Public law and regulators – the facts speak for themselves?

Public law and regulators – the facts speak for themselves?

CategoryArticles, News Author Duncan Sinclair Date

Duncan Sinclair acted in the successful judicial review of Ofgem British Gas Trading Ltd v GEMA [2019] EWHC 3048 for interested party npower. This past 12 months he was instructed in three successful statutory reviews under the statutory schemes overseen by Ofgem and in 2018 acted with his colleague Daniel Stedman Jones in the first contested case before the Enforcement Decision Panel (reducing the scope of breach and penalty to under half that proposed).

The boundary is often a fine one between the range of complaints in public law as to facts which will gain any traction in court.  Material errors, failures to consider, failures by a public body to inquire and/or acquaint itself with clearly material information are often complaints raised against public bodies. The public body often responds (and often with success) that a court should be slow to impugn their judgment, in particular if they are experts in the field.  Any attack/ground based on factual ‘error’ is portrayed as in reality a question going to the weight given to particular information, facts or analysis, and this is a matter of administrative discretion beyond the remit of a court in a judicial review.

The boundaries of this fine line have been explored 3 times this year by the courts in the context of Ofgem, the expert (independent) economic regulator of the gas and electricity markets.

Earlier this year in Gwynt-Y-Môr Offshore Wind Farm Limited) v The Gas and Electricity Markets Authority Ofgem (see the judgment at [85]) argued that it deserved ‘particular respect’ and a court should be ‘slow to impugn’ its approach in the context of an exceptional expenditure allowance which fundamentally depended on insurability.  May J acknowledged the principle that a court should be slow to intervene but (see [87]) she found that on the facts Ofgem was not expert in the fundamental issue before it (in contrast, it did have expert reports before it which strongly suggested a different result).  Ofgem was said to have only taken a “high level” approach to evidence (including evidence by actual experts) and so “failed to grapple with the material before it” [156] such that the decision was overturned.

There is a significant degree of overlap in the legal issues and Ofgem’s errors between Gwynt-Y-Môr and the issues in British Gas a few weeks ago. Ofgem might indeed be considered to be ‘expert’ in issues relating to imposition of a retail price cap (the central issue in British Gas).  However, in carrying out the setting of a retail price cap, just as in the earlier case, Ofgem had not grappled with the relevant information, which was (in short) whether/how suppliers had changed hedging strategies. This was ultimately framed by the judge as a failure to consult, and perhaps importantly, this was against the evidenced factual background that consultation would have disclosed material evidence from suppliers including the interested parties quite at odds with Ofgem’s assumptions.  As such, related alternative grounds of, for instance material error of fact, would have succeeded in the alternative.

In a third case decided against Ofgem this year, before the Court of Appeal of Northern Ireland following a judicial review, namely the Green Belt case [2019] NICA 47 (a case in which Duncan Sinclair was involved at an early stage which was then pursued in Northern Ireland by colleague Richard Harwood QC) there was a complete failure to consider (indeed a decision not to consider) evidence put to Ofgem during an internal and then a statutoruy review process (and so the decision was quashed in that case as irrational).

These three successful judicial reviews within a year share a common thread. Each case involved as the central public law error a failure to properly consider (including in one case to obtain by consultation) materially relevant facts or information.

This is not a sea change far less a change in law: the decisions were individually orthodox and followed established authority.  But together, perhaps, they lend weight to the dual-fold nature of the Tameside principle: first, the public authority must ask itself the right question; secondly (and important in these cases) it must then gather and properly consider the information necessary to address the issues.  And the various approaches of the courts illustrate the know well-accepted overlap in public law principles: for instance, the ‘mischief’ in British Gas could (was) as well framed as a failure to properly gather and consider information, as a failure to consult.  The mischief of a public body taking a decision without crucial material information is what was at issue, however precisely characterised.


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