Kool Blast Europe Limited v The Environment Agency
[2024] UKFTT 4 (GRC)
Klima-Therm Limited v The Environment Agency
22 November 2023
[2023] UKFTT 1080 (GRC)
First-tier Tribunal
A small company accidentally broke rules about refrigerants due to unclear government instructions. A judge said the company should pay a smaller fine than originally ordered because the mistake wasn't intentional and the instructions were confusing. The fine was reduced from £44,725 to £20,000.
Key Facts
- •Klima-Therm Limited (KTL) appealed a £44,725 civil penalty imposed by the Environment Agency (EA) for failing to obtain sufficient HFC quota authorisations before placing HFCs on the market.
- •The breach related to Article 14(1) of EU Regulation 517/2014, implemented by the UK's Fluorinated Greenhouse Gas Regulations 2015.
- •KTL argued the EA's decision was based on an error of fact, was unreasonable, and the penalty amount was excessive.
- •KTL contended that guidance on transferring quotas was confusing and that they believed they had sufficient quota through a sister company, Gree UK Limited (GUL).
- •The EA maintained that KTL had a legal responsibility to ensure sufficient authorisations in its own account and that readily available guidance was clear.
- •KTL's sister company, GUL, held unused quota authorisations which KTL intended to use but couldn't due to the new GB regime requirements.
Legal Principles
Civil penalties can be imposed for non-compliance with the Fluorinated Greenhouse Gas Regulations 2015.
Fluorinated Greenhouse Gas Regulations 2015, Reg. 31A, Schedule 4
Appeals against civil penalty notices can be made to the First-tier Tribunal on grounds including error of fact, error of law, unreasonableness, or an unreasonable penalty amount.
Fluorinated Greenhouse Gas Regulations 2015, Schedule 5
The Tribunal's role is to assess whether the EA's decision was erroneous, not to substitute its own judgment.
Reasoning of the Tribunal Judge
Reasonableness is assessed based on the EA's Enforcement and Sanctions Policy (ESP), considering factors like the nature of the breach, culpability, size of the organisation, financial gain, history of non-compliance, attitude, and personal circumstances.
EA's Enforcement and Sanctions Policy (ESP), Annex 2
Outcomes
The appeal was allowed in part.
The Tribunal found the EA's decision to impose a penalty was reasonable but the amount (£44,725) was unreasonable given KTL's negligent culpability, the confusing guidance, and the actual financial gain.
The civil penalty was reduced to £20,000.
This reflects a balance between the need for deterrence and the mitigating circumstances surrounding KTL's unintentional breach and the unclear initial guidance.