The Court of Appeal on property rights and the effect of a proposal

Cases

The Court of Appeal has recently delivered an important judgment on the right to property under Article 1 of the First Protocol ECHR (A1P1) in Breyer Group plc & others v Department of Energy and Climate Change [2015] EWCA Civ 408. The judgment was given by the Master of the Rolls, Lord Dyson, with whom Richards and Ryder LJJ agreed.

The appeal arose from a trial of preliminary issues on agreed and assumed facts in multi-million pound damages claims brought against  DECC by various participants in the solar photovoltaic (solar PV) electricity generation industry alleging unlawful interference with their A1P1 rights. The claims were for losses allegedly suffered due to the announcement by DECC in October 2011 of a proposal to reduce the rate of Feed-in Tariff (FIT) payable to solar PV generators. In fact, the proposal was never implemented as the Administrative Court and then the Court of Appeal (Secretary of State for Energy and Climate Change v Friends of the Earth [2012] EWCA Civ 28) had held that the proposal, if implemented, would have been ultra vires the governing primary legislation.

The first issue that the Court of Appeal considered was whether the High Court (Coulson J) had erred in finding that the claimants could not rely as possessions for A1P1 purposes on goodwill that was not constituted by, or not referable to, enforceable contracts concluded by the time that the proposal was made. The Court concluded that there was an important distinction in the Strasbourg case law between marketable goodwill (which could be a possession) and the mere expectation of future income (which could not), and that while the distinction was not easy to apply, Coulson J had been right to draw the line where he did thus limiting the extent of the claimants’ possessions (paras.40-49). (The claimants also reserved their position, in the event that the case goes higher, to argue that they had more extensive possessions in the form of legitimate expectations – paras.50-53).

The second issue was whether a proposal that was subject to consultation and had not been implemented was capable, in law, of amounting to an interference with A1P1 rights. The Court concluded (as Coulson J had) that, on the assumed facts as to adverse effect on the claimants, the proposal was capable of being an interference as the Strasbourg cases focussed on the practical effects (paras.71-73).

Next, the Court considered whether DECC was (as the claimants argued and Coulson J found) precluded from justifying such interference because the proposal was to do something which the Court of Appeal had held would have been unlawful, if implemented. Disagreeing with Coulson J, the Court held that it was not inherently unlawful to propose to do, or consult upon, something which, if implemented would be unlawful and therefore DECC could potentially justify the making of putative interference (paras.81-84).

However, turning to the issue of fair balance the Court concluded that Coulson J had been entitled to conclude, on the assumed facts, that the making of the proposal did not strike a fair balance between the interests of the claimants and of the public, principally because no compensation had been paid to the claimants in order to achieve the proposed savings (paras.95-99). Finally, the Court held that it would ultimately be a question of fact to be determined on the evidence at trial whether in each particular case the claimants’ businesses had been rendered unviable as a result of the proposal (paras.105-107).

Subject to any further appeals, the case will now proceed to trial on the evidence.

James Cornwell (instructed by the Government Legal Department) appeared as junior counsel for DECC.

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