Solar Century Holdings Ltd & Others v Secretary of State for Energy & Climate Change

JurisdictionEngland & Wales
CourtQueen's Bench Division (Administrative Court)
JudgeMr Justice Green
Judgment Date07 Nov 2014
Neutral Citation[2014] EWHC 3677 (Admin)
Docket NumberCase No: CO/3605/2014

[2014] EWHC 3677 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Green

Case No: CO/3605/2014

Between:
Solar Century Holdings Limited & Others
Claimants
and
Secretary of State for Energy & Climate Change
Defendant

Michael Fordham QC, Duncan Sinclair and Simon Murray (instructed by Prospect Law) for the Claimant

Robert Palmer (instructed by The Treasury Solicitor) for the Defendant

Hearing date: 17 th October 2014

Mr Justice Green

A. Introduction: Issues, parties and conclusion.

(i) Issues

1

There is before the Court a rolled up application for permission to apply for judicial review and, if granted, a hearing of the substantive application. The Claimants, a group of companies generating electricity from renewable sources, challenge a change of policy on the part of the Department for Energy and Climate Change ("DECC") as a result of which it is bringing to a premature close a " levy" supported scheme which was due to run until 2017 but which is now to close in 2015. In this judgment I shall refer to the scheme in issue as the "RO scheme". The Claimants also challenge the " periods of grace" introduced as part of the RO scheme closure arrangements which seeks to take account of and protect the interests of those operators who have not yet had projects accredited under the RO scheme but who have incurred significant investment.

2

The Claimants submit that it has been consistent Government policy, confirmed loudly and clearly over a number of years, that the RO scheme would not close before 2017 in recognition of the acknowledged need for operators to have a secure and stable legal and investment environment in which to plan. They submit that the bringing forward of the closure date pulls the rug from under their feet and thwarts their rights. They submit as follows. First, that the decision to introduce a statutory instrument implementing early closure is ultra vires the basic statutory power (contained in sections 32LA and 32LB Electricity Act 1989 (" EA 1989")) since a firm and clear " purpose" of that statutory power was to preserve the closure date (of 2017) but not to accelerate it. The Claimant's submit that this is clear from a range of admissible pre-legislative materials. Second, it is submitted that properly construed certain pre-legislative statements that the RO scheme would run until 2017 amount to an assurance which, according to the principles laid down by Lord Steyn in R (Westminster City Council) v National Asylum Support Service [2002] UKHL 38 at paragraph [6], are admissible and, in effect, bind the Executive. It is submitted that the early closure of the scheme violates the assurances given. Third, it is contended that in any event statements made by the Government, consistently from 2010 onwards, that the scheme would not close before 2017 in order to protect commercial certainty were clear and unequivocal representations which gave rise to a legitimate expectation which, on the facts of this case, cannot be trumped or thwarted by any of the policy considerations which the Government now advances to justify the early closure. Finally, they submit that the periods of " grace" will be retrospective in its operation in a manner which is unfair in a public law sense and hence unlawful.

3

The Secretary of State advances an entirely different analysis in response to the Claimant's case. It is said that context is everything. In particular it is said that an ever-present and all pervasive feature of the levy schemes for renewable energy were the limits imposed upon their financing by HM Treasury set out in a March 2011 document entitled "Control framework for DECC levy-funded spending" ("the LCF"). This instituted a control framework designed to ensure that the DECC achieved its policy objectives "…in a way that is consistent with economic recovery and minimising the impact on consumer bills". The LCF makes clear that overspend in relation (for example) to support measures for one category of renewable generator or supplier would have to be balanced by cuts elsewhere. It imposes a cap on expenditure which, in substance, cannot be exceeded. It recognises that some support methods are demand led and involve levels of financial support which may rise unpredictably; but makes no allowances for this for example by allowing DECC extra funding to cover the over-spend. Where expenditure rises cuts elsewhere must be found. The Secretary of State says that these limits were known to the market; their articulation was and is in the public domain and they therefore represent a form of systemic risk necessarily accepted by any operator who invests upon the basis of levy schemes. That systemic risk is that if uptake (demand) is unexpectedly high then DECC might need, in order to adhere to LCF principles, to take steps to limit expenditure under the scheme and one such step might be curtailment of a scheme. This explains why the amendments to the Electricity Act 1989 (" EA 1989") introduced to confer express powers on the Defendant to change levy schemes cannot, sensibly, be construed as having the purpose of tying the hands of the Minister as to obvious steps that might be taken to regulate expenditure. It also explains why there could never have been any species of " assurance" given to Parliament by the Government that it would not close the RO scheme before its allotted time. It further undermines the notion that any operator could ever have any form of legitimate expectation that the scheme would not be closed early if expenditure exceeded expectations and placed the cap at risk and also explains why, even if such an expectation did arise, there would still be a good reason for nonetheless frustrating that expectation. Finally, the Secretary of State argues that he did address his mind carefully to the position of those who had not yet been accredited under the relevant scheme but who had nonetheless incurred expenditure along the way towards accreditation. He submits that reasonable and fair " grace" measures were put in place to protect those who made a significant investment but he readily accepts that this will not be everyone who has incurred a more than de minimis expenditure. He submits that the line has to be drawn somewhere and that, in this case, the line that has been drawn in the scheme closure regulations is, prima facie, a matter for his discretion and is neither unfair nor irrational.

4

The issues for me are as follows:

a) Issue I: Whether the purpose(s) behind the introduction of sections 32LA and 32LB EA 1989 includes the preservation of a 2017 end date and therefore whether any exercise of the power in those sections which closed the scheme before 2017 was unlawful and ultra vires?

b) Issue II: Whether pre-legislative statements include an admissible and binding " assurance" that the scheme would not be closed prior to 2017?

c) Issue III: Whether the Claimants have a legitimate expectation that the RO scheme would not be closed prior to 2017 and whether, if such an expectation did exist, the Government has a sufficient policy justification for defeating that expectation?

d) Issue IV: Whether the new scheme is retrospective and unlawful?

(ii) Parties

5

The Claimants are four companies engaged, inter alia, in the installation of large scale solar photovoltaic systems ("solar PV"). These are sometimes called "solar farms". Many of the installations are over 5 megawatts in size. A common feature is that the projects can involve a significant lead time from first investment to accreditation.

6

The Defendant is the Secretary of State for Energy and Climate Change. He is responsible for schemes supporting and encouraging renewable energy sources.

(iii) Conclusion

7

I have concluded that this application for judicial review does not succeed.

8

As to the issues arising, first, I do not construe the relevant and admissible history leading up to the enactment of Sections 32LA and 32LB EA 1989 as incorporating any purpose which included keeping the RO scheme in place until 2017. Second, no " assurances" were given at any point that the scheme would be maintained until 2017. Third, whilst clear and repeated representations were made by Government to the effect that the scheme would remain in place until 2017 this was always subject to the overriding risk that if uptake of the scheme was such that DECC's spending limits were exceeded then the scheme would have to be modified and/or curtailed in some way in order to bring expenditure back into line. As such no undertaking investing in projects within the purview of the RO scheme had a legitimate expectation that the scheme would inevitably last until 2017 irrespective of the broader financial implications for Departmental spending. And, in any event, even if such an expectation did arise the Minster was entitled on the facts of the case to frustrate that expectation. Finally, I do not accept that the transitional " grace" arrangements put in place to take into account the interest of pipeline investors were unfair, albeit that I accept that the way in which the line is to be drawn will exclude some persons who have incurred expenditure which now risks being wasted.

B. Relevant Facts

(i) The Decision under challenge

9

This case concerns the legality of a proposal first contained in a Consultation paper of 13 th May 2014 and decisions upon that Consultation reflected in a Response to Consultation dated 2 nd October 2014. I shall, for the sake of convenience, refer to the relevant subject matter of the Response...

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