In R. (on the application of British Gas Trading Ltd) v Secretary of State for Energy Security and Net Zero  EWHC 737 (Admin), the High Court refused permission for judicial review where challenges to decisions made by the Secretary of State (“SoS“) regarding the transfer of the business of Bulb Energy to Octopus Energy were brought within a matter of weeks. The Divisional Court found there had been undue delay in bringing the applications for judicial review, but in any event would have dismissed the challenges, which were based on public law principles and on alleged non-compliance with the subsidy control principles, on their substance.
- The Court emphasised the importance of strict time limits in judicial review proceedings in order to protect the public interest in good administration.
- While accepting that the Administrative Court is not normally suited to determine disputes of facts, the Court noted that the judicial review procedures are flexible enough to accommodate such disputes if necessary.
- The Court reiterated that the Administrative Court will adopt a light touch standard of review in the commercial context where the decision makers have particular expertise.
In 2021, Bulb, an electricity and gas supply company with around 1.5 million customers, ran into serious financial difficulties. On 24 November 2021, an Energy Supply Company Administration Order was made by the High Court, and Joint Energy Administrators (the “JEAs“) were appointed. The JEAs conducted a sale process to sell Bulb’s business. All three claimant energy companies engaged in the early stages of this process, although only British Gas Trading (“BGT“) made an indicative offer. At that stage, Octopus made it clear that they would not be making a bid, but subsequently re-entered the process and put forward a bid.
Having considered the position, the JEAs recommended that the bid from Octopus should be accepted. The SoS commissioned an independent review of the JEAs’ final recommendations, and also received various assessments concluding that the terms of the Octopus transaction did not contravene the subsidy control principles set out in the EU/UK Trade and Co-operation Agreement (“TCA“). On 29 October 2022, the Government announced its approval of Bulb’s acquisition by Octopus and referred to the fact that it involved government funding.
At a hearing in the Chancery Division on 11 November 2022 for an order fixing the effective date of the transfer, BGT raised concerns about the government funding and asked for time to seek further information and consider judicial review proceedings. The hearing was adjourned for this purpose. BGT issued judicial review proceedings 17 days later, on 28 November 2022, followed by the other claimants one day later.
Undue delay and other procedural issues
Singh LJ and Foxton J emphasised the public and private interests in bringing judicial review proceedings promptly and without undue delay, as stated in the Administrative Court’s Judicial Review Guide (2022), and referred to previous case law highlighting that in the financial field, a delay of even a few days may be highly detrimental to the interests of third parties and good administration. The court stated that the urgency of the situation was and certainly should have been appreciated much earlier, and considered “disingenuous” the claimants’ statement that they only first appreciated an urgent application might be necessary on 24 November 2022, in circumstances where BGT raised points in the Chancery hearing on 11 November about the complications of trying to reverse the transaction. While judicial review proceedings should not be commenced before adequate information justifying the proceedings has been obtained, the court highlighted that it is of the utmost importance that proceedings should be commenced very speedily, and stressed that a claimant does not need to have full disclosure in order to launch judicial review proceedings, as it is usually the grant of permission that triggers the duty of candour.
Whilst the court did not suggest that judicial review applications should be started based on press reports, here, the substance of the two grounds advanced were essentially known to the claimants from early November, which meant that the judicial review proceedings should have been started much earlier. The claimants could have later amended the grounds following disclosure to flesh out the details.
In response to the claimants’ reliance on the need to send pre-action letters as a partial explanation for the delay, the court stated that in very urgent cases it is not necessary for there to be a pre-action protocol letter. In doing so, it referred to the provisions in the Administrative Court Guide suggesting that where full compliance with the pre-action protocol is not possible, the parties should try to comply to the fullest extent possible without putting the time limits for starting the case in jeopardy. In any event, the court noted that BGT’s pre-action letter was not sent until 10 days after the Chancery Division hearing, which in this context was not sufficiently prompt.
The court also had to consider the approach to issues of fact. Noting that the processes of the Administrative Court are not usually well suited to resolving disputes of fact, the judgment recognised that the procedures are flexible enough to accommodate the determination of factual disputes. This case was unusual in the amount of disclosure by the SoS and Interested Parties, which allowed the court to reach clear conclusions on the background facts, although the court was careful not to suggest that such an enquiry is necessary or appropriate in judicial review generally. Where, as here, no order is made for cross-examination of witnesses, the defendant’s evidence will usually be assumed to be correct unless there is material before the court indicating otherwise. BGT argued that this principle did not extend to the evidence of the Interested Parties, but the court was not persuaded that the evidence of the Interested Parties was in any different category to that of the SoS from this perspective.
The public law grounds
Under the public law grounds, the claimants alleged that the process leading up to the decisions was unfair because the claimants were not provided with the opportunity and information by which they could make a bid knowing that there was a subsidy available.
The court expressed its view that the commercial context was important here because it required the court to perform a relatively “light touch” intensity of judicial review, as compared to, for example, a matter concerning the liberty of an individual, in which a more intensive scrutiny would be called for. Other features of the relevant statutory scheme also indicated that the light touch intensity was appropriate, such as the fact that the JEAs were experts in their field who had access to expert advice. Further, the statutory regime specifically provided that the management by the JEAs must be carried out for the purpose of achieving the objective “as quickly and as efficiently as is reasonably practicable”. This was considered by the court to be a very important part of the statutory context in which the present case must be decided, in particular, whether and to what extent the duty to act fairly applies.
The court rejected the claimants’ arguments in relation to procedural fairness, finding that there was no duty to consult in this situation, and was not persuaded by the criticism that the SoS had regard to irrelevant considerations, or failed to have regard to relevant considerations. None of the public law grounds were considered arguable.
The subsidy control grounds
The other substantive element to the claimants’ case was that the SoS had failed to meet the requirements of the subsidy control principles set out in the TCA, as implemented in domestic law by the European Union (Future Relationship) Act 2020.
The claimants argued that, in order to implement Article 366 of the TCA, the ground of judicial review available should not be confined to the conventional principle of rationality but must include the principle of proportionality. In the court’s view, the TCA does envisage that the principle of proportionality must be complied with in the subsidy control regime, but when it comes to applying the principle of proportionality, the context is very important such that in practice the outcome may not be materially affected by the distinction between the concept of rationality and the principle of proportionality. This is consistent with the approach taken in applying the principle of proportionality under the Human Rights Act 1998, i.e. no matter how intense the standard applied, a court of review is not entitled to substitute its own decision for that of the constitutional decision-maker. An enhanced margin of appreciation will be given by the courts when reviewing the decisions of the executive in a context involving scientific, technical and predictive assessments and, even in the context of EU law, and even applying the principles of State Aid law (which are no longer directly applicable), a wide margin of judgment was to be afforded to a public authority when considering commercial circumstances in the private market.
Ultimately, if it had not been for the undue delay, the court would have granted permission on the Subsidy Control grounds under the TCA but would have rejected those grounds on their merits.
This decision provides a stark reminder that judicial review proceedings must be brought with the utmost urgency, particularly in cases in which reversing the challenged decision will have significant broader implications. In such cases, a lack of detailed evidence available to the claimant will not persuade the court that delay is justified.
The judgment is also significant as it examines the status of the TCA as an international treaty between the UK and the EU and, as such, its application as a matter of domestic law. Whilst accepting that the standard of review applicable is, in principle, that of proportionality, the court emphasised that the way in which that standard is applied depends on domestic law principles, and is a relatively “light touch” standard of review in this commercial context.