Homesun Holdings Ltd & Ors., R (on the application of) v Secretary of State for Energy and Climate Change

A proposal may be challenged by judicial review before it is formally implemented where it is intended to produce legal consequences through executive action or an executive decision subject to parliamentary scrutiny. The proposal must be lawful in substance and procedure. Statutory powers to establish and administer a scheme of financial incentives do not ordinarily authorise changes taking effect retrospectively, particularly where the statutory scheme requires consultation and parliamentary scrutiny before modification. A modification which retrospectively reduces an established entitlement is unlawful where it undermines the statutory purpose and lacks clear parliamentary authorisation.

The claimants, comprising industry participants and Friends of the Earth, challenged the Secretary of State’s consultation proposal to reduce feed-in tariffs for small solar photovoltaic installations. The proposal used 12 December 2011 as a reference date, although the relevant modification would be made only after consultation and parliamentary scrutiny. The claimants argued that the proposal was amenable to judicial review, exceeded the powers conferred by the Energy Act 2008, and would operate retrospectively.

The court considered whether the proposal was reviewable, whether the statutory power authorised the proposed modification, and whether the proposed reference date was lawful.

1. Judicial review was available. A proposal is ordinarily not reviewable merely because it is under consultation. However, where the proposal is intended to be implemented by executive action, or by executive action subject to parliamentary resolution or the absence of disapproval, its lawfulness may be challenged in advance. This was particularly appropriate because the proposal had already created significant uncertainty and had materially affected the relevant market. The principle in R (Shrewsbury and Atcham Borough Council) v Secretary of State for Communities and Local Government [2008] EWCA Civ 148 supported review before the substantive event.
2. The court assumed, without finally deciding, that the Secretary of State possessed power to amend the tariff. The court nevertheless doubted whether section 41 of the Energy Act 2008 was intended to permit the Secretary of State to make continuing changes after establishing the scheme, rather than leaving that function to Ofgem.
3. The proposed retrospective modification was unlawful. There is a strong presumption against retrospective legislation, particularly retrospective subordinate legislation, unless displaced by express statutory language or clear parliamentary intention. Sections 41 to 43 authorised modifications only for establishing or administering a scheme intended to encourage small-scale low-carbon generation. A change taking effect by reference to a date before it was made would undermine confidence in a long-term investment scheme and would not further that statutory purpose. Section 42 also prescribed a mandatory sequence of consultation, laying draft modifications before Parliament, the expiry of the scrutiny period, and making the modification. The legislation contained no clear authorisation for a modification adversely affecting installations before the modification was made and brought into effect.
4. The court therefore declared that implementation of a feed-in tariff modification by reference to 12 December 2011 would be unlawful. No quashing or prohibition order was necessary. Permission to appeal was refused for lack of a realistic prospect of success, but the time for filing an appellant’s notice was shortened to 4 January 2012 and a skeleton argument was directed to accompany it. The Secretary of State was ordered to pay each claimant’s costs of preparing and filing the claim form, with one subsequent set of costs payable to HomeSun.

First-instance judicial review in the Administrative Court. The judgment records that permission to appeal was refused, with the period for filing an appellant’s notice shortened to 4 January 2012.