RHI: Judge quashes attempts to recoup nearly £54,000 in payments from truck dealership

Mr Justice Humphreys quashed attempts to recoup nearly £54,000 in payments made to Dennison Commercials after finding that documents shared between the Department for the Economy and energy regulator Ofgem were not fully disclosed to the company.

He also identified an error of law and a failure to provide adequate reasons for the revocation.

The verdict reached in a test case could potentially have a wider impact for other businesses and poultry farmers in Northern Ireland challenging sanctions imposed over disputed allegations of producing heat to increase their payments.

Dennison, one of the largest commercial truck dealerships in the region, operates 11 biomass boilers under the non-domestic RHI scheme set up to provide an incentive for businesses to switch to environmentally friendly wood-pellet burning systems.

The botched green energy initiative was plunged into controversy after it emerged that initial subsidy rates were higher than fuel costs.

In October 2022 the Department revoked accreditation for two of Dennison’s installations based on an alleged assessment of heat previously being produced for the predominant purpose of increasing periodic support payments.

The company emphatically denies any burn to earn purpose, insisting the boilers at its bodyshop premises in Ballyclare were installed to improve processes and ensure staff comfort.

A legal challenge was mounted after the Department’s Statutory Review Panel upheld a determination reached in an investigation by Ofgem.

Dennison claimed the revocation decision was unlawful and procedurally unfair, based on failures to disclose how the alleged ineligible heat use was calculated or allow it to provide evidence from an independent energy consultant.

Counsel for the firm, John Larkin KC, argued that an obligation was wrongly imposed on operators to demonstrate compliance with the scheme when the burden of proof should be with the Department.

Disputing the impartiality of the probe, he stressed that a senior member of management provided a full account of boiler usage.

Mr Larkin also insisted it was improper to try to recoup more than £53,000, either through repayments or from future subsidies.

No failure to comply with obligations under the 2012 Regulations was alleged for any of the other nine biomass boilers run by Dennison.

The Department contended that an insufficient explanation had been provided for “very significant changes” in heat production by the two boilers.

Delivering judgment in the application for judicial review, Mr Justice Humphreys held that the panel took into account an array of material Dennison had no opportunity to comment on.

“There was a ready and regular exchange of information between the panel, the Department and Ofgem, none of which was made known or available to the applicant or its advisers,” he said.

“This represents an egregious breach of the basic principles of procedural fairness at common law.”

Dealing with further grounds of challenge, the judge described the panel’s decision letter as merely a statement of the outcome rather than a set of reasons.

He also held that generating heat to make businesses comfortable, but then allowing the premises to become cold after tariff rates were cut did not necessarily breach the scheme’s regulations.

The court heard less heat was produced in nearly 90% of installations following the reductions in 2017.

Mr Justice Humphreys stressed that the predominant purpose must be established.

“The participant may be generating heat both for the purpose of keeping his premises warm and also to increase periodic support payments,” he said.

“Without undertaking the required analysis, the decision maker simply conflates a significant drop in heat production with a breach of obligation.”

He held that the Department had misinterpreted the scheme and unlawfully applied the provisions.

“By effectively accepting Ofgem’s approach and rationale, the panel failed to properly apply the evidence to the statutory test,” he said.

The judge confirmed: “The applicant’s claims based on procedural fairness, error of law and inadequacy of reasons succeed.

“For the reasons set out, I quash the decision of the panel dated October 20, 2022.”

Outside court Dennison’s solicitor, Brian Moss, said there are still “grave concerns” about the transparency of the Department and Ofgem’s decision-making processes.

Mr Moss added: “My client, along with many other RHI participants who have been treated similarly, is hopeful that its excluded boilers will now be rightfully reinstated to the RHI Scheme, and that a back-payment of any periodic support payments it should have been entitled to, will now be made in full.”