Key Facts
- •Tool-Temp Limited appealed a £4,200 civil penalty imposed by the Environment Agency (EA) for failing to obtain sufficient HFC quota authorisations under the Fluorinated Greenhouse Gas Regulations 2015.
- •The breach involved a shortfall of 12 tCO2e, representing approximately 5% of the required quota.
- •The appeal was based on the unreasonableness of the EA's decision to impose the penalty and the unreasonableness of the penalty amount.
- •Tool-Temp is a small business with annual turnover of about £3 million, with a small portion of its business involving importing pre-charged HFC goods from Switzerland.
- •The company voluntarily reported the breach to the EA.
- •The Tribunal considered the EA's Enforcement and Sanctions Policy (ESP) in its decision-making process.
Legal Principles
The Tribunal's role is to determine whether the imposition and/or level of the penalty was erroneous due to factual or legal error or unreasonableness.
The Fluorinated Greenhouse Gas Regulations 2015, Schedule 5
Unreasonableness in this context means unfair, unsound, or excessive, considering the case's circumstances.
The Fluorinated Greenhouse Gas Regulations 2015, Schedule 5
The EA's ESP, including its stepped approach to penalty setting, guides the assessment of reasonableness.
The Environment Agency's Enforcement and Sanctions Policy (ESP)
Relevant factors in determining reasonableness include the nature of the breach, culpability, size of the organization, financial gain, history of non-compliance, attitude of the non-compliant person, and personal circumstances.
Annex 2 of the EA's ESP
The EA may not impose a civil penalty where punishment or future deterrent is not necessary.
Annex 2, Section E2.2 of the EA's ESP
Outcomes
The appeal is allowed.
The Tribunal found the EA's decision to serve a civil penalty notice unreasonable due to the minor nature of the breach, the Appellant's low culpability, the lack of clear guidance, and the voluntary reporting of the breach. Punishment was deemed unnecessary and disproportionate.
The Respondent is directed to withdraw the Notice of a Civil Penalty.
The penalty amount (£4,200) was considered unreasonable, even if a penalty were warranted. The Tribunal calculated a reasonable penalty amount to be £500 based on the ESP.