Contains public sector information licensed under the Open Justice Licence v1.0.
Brooke Energy Ltd, R (On the Application Of) v. Secretary of State for Business Energy and Industrial Strategy
Factual and Procedural Background
The claimant, a company engaged in energy generation projects using Biomass Combined Heat and Power ("CHP") systems, sought judicial review of the Renewable Heat Incentive Scheme (Amendment) (No. 2) Regulations 2016 ("the 2017 Regulations"). These amended the Renewable Heat Incentive Scheme Regulations 2011 ("the 2011 Regulations"), which established the non-domestic Renewable Heat Incentive scheme ("the RHI scheme"). The scheme provides tariffs for renewable heat generation, with eligibility determined by accreditation from the Office of Gas and Electricity Markets ("Ofgem").
The 2016 Regulations introduced a 20% minimum power efficiency threshold for biomass CHP installations to qualify for a higher tariff, responding to concerns that some plants were "gaming" the system by converting heat-only plants to CHP with low power output. The 2017 Regulations reduced this threshold to 10% on an interim basis without public consultation, a decision challenged by the claimant on grounds of procedural unfairness.
The claimant's three biomass CHP plants, located in The City, had applied for accreditation after the 2016 and 2017 Regulations came into force but had not yet been accredited. The claimant argued that the failure to consult before implementing the 2017 Regulations was unlawful. The Secretary of State contended that the claim was academic due to subsequent full consultation and repeal of the challenged regulations by the 2018 Regulations, which re-established the 20% threshold following consultation.
The court was tasked with determining whether there was a duty to consult before the 2017 Regulations and if the claim remained live or was academic given the legislative developments.
Legal Issues Presented
- Whether the Secretary of State owed a duty to consult before implementing the 2017 Regulations reducing the power efficiency threshold from 20% to 10% without public consultation.
- Whether the claimant had an accrued or vested right to periodic support payments under the RHI scheme prior to accreditation that was affected by the 2017 Regulations.
- Whether the challenge to the 2016 and 2017 Regulations was academic following their repeal by the 2018 Regulations and subsequent consultation.
- Whether relief should be refused under section 31(2A) of the Senior Courts Act 1981 on the basis that the outcome would not have been substantially different if consultation had occurred.
Arguments of the Parties
Appellant's Arguments
- The claimant asserted that there was an established practice of consultation on similar regulatory changes within the RHI scheme, giving rise to a procedural legitimate expectation to be consulted before the 2017 Regulations were made.
- Alternatively, the claimant argued this was a "secondary case" of procedural legitimate expectation where failure to consult would cause conspicuous unfairness due to the financial commitments and investments made by SMEs like the claimant.
- The claimant contended that the 2017 Regulations unlawfully altered the scheme without consultation, adversely affecting the financial viability of the claimant's projects.
- Reliance was placed on the Court of Appeal decision in Chief Adjudication Officer v Maguire to argue that the claimant had an accrued right to the tariff fixed at the date of application for accreditation, which could not be retrospectively altered without consultation.
- The claimant disputed the Secretary of State's assertion that the challenge was academic, arguing that no consultation had occurred on the 10% interim threshold applied post-2017 Regulations.
Respondent's Arguments
- The Secretary of State denied that there was an established practice of consultation, noting that consultation had occurred inconsistently in relation to the RHI scheme.
- It was submitted that the present case did not meet the threshold for the secondary case of procedural legitimate expectation as described in Bhatt Murphy, since no conspicuous unfairness or abuse of power arose.
- The Secretary of State argued there was no accrued or vested right to tariff payments prior to accreditation, distinguishing the present case from Maguire and Friends of the Earth.
- The 2018 Regulations repealed the challenged regulations after a full consultation, including on the power efficiency thresholds, rendering the claim academic.
- Under section 31(2A) of the Senior Courts Act 1981, relief should be refused as it was highly likely the outcome would have been the same even if consultation had occurred earlier.
Table of Precedents Cited
Precedent | Rule or Principle Cited For | Application by the Court |
---|---|---|
Chief Adjudication Officer v Maguire [1999] 1 WLR 1778 | Definition of accrued or vested rights and presumption against retrospectivity in benefit entitlements. | The court distinguished this case, holding that the claimant had no accrued right prior to accreditation, unlike in Maguire where the claimant had a vested benefit entitlement. |
Secretary of State for Energy and Climate Change v Friends of the Earth [2012] EWCA Civ 28 | Protection of eligibility for tariff rates once entitlement has been fixed. | The court found the challenge inapplicable here as the claimant's entitlement was contingent on accreditation, which had not occurred. |
R on the application of Bhatt Murphy v Independent Assessor [2008] EWCA Civ 755 | Doctrine of procedural legitimate expectation, including secondary case where failure to consult causes conspicuous unfairness. | The court applied the principles to reject the claimant's claim of a duty to consult, finding no established practice or exceptional unfairness. |
Wilson v First County Trust (No. 2) [2003] UKHL 40 | Presumption against retrospective alteration of law affecting vested rights and fairness in legislative changes. | The court acknowledged the principle but found it did not assist the claimant given the contingent nature of entitlement. |
R v Inland Revenue Commissioners ex parte Unilever [1996] STC 681 | Unfairness and abuse of power in refusing claims without prior notice or consultation. | Referenced in the context of the secondary case of procedural legitimate expectation; the court found no comparable abuse here. |
Secretary of State for Social Security v Tunnicliffe [1991] 2 All ER 712 | Parliamentary intention presumed not to alter law affecting past events unfairly unless clearly stated. | Used to support the presumption against retrospectivity and fairness considerations. |
Odelola v Secretary of State for the Home Department [2009] UKHL 25 | Distinction between vested rights and administrative policy changes. | The court relied on this case to reject the claimant's analogy, emphasizing no vested right prior to accreditation. |
Luton Borough Council and others v Secretary of State for Education [2011] EWHC 217 (Admin) | Example of successful claim of procedural legitimate expectation based on partnership-like relationship and consultation practice. | The court distinguished this case due to lack of similar relationship or practice between the Department and the claimant. |
Court's Reasoning and Analysis
The court first addressed whether the judicial review challenge was academic. It found that since none of the claimant's plants had been accredited, no accrued or vested right to tariff payments existed. The 2018 Regulations, enacted after full consultation, repealed the 2016 and 2017 Regulations and re-established the power efficiency threshold regime, including a 10% interim threshold applicable to the claimant’s plants. Thus, the claimant's entitlement, if any, would be governed by the 2018 Regulations, rendering the challenge academic.
On the duty to consult, the court examined the doctrine of legitimate expectation, focusing on three bases: a promise to consult, established practice of consultation, and exceptional cases where failure to consult causes conspicuous unfairness. The claimant did not pursue the established practice argument due to insufficient evidence of a clear, unequivocal, and uniform practice.
The court analysed the "secondary case" of procedural legitimate expectation, which requires exceptional circumstances and a pressing and focused impact of past conduct on the claimant. It found that the setting up of the RHI scheme did not constitute such past conduct giving rise to a legitimate expectation of consultation, particularly as the scheme was voluntary, subject to change, and no relationship existed with the claimant before accreditation applications were made.
The court rejected the claimant’s submission that the Department’s engagement with one of its officials created a legitimate expectation of consultation. It held that the Department’s discretion to formulate and reformulate policy, balancing competing interests, militated against imposing a duty to consult in these circumstances.
The court further concluded that even if a duty to consult had existed, relief should be refused under section 31(2A) of the Senior Courts Act 1981 because the outcome would likely have been the same. The subsequent consultation and enactment of the 2018 Regulations, including the 10% interim threshold, demonstrated that the claimant’s projects would still have been subject to similar requirements.
Holding and Implications
The claim for judicial review is dismissed.
The court held that the challenge to the 2016 and 2017 Regulations was academic due to their repeal and replacement by the 2018 Regulations following full consultation. There was no duty to consult prior to the implementation of the 2017 Regulations as no established practice or exceptional unfairness arose. The claimant had no accrued or vested right to tariff payments before accreditation. Relief was refused also on the basis that the outcome would not have differed if consultation had occurred.
The decision directly affects the claimant by confirming that their entitlement to periodic support payments will be governed by the 2018 Regulations and the 10% power efficiency threshold. No new precedent altering the law of legitimate expectation or accrued rights was established.
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