My Lords,

This case comes before the Court by way of a reference for a preliminary ruling by the High Court of Ireland.

The appellant in that Court is Mr Kevin Lee, who is an office clerk employed by Ag-Tech Refinery at Ballisodare, County Sligo. He is also a part-time farmer. In 1972 he acquired a small farm, consisting of two holdings, one of eleven acres and one of four acres at Cooney, Ballisodare.

The respondent is the Minister for Agriculture of Ireland.

The dispute between Mr Lee and the Minister relates to a claim by Mr Lee for a grant under the Irish Farm Modernization Scheme. That is an administrative scheme, introduced by the Minister on 1 February 1974, to implement two Council directives on the modernization of farms, namely Directive No 72/159/EEC (OJ L 96 of 23. 4. 1972, p. 1) and Directive No 73/131/EEC (OJ L 153 of 9. 6. 1973, p. 24). The questions referred to this Court by the High Court are questions of interpretation of the first of those directives.

The preamble to Directive No 72/159 envinces that its purpose was to achieve the objectives of the common agricultural policy set out in Article 39 (1) (a) and (b) of the Treaty through a reform of agricultural structures. It recites among other things that:

“the best results can be achieved if, acting on the basis of Community concepts and criteria, Member States implement the common measures individually through their own legislation and administrative procedures, and if, in addition, they themselves determine, on the basis of conditions laid down by the Community, the extent to which such measures should be intensified in or concentrated on certain regions.” The general scheme of the directive is this.

Article 1 requires each Member State to introduce a system of selective incentives for farms “suitable for development”. It authorizes Member States, within certain limits, to vary according to region the amounts of the financial incentives to be provided, and to refrain from applying in certain regions all or some of the measures envisaged.

Articles 2 to 10 set out the basic structure of the system. In so doing they leave a number of discretions to the Member States. It is in particular for them to define what is meant by “a farmer practising farming as his main occupation” (a farm being considered “suitable for development” only where the farmer answers that description); to lay down “the criteria for assessing the occupational skill and competence of the farmer” (adequate occupational skill and competence on his part being also a requisite qualification); to specify in various respects the method of computing what Article 2 (2) calls the “modernization objective” (i. e. a level of income which, it must be shown, the farm, if developed, is capable of yielding); to appoint the authorities responsible for examining applications and approving development plans submitted by farmers; and, within limits, to determine the form and the amount of the incentives to be granted to farmers whose applications have been accepted. The incentives may take differing forms, including interest rate subsidies and the provision of guarantees for loans.

Articles 11 to 13 require Member States to introduce systems of incentives for various specific purposes, viz., to encourage the keeping of accounts on farms (Article 11); to help in the launching of farming groups having as their objects mutual aid between farms, and the like (Article 12); and to promote the modernization of farms through schemes for irrigation, land reparcelling and related works (Article 13).

In what is plainly an exercise by the Council of its powers under Article 42 of the Treaty, Article 14 of the directive prohibits other State aids for investments on farms subject to certain fairly elaborately defined exceptions.

Articles 15 et seq. of the directive contain financial and general provisions. They lay down in particular machinery under which Member States are to forward to the Commission drafts of “all laws, regulations or administrative provisions” that they propose to adopt in pursuance of the directive, and under which, subject to the Commission being satisfied that such proposed measures comply with the directive, they are to be approved by a procedure resembling the Management Committee procedure. Those Articles also provide for expenditure incurred by Member States pursuant to the directive (other than under Article 14) to be eligible for assistance from the Guidance Section of the EAGGF.

By Commission Decision No 75/100/EEC of 20 January 1975 (OJ L 40 of 14. 2. 1975, p. 61), it was recorded that the Farm Modernization Scheme of 1 February 1974, which had been notified by the Government of Ireland, satisfied the conditions for financial contribution from the Community pursuant to the directive.

I need not, I think, trouble Your Lordships with the details of that Scheme except to say that the final provision of it, Section 12 of Part VII, was in these terms:

“The decision of the Minister on any matter relating to this Scheme or to any works thereunder shall be final”.

By ordinary civil bill dated 26 January 1978 Mr Lee brought an action against the Minister in the Circuit Court at Sligo for £420, which he said was due to him as a grant under the Scheme “for the installation of water” at his land at Cooney. He relied expressly on Directives Nos 72/159 and 73/131.

We were told on behalf of Mr Lee that the facts on which that claim was based were these.

Whilst his eleven-acre holding had a natural water supply, his four-acre holding did not. Accordingly, he bored for water on that holding, found it at 280 ft., and installed a pump and an underground pipe to a drinking trough for cattle. The total cost was £1,400. At the same time, because he had obtained outline planning permission for two sites for private dwellings on the land, and wanted to sell the sites serviced with a water supply, he inserted a T-junction in the pipe, leading to a tank which was to act as a reservoir for the dwellings when built. After he had sold the two sites he obtained planning permission for a third. The three sites are located together and add up to about 11/2 acres. The remainder of the holding, about 2 1/2 acres, is used to graze cattle and the cattle have access to water at the trough. The cost of the T-junction and of the tank for the dwellings was in addition to the £1,400. The £420 that he claimed represented 30% of the £1,400; and that, he said, was due to him under the Scheme by way of grant.

The Minister, in his defence in the Circuit Court, denied that £420 or any other sum was due to Mr Lee by way of grant or otherwise. He pleaded, among other things, that Mr Lee had not received written approval for the works; that if and insofar as Mr Lee had carried out certain works on the land and had applied for a grant in relation thereto, he was entitled to a grant of £15, which had been tendered to him but which he had refused; that the Circuit Court did not have jurisdiction to entertain Mr Lee's claim because of Section 12 of Part VII of the Scheme; and that such works as were carried out by Mr Lee did not relate exclusively to farm development or modernization, so as to come within the Scheme, but related substantially to the provision of a water supply to dwellinghouses. It transpired that the £15 tendered on behalf of the Minister represented 30% of the cost to Mr Lee of the cattle trough and of the pipe to that trough.

On 28 April 1978 the Judge of the Circuit Court dismissed Mr Lee's claim. There is nothing in the papers before us to indicate on what grounds he did so.

Mr Lee appealed to the High Court. The appeal came before Mr Justice Doyle sitting on circuit in Sligo on 4 April 1979. He decided to order the reference to this Court before he had finished hearing the evidence, with the result that we do not have the benefit of his findings of fact. The questions referred by him to this Court are these:

“1. Does Council Directive No 72/159/EEC, and in particular Articles 13 and 14 thereof, relate exclusively to farm development for agricultural purposes or does it provide also for development of land for the erection of dwellinghouses for occupation by persons other than those actively engaged in farming the land?

As to question 1, it was common ground between those on whose behalf observations were submitted to this Court, namely Mr Lee, the Minister and the Commission, that Directive No 72/159 was concerned only with development for agricultural purposes and did not provide also for incentives for the development of land for the erection of dwelling houses. That that is right is manifest from a perusal of the Directive.

On behalf of Mr Lee, however, the Court was asked not to answer the question in those stark terms. Nor do I think it should. The High Court of Ireland may find, when it has heard all the evidence, that, in boring for water on his four-acre holding and in installing the pump, Mr Lee had two purposes, one being to provide water for the cattle that were to be grazed on the land and the other to provide water for the houses that were to be built on it. If so, it may be that the cost of the well and of the pump, which appears to constitute the greater part of the £1,400, ought to be apportioned.

I am therefore of the opinion that Your Lordships should, in answer to question 1, rule that, whilst Council Directive No 72/159 relates only to farm development for agricultural purposes, it does not preclude the apportionment of expenditure incurred partly for those purposes and partly for others, such as the supply of dwellinghouses with water.

I turn to question 2.

On behalf of the Minister it was submitted that the Court should answer that question simply in the negative, i. e. by saying that a provision such as Section 12 of Part VII of the Scheme is not contrary to the directive. In my opinion, however, the Court could not do that without implicitly taking a view as to the effect of that provision as a matter of Irish law. There were cited to us on behalf of the Commission a number of decisions of the Irish Courts from which the Commission invited us to infer that those Courts would interpret the provision in a manner compatible with what the Commission said was the effect of the directive. I have looked at those decisions and it seems to me that, whilst they evince a trend in favour of the view that an administrative scheme containing a provision of the kind in question does not leave an applicant devoid of legal rights, the result of them is not clear enough for this Court to proceed upon. I therefore think that the Court must distil from the learned Judge's question the pure point of Community law to which it gives rise, which is: what did the directive require Member States to do?

On behalf of Mr Lee and of the Commission it was contended that the directive required Member States to implement it by measures creating in favour of individuals legal rights enforceable by the normal judicial processes available under national law. In the Commission's Written Observations, as in Mr Lee's, that proposition was put forward without qualification. At the hearing, however, it was said on behalf of the Commission that the proposition did not apply to the provisions of the directive that were not mandatory, in particular Article 14. This was an important qualification because, according to the Minister, Article 14 was the only provision of the directive that could be relevant to Mr Lee's case, since farming is not his main occupation. That did not seem to be disputed on behalf of Mr Lee.

In my opinion the Commission was manifestly right to say that Article 14 of the directive did not require Member States to confer legal rights on individuals. Article 14 left Member States free to do so or not to do so.

As regards the earlier articles of the directive the point is not quite so clear. I have however come to the conclusion that the answer is the same in their case.

It was submitted on behalf of Mr Lee that the present question was different from the question whether the directive could have direct effect. In my opinion, however, those two questions are at least closely akin because, as I ventured to point out recently in my opinion in Case 131/79 the Santillo case, a provision in a directive cannot have direct effect unless it is to be inferred from “the nature, general scheme and wording of the provision” that it required Member States to confer, by their own law, rights on private persons.

As I also mentioned in that opinion, one of the matters to be considered is whether the provision in question is precise enough to give rise to legal rights (see in this connexion Case 51/76 Nederlandse Ondernemingen ν Inspecteur der Invoerrechten en Accijnzen [1977] 1 ECR 113, paragraphs 23 to 29 of the judgment, and Case 143/78 the Ratti case [1979] ECR 1629, paragraph 25 of the judgment). In my opinion the provisions of Articles 1 to 13 of Directive 72/159 are not precise enough for that purpose. They leave too much to the discretion of Member States. Test it in this way. Suppose that a Member State (in flagrant breach of its obligations under the Treaty) had taken no step to implement the directive. What right could a farmer in that State assert in the courts of that State? He might not even be able to show that the region in which he farmed was not one in which the Member State could have refrained from applying all or some of the measures envisaged in the directive. If he overcame that hurdle, he might have difficulty in showing that he was covered by any reasonable definition that the Member State could have adopted of “a farmer practising farming as his main occupation”, that he satisfied any reasonable criteria that the Member State could have laid down for assessing “occupational skill and competence”, and that his farm could meet any reasonable “modernization objective” that the Member State could have specified. If he overcame those hurdles too, he would have to show that his development plan would have been approved by any reasonable authority appointed by the Member State to examine farmers' applications. Even, however, if he overcame all those hurdles, he would be unable to say what type or amount of incentive the Member State would have prescribed for his case.

In the result I am of the opinion that, in answer to question 2, Your Lordships should rule that Council Directive No 72/159/EEC did not require Member States to confer legally enforceable rights on applicants for incentives.