R (Infinis) v. Ofgem & Non-Fossil Purchasing Agency Limited, Interested Party  EWHC 1873 (Admin) Lindblom J, 10 August 2011 Read judgment
In a recent post, I suggested that successful claims under Article 1 Protocol 1 (the human right to peaceful enjoyment of property) faced all sorts of difficulties, hence the particular interest of that decision in Thomas which bucked the trend. Rash words at the end of a busy legal term: hard on the heels of that judgment of the Court of Appeal, there comes this further example of an A1P1 claim succeeding in the environmental context.
This time, the claim arose as a result of a judicial review, where the judge decided that the regulator had come to an unlawful decision, and hence that unlawfulness gave rise to a damages claim against the regulator.
So how and why?
The statutory regime for subsidising renewable energy was and is grindingly complicated, but can be reduced to these essentials for the purposes of this post The claimants took landfill gas from two sites and used it to drive gas engines (see the picture), and hence to generate electricity for the grid. The case was about whether these gas engines qualified for Renewable Obligation Certificates (in effect a renewable energy subsidy) for which they needed to be accredited: we have been there in a slightly different context. The defendant Ofgem had decided they did not so qualify. The claimants disagreed, and sought judicial review of this decision. The judge allowed the challenge. The question was then: what to do?
Though it may sound a bit odd to many people, you cannot just sue local or central government when they mess up and cause you loss because they get the law wrong. That is because the courts do not acknowledge the principle that an unlawful act or omission by a public authority necessarily entitles a claimant to the loss which naturally flows from that unlawfulness. Anyway, that is the starting point, in cases which do not involve Convention or EU principles. In domestic law, you need a good deal more than that to get your damages claim going.
Things change a bit when the law comes from across the Channel. EU law gives a claimant a remedy in damages when the defendant has committed a manifest breach of EU law, for instance not transposing an EU measure or obviously not enforcing it properly once transposed. So how does Strasbourg law as mediated through the Human Rights Act go about things?
S.8(3) of the HRA says that:
“No award of damages is to be made unless taking account of all the circumstances of the case, including –
(a) any other relief or remedy granted, or order made, in relation to the act in question (by that or any other court), and
(b) the consequences of any decision (of that or any other court) in respect of that act,
the court is satisfied that the award is necessary to afford just satisfaction to the person in whose favour it is made.”
S.8(4) HRA says that the domestic court must look to the ECHR caselaw in determining those damages. What do those cases show? Well, not a lot. But at least there are recent attempts at trying to come up with some principle in assessing damages. In Basarba OOD v Bulgaria (Application no. 77660/01, 20 January 2011), the court held (in paragraph 19 of its judgment) that reparation should be aimed at putting the applicant in the position it would have been in had the violation not occurred. This sounds very bland to an English lawyer – this proposition was laid down in a coal-mining case from the 1870s, if not before. It was acknowledged (in paragraphs 20 and 26 of Basarba) that precisely calculating the sums necessary to make full reparation might be impossible, but an award could still be made. The amount which it is necessary to award by way of just satisfaction is to be determined by the court in the exercise of its discretion “having regard to what is equitable”. And in those last words, therein lies the fudge – but not one taken up by the judge in this case, though Basarba itself was a classic ECHR fudge on damages. By which I mean that an English court would have decided that either the damages claimed were recoverable, or they weren’t. In a typical case, it would not have said that they were but then they weren’t, i.e that the full amount of loss recoverable should be discounted because there were imponderables involved.
By contrast to all this fudgy stuff, the judge concluded that because the consequence of the unlawful decision:
was to deny the claimants a pecuniary benefit to which they were statutorily entitled, it follows, in my judgment, that there has been a breach of the claimants’ right to property under article 1 of the First Protocol of the European Convention on Human Rights. I accept the submissions [counsel for the claimants] made to this effect. Indeed, the Authority did not deny that, if its decision was held to have been bad in law, those submissions would be sound.
But perhaps the key was in the next bit of the judgment, when agreeing with the claimants’ counsel:
the court is concerned here not with the exercise of an administrative discretion but with a statutory entitlement. The claimants were and are, he said, entitled under the statutory scheme to the benefits of accreditation. I agree.
So, because it turned on an issue of construction of statutory law, the judge in effect decided, the outcome was binary – C right, damages. D right, no damages. This is not necessarily the same outcome at EU law, particularly if the issue of construction is somewhat impenetrable – let alone what would happen under domestic law.
The judge then proceeded to decide that the claimants would not derive just satisfaction from quashing and mandatory orders alone. This was because giving the claimants the ROCs now would have been to give them something worthless; they were past their sell-by date. No claim in private law was available to them. If damages are not awarded they would not recover what is due to them under the relevant statutory provisions. As the judge put it:
Though acting in good faith, the Authority misapplied the statutory scheme, and the claimants were unlawfully denied that to which they were statutorily entitled. Their rights under article 1 of the First Protocol were thus breached. Just satisfaction requires that damages be awarded to them. If this outcome is repeated in other cases still to come, the precedent is set only by an understanding of the relevant statutory and contractual provisions which, as a matter of law, I have concluded is right. That, in my judgment, would not be a good reason for departing from the principle of “restitutio in integrum”.
Part of the judge’s rationale for this conclusion seems to have been that the losses were “clearly calculable”. This appears to have been based on the distinction found in the leading case of Anufrijeva between two types of infringements, namely those giving rise to readily computable type of losses (in domestic law parlance, “special damages”) and those leading to distress etc (“general damages”) – see paras.59-60 of that case; the former will be usually awarded, whereas the latter may or may not be, depending on whether their award is “necessary to award just satisfaction”. But in the case of past financial losses, the question of principle is whether damages are recoverable in the light of whatever it is that the public authority has done. You either decide that they are, or they aren’t. Once you decide that they are, then you work out what those damages are. But you don’t decide that they are recoverable because you can readily decide what they would be if they were recoverable. Quantification would then run ahead of recoverability.
Outcome : £93,454.38 in the bag, and £2,656,743.84 subject to further argument. Worth going to court about.
David Hart QC practices in environmental law, professional negligence, construction and medical law. This post was first published at UK Human Rights Blog. Eric Ltd is very grateful for his permission to reproduce it here.