Safeguard World International Holdings Limited v Environment Agency
[2024] UKFTT 34 (GRC)
Aermec UK Limited v The Environment Agency
21 March 2024
[2024] UKFTT 242 (GRC)
First-tier Tribunal
A company was fined for a mistake in understanding new environmental rules. The judge said the government's instructions were unclear and the company tried its best to follow them, so the fine was unfair and cancelled.
Key Facts
- •Aermec UK Limited appealed a £143,975 penalty notice from the Environment Agency for breaching the GB F-gas Regulation.
- •The breach involved the importation of pre-charged air conditioning equipment without sufficient quota authorisations; Aermec had mistakenly obtained quota instead.
- •Aermec argued the penalty was wrong in law, unreasonable, and the amount unreasonable.
- •The appeal centered on the Environment Agency's failure to apply its own Enforcement and Sanctions Policy (ESP), specifically its guidance on when a penalty should not be imposed.
- •The Tribunal found the Environment Agency failed to consider whether advice and guidance would suffice and if punishment was necessary before issuing the penalty.
- •The Tribunal found Aermec acted in good faith, attempted to comply, and ultimately did comply after clarification.
Legal Principles
The Tribunal can review the Environment Agency's exercise of discretion under Paragraph 4 of the Fluorinated Greenhouse Gases Regulations 2015.
Paragraph 4 of Schedule 5 to the 2015 regulations
Appropriate weight must be given to the Environment Agency's view as the regulator.
Hesham Ali v Secretary of State for the Home Department [2016] UKSC 60 at [45]
'Unreasonable' in the context of the regulations means unfair, unsound, or excessive, not the strict Wednesbury unreasonableness test.
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
The Environment Agency's Enforcement and Sanctions Policy (ESP) should be considered when determining penalties.
Environment Agency Enforcement and Sanctions Policy
Outcomes
The appeal is allowed.
The Environment Agency failed to consider whether advice and guidance would suffice and whether punishment was necessary under its own ESP before imposing the penalty. The Tribunal found Aermec's actions were made in good faith and that a penalty was unreasonable in the circumstances.
The Tribunal directs the Environment Agency to withdraw the penalty notice.
The Tribunal exercised its discretion under paragraph E2.2 of the ESP, concluding that imposing a penalty was unreasonable given the facts.