Environment Agency v Taylor Engineering and Plastics Ltd

On an appeal against a financial penalty imposed under climate change agreement regulations, the tribunal’s power to reduce the penalty is confined to correcting an error in the decision to impose it, including an error in the applicable calculation. It does not permit the tribunal to substitute a lower amount merely because the prescribed penalty appears disproportionate. The penalty provisions must be read with the statutory limits on the right of appeal. A decision issued by the First-tier Tribunal may be altered after promulgation only under an applicable slip rule or review procedure. Substantive changes to the subject matter, legislation or reasoning cannot be made informally.

The Environment Agency imposed a financial penalty of £2,636.64 on Taylor Engineering and Plastics Ltd for late reporting under an underlying climate change agreement. The First-tier Tribunal accepted that the company had defaulted but reduced the penalty to £750, considering the original amount disproportionate.

The Environment Agency appealed. The Upper Tribunal considered whether the First-tier Tribunal had jurisdiction to reduce a correctly calculated penalty on proportionality grounds, and whether it had lawfully amended its decision after promulgation.

1. Appeal allowed and decision set aside. The First-tier Tribunal had made an error of law by treating its power under regulation 23(1)(b) as permitting a general proportionality reduction.
2. Regulation 20(1) permits an appeal against the decision to impose a penalty. That provision reflects paragraph 52F(4)(a) of Schedule 6 to the Finance Act 2000, which limits the appeal to that decision.
3. Regulation 15 must be read as a whole. It gives the Environment Agency a choice whether to impose a penalty, but, where the relevant paragraph applies, prescribes the amount by reference to the required calculation. The amount calculated is an integral part of the decision to impose the penalty.
4. Regulation 23(1)(b) allows the First-tier Tribunal to reduce the penalty where the Environment Agency used the wrong calculation or made a calculation error. It does not authorise substitution of a different amount on the ground that the prescribed penalty is disproportionate.
5. The ordinary function of an appeal is to redress error and focus on particular issues. The tribunal’s appellate powers are therefore not wider than those of the Environment Agency.
6. The post-promulgation amendments were not clerical slips within rule 40 of the Tribunal Procedure (First-tier Tribunal) (General Regulatory Chamber) Rules 2009. They could potentially have been made on a review under section 9 of the Tribunals, Courts and Enforcement Act 2007 and rule 44, but there was no evidence that that procedure had been followed.
7. The Upper Tribunal re-made the decision because no error was identified in the Environment Agency’s calculation. The appeal to the First-tier Tribunal was dismissed, and the suspension of the penalty ceased.

• Upper Tribunal (Administrative Appeals Chamber): the First-tier Tribunal decision was set aside for error of law under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007. The decision was re-made and the appeal against the financial penalty dismissed.
• First-tier Tribunal (General Regulatory Chamber): reduced the Environment Agency’s financial penalty from £2,636.64 to £750.