A voluntary climate change agreement entered into between the company and the Environment Agency under the Climate Change Agreements (Administration) Regulations 2012 (made under Schedule 6 to the Finance Act 2000) included, by virtue of regulation 14, a requirement for the company to measure and report its energy use and carbon emissions against agreed targets over two-year target periods. The agency sent a notice of contravention notifying the company of its intention to impose a financial penalty under regulation 15 for breach of the reporting obligation, and then sent a further notice imposing a financial penalty in the amount of £2,636.64 fixed by reference to regulation 15(2)(b). The company appealed under regulation 20 to the First-tier Tribunal which, allowing the appeal, held that the penalty imposed was disproportionate in all the circumstances. It substituted a penalty of £750 purportedly in exercise of the power under regulation 23(1)(b), exercisable on determination of an appeal, to “reduce the penalty”.
On appeal by the agency—
Held, appeal allowed. Regulation 15 of the Climate Change Agreements (Administration) Regulations 2012 conferred only a power and not a duty to impose a penalty but, once imposed, the amount of that penalty was fixed by regulation 15(1A) to (3) which set out three calculations and the circumstances in which each applied. The Environment Agency had to select the appropriate amount of the penalty from those available and there was no scope to impose a different amount from that derived from the appropriate calculation. Accordingly, read as a whole, regulation 15 did not make separate provision for the imposition of a penalty and its calculation but instead made a composite provision for the imposition of a penalty of a particular amount. An appeal under regulation 20 was authorised only against the decision to impose a financial penalty, of which the amount was an integral part. That analysis was consistent with the enabling legislation in paragraph 52F(1)(a) and (4)(a) of Schedule 6 to the Finance Act 2000 and, read in the context of the Regulations as a whole, regulation 23 did not permit of a different result. While regulation 23(1)(b) was not redundant, as it enabled the tribunal to reduce the penalty if the agency had used the wrong calculation, or made a mistake in making the calculation, it did not authorise the substitution of a different amount from that derived from the appropriate calculation. It followed that, in so far as the tribunal had believed that it had power to confirm the decision to impose a penalty, but to reduce the amount of that penalty to one that was more proportionate, it had erred in law (paras 1, 14–23).
The appeal was determined on written submissions.