Lees Cleaning Contractors LLP v Environment Agency

1. The Energy Savings Opportunity Scheme Regulations 2014 were made by the Secretary of State and came into force on 17 July 2014 and require all large undertakings to audit their energy use in four-yearly cycles.

2. The Appellant in these proceedings was identified by the Environment Agency as falling within the statutory criteria of a “relevant undertaking”. Regulation 15 defines a relevant undertaking:

15. —(1) Subject to regulation 16, an undertaking is a “relevant undertaking” in relation to a compliance period if, on the qualification date for that compliance period, it is— (a)a large undertaking, or …

3. Schedule 2 of the regulations defines large undertakings: Large undertakings, and small or medium undertakings

1. In these Regulations— (a) a “large undertaking” means an undertaking which either— (i) employs at least 250 persons, or …

4. The Respondent Environment Agency (EA) contacted the Appellant on 14 December 2023 drawing attention to the scheme and explaining “The Environment Agency is the scheme administrator and believes that your organisation qualifies and may need to take actions to comply”. The Agency wrote again on 29 May and 26 July 2024 explaining the need to register with the scheme and take action to ensure that the company was able to comply with the information requirements of the scheme. The letter warned: “Organisations qualifying for ESOS must submit a notification of compliance by the 6 August 2024”

5. On 11 September 2024 the EA sent the Appellant a Compliance Notice stating that it believed the respondent to be a large undertaking and requiring it to provide information by 25/9/2024.

6. On 17 October 2024 the EA served an Enforcement Notice on the Appellant requiring it to take steps by 17/01/2025. On 29 October the Appellant started its appeal to the Tribunal, it disputed having received correspondence prior to the 11 September letter and further argued that while they employed 267 staff they were a contract cleaning company and only 17 worked at their offices, the remainder at client sites over which they had no control and therefore any energy information would be irrelevant.

7. An officer of the Appellant contacted the EA raising issues about the status of its employees who were largely part-time. On 25 November, following discussion the EA responded: “As discussed, the ESOS Phase 3 qualification guidance relates to your registered accounts dated on or before 31 December 2022, which state that in 2022 you had 330 employees, and in 2021 you had 347 employees. I referred to the specific guidance (Section 1.2) that states that if the employees are employed on a contract OF service, they are counted for the ESOS eligibility calculation, but if they are employed on a contract FOR service, they are not included, and therefore you will be less likely to qualify.”

8. On 17 December 2024 in response to a case management direction the Appellant explained its position: “...the issue of the enforcement notice was unreasonable on the following grounds, although we do employ 267 staff, 250 are employed on clients premises and do not access our offices. Of the remainder 10 are window cleaners, who apart from starting at the office garage in the morning and returning at 4pm to drop off the company vans do not access the building. We therefore have a situation where only 7 staff are working in the offices at any time. It is therefore obvious that any survey on energy usage at the offices would be totally inaccurate and misleading with regard to 267 staff, we request that this enforcement notice be scrapped.” Consideration

9. Appeals against the service of an enforcement notice are governed by Regulation 48 which provides: Appeals

48. —(1) A responsible undertaking served with a determination under regulation 35(5) or paragraph 13(2) of Schedule 2, or with an enforcement notice, or a penalty notice, may appeal to the relevant appeal body on the grounds that the determination, enforcement notice or penalty notice (as the case may be) was— (a) based on an error of fact, (b) wrong in law, or (c) unreasonable.

10. From a consideration of the material before it the tribunal is satisfied that the Appellant met the definition of a “relevant undertaking” given the number of its employees at the relevant time. The tribunal is also satisfied that the EA sent the appropriate communications and notices to the company prior to issuing the enforcement notice. At the time the enforcement notice was sent the issuing of the enforcement notice was a proper and reasonable step to take.

11. The powers of the tribunal in considering an appeal are set out in Regulation 50 (the tribunal is described as “an appeal body”). Determination of an appeal

50. An appeal body may— (a) cancel the determination, enforcement notice or penalty notice (as the case may be), (b) affirm the determination, enforcement notice or penalty notice (as the case may be), whether in its original form or with such modification as it sees fit, (c) instruct the scheme administrator or the relevant compliance body to do, or not to do, any thing which is within the power of the scheme administrator or compliance body.

12. The tribunal is satisfied that the notice was properly issued. The Appellant was repeatedly told of its obligations to provide information. If it had done so it would have been able to explain the circumstances of the company; since the organisation of the Appellant company means that the energy savings potentially arising in its operations are far less than for organisations of a similar size. Because it failed to do so, despite all the opportunities it had it caused the EA to correctly go through the formal procedures to secure compliance, culminating in the issuing of an Enforcement Notice. The issuing of the Enforcement Notice was a proper and reasonable step for the EA to take; it was not based on an error of fact and it was correct in law. The Notice was correctly served. If the Appellant had dealt with this more appropriately considerable time and resources would have been saved. It is now a matter for the EA to determine what action it takes. Signed Date: Hughes 5 January 2026