The applicant states that the consolidated Belgian laws relating to family allowances for employed persons make provision for four types of benefits: family allowances, child-birth allowances, family holiday allowances and the socio-educational allowance (Chapter V, Section I, Section 4 bis, ter and quater). With regard to the family holiday allowance Article 73 quater of the said laws, as modified by Article 5 of the Law of 25 July 1962, provides:

Article 1 of the Royal Decree of 1 February 1968 on family holiday allowances, as amended by Article 6 of the Royal Decree of 5 October 1973, provides that the amount of the family holiday allowance shall be equal to the amount of the family allowance.

Furthermore for a given year the Management Committee of the Office National d'Allocations Familiales pour Travailleurs Salaries (The National Office for Family Allowances for Employed Persons, hereinafter referred to as the ONAFTS) decides to grant special family allowances paid from the reserves of the ONAFTS. In 1975 an allowance of the latter type was granted of an amount roughly equal to the family allowance.

Until 1976 the Commission had never deducted from the dependent child allowance, paid pursuant to Article 67 (1) (b) of the Staff Regulations, the family holiday allowance and the special family allowance paid in Belgium since it rightly considered that the said Belgian allowances and the dependent child allowance were not of like nature.

In fact the dependent child allowance is an ordinary family allowance which is not intended to affect specific expenses incurred in respect of children. The Staff Regulations themselves distinguish in principle between allowances not intended for a special purpose (dependent child allowance) and allowances intended for a special purpose (education allowance). This means that family allowances intended for a special purpose which are paid from other sources and the dependent child allowance under the Staff Regulations cannot be of like nature. This also applies to the family holiday allowance and the special family allowance paid in Belgium.

The special family allowance is not provided for by law (except in the case of civil servants), is not general (it is not paid to self-employed persons) and is paid intermittently: future rights to the special family allowance cannot be established. Furthermore it constitutes to some degree an ex gratia payment. The Management Committee of the ONAFTS decides after consulting the two sides of industry to use its reserves for granting a special family allowance.

Accordingly the Commission, by deducting the two abovementioned Belgian allowances from the allowance under the Staff Regulations, has infringed the Staff Regulations.

The defendant recalls first of all that the heads of administration of the institutions decided on 5 February 1976 that the provisions against overlapping benefits laid down in Article 67 (2) of the Staff Regulations should apply to the two Belgian family allowances in question.

With regard to the various systems of family allowances in the Member States of the Community the defendant considers that under the relevant national legislation and the Staff Regulation of Officials it is intended that the allowances should at present cover the expenses relating not only to the feeding, clothing and accommodation of children but also to their education and leisure as well as their holidays.

Whilst the Staff Regulations of Officials indeed do not make provision for the grant of a family holiday allowance it none the less remains a fact that the objective pursued by the Belgian legislature is also attained through the provisions of the Staff Regulations on the dependent child allowance. In fact the dependent child allowance is more than the ordinary Belgian family allowances and covers all the expenses, including holidays, which form part of the normal upbringing of a child. Furthermore the details of the Belgian family holiday allowance are, except for the frequency of payment, fully identical with the ordinary family allowance.

The special family allowance originated in negotiations in 1970 between the employers' organizations, the trade unions and the government regarding the use of the reserve fund of the ONAFTS. This reserve fund, which was principally intended to meet any lack of income, may nevertheless be applied to other purposes if authority therefor is obtained in advance from the competent minister.

The said allowance has been granted each year since 1970 in respect of all children entitled to ordinary family allowances whether or not they are of school age. The amount of this allowance is equal to the ordinary family allowance for the month of August and is paid at the same time as the latter allowance. Whether the allowance is for a specific purpose, namely to contribute to the expenses of returning to school, or whether it simply constitutes an additional month's family allowance, the special family allowance cannot be considered as differing in its nature from the allowances provided for in the Staff Regulations (education allowances or dependent child allowances).

The applicant replies that the finding that the Staff Regulations do not in fact provide for the grant of a family holiday allowance is sufficient to establish that the relevant Belgian allowance and the allowance under the Staff Regulations are not of like nature.

She concedes that the purpose of the allowance under the Staff Regulations is to provide, without any distinction, for all the expenses of bringing up a child but it may be considered that an ordinary allowance of this kind is concerned particularly with expenses of upbringing which take precedence over holiday expenses. In addition to ordinary family allowances provision is made in both the Staff Regulations and Belgian legislation for allowances with specific objectives in which certain expenses arising from the upkeep of a child are distinguished from general expenses and a special payment is madè in respect of them. If the defendant's argument were well founded there would be no reason for the education allowance provided for in the Staff Regulations since the dependent child allowance would also cover the costs of education. Such reasoning would moreover produce anti-social results.

Social developments led to the granting of family allowances for specific objectives since ordinary allowances were in fact earmarked for priority requirements (food, housing, health care) and many children for example could not have holidays or continue their schooling beyond the minimum requirements laid down by law.

To decide, as the defendant does, that the family holiday allowance and the allowance under the Staff Regulations are of like nature is to deny and oppose these social developments.

The defendant's line of argument, based on detailed points concerning the Belgian allowances, is quite irrelevant. In fact those points do not concern the essence of the allowances. They constitute extrinsic and intermittent characteristics which most often correspond to a desire to facilitate and rationalize administration and are foreign to the objectives of the institution.

As a secondary matter it should be pointed out that on an important point, namely the frequency of the payments, the details of the relevant Belgian allowances differ from the ordinary allowances.

The defendant observes that if it were necessary to adopt the applicant's argument the application of the provisions of the Staff Regulations against overlapping benefits would depend solely oupon the description applied by national law to benefits paid pursuant thereto. Thus any deduction would be ruled out if a State were to grant a specific benefit for each wide category of requirements (education, clothing, food, holidays, leisure and so on) since such particular and specific allowances and the general dependent child allowance cannot be of like nature.

It must further be emphasized that the provision in the Staff Regulations reads allowances of like nature paid from other sources' and not Family allowances of like nature paid from other sources. The phrase of like nature is thus clearly intended to emphasize that such allowances are in the nature of family allowances without requiring that they shall be identical with those in the Staff Regulations.

With regard to the education allowance provided for under the Staff Regulations the defendant recalls that under the Staff Regulations, as under national legislation, the intention is to contribute to the charges involved in the normal upbringing of a child. The Staff Regulations have created a homogeneous system based on the grant for general purposes of a relatively high family allowance and, where appropriate, upon the payment of a specific allowance if it is justified by a precise factual situation (the child's attendance at school).

Far from running contrary to social developments the provisions of the Staff Regulations against overlapping benefits are solely concerned to prevent a couple from receiving family allowances twice in respect of the same children. Articles 60 and 64 of the consolidated laws show clearly that the Belgian legislature shares this concern of the authors of the Staff Regulations.

Finally the defendant observes that it never intended to confuse the essence of the two Belgian allowances with the detailed conditions for their grant. On the other hand, it believes that consideration of the details of the allowances may be helpful in clarifying their nature: in particular the fact that the relevant allowances are frequently described as thirteenth and fourteenth months of family allowances emphasizes that the nature of those various allowances does not differ appreciably.

The applicant considers that even if the Court were to decide that the Belgian family allowance and special family allowance were of like nature to the allowance provided under the Staff Regulations and in principle were to be deducted from the latter, the deduction could no longer and cannot be deducted in the present case, or at least could not be deducted with retroactive effect.

It may be inferred from the judgment of the Court (First Chamber) of 24 June 1976 (Case 56/75, Elz v Commission [1976] ECR 1097) that a benefit which may be contrary to the relevant legislation may not be withdrawn ex nunc, and a fortiori ex tunc, unless such benefit did not result from an express or implied decision of the institution concerned (paragraphs 18 to 20).

If a decision has been adopted which creates a right for the beneficiary, withdrawal of the benefit, even for the future, infringes the principle that vested rights must be respected.

In the present case the relevant Belgian allowances were not deducted pursuant to a decision adopted at the appropriate time by the Commission. In this connexion the applicant refers to a memorandum fom the Legal Department of 8 September 1965 to the Directorate General for Administration establishing general criteria with which allowances paid from other sources must comply if they were to be deducted from the allowances provided for in the Staff Regulations. Since the Legal Department was consulted on the meaning of the words 'of like nature the fact that, over a period of ten years, the Belgian allowances in question were not deducted was not the result of tolerance or a failure to act on the part of the competent departments of the Commission but of a decision creating rights in favour of the persons concerned, which cannot be withdrawn even as regards the future.

The decision to deduct the allowances in question is illegal if only because it violates the principle of vested rights. In addition the decision violates the principle of the equal treatment of officials in that it is not the consequence of a detailed study of the social laws of all the Member States on family allowances and/or dependent child allowances and/or the various benefits granted in respect of expenses in general or certain specific expenses incurred in respect of dependent children.

Although the extreme complexity and diversity of such laws make it impossible to establish general criteria for determining which allowances are of like nature to the dependent child allowance provided for by the Staff Regulations the principles of equality of treatment, of distributive justice and of proper administration required that nothing should be deducted from the said allowance under the Staff Regulations other than the ordinary family allowance which is not intended for any special purpose and which is paid regularly and more frequently than once a year.

As a further alternative point, within the framework of this alternative submission the applicant claims that the defendant's decision could only have taken effect ex nunc and could not have been applied retroactively without infringing Article 85 of the Staff Regulations.

Under that provision any sum overpaid is to be recovered if the recipient was aware that there was no due reason for the payment or if the fact of the overpayment was patently such that he could not have been unaware of it.

Since the conditions laid down by Article 85 were not fulfilled in this case the defendant's decision that the applicant must effect repayment in the form of amounts withheld from her salary for June, July and August 1976 of the sums alleged to have been overpaid in 1975 owing to the failure to effect the deduction in question was contrary to that provision.

The defendant disputes the interpretation which the applicant places upon the judgment in the case of Elz v Commission.

It is clear from that judgment that the principle of vested interests cannot be relied upon to prevent the recovery for the future of a benefit, the grant of which infringed the Staff Regulations. When the Court of Justice considered the case in point it found that because of the factual circumstances (failure to act or toleration by the administration) and the legal position (infringement of the Staff Regulations) the continuation of the benefit in dispute did not imply any decision on the part of the institution which might create rights in favour of the person concerned. Thus, regardless of matters of form — mere failure to act or toleration, an implied or express decision — the official could not claim to have acquired rights the continuation of which he could insist on for the future since the acquisition of those alleged rights was contrary to a provision of the Staff Regulations.

In any event, the failure to effect a deduction from the allowances in dispute cannot be described as a decision creating a right. In particular it was not the consequence of a decision taken at the appropriate time by the departments of the Commission but must be regarded as the application of a provision of the Staff Regulations which remained incomplete because the applicant never declared to the administration the payment of one at least of the allowances in question. Since no such declaration was made the Commission was thus not in a position to take a decision concerning the applicant to the effect that the provisions against overlapping benefits should not apply to one at least of those two Belgian family allowances.

With regard to the memorandum from the Legal Department cited by the applicant the defendant observes that an opinion of the Legal Department, which does not bind the Commission, cannot constitute a decision creating a right, even with regard to one of its officials.

If the Court, however, were to consider that the failure to effect a deduction was based upon a decision, such a decision, based upon an erroneous interpretation of the Staff Regulations, would not create a right in favour of the applicant and accordingly could be withdrawn for the future.

The defendant then disputes that the contested deduction was based upon Article 85 of the Staff Regulations. It was based solely upon the application of Article 67 (2) of the Staff Regulations which makes express provision for the deduction of allowances of like nature paid from other sources. However, even if the argument concerning the application of Article 85 were well founded it must be admitted that that article was observed in the present case. In this connexion the defendant refers to the opinion of the Advocate General in Case 71/72, Kuhl v Council (judgment of 27 June 1973 [1973] ECR 705). It is established either that the applicant caused the error of the administration, by her failure to declare the special family allowance, or that she could not be unaware that the payments of the allowances under the Staff Regulations were improper unless the special family allowance were deducted.

The family holiday allowance, like the ordinary family allowances, was declared by the applicant. Since the deduction of the ordinary family allowances has not been disputed the defendant is astonished that the deduction of the family holiday allowance should be called in question within the framework of this submission.

The applicant replies that an analysis of the judgment in the case of Elz v Commission shows that withdrawal ex nunc of a benefit is possible only if two conditions are fulfilled: on the one hand that the benefit was improper and on the other that it was not based on a decision. In the said judgment the Court was at pains to emphasize that the grant of the benefit originated either in a failure to act or in administrative tolerance (paragraph 19) and it further emphasized the point that no decision, even an implied decision, was entailed which might create rights in favour of the person concerned (paragraph 20).

It is thus necessary to determine in fact whether or not a decision was taken in this case.

The defendant's argument is first of all unfounded in fact since there is a complete absence of any causal connexion between the failure by the applicant to declare one of the allowances and the failure to deduct two allowances. Since the family holiday allowance was not deducted, although it had been declared, it necessarily follows that the failure to effect the deduction until 1976 did not originate in the failure to make the declaration.

Finally, with regard to the opinion of the Legal Department which undoubtedly did not, by itself, constitute a decision creating rights, the applicant sets out her argument as follows: since the defendant for ten years refrained from deducting the relevant Belgian allowances from the allowance provided for under the Staff Regulations on the basis of an opinion given by the Legal Department it may be properly inferred from this that the failure to effect a deduction was based upon a decision, albeit implied, creating a right in favour of the persons concerned and that accordingly it may not be withdrawn even for the future. A well-defined policy, which has been followed over a very long period after mature consideration from the legal point of view cannot be regarded as an instance of tolerance or failure to act on the part of the administration.

As a further subsidiary point, the applicant states that if the Court were to hold that no decision was taken it would further be necessary to inquire into the nature of the alleged irregularity. In this connexion the applicant observes that the application of Article 67 (2) of the Staff Regulations presupposes an interpretation of the words of like nature and thus it cannot be claimed that the failure to effect the deduction would be directly at variance with the wording of the said provision. When an interpretation by the administration of a legal provision does not disregard the wording and is reasonable it binds the administration, being incorporated to some extent in the legal provision on the lines of the measures adopted for its implementation.

Finally with regard to the application of Article 85 of the Staff Regulations it must be remarked that the administration itself considered that the recovery of the amounts overpaid though failure to deduct the Belgian allowances in dispute was based on the said article as is clear from the note of 14 May 1976 addressed to the applicant (Annex 1 to the reply);

The applicant disputes that the defendant has complied with that provision: there is no causal connexion between the failure to make the declaration and the failure to effect the deduction for the reasons indicated above. In those circumstances it is clear that the applicant cannot have caused the alleged error on the part of the administration. Likewise there can be no patent irregularity since the defendant was in possession of the facts and refrained for ten years from deducting the said Belgian allowances.

The defendant recalls that it disputes the interpretation placed by the applicant upon the judgment in the case of Elz v Commission. It examines the case-law of the Court in this field, in particular the judgment of 12 July 1957 in Joined Cases 7/56 and 7/57, Algera (Rec. 1957, p. 81) and the judgment of 1 June 1961 in Case 15/60, Simon (Rec. 1961, p. 223). That case-law clearly established the principle that unlawful individual measures may be revoked in very general terms and that the exercise of such a power need not be made subject to any condition or, in particular, to any time-limit. That principle was confirmed by the judgment in the Elz case which shows clearly that the principle that vested rights must be respected cannot be relied upon against the withdrawal of a benefit the granting of which infringes the Staff Regulations.

It is clear from the relevant case-law as a whole that no vested right in the sense of a definitively vested right or intangible right can arise from an unlawful act; accordingly the need to re-establish legality is restricted only by the requirements of legal certainity which apply only in regard to withdrawal with retroactive effect; this is authorized only within a reasonable period. On the other hand the need for legal certainty in no way prevents the revocation for the future of unlawful decisions without any condition with regard to time-limits.

It must further be emphasized that the applicant's argument would in practice render Article 85 of the Staff Regulations a cipher: how would it be possible to apply that provision if withdrawal ex nunc of an unlawful decision were prohibited? The applicant's argument would thus not only lead to disregard of the principles underlying proper administration and the perpetuation of unlawful situations but would further bring about a tacit revision of the Staff Regulations by rendering inapplicable one of their provisions.

In any case the failure to deduct the allowances in question was not based upon a decision. Whilst it is true that the applicant declared the payment of the holiday allowance at the appropriate time, failure to effect the deduction on the basis of that single declaration cannot be classified as a decision of the institution. In any event it must be emphasized that that declaration relates only to the family holiday allowance.

The applicant is wrong in maintaining that the interpretation of a legal provision by the administration binds the administration and becomes incorporated in the provision. It is impossible to concede that an official may claim that the interpretation of a provision should be maintained in perpetuity. Such a view would rule out not only a dynamic conception of the law, by crystallizing it in supposedly definitive interpretations, but also by the very existence of case-law.

Finally the defendant persists in its argument concerning the alleged infringement of Article 5 of the Staff Regulations. Although the administration in certain cases for administrative reasons considered that it must have recourse to the procedures of Article 85 it none the less remains the fact that the deductions in dispute originate in Article 67 (2) of the Staff Regulations the general plan of which necessarily implies that the deductions must be effected a little later than the payment of the national family allowances and this situation cannot be confused with that of retroactive effect.