Breyer Group Plc v Department of Energy and Climate Change
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr. Justice Coulson,The Hon. Mr Justice Coulson |
| Judgment Date | 09 July 2014 |
| Neutral Citation | [2014] EWHC 2257 (QB) |
| Docket Number | Case Nos: HQ12X03560 HQ12X04457 HQ13X03998 |
| Court | Queen's Bench Division |
| Date | 09 July 2014 |
[2014] EWHC 2257 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Rolls Building
Fetter Lane, London, EC4A 1NL
The Honourable Mr. Justice Coulson
Case Nos: HQ12X03560
HQ12X04456
HQ12X04457
HQ13X03998
Mr Michael Fordham QC and Mr Simon Murray (instructed by Prospect Law) for Breyer & Others
Mr Sam Grodzinski QC (instructed by Asserson Law Offices) for HomeSun Holdings
Mr Patrick Lawrence QC and Can Yeginsu (instructed by Bhailok Fielding Solicitors) for Free Power for Schools and Touch Solar
Mr Michael Beloff QC and Mr James Cornwell (instructed by The Treasury Solicitor) for the Defendant
Hearing dates: 19, 20 and 21 May 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
This large and (in some respects) novel claim arises out of the defendant's proposal, announced in a Written Ministerial Statement on Monday 31 October 2011 and a consultation document published on the same day, to bring forward the cut-off date by which certain Feed-in-Tariffs ("FIT") at a particular rate would be paid to generators (or their nominated recipients) involved in small-scale solar panel installations. The FIT scheme was designed to encourage small-scale low carbon generation installations. However, by October 2011, the defendant thought that the initial rates for solar photovoltaic installations were too generous to generators. So the defendant proposed to bring forward, from 1 April 2012 to 12 December 2011, the date by which the installations had to be commissioned/registered in order to qualify for the highest FIT rate.
On the Assumed Facts the making of this proposal had a significant effect on the solar photovoltaic ("solar PV") industry. Hundreds, if not thousands, of installations which would otherwise have been completed by the April 2012 cut-off date were abandoned, when those involved realised that they could not complete them by the new date of 12 December 2011. Some of those directly affected by this proposed change issued judicial review proceedings. In Friends of the Earth v Department of Energy and Climate Change Mitting J gave judgment in favour of the claimants on 21 December 2011 ( [2011] EWHC 3575 (Admin)). On 25 January 2012, the Court of Appeal ( [2012] EWCA Civ. 28; [2012] ENV L.R. 25) also concluded that the proposal was unlawful because there was no power under the relevant statute to make delegated legislation retrospective. The proposal would have taken away existing entitlements without statutory authority.
The defendant changed its proposals. It laid before Parliament a Licence Modification to take effect on 3 March 2012 which had the effect of reducing the rate of FIT payable from up to 43.3p per kWh to up to 21p per kWh as from 1 April 2012, for solar PV installations with eligibility dates on or after 3 March 2012. No issue arises as to the lawfulness of those changes. They are irrelevant to the claimants' case, because they maintain that the damage was done to them by the simple making of the original proposal on 31 October 2011.
The claimants contend that, by the time that the courts ruled that what was proposed was unlawful, the installations which would otherwise have been completed by April 2012 had been abandoned because of the clear statements (on 31 October and thereafter) that the cut-off date was being moved forward to 12 December 2011. Accordingly, in these proceedings, the claimants seek damages against the defendant pursuant to Article 1 of the First Protocol ("A1P1") on the basis that the proposal was an unjustified interference with their peaceful enjoyment of their possessions.
By the orders of Master Leslie and then Andrews J, various preliminary issues were identified to be tried between the parties on the basis of Agreed or Assumed Facts 1.
There are issues about whether or not the claimants have 'possessions' within the meaning of A1P1; whether or not the announcement by the defendant of its proposal on 31 October 2011 could amount in law or in fact to an interference; whether or not, if the proposal constituted an interference, it was justified; and whether or not proper satisfaction would lead to a financial remedy. I propose to deal with those issues in that order, having first set out in more detail, the component elements of the FIT scheme and the relevant chronology. I am very grateful to all counsel who appeared at the hearing of the preliminary issues for the clarity and focus of their submissions.
THE FIT SCHEME
General
The FIT scheme was introduced in April 2010 to encourage the low-carbon generation of electricity by specified types of technology. One particular type of generation technology was solar PV. The encouragement came in the form of FIT payments by the electricity supply companies to the small-scale producers of low-carbon electricity. This case is principally concerned with the 'generation tariff', which is a payment for the amount of electricity produced by the small-scale low-carbon generator, even if that electricity is used by the person who generated it. The second element, the export tariff, is concerned with payments for electricity exported into the National Grid. Other than acknowledging that different type of FIT, it is not relevant to this case.
Pursuant to Section 41 of the Energy Act 2008 ("the 2008 Act"), the defendant could modify the conditions of licenses granted by the Office of Gas and Electricity Markets ("OFGEM") under the Electricity Act 1989, so as to provide for financial incentives for small-scale low-carbon generators of electricity. It was pursuant to this power that the FIT scheme was created. The Explanatory Notes to the 2008 Act said that its stated aim was to encourage "the necessary upfront capital investment" through the "certainty of the payback."
In July 2009, the Government published a consultation paper on renewable electricity financial incentives. That consultation expressly recognised the need to encourage private investors to fund the necessary installations. At paragraphs 3.56 and 3.57 of the consultation paper, relating to the proposed FIT scheme, it said:
"3.56
…Some organisations have seen easy access to up-front, low-cost capital as essential to the uptake of the technologies; others are of the view that tariffs themselves will be sufficient to drive the financial market to develop products in this area and provide the necessary capital, and would be discouraged by government intervention in this area.
3.57
Therefore, we propose that central Government will not be looking to provide up-front capital schemes to finance FIT installations in the majority of cases…"
At paragraphs 3.96–3.102, the paper stressed that regular reviews would be necessary and that it was important to "strike the right balance between flexibility and investment security."
In their response to the subsequent consultation in a document dated February 2010, the Government set out their legislative proposals. In the Executive Summary at page 6, in relation to the FIT scheme, the response said:
"Once an installation has been allocated a generation tariff, that tariff remains fixed (though will alter with inflation as above) for the life of that installation or the life of the tariff, whichever is the shorter."
Other parts of the paper stressed that FIT rates applicable for later installations would be lower "both to reflect and to encourage and drive cost reductions from the relevant sectors", but paragraph 21 went on to say:
"But any individual installation, once starting to receive a tariff at a certain level, will continue to receive the same generation tariff level throughout its entire support period under the FIT scheme."
Paragraph 24 stressed that, in order to deal with uncertainty for investors, it was expected that the system "will provide long-term certainty for export payments".
Paragraph 62 and 63 of the response paper dealt with the proposed FIT rates. Paragraph 62 stated that the tariffs "should encourage investment in small-scale low-carbon generation that will contribute towards meeting our challenging renewable and carbon targets, and do so in a way that ensures value for money for the scheme as a whole, bearing in mind that the costs of support are shared by all electricity consumers". Paragraph 63 said that the tariff levels had been set to provide an expected rate of return of approximately 5–8% (or 7–10% because the FIT rates were linked to inflation), taking into account amongst other things, "the likely effect those risks would have on investors' willingness to invest". Paragraph 71 onwards was concerned with degression, that is to say the reduction in the fixed rates for installations completed in later years. Paragraph 72 stressed that the generation tariff was the one that would apply to generation from that installation for the life of the tariff, subject only to indexation, and stated that the applicable rates would be degressed only for new installations from that point forward. Paragraph 74 explained the relevance of the April 2012 cut-off date. It read:
"Several responses to the consultation argued that early degression would provide a disincentive for new businesses setting up. We have therefore...
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