[2024] UKUT 345 (AAC)

The FTT’s preliminary decision was seemingly made under rule 5(3)(e) of the GRC Rules (Footnote: ¹) and was binding on the parties to the appeal. I was told, and proceed on the basis that, the FTT had given a direction pursuant to rule 42(2A) of the GRC Rules the effect of which was that time did not begin to run for challenging the FTT’s preliminary decision until it had also made the substantive decision. The preliminary decision made rulings on a number of matters, two of which remain of relevance.

First, the FTT addressed what made an ‘energy plan’ a ‘green deal plan’. The FTT ruled that to be a green deal plan the energy plan had to meet what it termed the ‘legislative requirements’ set out in sections 1(3) and (4)(a) to (e) of the Energy Act 2011, read with sections 4 and 5 of the same Act, and regulations 30-36 read with regulation 29 of the Framework Regulations. In the FTT’s view, for the energy plan to be a green energy plan it had also to meet all the conditions set out in sections 4 and 5 of the Energy Act 2011 and the requirements of regulations 27 and 28 of the Framework Regulations. However, the FTT did not accept that sections 1(3) and (4)(a) to (e) of the Energy Act had to be read with section 2 or regulations 7b and 26 of the Framework Regulations. The FTT concluded on this issue that an energy plan that failed to meet these ‘legislative requirements’ would “by necessity, remain an energy plan rather than a green deal plan”. It further concluded that a dispute as to whether the individual aspects of the ‘legislative requirements’ were met, and thus whether a green deal had been put in place, was largely a factual enquiry and could only be made on a case by case basis.

Second, the FTT in its preliminary decision considered the correct approach to determining the appropriate sanction if a green deal provider had breached its obligations. This included consideration of the correct approach to determining whether a sanction was proportionate to the breach. The FTT found that six steps were to be followed when determining the appropriate sanction. It expressed those six steps as follows (at paragraph 76 of the preliminary decision):

“i)

Identify whether there has been a breach of a relevant requirement.

ii)

Decide whether the breach is sufficiently severe to warrant a sanction being imposed, or whether there has been a series of breaches by the green deal provider either at the same property or at different properties;

iii)

Assess the seriousness of the breach(es) overall, and decide whether the sanctions of a compliance notice, financial penalty or withdrawal are appropriate, by deciding whether the severity of these sanctions are proportionate to the seriousness of the breach.

iv)

Decide whether the bill payer has, or is likely to suffer substantive loss by considering whether they have suffered harm.

v)

Assess both the level of the harm suffered and the impact of the harm.

vi)

Decide whether the sanctions of cancellation or reduction are proportionate, by reference to both the severity of the breach and the harm caused to the bill payer.

Implicit in the sixth step is a point the FTT then made explicit in its consideration of the proportionality test found in regulation 79 of the Framework Regs, namely that the impact on the green deal provider was not relevant to the sanction decision. In so doing the FTT ruled, inter alia, that the identification of a windfall benefit (here to Ms Heaney) was also relevant to the sanction decision as such a benefit “will inevitably go to the level and impact of any harm suffered”. The FTT continued on this specific point:

“However, a windfall benefit ought not to operate as an effective bar to a sanction of cancellation, since it can only be one of several potentially relevant factors. In some cases, for example, that the bill payer may have suffered harm of a different nature which may be assessed as outweighing the windfall benefit, or it may be that the seriousness of the breach(es) justify the imposition of a severe sanction, windfall benefit notwithstanding.

The FTT’s key reasoning for why it concluded that the effect on the green deal provider was generally to be ignored under the proportionality test in regulation 79 of the Framework Regs was as follows.

“82I am not persuaded by [GDFC’s] submissions that the test for proportionality in this context requires a determination of fairness inter partes. I am satisfied that the impact of the sanction upon the green deal provider and/or the relevant person will only be relevant considerations in exceptional circumstances, notwithstanding subsisting A1P1 rights

i)

M[y] starting position is that the Court of Appeal decided in Breyer Group Plc v Dept of Energy and Climate Change [2015] EWCA Civ 408 (a case relating to the rates payable under a FIT arrangement) that an existing, enforceable contract forms part of the marketable goodwill of a business and is a possession for the purposes of [Article 1 of the First Protocol of the European Convention on Human Rights] A1P1….

iii)

The fact that the terms of Ms Heaney’s agreement may not have complied with regulatory requirements of the green deal scheme does not deprive GDFC Asset Ltd of its A1P1 rights. This was considered by the Court of Appeal in Wilson v First County Trust Ltd [2001] EWCA Civ 633.

iv)

However, a person’s right to the peaceful enjoyment of their property is not absolute. They may be deprived of their possessions by the state where, to paraphrase the language of the Convention, it is in the public interest to do so or where a legitimate aim is being pursued, and where any action taken complies with conditions provided for in law.

v)

I find that, although a relevant person’s A1P1 rights will be engaged in the context of a sanction of reduction or cancellation, the issue of whether the deprivation is proportionate must be considered from the perspective of the legislation as a whole, rather than through the lens of the exercise of the Secretary of State’s discretion in each individual case. In reaching this conclusion I have adopted a number of relevant principles identified by Henderson J in Whitter v HMRC [2016] EWCA Civ 1160, which was approved by Lord Carnwath when the same matter was considered by the Supreme Court ([2018] UKSC 31 at paragraph [22]).

vi)

The first relevant principle is that that any statutory discretion has to be exercised consistently with the object and scope of the statutory scheme

viii)

In the context of the Green Deal Scheme, the object and scope of the legislation is the regulation of the installation of energy efficiency improvements and ensuring regulatory compliance by green deal assessors, providers and installers. That is the purpose for which the Secretary of State’s enforcement powers are provided and I am satisfied that the financial circumstances of a relevant person are extraneous to the exercise of this discretion. Given my considerations above, I conclude that the legislative scheme and Guidance provides sufficient ‘content’ to the Secretary of State’s powers: in broad terms he is directed to exercise his discretion by considering the seriousness of the breach and any harm it may have caused. Although a tax regime necessarily gives rise to some unique considerations, I am satisfied that the green deal legislation is a similarly ‘tightly constructed statutory scheme’ that provides no legislative basis for reading in a generalised proportionality requirement.

ix)

The second relevant principle identified by Henderson J, at paragraphs 68 – 71, is the potential existence of a common law principle of proportionality where this forms part of the legislative background. However, he concluded that the legislative regime before him was clearly proportionate in terms of the balance between struck between ends and means, noting in addition the existence of procedural safeguards…

x)

I am similarly satisfied that the ‘ends and means’ of the green deal scheme are balanced and proportionate, supported by the provision of additional procedural safeguards as identified by Mr Wilcox. Any proportionality-based appeal against the imposition of a sanction in this context would be against severity of the sanction when assessed against the seriousness of the breach. There is, again, no basis upon which to conclude that the ‘ends and means’ of the green deal regime requires consideration of the impact of the sanction decision upon the green deal provider/relevant person for the purpose of this proportionality assessment.

xi)

The third relevant principle identified by Henderson J is that, in the context of an assessment of proportionality for the purposes of A1P1 rights, other than in the most exceptional cases, the assessment should be confined to the statutory regime as a whole rather than the exercise of a statutory function by a public body

xii)

I therefore conclude that, as a matter of domestic and international law, the relevant question is whether any interference with A1P1 rights by the scheme as a whole is in the public interest or is in pursuit of a legitimate aim and accords with conditions provided for in law. For reasons already given I am satisfied that the green deal enforcement provisions meet this requirement.”