Infinis and damages for regulatory wrongs: Hot topic or damp squib? Gordon Nardell QC MCIArb gordon.nardell@39essex.com
The Infinis decision R (Infinis plc) v. Gas and Electricity Markets Authority [2011] EWHC 1873 (Admin), [2103] EWCA Civ 70: Facts/issues: Ofgem refused accreditation/rocs for 2 landfill gas power plants Decided RPPAs were extant qualifying arrangements providing for building of a generating station, so excluded by Renewables Obligation Orders 2006 and 2009 Arts 6, 21 Had no force and effect provisions been triggered by nonfulfilment of conditions precedent? Lindblom J: Ofgem wrong Awarded A1P1 damages 93,454.38 for 2008/9 ROCs; 2.6M (less mitigation) for 2009/10 ROCs; stay re 2010/11 ROCs CA agreed
The big picture: compensation for public law wrongs Orthodox position: successful challenge does not provide entitlement to damages. May include damages claim in JR, but will only succeed if facts establish discrete cause of action. No constitutional tort. Patchwork quilt of differing rules -- NB control mechanisms Tort: Misfeasance in public office: bad faith Breach of statutory duty: legislative intention to give rise to civil claim rarely found, esp. in cases involving discretion/economic loss Negligence: reluctance to superimpose duty of care on statutory functions EU law: Treaty/Francovich claim: Breach must be sufficiently serious HRA s. 8 Discretion: just and appropriate (s. 8(1)) Necessary to afford just satisfaction (s. 8(3)) Take into account ECtHR Art 41 principles (s. 8(4))
Sufficiently serious Brasserie du Pêcheur/Factortame [1996] ECR I-1029 English courts previously vacillated between strict liability/no liability for damages: Garden Cottage Foods v. Milk Marketing Board [1984] AC 130 cf. Bourgoin SA v. MAFF [1986] QB 716, CA. CJEU assimilated Member State liability to rules governing noncontractual liability of EU institutions: breach must be sufficiently serious to warrant liability in damages. Did State manifestly and gravely disregard the limits on its discretion? (Judgment [4]) clarity and precision of the rule breached ; whether any error of law was excusable or inexcusable ; where breach has persisted despite a judgment finding the infringement established Legislative reform? Law Commission 2004-2010 Administrative Redress project parked indefinitely.
A1P1 Groundrules #1 Possession : Acquired economic interests Includes economic benefit of licence/consent required for profitable activity Excludes mere prospect of future income/acquisition unless legitimate expectation When does an uncompensated interference violate A1P1? The three rules James v. UK: Interference with peaceful enjoyment Deprivation of possessions Control of use of property All interrelated and subject to fair balance test. But categorisation important because of ECtHR s rules of thumb about compensation
A1P1 Groundrules #2 Deprivation generally fails to strike fair balance if not accompanied by compensation (broadly) related to market value. BUT deprivation a v. narrow category: Outright taking/expropriation by the State Not cases of operation of regulatory system, eg seizure of contraband goods and means of transport: Air Canada v. UK (1995) Demolition of building erected in breach of planning control: Panvert v. UK (1996) Extinction of title through adverse possession: JA Pye (Oxford) Ltd v. UK (2006/8) Interference with peaceful enjoyment and control of use cases - lack of compensation only violates A1P1 if clearly disproportionate: State enjoys broad margin of appreciation Arbitrary / Individual and excessive burden In control of use cases, even fairly extreme facts may fail to upset the fair balance, eg. Pye
A1P1 and just satisfaction Where breach of A1P1 found, by definition there has been an unjustified interference with valuable economic rights. But under Art 41, compensation and certainly full compensation does not necessarily follow. Even in cases where gist of violation is lack of compensation for taking of property. ECtHR recognises that commercial activity is inherently risky. Court tends to heavily discount alleged capital/revenue losses and make an equitable global assessment: Eko-Alda Avee v. Greece (2006): wrongful retention of overpaid tax. 120,000 awarded against claim for 1.2M Centro Europa 7 SRL v. Italy (2012): long delay in allocating TV broadcast frequency. 10M awarded against claim for 2.175Bn East/West Alliance Ltd. v. Ukraine (2014): seizure of commercial aircraft. 5M awarded against claim for US$166M.
HRA damages in the English courts Distinctly -- and deliberately parsimonious. Courts at pains to contrast remedial objectives of common law and ECHR, and stress importance of preserving legitimacy of HRA. Anufrijeva v Southwark LBC [2004] Q.B. 1124, CA, Lord Woolf CJ (Article 8): compensation usually of secondary, if any, importance [53] Just satisfaction" is distinct from the approach at common law where a claimant is invariably entitled, so far as money can achieve this, to be restored to the position he would have been in if he had not suffered the injury [55] Damages must strike balance between the interests of the victim and those of the public as a whole and a remedy of last resort [56] where breach tantamount to maladministration in those cases where an award of damages is appropriate, the scale of such damages should be modest. If impression given that victims are profiting from their status, this could bring the HRA into disrepute. [75] R. (Greenfield) v SSHD [2005] 1 WLR. 673, HL, Lord Bingham: HRA not a tort statute. Courts should not aim to be significantly more or less generous than the [ECtHR] might be expected to be, in a case where it was willing to make an award at all.
The reasoning in Infinis Lindblom J [103]-[106]: Ofgem conceded applicability of A1P1. Consequence of its unlawful decision was to deny the claimants a pecuniary benefit to which they were statutorily entitled [103]. Court concerned not with the exercise of an administrative discretion but with a statutory entitlement Ofgem acted in good faith. ECtHR cases support restitutio in integrum. Possibility of similar claims in other cases no good reason for departing from that principle. CA: Ofgem withdrew concession. But claimants had legitimate expectation, hence possession [24], [25] On damages ([26], [27]), approved judge. He correctly identified Strasbourg restitutio in integrum principle consistent with Anufrijeva para. [59]. Right to conclude no good reason for departing from the usual approach to assessment of pecuniary loss.
Were the CA right? Reminder of principle of legality: interference unsupported by domestic law breaches Convention, whether or not proportionate. But conversely, violation of Convention right consists simply of error of domestic law in good faith. Should damages automatically follow? Discretion v entitlement : Merely establishes possession Hard to see why should be treated more favourably than discretion case where must inevitably pass high threshold ( arbitrariness etc) to establish violation Court not grappling with key issues: Character of interference really deprivation? Context for Anufrijeva [59] CA s careful explanation of how that differs as a ECHR principle from the corresponding common law principle. Nothing special about A1P1. Usual approach is NOT full, automatic compensation.
Infinis and beyond Impact on subsequent cases dealing with HRA damages: So far, no (reported) analysis of the decision. Contrasting outcomes in two recent cases on loss caused by wrongful issue of ECRCs containing information harmful to employment prospects: R (A) v. Chief Constable of Kent [2013] EWHC 424 (Admin), R (L) v. Chief Constable of Kent [2014] EWHC 463 (Admin) Implications for claimants/public bodies? The misery of uncertainty Claimants: generally worth making claim. But what about litigation funding are damages-based agreements viable? Public bodies defensive decision-making? A more general compensation principle? If Infinis lays down a broad approach, will not have assisted. What is the control mechanism? Something analogous to seriousness probably needed before approach to HRA damages can form basis of wider principle
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