The High Court has quashed both parts of the Government’s 12 July 2006 decision on how to allocate EU restructuring aid following the closure of Ireland’s sugar beet industry. The court said it would hear counsel further on the precise form of the order.
Greencore Group plc and Irish Sugar Limited, trading as Greencore Sugar, had challenged the decision under the EU sugar industry restructuring scheme. The Government had reserved 32.38% of the aid for growers and machinery contractors, and set out how the remaining funds would meet costs connected with the processor’s closure and workforce.
Mr Justice Clarke found that the Government used an incorrect basis to calculate growers’ losses. Under the regulation, the relevant losses were those resulting from closure of the Mallow plant, rather than losses from the wider reform of the EU sugar regime, including its price reductions. The court concluded that the Government had adopted an expert report’s calculation, which assessed losses from the broader reform. It therefore quashed the part of the decision setting the percentages for growers and contractors so the Government could make a new decision using the proper basis.
The judge also identified flaws in an alternative calculation prepared during the proceedings, including an assumption that Greencore would have paid growers enough to maintain supply despite the effect that this could have had on the viability of its business. He said the Government’s reassessment should give proper regard to Greencore’s losses from the accelerated write-down of plant and machinery. The court did not determine the correct amounts, and said it remained unclear whether a proper assessment would affect the contractors’ share.
A separate part of the decision specified amounts to be directed towards costs including redundancy, pensions, training, environmental work and demolition. The court found that directing specific sums for some pension and environmental measures amounted to prejudgment before Greencore’s restructuring plan had been submitted and assessed. It quashed that part of the decision as well. The Government could assess the likely costs when considering the plan, but the plan’s obligations were to achieve specified objectives rather than necessarily spend fixed sums.
The judge rejected Greencore’s claim of objective bias, finding that the Minister’s media comments did not provide a sufficient basis for it and that the key decisions were taken on the basis of independent advice. The judgment did not set new aid percentages or award compensation.