In R (Tate & Lyle Industries Limited) v Secretary of State for Energy and Climate Change the Court of Appeal emphasised the importance of the fairness principle in public law, but clarified that, in the context of reconsidering decisions, fairness will only require a decision-maker to ignore up-to-date information in exceptional circumstances.

Key Points

  • There is a public law duty to act fairly, consistently and without unjustified discrimination. Fairness generally requires that all participants in a scheme, both initially and on review, are treated the same.
  • However, where a public body reconsiders an erroneously made decision, the principle of fairness normally allows (or even obliges) the public body not only to correct the error, but also to take account of material circumstances prevailing at the time of the reconsideration, including new information.
  • Regard must be had to the wider public interest: fairness can mean that participants are treated differently in order to prevent the interests of third parties and the public being jeopardised.
  • Exceptional circumstances may dictate otherwise, where this approach would itself lead to unfairness, for example in cases akin to maladministration or abuse of process, or where a remedy can be granted without jeopardising the interests of others. 
  • It may be open to a decision-maker to choose between simply correcting an error or taking account of new information, for example where an error is identified quickly. However, the fact that the error is the decision-maker's own does not oblige him or her to act in a certain way.

  Statutory context and background facts

The statutory context and the background facts are summarised in our e-bulletin of 1 December 2010 discussing the High Court judgment (click here).

In short, the UK has implemented the EU Renewables Obligation (derived from Directive 2001/28/EC, now Directive 2009/28/EC) via the Electricity Act 1989 and Orders made thereunder. The Order at issue in this case is the Renewables Obligation Order 2009 (the '2009 Order'). The 2009 Order introduced a 'banding system', through which the level of financial support to generators using renewable sources of energy is determined depending on the particular technology used. This is measured by a number of 'renewables obligation certificates' ('ROC') per megawatt hour ('MWh').

The Secretary of State (the Respondent) allocated Tate & Lyle (the Appellant) an incorrect band under the 2009 Order, which Tate & Lyle challenged by bringing judicial review proceedings. In the course of the proceedings, the Secretary of State discovered that there had been an error in band allocation, specifically in the figures used to assess costs in the calculation of ROC/MWh. As a result, the Secretary of State ordered an 'Early Review', using powers under the 2009 Order.

In the Early Review, the Secretary of State carried out a full review using updated information, including wholesale electricity prices which had increased substantially since the time of the initial calculation. The Secretary of State reached the same result following the Early Review, which had the effect that Tate & Lyle's band allocation was not changed. Tate & Lyle maintained that the Secretary of State should have simply updated the calculation using the corrected costs figures. Had the Secretary of State done so, Tate & Lyle would have been placed in a higher band and received a higher level of support.

Moses LJ in the High Court held in favour of the Secretary of State. The judge's decision was influenced by the concern that if the Secretary of State was obliged not to consider the new data, Tate & Lyle would have been over-subsidised and this would have led to a breach of the prohibition against competitive distortion attributable to State aid. Tate & Lyle appealed.

Court of Appeal judgment

The Court of Appeal's decision, delivered by Elias CJ, rested on what the principle of fairness required in the Early Review.

Tate & Lyle's arguments

Tate & Lyle accepted that, generally, a public body reconsidering a decision will do so in light of the material circumstances prevailing at the time of the reconsideration. However, Tate & Lyle maintained that its case should be treated as exceptional, along the lines of authority such as R (Rashid) v Secretary of State for the Home Department [2005] EWCA Civ 744. It argued that the only legitimate purpose of the Early Review was to correct the initial error without altering any other factors: the Secretary of State's error had triggered the Early Review and, furthermore, fairness in this case required the technology employed by Tate & Lyle to be assessed in the same manner as other technologies that had not been subjected to an Early Review. If the Secretary of State had not made the initial error, the Early Review would not have come about and Tate & Lyle would have received a higher subsidy; consequently, the Secretary of State's conducting of a full review with updated information at the time of the Early Review was unfairly discriminatory against Tate & Lyle.

Secretary of State's arguments

The Secretary of State recognised the public law duty to act fairly and consistently and without unjustified discrimination. But he maintained that the initial error did not compel him to conduct the Early Review on limited terms and that it was not appropriate to treat Tate & Lyle's case as exceptional: public law did not require a public body that has made an error to put the wronged party in the position in which it would have been had the error not been made. Given that the purpose of the banding exercise was to determine an appropriate subsidy, this could be frustrated if historic figures were used in a review when more accurate information was available. In addition, it was not necessarily the case that an early review would result in the subject of the review being disadvantaged while its competitors were favoured.

Court of Appeal decision

The Court of Appeal rejected the appeal. It recognised that fairness is an important principle of public law, but in determining what is fair it is important to consider the wider public interest. Rashid was distinguished as a case that had involved an error akin to maladministration and where the individual concerned could be granted a remedy to remove the resulting unfairness without jeopardising the interests of others. By contrast, if up-to-date information was not considered in Tate & Lyle's case, an inappropriate subsidy could discourage investment, thereby prejudicing the public interest. Tate & Lyle was not being treated unfairly as, according to the calculation based on the up-to-date information, it was receiving an appropriate subsidy: in the circumstances it was "bad luck" that Tate & Lyle missed out on the higher subsidy.

The Court of Appeal acknowledged that the Secretary of State did not necessarily have to adopt the above approach. For example, had the error been discovered more quickly, it might have been open to the Secretary of State to conclude that the information would not have changed sufficiently materially to warrant a full review, subject to the public interest dictating otherwise.

Comment

The Court of Appeal's decision illustrates how the public interest can impact upon what will amount to unfairness amounting to an abuse of power in a given case. It is not necessarily unfair to treat a party differently, particularly where the interests of third parties and the public would otherwise be jeopardised.

This case suggests that in instances of administrative decision-making in a commercial context, where errors are made that have financial consequences, a case will not be "exceptional" if it is reasonable for the decision-maker to use updated information, even if this puts the affected entity in a worse position than it would have been in had no error been made in the first place. However, the line between such "bad luck" and unfairness should be apt to shift if the error at issue is akin to maladministration or there has been an abuse of power, and a remedy can be granted without creating further, wider, unfairness, or the circumstances are otherwise compelling.

R (Tate & Lyle Industries Limited) v Secretary of State for Energy and Climate Change [2011] EWCA Civ 664