In this latest Environmental Law News Update, Gordon Wignall, William Upton and Natasha Hausdorff consider recent authorities on abuse of process, closer scrutiny of air quality sampling and an EC consultation on new guidelines for company reporting on climate-related information.
The revival of abuse of process?
Recent judgments from the Court of Appeal show that judges at first instance in the criminal courts are prepared to be outraged by the regulatory behaviour of local authorities. In the context of settlement negotiations about enforcement notices, individual courts have recently stayed criminal proceedings that have been brought after defendants had been led to believe that a compromise might be reached leading to an alteration of their position to their detriment.
The cases are R v The Knightland Foundation  EWCA Crim 1860, Ceredigion County Council v Robinson  EWHC 2121 and Wokingham BC v Scott & Ors  EWCA Crim 205. The last of the three is a particularly useful read. Much more than can be derived from it than can be adequately set out in any short commentary. The judges at first instance were supported in each case.
Ironically perhaps, these three cases come at about the time that the SFO announced the end of the first of its four Deferred Prosecution Agreements under the statutory resolution process made available to designated prosecutors by the Crime and Courts Act 2013 (Press Release, 30 November 2018).
In Wokingham BC’s case, the chief defendant withdrew his appeal against an enforcement notice “based on representations made by WBC that that they would come to a mutually satisfactory agreement”. In The Knightland Foundation’s case, enforcement officers interfered with the planning application process so that the defendant was denied his “legitimate expectation that it would be determined on its merits” (a similar finding about “legitimate expectation” also being made in WBC’s case). In both, the local authority’s desire to take advantage of the POCA regime played a part.
The Court of Appeal in WBC’s case dismissed the suggestion that a “solemn promise not to prosecute is always required to support an abuse argument”, with various authorities being considered. The Court was somewhat critical of Blackstone’s commentary on this issue.
Ultimately, the tribunal at first instance must assess all the circumstances. Practitioners will find the underlying notion of an inducement to a defendant in the context of the detailed guidance in the Code of Crown Practitioners to be a fertile area. But it is clear that judges will be affronted where they think a settlement has resulted in some detriment to the defendant, especially if it likely that a regulator has an eye to some financial advantage from POCA. There is a clear thread that the criminal courts are worried about POCA and the influence that the ability of the prosecutor to profit from the prosecution can have on a decision to prosecute. Moreover, judges in the Court of Appeal have perhaps become less likely to intervene than they once were.
These are planning cases, but the principles must be understood as applying to all environmental (and other) regulators. Lady Justice Hallett’s rejection of a possible ‘chilling effect’ on negotiations at the end of the WBC judgment is telling: that is indeed a probable result and an unintended consequence.
Closer scrutiny of Air Quality sampling
The next chapter in air quality litigation has begun, as governments across the EU try to comply with the relevant air quality limit values in the EU Directives. The formidable run of ClientEarth cases in our courts has already led to the production of a new Air Quality Plan for England, where many of the specific measures will need to be taken by local authorities. If that UK case has resonated across the EU, we now have an example of a Belgian case that may resonate here – the Advocate General’s Opinion has been published in Case C-723/17 Craeynest and Others (including, again, ClientEarth) v Brussels Hoofstedelijk Gewest and Others (February 28, 2019). The effectiveness of any measures need to be properly monitored, and there has always been a doubt about how far the courts should be expected to scrutinise the detailed measures.
Part of the dispute about whether an adequate air quality plan has been established for Brussels has been referred by the Belgian court to the CJEU, about the extent to which national courts may review the siting of sampling points and, secondly, whether the results from different sampling points may be averaged in order to assess compliance with the limit values. Advocate General Kokott’s advice to the CJEU is that it should hold that the national courts must examine whether the fixed sampling points have been sited in accordance with the criteria set out in the Directive, and the national courts should not restrict themselves to identifying manifest errors, on account of the importance of the rules on ambient air quality for human life and health. This may give rise to them ordering that sampling points are sited at certain locations or for the authorities to undertake further investigations in order to identify the correct locations.
Whilst there may remain some doubt about how interventionist the courts should be in an area of such complex scientific assessment, the Advocate General is surely right to recommend what should be done about the results – that compliance with the limit values for sulphur dioxide, nitrogen dioxide, PM10, lead, benzene and carbon monoxide should be assessed by reference to the measurement results from the fixed sampling points, without obtaining an average from all the sampling points. Appropriate measures must be taken where adverse effects are identified. It is only of limited importance to assessing that risk whether an exceedance applies to the entire zone on average. In one of those wry reminders about the maths, the AG makes the point that “This is clearly illustrated by the joke about the statistician who drowns in a lake even though it averages only a few centimetres in depth”.
EC consultation on new guidelines for company reporting on climate-related information
The European Commission has launched a consultation on the update of the non-binding guidelines on non-financial reporting, through its departments for Financial Stability, Financial Services and Capital Markets Union. Those following the development of reporting frameworks will be aware that the non-binding guidelines may well foreshadow future reporting obligations. The Commission’s planned guidelines will likely be a significant step forward on company reporting of climate-related information in this fast-evolving dynamic.
Voluntary reporting of climate information by companies has increased significantly in keeping with initiatives to improve disclosure. Building on the January report of the Technical Expert Group on Sustainable Finance, and feedback from stakeholders, this consultation seeks to drive that trend further forward in light of the urgency of the climate crisis.
The consultation has been launched as part of the Sustainable Finance Action Plan, which was adopted by the Commission in May last year, as part of a comprehensive strategy to further connect finance with sustainability in accordance with the High-Level Expert Group on Sustainable Finance. Importantly, the plan includes measures to clarify asset managers’ and institutional investors’ duties regarding sustainability and strengthening the transparency of companies on their ESG policies. The consultation looks at both how the financial performance of companies can be impacted by climate change and how companies may positively and negatively impact the climate.
The Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union, Valdis Dombrovskis, said of the initiative:
“The success of the Commission’s Sustainable Finance Action depends amongst other things on companies being more transparent about their impact on the climate and on the business risks and opportunities that climate change creates. I strongly encourage companies and other organisations to respond to this consultation, to help us make these guidelines as impactful as possible.”
The new guidelines on climate reporting, expected by the end of June, are intended to supplement the existing guidelines on non-financial reporting that the Commission published in 2017. It is intended that large listed companies, banks and insurance companies, with more than 500 employees, those falling under the scope of the Non-Financial Reporting Directive 2014/95/EU, will benefit from the guidelines.
The announcement of this consultation highlights the fast-developing nature of sustainable finance and company reporting requirements, as discussed at last week’s Six Pump Court seminar on ‘Company Directors and Environmental Responsibilities’.
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