Solaria Energy UK Ltd v Department for Business, Energy and Industrial Strategy
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson,Lady Justice Rose,Lord Justice Henderson |
| Judgment Date | 04 December 2020 |
| Neutral Citation | [2020] EWCA Civ 1625 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2019/2717 & 2718 |
| Date | 04 December 2020 |
[2020] EWCA Civ 1625
Lord Justice Henderson
Lord Justice Coulson
and
Lady Justice Rose
Case No: A1/2019/2717 & 2718
IN THE COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
BRISTOL DISTRICT REGISTRY
(HHJ RUSSEN QC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Guy Adams (instructed by Capital Law Ltd) for the Appellant
Tom Weisselberg QC and Dominic Howells (instructed by Government Legal Department) for the Respondent
Hearing Date: 4 th November 2020
Approved Judgment
INTRODUCTION
By proceedings commenced on 21 December 2018, the claimant (“Solaria”) seeks damages against the defendant (“the Department”) as a result of an alleged wrongful interference with Solaria's possession (namely an existing sub-contract to provide photovoltaic (“PV”) panels and related equipment) contrary to Article 1, Protocol 1 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, as scheduled in the Human Rights Act 1998 (“A1P1”). The claim arises out of a proposal by the Department's predecessor (the Department of Energy and Climate Change), published on 31 October 2011, to bring forward the qualifying date for the Feed-In Tariff Scheme from 31 March 2012 to 12 December 2011, and to reduce the subsidies payable thereunder.
That proposal, had it been implemented, would have been unlawful in R (on the application of Homesun Holdings Ltd) v Secretary of State for Energy and Climate Change [2011] EWHC 3575 (Admin), a decision affirmed on different grounds by the Court of Appeal in R (on the application of Friends of the Earth Ltd) v Secretary of State for Energy and Climate Change [2012] EWCA Civ 28. Subsequently, in Breyer Group Plc and Others v Department of Energy and Climate Change [2014] EWHC 2257 (QB), affirmed by the Court of Appeal at [2015] EWCA Civ 408, in an action brought against the Department by manufacturers and suppliers of solar panels, it was held that, in principle, the unlawful proposal could amount to a wrongful interference with or deprivation of the claimants' possessions, namely existing contracts, contrary to A1P1.
The Department sought to strike out Solaria's claim in these proceedings on the grounds that:
(a) The claims for loss and damage at paragraph 49 of the Particulars of Claim, said to represent a loss of marketable goodwill (calculated as “the capitalised value of the expected future cash flow generated” by Solaria's sub-contract), did not amount to a possession pursuant to A1P1. The primary ground for this submission was that, unlike the assumed facts in Breyer, the sub-contract was not capable of assignment and therefore, by reference to the authorities, could not in law amount to a possession.
(b) The claim was statute-barred. The claim had not been brought within the one year period identified in section 7(5)(a) of the Human Rights Act (“ HRA”), and the Department submitted that, by reference to the alternative provision at section 7(5)(b), it would not be equitable to allow the claim to be brought so long after “the act complained of” (ie the proposal of 31 October 2011).
In a detailed judgment dated 22 August 2019, His Honour Judge Russen QC (“the judge”) found in favour of the Department on both limbs of the application. The claim was therefore struck out. On 20 February 2020, Solaria was granted permission to appeal against the decision to strike out. It follows that Solaria need to succeed in their attack on both limbs of the judgment in order for this appeal to be allowed and the proceedings reinstated.
THE FACTUAL BACKGROUND
In July 2011, Solaria entered into a sub-contract for the supply of PV panels and associated accessories to GB Building Solutions Limited (“GBBS”). GBBS were, in their turn, engaged by Northumberland County Council (“NCC”) to supply and install PV panels at residential and commercial properties in the North East.
The sub-contract was for the supply by Solaria to GBBS of PV panels for 130 commercial premises and 400 residential premises. The sub-contract also envisaged that additional panels might be ordered by GBBS and stipulated that the sub-contract rates would apply to any such additional materials. It is Solaria's case that, in October 2011, it was agreed in principle that they would provide panels for another 300 residential dwellings, but it is accepted that no sub-contract instruction to that effect was ever issued by GBBS.
The sub-contract incorporated the JCT 2005 Design and Build sub-contract conditions, with some bespoke amendments. For present purposes, only clauses 3.1 and 3.2 are relevant:
“Assignment and Sub-letting
Non-Assignment
3.1 The Sub-Contractor shall not without the [prior] written consent of the Contractor assign this Sub-Contract or any rights thereunder.
Consent to sub-letting
3.2 The Sub-Contractor shall not without the [prior] written consent of the Contractor (which consent shall not be unreasonably delayed or withheld) sub-let:
.1 the whole or any part of the Sub-Contract Works; or
.2 the design for the Sub-Contractor's Designed Works.
The Sub-Contractor shall remain wholly responsible for carrying out and completing the Sub-Contract Works in all respects in accordance with this Sub-Contract notwithstanding any such sub-letting and the Contractor's consent to any such sub-letting of design shall not in any way affect the obligations of the Sub-Contractor under clause 2.13.1 or any other provision of their Sub-Contract.”
During the currency of the sub-contract, the Department's predecessor published a consultation document on 31 October 2011, which contained a proposal to reduce the subsidies payable under the Feed-In Tariff Scheme in respect of electricity generated by PV installations. The tariff is the fixed price paid by electricity supply companies for the power fed into the grid from small-scale solar panel installations. The consultation document proposed a reduction in fixed rates from 12 December 2011, which was prior to the end of the proposed consultation period. The proposal, had it been implemented, would have been unlawful: see Homesun and Friends of the Earth, cited in paragraph 2 above. The date of the judgment in the Court of Appeal was 25 January 2012. Thereafter, the Department published a revised proposal which brought forward the review date (and the reduced subsidies), this time to 2 March 2012. It has never been suggested that this revised proposal was unlawful.
The proposal of 31 October 2011 had a significant impact on the solar energy industry. A large number of claims were brought by contractors and suppliers in the same business as Solaria, alleging interference with their possessions and therefore breach of A1P1. Those claims were the subject of the Breyer judgments in 2014 and 2015, noted in paragraph 2 above, when various preliminary issues of principle were decided largely (but by no means entirely) in favour of the claiming companies. Solaria acknowledge that they were aware of the Breyer litigation from shortly before judgment was given in the Court of Appeal.
Following the decision of the Court of Appeal in 2015, what remained outstanding in the Breyer litigation was the resolution of the individual claims. Because the preliminary issues had been resolved by way of assumed facts, the subsequent trial would have had to deal with the myriad factual disputes that arose out of the thousands of contracts said to have been affected by the wrongful interference. There was a major issue as to causation, because each claimant needed to demonstrate that it was the proposal of 31 October 2011, and not any other matter, which had interfered with or prevented the performance or completion of each disputed contract. The trial was due to be heard in January 2018 but was settled very shortly before it was due to start.
Solaria was not a party to the Breyer litigation. They continued to supply PV panels to GBBS well into 2012. Pursuant to the sub-contract, Solaria was entitled to be paid by reference to the contractual rate of £1.35 per watt. However, they claim that, as a result of the Department's proposal, they were obliged to renegotiate the sub-contract. They invoiced GBBS at the lower rate of £1.10 per watt until July 2013, when they issued a further invoice claiming recovery at the higher rate. Solaria then waited another year, until August 2014, before they commenced proceedings against GBBS claiming the shortfall. In March 2015, GBBS went into administration and Solaria's claim was never resolved.
Solaria also pursued NCC who, they said, had had the benefit of at least some of the PV panels for which Solaria alleged they had not been properly paid. It appears that in May 2018 some modest recovery was made on this basis from NCC.
Solaria did not indicate a claim against the Department until their letter before action on 21 December 2016. In their response dated 30 January 2017, the Department took the limitation point and said that, if proceedings were commenced, it would seek to strike them out on the ground that the claim was statute-barred. Thereafter, at something of a snail's pace, the parties agreed a standstill agreement which was backdated to 21 December 2016, even though the agreement itself was not signed off until 21 November 2017. Very soon thereafter, on 30 January 2018, the Department gave notice pursuant to the standstill agreement that it...
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