENTRES (RATES & CHARGES) ORDER SI 239/1990

FISHERY HARBOUR CENTRES ACT 1968 S4(2)(A)

FISHERY HARBOUR CENTRE (ROSSAVEEL) BYE LAWS SI 250/1999

FISHERY HARBOUR CENTRES ACT 1968 S4(2)(B)

FISHERY HARBOUR CENTRES (MANAGEMENT, CONTROL, OPERATION & DEVELOPMENT) BYE-LAWS 1979 BYE-LAW 85

FISHERY HARBOUR CENTRES (RATES & CHARGES) ORDER SI 439/2003 S10(A)

CASSIDY v MIN FOR INDUSTRY 1978 IR 297

FISHERY HARBOUR CENTRES (RATES & CHARGES) ORDER SI 439/2003 S10

MEADOWS v MIN FOR JUSTICE 2011 2 ILRM 157

RADIO LIMERICK ONE v INDEPENDENT RADIO & TELEVISION COMMISSION 1997 2 ILRM 1

FISHERY HARBOUR CENTRE (ROSSAVEEL) BYE LAWS SI 250/1999 BYE LAW 4

MICHELIN v COMMISSION 1983 ECR 3461

RTE v COMMISSION 1991 2 ECR 485

DEANE v VHI 1992 IR 319

MERCI CONVENZIONALI PORTO DI GENOVA v GABRIELLI 1991 ECR 5889 1994 4 CMLR 422

BODSON v POMPES FUNEBRES DES REGIONS LIBEREES SA 1988 ECR 2479

TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION ART 102

Mr. Justice Cooke

1 The plaintiff company is the owner and operator of a number of vessels engaged in the provision of passenger services between Rossaveel harbour in Co. Galway and the Aran Islands. It is the family owned company of the O'Brien family whose members have been engaged in providing services between the mainland and the Aran Islands for several generations. Having in times gone by ferried not only passengers but cargos of livestock, turf and other supplies to the islands by Galway hooker, they now operate a number of modern passenger ferries catering principally for islanders going to and from Galway and, in the summer season, for visiting tourists making short-stay or day trips to the islands. As explained in greater detail below, at the time to which the issues in this action relate, the company had six such ferries. The motor vessels Ceol na Farraige and Draoicht na Farraige are the main operating vessels with MV Aran Flyer (renamed Glor na Farraige) and MV Aran Express (renamed Banrion na Farraige) providing standby cover. The two remaining vessels are currently up for sale.

2 These vessels are based at Rossaveel harbour and as such are required to pay various harbour dues, fees and other charges for use of that harbour and for services, fuel supplies and other facilities made available there. These charges are defined, imposed and payable under orders made by the first named defendant under the provisions of the Fishery Harbour Centres Acts1968-1980 (the "Act of 1968") and the dispute in this action arises out of increased charges and a new basis for the principal charge introduced at Rossaveel with effect from the 1^st May, 2004 by the adoption of the Fishery Harbour Centres (Rates and Charges) Order 2003 ( S.I. 493/2003, the "2003 Order"). The plaintiff has contested the legality of these new charges and of that new regime; has refused to pay the increased amounts for that reason and, as a result, had one of its vessels detained for a period until it was released under bond.

3 In this action the plaintiff seeks to make good that challenge to the legality of the charges and to recover damages for the losses it claims to have sustained as a result of the detention of its vessel. The defendants dispute these claims and counterclaim for the amounts said to be owing, together with interest on the amount of the outstanding charges. At the date of delivery of an amended defence and counterclaim in 2006, the aggregate amount of the various heads of charge in the counterclaim was €987,657.69.

4 The plaintiff's challenge to the legality of the 2003 Order is threefold. It is submitted that:

5 (1) The relevant order isultra vires the powers of the Minister under the Act of 1968 (as amended);

6 (2) The Minister acted unlawfully in imposing the charges in that he is an "undertaking" in the sense of s.3 (1) of the Competition Act2002 which occupies a dominant position as the sole provider of harbour facilities and services at Rossaveel and has thereby abused that dominant position in violation of s. 5 of that Act;

7 (3) In the alternative, the order and the provisions of the Act of 1968 are unconstitutional.

8 5. The plaintiff also challenges as similarly ultra vires or unconstitutional the provisions of certain bye-laws made under the Act of 1968 which were relied upon to withdraw the operating permits from its vessels. (See paragraph 21 below).

9 6. Subsequent to the commencement of this action against the first named defendant, the powers and functions of that Minister under the Act of 1968 were transferred to the Minister for Agriculture, Fisheries and Food and by order of the 27^th April, 2010 (McKechnie J.) the latter Minister together with Ireland and the Attorney General were directed to be joined as co-defendants in the proceedings. (The references in this judgment to "the Minister" are to be taken as referring to the Minister for the time being vested with the powers and functions of the Act of 1968.)

10 7. On the 2^nd November, 2010, an order by way of case management was made by the Court (Cooke J.) in which the issues apparently raised by the claims and counterclaims in the proceedings were divided into three groups or modules as follows:

a A. Basic competition issues;

b B. Issues relating to the harbour charges; and

11 c C. Issues relating to the claims to and quantification of damages together with the issues arising out of the counterclaim.

12 8. As required by that order of the Court, lists of witnesses and legal submissions were exchanged by the parties and filed with the Court and common books of pleadings, documents, statements and correspondence were agreed between the parties and lodged. On the 18^th January, 2011 and the following days, the Court heard the evidence and argument relating to the issues within the first two modules above. This is the judgment of the Court upon those issues.

13 9. Although both in the pleadings and in the expert evidence and argument at the trial, primary emphasis has been laid upon the issues arising out of the allegations of abuse of dominance on the part of the Minister in the unilateral imposition of the increased charges, the Court considers it appropriate and necessary to deal first with the claims made to the effect that the 2003 order imposing the new charges with effect from the 1^st May, 2004, is ultra vires. If it is established that the Minister acted in excess of the power delegated to him under the Act of 1968, in imposing the charges, the amounts in question cannot be recovered and it may be unnecessary for the Court to consider the complex issues raised by the allegations of anti competitive conduct. It is appropriate therefore first to...