Environment Agency v Amphenol Invotec Ltd

On an appeal against a financial penalty under the Climate Change Agreements (Administration) Regulations 2012, the First-tier Tribunal’s power to reduce a penalty is confined by the statutory scope of the appeal.

The Regulations prescribe the amount of a penalty through the applicable calculation. The First-tier Tribunal may correct an erroneous calculation or other error forming part of the decision to impose the penalty. It may not substitute a lower amount merely because the prescribed penalty appears disproportionate. Regulatory policies and the Regulators’ Code do not enlarge that statutory appellate power.

The Environment Agency imposed a financial penalty of £3,058.30 on Amphenol Invotec Ltd for failing to report information required under its climate change agreement. The First-tier Tribunal accepted that a penalty was justified but considered the amount disproportionate and reduced it to £750.

The Environment Agency appealed to the Upper Tribunal. The central issue was whether the First-tier Tribunal had power to reduce the amount of a penalty on proportionality grounds, where the amount was prescribed by the applicable statutory formula.

1. Appeal allowed. The First-tier Tribunal’s decision involved an error of law and was set aside under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007. The decision was re-made by dismissing Amphenol Invotec Ltd’s appeal against the Environment Agency’s penalty notice.
2. Regulation 20(1) of the Climate Change Agreements (Administration) Regulations 2012 authorises an appeal against the decision to impose a financial penalty. That reflects paragraph 52F(4)(a) of Schedule 6 to the Finance Act 2000, which limits the statutory 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 the applicable provisions prescribe the amount by reference to the specified calculation. The amount calculated is an integral part of the penalty imposed.
4. Regulation 23(1)(b) does not give the First-tier Tribunal a general power to substitute a different penalty because it considers the prescribed amount disproportionate. It permits correction where the Environment Agency used the wrong calculation or made an error in calculating the penalty. The Tribunal’s appellate powers are not wider than those of the Environment Agency.
5. The enforcement policy and the Regulators’ Code could not confer a power which the Regulations withheld. Section 21(3) of the Legislative and Regulatory Reform Act 2006 makes the statutory principles subject to other requirements governing the regulatory function.
6. The circumstances relied upon by the company did not affect the legally prescribed amount. A rehearing was unnecessary, and the original penalty was restored.

• Upper Tribunal (Administrative Appeals Chamber): set aside the First-tier Tribunal’s decision for error of law and re-made the decision by dismissing the appeal against the financial penalty.
• First-tier Tribunal (General Regulatory Chamber): on 5 May 2022, amended on 6 June 2022, reduced the Environment Agency’s penalty from £3,058.30 to £750.