Suez Recycling and Recovery UK Ltd, R (on the application of) v Environment Agency

A compliance assessment report recording adverse regulatory findings may be a regulatory decision for the purposes of §2.3 of the 2014 Regulators’ Code, even though it does not impose a mandatory obligation. The regulator must interpret the Code correctly when making arrangements for appeals. It may depart from the Code after consciously considering the issue, recording the departure and giving reasons. Common law procedural fairness does not, however, require every adverse report to attract a merits appeal. Whether fairness requires further review depends on the facts and circumstances.

The claimant operated a waste reclamation plant regulated by the Environment Agency under an environmental permit. Two Compliance Assessment Reports recorded Category 2 breaches concerning odour and contributed to an increased subsistence payment. The claimant challenged the reports through the Agency’s complaints procedure and then sought judicial review of the reports, the Stage 2A review decision and the absence of a merits appeal.

The central issues concerned the meaning of “regulatory decision” in §2.3 of the 2014 Regulators’ Code, common law procedural fairness, the adequacy of the officers’ investigations and the lawfulness of the Stage 2A review.

1. Issue (1): statutory Code duty. The Agency materially misdirected itself by treating “regulatory decision” in §2.3 of the 2014 Code as confined to an adverse decision imposing a mandatory obligation. The correct concept is a decision taken in the exercise of a regulatory function which is adverse to a regulated person. An adverse CAR recording non-compliance can fall within that concept.
2. The Code does not require a merits appeal against every regulatory decision. Under s.22(2) of the Legislative and Regulatory Reform Act 2006, the Agency may depart from the Code where it concludes that a provision is inapplicable or outweighed by another relevant consideration. It must make that decision consciously, record it and record its reasons. That had not occurred.
3. The Agency’s misinterpretation caused the absence of any recognised merits appeal against CAR1 and CAR2. The claimant therefore succeeded on Issue (1).
4. Issue (2): procedural fairness. Common law fairness did not establish a freestanding right to a merits re-evaluation in every adverse CAR case. Fairness is fact-sensitive. Relevant circumstances may include whether the operator had an opportunity for informed representations before the decision, and whether the original decision-maker could properly reconsider the decision with an open mind. A general requirement for an independent appeal or expert evidence was rejected.
5. Issues (3)–(6). The officers’ investigation was legally sufficient and complied with the applicable Agency guidance, including the pandemic-specific guidance. Their subjective assessments of odour intensity, source and attribution were not shown to be irrational or based on an objectively established mistake of fact. The Stage 2A supervisory review was careful, procedurally fair and reasonable.
6. The claim was allowed on Issue (1) and rejected on Issues (2) to (6). The Stage 2A decision was quashed and the claimant’s challenge to CAR1 and CAR2 was remitted to the Agency for reconsideration. The Agency was ordered to pay 60% of the claimant’s costs.

First-instance judicial review proceedings. Permission had previously been granted in [2023] EWHC 717 (Admin). The present court allowed the claim on one agreed issue and rejected the remaining issues.